For Sale By Owner: Why Going Solo May Not Be Going Smart

Some people opt to sell their own home for the purpose of avoiding the payment of commission to a real estate agent. But what most people fail to understand it the fact that selling a home is a complicated process. It can be challenging to under any kind of market condition and more so in the prevailing real estate environment.

When you choose to take the route of “For Sale By Owner” or FSBO, you are basically listing your own home. Since you are already a homeowner, you sure know the time consuming process, the complex paperwork, and a ton of legal language that was involved in the home buying process. Selling a home also involves its share of legalities, risks and liabilities. There are very few homeowners that are proficient in the ever-changing rules and regulations of real estate sales and those that are may be able to pull off a sale on their own. However, the vast majority of homeowners do not have the in-depth knowledge and intricacies involved in selling a home.

Lack of knowledge and training in real estate transactions can hurt most FSBO sellers in many ways including failure to set the right asking price, staging the home properly, wasting a lot of time showing the home to bargain hunters or unqualified buyers, not getting professional recommendation regarding repairs and enhancing the home’s appeal, and most importantly, they miss the professional advice of an experienced real estate agent that can help them comply with the pertinent legal and paperwork requirements.

According to the National Association of Realtors (NAR) Profile of Home Buyers & Sellers survey, the median price for homes sold with the help of a real estate agent was 21 percent higher than for those sold For Sale By Owner without professional assistance. Nationally, 86 percent of buyers relied on a real estate agent to buy a home. NAR studies have shown that 83 percent of real estate sales happen because of agents’ contacts, past clients, testimonials, referrals, personal contacts, or family and friends.

Setting the right price is critical. Real Estate agents do this for a living and they are aware of local neighborhoods, trends, available amenities, schooling, buyers’ hot buttons and other aspects that are essential in helping sellers with the right asking price. In a typical FSBO scenario, the for sale sign in the yard is the only primary marketing channel. However, real estate agents can help sellers by listing the home in the multiple listing services (MLS) databases, periodicals, newspapers, various websites, and by spreading the word through their large network of contacts via events, blogs, social media, and member association meetings.

Over-pricing and under-pricing can also make a big impact. An over-priced home may generate a lot of initial interest, but when buyers see similar homes in local neighborhoods that are priced lower, the interest levels drop precipitously. Similarly, under-pricing can be misconstrued by potential buyers as a sign of desperation and they may try to push down the prices further with the hope of scoring a bargain.

Real estate agents are required to undergo ongoing continuous education regarding disclosures, limiting seller’s liabilities, state and federal laws, fair housing standards, environmental regulations and contractual responsibilities. The soup-to-nuts process of listing through closing of a home is considered a team effort. The team members include lenders, attorneys, home inspectors, appraisers, and repair experts. Real estate agents have the advantage of a readily available team of experts. Most people that choose to sell on their own don’t have the network or knowledge in these areas, which could expose them to unnecessary risks, and liabilities.

When it comes to negotiations, real estate agents can deal with potential buyers objectively without any emotional attachments. They can also deftly manage buyer contingency responses, timelines for appraisals, inspections, and financing issues.

In conclusion, a very small percentage of owners that sell their homes on their own are successful. However, for most people, the convenience, knowledge, expertise, ease of paperwork, professional advice, and the peace of mind that comes by working with a real estate agent is worth way more than the cost of commission.

What Home Buyers are Asking For

This has been one of the longest real estate buyers’ markets in recent U.S. history. With the availability of an abundant supply of homes at rock-bottom prices, buyers have become very picky about their wants and needs. It has therefore become imperative for sellers to not only maintain their homes in impeccable condition, but to also entice buyers with various incentives. It is as if homebuyers are able to catch fish with their bare hands and choose the biggest and the best fish from the lot!

Buyers are driving a hard bargain and demanding the best bang for their buck by seeking properties that are well-maintained, mechanically sound, and have an intrinsic value. As a seller, setting an appropriate asking price has become difficult because regardless of the already low listed price, buyers are bargaining hard and negotiating for various freebies.

Money is tight everywhere. Although buyers have cash to buy a home, generally they don’t have enough to buy a fixer-upper or the desire to renovate it. Another reason for this is the difficulty in obtaining a loan for home improvement. Most Realtors agree that their clients are demanding to see homes that don’t require any repairs. Banks are also seeing similar attitudes from buyers for REO properties. They expect bank-owned properties to be in ready to move-in condition.

To make their homes standout from the crowd, sellers are urged to update, repair, clean and stage their homes very well. Sellers must put themselves in the shoes of fastidious buyers and take care of every subtle nuance in their homes that may prevent buyers from giving a second look.

Given the market conditions, it’s not enough these days to have a solid, well-kept house with a great curb appeal. Buyers look for homes that have upgrades such as screened porches, home theater rooms, home offices and other goodies. Sellers are also upping the ante by offering incentives such as free flat screen TVs, gift cards and the most common contribution to the closing costs. As if this isn’t enough, some buyers are demanding tank-less water heaters, new windows, high efficiency appliances and upgraded landscaping.

Interestingly, buyers prefer homes with an open kitchen that extends into the family room without a separating wall. This is not surprising considering that the kitchen has become the most important room in the house for Baby Boomers. Many buyers are practical and environmentally conscious too. While they prefer granite kitchen countertops, they will settle for any natural composite material with a stone-like appearance.

