Kildares Pub - King of Prussia, PA - I see so much joy in Real Estate - last Friday I helped an older couple buy their first property. They had rented for 30 yrs, in an effort to send their 5 kids thru school, debt free. The biggest issue we had was their lack of credit.They paid cash for everything. Thankfully he had Veteran benefits and we were able to use a VA loan to get them financed in their new home in Abington. Just an example of some of the pleasure I have in helping clients.
On the flip side, I am lately more and more involved with people looking to get out of a BAD situation, they cannot make their monthly mortgage payment, for various reasons: divorce, job, over extended credit, illness, medical bills or life just gets in the way. I am becoming an expert in Short Sales. This is when the owner of a home is upside down in the mortgage. They owe more on the property than what the property is valued at. Lately, values have levelled off and some borrowers have been using their homes like an ATM - taking cash out of the property, to pay bills, invest in their business, take a vacation, etc. When values were appreciating at terrific rates, it seemed to not be an issue or to mask the real issue - that they were spending more than making.
In real estate, a short sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic hardship on the part of the mortgagor. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale.
Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation.
A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale (or pre-foreclosure) if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, the advantages include avoidance of having a foreclosure on their credit history. Additionally, a short sale is typically faster and less expensive than a foreclosure.
In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount.
Lenders have a department (typically called a loss mitigation department) which processes potential short sale transactions. Typically, lenders do not accept short sale offers or requests for short sales until a Notice of Default has been issued or recorded with the locality where the property is located.
Lenders have a varying tolerance for short sales and mitigated losses. The majority of lenders have a pre-determined criteria for such transactions. In fact, if you do not have a fully executed agreement of sale, submitted with a complete short sale package, including a Net Sheet for the lender and a Hardship Letter (outling the circumstance of the reason for owner default).
(2 - Blue Bell example)
Other distressed lenders may allow any reasonable offer subject to a loss mitigator's approval. "Red tape" is very common in short sales, similar to REO and HUD properties, requiring potentially multiple levels of approvals and conditions. Junior liens, such as second morgagees, HELOC lenders, and HOA (special assessment liens), may need to approve of the short sale.
While it is frequent if not common for a lender to forgive the balance of the loan in question, it is unlikely that a lien holder that is not a mortgagee will forgive any of their balance.
The Mortgage Forgiveness Debt Relief Act of 2007
When the lender decides to forgive all or a portion of a borrower's debt and accept less, the forgiven amount is considered as income for the borrower and is liable to be taxed.
However, after the signing of The Mortgage Forgiveness Debt Relief Act of 2007 by President Bush, amendments have been made to remove such tax liability and allow the borrower and lender to work freely together to find a common solution that is beneficial to both parties. This protection is limited to primary residences so consultation with a tax advisor is necessary ensure that a borrower qualifies.
A short sale does not adversely effect a person's credit report beyond documenting the short sale as "foreclosure proceedings started". But it does count against a person's credit to about the same degree as their number of 'lates' on the credit reporting bureaus - from not paying their mortgage as agreed.
"If we don't take care of our customers, someone else will."
A real estate company depends upon clients for survival. No clients virtually translates to no business! So, it's no surprise to see companies allocating huge funds to market to new prospects with the goal of turning them into clients. But in the process of chasing new clients, many of these businesses forget their existing client base.
A successful business will typically see 80 percent of its business coming from 20 percent of its clients. And it is this loyal client base that has to be protected. Remember, it costs five times as much to find a new client as it does to keep an existing one.
How can you keep your client base from wandering over to your competitor? We've listed 5 simple tips by which you can maintain your loyal clients and also generate new ones:
1. Treat them right: One of the most important elements of good customer service is to make clients feel wanted. Just the words "Thank You" with a smile will reap huge goodwill. You'll be surprised at how much it matters! Say "thank you" to new clients within days (or if it's online, within hours) of receiving your first order. Knowing the names of regular clients and addressing them personally will immediately set the tone for a positive customer experience.
Have a dedicated phone line for long-term clients to allow them more convenient access to you. Make things easier for them the second time around. If you can, have couple of sales persons solely dedicated to deal with regular clients.
