Buy the Neighborhood

How to Find the Perfect Home

http://finance.yahoo.com/real-estate/article/102720/Buy-the-Neighborhood

5 Expensive (and Unexpected) Things That Can Happen to Your Home

http://finance.yahoo.com/real-estate/article/110621/expensive-unexpected-things-happen-to-home?mod=realestate-homeimprove

Appraisals Increasingly Becoming 'Deal Killers'

Appraisals are increasingly being blamed for preventing deals from making it to the closing table. In a common scenario playing out across the country, sellers are accepting buyer offers to later have an appraisal come in at a dramatically lower amount, which threatens to derail the entire deal. Unless the seller comes down in price or the buyer puts down more money, the deal often fizzles.

"The appraisers have so much power to kill deals," Jennifer Snyder, president of the St. Paul Area Association of REALTORS® in Minnesota, told the Pioneer Press.

Appraisers determine a property value by evaluating over the past six months sold transactions, current listings, and pending sales. But some critics argue that appraisers are giving too much weight to foreclosed properties in their comparables. While appraisers once rarely factored in short sales and foreclosures, appraisers would be negligent not to do so now, said Paul Sellwood, owner of Real Estate Appraisal Services in White Bear Lake.

"We're not playing God and saying what is your property worth," says Neal Harrah, owner of Regional Appraisals Inc. in Lakeville, Minn. "We're offering an opinion based on current data out there."

Real estate pros are educating sellers more about the appraisal process, realizing that sellers will need to consider the appraisal process more than they ever have and how it can threaten the sale. For example, one of Snyder’s clients had an appraisal come in $10,000 under the buyer’s accepted offer. To save the deal, the seller agreed to drop the home’s price to offset the difference.

In another incident, a buyer offered $110,000 for a condo in St. Paul, Minn., which was then appraised at $65,000. That deal was able to survive, thanks to a buyer who had deep pockets and was willing to put up more money, but the agent says with a normal buyer, it would have never gone through.

Source: “Appraisals: The New Deal Breaker in Real Estate,” Pioneer Press (Jan. 24, 2011)

The Real American Idol – HOMEOWNERSHIP!

by The KCM Crew on January 25, 2011

Simon Cowell would have to be considered congenial compared to the critics of real estate in the last few years. But like the popular TV show, where the ultimate winner is not chosen by a select few but instead by the vote of the nation, homeownership again has proven to be the choice of the people. There have been numerous survey’s and polls done in the past 90 days that confirm this.

 American Attitudes About Homeownership is a new survey conducted by Harris Interactive for the National Association of Realtors. The findings of this survey combined with the findings of Fannie Mae’s November  National Housing Survey and last week’s Gallup Poll paint a clear picture that the majority of Americans still value homeownership and believe in its benefits. In the latest survey, America’s belief in owning a home came through loud and clear.

Here are a few of the findings:

Homeowners and renters agree that owning a home is a positive choice. A majority of homeowners and a sizable percentage of renters agree or strongly agree that owning a home provides a healthy and stable environment for raising a family (87 percent among homeowners and 64 percent among renters), that it helps them meet long-term financial goals (77 percent among homeowners and 55 percent among renters) and it helps them realize the American Dream (70 percent among homeowners and 48 percent among renters).
Most homeowners (95 percent) and renters (72 percent) believe that over a period of several years, it makes more sense to own a home than to rent.
More than 8 in 10 homeowners (82 percent) and half of renters (50 percent) would prefer to buy a home if they had to move in the next six months. Furthermore, 78 percent of homeowners consider now a good time to buy as do 58 percent of renters.
Homeownership is viewed as a positive experience while less so for renting. Eighty-eight percent of current homeowners report that owning a home has been a positive or very positive experience. About half of renters (51 percent) consider their experience as positive or very positive.
Many renters aspire to homeownership. More than 6 in 10 renters are at least somewhat likely to purchase a home in the future and 24 percent indicate that they are extremely likely. Among young adult renters, 74 percent say they are likely to buy at some point in the future. About one-third (35 percent) of renters plan to purchase a home in the next 3 to 5 years (43 percent among young adult renters).

More about the non-financial benefits of homeownership

We have argued for some time that the benefits of homeownership are more than just financial. This survey addressed this point and reported:

A larger share of homeowners than renters describe their communities as safe and stable. Homeowners also report that they are more satisfied with their community and family life. While many factors contribute to a positive community environment, a large percentage of homeowners and renters believe a high rate of homeownership is one factor. Homeowners generally feel more connected to their communities, participate in community and civic activities more frequently and are more likely to know their neighbors well.

Bottom Line

Owning a home has both financial and social benefits for your family. Today, you can buy a home at a discounted price and at an historically low interest rate. Why wait?

Job Recovery is Vital for a Strong Economy

With the exception of financial companies, corporate profits in 2010 were the highest ever, which should bode well for U.S. job recovery, says NAI Global Chief Economist Peter M. Linneman. “This could be a real stimulus for the economy,” unlike government efforts which just shifted existing funds around, he says.

The problem so far is that this $1.3 trillion of excess cash isn’t translating into new jobs. Linneman, who made his remarks during a Jan. 18 webcast, attributes the inactivity to uncertainty over political policies and regulation. But he adds that once corporations achieve a level of certainty, spending “could pick up much quicker than people realize.” “I’m very optimistic about this happening,” he says.

Yet, even if job growth returns to normal rates of approximately 1.7 million new jobs per year, it will take about five years to replace the 9 million lost jobs and absorb current vacant office space. “About 85 percent of vacancies today are due to job loss, not overbuilding,” Linneman says.

