Finding a home that won’t lose value

Given the current state of the economy, for all of you home buyers out there, I’m guessing that, when you do find a home you’re going to purchase, that you want to find one that won’t lose value.  You’ll want to look for features that will appeal to a seller when you do go to sell, whether that’s in one year or 20.  Here’s a quick list of features in homes that won’t lose value in a recession.

1. Choose a single-family home.  Sure, you may be starting out and want something small, preferably a condo.  However, in a worse economy, condos and townhomes lose their value more quickly than a single-family home.  So ask your Realtor to help you find a smaller detached home.  I have sold many first-time buyers one- or two-bedroom single-family homes, which was just the right size for their needs.

2. Keep carrying costs low.  When you do go to buy, make sure you find a property that is well-maintained and one that doesn’t require a lot of work over time, especially if you don’t plan to stay long.  New buyers get scared with all the costs of a mortgage, taxes, insurance, and maintenance, so whatever you can do to keep costs low will help you in the long run.  Here’s another tip.  If you see a problem, such as water dripping from the roof, make sure to take care of it BEFORE it turns into a large hole, which will just cost you more money because you waited.

3. Know your market.  Certain markets will never lose much value because they are important to certain segments of the population.  For example, a home within walking distance of the Metra in the Chicago suburbs is a great feature for commuters heading into the city.  A home with a swimming pool is going to sell quicker than one without in Arizona.  

4. Keep your kitchen and bathroom up to date.  As I have mentioned in the past, if you’re going to update or remodel any room in your home, these are the two to focus on.  These are the biggest rooms that “sell” a house.  Try to include appliances if you can.  Many first-time buyers don’t have these at their disposal, and it’s another thing that will help keep their costs down.  If you must take yours with you, consider offering an appliance credit instead.

I hope these tips help both potential buyers and sellers.  And to all my readers, have a very Happy Thanksgiving!  Visit me online.

Home values not going up anytime soon

Unfortunately, the news I have isn’t good.  I mean, we all know the real estate market isn’t going to magically improve overnight.  But for those of you that thought the good news is right around the corner and that home values would start to steadily increase, I’m sorry to do this to you.

According to this USA Today article, “Already, more houses are for sale in America than people want to buy, and the roughly 1.6 million homes in the nation’s shadow inventory promise to drag down home prices for years, experts say. States like California, Florida, Illinois, Georgia, and Ohio have the largest shadow inventories, according to RealtyTrac, a firm that tracks foreclosures and delinquent properties nationwide.

“Sale prices are down across the state with none of the area being able to maintain more than a one month growth in sales prices, ” said Bob Niemi, director of the Ohio Mortgage Bankers Association.”

So this shadow inventory is going to keep home prices down for a while.  As I was flipping through TV channels yesterday morning, I caught wind of CNBC reporting the same news.  Banks had previously been taking extra long to process foreclosures because of problems they had with paperwork and their hope to keep as many homeowners in their homes as possible.  Because of that, it had held up a lot of new foreclosures from going on the market.  But that influx is what USA Today is dubbing “shadow inventory.”  And that’s going to keep prices down.

The market can’t handle all of the foreclosures and short sales on top of the current inventory.  It for sure doesn’t help sellers get the value they need/want out of the homes they’re trying to sell.  And even for buyers trying to score a great deal, it’s not clearing the inventory fast enough.  

So as I’ve stressed in the past, if you don’t need to sell, don’t.  It’s not worth it watching your home sit on the market just to try to buy something.  However, if you are looking to purchase an investment property or two, I cannot recommend a better time to buy!  I can be reached online.

Getting the best deal on a contractor

Chances are that in the time you live in your home you’ll want to get at least one home improvement project done where you’ll need to hire someone.  Whether it’s a new roof, new floors, new windows, paint, or a complete gut rehab, you’ll want to find a contractor at the best price to do the best work.  Here are some tips to save you money and get a great deal.

1. Get at least three estimates.  You really won’t have a great idea of how much your improvement costs until you speak with at least three people.  And by talking to more people, the better idea you’ll have of what goes into the project and how much it really does cost.  On that same note, don’t go with a bid that’s way below what everyone else is charging, especially if it’s someone new or an amateur.  You could end up with poor work that needs to be redone.  So make sure the contractor you choose is licensed and bonded and gets all the appropriate permits to do the job.