2. Attend to complaints: Try to solve clients' problems or complaints as soon as you can. Start by saying that you are sorry for what happened even if it is the client's fault. Then attend to the problem. Never say, "well, that's our policy"- that's a sure-fire tactic to drive your client away.
Use complaints to build business! You may well ask how that can be - by promptly following up and resolving a client's complaint, the client might be even more likely to continue doing business with you. And what's more, they might just recommend you to their family and friends on the basis of how promptly and efficiently their complaint was attended to.
3. Give incentives: Give clients a reason to return to your business. Offer special discounts or rewards to long-time clients. Invite your loyal clients to "special" events - make them feel important and wanted.
4. Listen to them: People like to be heard, they want their opinions known. So, talk to your regular clients and actually listen to what they are saying. And if possible, implement a couple of their suggestions and let them know you did it because of them.
5. Reach out: Keep in touch with your regular clients - send Christmas cards, see them at trade shows, send newsletters with useful information and updates. The more they see you and the more they know about your accomplishments, the more loyal they will be.
The trick to retaining client loyalty is to not ignore them, to treat them well and to ensure they receive value for their money.
Your customers will pay you back by spreading the good word about you.
NEW YORK (CNNMoney.com) -- Sales of existing homes rose slightly more than expected in May as home buyers responded to plummeting home prices, according to an industry trade group.
The National Association of Realtors (NAR) said Thursday that the number of existing homes sold during May rose 2% to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April.
But sales remain 16% below the 5.93 million-unit pace in May 2007, the report showed. And Thursday's report marks only the second time in 10 months that sales have increased.
Analysts were expecting the sales rate to increase to 4.95 million last month, according to a consensus of analysts' estimates gathered by Briefing.com.
The report also showed that the national median existing-home price for all housing types fell 6.3% to $208,600 from $222,700 a year earlier.
"Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages," said NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists, in a statement.
Total housing inventory at the end of May fell 1.4% to 4.49 million existing homes available for sale, indicating a 10.8-month supply at the current sales pace. That's down from a 11.2-month supply in April, according to the report.
The large supply of homes on the market favors buyers, but it should take several more months to draw the inventory down, said Lawrence Yun, NAR chief economist.
"Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets," Yun said.
The housing market remains mixed around the country. But the report showed that highly overbuilt markets - including Sacramento, the San Fernando Valley and Monterey County in California, Sarasota, Fla. and Battle Creek, Mich. - all experienced sales increases versus last year.
However, it's important to note that Thursday's report lags the interest rate cycle and is "old news" to some extent, according to Bob Brusca, chief economist at FAO Economics.
Interest rates have risen since the existing home sales number was calculated, Brusca said. That means the current market could be less favorable for homebuyers.
What's more, the existing home sales figure mostly reflects sales by individual homeowners as opposed to Wednesday's new home sales report which tallies sales by commercial homebuilders.
"People selling their own home usually live in the home until they sell it, so they're probably very motivated sellers, since they could be paying two mortgages," Brusca said.
Conversely, homebuilders are "authentic sellers" and the new home sales report gives a "better view of what the market is like," he said.
On Wednesday, the Census Bureau said that May sales of new single-family homes fell 2.5% to a seasonally adjusted annual rate of 512,000 from April's revised reading of 525,000.
"The message is that the housing market is probably still weakening," Brusca said. First Published: June 26, 2008: 10:11 AM EDT
This is fascinating and I'm about to say something many readers will find quite controversial. It might even anger some of you. I believe it is a reality and can help us understand how to control our destiny.
by Bill Mann
Some Chinese guy is helping you pay your mortgage.
I know, you don't recall ever getting a check from a Mr. Li, and if you were to find this Mr. Li, he'd disavow sending funds to you, but the nature of the balance of trade between China and the United States guarantees that what I'm about to tell you is true (unless you don't own a home or it's paid off, but let's not get pedantic).
Here's why Over the last decade, China's trade surplus with the U.S. has added up to $1.3 trillion. What this means (tautologically) is that these dollars accumulate in the Chinese financial system, most notably at People's Bank of China (PBOC) -- the Chinese equivalent to the Federal Reserve. What then happens is -- OK, this is boring. How about we track what happens using a Barbie doll?