Jobs are also the catalyst for multifamily demand growth, says Linneman. With more than 2 million “pent-up households," there will be more households than units waiting for them if the economy begins to add jobs at a more normal pace.

Source: "Global Economic Outlook Web Conference," Peter Linneman, NAI Global (Jan 18, 2011)

Resolutions for Home Sellers in 2011

by Amy Hoak
Sunday, January 2, 2011

If your New Year's resolution involves selling a home in 2011, you've got some work to do: There's lots of inventory out there and in a buyer's market like this one, getting an offer on a home can be challenging.


Still, for the committed seller willing to do some prep work and come to terms with the current value of his or her home, locking in a buyer isn't impossible.
By listing in early January, you might be able to catch some of those early birds who start browsing in the winter so that they can find a new home before school starts in the fall, said Louis Cammarosano, general manager of HomeGain.com, a real-estate website. In fact, many buyers tend to start their searches online right after Christmas, and continue throughout January and February, he said.

"If you hit the ground running and you're a fresh listing that has done everything right, you've got the best shot," said Cammarosano.
Consider the following tips to give your home the best chance to get noticed -- and sold -- in 2011.
Price It Right from the Start
Many sellers suffer from attachment bias, said Tara-Nicholle Nelson, consumer educator for real-estate website Trulia.com. They believe that their home is worth more than they'd pay for it in another context. While it's always a bad idea to overprice a home, it's especially dangerous in times like this because there is so much competing inventory in many local markets.
Nelson's advice: Give yourself a reality check by looking inside comparable homes during open houses. That can help you get a clearer idea of your home's value.

You might even consider interviewing a few real-estate agents to get more than one take on how the home should be priced, Cammarosano said.
The longer something sits on the market, the more price reductions you might have to make and the more potential buyers will assume that there's something wrong with the home, he said. So more often than not, it's best not to try testing the waters with a higher price, he adds.
Don't be afraid to advertise in the listing and marketing materials that it's not a foreclosure or short sale, Nelson said. In markets where distressed sales are plentiful, there are buyers who simply don't want to deal with the extra hassle and uncertainty of a short sale or bank-owned property, she said.
Get the House Ready
Most sellers know they need to declutter, paint in neutral colors and generally stage the home as best as they can to help buyers envision themselves in the home. Often, this is done on the advice of a real-estate agent or professional stager.
The closer you can get your home looking like a photo from a Pottery Barn catalog, the better off you will be, said Beth Jaworski, a real-estate agent in the Milwaukee area.
And make sure that your cabinets and refrigerators are cleaned out and decluttered, too. "You want to have a minimum of 'stuff' in the house. The less stuff you have, the larger the closets, basement and garage will look," she said.
Jaworski also recommends having a home inspection done a month before putting the home on the market to identify any major defects that need to be corrected.
Provide as Much Information as Possible
Have energy bills and a list of updates available for buyers to see, Jaworski said.
"Buyers are always curious what the utility bills are, how old the roof is, how many layers it has, how old the major mechanicals are and when that addition was added," she said. "The more information you can provide on the house, the better."
Consider providing a floor plan with listings as well, Cammarosano said. That way the prospective buyers don't have to keep making return visits to determine how their furniture will fit in the space -- they'll have the dimensions in hand.
Make It Easy to Show
The more available you can make your home for showings, the better, said David Welch, a broker/associate in Orlando, Fla.
Make it easy for your real-estate agent to access the property and keep the place clean.

"You want your home to be easy to show because you don't know if you will get a second chance," Welch said. "Trust me, the buyer wants to like your house. Keep it in show-ready condition," he said, so they aren't turned off by a first impression.
Be Flexible
Buyers are in the driver's seat these days, and they know they can make all sorts of unusual requests without risking the deal. Be ready.
"Buyer wants to see the house at 7 a.m. on Tuesday, OK," Jaworski said. "Buyer wants to bring 10 family members and an inspector to check out the house for three hours this weekend, OK. Buyer wants you to include the kitchen table and chairs, the painting over the fireplace and your snow blower, OK."
"The more flexible you are," she said, "the better off you will be."
Amy Hoak is a MarketWatch reporter based in Chicago.
___

Is the Housing Market Starting to Come Back?

by The KCM Crew on January 21, 2011

It seems that the housing market is finally showing signs of a recovery. We are not suggesting that it will come roaring back and we will see 2006 numbers again. However, the National Association of Realtors released their December Existing Home Sales Report yesterday. The report showed a 12.3% increase in closed transactions over the month before. Earlier in the week the Census Bureau  reported that:

Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent above the revised November rate of 544,000.

Should we believe that real estate is starting to make a comeback? To some degree, we think yes. Both of the above reports are promising.
However, not all the news in the reports was positive. Existing home sales were slightly down from the same month last year. Housing completions were down 22.2% from last year’s numbers. Yet, we must also factor in that the numbers from the end of last year were artificially inflated by the Homebuyer Tax Credit. Any correlation between these numbers is not an apple-to-apple comparison.
These reports, coupled with anecdotal information we are receiving from the agents we coach all across the country, seem to suggest that we may have bottomed out in regard to the number of transactions being completed. That can only be a positive for the industry.

Bottom Line

Even though there is a huge amount of visible and shadow inventory which will continue to put downward pressure on prices, it seems that buyers are beginning to realize that there are tremendous opportunities in the market. 