The weak economy seems to be fueling entrepreneurship in a big way. A lot of buyers prefer to convert rarely used rooms such as the formal dining room or the living room into home offices, reading room or a space for pursuing a hobby. This makes sense because studies have shown that on an average, families use the formal living room no more than 3-4 times per year.  To make the living space feel larger, try staging a rarely used formal area, as additional useable space. 

The thrill of scoring a bargain is driving homebuyers’ demands into unchartered territories. As a seller, think outside of the box and wow the buyer. 

Preemptive Steps to ensure a Home Sale goes through

Buying a home is one of the biggest milestones an individual or family would undertake in their lifetime. When a seller finds a buyer for their home, the ensuing deal is not a simple transaction. Many things could go wrong which could cost the seller time and/or money, and the home could slip away from the buyer as well. While some of these deal busting factors are beyond the control of either party, taking some preemptive steps could avoid mutual frustration and minimize the chances of killing the deal.

Work with a knowledgeable, local buyer’s agent.
Appraisals are the number one deal killers. Lenders are required to verify the true value of the house and they send an appraiser to determine if the house is worth the amount they are lending. Appraisers calculate the home’s value by comparing the prices of similar homes recently sold in the neighborhood. But due to the uncertain real estate market, appraisers that are not familiar with the location find it difficult to accurately figure out the home’s value because of foreclosures, short sales and constantly changing home values in the neighborhood. This could potentially scuttle the deal. The best way to prevent this is to find and work with a local buyer’s agent, one who’s very familiar with the neighborhood. They can provide comparable data to the appraisers and help them determine the home’s right value.

Read the home inspection report thoroughly
Another deal breaker that’s closely related to appraisals is home repairs demanded by the lender. The lender can demand that repairs of any issues identified in the appraisal report be performed. Before the real estate market collapsed this was not much of a problem. Lenders would typically let the sale go through by requiring the seller to escrow the repair amount and fix the problems after the sale. Lenders are much stricter these days and such liberties are a rarity. A proactive way of eliminating this stumbling block is to go through the home inspection report with a fine-toothed comb to see if there are any problems with the home.

Make sure your mortgage is preapproved
Get your financial house in order at least one year before shopping for a home. This includes obtaining credit scores and reports, saving up for the down payment and performing any other financial repairs. An import aspect of this step is to get preapproved for a mortgage and not just prequalified. Prequalification is merely a written statement by the lender about the buyer’s estimated borrowing ability, which can be obtained by simply making a phone call to a lender. Preapproval is a more formal process in which the buyer is required to submit their detailed financial information such as bank statements, employment verification, salary slips, tax returns and W2s. Although lenders can back out of it, a preapproval provides conditional approval of the mortgage.

The importance of title insurance
The home inspection report identifies tangible problems with the interior and exterior of the house. But what about dangers that could lurk in the background like unknown liens on the house? There could be an unsettled claim between the seller and a contractor that was hired in the past or a claim on the home by the seller’s creditors. Lack of appropriate permits can also put the brakes on a sale. Many homeowners are known for doing remodeling projects on their own and many fail to obtain necessary permits because of their costs. The sale may come to a grinding halt if the home inspector cannot prove if the remodeling job was done according to building and fire code. Since many of these problems can surface after the sale has gone through, it is imperative to purchase title insurance for the home.

What goes into a written offer

Buying a home is not only one of the biggest investments a person makes in his or her life, but the amount of paperwork and legalities involved are also enormous. A written offer is the final and one of the most important aspects of the home buying process.

Once you have found your dream house and you are ready to pull the trigger on purchasing it, what comes next is a written offer. Although it sounds simple, a written offer is a legally binding contract which can have serious legal and financial implications if done incorrectly.

All the paperwork that’s involved in the formal written offer is prepared by the buyer’s real estate agent. The agent will get input from the buyer for payment terms, contingencies, and legal protections. It is very important to be knowledgeable about what goes into this document.

The starting point of a written offer is the price the buyer is willing to pay for the house. Other factors include the method of funding the mortgage, the down payment amount, earnest payment, and closing costs, inspection of the home, conveyances, terms of cancellation, any repairs to be performed by the seller, timeline of events leading to the closing, mediation, etc.

The following terms are typically included in a written offer according to Freddie Mac:

Proposed purchase price
It is a good idea to discuss the offer price you are proposing with your agent because they can figure out the prices at which similar homes were sold in the area, market conditions, overall condition of the house, supply and demand, etc. Too many people make the mistake of low-balling their first offer, hoping the seller would come back with a slightly higher counter offer. This strategy can backfire if the seller feels insulted by the low offer and refuses to make a counter offer or if another buyer makes a better offer and purchases it while you are waiting to hear from the seller.

Concessions
This includes things you'd like the seller to help pay for, such as portions of the closing costs, home owners warranty, and other expenses.

Conveyances
This includes any personal property that the seller may leave behind such as kitchen appliances, washer or dryer. These items must be clearly itemized and listed in the written offer.

Home inspection contingencies
The written offer must clearly state that you would proceed with the sale only if the home inspection comes out clean. Many surprises can show up after a home inspection such as mold, radon, termites, etc.  You must determine if you would ask for a reduction in the sale price and do the repairs on your own or if you want the owner to repair them before the sale is made.

Earnest money
Earnest money is a deposit the buyer offers to show their seriousness about purchasing the house. Earnest money is usually held in escrow and applied to the buyer’s closing costs at settlement.

Acceptance
This covers how long the seller has to respond to the buyer’s offer before the offer is no longer binding. If the seller accepts the offer outside of this time limit, the offer may no longer be legally binding

Mediation and arbitration
These are legal methods for handling contract disagreements between the buyer and the seller.

