My Real Estate Pagenewsletter for November discusses how to make the most of an appraisal in this market. I've sent this issue to every client doing a refinance and every listing agent I know. Appraisals are the subject of much conversation in our industry and much of the conversation is definately not happy talk. Appraisers are sworn to identify the accurate value of a property to support mortgage loans that are secured by real estate. Appraisers have to deal with a wide variety of factors, not the least of which is the new HVCC structure that limits the contact between the apprasier and the lender.
If you want to obtain the most accurate appraisal of your, or your client's property, you need to be proactive in the process.
I've posted the newsletter on my website and attached a copy of the file to this email. You can access the PDF version to print or download at this link: Obtaining The Best Appraisal in Any Market
Please feel free to distribute to your clients, especially your sellers. I hope it helps your business and if you have any questions, please call or email me at your convenience.
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Jeff Baxter - Prosperity Mortgage - Bethany & Rehoboth Beach, DE
Here are my newsletters for the month of November. They are posted on my website - www.sjbaxter.com - or you can click on the links below to access the PDF files. Feel free to distribute to your clients.
Condos, especially condos purchased as second homes or investment properties in a resort area, continue to drive buyers, sellers, mortgage lenders, and Realtor's crazy.
One of my referral agents had a client call me about 4 weeks ago to finance a condo in Bear Trap Duneshere at the beach in Delaware. Now, I do loans in Bear Trap all the time and have already fought the battle with my lender and Fannie/Freddie that this is NOT a Resort Condo or a Condotel. And, I understand that if you put less than 25% down on a condo, there is a 3/4 point add-on to the price of the mortgage (assuming it's sold to Fannie or Freddie).
So what happened you ask. The borrower consulted an out of state mortgage broker (referred by a relative) who told her, no problem, I can give you the same rate with 20% down AND "no issue getting a condo approved."
Fast forward, with a "locked" rate in hand, the borrower moved ahead with the out of state broker thinking she'd gotten a GREAT deal. Problem is, I got a phone call late yesterday that the broker's lender can't get the condo approved "by Fannie Mae" and therefore they can't close the purchase loan on Tuesday - can I just take her broker's loan file and close the loan myself keeping the great rate? Unfortunately, I can't. We have to order a new appraisal, submit a new mortgage application, and lock today's rate. I can probably close in 2 weeks if all goes well, but you know, the pipeline is pretty full in our processing shop right now with first time buyers trying to close by November 30th.
Lesson learned? If you are buying, selling, listing or showing a condo in a resort area - know the issues. Use an experienced lender that does condo financing regularly. Then you won't need to worry about a delayed settlement, lost rate locks, and other financial penalties and wasted money.
Jeff Baxter - Prosperity Mortgage - Bethany & Rehoboth Beach, DE
I have to admit, my absolute favorite blogger is Calculated Risk. He writes well, covers real estate and finance, and doesn't sugercoat anything.
When September New Home Sales (Report is a PDF file to print or download) came out yesterday, I wanted to see CR's reaction. You see, sales dropped 3.6% to an annualized rate of 402,000. This was down from a downwardly revised August number. It was also the first drop in 6 months. Not the best news.
New home sales are far more important for the economy than existing home sales, and new home sales will remain under pressure until the overhang of existing homes declines much further. Builders are having a very tough time competing with lower priced distressed sales in the existing home market.
It's going to be interesting to see how the expiration of the FTHB tax credit impacts sales going forward. It probably had more of an effect on new home sales becuase of timing (the sale has to close by 11/30 so a newly constructed home had to be purchased much earlier than an existing home). Also, the recent flurry of stories about a compromise agreement to extend and even expand the tax credit may actually goose sales, both new and existing in coming months. We'll see. What do you think?
Jeff Baxter - Prosperity Mortgage - Bethany & Rehoboth Beach, DE
I think we can probably all agree that interest rates are probably headed higher next year. The Federal Reserve's MBS purchase program, while extended through March 31st, will be wound down. The massive Federal spending spree we've seen this year can only add to inflationary presuure.
Thinking about how the almost dead certainty of rising rates will impact buyers, we've put together an online presentation explaining our concerns and how increasing rates will impact the cost of purchasing a new home. Even beyond rates, your buyers need to be concerned about the continued tightening of underwriting guidlines.
This is a nice presentation to send to your clients that are considering a purchase but are sitting on the fence. Hope it helps!