December Existing-Home Sales Jump

Daily Real Estate News 

Existing-home sales rose sharply in December, when sales increased for the fifth time in the past six months, according to the National Association of REALTORS^®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 12.3 percent to a seasonally adjusted annual rate of 5.28 million in December from an upwardly revised 4.70 million in November, but remain 2.9 percent below the 5.44 million pace in December 2009.

Lawrence Yun, NAR chief economist, said sales are on an uptrend. “December was a good finish to 2010, when sales fluctuate more than normal. The pattern over the past six months is clearly showing a recovery,” he said. “The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level. The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”

The national median existing-home price for all housing types was $168,800 in December, which is 1.0 percent below December 2009. Distressed homes rose to a 36 percent market share in December from 33 percent in November, and 32 percent in December 2009.

“The modest rise in distressed sales, which typically are discounted 10 to 15 percent relative to traditional homes, dampened the median price in December, but the flat price trend continues,” Yun explained.

Inventory Levels
Total housing inventory at the end of December fell 4.2 percent to 3.56 million existing homes available for sale, which represents an 8.1-month supply at the current sales pace, down from a 9.5-month supply in November.

NAR President Ron Phipps said buyers are responding to very good affordability conditions despite tight mortgage credit. “Historically low mortgage interest rates, stable home prices, and pent-up demand are drawing home buyers into the market,” Phipps said. “Recent home buyers have been successful with very low default rates, given the outstanding performance for loans originated in 2009 and 2010.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.71 percent in December from 4.30 percent in November; the rate was 4.93 percent in December 2009.

Transaction Types
A parallel NAR practitioner survey shows first-time buyers purchased 33 percent of homes in December, up from 32 percent in November, but are below a 43 percent share in December 2009.

Investors accounted for 20 percent of transactions in December, up from 19 percent in November and 15 percent in December 2009; the balance of sales were to repeat buyers. All-cash sales were at 29 percent in December, compared with 31 percent in November, but up from 22 percent a year ago. “All-cash sales have been consistently high at about 30 percent of the market over the past six months,” Yun said.

Single-family home sales jumped 11.8 percent to a seasonally adjusted annual rate of 4.64 million in December from 4.15 million in November, but are 2.5 percent below the 4.76 million level in December 2009. The median existing single-family home price was $169,300 in December, down 0.2 percent from a year ago.

Existing condominium and co-op sales surged 16.4 percent to a seasonally adjusted annual rate of 640,000 in December from 550,000 in November, but remain 5.2 percent below the 675,000-unit pace one year ago. The median existing condo price was $165,000 in December, which is 7.4 percent below December 2009.

Performance by Region
Regionally, existing-home sales in the Northeast jumped 13.0 percent to an annual pace of 870,000 in December but are 5.4 percent below December 2009. The median price in the Northeast was $237,300, which is 1.4 percent below a year ago.

Existing-home sales in the Midwest rose 11.0 percent in December to a level of 1.11 million but are 4.3 percent below a year ago. The median price in the Midwest was $139,700, up 3.3 percent from December 2009.

In the South, existing-home sales increased 10.1 percent to an annual pace of 1.97 million in December but are 2.5 percent below December 2009. The median price in the South was $148,400, unchanged from a year ago.

Existing-home sales in the West surged 16.7 percent to an annual level of 1.33 million in December but remain 1.5 percent below December 2009. The median price in the West was $204,000, down 5.6 percent from a year ago.

— NAR

Most Americans Say It Is a Good Time to Buy a Home

by The KCM Crew on January 19, 2011

We have been making two major points for several months. If you are selling a house, you must do it now AND if you are buying one, you must also do it now. This sounds crazy – but it is true. PRICE is the most important thing to a seller. With prices projected to fall through the first half of 2011, if you want to sell, do it now. The alternative might be to wait over a year just for prices  to recover to current values. The second point revolves around the fact that buyers are more concerned about COST (price AND interest rate). Fannie Mae, the National Association of Realtors, the Mortgage Bankers Association and the PMI Company are all projecting interest rates to rise this year. If you want to buy, your best time to purchase could be right now.
We have had people question us on the second point. We truly believe it is a good time to buy however. And a new survey says that the majority of Americans agree with us. Gallup just released a poll showing that 67% of Americans think this is a good time to purchase a home. The interesting thing is that the same poll showed that more people believed that prices would decrease (27%) than increase (21%). Most people realize that this is a opportune time to purchase even if prices continue to soften.
Even the Gallup people weighed in on the subject:

Overall, there is good reason for most Americans to think now is a good time to buy a house. Interest rates remain near historic lows. Home prices are down sharply, providing many incredible buys. 

Bottom Line

There may be people advising you to use caution before buying a home right now. That is probably good advice. However, there is a difference between caution and fear. Fear could paralyze you and prevent you from making a good decision. Caution will make sure you make the right decision. And remember: if you do think it makes sense to buy your home today, 2 out of 3 people agree with you.

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Buy or Rent? Play Chess, Not Checkers

by The KCM Crew on January 17, 2011

• 
• 252Share
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A number of pundits are saying that now is NOT the time to buy a home. They look at how prices have fallen over the last four years and claim that investing in real estate is too risky. However, we must also look at the gamble one takes in not buying to determine which is the riskier of the propositions. The cost of renting today verses the cost of purchasing a home today must be compared. We must also consider probable future costs in order to fully calculate the risk. We must think a few moves ahead.
We must play chess, not checkers.
There is much to consider in the rent/buy decision. If you own a home, your mobility is curtailed to some degree. If you rent, there is less stability in the household as the landlord, not the tenant, determines if or when the house must be vacated. For the sake of today’s debate, we will only look at the financial aspects of this decision.