Picking between a New and Existing Home

One of the biggest dilemmas potential home buyers face is the decision whether to purchase a new one or an existing home. Although many factors influence this decision, it is strictly a matter of personal choice and circumstances. There are pros and cons to both and this must be taken into consideration in the early stages of the planning process.

In the prevailing real estate environment, the biggest difference between new and existing homes is price. The price difference between new and existing homes is growing, both regionally and nationally. According to SalesTraq, the median price of existing homes was $108,000 and $195,950 for new ones. The gap between new and existing home prices in Las Vegas widened to $88,000 in March 2011, compared to $7,000 in 1996. Although differences vary, the stark difference in prices between new and existing homes is a common scenario nationally.

In addition to factors such as price, distance from work, neighborhood, schooling, amenities and resale value, there are many other pros and cons that must be considered to make it easy to decide between a new or existing home.

New Home
Pros: you usually get a builder’s warranty which covers construction and appliances. It’s your own brand new home. You can customize, paint and decorate it anyway you prefer. It may have more energy-efficient design, building materials, and appliances. You may be able to negotiate with the builder to thrown in various options. New homes are built to updated building and safety codes. The electrical system may be wired to handle today’s technology demands such a home theater. The new subdivision may have modern recreational facilities and amenities. You definitely have less maintenance than an older home.

Cons: New homes can cost a lot more than existing ones because of the increase in costs associated with land, materials, and labor. In a down market, it may be difficult to sell your existing home to help you pay for the new home. Your commute to work may be longer because new homes are usually constructed on the outskirts of the city or suburbs. The schooling system in the new neighborhood may not be as good as ones is established areas. You may pay higher property taxes to expand utilities and other services to a new area with fewer inhabitants. Landscaping can be expensive. The homeowners’ association fees may be higher than an older subdivision.

Existing Home
Pros: An existing home may be a lot cheaper than a new one. You may have many more choices of types of home as well as locales. You may be able to find a house in a desired neighborhood or a good schooling system. Landscaping costs are generally lower. You may get more bang for your buck in terms of quality of workmanship in a home that was built when land, labor and material costs were lower. You may have more living space, more land and more distance between houses. If the yard has mature trees, you’d benefit by having a cooler home and lower air conditioning bills in summer. The home may have a renovated kitchen and other goodies such as a finished basement. Appliances and window treatments are often included.

Cons: Older homes are generally less energy-efficient and may have leaky doors and windows, which means higher cost for heating and cooling. The house may require expensive repairs. Appliances which are no longer under warranty can fail anytime requiring immediate repair or expensive new purchases. The styling, décor, and flooring may be outdated. Building materials can be harder to match or replace.

The best way to decide if a new or existing home is best for you and your family is to make a list of what you are looking for in a home, your budget, preferred location and other factors that are important to you.

Foreign Buyers Recognize Value of Homeownership in the U.S.

Foreign buyers are capitalizing on the slump in the U.S. housing market by purchasing homes here in large numbers. The U.S. has been the top destination for foreign buyers for a long time. The increase in foreign real estate investment by $16 billion indicates that the U.S. still continues to be the most attractive destination for foreign buyers.

Here are some hard facts to validate this. According to the National Association of Realtors’ (NAR) 2011 Profile of International Home Buying Activity, the total residential international sales in the U.S. for the past year ending March 2011 equaled $82 billion, up from $66 billion in 2010. But more importantly, the average amount paid by foreign buyers was $315,000, whereas the domestic average was $218,000. However, 45 percent of international purchases were under $200,000.

Here are some reasons why international buyers prefer to purchase homes in the U.S. The U.S. is generally considered a safe and stable environment for investments. Properties here are a lot cheaper than most markets in Europe. Unlike many other countries, real estate investments in the U.S. have historically achieved a higher long-term appreciation. Since many international students come to U.S. universities for undergraduate and higher education, many parents believe it makes practical sense to buy rather than rent homes for their kids. Many temporary foreign workers in the high-tech field also find it more economical to buy a home rather than leasing apartments.

International buyers are very picky when it comes to their buying preferences. The buying decisions were primarily influenced by four factors: proximity to their home country; convenience of air transportation; climate and location. Florida, California, Texas and Arizona have been the darlings of international buyers for the past five years, mostly because of their balmy winters. 31 percent of foreigners prefer to by homes in Florida, which is the top destination. California comes in second with 12 percent, followed by Texas with 9 percent, and Arizona with 6 percent. There is a distinct pattern of buying preference among various ethnic groups. Florida is preferred by Canadians, Europeans and South Americans. Asians have historically chosen the West Coast and most Europeans prefer the East Coast. Mexican buyers seem to prefer the Southwestern region.

People from 70 countries purchased homes in the U.S. this year, which are 17 more than the year before. Canadians dominated the foreign buyers with 23 percent. China came in second with 9 percent. India, the U.K. and Mexico were tied for the third place. These five countries accounted for 53 percent of foreign transaction in 2011.

As far as statistics are concerned, 28 percent of Realtors reported working with a foreign buyer in 2011. 55 percent served at least one international client. Eight percent of Realtors obtained 50 percent or more of their transactions from foreign buyers. 61 percent of foreign buyers bought a single-family home while 36 percent purchased a condo, apartment or townhouse. 62 percent of international transactions were made by paying cash. The biggest hurdle for foreign buyers continues to be the availability of financing, with 32 percent reporting this as their primary reason for not buying a home. In addition to financing, foreign buyers cited legal, tax and immigration as other factors that prevented their real estate purchase.