On October 1, 2009, important changes to the National Flood Insurance Program (NFIP) will take effect. There will be an increase in rates, the standard deductibles will increase, and the basic insurance limits will increase. However, the total coverage available will stay at a $250,000 maximum. These combined changes will result in an average premium increase of 8 percent. The increases will apply only to policies that are written or renewed after October 1, 2009.
I'm going to include much of the detail from the FEMA announcement, so please bear with me. The increase in the minimum deductible and the rate increases are the most important aspects of this annoucement. It's also interesting that they are finally doing away with the paper maps.
The standard deductible of $500 is being discontinued for all properties. The new standard deductible for Post-FIRM (Flood Insurance Rate Map) properties will be $1,000 and Pre-FIRM properties will be $2,000. Owners of Pre-FIRM properties have the option to buy back the $1,000 deductible within 60 days of the renewal of their flood insurance policy. Otherwise, deductibles cannot be reduced midterm unless required by the mortgagee. It is important to remember that there is a 30-day waiting period unless it is a requirement for loan closing. In most cases the deductible is only a fraction of the average flood insurance claim, which can be substantial.
Just as with other lines of insurance with high claim potential, such as wind insurance, it is not unusual for minimum deductibles to increase to foster the soundness of the program. The NFIP's previous deductibles were in place for almost a decade. In taking inflation into consideration over time, the new standard deductibles being changed effective October 2009 are comparable in value to the previous deductibles when they were first established.
The basic insurance limits are also increasing for all categories of buildings and contents:
The basic limit for 1-4 Family Dwelling Coverage will increase from $50,000 to $60,000. Additional insurance limits are $190,000 for a total limit of $250,000.
Other Residential Building Coverage basic limit will increase from $150,000 to $175,000 with additional insurance limits of $75,000 for a total limit of $250,000.
Non-Residential Building Coverage will increase from $150,000 to $175,000 for the basic limit. Additional insurance limits are $325,000 for a total of $500,000.
Residential Contents Coverage basic limit will increase from $20,000 to $25,000. Addition limits are $75,000 for a total insurance limit of $100,000.
Non-Residential Contents Coverage basic limit will increase from $130,000 to $150,000. Additional insurance limits are $350,000 for a total insurance limit of $500,000.
The premium increases vary by Zone. V Zones are coastal high-velocity zones and will have larger rate increases as a result of the Heinz Center's Erosion Zone Study, which clearly indicates that current rates significantly underestimate the increasing hazard from steadily eroding coastlines. The premium increases by zones are as follows:
V Zones
V Zone premiums will increase 10 percent.
A Zones
A Zones, which are non-velocity zones that are primarily riverine zones, will increase by 8 to 10 percent.
Post-Firm A1-A30 and AE Zones will increase 10 percent.
Pre-FIRM AE Zones premiums will increase 10 percent to decrease the amount of subsidy in our Pre-FIRM rate.
AO, AH, AOB, and AHB, which are shallow flooding zones, will have an 8 percent increase in premiums.
Unnumbered A Zones, which are remote A Zones where elevations have not been determined, will have increase of 10 percent in premiums.
A99 Zones, which are approved flood mitigation projects, e.g., levees still in the course of construction, and AR Zones will have premium increases of 10 percent.
X Zones and Miscellaneous
X Zones, which are zones outside the Special Flood Hazard Area, will have an increase of 8 percent for a Standard Risk Policy and no increase in premiums for a Preferred Risk Policy (PRP).
Mortgage Portfolio Protection Program (MPPP) will have an increase in premiums of 10 percent.
Discontinuance of Paper Flood Insurance Rate Maps
Effective October 1, 2009 FEMA will discontinue the distribution of paper maps. The paper maps will be replaced with Digital Flood Insurance Rate Maps (DFIRMs). Replacing the paper map products with digital versions is more environmentally friendly and will improve the usability of FEMA's flood hazard data. It also provides users with a more powerful tool for insurance activities and flood risk management.
As we enter into the last quarter of 2009 and prepare for 2010 I have some concerns that the sun will be setting on the advantages for the first time homebuyer. First and most importantly, the $8,000 tax credit expiring midnight November 30th.
Second, home prices have begun moving up in the lower end of the market - where the first time buyer is typically looking. And third, we are surely going to pay the piper with regard to interest rates in the future.
We've laid out these concerns in our monthly online presentation entitled "Is time Running Out For The First Time Homebuyer?"
If you would like to know more about "Is Time Running Out for First Time Homebuyer?" click below to find out more!
