Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Monday, March 26, 2012
Saturday, March 24, 2012
Spring Has Sprung
by on March 22, 2012
Here comes Spring, historically the time of year when buyers awake from the winter slumber of the holidays and snowfall, and go on their pilgrimage to look for new housing. Houses look better in Spring with green grass, blooming trees, and flowers.
Plus, buyers who find a home in the next 60 days can close after the school year ends and enjoy the summer months in their new backyards. It’s almost a rite of passage; baseball teams go to spring training, buyers go look at homes, and the birds fly back north.
But this Spring is different than those of recent memory…
- Because of the warm weather we experienced here in the Northeast for most of this past winter buyers have been out for months – making offers and buying homes.
- Many sellers have finally come to understand that they need to have a compelling price on their home to attract buyers. The days of listing your home and negotiating down are over because there are homes on the market already priced correctly, and those are the homes that buyers are going to. The overpriced inventory doesn’t even get their chance to negotiate down.
- Rates have ticked up as economic news (like unemployment numbers) has improved. That, coupled with rising mortgage insurance premiums and guarantee fees, seems to have given some sense of urgency to buyers.
- The looming shadow inventory, which most certainly will keep downward pressure on home prices (when added to easier short sale approvals), has tended to encourage home sellers to be more realistic in their expectations.
- The abundance of information available to consumers has further increased their need for sound advice from top-notch real estate and mortgage professionals. The cream is certainly rising to the top in those professions.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Wednesday, March 21, 2012
Rents Rising as Rental Availability Shrinks
by on March 21, 2012
Because of the challenges in the current economy, many families have either decided to rent or been forced to rent. How has this impacted rental options and the cost of the available options?
HousingWire recently quoted Paul Dales, senior economist with Capital Economics:
“As a consequence of Americans being less willing and less able to buy a home, the number of households in rented accommodation is set to rise by at least 850,000 a year over the next few years.”The price of anything is determined by supply and demand. As demand increases, the price of an item will increase unless there is an equal increase in supply. The article mentioned above said:
“Dales said in his research that rental vacancy rates will fall again in the future, pushing prices up. The median rent is already up to $712 per month—well above the average monthly mortgage cost of $647, Dales reported.How many markets will be impacted? A new rent index offered by Zillow:
He estimates vacancies in the home-rental market will push average rental rates up as much as 5% by early 2013.”
“…showed year-over-year gains for 69.2 percent of metropolitan areas covered.”
Bottom Line
Rents are increasing and will continue to do so for the foreseeable future. In many parts of the country, buying a home might make more sense as you can lock in your housing expense for the next thirty years.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Friday, March 16, 2012
Is the Housing Market Actually Recovering?
by on March 13, 2012
Everyone wants to know if the housing market is truly showing signs of a recovery. There are conflicting headlines every day. One day, we hear sales are up. The next day it is reported that prices are down. Is the real estate market coming back? The answer is ‘yes’ and ‘no’.
There are two aspects that must be evaluated: house sales and house prices. They will not recover at the same time. Sales are already increasing rather nicely while prices will still soften in many markets through 2012.
Home Sales
The National Association of Realtors (NAR) issues a Pending Home Sales Report each month. We can see by the graph below that sales have been increasing nicely over the last twelve months. Real estate professionals across the country are reporting that activity has increased compared to last year. The sales side of the recovery is starting to show great promise.
Home Prices
Many price indices have shown that national home prices are continuing to stumble. Even with demand increasing, we must look at where the supply of housing stock stands. Though ‘visible’ inventory (homes currently on the market) is shrinking, there is still a large overhang of ‘shadow’ inventory (foreclosures about to come to market as a result of the National Mortgage Settlement). This increase in inventory will outpace the increase in demand and thereby cause prices to continue to soften in many parts of the country.Bottom Line
Housing is coming back. However, sales will come back before prices. We will not see prices appreciate until we work through the oversupply of homes on the market.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
March Madness for Real Estate and Mortgages
by on March 15, 2012
It’s the time of year when the so-called experts tell you how to fill out your brackets for college basketball. The frenzy has been coined March Madness. Well, in the mortgage industry, we are seeing a frenzy of headlines, offers of so-called expert advice, and an unusually high level of buzz around real estate and mortgages. Here are some of the things I keep hearing…
- “The bank bailout settlement is going to allow all the shadow inventory to come to market at lower prices, which is going to drive home prices even lower.” Likely true. How much and how fast prices fall will be determined by the speed at which lenders proceed with the foreclosures.
