Disgruntled Short Sale Buyers Moving To “New” Homes

Written by David Fletcher

Recently, Tampa Bay Realtor Christine Hensley’s $153,000, 1800-square-foot ten-year old short sale canceled unexpectedly. The seller allegedly could not get comfortable with what he would really owe the lender after the closing.

One week later, Hensley’s buyer closed for cash on a brand new upgraded 2100 square- foot Centex home for $170,000 cash, or about $2 per square-foot less than the short sale.

Within two days of asking for interviews from Centex if they had any recent sales resulting from burnt-out, distressed sale shoppers in Central Florida we had three stories and had to withdraw our request.

“I purchased a new home because I will never ever go through a short sale nightmare again in my lifetime,” said buyer Lynn Buonviri. Her dream short-sale fell through when the seller canceled without telling anybody, refused to move out, and would not come to the door. The fact that she had just arrived after pulling a trailer 1,000 miles for the scheduled final inspection, did not help.

“My broker negotiated with the bank and owner for 5.5 months. The stress on both of us was incredible, but the idea of going through this again was unbearable.”

Fortunately, everything worked out for both buyer and broker.

“I couldn’t be happier with my new home, its 10-year warranty and the fact that Christine earned a commission in the face of what could have been a real nightmare for both of us,” Buonviri said. (Disclosure: This happened to be a Centex property, but the same principles apply to all production builders. The author has a professional relationship with Pulte Homes.)

If you didn’t know better, you would think Hensley is a recovering short-sale specialist, with a new-found passion for selling new homes. That’s an understatement. The chances of a homebuilder canceling a sale is about as likely as the United States Supreme Court overturning the law of gravity.

Others think that a short sale or a foreclosure is the best price and therefore, the best value on the market, when this clearly may not be the case. Short sale versus new home pricing is proof that ‘price’ does not equal ‘value’.

Could the ‘new home alternative’ be trending as an option to a short sale purchase?

According to Sean Strickler, Vice President of Sales for the Pulte Group, of which Centex is one of its brands, he thinks so.

The broker community is starting to move in the new homes direction for different reasons than just price, according to Strickler.

Hensley thinks builders should take advantage of the lack of affordable, closeable inventory and should build to compete specifically with short sales in their markets. In her Valrico market, she believes the price point is “around $175,000.”

Strickler said that the Pulte-branded communities maintain an inventory home program specific to each community, “While we don’t want to overbuild in a particular community, our goal is to always have a quick move -in or two for those buyers who don’t want to wait for their home to be constructed.”

No doubt, this is a market-specific challenge, but there is plenty both builders and agents can do to improve sales, starting with confirming what the short sale/new homes story is in your market.

The recommended action plan for real estate brokers:

1. Do not assume you understand the new homes market.

2. Understand the square foot price differences between resales and new homes.

3. Visit sales centers for yourself. Ask questions.

4. Email this column to a builder and ask him to give you his comments.

5. Ask for case studies of short sales buyers who eventually purchased a new home. How long did the new home take to close?

6. Call at least three new homes sales offices. Ask them if they are seeing an increase in short sales buyers who are shopping and buying new homes in your market.

7. Put your findings in writing, so you can show the results to a short sale buyer who may not be aware of the differences in short sale and new home prices.

8. If you confirm a new home alternative, establish a new homes niche to strengthen your short sale program.

Recommended “critical few” action plan for builders:

1. Conduct an informal focus group with productive short sale agents. They have the buyers.

2. Compare recent short sales square foot prices with yours.

3. Educate the broker community.

Are new homes sales trending as a short sale alternative? It’s too early to tell.

If so, home builders and Realtors are finding a most unexpected sales solution – each other.

– Copyright © 2010 Realty Times. All Rights Reserved.

Continue reading...

Most Homebuyers Have No Regrets

Written by Broderick Perkins

An overwhelming 90 percent of homeowners say they don’t regret buying their current home, according to a new study by Bankrate, Inc.

That’s even in the face of stagnant – or sliding – home prices they’ve suffered and rock-bottom mortgage rates they may have missed out on.

Only 9 percent of respondents expressed second thoughts about taking the plunge. Why? Most often because they couldn’t sell their home and move on, or because they were unable to afford the monthly mortgage payment.

“It’s surprising and reassuring to hear 90 percent of homeowners say they don’t regret the purchase of their current homes,” says Greg McBride, CFA, senior financial analyst for Bankrate.com.

“And all the nasty headlines in the past two years have really moved the needle in terms of mortgage awareness, with a significant drop in the percentage of borrowers who don’t know what type of mortgage they have,” McBride said.

