WHY DO A HOME INSPECTION?

I always insist that my buyer’s have a home

inspection.  I don’t care what the price point.  I don’t care if the home is a short sale or lender owned and the owner will do NO repairs.  You need to know what to expect going in.  It’s the best money you’ll spend because knowledge is power.  In addition, buyers should also purchase a home warranty plan….at least for the first year or after.  This way if there is something major that happens, you’re covered.  The home warranty companies are doing a great job on the distressed properties.

Also, if you are an FHA buyer, there are things that the government loan program requires…i.e., no leaks in the roof or any leaks under sinks, operable hot water heater, operable furnace and A/C.  An inspector looks at everything.  While they are not licensed HVAC or plumbers or electricians, they do find the problems and bring them to your attention.  Many may be small things that you yourself can fix, but it’s good to know what you’re up against going in.

I’ve never been a big fan,  however, in this market it’s a good idea.  The home inspection process is necessary and worth the money.

NEW FHA GUIDELINES

Changes are headed our way from the FHA.

New guidelines are coming down the road.  I believe these are good changes for our industry in that perhaps they will stem the bleeding in the future with regard to people just “walking away” from a home.  They’ll actually have skin in the game.

Here are the new proposals:  The mortgage insurance premium that is paid “up front” will be increased from 1.75% to 2.25%.  This increase is slated to take effect April 5, 2010.  There’s a proposal to reduce seller contributions to NO MORE THAN 3% (down from 6%).  And, there’s talk of increasing the down payment for persons with credit scores lower than 580 from 3.5% to 10%.  Finally, there’s talk of raising the “annual mortgage insurance rate” to more than the current .55%.  The FHA is in financial trouble–no surprise there!

Because of the unstable economy, most realtors are relying heavily on FHA for their first time home buyers.  These changes, while they may seem extreme are actually being applauded by realtors, myself included.  The reason we’re all in this mess is because someone in Washingon DC said that people deserve to own a home, so let’s make it easier….well, now we’re ALL paying for that brilliant comment!

Check back to see what has actually been enacted with regard to the FHA’s new rules.

(Realtor Mag, March 2010)

FIRST TIME HOMEBUYER TAX CREDIT

Once again, the tax credit is coming to an end.

It’s set to expire on April 30, 2010.  We’ll see if we have the rush to write contracts in the coming weeks.  If you’ve been pre-approved and are just waiting for the right house, you’ll be fine for the next few weeks.  However, I wouldn’t be looking a short sales.  These transactions take a bit longer.  Stick with the “regular” sales or lender owned.

I took a couple out to look at homes last weekend.  They have put offers in on several homes over the last few months and each and every time there is a multiple offer situation.  It can be very disappointing.  When you find a home you like, make sure your agent calls the listing agent (if possible) to ascertain whether or not there are any offers on the property.  Offer what you would be willing to pay.  For example, if the house (lender owned) is $80,000.  Are you willing to pay that?  What about if you end up in a multiple offer situation?  You’ll be asked to come back with highest and best.  You could be bidding against cash offers.  If you’re an FHA buyer, the seller will most likely take a conventional loan over yours.  If you’re asking for seller contribution for closing costs, that may make your offer less attractive if there are others that don’t ask for contributions.  Be prepared to know how you will proceed.  Once you’ve made an offer on a home, you’ve got an emotional stake in it, and it’s disappointing when it falls through.

I put an offer in on a home and there were multiple offers, so we moved on.  I got a call from the listing agent 2 weeks later that all the other offers had fallen through and was my buyer still interested.  That was a good outcome as my buyers will close in about a week.

It will be interesting to see if when the tax credit expires the number of offers presented on a property decreases and if the market slows down substantially.  I’ve talked to people who don’t care about the tax credit and then some who are counting on it.  Should be an interesting summer in the RE business.

PHOENIX REAL ESTATE MARKET WATCH

Here are a few statistics regarding the Phoenix

housing market.  According to RS Media, “-Phoenix was 2009’s most popular city in the country for online home hunters, according to the volume of the total number of home searches on www.ZipRealty.com throughout the year.”  Yes, there are still a lot of distressed properties, but at least we are clearing our inventory.

In addition, there were 6,551 homes sold in December, 2009 as compared to 4,920 sold in December, 2008.  The price range is up to $399k (houses over $400k sold were 393).  Of those 6,551, 43% were REO sales, 23% short sales and 34% regular sales.  We had 36% regular sales in December 2008 and the REO sales percentages have gone down while short sales have gone up. (Thank you, Tom Newell, First American Title).

I think we’ll continue to see these distressed properties for some time to come.  Another short sale statistic might interest you.  Your home will sell for more $$ via short sale than if it goes into foreclosure.  So, you’d think that the banks would be all over this one.  Unfortunately, we are still dealing with people, at the lending institutions, who are slow to respond and don’t care about any situation.

I’d love to hear from you with questions and/or comments on the short sale or REO process.

HAPPY NEW YEAR-WHAT’S AHEAD IN 2010?

I don’t know about you, but I’m glad to see

2009 come to an end.  My family and I have not been immune to the affects of the downturn in the economy.  While my real estate has been my best year yet, my husband’s business definitely saw a tremendous downturn.  We’re hoping that the new “streamlined” attitude within his office and our home will help us to get a better handle on our finances for 2010.

The real estate market will be a buyer’s market for the foreseeable future.  I don’t see the foreclosures and/or short sales ending any time soon.  I will be increasing my knowledge in the short sale process and my brokerage will be marketing to short sale properties within Scottsdale.  I typically steer my buyers away from short sales, but sometimes those are the only properties that are affordable — especially with my first time buyers.