- “The bank bailout settlement means people will get large principal reductions in their loans, if they are underwater.” Some will, most won’t. In its settlement, Bank of America will exclude loans owned by FannieMae/FreddieMac. This agreement will probably be mirrored by others, and therefore, won’t help a good portion of the population.
- “The government has finally helped the homeowner who is underwater yet still maintained a good payment history.” Semi-true. If you have an FHA loan closed prior to June 2009, you are able to do a streamline IF rates make sense in June (too soon to tell). If you closed after June 2009, no such luck. On the conventional front, HARP 2.0 may offer some help to those who have had their loan held by FannieMae/FreddieMac as long as there was no private mortgage insurance. Not exactly all inclusive – but applaudable.
- “You need to put 20% down to get a mortgage these days.” I hear this crazy notion from people far too often. Besides the FHA insuring loans with as little as 3.5% down (on loans up to $729,250 in high cost areas), people often forget that veterans can still finance 100% of the purchase price, and that Private Mortgage Insurance Companies are still insuring loans with 5-10% down.
- “Costs associated with loans are going up.” Most definitely. The hike in the guarantee fees has already caused a 3/8 – 1/2 increase in conventional loans and will raise FHA loans by 10 basis points in April. The FHA is also changing its premium structure to increase the cost of the mortgage—regardless of where rates themselves are headed.
- “Rates will stay low through 2014.” While every indication from Ben Bernacke & friends is consistent in their rhetoric that rates will stay low, we have already seen some significant swings in rates based on market conditions (unemployment numbers, problems in Greece, and so on). Rates will likely stay low, but getting the best rate will still require staying on top of everything.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Wednesday, March 7, 2012
Real Estate Commissions: You Get What You Pay For
by on March 7, 2012
Does it make sense to pay a full commission to your real estate agent in today’s market? Sellers, buyers and even agents are debating what should be charged to assist a consumer in completing a real estate transaction. Forget what the actual amount of the commission is. The bigger question is whether you should pay a ‘full fee’ when hiring a real estate expert to guide you through the complexities of today’s rapidly changing housing environment.
If a full fee was the rule in 2006 when completing a deal was so much simpler, why would you now consider cutting the fee of your agent in today’s tumultuous market? You are depending on this person to help you reach your goals in a sale or purchase. In 2006, buyers were willing to pay almost anything to a seller just to get into a home. Banking entities seemed to be willing to mortgage any property for any buyer. The process was rather simple.
Today, a person looking to buy or sell should be willing to pay a full fee for two reasons:
You need an expert guide if you are traveling a dangerous path
The field of real estate is loaded with land mines. You need a true expert to guide you through the dangerous pitfalls that currently exist. Finding a buyer willing to pay fair market value for your home at a time that there are mass inventories of foreclosures and short sales will take a true real estate professional. Finding reasonable financing can also be tricky in today’s lending environment.Experts in any profession do not discount their fees; especially when the job is becoming much more difficult.
You need a skilled negotiator
In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step of the way – from the original offer, to the possible re-negotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.When an agent is negotiating their commission with you, they are negotiating their own salary – the salary that keeps a roof over their family’s head; the salary that puts food on their family’s table. If they are quick to take less when negotiating for themselves and their families, what makes you think they will not act the same way when negotiating for you and your family? If they were Clark Kent when negotiating with you, they will not turn into Superman when negotiating with the buyer or seller in your deal.