Renting

In a growing number of regions, homeownership is already less expensive than renting. And, it looks like rents are headed even higher. The WSJ, in an article on their online resource Market Watch,titled Double Digit Rent Hikes Are on the Way reported:

Apartment dwellers could be facing double-digit rent increases in the coming years as a shortage of new multifamily units coupled with a rise in prime renter-age households gives landlords clout they haven’t see since the mid-1990s.
“Demand pressures are building. It’s not bad today because rents have been down the last two years,” said William McLaughlin, an executive vice president with Avalon Bay Communities.
“But it feels a lot like 1992, when we were coming out of a deep recession … and we ended up seeing double-digit rent increases after that,” he said.
…Already there are signs the apartment market is tightening and in some cities rents are already going up 7% or 8% per year.

Does it make sense to pick a form of housing that will dramatically increase in cost over the next several years? You may think you are being forced to pick the ‘lesser of two evils’ knowing that house prices are still falling. Realize, even with prices still softening, the cost of purchasing a home is determined by both the price and the financing.

Buying

Although prices are falling, interest rates are on the rise and that can have a huge impact on your cost. The monthly mortgage payment (COST) you can negotiate today may be the lowest it will ever be in your lifetime.
John Paulson, one of the smartest housing analysts in the country, recently made it a point to say that if you don’t own a home – BUY ONE! Stan Humphries, chief economist of Zillow, explains that Paulson is talking about COST NOT PRICE.

Paulson is not just betting on house prices, but also on the ability to lock in low financing now with the expectation that it will be easier to pay it back in the future because of inflation.

Bottom Line

Don’t play checkers! If you want to make the best financial decision regarding your housing, think ahead a few moves. Play chess by considering future costs.

6 Tips for Choosing the Best Offer for Your Home

By: G. M. Filisko

Published: February 10, 2010

Have a plan for reviewing purchase offers so you don't let the best slip through your fingers.

1. Understand the process

All offers are negotiable, as your agent will tell you. When you receive an offer, you can accept it, reject it, or respond by asking that terms be modified, which is called making a counteroffer.

2. Set baselines

Decide in advance what terms are most important to you. For instance, if price is most important, you may need to be flexible on your closing date. Or if you want certainty that the transaction won’t fall apart because the buyer can’t get a mortgage, require a prequalified or cash buyer.

3. Create an offer review process

If you think your home will receive multiple offers, work with your agent to establish a time frame during which buyers must submit offers. That gives your agent time to market your home to as many potential buyers as possible, and you time to review all the offers you receive.

4. Don’t take offers personally

Selling your home can be emotional. But it’s simply a business transaction, and you should treat it that way. If your agent tells you a buyer complained that your kitchen is horribly outdated, justifying a lowball offer, don’t be offended. Consider it a sign the buyer is interested and understand that those comments are a negotiating tactic. Negotiate in kind.

5. Review every term

Carefully evaluate all the terms of each offer. Price is important, but so are other terms. Is the buyer asking for property or fixtures—such as appliances, furniture, or window treatments—to be included in the sale that you plan to take with you?

Is the amount of earnest money the buyer proposes to deposit toward the downpayment sufficient? The lower the earnest money, the less painful it will be for the buyer to forfeit those funds by walking away from the purchase if problems arise.

Have the buyers attached a prequalification or pre-approval letter, which means they’ve already been approved for financing? Or does the offer include a financing or other contingency? If so, the buyers can walk away from the deal if they can't get a mortgage, and they'll take their earnest money back, too. Are you comfortable with that uncertainty?

Is the buyer asking you to make concessions, like covering some closing costs? Are you willing, and can you afford to do that? Does the buyer’s proposed closing date mesh with your timeline?

With each factor, ask yourself: Is this a deal breaker, or can I compromise to achieve my ultimate goal of closing the sale?

6. Be creative

If you’ve received an unacceptable offer through your agent, ask questions to determine what’s most important to the buyer and see if you can meet that need. You may learn the buyer has to move quickly. That may allow you to stand firm on price but offer to close quickly. The key to successfully negotiating the sale is to remain flexible.
G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