Please feel free to share the presentation with your clients, friends and family. If you are looking for financing in the mid-Atlantic area (DE, MD, VA, PA), please give me a call to discuss.
SCAOR (Sussex County Association of Realtors) sponsored a fun, if rain filled, evening at Jungle Jim's in Rehoboth Beach this past Friday to raise money for RPAC - the Realtor Political Action Committee. Most of the local real estate offices purchase an "Office Duck" to decorate and race as a way to raise money. I decided that Prosperity Mortgage would do the same and challange the real estate offices I service and support. My Pirate Duck, the Rate Slasher, is seen here.
It was down to the wire as office ducks jockey for top duck; small ducks vie to win prizes. Which office had the most REALTORS® attending?..... It was time for the Prosperity Mortgage Pirate Duck to emerge from seclusion and have a little fun.
Although we missed out winning the Dapper Duck Award for "best dressed" to Little Miss RPAC 2009 submitted by the Rehoboth Beach Long and Foster office, I think the trophy was stolen. Here's a picture of Little Miss RPAC and I'll let you decide.
Regardless, the evening was a blast and my Pirate Duck came in 3rd in the overall office duck race, handily beating Little Miss RPAC and the entry from my other Long and Foster office in Bethany Beach - Biker Chick.
Individual realtors also purchased ducks and raced them as well. Entertainment was provided by a steel drum band and everyone had a great time.
Events like this are always a fun way to blow off steam and get aways from the pressures of the business we're in. Whether selling houses or loans, this market can make us all a little crazy.
I produced a "virtual tour" of the event for everyone that couldn't make it in person. Hope you enjoy it:
[Excerpts from Jim Remley (Real Estate Agent, Oregon) new book entitled Sell Your Home in Any Market - 50 Surprisingly Simple Strategies to Sell Your Home Fast and For Top Dollar!]
Your kitchen can make or break the sale of your home. Why? A potential buyer might overlook the fact that the bedrooms are on the "smallish side", but if the kitchen does not measure up, you may want to consider the top 5 kitchen improvements, as recommended by Jim Remley, a top real estate agent in Orego!
•1. Sinks & Faucets - Clean your faucets, re-caulk your sink and if it's chipped, go to your local hardware store for a fixer kit. If it's really beat up, maybe it's time to upgrade the faucets, the sink or both.
•2. Appliance Upgrade - Updated appliances that match will make buyers take a second look. It's not cheap-but can make the real estate sign change from "For Sale" to "Sold". As well, small appliances that take up counter space, and are rarely used, should be packed and stored (break makers, toaster oven).
•3. Kitchen Cabinets - You have two options here - replace old cabinets or opt for the less expensive option of re-facing the older ones. Make sure that whatever you do, that they match your appliances.
•4. New Lighting - Buyers are looking for bright, yet soft lighting which makes working in the kitchen a joy. In addition to upgrading the fixtures, consider installing lighting under cabinets for "task lighting" which throws light to countertop work areas below.
•5. Counter Tops - The countertop is the one thing that ties every piece of your kitchen together. If not, the most expensive and time consuming is to have them totally replaced. However, there is a cheaper update where you can have them resurfaced with stone veneer, tile or wood laminate. And don't forget to update your back splash as a worn out backsplash can make the best countertops look dated or dull.
Hope these tips are helpful.
Jeff Baxter - Prosperity Mortgage - Bethany & Rehoboth Beach, DE
Great list of tips for the 1st time home buyer, especially if you are trying to take advantage of the $8000 tax credit. However, I'd advise not looking at short sales or REO at this late date if you want the credit. Chances are you won't get to settlement by November 30th. Good luck
You still have time to take advantage of the 1st Time Homebuyers Tax Credit, but you’ve got to act quickly and strategically. You must close escrow by November 30, 2009, which means you really should enter into contract by October 15. (The government could extend this deadline, but you can’t count on it.) There’s a lot of bidding competition right now, and issues can come up during escrow, so you’ll want to give yourself as much time as possible. Even if the Tax Credit isn’t your main motivation, you can still cut down on lengthy searches and write fewer offers by following these strategic steps. Many of these you’ll do upfront, even before you start your actual search. It’s a lot like a great paint job—the best results come from the most diligent prep work.