If you’re fence sitting at all perhaps you should take the plunge.  From all indications we could see interest rates inching up by the end of the year.  The way the government is spending money, we are in for a tremendous period of inflation and it’s only a matter of time….

PHOENIX FORECLOSURE NEWS

I was recently in New York and had lunch

with a young man, who is in commercial real estate (former Phoenix resident).  We spoke about the housing market in Phoenix and what our predicitions are regarding same.  He is of the mind that we have not yet seen the bottom of our home pricing.  You know what they say about opinions…..

An article in the Arizona Republic recently says pretty much the opposite.  The article quotes the “Cromford Report”, which I read and feel is a good barometer of our market.  While new housing starts are still off significantly from 2005, we are seeing an emptying of current spec inventory.  Building permits have picked up slightly as well.  December numbers will be telling.  However, keep in mind that the holiday season is typically slower….people are preoccupied.

The foreclosures have dipped in the valley as well.  As first time home buyers enter the market (due in part to the tax credit scenario), investors are also back to buy up the distressed properties, fix, repair, perhaps rent and then sell.  Once again, house flipping is in vogue, and not just for low end homes.  There are some truly amazing properties out there that can be bought for a song.

Keep in mind that if you are an FHA buyer and looking at a home that has been bought by an “investor”, there is a 90 day “seasoning” period before you can purchase that home.  Most agents should note that in their listing, but sometimes it’s missed.

Still and all, it’s a good time to buy if you can.  I am always hopeful, but feel that these are truly uncharted waters and we still don’t know what lies over the horizon.

EXTENSION OF $8,000 FIRST TIME HOMEBUYERS TAX CREDIT

Recently, the government has voted to extend the

first time home buyer tax credit through April, 2010.  Keep in mind that any buyers out there should click on and reference this website link regarding the “qualifications” for the tax credit.  There are income limits as well as your marital status which affect how much money you will get.

So, the extended tax credit, low interest rates, affordability and the fact that FHA is the predominate loan for first time buyers makes this a good market for people who are just coming in or have been fence sitting.

In addition, the federal government is extending a tax credit for current homeowners — those who have lived in their residence for 5+ years — in order to get people who were thinking of selling into a “maybe I should” mode.  This, of course, will depend on whether or not the homeowner has equity and is able to sell in a market with lender owned properties and short sales as competition.

You can search for homes directly through my blog site or feel free to contact me to discuss how you can take advantage of this program.

PHOENIX DROPS IN FORECLOSURE REPORT

According to the “Business Journal”, Phoenix has now

officially dropped from the top 10 on the list.  Now at #12, Phoenix saw fewer foreclosures in the 3rd Quarter.  This is a positive sign for the valley, but I don’t think is indicative of a market improvement just yet.  I know I should be more upbeat about this news, but it’s still too early.  We have to have a few quarters of positive before we can consider this a recover or a move in the right direction.

California continues to suffer.  I’ve also noticed a lot more California cars driving around.  Could this be that they are jumping ship?

$8000 HOMEBUYERS TAX CREDIT-FREIND or FOE??

Now that the end of the first time homebuyers tax

credit is upon us and the government is thinking of extending it, I’ll put my economic 2 cents in.  I don’t hold myself out to be anything but a concerned tax payer.  I will agree that the tax credit has spurred on people to buy homes.  However, as in all these types of programs, there is massive fraud.  It’s so disheartening when you hear about people purposefully scamming other Americans to this degree.  And, why is this even able to happen?  Could it be because the government is keeping as much of an eye on this as they do every other program they run?

I am not a proponent of artificially “propping up” the economy.  It does no good.  Cash for clunkers is a prime (and recent) example and so this this first time home buyers tax credit.  Are we putting ourselves into the same situation that got us here in the first place, i.e., allowing people who cannot afford to maintain a home buy a home?  I’m sure there are people who will do fine, but what are the odds that we’ll end up with more foreclosures out of this?  My guess is that yes we will…..

When are people going to realize that “the government” consists of its citizens.  It’s not some magical pot of gold that the elected officials in Washington are going into each day.  It’s borne on the back of us the American citizenry.  We are saddling our children and their children with massive amounts of debt.  The free market should be allowed to ride this storm out without “Uncle Sam”.

I believe that the low interest rates and the affordability of homes in this market would have brought buyers to the table.  Perhaps the numbers would have been smaller, but maybe it would not have cost us as much.  I am a realtor who loves to work, but sometimes it’s as if the hurrier I go, the behinder I get.  Basically, buyers should just go door to door and ask their neighbors for the $8000, because that is in essence what we’re doing.

$8,000 TAX CREDIT — A GOOD IDEA?

Now that the window is closing on the $8,000

first time homebuyers tax credit the government is mulling over the possibility of extending it.  Is this a good thing?  Do we want to continue to artificially prop up our housing market?  While this incentive may have brought more people into the housing market is it a good thing to continue?  Would people buy anyway based upon the affordability of home prices and the lower interest rates?

I’ve had people both want to close before it runs out and then I’ve had people say that it’s not a deal breaker for them.  I have very mixed feelings about the government (that means you and me) spending any more money.  We are a capitalist economy and while this is definitely a challenging time, hopefully, this too will pass.  The markets whatever they may be need to ride it out.  Consumers are still a little gun shy and it’s going to be a slow and painful recovery.

I believe there are still homes that will go into foreclosure and we’ll likely see those start to drop off.  If nothing else, this has been a huge lesson for everyone about spending beyond your means.  We need to get back to what’s important in life….friends, family, etc……and not worry so much about what the neighbors are doing or buying.  Then and only then will we begin to see a light at the end of the tunnel.