Only 8 percent of Americans don’t know what type of mortgage loan they have. That’s a lot lower than the 26 percent of respondents in a Bankrate study done two years ago who said they were in the dark about their mortgage type.

Being bullish on homeownership isn’t necessarily new. A recent Fannie Mae report revealed 70 percent of consumers see a home as one of the safest investments to make and 64 percent think now is a good time to buy.

“The key to any real estate survey conducted in today’s market would be to factor in the state where the survey’s respondents reside. In many parts of the country, particularly in the Central states, they did not experience a real estate boom like the West and East coasts and therefore are not faced with the fall out of a dramatic real estate bust today,” said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.

She added, “Feelings about home ownership should have changed very little in those states where home prices and equity have remained relatively stable.”

Other results in the Bankrate poll of 1,001 randomly selected adults, conducted last month by Princeton Survey Research Associates International, include:

  • Fixed-rate mortgages are gaining in popularity. Seventy-nine percent of respondents said they had this type of mortgage on their home.
  • Wealthier Americans — those making more than $75,000 — overwhelmingly preferred fixed-rate mortgages. Almost 90 percent of those who were asked, said they used a fixed-rate mortgage.

– Copyright © 2010 Realty Times. All Rights Reserved.

Continue reading...

Mortgages Rates Lowest Since 1950s

Mortgages are cheaper today than they’ve been in a half-century. If only most people had the job security, the credit score and the cash to qualify.

The average rate for a 30-year fixed loan sank to 4.69 percent this week, beating the low set in December and down from 4.75 percent last week, Freddie Mac said Thursday. Rates for 15-year and five-year mortgages also hit lows.

Rates are at their lowest since the mortgage company began keeping records in 1971. The last time they were any cheaper was the 1950s, when most long-term home loans lasted just 20 or 25 years.


Source: MyDesert.com

Continue reading...

Where is Real Estate Headed?

Written by Phoebe Chongchua

Many have watched the real estate market with bated breath, wondering what lies ahead. The Norris Group, a California-based company that produces an annual report on the state of real estate and predictions, provides some insight. The company recently released the Tip of the Iceberg report by Bruce Norris, an active investor, hard money lender, and real estate educator with 29 years of experience. While the report focuses on California, there are many other national predictions included. Here’s a look at what Norris is predicting in the coming eight years.

“Real estate isn’t even the first domino. Everything that happens in real estate can happen because of other things,” Norris said at a conference earlier this year. In this report, I’m looking at all those other things and finally seeing that they play a big part, if not the biggest part, in how things work out,” said Norris.

The report shows the various government programs for delinquent and financially challenged homeowners and reveals a disturbing fact. “All the delinquency trends for all the types of loans are up,” said Norris. “It doesn’t matter if it’s prime or subprime.” “The national average is 13.2 percent for total non-current (both delinquencies and foreclosures). California ranks at 15 percent, Illinois at 14 percent, Pennsylvania at 10.7 percent, and Florida, the highest, at 23.5 percent. “My friend Alex lives in Florida in Orlando and houses that were selling for $180,000 to $220,000, he’s regularly buying for $20,000 to $22,000,” said Norris.

The national average for the total non-current FHA loans (including delinquencies and foreclosures) is 17.4 percent. California is at 9.7 percent, Illinois at 21.3 percent, Pennsylvania at 15.3 percent, and Florida is at 23.8 percent.

Norris thinks this will provoke more usage of the 203(k) Mortgage by HUD (U.S. Department of Housing and Urban Development). The “Streamline (K)” Limited Repair Program permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. “They’ll actually loan you more than the house is worth, intentionally,” said Norris. “Right now it’s only available for owner-occupants but I’m sure that’s about to change,” he said.

“All of us who thought that we were going to see REOs (real estate owned by lending institutions) all over the place for the last few years are quite surprised,” he said. “It’s because there was intervention.” But how will that intervention and the aging population impact us? The report states that having a Federal debt that is trillions of dollars (and growing) and the size of the baby boomer generation will cause big changes that affect finances and real estate. “You’re going to expect higher taxes,” he said. Norris predicts, maybe even up to 45 percent for top tax bracket in 2011 and possibly higher after that. “If we’re going to try to resolve some of our problems and pay for stuff that’s gone on in the past, I think you’re going to have to say ‘We’re going to have to pay some higher taxes.'” Norris also predicts higher unemployment, aging consumers buying less and saving more which he says will mean more burden on the government due to fewer tax revenues and greater expense for government.

Perhaps the good news is the prediction for consistently low interest rates. “This is one of the conclusions that I didn’t think I was going to come up with. I really thought that we’d probably have some scary interest rates but I just don’t think so. Without an overheated economy, I don’t see the big inflation risk for the next period of time. I see the big picture that it could be very scary but for the length of time that I’m trying to cover in this report, I’m not as afraid of it as I thought I’d be,” said Norris.