Bottom Line
We believe that famous sayings become famous because they are true. You get what you pay for. Just like a good accountant or a good attorney, a good agent will save you money…not cost you money.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Wednesday, February 29, 2012
Warren Buffett: It’s Time to Buy Real Estate
by on February 29, 2012
Warren Buffett appeared live on CNBC’s Squawk Box this week. During the interview, he was asked about the current real estate market and whether he felt now was the time to buy. His response was rather emphatic and has been used as a headline in hundreds of articles since the interview:
“If I had a way of buying a couple hundred thousand single-family homes I would load up on them.”
However, throughout the interview, he addressed the market from a few angles. Here is what he said:
Why invest in real estate now?
“It’s a way, in effect, to short the dollar because you can take a 30-year mortgage and if it turns out your interest rate’s too high, next week you refinance lower. And if it turns out it’s too low, the other guy’s stuck with it for 30 years. So it’s a very attractive asset class now.”
Is buying your own home better than investing in stocks right now?
“If I knew where I was going to want to live the next five or 10 years I would buy a home and I’d finance it with a 30-year mortgage… It’s a terrific deal.”
Should we buy multiple houses?
“If I was an investor that was a handy type and I could buy a couple of them at distressed prices and find renters, I think it’s a leveraged way of owning a very cheap asset now and I think that’s probably as an attractive an investment as you can make now.”Over the last couple of months, there have been more and more financial analysts coming to the same conclusion: It’s time to buy real estate.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Thursday, February 23, 2012
How the Serenity Prayer Applies To Selling a Home
You may believe that selling your home is impossible in today’s market. You may feel powerless to the process. What could YOU possibly do to turn this housing market around? There is no doubt that today’s real estate market is extremely difficult to navigate. However, we want you to know that thousands of homes sold yesterday, thousands will sell today and thousands will sell each and every day from now until the end of the year.
It is totally within your power to guarantee that your house will sell even in the current market.
“How?”, you ask. Let’s look at the simplicity of the famous Serenity Prayer and apply it to selling a home in today’s real estate market.
“Grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.”
Accept the things you cannot change
The two main reasons that the housing prices have softened:- the current economy
- the inventory of distressed properties (foreclosures and short sales)
Have the courage to change the things you can
There is not a vacuum of buyers in the market. There is a vacuum of homes a buyer in today’s market will purchase. Let us explain: could you sell your home today for $1? … $1,000 … $10,000? Of course you could. There are plenty of buyers in the market for a home they consider priced correctly. You have to decide what the correct price is for your home if you truly want to sell. If you want your house sold, you must list it at a price a buyer will pay for it. Not a buyer from 2006 but today’s buyer who has plenty of homes from which to choose.It will take courage to sit with a real estate professional and honestly decipher the true value of your home. If you want to sell, you must have that courage.
The wisdom to know the difference
We all realize that the economic situation will take some time to correct. If we want to wait for prices to return to 2006 levels, we will probably have to wait for 5-7 years.Look at the reason you decided to sell in the first place and decide whether the extra money you would get from the sale is worth that wait. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?
This is where your wisdom must kick in. You already know the answers to the questions we just asked. You have the power to take back control of the situation by pricing your home to guarantee it sells. The time has come for you and your family to move on and start living the life you desire. That is what is truly important.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Tuesday, February 21, 2012
Ardrey Kell Junior Varsity Basketball Team Records Undefeated Season.
With a strong work ethic and a group of talented basketball players, the Ardrey Kell Junior Varsity Basketball Team has recorded an undefeated season. Led by Coach Jennifer McVicker, the Knights have battled hard in every game from start to finish. The lone blemish on the record is a tie with Myers Park. (CMS allows junior varsity games to end in a tie) Coach McVicker talks about her young players; “We have been strong this year due to our work ethic at practice, the ability to execute on both ends of the floor, and of course, the experience of the Sophomores from last years team with the addition of some really good freshmen players.” “We are very blessed to have the talent level at both the JV and Varsity levels at Ardrey Kell. It speaks volumes of the girls’ ability to work hard and get better everyday at practice and in games. We stress everyday on the JV Team “How Big is Your Heart?” and “We begin as 1, We Play as 1, We win as 1, TOGETHER!” (L-R)
Alaina Naccarato, Dana Amendola,
Emily Murphy, Justice Montgomery,
The team has been led by many different players. Until late, Darah DeWalt was a main contributer. She was recently called up to the varsity team. “Right now, every player on my roster has really tepped up to fill Darah’s role. In the last five games, We have had four different players lead us in scoring and rebounding. However, Freshman, Erin Rogers has increased her scoring and steals along with Freshman, Deja McCain with scoring and rebounding. I am so very proud of all of these young ladies to really work hard as a team.” Congratulations to the Ardrey Kell High School Junior Varsity Girls Basketball Team.