And yes, that's what I'm saying: Our willingness to consume Barbie dolls is forcing some Chinese guy to pay your mortgage.
Globetrotter Barbie So, we head off to Target (NYSE: TGT) to buy a Barbie Doll. They cost approximately $20 apiece. Of this amount, most goes to Target, manufacturer Mattel (NYSE: MAT), various tax authorities, etc. And a smaller amount -- let's call it a dollar -- goes back to China.
The Chinese factory where Barbies are made is, redundantly, Chinese. All of its costs are rendered in Chinese yuan, but all of its contracts are rendered in U.S. dollars. So its contract with Mattel to produce 100,000 Barbie Fairytopia Rainbow Adventure Elina dolls (yes, I have girls) is worthless to the company until it converts those sawbucks into yuan. They do so by taking their dollar receipts to a commercial bank, which converts them into local currency.
Stick with me now -- for without even paying attention, we've just met our Mr. Li. He makes a paltry 1,500 yuan per month ($200) assembling Barbie dolls at the factory. We'll get back to him in a second.
Keeping with our dollar So this dollar meets up with thousands and millions of other U.S. dollars in this Chinese bank, residuals from our consumption of Nike (NYSE: NKE) basketball shoes, Apple (Nasdaq: AAPL) iPods, whoopee cushions, and so on. Banks all over the world use their foreign currency holdings to invest them for their highest marginal use -- but not in China, where all foreign currency gets surrendered to the PBOC.
Now our single dollar has joined a river of them flowing toward the PBOC. The PBOC, in turn, has to figure out how to invest this unending stream of cash. Mostly, it's purchased U.S. Treasuries, but it's started buying U.S. equities, such as when China invested $3 billion in Blackstone Group (NYSE: BX) last May.
As a result, the dollar which we sent to China when we purchased a Barbie doll boomerangs back to the United States as some type of investment.
Wait, what about Mr Li? In effect, this relationship means that every American has borrowed several thousand bucks from someone in China. Because remember what Treasury notes are -- an obligation to pay someone who is lending money.
In this case, while the lender here may seem like it's the PBOC, China's policy to keep its exchange rate artificially low means that the country's workers are bearing the brunt of the cost. (An interesting dynamic for a "communist" country, don't you think?)
See, the low exchange rate benefits Chinese companies by keeping costs low, but by the same measure, prevents laborers from benefiting at all. Just imagine if the yuan was allowed to float freely. Suddenly millions of folks like Mr. Li would see their paychecks double in dollar terms, China would be wracked with inflation, and its export-based economy would be a lot less cost competitive.
This has real consequences for Mr. Li. Not only does he get paid an artificially low amount (in effect, lending the balance to you), but since China has to keep finding places to stick all of those dollars that keep inflation in check, the government won't make the kinds of expenditures that make sense in a rapidly developing economy: Schools, pollution controls, and so on. If you've been to China, then you know that there are a lot of good places where $1.3 trillion could be put to work.
This makes zero sense until you realize that the overarching goal of the Chinese government is to improve the standard of living for as many of its citizens as possible, while limiting the income gap between those whose lives have already improved and those whose have not. Still, the overall impact -- the fact that our comparatively exorbitant spending is subsidized by low-paid Chinese workers is shocking on many levels.
Scratch?that: It's stunning.
You have two choices One way to combat this reality is to consume fewer Chinese goods. While some are attempting to do just (call it a?Lou Dobbs-ian form of protest), it's unlikely to move the needle. Besides, why get into a trade war when the burgeoning Chinese middle class will soon be an extraordinary growth market for our own product?
So rather than make a pyrrhic political statement, I suggest you act to benefit from this reality by investing overseas. This way you can profit from the natural downward pressure on the dollar created by our spending habits. And while you needn't pick Chinese companies, an outstanding company such as Motley Fool Global Gains recommendation New Oriental Education & Technology (NYSE: EDU) would fit the bill nicely. (Incidentally, this is also a business that benefits from the burgeoning and education-focused Chinese middle class.)
If the prospect of investing in China frightens you, you can also consider picking up American names that do substantial business in the country. Yum! Brands (NYSE: YUM), for example, has opened more than 3,000 KFC, Pizza Hut, and East Dawning restaurants in China.
