The Highest Offer May Not Be the Best

Sellers who get more than one offer should be aware that the highest offer isn’t necessarily the best offer, say experienced practitioners.

In this tough market, going with the buyer who has enough cash to pay a large down payment and who won’t be scared away if the inspection uncovers some needed repairs is often the wise choice.

Practitioners should encourage sellers to review all the terms and conditions of the sales contract. In some areas, the allocation of fees can take a big bite out of the net proceeds. While most contracts are written to reflect that, it isn’t always the case.

Also, the closing date in the offer should be considered carefully. A buyer who can close quickly can save a seller thousands. Offers contingent on the sale of another property are particularly suspect in this market.

Source: Inman News, Dian Hymer (12/28/2009)

Mortgages Becoming Easier to Obtain

In some parts of the country, borrowers with good credit are more likely to be able to borrow 95 percent of the purchase price than they were just a few months ago.

In Florida and other troubled markets credit remains tight and mortgage companies continue to scrutinize property appraisals, which makes it difficult for some borrowers to get financing. But in most areas of the country where prices are stabilizing or falling only slightly, standards are relaxing.

“We are starting to see...moderation," said Neil Librock, head of credit risk for Wells Fargo & Co.

Source: The Wall Street Journal, Ruth Simon (12/19/2009)

Report: Home Prices Likely to Hit Bottom in March

Home prices in 45 of the largest housing markets are expected to fall another 4.2 percent before they hit bottom in March, according to First American CoreLogic’s LoanPerformance Home Price Index.

By October 2010, prices are expected to be heading upward again by about 1 percent compared to 2009.

The report warned that this progress could be jeopardized by an increasingly large “shadow inventory” of homes owned by banks but not yet on the market. The problem is particularly acute in Michigan and Ohio cities, the report said. It projected a 12.7 percent further decline in values in Detroit, an 11.4 percent decline in most of the rest of southeast Michigan, and a 6.3 percent fall in Cleveland.

The report expects the strongest recoveries next year in California cities. These include:

1. San Francisco, up 5.7 percent
2. Los Angeles, 5 percent
3. San Diego, 4.7 percent
4. Sacramento, 4.6 percent

Exterior Remodeling: Best Bang for Your Buck

Despite a slow market and a slight decrease in the resale value of most remodeling projects, REALTORS® report that the smartest home improvement investments may also be some of the least expensive. Results from the 2009 Remodeling Cost vs. Value Report show that small-scale exterior projects are the most profitable at resale, according to estimates by REALTORS® who completed a recent survey.

On a national level, eight out of the top 10 projects in terms of costs recouped were exterior replacement projects that cost less than $14,000. Certain types of door and siding replacements, as well as wood deck additions all returned more than 80 percent of project costs upon resale. A steel entry door replacement – a new addition to this year’s list – recouped 128.9 percent of costs, followed by upscale fiber-cement sliding replacements at 83.6 percent. Wood deck additions recouped 80.6 percent of costs.

“Once again, this year’s Remodeling Cost vs. Value Report highlights the importance of a home’s first impression,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “With exterior projects returning a high percent of project costs upon resale, Realtors® can help give your home curb appeal while adding value to the real estate transaction.

The 2009 Remodeling Cost vs. Value Report compares construction costs with resale values for 33 midrange and upscale remodeling projects comprising additions, remodels and replacements in 80 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the twelfth consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with REALTOR® Magazine, as REALTORS® provided their insight into local markets and buyer home preferences within those markets.

On a national level, the project with the biggest improvement from 2008 was the attic bedroom addition, recouping 83.1 percent of remodeling costs compared to 73.8 percent in 2008. The only other interior project that landed in the top 10 was a minor kitchen remodel with 78.3 percent costs recouped.
Other exterior projects in the top 10 include midrange vinyl and upscale foam-backed vinyl sliding replacements, which returned more than 79 percent of costs. In addition, several types of window replacements – midrange wood, midrange vinyl, and upscale vinyl – all returned more than 76 percent of costs upon sale.

Similar to last year’s report, the least profitable remodeling projects in terms of resale value were home office remodels and sunroom additions, returning only 48.1 percent and 50.7 percent of project costs.