Alaina Naccarato, Dana Amendola,
Emily Murphy, Justice Montgomery,
Hayley Western, Kaylan Cox, Coach
McVicker, Deja McCain, Abby Callahan,
Lindsey Bish, Erin Rogers, Anna Burgess,
Annie Bennett
Saturday, February 18, 2012
Who’s the Quarterback?
Given that it’s Superbowl Week (Go Giants!), I thought we might go with a football theme today. I can’t tell you how many different people I hear proclaim that they are the quarterback of the real estate transaction – the agent, the loan officer, an attorney, accountant or financial planner. But for goodness sake, the buyer/borrower had better be the one calling the shots. Not that everyone else doesn’t play an important role, but the buyer/borrower is the one most impacted by the choices made.
Here’s my opinion of how the team works best:
- Head Coach (Your Loan Officer) – Your loan officer should be the Head Coach. After careful analysis of your income, credit and assets, this is the person in the best position to make sure you are playing to your strengths and minimizing your weaknesses. Your loan officer can discuss the economic realities of homeownership, while listening to your quality of life concerns. (How often you’ll be able to eat out or vacation, for example.) The loan officer can set up the game plan.
- Offensive Coordinator (Your Real Estate Agent) – Your real estate agent is your offensive coordinator. Armed with the game plan (which includes your limitations), the agent calls the plays, counseling you on the geography, the competition, the best ways to negotiate your way to your personal touchdown. Agents know the playing field (the inventory and the market). If you hire them to represent you, they can disclose the weaknesses of your competition (the seller).
- Offensive Line (Your Attorney, Accountant and Financial Advisors) – Your attorney, accountant and financial advisors are your offensive line. They are there to protect you from the blitzes that come from outside (sellers, title issues, tax consequences, and protecting your assets). Not the glamour positions, but vital to any success you are going to have.
- Running Backs and Wide Receivers (Your Friends and Family) – Your friends and family are the running backs and wide receivers. They often receive the glory and attention, but honestly, if everyone else doesn’t do their job, they rarely ever see success. Bad game plans, weak play calling, poor execution on the offensive line or by you, as quarterback, leave them merely as names on the roster.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Friday, February 17, 2012
Two Things You May Have Missed
Before the end of the year, Congress and the President agreed to extend the payroll tax cut. In that bill, there were two items of interest for those involved in real estate.
1.) The hike in the Guarantee Fees charged by the GSEs Fannie Mae and Freddie Mac.
The 10 basis point increase in the fees has translated to a .375% to .5% increase in mortgage rates for conventional loans. Many customers who started their loans a couple of months ago are being “surprised” with higher than expected rates. Heck, everything you read in the papers says rates are at historic lows and will likely stay there through 2014. Many consumers feel as if their lender is being unscrupulous. However, your lender has fallen victim to the increase in Guarantee Fees and how the secondary market is passing on the cost. What looks like possible lender greed is just a passing on of the increased expense imposed by the government. Sadly, the increased revenue isn’t even being used to help aid an ailing Fannie Mae or Freddie Mac. It is being turned over to the US Treasury to cover the temporary extension of the payroll tax cut.
2.) Permission for HUD to increase the insurance premiums they charge on FHA loans.
If you remember, HUD charges two insurance premiums – a monthly one and an up-front one that is usually added into the loan. Most recently, they reduced the up-front mortgage insurance premium (UFMIP) and dramatically raised the monthly fee (MMIP). It is widely anticipated that, maybe as soon as April, we will see a hike in the UFMIP with no adjustment to the MMIP. While this will help shore up the reserves in the insurance fund, it will simultaneously make buying a home more expensive. No one knows the effective date or amount of the increase. Buyers should look to buy before the increase in fees.