4 Predictions for the Mortgage Industry in 2011

January 6, 2011 by Brian Summerfield ·

By Brian Summerfield, Online Editor, REALTOR® Magazine
One of the biggest obstacles for a recovery in housing has been — and will continue to be — mortgage lending. Although rates fell to historic levels in 2010 and will likely remain relatively low through a good portion of this year, credit still isn’t easy to come by, even for many borrowers who would be considered safe in a normal market.
With that in mind, what can we expect in mortgage finance during 2011? Here are a few predictions, with help from Tom Wind, managing director at J.I. Kislak Mortgage, former CEO of JPMorgan Chase’s residential mortgage lending businesses, and former president and COO of CitiMortgage:
1. Several proposals will be made to reform and reconstitute Fannie Mae and Freddie Mac, but no new plan will be implemented this year. The U.S. Treasury Department is expected to offer recommendations to Congress this month on how to restructure the mortgage market, and incoming GOP representatives have made Fannie and Freddie reform a top priority for its agenda this year. However, Wind expressed some reservations about a speedy resolution to the issue. When some sort of reconstitution — or even replacement — of Fannie and Freddie does come, though, it will probably include an overt guarantee of government backing, he added.
“Government support is essential to a well-functioning market,” Wind explained. “There may be times when the market can function without it, but long-term, ensuring the liquidity of mortgages is essential.”
2. FHA will continue to be the prime mover in the secondary mortgage market. Because Fannie and Freddie are still in limbo, the FHA will remain the most important institution in the mortgage space during 2011. And while Wind sees its role diminishing somewhat as the secondary mortgage market settles into some as-yet-undefined new normal, he says it will probably remain the primary driver of home loans for first-time buyers for the foreseeable future.
3. Refinances will go down, purchases will go up. Overall, Wind expects U.S. mortgage lending activity to be way down in 2011, due almost entirely to a severe drop in refinances. (Wind predicts that the refi market will fall more than two-thirds, from $1 trillion to $350 billion.) This decline — along with changes to compensation caused by new rules from the Federal Reserve and the Dodd-Frank Wall Street Reform and Consumer Protection Act, which could mean 30-40 percent less in earnings on each loan — will drive many loan officers out of the business this year.
The silver lining here is that with favorable affordability conditions, improving economic fundamentals, and moderate interest rates, mortgages for home purchases will likely go up. “Any way you cut it, it’s going to be a smaller market,” Wind says. “But purchases will probably grow.”
4. Jumbo loans will remain hard to come by. Although Wind sees private investors and financial institutions easing back into jumbo mortgage loans, there’s still substantial concern about high-end homes holding their value over the next couple of years. He predicts this will be the last strata of mortgage loans to recover: “For a healthy jumbo market, we need a healthy housing market [first].”

Solid Gain In Pending Home Sales

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New tax values coming for Mecklenburg

Charlotte Business Journal - by Susan Stabley

Date: Monday, January 3, 2011, 7:32pm EST - Last Modified: Monday, January 3, 2011, 8:43pm EST

• Susan Stabley
• Staff writer
• Email: sjstabley@bizjournals.com

Mecklenburg County Tax Assessor Garrett Alexander says as many as 8,000 appeals may be formally heard during the property revaluation process this year.
That’s a fraction of the 40,000 appeals that are expected to be sent to the county.
The county is undertaking the massive task of appraising values on about 360,000 parcels for tax purposes — a process known as revaluation. State law requires new property values to be set at least every eight years. Mecklenburg’s was last completed in 2003.
Alexander pledges the process will be done as “expeditiously” as possible.
The Mecklenburg County Board of Equalization and Review will consider the appeals but is limited in its response because of the volume of appeals expected this year. About 3,600 appeals were brought to the board during the 2003 revaluation process, Alexander says.
Property owners will start to receive notices of the new values by the end of this month. Tax bills based on the new values will be sent out in the fall.
Alexander’s office used 2009 and 2010 sales data for the reval process. Many homeowners will still see an increase in their newer tax values – even though home prices have plummeted in recent years – because current property valuation is based on 2003 assessments.
Charlotte property values have increased across the city since 2003, he says.
The county will consider the effect of foreclosures in neighborhoods where more than 15 percent of the total number of sales were banks sales, he says.
Alexander says his office also has a specialist who weighs the impact of rental properties on values.
Property owners can visit reval.charmeck.org for more information on revaluation appeals.

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Read more: New tax values coming for Mecklenburg | Charlotte Business Journal

Mortgage Applications Jump as Rates Ease

Mortgage Applications Jump as Rates Ease
The Mortgage Bankers Association's index of loan demand climbed 2.2 percent overall for the week ended Jan. 7, to its highest level in nearly a month.

The group's index of refinancing applications rose 4.9 percent, while its gauge of loan requests for home purchases fell 3.7 percent.

Source:"Mortgage Applications Rise as Lending Rates Ease," CNBC News, Jan. 12, 2011

© Copyright 2010 Information Inc.

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Homeowners Insurance: Are You Over- or Underinsured?

By: G. M. Filisko

Published: August 28, 2009

Paying for more homeowners insurance than you need is a waste of money, but it can prove even more costly to get caught without enough coverage.

 

Added to Binder

To get the full benefit of replacement coverage, you need to purchase enough insurance to cover the total cost to rebuild your home. Image: Michael Blann/Digital Vision/Getty Images

Trying to get just the right amount of homeowners insurance for your house and possessions may leave you feeling a bit like Goldilocks searching for a chair, a bed, and porridge that are just right. If you underinsure your home and suffer a devastating loss—flood, fire, theft—then you risk not being able to return to the lifestyle you’ve worked hard to achieve. Yet if you overinsure, you’re throwing money away every year on unnecessarily high premiums.
What you need is coverage that’s just right. Here’s how to get it, and it shouldn’t take more than 4 or 5 hours of your time spent reviewing your homeowners insurance policy, talking to your agent, and doing a little research.

Look before you leap into a policy

All homeowners insurance isn’t created equal. That’s why it pays to review your coverage every year to ensure your policy meets your evolving needs. Begin by understanding the types of coverage available.
Actual cash value coverage reimburses you for the value of your home based on its current condition, explains Marjorie Young, senior vice president at E.G. Bowman Co., a New York City insurance brokerage. If your home was built 10 years ago, you’d receive only the depreciated value of decade-old windows, cabinets, appliances, and so on.
Most insurers recommend the more comprehensive replacement cost coverage. With it, says Young, you’ll be reimbursed for the amount it will cost to rebuild your home like new with the same kind and quality of materials. Depreciation doesn’t factor into the settlement equation.
To get the full benefit of replacement coverage, you need to purchase enough insurance to cover the total cost to rebuild your home, excluding the value of the land. Many people make the mistake of insuring at the market value, says June Walbert of USAA Financial Planning Services in San Antonio. But the amount you could sell your home for today isn’t necessarily the same as how much it would cost to rebuild.