2. Ask friends and neighbors for recommendations.  They’ll know from personal experience who to hire and who to avoid like the plague.  Also, it’s common when you mention that you got their name from so and so that the contractor may be willing to work out a discount, especially if you pass their name along in the future for a job well done.

3. Negotiate.  Let’s say you hire the contractor that came in at the highest.  Tell him you got two other bids lower than his but you went with him because of his reputation.  Is he willing to match the lower bid?  Will he go down in price if you pay in cash?  Let’s say you went with the contractor that did have the lowest bid.  Did he know that you chose him out of 3 contractors because you liked his estimate the best?  Would he be willing to finish 2 days earlier than you were planning?  It never.hurts.to.ask.  This is not someone you plan to become best friends with.  It’s a business arrangement.

4. Make sure everything is in writing and know what it says.  True story: My relatives had hired someone to fix the roof and had a written contract.  Fast-forward one year later when they had a bad rainstorm and they now have a huge hole in their ceiling because the roof is leaking.  So they contact the roofer who specifically states in his contract that he is not responsible for interior damage.  Um, red flag?  Does he do this because of a previous problem?  My relative is an attorney and even missed this clause.  So make sure you thoroughly go over the contract and understand it before signing anything.  Now they have no recourse and have to pay for fixing their ceiling on their own.

Do you have any other great tips for getting a good deal?  I’d love to hear them.  Please leave me a comment or visit me online.

What to do with all these foreclosures

So inventory is high with all these foreclosures and, therefore, property values are down.  So what does the government want to do about it?  According to the Wall Street Journal, they have two interesting options to help drive home values up again.

The first scenario is to sell packages of foreclosed properties in batches of hundreds or thousands to investors who would in turn agree to rent them out.  At the end of June, Fannie Mae, Freddie Mac, and the Federal Housing Administration owned about a combined 250,000 homes.  There’s about 830,000 that are still in the foreclosure process that would eventually land in their laps.  

 The second option they’re looking at is to “let investors enter joint ventures with Fannie or Freddie to invest in a pool of converted rental homes. A national property-management business would handle day-to-day landlord responsibilities. Investors would pay for rehabbing and maintaining properties and would share revenue from monthly rental income and the ultimate sale of the property.”  So they basically figure they can rent out the homes in order to keep them from being listed currently and to earn some money back.

Since there’s a lot less buyers today qualifying for loans or even willing to purchase, it’s investors who are picking up some of the inventory.

Both scenarios are interesting propositions.  I worry about the second one since that basically would make the government the landlord.  And that’s just another controlling factor that they shouldn’t be a part of.  And then on top of all the foreclosed homes they’re so slow to deal with already, how are they going to handle late rent payments or problems in the property?  They mention that a national property manager would deal with it, but that’s a huge influx of properties they will need to take over.  So can they really handle it?  I appreciate what they’re trying to do, but I don’t know if this is the best solution.

I’m definitely interested in hearing more about the first scenario, selling foreclosures in bulk.  By offering a package deal, that would also keep a lot of foreclosures off the market. 

I’d love to hear your thoughts on these scenarios and if you have other suggestions for how the government can or should be involved.  Please leave me a comment or visit me online.

 

Help on the way for unemployed homeowners

With talks still ongoing this weekend about the debt ceiling and if lawmakers will reach an agreement, there is good news to come from Washington, at least for those unemployed homeowners.

The Obama administration has announced that they will extend unemployed homeowners a few months’ forbearance on paying their mortgages to 12 months.  This is another action by Washington to put a halt to foreclosures and keep people in their homes.  Obama has been quoted as saying the housing market has been a terrible issue to solve and that “The continuing decline in the housing market is something that hasn’t bottomed out as quickly as we expected, and so that’s continued to be a big drag on the economy.”

He also mentioned that they will be communicating with banks in the hopes that they will work more efficiently to help modify loans for those in need.  And in order to qualify for the 12 months’ relief, homeowners must be in the process of looking for a job.  And for those that can afford to pay a portion of the loan, they must do that, as well.  You wouldn’t be mortgage-free the entire time.