We always hear how our government officials tuck away things in their bills. In this case, while the headlines during the holidays praised Washington for preserving the payroll tax cut, they may have hurt us more in the long run.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Sunday, February 12, 2012
Do Appraisers Use Distressed Properties as Comparables?
Many of our readers ask us if appraisers use distressed properties (short sales and foreclosures) as comparables when doing an appraisal on non-distressed properties. We have posted on this issue on several occasions (examples: here and here). Last month, the Appraisal Institute issued a paper on the subject. In the paper, the Institute explained that:
“Foreclosures and short sales can provide important information for appraisers, who develop valuations based on market data and market forces.”On whether an appraiser should use distressed properties as comparables, the Institute was very direct (all items in bold were shown as bold in the original paper):
“An appraiser should not ignore foreclosure sales and short sales if consideration of such sales is necessary to develop a credible value opinion.”
And they explained the possible differences between short sales and foreclosures:
“A short sale … might have involved atypical seller motivations and so might not be an ideal comp…
A sale of a bank-owned property might have involved typical motivations, so the fact that it was a foreclosed property would not render it ineligible as a comp.”
Bottom Line
Some will argue that distressed properties should not be used when appraising non-distressed properties. However, there is no longer any doubt that they will be.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Wednesday, February 8, 2012
Where Are Rents Headed?
People are delaying the decision to buy a home because they are not sure where prices are headed. If they buy and prices continue to soften, they feel that they will not have purchased at the optimal moment. They reason that, if they sit and wait, they can’t be hurt. This thinking assumes that a non-decision comes without consequence.
The normal retort to this thinking by people bullish on real estate is that prices may soon turn to the positive or that interest rates will start heading upward. Buy now before the cost of buying increases! Today, we want to look at this from a different angle. We want to alert our readers that their housing expense is about to increase if they continue to rent.
Currently, in most parts of the country, buying is less expensive than renting. Plus, purchasers can lock in their housing expense for the next thirty years by buying now. They will get a sensational price and a record low interest rate. What will happen if they continue to rent?
The Alternative to Buying
If a family continues to rent, they are looking at a housing expense which will rise with the market. Rental costs increase by 3% a year historically. But today’s rental market favors the landlord to a greater degree. Below is a graph of how rental prices have increased recently and where they are projected to go over the next few years based on a report from Marcus & Millichap.
Bottom Line
Hoping to save by delaying the purchase of a home may result in higher housing costs while you’re waiting, thus achieving the exact opposite result. Check with a local real estate professional to determine the best option for you and your family.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Friday, January 13, 2012
The Power of Assumability
One of the rarely touted advantages of people taking FHA mortgages today is the fact that they are assumable. What that means is, when the FHA homebuyer of today is looking to sell his home, a qualified purchaser can “take over” their loan.
Most people believe that interest rates will return to a “normal” range (between 6.5% and 7%) in a couple of years. When you assume a mortgage, the terms remain the same. This means that a buyer five years from now can enjoy a 4 – 4.5% mortgage by assumption rather than the 6.5% – 7% mortgage they would get without it. Since most people buy homes based on how the monthly payment fits into their personal monthly budget, this is extremely impactful.
As an example, a $300,000 loan at 4% today carries with it a $1,432.25 principal and interest payment on a 30 year fixed mortgage. If offered for sale in five years, the purchaser could assume the $271,858.56 balance with the same $1,432.25 payment and remaining term of 25 years. The total payments over the 25 years would be $429,675.
Compare that to a new $272,000 loan at 6.5% for 25 years, which would carry a monthly payment of $1,836.56 (over $400 more a month than the assumption and more than $120,000 more over the 25 year term).
At 6.5% for 25 years, to wind up with the same payment as the assumed mortgage, our borrowers would only be getting $212,000…$60,000 LESS!