He thinks over the next eight years, interest rates will be under 8 percent “and you may have times where they are as cheap as they are now.” Norris anticipates milder price increases in real estate as well as a decline in ownership coupled with a constant inventory available. The report also points out something that buyers are already facing, “regulation of finance markets might make it harder to get finance.” He predicts the median price to increase for California to approximately $460,000 in the beginning of 2018 due to factors such as migration. And if the employment conditions improve in the state, Norris thinks migration numbers will do even better, helped in part due to retirees moving into the state. Norris expects more emphasis on housing for seniors, which seems to be a trend in many states.

“I view the next eight years as a pivotal time for us, as a country, to make sure that we don’t end with bigger problems than we’ve got,” said Norris.

The good news is that Norris predicts less volatility in the real estate market and expects increases, albeit, not as drastic as in the past.

– Copyright © 2010 Realty Times. All Rights Reserved.

Continue reading...

Seniors Looking to Downsize, Seek Opportunities to Socialize in Urban Areas

Written by Phoebe Chongchua

Aging baby boomers want to feel connected. As many decide to downgrade the size of their current home, they search for a new one. However, it’s more than just their living quarters that makes them want to buy.

“I think previously there was this preconceived idea that senior citizens retire and they move to Florida or Arizona or they move somewhere to a senior citizen community,” says Steve Matthews, a real estate industry expert and chair for the Montclair Senior Citizen Advisory Committee in New Jersey. But he says there’s a changing mindset emerging. “Senior citizens no longer want to be in an isolated place.”

Many are selling their homes and looking for a community connection in the location where they plan to purchase their next home. “Like the rest of America, there was this movement going out toward suburbia. Now, there’s a movement going back toward more urban areas and towns are starting to be challenged,” says Matthews.

His town, Montclair, is a 30 – minute train ride from New York City. “So, it becomes a commuter town for people who work and it’s always been known as a town where young families go and buy. But now we’re seeing seniors who would previously move down to South Jersey or move somewhere else, choosing to stay closer to home,” says Matthews.

And that means that towns like Montclair need to understand the changing needs of its residents.

There are multiple factors causing the desire for urban living. Extended family living under one roof and caring for each other, low – maintenance condos, and social connectivity are a few reasons that top the list.

“Towns aren’t used to having to provide other services for seniors. Many towns have always focused services toward children – school systems, park systems, and things like that. Now, towns are being challenged to provide support systems for seniors who are choosing to retire in place,” says Matthews.

As more seniors shop for smaller, easy – to – maintain homes, that puts them in the same market as first – time buyers. However, seniors often have one distinct purchasing advantage. “A lot of them are selling their home, so they’re cash buyers and that makes them a stronger buyer in this market,” says Matthews.

Some seniors tend to be interested in homes that are completely renovated or upgraded. But Matthews says he encourages seniors to look at homes that might need some remodeling because they may get a better deal. Then the buyers can renovate the home in a way that is most suitable for their needs.

For sellers looking to market their property, Matthews says there are some specific items that tend to appeal to this group such as, buildings with doormen and onsite maintenance staff, alternate transportation such as a senior shuttle or bus stop nearby, and ‘lock and leave’ homes (baby boomers are adventurous and like to have the ability to easily leave for travel). Studies show this group also likes smaller quarters. They’re willing to get rid of extra stuff and live freely, yet comfortably which is why condos, active adult communities, and city apartments are highly appealing.

According to the Over – 50 Council of the National Association of Home Builders, as much as 6 percent of people between the ages of 55 and 64, move every year.

– Copyright © 2010 Realty Times. All Rights Reserved.

Continue reading...

Interest Rate Watch

U.S. averages as of April 30, 2010:

  • 30 yr. fixed: 5.06%
  • 15 yr. fixed: 4.39%
  • 1 yr. adj: 4.25%

– Copyright © 2010 Realty Times. All Rights Reserved.

Continue reading...

Interest Rate Watch

Selected Rates as of February 25, 2010:

  • 30 yr fixed: 5.05%
  • 15 yr. fixed: 4.40%
  • 1 yr. adj: 4.15%

– Copyright © 2010 Realty Times. All Rights Reserved.

Continue reading...

Interest Rate Watch

Selected Rates as of February 5, 2010:

  • 30 yr fixed: 5.01%
  • 15 yr. fixed: 4.40%
  • 1 yr. adj: 4.22%

– Copyright © 2010 Realty Times. All Rights Reserved.

Continue reading...