Pick your passion Given today's global economic realities, it makes great sense to invest overseas and ensure that your savings have exposure to other (stronger) currencies.
Each month, my team and I seek out the best foreign investments for American investors in our Motley Fool Global Gains international stock investing service. You can see all of our research and recommendations, including our top picks for new money now, free with a 30-day trial. Click here for more information.
Bill Mann's own plan to lower American trade deficits involves marshmallow Peeps. That's all we can tell you for the time being. He holds shares of none of the companies mentioned in this article. New Oriental is a Global Gains recommendation. Apple is a Stock Advisor recommendation.
The big question everyone is asking these days is "When will the bottom of the real estate market occur?" The bottom of the market may be closer than you might think. Housing Predictor explores the ways to tell about your market.
The big question in real estate these days is "When will the bottom of the market occur?"
The elusive bottom of the market may be closer than you think, but it depends where you live and what you see. Housing Predictor explores how to find the elusive bottom of your real estate market, and lists the 10 Signs to look for when the bottom of your market is near.
Housing Predictor forecasts more than 250 local housing markets in all 50 U.S. states, and provides insightful exclusive real estate news in its growing online magazine format.
All real estate markets are local in nature driven by regional economies, including job growth, business development and a list of other indicators that determine each community's economic health. Finding the bottom in any real estate market is no easy task, but there are chief indicators that can at least shed some light on the current state of the market.
Investors look for stabilization to develop first and then determine for them selves whether it's a prudent time to take the next step. Historically, real estate cycles last any where from 7 to 10 years on average in the U.S. But that too may be changing as economic conditions outside of the norm develop to drastically reform market dynamics.
That's what happened to cause the credit crisis as Wall Street sold securities in record numbers to fill record high orders of home mortgages like commodities. The crisis has widely extended into the overall economy as all-time high foreclosures worsen in just about every state of the nation.
Real estate recessions exist in 46 states, but the bottom of many markets may be closer than you might think. Take for instance, Florida, which saw its real estate markets stall out earlier than the rest of the nation as a result of two terrible successive years of hurricane activity. The back to back active hurricane seasons threw Florida into an earlier slowdown than the rest of the country, and many of its local housing markets are already showing many signs of hitting their bottoms.
Other markets in California and Arizona are beginning to signal that some markets may be getting close to bottoms. Market bottoms don't happen with a big bang. Most people hardly ever realize they've happened until markets are headed up.
To learn the 10 Signs to the Bottom of Real Estate Markets, check your market forecast and search real estate listings visit http://www.housingpredictor.com/
Great article on how the recent numbers are analyzed today and why we are measuring the numbers differently all of a sudden. We now use Shiller's Index, instead of NAR (Nat'l Assoc of Realtors) and OFHEO (Office of Fed Housing and Oversight) government. Very interesting and worth a ponder...
-Tom Higgins
Realtor, RE/MAX Services - Philadelphia - quite a stable healthy market. Our region has experienced the resilience that is spoken of by David. We have seen the number of sales decline by 8-9%, but the average sale price has not fallen but actually risen by 1% overall.
"Knowing what we know about real estate."
By David M. Michonski
How we know what we know is an arcane epistemological question. Now it may be a matter of national economic security. Our entire financial system's survival may now depend on how we "know" what we "know" about real estate markets.
What we "know" is that day after day the headlines tell us real estate markets in America are falling out of bed. Because homes are presumably falling in value, the mortgage markets have seized up and institutions are reluctant to lend against an asset declining in value.
The financial market's reluctance to lend against this declining asset and the public's reluctance to buy it, fuels a self-fulfilling cycle of falling prices that today threatens the very Wall Street firms who securitized and internationalized the once sleepy, local mortgage market. The failure of one or more of those firms could have a domino effect on our entire financial infrastructure and cause further panic in financial and real estate markets of epic proportions.
But what if the headlines are not quite accurate? What if what we know about the real estate markets is distorted and the distortions are being sensationalized?
Given the importance of the outcome, now might be a good time to ask how we know what we know before fiction becomes reality.