Construction costs play big role

Look to current construction costs in your local area for guidance. If you’ve purchased a newly constructed home in the past year, you already have the answer. The same is true if you’ve refinanced within the past year. You almost certainly paid for an appraisal during that process that likely includes three valuations: replacement cost, market value, and actual cash value.
If you’re determining replacement cost without those head-starts, Walbert recommends calling several local homebuilders and asking the average square-foot construction cost in your area. If the going rate is $175, and your home is 2,000 square feet, you’d purchase $350,000 in coverage. For just a few bucks you can also order a valuation report online at a website like AccuCoverage ($7.95) or Home Smart Reports ($6.95).
Remember that any time you spend at least 5% of your home’s value on a remodeling project—or $5,000, whichever is less—you should contact your insurer to increase your coverage. Young recently did that after she revamped her own kitchen. An additional $40,000 in homeowners coverage raised her annual premium by about $40.

Don’t neglect valuables, liability

Be sure you’re also insured at the right value for your home’s contents and for personal liability. Most insurance polices provide only actual cash value on contents, says Lisa Lobo, vice president of underwriting operations at The Hartford in Southington, Conn. To get replacement cost coverage, you’ll need to purchase an endorsement. If you have valuables not covered by your policy—silverware, jewelry, furs—purchase endorsements for those, too.
Many people pay no attention to the liability coverage limits in their policies, but Walbert says that’s a mistake. If you have a dinner party and a guest falls down your front steps, you don’t want to be underinsured. In recent years the average liability claim for bodily injury and property damage has been $15,854. Walbert recently increased a homeowner’s liability coverage by several hundred thousand dollars for just $6 more per year.
If you’re concerned about increasing your premiums by adding endorsement after endorsement, ask whether you can save money by splitting your deductible, paying a higher amount for certain claims and a lower amount for others. Bundled endorsements can save you a few bucks, but only if you require them all. Take a pass on unneeded riders. Why spend $8 to $12 a year for $500 worth of refrigerated property coverage when you eat takeout every night?
G.M. Filisko is an attorney and award-winning writer who has been involved in insurance litigation. A frequent contributor to many national publications including Bankrate.com, REALTOR(R) Magazine, and the American Bar Association Journal, she specializes in real estate, personal finance, and legal topics.

Read more: http://www.houselogic.com/articles/homeowners-insurance-are-you-over-or-underinsured/#ixzz1AmhgBUya

Keep Your Home Sale from Falling Apart

By: G. M. Filisko

Published: March 30, 2010

After finding a buyer, all you have to do to make it to closing is to avoid these five traps.

Mistake #1: Ignore contingencies

If your contract requires you to do something before the sale, do it. If the buyers make the sale contingent on certain repairs, don’t do cheap patch-jobs and expect the buyers not to notice the fixes weren’t done properly.

Mistake #2: Don’t bother to fix things that break

The last thing any seller needs is for the buyers to notice on the pre-closing walk-through that the home isn’t in the same condition as when they made their offer. When things fall apart in a home about to be purchased, sellers must make the repairs. If the furnace fails, get a professional to fix it, and inform the buyers that the work was done. When you fail to maintain the home, the buyers may lose confidence in your integrity and the condition of the home and back out of the sale.

Mistake #3: Get lax about deadlines

Treat deadlines as sacrosanct. If you have three days to accept or reject the home inspection, make your decision within three days. If you’re selling, move out a few days early, so you can turn over the keys at closing.

Mistake #4: Refuse to negotiate any further

Once you’ve negotiated a price, it’s natural to calculate how much you’ll walk away with from the closing table. However, problems uncovered during inspections will have to be fixed. The appraisal may come in at a price below what the buyers offered to pay. Be prepared to negotiate with the buyers over these bottom-line-influencing issues.

Mistake #5: Hide liens from buyers

Did you neglect to mention that Uncle Sam has placed a tax lien on your home or you owe six months of homeowners association fees? The title search is going to turn up any liens filed on your house. To sell your house, you have to pay off the lien (or get the borrower to agree to pay it off). If you can do that with the sales proceeds, great. If not, the sale isn’t going to close.

More from HouseLogic

How maintenance adds to home values

Reducing closing stress

Other web resources

More on calculating closing costs

More on the closing process

G.M. Filisko is an attorney and award-winning writer who wanted a successful closing on a Wisconsin property so bad that she probably made her agent rethink going into real estate. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Lenders May Be Not-So-Fast to Foreclosure

After a pivotal court ruling last Friday in Massachusetts, lenders are likely to be more willing to help home owners who are struggling to make their mortgage payments.

Last Friday, the Massachusetts Supreme Judicial Court ruled that two foreclosures in the case were invalid because the banks didn’t follow proper steps to show they had the authority to foreclose on the homes.

The case likely has set a precedent for the rest of the nation’s lenders to follow: Before you foreclose on a home owner, make sure you have authority to do it.

“What banks are going to have to do is make sure they’ve dotted their I’s and crossed their T’s before going through with a foreclosure,” says Stuart Rossman, director of litigation at the National Consumer Law Center.

This could mean an even slower pace for foreclosures as banks take extra caution on their paperwork, says Roy D. Oppenheim, senior partner at Oppenheim Law in Weston, Fla.