Mortgage Rates at Lows for Year

Amidst the continued weak economy, mortgage rates have dropped for four weeks in a row to their lowest point this year, according to Freddie Mac’s Primary Mortgage Market Survey that was released on June 2, 2011.

Rates on 30-year fixed-rate mortgages averaged 4.55 percent with an average 0.6 point for the week ending June 2, down from 4.71 percent last week and 5 percent a year ago.

The 30-year fixed-rate mortgage hit an all-time low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11, 2010, and so far this year has ranged from 4.71 percent in early January to a high of 5.05 percent in February.

Rates on 15-year fixed-rate mortgages averaged 3.74 percent with an average 0.7 point, down from 3.89 percent last week and 4.36 percent a year ago. This is a new low for 2011, but it is well above the all-time low in records dating back to 1991 of 3.57 percent, set in November.

Rates on 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.41 percent with an average 0.6 point, down from 3.47 percent last week and 3.97 percent a year ago. The 5-year ARM hit a low in records dating to 2005 of 3.25 percent in November.

Rates on the 1-year ARM loans averaged 3.13 percent with an average 0.6 point, down from 3.14 percent last week and 4.07 percent a year ago.

Some analysts are anticipating an upward movement in mortgage rates. Mortgage applications have been rising, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. Also, the number of borrowers looking to refinance is currently at its highest level since the second week of December. Mirroring the steady decline in rates, refinancing activities have increased 35 percent over the past seven weeks. However, refinancing is only at 50 percent the level it reached during the fall of 2010, when mortgage rates fell to their record lows.

Despite an uptick in refinance activities, the low mortgage rates haven’t been good enough to nudge the weak housing market. According to the National Association of Realtors, fewer people bought previously occupied homes in April. Sales fell to a seasonally adjusted annual rate of 5.05 million units, which is far below the 6 million homes a year that economists consider a healthy housing market.

Despite the lackluster housing news, Freddie Mac’s Vice President and Chief Economist Frank Nothaft highlighted one positive observation.   "Households have been strengthening their balance sheets over the past year," he said. "The New York Federal Reserve Bank reported that the serious delinquency rate (90 or more days delinquent plus foreclosures) on first mortgages and closed-end home equity loans balances fell to 7.46% in the first quarter from a peak of 8.89% the same period last year. This suggests there may be fewer distressed sales later this year." Distressed houses have accounted for a much higher than normal share of all homes on the market for the last year, and a reduction in their number would help stabilize home prices, which have been falling since last summer.

10 Markets with Fastest Rising Real Estate Prices

According to monthly data released by Realtor.com, the south dominated a list of 10 markets with the highest year-over-year increases in median list price in April. Out of the 146 metro areas considered nationwide, southern metros dominated the top ten.

The highest jumps were seen in two Florida markets. The median list price in Fort Myers-cape Coral rose 25.7 percent to $225,000, and it rose 8.5 percent to $239,000 in Miami. These two markets were the only metros in the top 10 to move properties at a rate slower than the national median of 95 days. The median age of inventory for each of these markets was 116 and 129 days respectively. Fort Myers-Cape Coral and Miami also saw the biggest year-over-year drops in inventory: -25.3 percent and -29.9 percent, respectively.

Shreveport-Bossier City, La., had an 8.1 percent increase, to $173,000. In the U.S. overall, the median list price fell 4 percent year-over-year in April, to $191,900.The three other Southern metros to make the list were Charleston, W.V.; Tyler, Texas; and the Virginia segment of the Washington, D.C. metro area. The Washington, D.C., metro was the fastest-moving among the 10 markets with a median inventory age of 57 days.

Two Midwestern metros (Columbia, MO, and Peoria-Pekin, IL) and two Western metros (Fort Collins-Loveland, CO; and Anchorage, Alaska) made the list. No market in the Northeast was among the top 10.

Year-over-year, eight of the 10 metros saw their inventory decline last month, six of them by double-digit percentages. Only Anchorage and Tyler saw their total listings rise to 15.7 percent and 3.6 percent, respectively. Nationally, total listings fell 8.3 percent.

Western metro areas had the fastest-dropping median list prices among the top 10 markets. Two of the top 10 are in the South and two are in the Midwest. All 10 witnessed double-digit declines compared to April 2010. There were no Northeastern markets in the top 10 list.

The biggest price decline was seen in Santa Barbara-Santa Maria-Lompoc, CA. It was down 26.2 percent to $498,250. This market was also one of two to see its inventory rise year-over-year, by 6 percent. The other was Reno, NV, with a 9.5 percent increase.

Inventory declined by double digits in six of the remaining eight markets. Savannah, GA, experienced the sharpest decline: -48.3 percent. Savannah was also one of three markets with a median age of inventory above the national median. The market's median inventory age was 198 days in April, though that represents an 11.2 percent decline from April 2010.

To obtain the median age of inventory for each market, Realtor.com subtracted a property’s listed date from whichever was earlier, its end listing date or the end of the time period, and took the median of all the resulting individual days on the website.

Ackley Realty Captures Region Sales Honors

We were honored by this amazing article in the June 9^th Osceola News Gazette front page (cover) and front page on the real estate section of the HomeFinder. 

I would like to let each and every one of you know how proud I am of your contribution to us getting this prestigious award.

Feel free to send this article to your clients with a note from you.

Coldwell Banker Ackley is truly grateful to have you as part of our team.

You all rock!!

Have a fabulous day!

Rajia

What happens to mortgage rates after QE2 ends in June?

