How to Get the Best REO Deal
REO and short-sale properties can be money pits when offers take forever to close and vacant properties are trashed.
Here are some suggestions for expediting the deals:
- The best short-sale deals are those where the bank has pre-approved the sale price. The property may still take a long time to close, but not as long as it would otherwise.
- Buyers of a short-sale should be prepared for multiple offers. If the short-sale property is an attractive one, the lender will continue to market the property even after signing a sales contract. And if it gets a better offer, it may sell the property without giving the original buyers a chance to negotiate.
- Seek out houses protected by the Cash for Keys program, which gives short-sale and foreclosed owners money to prevent them from trashing the place on the way out.
- Inspections are important. If a home has been vacant, get the property re-inspected prior to closing.
- Buyers shouldn't focus on price alone. Homes that are in poor neighborhoods, have serious maintenance issues, or have terrible floor plans aren’t bargains despite the price.
Source: Inman News, Bernice Ross (11/30/2009)
Parents Should Consider Homes as Gifts
Parents who are looking for a gift to give their kids this holiday season should consider a house.
With prices in the cellar, this could be a terrific year to give a down payment or even the whole home.
The Internal Revenue Service says a married couple can each give gifts of $13,000 of money or property without triggering taxes for the gift givers or the recipients. That means a married couple can give another married couple a total of $52,000 a year. To maximize that they can give $52,000 in December and another $52,000 in January for a total of $104,000 to be used on a property before the federal tax credit expires.
This would buy a house in some parts of the country and be sufficient for a down payment in most others.
Source: The Wall Street Journal, June Fletcher (11/27/2009)
Harvard Economist Predicts Prices Will Stay Low
Harvard University economist Edward Glaeser discusses with Money Magazine where home prices will move next. He argues that older, colder cities are unlikely to come back because their initial growth was tied to transportation costs. Now that few goods are moved by water, their productivity – and number of residents – has declined.
Today, cities are likely to grow because they are located in warm areas where people want to live, Glaeser says. Cities like Atlanta, Dallas, and Houston that have a vibrant economy and a lenient building environment have gone through the housing meltdown with less of a decline in prices. These cities, he says, are likely to continue to attract residents, while their flexible approach to building regulation will keep home prices moderate.
But Glaeser doesn’t foresee property values rising to previous levels even in attractive locales. “The harsh reality is that real estate prices that go up come down. I've found that for every real $1 increase in local market prices over a five-year period, prices go down 32¢ over the following five years,” Glaeser says.
Source: Money Magazine, Lisa Gibbs (11/25/2009)
Loan Modification Success Said to be Overlooked
A report from the voluntary, mortgage industry-driven Hope Now program says the mortgage industry has assisted 2.7 million homeowners in 2009 with mortgage modifications or repayment plans outside of the federal programs.
The statement released Wednesday lacked many details about what kind of help servicers were offering. "What are the circumstances?" asks economist Joel Naroff, with Naroff Economic Advisors. "It's a large number, but they're probably not helping a lot of people who we'd think of as getting a modification. They might just be rewriting a mortgage to more of a fixed rate."
The Executive Director of Hope Now Faith Schwartz says industry efforts to solve the foreclosure problem are significant. "We've got to talk about what else is going on in the market. That's the bigger picture," she says.
Source: USA Today, Stephanie Armour (12/03/2009)
Fed: Economy Improving, Commercial Still Weak
The U.S. economy has “improved modestly” since early October, the Federal Reserve said Wednesday in releasing its monthly “beige book” survey of regional economic conditions.
The Fed said residential real estate sales increased everywhere but the Northeast. Also, fewer homes overall were being built.
The report also said commercial real estate was worse than the residential market, with conditions reported to have weakened in virtually all districts, with “rising vacancy rates, downward pressure on rents, and little, if any, new development."
Overall, the Fed reported that the labor market remained weak in most areas, but it noted improvement in some areas and an uptick in retail sales.
Source: The Wall Street Journal, Sudeep Reddy (12/03/2009)
Mortgage Applications Rise Over Thanksgiving
Mortgage applications rose last week, according to the Mortgage Bankers Association weekly survey.
On a seasonally adjusted basis, mortgage loan applications increased 2.1 percent compared to the previous week. The seasonally adjusted purchase index increased 4.1 percent from the previous week, while the refinance index rose 1.7 percent.
On an unadjusted basis – reflecting the Thanksgiving holiday – the purchase index decreased 30.4 percent compared with the previous week and was 34.9 percent lower than it was the same week a year ago.
Mortgage rates continued to decline, with 30-year fixed rates reaching their lowest level since May.
30-year fixed-rate mortgages decreased to 4.79 percent from 4.82 percent;
15-year fixed-rate mortgages decreased to 4.27 percent from 4.32 percent;
1-year ARMs decreased to 6.56 percent from 6.66 percent.
Source: Mortgage Bankers Association (12/02/2009)
Remodelers Say Business Is Picking Up
Home remodeling business is picking up all over the country. Contractors began noticing the trend at the end of what was a long, slow summer.
The reason for the upturn is that home owners, unable to sell properties, are deciding to stay and fix up the deficiencies. An added incentive is the $1,500 federal tax credit for energy-related improvements.
The National Association of Home Builders' Remodeling Market Index, a measure of contractor confidence, rose slightly last month and its futures index also increased, indicating contractors are more confident that business is improving.
Kermit Baker, chief economist for the American Institute of Architects and Senior Research Fellow at Harvard University's Joint Center for Housing Studies, agrees that the remodeling industry hit bottom during the summer, but he doesn’t expect substantial improvement until Spring 2010.
Source: CNNMoney.com, Les Christie (12/04/2009)