What we know today is largely courtesy of the S &P Case Shiller Index. This index has replaced two older indexes on the front page of American newspapers. One was the National Association of Realtors' monthly price index and the other is the OFHEO index (Office of Federal Housing Economic Oversight). The latter two use rather different methodologies but over the years have reached remarkably similar conclusions about prices of homes in America. When different methodologies yield similar results, you get a good handle on reality.
Today we don't hear much about either index. Instead, the Case Shiller index is everywhere with its ominous message. The index talks about a 15% price decline in Miami and 4.8% for the year in New York. Bloomberg quotes Shiller: "We are in an historic housing bust right now."
Two weekends ago I opened my AOL account and saw a bold headline that home prices in 20 markets were falling rapidly with quotes from Shiller that prices nationally finished down 8.9%. "Wherever you look things look bleak" Shiller said.
The Wall Street Journal runs a headline "Home Prices Decline at Record Rates" quoting Shiller yet again.
Is Shiller right? The importance of the question forces us to look at the market through the other available lenses, NAR and OFHEO.
OFHEO has been keeping a national index for years and publishes monthly a one inch thick book on housing prices. It says that in 2007 the average price in America was down .3%. Yes, that is three tenths of one percent, not Shiller's 8.9%. Compared to OFHEO Shiller's index overstates the decline by 29 times or 2900%, not a small amount.
The National Association of Realtors index showed a median 1.4% decline nationally after 64 years of uninterrupted gains. Compared to NAR's 1.4% median price decline, Shiller overstates the "freefall" by 6.3 times or over 600%.
When I pondered the 2007 OFHEO and NAR numbers a blasphemous thought came to mind, one contrary to today's media dogma: the numbers showed not weakness in the real estate markets, but rather resiliency. Just my musing. Interpret as you will.
Recently, another report came out that was greatly at odds with Shiller's shrillness. It came from the 2007 results for Realogy, the largest real estate brokerage company in the world. It owns the Century 21, Coldwell Banker, Coldwell Banker Commercial, Sotheby's, ERA and Better Homes and Gardens brands, among others. They have over 300,000 agents under their franchised brands, or about one-fourth of the members of the National Association of Realtors. So these are real people doing real business everyday in the real marketplace, not in a Yale think tank.
Realogy reported that their average price in 2007 was down 1%, right in line with the NAR and OFHEO data. Again this is from a real real estate firm operating in the real world daily. This makes three out of four indexes point in one way and Shiller alone points to much more calamitous and foreboding results. Is there a reason why?
Some think it may have to do with methodology. Shiller and OFHEO's are both repeat sales indexes whereas NAR's data and that of Realogy take all sales volume and divide it by unit sales to get an average price and then figure out the median. Still, even using different methodologies, three out of four give one clear answer, that prices have fallen about 1%, while Shiller points to a 9 times greater fall.
Some additional notes. Shiller issues national press releases monthly but his index is anything but national unlike OFHEO, NAR and Realogy's data. He covers completely only 8 states out of 50 and in part another 13. He has no data from 29 states.
The eight states completely covered are among the weakest in the nation. Coincidence? Even the Wall Street Journal said several weeks ago that Shiller's index may be negatively biased.
Shiller claims to cover 20 markets (some are in the same states and hence 20 markets but only 8 states are fully covered) . He labels those markets with the names of cities, not states. Hence New York, Miami, Seattle, etc. This gives the impression that the markets he is reporting on are in fact cities (what else would one think?)
In fact, Shiller does not report on cities but on MSA's, short for Metropolitan Statistical Areas. This leads to some remarkable distortions. For instance, Shiller claims New York prices fell 5.6% in 2007 versus an index created by Manhattan based Miller Samuel that says the average Manhattan price rose 17.6%. The two are reporting apples and oranges but which gives the more correct impression?
Miller Samuel tracks coop and condo sales in Manhattan and Manhattan is what most people think of when they think of "New York." Shiller's index, expressly excludes condominiums and coops which account for 1/3 of New York City sales and 99% of Manhattan sales. Thus, Shiller gives the impression of reporting that prices have dropped 5.6% in a place where he does not cover 99% of the sales and where prices have not dropped but risen, substantially.