As far as federal agencies are concerned, none of them have a bigger clout than the Federal Reserve. It is said when the Feds sneeze, the world economy gets hiccups. Their policies affect everything from the milk we buy at the grocery store to the interest rates of a 30-year mortgage.

It is no wonder that Quantitative Easing 2 or QE2 is one of the hotly debated topics these days? So what in the world in QE2? Simply put, it is an attempt by the Feds to jump-start the sluggish economy by pumping billions of dollars into the financial markets.

Under normal circumstances, if the central bank wants to stimulate economic growth, it simply lowers interest rates, which in turn increases the money supply and infuses cash into the real economy. The domino effect occurs when people borrow this increased amount of available cash and banks lend it, which eventually sputters the economy back to normal growth patterns. However, this only happens in normal market conditions. But the market situation in the U.S. is far from normal these days.

Back in 2008 the feds lowered the short-term interest rate target to near 0%, but the economy continued to be sluggish and has not gained any traction since. So, when the central bank exhausts all its options to influence interest rate movements, it engages in a process known as quantitative easing. The goal of quantitative easing is to increase the money supply by purchasing Treasury securities. This increase in money supply is meant to ease the financial burden on banks. As pressure is alleviated from banks, they will be encouraged to lend money to people seeking small business loans, mortgages, auto loans, etc.

Between November 2010 and Junes 2011, the central bank will invest $600 billion in long-term bonds. The bond/treasury purchases are aimed at stimulating the economy. By buying Treasuries, the Fed intends to soak up supply and push their prices up. Because interest rates move inversely to bond prices, interest rates move down. Mortgage rates, corporate bond rates and other interest rates will go down, or at least be lower than they otherwise would be.

But now that the central bank's bond-buying spree is drawing to a close, even some of the Fed's toughest critics are nervous. QE2 was designed to keep bond prices high and interest rates low. It is credited with propping up the economy a bit and, in turn, boosting the stock market. Technically, the Fed is in the midst of its second round of bond buying—hence the 2 in QE2 —since the financial crisis struck in 2008. When the first round ended in spring 2010, both stocks and bonds tumbled.

Now that QE2 is scheduled to cease at the end of June, financial analysts are predicting that the demand for bonds and mortgage-backed securities will fall, which could result in higher rates. This is because there won’t be any bulk buyers of bonds after the Feds stop buying them. Others are speculating that if the prices of oil, gasoline and food continue to remain high, the economy may slow down even further, which may cause the mortgage rates to decline even further. While there are no clear answers, the best thing to do is stay tuned.

The Fed proposes Mortgage Standards Rule

The Federal Reserve Board has proposed a rule that would require banks to determine a borrower’s ability to repay a mortgage before making the loan.

Although this rule seems obvious, it is now required by the Dodd-Frank act, which also establishes minimum mortgage underwriting standards. This means borrowers can sue lenders if appropriate efforts are not taken to ensure they can repay the loan.

The proposed rule is in response to a spate of so-called “liar loans” that lenders offered to borrowers in the years leading up to the housing market crash. In many cases, lenders did not verify the income stated by borrowers, which meant no due diligence was made to determine the borrower’s ability to repay. Many of these liar loans ended up on foreclosures, which contributed further to the nation’s financial crisis. Some of the criteria that will be used to determine a borrower’s credit worthiness and ability to repay a mortgage loan include a person's income, employment status, the monthly mortgage payment, any other current debt obligations and a consumer's credit history.

The revisions to mortgage regulation, which implements the Truth in Lending Act (TILA), are being made following the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposal would apply to all consumer mortgages except home equity lines of credit, timeshare plans, reverse mortgages, or temporary loans.

The proposed rule would provide four options for complying with the ability-to-repay requirement.

·         First, a lender can meet the general ability-to-repay standard by considering and verifying specified underwriting factors, such as the borrower’s income or assets.

·         Second, a lender can make a "qualified mortgage," which provides the creditor with special protection from liability provided the loan does not have certain features, such as negative amortization; the fees are within specified limits; and the creditor underwrites the mortgage payment using the maximum interest rate in the first five years.

·         Third, a lender operating primarily in rural or underserved areas can make a balloon-payment qualified mortgage. This option is meant to preserve access to credit for consumers located in rural or underserved areas where banks originate balloon loans to hedge against interest rate risk for loans held in portfolio.

·         Finally, a lender can refinance a "non-standard mortgage" with risky features into a more stable "standard mortgage" with a lower monthly payment. This option is meant to preserve access to refinancing.

The proposal would also implement the Dodd-Frank Act's limits on prepayment penalties. The Fed is seeking comments on the proposed rule until July 22, 2011. The process of writing rules based on the Fed’s proposal is scheduled to transfer to the soon-to-be-effective Consumer Financial Protection Bureau (CFPB).

The Dodd-Frank Act requires the creation of this bureau, which will write rules for mortgages and other consumer credit products. The CFPB will take over enforcement of consumer protection laws on July 21.

Gas Prices Impact Real Estate Choices

Gas prices have been steadily rising. The average price of a gallon has increased more than 30 percent over the past 12 months. Although it has come down a few cents in the past few weeks, economists expect it to remain well above the $3 per gallon mark through the rest of 2011. This not only affects the type of cars Americans drive and their driving habits, but it also impacts their housing choices. More buyers are choosing homes closer to shops and services because of the increase in gas prices.