Comments to this USA article suggest that programs like I’ve described just drag this crisis out longer and makes it tougher for those not struggling to make money on their home.   What are your thoughts on this?  By offering relief to some, is it negatively impacting others?  Will this keep the housing market at an all-time low for too long?  I’d love to hear your thoughts.  Please leave me a comment or visit me online.

In great reversal, Bank of America foreclosed upon

Now this is irony.  I read this article, and I just had to share it.  A homeowner has foreclosed on Bank of America.  Yes, that’s right.  They foreclosed on the bank, not the other way around.

So here’s what happened.  A couple in Naples, Florida bought a home with cash (no mortgage) in 2009.  In 2010, Bank of America began foreclosure proceedings against them.  This was Bank of America’s mistake, of course.  This couple, the Nyerges, hired an attorney to help defend them against this foreclosure, and then Bank of America realized their mistake and dropped it.

Well, it’s great that it’s been dropped, but the Nyerges are out $2,534 in legal fees.  So they’ve requested that Bank of America cover the cost multiple times over the phone and in writing.  They finally get a judge to order that Bank of America pay the fees.  When they still haven’t gotten their check after five months of more calls and letters, they obtained an order of foreclosure against the bank.

Their attorney “then reported to a local branch of the bank with sheriff’s deputies, who he instructed to remove cash from the tellers’ drawers, furniture, computers and other property.  Approximately one hour later, the Naples News reports, the bank manager produced a check for $5,772.88 to satisfy  fees and additional costs.”

 ”I talked to branch managers, I called anyone who would listen to me,” the couple told the Naples News. “And I wrote a certified letter to the president (of the bank). No response, nothing.”

Can you imagine what the bankers thought when they showed up to work that morning?  I think this is great.  The banks are so quick to foreclose on properties, yet when it comes to them paying a fee (a very small fee comparatively) for something they didn’t pay, it ends up that they can’t do it.   So I can only imagine how many foreclosures that are taking place behind the scenes are incorrect because of paperwork errors.  

Reading this article just puts a smile on my face.  I’m glad that it turned out for the best for everybody in this situation, but it’s fun to see the bank get a taste of its own medicine.

What do you think?  I’d love to hear your comments.  Please be sure to visit me online.

 

Foreclosures down, backlogs up

Well, I’ve got good news and bad news.  And the bad news can even be interpreted as good news for some.  Good news: foreclosure rates across the country are at a 3-year low, according to MSN Real Estate.  Bad news: Courts are so backlogged by the foreclosure filings that it’s taking a year or more for foreclosures to be processed on some homes.  And that can be good news for those underwater on their mortgages, as they can live in their home for even 2 years in some states without being evicted and without a mortgage payment.

RealtyTrac Senior Vice President Rick Sharga says that “This is really all part of the robo-signing paperwork issue.  Almost none of this is related to a decline in distressed properties. ”  It’s just that Courts can’t keep up with all the paperwork.  And Sharga is unsure whether we’ve reached our peak of foreclosures or more filings will occur once the banks and Courts start catching up.  Even new hirings aren’t helping the banks move the process along any quicker.  And that’s also bad news for buyers interested in foreclosure or bank-owned properties.  The waiting process can still take a while for someone to review all the paperwork.

I just mentioned how some homeowners can live in homes for 2 years prior to being evicted.  In some states, like New York and New Jersey, it’s taking the bank an average of 800 days to finalize a foreclosure once the process has started.  And now the government is going to charge lenders for handling foreclosures improperly.  They’ve also passed regulation requiring 14 mortgage servicers to hire more staff and have a single point of contact for a homeowner dealing with a foreclosure or loan modification.

Nevada leads the country with the highest foreclosure rate.  1 in every 35 homes has received a foreclosure filing.  Arizona and California round out the top 3.  And, unfortunately, Illinois also is included in the top 10, along with Colorado, Idaho, Utah, Georgia, Michigan, and Florida.

And analysts say it can take years for all these foreclosed homes to clear the market brining home values up again.  But it could take even longer because of the backlogs in the courts.  Fannie Mae and Freddie Mac even said they’re going to slowly trickle foreclosures into the market instead of releasing them all at once.  While this is beneficial to home values now, it just means it will take even longer for the housing market to stabilize.

What do you think?  Should banks be allowed to control when foreclosures hit the housing market?  Please leave me a comment or visit me online.