Regionally, cities in the Pacific states of Alaska, California, Hawaii, Oregon and Washington once again outperformed the rest of the nation in terms of remodeling costs recouped upon resale. The West South Central region of Arkansas, Louisiana, Oklahoma, and Texas; the East South Central region of Alabama, Kentucky, Mississippi and Tennessee; and the South Atlantic region of the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia also performed relatively well.

The regions that generally returned the lowest percentage of costs were New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island and Vermont), East North Central (Illinois, Indiana, Michigan, Ohio and Wisconsin), West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota), and the Middle Atlantic (New York and Pennsylvania).

Golder commented that remodeling projects are just one of many factors that contribute to a home’s overall resale value. “As the first, best source for real estate information, REALTORS® are experts in providing insight into what projects and investments will make a difference in your house. It’s important to consult with a REALTOR® who can explain the variety of factors that affect a home’s value, such as location, condition of surrounding properties and the regional economic climate,” she said.

Results of the report are summarized in the January issue of REALTOR® Magazine. To read the full project descriptions, access national and regional project data, and download a free PDF containing data for any of the 80 cities covered by the report, visit www.costvsvalue.com. “Cost vs. Value” is a registered trademark of Hanley Wood, LLC.

Source: NAR

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Foreclosure Activity Declines in November

U.S. foreclosure filings, including default notices, foreclosure auctions and bank repossessions, fell 8 percent in November from the previous month, marking the fourth consecutive month of declines, according to the the latest data from Realty Trac.However, foreclosure filings were still up 18 percent compared to a year ago, and a total of 306,627 U.S. housing units, or one in every 417, received a foreclosure filing in November. Foreclosure activity now has declined 15 percent from the peak in July 2009.

Nevada, which posted a double-digit percentage drop in foreclosure activity for the second straight month, still had the nation’s highest foreclosure rate with one in every 119 housing units receiving a foreclosure filing. Florida had the second highest foreclosure rate with one in every 165 housing units receiving a foreclosure filing and California was third with one in every 180 units receiving a foreclosure filing.

“Loan modifications and other foreclosure prevention efforts, along with the recently extended and expanded homebuyer tax credit, are keeping a lid on the most visible symptoms of the nation’s ailing housing market — foreclosures and home value depreciation,” says RealtyTrac’s CEO James J. Saccacio. “This is providing a welcome respite for the real estate industry, but a full recovery will only come when unemployment recedes to normal, healthy levels and when availability of credit reaches a more rational balance between the extremes of the past few years.”

Cities Where Housing Is on the Mend

No cities have totally avoided the foreclosure crisis, but some were able to sidestep the worst of it. These markets are now recovering quickly.

The recovery is swiftest in those areas that didn’t have as much of a housing price run up to begin with, either because the economy in those areas has stayed healthy or the economy has been limited for decades and residents have adapted or left.

To identify places where the recovery has begun, Forbes magazine examined the number of loans that were foreclosed in the 100 largest metropolitan statistical areas. Then it calculated the percentage of loans that are descending further into delinquency vs. those that are improving. The lower the deterioration ratio, the higher the ranking.

Here are the cities that fared best by that measurement and are recovering the most quickly:

1. Harrisburg-Carlisle, Pa.
2. Austin-Round Rock, Texas
3. Ogden-Clearfield, Utah
4. Buffalo, N.Y.
5. Knoxville, Tenn.
6. Raleigh, N.C.
7. San Antonio, Texas
8. Syracuse, N.Y.
9. Salt Lake City, Utah
(Tied)
10. Moline, Ill.
10. St. Louis
10. Wichita, Kan.
10. Rochester, N.Y.

Source: Forbes, Francesca Levy (12/09/2009)

Home Values Have Been Stabilizing

U.S. homes lost $489 billion in value during the first 11 months of 2009. That’s significantly less than the $3.6 trillion lost during 2008 and evidence that home values are stabilizing, says Zillow.com, online real estate research firm.

Properties in 48 of the 154 markets tracked by Zillow rose in value this year, but Zillow’s Chief Economist Stan Humphries believes prices could decline again in 2010.