Home buyers are not only thinking about carpooling and taking public transportation to work, but they are also rethinking their long commutes to work. According to a Coldwell Banker survey of 1,188 of its real estate agents regarding buyer trends, 75 percent said higher gas prices are influencing homebuyers about their decisions purchase homes. 89 percent of the respondents said buyers want to look for homes closer to work, and a whopping 93 percent said buyers would choose to live closer to their work if gas prices continue to rise.

Since more employers are providing flexibility to work from home, more buyers are expected to look for homes which allow them to telecommute. In fact, 77 percent of the surveyed agents said more buyers are interested in having or creating a home office.

Since most buyers wouldn’t fancy living in their gas-sipping Toyota Prius, they are thinking about considering urban living. 56 percent of the surveyed agents said compared to 5 years back, more home buyers are contemplating urban living as a way of reducing their commute time and distance. The main attraction is the ability to walk to work, buy groceries and hop on public transportation. It is no wonder that smart growth communities are becoming popular in several metros. People seem to like the attractive mix of affordable, middle-income, and up-scale housing with restaurants, theaters, offices and retailers located within the community. Many of them are located near or close to a public transportation facility, which means people can walk to work, ride a bike or take the bus or train.

"The decision to buy a home has always been tailored around the personal, multi-faceted lifestyle needs of each buyer," said Jim Gillespie, CEO of Coldwell Banker Real Estate. "Today, rising fuel costs and a person's decision to commute or perhaps work remotely are additional factors of the decision home buyers must consider."

When a nation is in recession, real estate typically helps in recovery. But given the weak economy combined with sustained high gas prices, real estate is not expected to get the country out of this recession. But it is definitely interrupting the pattern of unending urban sprawl in most metros.

Are gas prices influencing your decision about where you would buy your home? Are you planning to look for smart growth urban living communities? Let us know the choices and changes you are considering.

CBAR made the news in Utah!

Check it out: http://utah-mls.net/realty-listings/latest-listings-news-6/

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KISSIMMEE, FL Riding the crest of one of one of its best years to date with more than 170 million in Central Florida property sales, Coldwell Banker Ackley Realty earned top state and regional honors for 2010 sales production.Ackley Realty was recognized by Coldwell Banker as the No. 1 Florida affiliate in its category 51 to 100 agents for Adjusted Gross Income and as the top-ranked affiliate…

Existing Home Sales Rise in March

There have been some signs lately about the housing market crawling its way back slowly after it bottomed out last July. According to the National Association of Realtors (NAR), sales of existing homes in the United States rose 3.7% in March to a seasonally adjusted annual rate of 5.1 million.

These results were better than expected because many experts and economists had predicted that number to be close to 5 million units. In February, 4.88 million existing homes were sold, while the initial estimate was 4.92 million units. Although March's rate was 24.8% below the November 2009 peak of 6.49 million units, the fact that existing home sales have increased in six of the past eight months is being considered a small but sure step towards the U.S. housing market recovery.

In March, three of the four U.S. housing regions saw an increase in existing home sales. The South led the way with an 8.9% increase in resales to an annual level of 1.99 million, followed by a 3.9% increase in the Northeast to an annual level of 800,000, and 1% in the Midwest to an annual rate of

1.06 million. Sales of existing homes fell 0.8% in the West to an annual level of 1.25 million. 

Sales of single-family homes grew by 4% in March to a seasonally adjusted annual rate of 4.45 million units. Sales of condos rose 1.6% to an annual rate of 650,000. Some housing analysts argue that sales of existing homes in March of this year were lower than the 5.44 million units sold in March 2010. Although it is true that sales were at a higher level between the months of March and June 2010, these elevated levels were due to buyers rushing to take advantage of the federal tax credits for homebuyers.

According to a NAR survey, first-time buyers purchased 33% of homes in March, compared with 34% in February. Cash sales accounted for 35% of the market share in March, up from 33% in February. Investors accounted for 22% of sales, up from 19% in February. The remaining 45% were purchased by repeat buyers.

The improving sales pattern is likely to continue, said NAR Chief Economist Lawrence Yun. "Existing-home sales have risen in six of the past eight months, so we're clearly on a recovery path," he said. "With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain-primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percentage of income have been at record lows."

"Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago-before the loose lending practices that created the unprecedented boom-and-bust cycle," Yun explained. 

NAR's housing affordability index shows that the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13% of gross household income, the lowest since records began in 1970. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84% in March, down from 4.95% in February.

The inventory of existing homes decreased to 8.4 months in March, as compared to 8.5 months in February. If sales continue at this rate for the rest of 2011, this year will be better than 2010 for existing home sales.

Congress eliminates all funding of HUD “Housing Counseling Assistance Program”

The recent budget approval by the U.S. Congress avoided a government shutdown and ensured that the federal government would be operational through the end of this fiscal year (FY). The final budget agreement contains numerous spending cuts across a variety of domestic discretionary programs, including the elimination of all funding, totaling $88 million, for the Housing & Urban Development Department’s (HUD) Housing Counseling Assistance Program. The program helps millions of home owners by providing free counseling on foreclosure, reverse mortgages, refinancing, and pre-purchase services.

These cuts include all funding for federally mandated reverse mortgage counseling. Borrowers seeking FHA-insured reverse mortgage are mandated by federal guidelines to first go through HUD-approved reverse mortgage counseling. In many cases, local housing counseling agencies – approved and funded in part by HUD – are the only source of help for distressed homeowners.

"This unique counseling helps older homeowners understand the costs, benefits, and risks associated with these loans,” said Barbara Stucki, of the National Council on Aging (NCOA), one of eight intermediaries that provide this counseling service nationwide. “Without this funding, older Americans who can least afford it may have to pay for this critical advice out-of-pocket,” Stucki said. 