1.YOUR LOAN—BE PREPARED. Clearly identify your loan amount, loan program, and source of any gift funds upfront. Switching programs midstream can cost you time and might result in the loss of an offer. You’ll need a preapproval from a direct lender, and one who is available to write new preapprovals as required (on weekends, too). Once you’ve found the lender you want to work with, stick with them. Loyalty is mutually beneficial. Be prepared to write an earnest money check for 1% of the purchase price –or more. You may also be required to put this money into escrow upon seller acceptance—even before the short sale is approved by the bank. Even if you’re paying cash, plan on showing proof of funds.
2. YOUR LOAN—STAY PREPARED. Keep all your paperwork close at hand and updated, including your FICO scores and proof of funds to close (down payment and closing costs). Scan it and have it ready, so if the seller requires you to prequalify with their lender too, you will have everything ready. They may also ask you for DU approval (desktop underwriting).Don't buy anything that will affect your credit score, especially big ticket items like furniture or a car. Your credit score may be rechecked up until the day of closing and a new purchase may affect your ability to get a loan.
3. YOUR SEARCH—BE $$$ REALISTIC. Have your REALTOR® pull the solds for the past 3 months in your desired neighborhood and pay particular attention to the past 30 days. If prices are on the rise, make sure this is still a realistic area for you. Keep in mind that most people are looking for the same thing—the nicest house in the best neighborhood for the lowest price. You’ve got competition!
4. YOUR SEARCH—TARGET IT.Zero in on just a few favorite neighborhoods. This is not the market to be looking all over the entire county. If prices are rising in your first choice community, switch quickly. Have a backup area in mind from the beginning.
5. YOUR SEARCH—REALLY KNOW WHAT YOU WANT.Sit down with all decision makers involved and have a heart-to-heart about which amenities and features you really need and want, and which you can live without. Don’t let your emotions get in the way. Be logical when you make your wish list; because as soon as you start looking at homes, your emotions will kick into high gear.
6. YOUR REALTOR®-- PUT THEM TO WORK. Full time professional REALTORS® love what they do, and will be your greatest asset in this turbulent market. Their connections, perseverance, hard work and loyalty will get you the results you want. Be prepared to sign a Buyer Broker Agreement, which spells out the specific duties of both parties. if you’re not willing to make a commitment, the best agents won’t take time away from their loyal clients to help you.
7. THINK OUTSIDE THE BOX. Do you really have to have 2 full baths? There’s less competition for homes with 1 bath, and you could add another one later, or get a rehab loan upfront.Or how about a 2-on-1 instead of a single family home? Extra space or rental income can be a great asset.
8. LOOK AT THE CONTINGENT/PENDING LISTINGS. Another reason for having a good REALTOR® at your side.A very high percentage of escrows do not close with the original buyer, so it pays to track these homes and put in a competitive backup offer . In San Diego we now have a “contingent” status, where a short sale seller has accepted the offer but the bank has not yet approved it. Many of these first-position buyers are putting in offers on several homes at once, so look for homes which have been in contingent/pending for at least 1 month or more. Chances are that many short sale listings will need a new buyer, and when they do, they will need one quickly.
9. LOOK FOR HOMES NOT ON THE MARKET YET. Your REALTOR® can help you here, too, by checking the recent NOD (notice of default) filings in your targeted neighborhoods. Another possibility—homes which are going to auction within the next few weeks. Many of these would have made great short sales but the seller stayed in denial too long, or perhaps didn’t’ get the loan mod they were seeking. If your agent can get a short sale listing from the seller, and you write a strong offer and present it to the bank, you have a shot at getting the house, and helping the seller salvage their credit.
10.PUT IN OFFERS ON BOTH SHORT SALES AND REOs (and regular sales). You never know which will pop first and it’s best to cover all your bases. The advantage with regular and REO sales is simple—you’re dealing with the owner (private seller or bank). The decision can be made relatively quickly, so you can get into escrow quickly. However, everyone else knows this too so the competition is fierce, with dozens of offers on almost every decent home.Short sales can take a long time and there’s a good chance the approval won’t come before your deadline. The good news is you still can get some tax benefits from selected home purchase related fees. If it’s the house you really want, in the long run you’ll be doing well.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
SCAOR (Sussex County Association of Realtors) sponsored a fun, if rain filled, evening at Jungle Jim's in Rehoboth Beach this past Friday to raise money for RPAC - the Realtor Political Action Committee. Most of the local real estate offices purchase an "Office Duck" to decorate and race as a way to raise money. I decided that Prosperity Mortgage would do the same and challange the real estate offices I service and support. My Pirate Duck, the Rate Slasher, is seen here.
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