Even more perversely, Schiller's MSA for "New York" tracks sales in Putnam County, two hours north , and single family home sales in Bergen County, New Jersey and home prices out on Long Island. Trailer park sales in Putnam County are in his "New York" index.
Criticisms of Shiller's inaccuracies are growing. RealTrends, a national industry monthly, ran its January headline "Case Shiller Index Exposed" and ran a synopsis of a paper done by Andre Leventis of OFHEO in which it chronicles the "flaws in Case-Shiller that are traceable and have a huge impact on the variance between their reports and those of so many other reports, including NAR's and our own."
Lawrence Yun of the National Associations of Realtors (who was named by USAToday as one of the top ten economic forecasters for his accuracy) has ratcheted up his criticism of Shiller. Yun calls Shiller's index a "total distortion of market conditions based upon a small selection of falling local metro coverage."
OFHEO has also chimed in by indicating that 70% of markets nationwide are not falling but actually rising, a far cry from what Shiller is peddling to the press.
But something more sinister is coming to the fore which a responsible press cannot ignore. Shiller shrillness may be due to self interest and private gain.
The gospel according to Shiller is that national home prices are in a freefall of epic proportions and that 20% to 30% price drops are in order. How could that help Shiller?
Yun suggests that Shiller profits from creating fear. He creates fear so that people will want to hedge themselves against price declines by buying insurance against a free fall in prices. Where is such insurance available? Answer: on the S & P Case Shiller index traded on the Chicago Mercantile Exchange. According to Yun, Shiller has a "side business in Chicago. His index is used at the Chicago Mercantile Exchange for hedging housing futures values. The more hedging of bets that occur, the more profits go into Dr. Shiller's bank account. And more hedging of the bets will take place if people believe there will be a crash in housing values. So naturally he has a financial incentive to ‘scare' the market."
I have no direct knowledge that he does so for profit although anecdotally I have been told this is true. I suggest it is time for the media to find out.
If the media does not look more deeply into the methodology being used today, Shiller may indeed scare America into depression or a Depression.
While asking for disclosure of Shiller's self interest, allow me to disclose mine. I am indeed a REALTOR and make a better living when real estate markets are healthy than when they are sick. As a REALTOR I subscribe to something made clear in our Code of Ethics: we believe that upon "widely allocated ownership [of real estate] depend the survival and growth of free institutions and of our civilization." No small thing. Our Code says this imposes on us "obligations beyond those of ordinary commerce."
Today the commerce of real estate is being distorted, possibly for private gain. Widely allocated ownership and possibly the survival and growth of our free institutions is at stake. With it is something else at stake. It is called the American Dream.
While REALTORS work to make a living, most find a different satisfaction from the business. Ostensibly the business seems to be about selling homes, but really it is about selling the American Dream. We take some satisfaction out of trying to make sure as many people as possible can have that dream. We even think that promoting home ownership fosters better citizenship, because citizens who own a piece of America will want to take greater care of it.
So we feel there is a lot at stake here, both for REALTORS like me, as well as the rest of America. Is it not time to start some background checks?
David M. Michonski is Chairman and CEO of Coldwell Banker Hunt Kennedy in New York
It's that time of a Real Estate Cycle that I'm willing to step out on a limb and tell everyone it's time to buy. As we all know real estate markets just like other commodity markets, go up and down. Timing is everything. Traditionally, Real Estate is a long term investment. It still is. Congress Raises Conforming Loan Limit Congress passed the economic stimulus package which temporarily raises the conforming loan limit to $729,750 from $417,000. This should loosen up credit and give a boost to the real estate market, especially in high-priced areas. It offers some of the same advantages and disadvantages as the bond, stock and commodities markets. One disadvantage is that it is not as liquid as some of the aforementioned investments. As many area sellers are finding out right now. That said, the advantages far outweigh the liquidity issue. For instance, among other things, it offers: income, amortization, appreciation, depreciation, tax benefits, leverage, tangibility, pride of ownership and shelter to you or to your tenants.
In the past few years I did work with people who just wanted to flip homes as that was the thing to do to take advantage of that market (and they typically made QUICK money). Today is not the 'flipping' market, because as we know the markets go up and they go down. As the records show, every 10 year period in history properties have gone up.