The point here is that, when rates go up, homes with assumable mortgages will have more value and will sell at higher prices because they are more affordable. As an additional bonus, the closing costs on assumable mortgages are significantly less (especially here in New York where NYS Mortgage Tax is such a large component of closing costs).
The borrowers must be credit-worthy of course (have good credit, qualifying income, and necessary assets to close), but they would have to be credit-worthy to get a new mortgage too!
Besides the multiple other reasons to obtain an FHA mortgage (low down payment requirements, extended income ratios, lower credit scores, and easier sourcing of funds), there is another perk. In the future, there is a good chance that you may be able to sell your home for more money because of the FHA loan’s assumability.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Wednesday, January 11, 2012
People Are Buying Homes AND GETTING MORTGAGES!
Many believe that very few houses are selling and that almost no one can get a mortgage. We want to let everyone know that neither of these assumptions is true. Recently, the National Association of Realtors (NAR) released their Existing Homes Sales Report. According to the report there are, on average, 12,109 homes selling in the United States EACH and EVERY DAY! That means that approximately 12,000 houses sold yesterday, approximately 12,000 will sell today and approximately 12,000 will sell tomorrow. So the thinking that homes aren’t selling just isn’t true.
Another interesting fact in the report was that 72% of these transactions were accompanied by a mortgage. That means that approximately 8,719 people qualify for a mortgage on a daily basis in this country.
There are over 12,000 homes sold and over 8,000 mortgages granted every day. The real estate market is doing better than many believe.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Monday, January 2, 2012
5 Top Real Estate Stories in 2011
In 2011, we experienced one of the most volatile housing markets in American real estate history. Things we never anticipated happened. Events we were sure would take place didn’t. Today, we want to review the five headlines we think had the biggest impact in 2011.
1.) Interest Rates remained at historic lows
In order to help stabilize the economy in 2010, the Fed took certain actions which kept mortgage rates at or near historic lows (approximately 4%). Most felt this would be a short term tactic and once abandoned would result in rates returning to long term averages (6-7%).However, the government has continued to support lower rates with the hope of fostering a recovery in the housing sector. The 30 year fixed rate mortgage (as measured by Freddie Mac) stood at 4.77% to begin 2011. A month later, it was over 5% and many, including us, believed this was the beginning of rates returning to normal levels. Instead, rates continued to fall ending 2011 at 3.91%.
The lower rates along with great prices have had a favorable impact on home affordability leading more buyers to enter the market.
2.) Sales up over 2010
At the beginning of 2011, we all realized that a year-over-year (Y-O-Y) comparison of home sales would not be a true “apples to apples” comparison as home sales at the beginning of 2010 were bolstered by the Home Buyers Tax Credit. Likewise, comparing home sales over the summer would not be a fair comparison as many sales in 2010 were dragged forward so that buyers could take advantage of the credit. However, many thought Y-O-Y comparisons would again be useful later in 2011 as the impact of the 2010 tax credit waned. Yet, the National Association of Realtors (NAR) Existing Homes Sales Report shows that over the last three months sales have increased quite nicely. The October and November reports each showed a Y-O-Y gain of in double digits and the December report gain was 12.2%. These numbers showed closed sales were increasing even though more contracts were falling through.3.) Contract cancellation rate surges
Probably the most troubling trend to emerge in 2011 is that the number of sales contracts that are cancelled before closing has skyrocketed in the last year. The cancellation rate has jumped from 9% in August 2010 to 33% each of the last two months.Some of the increase can be attributed to the higher level of difficulty in distressed property transactions. However, NAR also says cancellations are caused largely by “declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price.”
4.) Foreclosures were delayed
The robo-signing debacle of late 2010 caused a delay in many foreclosures entering the market. It DID NOT prevent the banks from continuing to put homes into the foreclosure process. The delays jut prevented banks from repossessing the homes and putting then up for sale as REOs (foreclosures owned by the banks).For most of 2011 the banks and the state governments worked on a set of standards that would be enforced before a bank could repossess the house. They are currently working on a settlement to be paid for those homes that where foreclosed on without the proper paperwork.