The federal agency, state housing associations, and even some lawmakers themselves have touted such HUD-approved counselors as the go-to source for homeowners struggling to make their mortgage payments. Their services are free and organizations working to educate borrowers about foreclosure relief scams position HUD-approved counselors as their strongest defense.

Over the past two years, HUD-approved housing counselors have helped more than 4 million families struggling to keep their homes, according to the federal agency.  Housing experts state that the HUD funding provides much-needed assistance to struggling homeowners across the country — and the housing recovery — could be severely impacted by its elimination.

Faith Schwartz, executive director of HOPE NOW, said, “Housing counseling dollars remain critical to homeowners at risk…Housing counselors have a proven track record of success with regard to pre-purchase and foreclosure prevention counseling. Eliminating an important source of funding is concerning, as industry and non-profit counselors have been working together to keep people in their homes.”

Despite having a history of bipartisan support, the program lost its entire budget. Eliminating this program will cause many nonprofits to cut these free counseling services and lay off highly skilled staff. A lot of people are shocked that Congress would cut such a results-driven program especially with data showing that access to counseling reduces default rates. 

Many industry analysts feel cutting the nation’s nonprofit housing counseling system is a bad public policy, especially when the country is burdened by record foreclosures, high unemployment and economic uncertainties. Many nonprofit organizations are warning about an increase in foreclosures due to the elimination of the Housing Counseling Assistance Program. Scam artists and real estate speculators are expected to come out in droves to take undue advantage of vulnerable homeowners.

Rent vs. Buy – Where Real Estate gets Personal

Home ownership has always been considered as the cornerstone of the American Dream. Lately however, due to the ongoing housing crisis, renting instead of buying has been on the rise. Some pundits are saying that the benefits of home ownership are declining and renting as opposed to owning is the trend of the future. People on the other side of this issue are strongly disagreeing with such statements. Regardless of which way the debate goes, let’s look at the pros and cons of both renting and buying a house.

Pros of Buying

·         You have the pride of home ownership

·         You have achieved a part of the American Dream

·         You may benefit from tax deductions that come with home ownership

·         In the long run and under normal circumstances, you may benefit financially

·         You have full freedom to paint, remodel, drill, nail, and decorate your home as per your wishes

·         You won’t feel guilty about helping your landlord payoff his/her mortgage and enjoy the benefits at your expense

·         You can have pets

·         You’ll eventually be able to pay off your mortgage and become debt free

·         It gives you satisfaction that your kids can inherit your property.

 Cons of Buying

·         You will be shelling out a lot of your savings for the down payment

·         When you add property taxes, escrow and PMI (if you haven’t put 10 percent down) to your monthly mortgage payment, you’ll end up spending more than renting

·         You will be responsible for landscaping costs, home owners’ association fees and general upkeep expenses

·         Homeowner insurance is significantly higher than Renter’s insurance

·         Your appliances will eventually breakdown, requiring you to pay for repairs or replacements

·         In recessionary periods, you have the risk of significantly losing the value of your home

·         You may not be able to move easily or quickly to pursue better employment opportunities

·         You may incur additional expenses of managing and maintaining your property if you rent your house due to a forced relocation

·         The money you have spent on remodeling cannot be recouped if your house is in a down market.

Pros of Renting

·         Renting offers quick mobility and liquidity, but you lose quite a bit of freedom and you may have to make some compromises with your preferred quality of life

·         You really like the area but it is very difficult or expensive to buy a house there

·         If your rent is lower than the prevailing mortgage payments in the area, you’ll have more money for other things

·         If you have newly relocated to a town, renting for six months to a year may be a better option for you till you figure out where you want to live

·         Perhaps your personal financial situation is not healthy enough to buy a house at this time

·         May be your job requires you to stay in a city for a relatively short period of time and relocate to a different part of the country or world at a short notice

·         You may be in an area that has taken a severe beating during the recent real estate crisis, and the prices are still unstable

·         Your job situation may be shaky and even though you can afford to buy a home now, you have the freedom and peace of mind of being able to relocate quickly if need be

·         You are unsure how long you will live in the area, and it may also be very difficult to sell in that area

·         You don’t have to worry about your home losing its value drastically, leaving you with an upside down mortgage – where you owe more than the value of the house.

Cons of Renting

·         You are not building equity or assets when you rent

·         Your rent may sharply increase after your lease period ends if you are living in a high demand area

·         You like the house you are renting. But it has carpet, whereas you prefer hardwood

·         You desire to own a pet. But the landlord of the home you are renting has a no-pet policy

·         You prefer gas-based cooking, but the house you are renting has an electric stove

·         You like hanging lots of family pictures and paintings, but the home owner may restrict nailing walls

·         You have a problem with an appliance, but your landlord is not very responsive

·         You will not be able to cut a hole in a wall to conceal your home theater speakers

·         You emotionally resent the idea of helping your landlord become debt free instead of yourself

·         The owner of the home you are renting may become delinquent on the payments and the house may be foreclosed, causing you to lose your security deposit and your roof.

This is by no means a comprehensive list. Feel free to send us additional pros and cons to make this a bigger and better list.

Approached by someone about your loan delinquency? Common scams and how to avoid them

With mortgage delinquencies going through the roof in recent times, scam artists are coming out of the woodworks in droves. In this blog post we will highlight how to identify and avoid some of the common loan delinquency avoidance scams.