Right now the market is perfect for buyers as the large amount of short sales are fueling a buyers market. The other factor helping is the low interest rates. this is why I'm going out on a limb (hey but don't sue me) and telling my clients its time to get going. The clever investors are. Another sign of a Buyers Market is that the majority of buyers are not buying. When the majority do buy, it will be the time to hold what you have and/ or sell to the frenzied buyer - cycle.
We have had several clients now pick up wonderful pricing on homes that are worth thousands of dollars less than what even is owed on the homes. And we see deals all over the Delaware Valley. Many investors from outside the area...I am currently working with several Europeans and out of Staters.
Rates are fantastic, we can now get approved clients loans locked for 30 years with rates in the 5-6% range. The combination of some adjusted values and the fantastic lowering of rates, align the market as a BUY.
So that is why I'm sending out this message now, as I don't want anyone to call me in a year or two and say "we should have bought back when everything was so low". Those who do not remember history are doomed to repeat it. Wow, would I love to be a buyer in the previous markets!!!! But, I am a Buyer in this market!! ·
"The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline." (Time, December 1, 1947) ·
"Houses cost too much for the mass market. Today's average price is around $8,000-out of reach for two-thirds of all buyers." (Science Digest, April, 1948) ·
"The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs $28,000." (Business Week, September 4, 1969) ·
"The era of easy profits in real estate may be drawing to a close." (Money, January, 1981) ·
"The golden-age of risk-free run-ups in home prices is gone." (Money, March 1985) ·
"Most economists agree... [a home] will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980s." (Money, 1986) ·
"Financial planners agree that houses will continue to be a poor investment." (Kiplinger's Personal Financial Magazine, November1993) ·
Today: headline: "Real Estate is in for a Meltdown" (Business Week Feb. 2008)
Don't be the one to look back in the coming years and regret missing this opportunity! We are here to help, if you need research to help you become informed about our current market stats, please call me as we have access to lots of market data.
I appreciate that now is not the time for EVERY person. There are extenuating factors in some of our lives that prohibit an investment at this time. I understand.
But if you are: · able to BUY · the market is ready, · I am willing to help you make an informed decision
Please call me for a confidential discussion on your Real Estate needs.
In this current market I think it is advisable to try to sell your house first before you offer on one to buy. But...
It's a buyers' market right now. There have been houses for sale in many neighborhoods for months now. Yours is a super place and if priced and marketed properly, I'm sure will sell in a reasonable period of time. Today, that means 2-3 months.
We could offer and put a contingency in the offer that your current home must sell before you can purchase. That way you are not tied with two mortgage payments. Problem is that most Sellers may not accept the offer structured this way. What we could do further, is to put in a clause in the contract called a "first right of refusal." What this means is that the sellers have the right to continue to advertise and show the home to prospective buyers, but if they get another offer you will have the option to either go ahead and purchase the property or let it go. Within a predetermined period of time (say 2-5 days).
There are no real rules on this subject, it is a juggling match. Controversy and debate always surround this question!
Apparently, people who are faced with this question think that they should first find their next house and put it securely under contract. There is and are good grounds for this choice, although it is often the least prudent option of the two choices that are available.
By first finding your new home, you will: - Know how much money (or equity) you will need to take out of your existing house in order to afford the new one. - Know when you will need to finalize the sale of your current house in order to move into the new one. - Know that you will have somewhere to live when you move out of your existing house.
Although the logic behind these reasons is more than sound, most people who are experienced in "moving up" or upgrading to another house will argue that it makes more financial sense to list your house first, and then begin the house Buying process.
Another option, is the financing way. If you have the equity in your home, you take out an equity loan (short term) to carry the equity towards the new purchase for down payment or closing cost coverage.
A reputable lender may be a source of advice here. The credit markets have changed and tightened (daily) that some of these options have gotten very limited. Although the benefit of this tightening of credit, has lowered mortgage rates - making it the time to get these loans. But even that seems to change every few days.
I guess this is a GUIDE BOOK of sorts. I am just trying to give you the options and the pro's and con's of buying a home before you sell your present residence. 'Til next time....
Tom Higgins
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