As these procedures and settlements are completed, more and more of the backlog of distressed properties will come to market. Distressed properties sell at a discount. They will have a substantial impact on the prices of all houses in the region.
5.) Prices move up then down
Many experts expected prices to continue to slide downward as we entered 2011. However, a large inventory of distressed properties was held back (see #4). That turned out to be good news for prices as supply decreased throughout the year and demand increased in the second half of the year. That actually caused prices to ‘bottom out’ and ten nudge upward in the late summer and early fall.As the foreclosed properties again began to enter the market in the last quarter, prices again began to slip. Most believe this downward trend will continue through the first half of 2012.
We spent today looking into the rearview mirror. Tomorrow, will share some of the trends we think we will see in 2012.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Thursday, December 29, 2011
Short Sale Vs. Foreclosure: A Short Sale Always Wins
Today’s ever changing real estate industry has brought upon some very challenging questions from our clients. We as counselors, want to put forth the best, non-emotional advice that we can, in hopes that we can help our clients and their families navigate the rough waters of the short sale process.
The most prevalent question and one that continues to permeate the industry is:
“Why should a seller go through the short sale process rather than letting their house be foreclosed upon?”
While we cannot speak to every client circumstance, we can say one thing with complete conviction. In almost all instances in which a potential seller is contemplating whether they should short sell their house or let it go through the foreclosure process, a short sale is the better option. The following are examples to consider:
Example A- Short Sale
Mr. Smith owns a home in which he has a mortgage balance of $220,000 and a current market value of $150,000. Mr. Smith has elected to short sell his property. His Realtor successfully obtains a buyer who puts forth an offer price of $120,000 (80% current market value according to Realty Trac Foreclosure Report 5/26/2011). After reviewing the buyers offer and the financial hardship information from Mr. Smith, Mr Smith’s bank agrees to accept the short payoff of $120,000 which would leave a deficiency balance of $100,000.The transaction closes and is final. Mr. Smith then pulls his credit report 30 days after the transaction takes place. On the report he notices that the mortgage trade line states “Mortgage debt was settled for less than full” and the balance on the mortgage is $0. Mr. Smith is now on the road to financial recovery.
Example B- Foreclosure
For the ease of illustration we will use the same value and mortgage debt amounts as in Example A. However, Mr. Smith has elected to forgo the short sale process and let the bank foreclose on the property. The bank holding his mortgage facilitates the proper legal procedures to foreclose on the property, all of which are costly. Mr. Smith is notified and his property foreclosed upon of which is taken back by the bank to sell as an REO.Six months later, the bank finally sells Mr. Smith’s home only they sell it for $90,000 (60% of current market value according to Realty Trac Foreclosure report dated 5/26/2011). Remember, as a short sale, the home would have sold for $120,000 keeping the deficiency to $100,000. In addition to the deficiency now being $130,000, the bank has elected to add on legal costs of $15,000 and asset preservation costs of another $5000 for a total deficiency liability of $150,000. Mr. Smith pulls his credit report 30 days after being notified that the bank has sold his property and of his liability.
On the report he notices that the mortgage trade line states “Foreclosure” and the balance is $150,000. Because of Mr Smith’s choice to choose foreclosure vs. short sale his road to financial recovery has taken a major detour. He not only has a foreclosure on his credit report but now has a much larger deficiency balance in which the bank, in most cases, will report on his credit report as a balance owed.
The Best Option is Clear
While the financial and credit advantages are clear when choosing a short sale over a foreclosure, other advantages are sometimes overlooked. The most important of all of them is maintaining the seller’s dignity and peace of mind. We have heard too many stories of families having to leave their homes because of a Sheriff’s order or some other type of legal action. The short sale process alleviates this negative social impact. The process puts the control back in the seller’s hands so that they can get back on the road to financial recovery and start providing for their families. In the battle of the two evils, a short sale always wins!!!
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Saturday, December 24, 2011
Happy Holidays!!