“We believe that demand will come under downward pressure as mortgage rates creep back up after the first quarter and that housing supply will experience upward pressure as the volume of foreclosures continues to remain high. Both these factors will challenge the recent stabilization of home prices," Humphries said in a statement.

Areas where home prices rose the most in 2009 were:

• Boston
• Providence
• Denver, Colo.
• Atlanta, Ga.
• Rochester, N.Y.

• Los Angeles
• Chicago
• New York
• Miami-Fort Lauderdale
• Phoenix

Foreclosures Decline for Fourth-Straight Month

Foreclosures declined 8 percent in November compared with October, but were still up 18 percent from November 2008.

This was the fourth-straight month that U.S. foreclosures have declined since hitting an all-time high in July, according to online foreclosure marketer RealtyTrac.

Default notices, an indicator of coming foreclosures, also were down 8 percent from October, but up 22 percent from November 2008. Bank repossessions were flat from the previous month and down 2 percent from November 2008.

"We don't really believe the underlying problems have been resolved," said Rick Sharga, senior vice president for RealtyTrac. Many borrowers, he told the Associated Press, "simply aren't going to qualify" for government and mortgage servicer help.

States with the highest foreclosure rates are:

• Nevada
• Florida
• California
• Arizona
• Idaho
• Michigan
• Illinois
• Utah
• Maryland
• New Jersey

Bernanke Promises Low Rates

Federal Reserve Chair Ben Bernanke said Monday that he could make no guarantees that the current economic recovery will last, but he promised to keep interest rates at low levels for “an extended period.”

Central bank officials will discuss monetary policy when they meet Dec. 15-16.

Bernanke, who was speaking to the Economic Club of Washington, D.C., is seeking a second term. He provided a light-hearted answer to the question, “What do you like best about being Fed chief?”

"I get to go through the security lines at the airport much more quickly, and I can take along even three ounces of fluid if I want to," Bernanke told a laughing audience.

Source: Associated Press, Jeannine Aversa (12/07/2009)

Mortgage Delinquencies to Improve by Year-End 2010

National mortgage loan delinquencies — borrowers with loans that are 60 days or more past due — will drop by nearly 3 percent by the end of 2010, according to the annual credit forecast by TransUnion. The projected decrease would reverse a trend in which mortgage delinquencies posted year-over-year increases of 54 percent between 2006 and 2007, 53 percent between 2007 and 2008, and 43 percent between 2008 and 2009.

Ezra Becker of TransUnion’s financial services group says delinquencies will decrease gradually due to expected improvements in unemployment rates and housing values. “We expect this change to be driven in part through the continued conservative approach lenders are taking to new loan underwriting, as many of the existing mortgages in the market work their way out of the system and off the books of lending institutions,” Becker says.

By the end of 2010, Florida is projected to have the highest mortgage delinquency rate at 16.86 percent, followed by Nevada at 16.14 percent, while North Dakota (1.43 percent), South Dakota (2.20 percent) and Nebraska (2.35 percent) are forecast to have the lowest delinquency rates.

Tue, Dec 8, 2009

Did You Know:  Internet Usage Facts

The National Association of REALTORS has released their 2009 Profile of Home Buyers and Sellers.  This year 90% of home Buyers reported using the Internet to search for homes; this is up nearly 20 percentage points in just the last six years, further reinforcing that successful REALTORS need to have a strong online presence.  Of these 90% of home Buyers who report using the Internet to search for homes, 76% report using it "frequently" with many requesting additional information and 60% of these home Buyers also being likely to request a showing.

Pending Home Sales Continue to Show Gains

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, rose 3.7 percent in October and was 31.8 percent higher than October 2008, the National Association of REALTORS reported Tuesday morning. It is the ninth consecutive month that the index increased.

The index showed gains in three of the four regions of the country. In the Northeast, it climbed 19.9 percent during the month and was 44.2 percent above a year ago. In the Midwest, the index rose 11.6 percent and was 36.6 percent higher than October 2008. In the South, it increased 5.4 percent and was 31.6 percent above a year ago. However, the index fell 11.2 percent in the West, but was 21.9 percent above October 2008. 

National Association of REALTORS chief economist Lawrence Yun says that despite these gains, home sales could dip in the coming months. “The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months. Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process,” Yun says.