Experts say the court ruling was a positive for home owners who are in the middle of the foreclosure process, those trying to work out modifications, refinance, or do a short sale. They say that reaching a deal with lenders may become easier.

“I am expecting the banks to do fewer foreclosures and to engage in serious conversation in pre-foreclosure with borrowers,” Oppenheim says. “We’re already seeing [some] modifications that included for the first time principal reduction.”

Source: “Foreclosure Ruling May Be Good News for Homeowners,” MarketWatch (Jan. 11, 2011)

Are Short Sales the BIG Solution?

KCM Blog

Our blog yesterday discussed the challenge that banks are facing in their attempt to complete foreclosures. Some courts are attempting to void the foreclosure if the bank did not properly transfer the mortgage from one bank to another. The courts are claiming that, if you didn’t ‘legally’ transfer ownership of the loan documents, then you don’t ‘legally’ own it. If you don’t own the debt instruments, you can’t foreclose on them. What does this mean to banks when they handle future foreclosures?

One possibility is that banks may start favoring ‘short sales’ over foreclosures in more cases. The ‘short sale’ option has already been gaining momentum. The OCC and OTS Mortgage Metrics Report shows foreclosures are up 57.5 % year over year; ‘short sales’ are up 82.9%.

Now, with courts scrutinizing the foreclosure process, it may make more sense for banks to work with the current homeowner to sell the home even if it is at a price less than the amount owed on the mortgage. Adding to this possibility is that banks could lose less in a ‘short sale’ than a foreclosure. A ‘short sale’ sells for 81% of what a similar, non-distressed property would sell. A foreclosure sells for 59% of full value.

In the past, banks weren’t concerned with the difference because mortgage insurance companies had the legal requirement to cover the majority of the additional loss. However, insurance companies are now fighting these payments claiming that the original mortgage application might have been fraduantly written. This all adds up to the liklihood that banks will look more favorably at the ‘short sale’ process.

To this point, an article in Housing Wire quoted John Vella, the chief operating officer at technology provider Equator:

“Investors usually see a 20% to 30% better execution on a short sale versus an REO sale when it comes to loss severity. With the foreclosure volume, current and pending REO inventories, servicers will be pressed to do more short sales in 2011…they could see an increase of at least 25% over 2010 in completed short sales.”

Bottom Line

For the reasons mentioned above, the banks will probably lean more toward ‘short sales’. If you are a homeowner not able to pay your mortgage, this may be a much better option then allowing the home to go to foreclosure.

5 Factors That Decide Your Credit Score

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:
1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.

2. How much you owe. If youowe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.
3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.
5. The types of credit you use. Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.

For more on evaluating and understanding your credit score, visit www.myfico.com.

What You Can Do to Improve Your Credit

Credit scores, along with your overall income and debt, are big factors in determining whether you’ll qualify for a loan and what your loan terms will be. So, keep your credit score high by doing the following:
1. Check for and correct any errors in your credit report. Mistakes happen, and you could be paying for someone else’s poor financial management.
2. Pay down credit card bills. If possible, pay off the entire balance every month. Transferring credit card debt from one card to another could lower your score.
3. Don’t charge your credit cards to the maximum limit.
4. Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less for problems after a year.
5. Don’t order items for your new home on credit — such as appliances and furniture — until after the loan is approved. The amounts will add to your debt.
6. Don’t open new credit card accounts before applying for a mortgage. Too much available credit can lower your score.
7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.
8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.
This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation. To obtain a complete copy of the publication, Knowing and Understanding Your Credit, visit www.homebuyingguide.org.

3 Ways to Avoid Legal Trouble With REOs

3 Ways to Avoid Legal Trouble With REOs
REO and short-sale transactions are expected to continue to make up a big part of the real estate landscape in 2011. Real estate coach and trainer Bernice Ross offers some of the following tips to avoiding common pitfalls when working with distressed properties.

1. Make sure you have the training. If you lack the experience in handling REOs, short sales, or foreclosures, you need to disclose that fact to your clients. You’re better off not taking on a transaction if you lack the proper training in navigating these complex deals. Instead, a smarter and safer business approach: Refer the business to another agent and take a referral fee, Ross says.

2. Determine if it’s a recourse or nonrecourse loan. You need to determine how many loans the owner of a distressed property has on the property and whether those loans are “recourse” or “nonrecourse” loans, Ross says. With a recourse loan, if a lender forecloses or grants a short sale, the lender can still seize other assets belonging to the defaulting home owner to cover the lender’s loss. With a nonrecourse loan, the lender's only option is to foreclose on the property and they will not be able to seek such a deficiency judgment. It’s possible for an owner to have both recourse and nonrecourse loans on the same property.

Also, make sure your clients are fully informed about any tax ramifications prior to committing to any type of transaction, Ross notes, suggesting you have clients consult a tax professional before making any final decisions.

3. Have an attorney on call. Many lenders use language in their listings and sales contracts that note a “blanket indemnification of the lender." That means if there’s a lawsuit you’ll have to defend yourself and the lender. Have an attorney review all lender listing agreements so that you can remove any blanket indemnification language, Ross says.