Run as far as you can if you encounter any of these red flag situations:

A person or organization guarantees avoiding foreclosure and seeks upfront payment from you to discuss the specifics. The payment they ask may be in the range of one thousand to five thousand dollars and they may have a compelling dog and pony show to make you a believer. No one can guarantee stopping foreclosure proceedings, especially without performing an in depth analysis of your personal situation. Just remember that these scamsters will disappear as soon as they get your money, and they will never talk to a lender.

These sleaze bags claim to have the magic formula for stopping foreclosures dead in their tracks. Of course they will not talk to you without an upfront credit card number from you. They will then charge you for the initial consultation, phone calls and paperwork to get general information which you could have done on your own. Their objective is to lull you into a false sense of trust and security and prevent you from seeking qualified help. They will end up with your money and you will be left with huge credit card bills and an imminent foreclosure.

A person or organization, that asks you to pay them instead of your mortgage lender.

Again, these are unscrupulous criminals whose only agenda is to rip you off and fill up their pockets. Many scam artists create attractive flyers, fake testimonials and impressive credentials to convince their credibility to you. Just tell them you believe in researching everything thoroughly before making a decision…and you will perhaps never hear from them again. Here’s how this scam works:

Let’s say you put your house on the market because you are finding it difficult to make payments anymore. A potential buyer approaches you and offers to pay the full price you are asking and even promises to help you avoid foreclosure. But there is a catch. You are required to deed your property to this buyer and you must also move out immediately. What happens next is this so called buyer simply pockets the monthly mortgage payments you are giving him instead of sending it to your lender. The lender will eventually foreclose on you and you will be left wondering what happened because you were not in your house to read and act upon the bank’s foreclosure notices.

Another variation of this scam is where the so called buyer promises to bring the mortgage current. He will even let you stay in the home, provided you transfer ownership to him. Again, no payments are made by him to your lender and you will soon receive an eviction notice.

A third variant is the “rent or buy it back” offer in which just like the previous two cases, you are required to transfer ownership to this scheming buyer, with the understanding that you will be renting the house from him for an amount that’s lower than your monthly mortgage payment, with an option to let you buy it back from him in the near future. The end result is no different.

Fake counseling agencies

Some online companies with nice websites may convince you they are legit counseling agencies and bait you into giving them your personal information. To ensure that you give them your credit card, they will throw in many freebies such as a free 20 minute consultation to analyze your personal situation (which according to them is a $500 value!), a promise to cut a deal with your lender to lower your interest rate, or negotiate a lower monthly payment plan, etc., which by the way are things you can do on your own without spending a penny.

To avoid becoming a victim to any of these scams, do not give any personal information, credit card number or a check upfront to any individual or company without asking them for sending details in writing. Then call the Better Business Bureau (www.bbb.org) or your local consumer advocates to verify their authenticity. Most reputable businesses do not use pressure tactics to get your business, or make lofty promises. A prudent thing to do would be to first call your lender or an authentic non-profit credit counseling agency that does not require you to cough up upfront money or your credit card number. You could also contact a licensed professional real estate firm like Coldwell Banker Ackley Realty.

A heightened awareness of foreclosure prevention scams and proactive vigilance is the only way to combat this growing menace. Just remember that if anything sounds too good to be true, it probably is!

Visit these websites for more information:

www.usdoj.gov/ust/eo/public_affairs/factsheet/docs/fs06.htm

http://www.federalreserve.gov/pubs/foreclosurescamtips/default.htm

http://www.federalreserveeducation.org/news/multimedia/foreclosure_avoidance_scam_ads.cfm

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre42.shtm

2011 First Quarter Office Awards

Coldwell Banker Ackley Realty, just named "Top Office" AGAIN by Coldwell Banker. 

The Top Office Awards was presented to CBAR for the following awards.  This is a repaeat of the previous quarter.  CBAR has an exceptional team, who not only lists homes but sells them!

FIRST QUARTER, 2011

LISTING UNITS

SOUTHERN REGION

51-100 SALES ASSOCIATES

FIRST QUARTER, 2011

TOTAL UNITS

SOUTHERN REGION

51-100 SALES ASSOCIATES

Dorothy Buse Earns Top Spot at the Coldwell Banker 2010 International Awards

Each year Coldwell Banker ranks Associates on several different categories and on several different levels.  This year, Coldwell Banker Ackley Realty is proud to announce, Dorothy Buse was #1 in Florida, #1 in the South East Region and #1 Nationally. 

Dorothy’s 2010 Awards

#1 Sales Associates National Awards! This prestigious national award recognizes the top producing individual COLDWELL BANKER® sales associate in North America for Total Units.  (Approximately 90,000 associates)

#1 Sales Associate Regionally Awards recognizes the top producing individual sales associate, from independently owned and operated COLDWELL BANKER® companies for each of the U.S. Regions in the categories of Adjusted Gross Commission Income and Total Units. Dorothy won both categories!

#1  Sales Associate by State Award!  This award recognizes the top producing individual from independently owned and operated COLDWELL BANKER® offices in each U.S. state for Adjusted Gross Commission Income.

Sales Level Designations

International President’s Premier  - less than 1% of all sales associates internationally qualified

Dorothy Buse

Peter Macera

International President’s Circle - the top 4% of all sales associates internationally qualified

Rajia Ackley

Domincio Pagan

David Plasencia

International Diamond Society -  the top 7% of all sales associates internationally qualified

Dave Couture                                                   

Marion McKenzie

Jeanine Madden

Paul Antonelli

International Sterling Society - 11% of all sales associates internationally qualified

John Guelde