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Tuesday, December 20, 2011
Real Estate: Today’s Golden Opportunity
Everyone wants to comment on the current real estate market. They want to talk about how now is not the time to buy a home. Some even argue owning a house has never been a great investment. Most say it will be a long time before real estate again begins to appreciate. It all sounds so familiar to us. It was just a decade ago that many made the same arguments about gold as an investment.
Gold had dropped from over $400 an ounce to $250 an ounce (a 40% decline) from February 1996 to August 1999. People ran from gold as though it was a plague.
Lord William Rees-Mogg, the current Chairman of The Zurich Club, in 1997 said:
“No investment has been so thoroughly exploded as gold; most people think that there will no more be another gold boom than there will be another boom in tulip futures in The Netherlands.”Two years later in 1999, Don Wolanchuk author of the Wolanchuk Report explained:
“Everybody hates gold. You can’t have a bottom until everybody is out. And everybody is out of the gold sector.”
Everyone knows what happened next. The proclamation of gold’s death was rather premature. Gold rose from $250 an ounce to over $1,500 an ounce in the next twelve years. We see the same situation with real estate today. We are not predicting that real estate will see the same levels of appreciation. I do believe however that the market will rebound strongly.Those who continued to believe in gold as an investment were rewarded. Those who continue to believe in real estate as a sound investment will also be rewarded.
Here is what Adam Hamilton wrote in October 2000 in an essay titled Is Gold Dead?
The road for gold investors has been long and parched in the last five years. They have wandered through a seemingly endless desert, occasionally tempted by what proves to be an illusory mirage. Many have fallen beside the sun-cracked path, their white bones picked clean by buzzards and gleaming in the sun. Nevertheless, a brave contrarian core continues to march forward. They have studied history, currency, gold, investments, economics, and finance. They understand the timeless value of gold, the cyclical nature of the markets, and the vagaries of human psychology. They realize it is darkest before the dawn, and the journey most difficult right before the homestretch is reached. Gold is in an INCREDIBLE position, and it will have its day. Nothing goes up in price forever, and nothing goes down in price forever. Investments are cyclical. Gold is NOT dead, it is simply biding its time, waiting for its next earth-shattering mega-rally. The spoils that go to the few remaining gold investors when that day inevitably arrives will be fantastic. The stunning victory will quickly blot out the painful memories of the long struggle…You could replace the word ‘gold’ with the words ‘real estate’ throughout this essay and it would apply today.
We originally ran this blog back in March. We believe it still applies. By the way, Gold closed yesterday at almost $1,600 an ounce.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
Friday, December 16, 2011
Why Involve a LENDER in the Home Selling Equation?
by on December 15, 2011
One thing many real estate agents have learned is the importance of having a team of professionals to facilitate a smooth transaction. Having a lending expert on the team, can make available the following services to you…all for FREE:
- They stand ready to screen all potential buyers. Today’s lending landscape is a rapidly changing environment. Programs and requirements are changing regularly. A good loan officer should have a reputation for being on top of current guidelines and finding the best solutions for prospective clients. You need to know that when you accept an offer, the buyer can actually close.
- Financing is an important component to getting a home sold. Whether it’s marketing flyers, carrying costs, unique mortgage strategies (such as buy-downs and Sales Concessions) or even loan programs to differentiate your home (ex. loans that can incorporate monies for the purchase and renovation of a home), the best loan officers take pride in their ability to help increase the number of people for whom your home could be a fit. More prospects equals higher sales prices.
- In so far as a professional loan officer is seen as an educator, they would want to offer you the chance to tune into some of their online seminars (called webinars) and videos. As an example, some lenders have webinars with topics ranging from “How Lenders Look At A Mortgage Application” to “Renovation Lending” to “Getting Your Optimal Credit Score”, as well as videos that can fully explain your Good Faith Estimate. They are constantly striving to be a resource for everyone they come in contact with.
- Lastly, your loan officer knows that most home sellers become home buyers. Not only will they run your credit and analyze your income and assets, but they will also pre-approve you for your next mortgage, typically free of charge.
Joe Naccarato, Broker, Realtor
Top Performer Award Recipient
Allen Tate Realtors
Tel. 704.953.0183
e mail: joe.naccarato@allentate.com
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number!
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