Source: “5 Pitfalls of Distress Real Estate Listings,” Inman News (Jan. 6, 2011)

5 Feng Shui Concepts to Help a Home Sell

To put the best face on a listing and appeal to buyers who follow feng shui principles, keep these tips in mind.
1. Pay special attention to the front door, which is considered the “mouth of chi” (chi is the “life force” of all things) and one of the most powerful aspects of the entire property. Abundance, blessings, opportunities, and good fortune enter through the front door. It’s also the first impression buyers have of how well the sellers have taken care of the rest of the property. Make sure the area around the front door is swept clean, free of cobwebs and clutter. Make sure all lighting is straight and properly hung. Better yet, light the path leading up to the front door to create an inviting atmosphere.
2. Chi energy can be flushed away wherever there are drains in the home. To keep the good forces of a home in, always keep the toilet seats down and close the doors to bathrooms.
3. The master bed should be in a place of honor, power, and protection, which is farthest from and facing toward the entryway of the room. It’s even better if you can place the bed diagonally in the farthest corner. Paint the room in colors that promote serenity, relaxation, and romance, such as soft tones of green, blue, and lavender.
4. The dining room symbolizes the energy and power of family togetherness. Make sure the table is clear and uncluttered during showings. Use an attractive tablecloth to enhance the look of the table while also softening sharp corners.
5. The windows are considered to be the eyes of the home. Getting the windows professionally cleaned will make the home sparkle and ensure that the view will be optimally displayed.
Source: Sell Your Home Faster With Feng Shuiby Holly Ziegler (Dragon Chi Publications, 2001)

3 Questions You Must Answer Before Buying a Home

by The KCM Crew on January 4, 2011

If you are thinking about purchasing a home right now, you are surely getting a lot of advice. And most of that advice is probably negative. Why buy now with prices still falling? Don’t you realize real estate is no longer a good investment? Don’t you know that people who bought five years ago lost their shirt? We understand the concern your friends and family have. However, let’s look at whether or not now is actually the perfect time to buy a home.
There are three questions you should ask before purchasing in today’s market:

1. Why should I buy if house prices are still depreciating?

We believe that in most parts of the country prices will in fact soften in 2011. Price is the major concern for anyone selling a home. When you are buying, COST should be your primary concern however. Your monthly payment (cost) is definitely impacted by the price of the home you purchase. The other major component is the interest rate. Waiting for prices to bottom out while rates are increasing can wind up costing you more over the life of the mortgage (see chart here).
Over the last seven weeks, rates have increased over 1/2 a point going from 4.17 to 4.86. Looking at the attached chart shows this increase. Waiting for prices to bottom out seems to make perfect sense. Yet, at a time when rates are increasing, it might NOT make sense. Make sure you have a mortgage professional help you with this math before making a decision.
In an article last week CNN Money reported:

“You can kiss those record lows goodbye,” said Greg McBride, chief economist for Bankrate.com.
Keith Gumbinger of HSH Associates, a provider of mortgage information said that the market reached a new plateau.
“I don’t think we’re going back to a 50-year low anytime soon without an economic collapse,” he said. “Rates will probably never revisit those levels.”

2. When will I begin to see appreciation if I buy now?

This is a great question. Macro Markets, LLC is a company that studies housing prices. They started their Home Price Expectation Survey in 2010.  They ask 100+ housing industry experts to project housing prices through 2015. The most current survey shows that the experts are predicting prices to soften until 2012. The experts then project prices to rise reaching a cumulative appreciation of over 10% by 2015.
Purchasing a home today makes great sense from a financial standpoint. Think of the old axiom: You want to buy low and sell high. We may be at the low point regarding the COST of a home. But, this decision should not only be a financial one.
That leads us to our third and final question:

3. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. The Fannie Mae National Housing Survey shows that the four major reasons people buy a home have nothing to do with money:

• A good place to raise children and for them to get a good education
• A place where you and your family feel safe
• More space for you and your family
• Control of the space

What non-financial benefits will you and your family derive from owning a home? The answer to that question should be the reason whether you decide to purchase or not.

Bottom Line

The COST of a home will probably remain relatively unchanged even if prices continue to depreciate. Don’t allow money to get in the way of you making the right decision for you and your family. In the long run, the finances will work in your favor anyway.

Kiss 4% Mortgage Rates Goodbye

The ultra-low mortgage rates that dominated 2010 are vanishing, but industry experts say this actually could be a boost to the housing market. Click the link below for the full article:  

http://money.cnn.com/2010/12/30/real_estate/mortgage_rate_spurt/index.htm

Contractors more optimistic about 2011

Charlotte Business Journal

Date: Thursday, December 30, 2010, 10:33am EST

The construction industry in the Carolinas expects slightly better conditions in 2011 than those it struggled to survive this year.

A survey by the Carolinas chapter of the Associated General Contractors of America finds contractors are optimistic about the coming year. The Charlotte-based group’s third-quarter “construction barometer” inched up 1 percent from the same period last year. Contractors are seeing improved business conditions and greater demand for skilled labor throughout the Carolinas. Still, challenges remain, the organization reports. While material prices remain low, there’s concern that those prices will climb. Federal stimulus dollars, which funded much recent construction, have been spent and many government bodies are projecting huge budget deficits, which should damper public projects. And financing for commercial work remains difficult to obtain, despite low interest rates. In the Piedmont region of North Carolina, contractors predict rising demand for labor. The labor and employment section of the AGC barometer jumped 10.9 percent during the quarter, an indication of higher labor costs. That marked the first back-to-back quarterly increases in labor costs in two years. But the AGC warns no clear trend has emerged to indicate the industry is on its way out of recession.

Read more: Contractors more optimistic about 2011 | Charlotte Business Journal

6 must-do's before buying a home

Click on the link below to read the full article:

http://www.bankrate.com/finance/mortgages/6-must-dos-before-buying-a-home-1.aspx