Easy now...they aren't all like this!

Some of the best buys though, are much like the picture, beat up, rough to work on and in disrepair.  On the other hand, most are very good buys!  If you lack construction skills, no worries, there’s always the FHA 203k finance program; you can hire a certified contractor to do the work and add the cost into your loan…sweet deal, sweet as it can get!.

While the market threatens to continue on a down-slide and rates are the lowest ever, many would be buyers are still fighting lenders about their qualifications.  If that applies to you…know this; you have to have a practiced, skillful advocate to get you approved.  This is something we do all the time.  When you land here, you benefit from our years of experience and connections with outstanding Loan Officers.  We’ll get you to the sources you need.

Buyers are getting absolutely remarkable deals and terrific rates.  Buy now if you can!  don’t wait, thinking you save if prices continue to drop.  Prices will continue to drop but distress homes are disappearing fast too.

It was surprising to see that Lowes, posted a 44% earnings drop in Q3.  With all the foreclosure homes being repaired, I’d expect to see the supply chains showing huge sales and profit increases.

Fannie also posted a Q3 loss of 51.1B.  Wow!  It plans to get 7.5B from the govt ’cause it needs to pay the govt dividends for money it borrowed before.  It owes 2.5B for dividends.  Huh?  Borrow another 7.5B so it can pay 2.5B out?

Then…there’s the FHA, the agency that insures loans for the banks.  This agency pays a % of loans that default, back to the bank.  Nice…’cause if they didn’t do this, the banks would make even fewer loans.  But…who’s watchin the cash register?  Do you know about the FHA’s “Infinite Budget Authority?”  No?  You should…you’re involved, if you’re an American tax payer.  It’s really cool, here’s how it works: If the FHA messes up, you know, runs out of dough, they can draw on funds from the Treasury Department.  So who, you ask, monitors this activity?  What arm of the govt has to approve these draws?  Well…no one…they can just take the money, no congressional appropriation needed.  Wow! Wow!  Anyone know where a guy can get a small business loan like this?  No worries though.  Financial pundits expect the FHA will lose as much as another 50B in the coming years.  Nice to have this drawing account in place, ‘eh?

At least there’s an uptick in commercial building, and uptick to keep pace with the demand for more rental housing, as people continue to spill out of their homes via foreclosure.  Think it can’t get worse?  What do you think?  Drop us a line on all this, we’d love to hear from you!

Having problems with your Realtor?  Have you thought about firing the inept, lazy… shows you too many homes that don’t fit your parameters, only cares about his/her commission, hard to reach person?  Why not?

See, here’s the problem with too many people on a home search, they think they’re stuck with the Realtor they started with, when in fact, they may be not.  If you hired someone to fix your roof and they didn’t perform to your standards, you’d can them, right?  Take heart, in most cases, you can do this with an under performing Realtor as well, but you have to fight for your rights!

Think about it this way…the Realtor will likely get about 3% for getting your deal closed.  Here’s what the Realtor should do: help you find the home you want, drive you around to the homes, conduct computer searches, write the deal, set up a title company and attend the close with you.  All together, on the average, the agent will put in about 20-25 man hours, including all the above.

Let’s look at a typical deal, a home purchase for $350k.  The commission at 3% = $10,500.  That’s $10,500 divided by 20 man hours = $525 per hour! But, did the Realtor perform to your standards?  Did the agent send you hundreds of homes to search through, many of which did not even come close to what you wanted? If so, the agent was wasting your time!  Did you have to cater to the agent’s time schedule…or did the agent accommodate you?  Were you pressed to buy a home you looked at, but really didn’t know if it was what you wanted? Were your calls to the agent answered in a timely manner?  Did the agent offer you Lender resources, so you could shop the mtge rate, for a best deal? Did the agent run a comparable study, regarding the price you were going to pay, to protect your interest…you certainly didn’t want to pay too much?  Of course, the more you pay, the more the gent makes…right?

I’m working with two buyer’s right now.  We’ve seen some homes each may have purchased, had I not encouraged them to, “make sure you get this right, you don’t want to spend a quarter of a million dollars unless it’s the house you really want!”

If the agent you started with isn’t getting it done for you, or, expects you to run around to “open house’s,” and do your own searching, and have you call them to get you in to a house you found, so the agent can get the $525 per hour he/she is not entitled to…CAN THEM!

First, tell the Realtor you don’t care to work with them any more.  If you didn’t sign an “exclusive buyer’s agreement,” that’s all you have to do…tell them to take a hike.  If you did sign an agreement…and…the agent won’t release you, contact the Broker the agent works for and insist that your agreement be canceled.  The Broker may want you to come in and “work it out,” but tell them you have no desire to spend anymore of your precious time on this, you just want to end the arrangement.  Get it in writing!

In most states, the Broker can hold you to the contract, making you stay with them to the end of the agreement.  In that case, if it were me, I’d let them know, I’ll tell everyone I know about the mistreatment I experienced with the agent and the Broker.  That might influence them to release you.  The language in the agreement is critical…do you have any way to get out of the agreement.  If not, call an attorney to see what they would charge to write a letter on your behalf.  It may be worth a couple hundred bucks to get out of the deal?  Raise all the hell you can, don’t lay down for being mistreated!

Warning: if you do buy a home the agent showed you, you will probably be required to pay that agent the commission due them. If you do get released and start working with another agent, if you go back to a home the first agent showed you, and you do decide to buy it, the first agent will have a cause to claim “procurement,” and rightly so.  In that case, the agent you are presently working with would not get paid.  So be careful about this kind of issue.  If the first agent showed you a house you are still considering, tell the new agent you need something in writing that excludes that house from your arrangement with them.

An agent is working for you, not the other way around. Don’t sign an “Exclusive Agreement.”  If the agent is worth his/her salt, they should be confident you’ll stay with them, because they will perform to your standards.  Neither my partner nor myself, require our buyer’s to sign any agreement, we work on a handshake basis and tell our buyer’s; if at any point in the search and purchase process, they aren’t happy with us, they can fire us at will.  That’s only fair, don’t you agree? This applies to our home seller’s as well.

The deals out there today are the best you’ll ever see.  If you can buy, do it soon.  There are so many homes still in the bank’s hands, but waiting to see what comes on the market, could be a huge mistake.  If you find what you like, buy now…rates are great and you’ll have a very manageable mortgage payment.

Ed

Help me…I’m one of 4.5 million that got a letter saying ‘I may be qualified for a mortgage adjustment, for my underwater home.  They say; the bank may have taken advantage of me?

So what’s the deal?  The govt. has told the banks they need to send a letter to 4.5 million owners who may have been financially harmed in the “Robo” signing process.  They may be entitled to compensation as well.  Nice, ‘eh? The banks have begun sending the letters out.  NOW we’ll see some action!  (Not!)

The WSJ/11/2/2011, reported that the reviews cover 14 of the nation’s largest banks and are being overseen by the Office of the Comptroller of the Currency and the Federal Reserve.  Lenders have hired hundreds of employees to conduct the labor-intensive reviews, so says the journal. Sounds good so far…or does it?

This will, no doubt, be much like the original approach the banks had to take, as they didn’t have enough help to handle the enormity of the problem…hire hundreds to thousands of new employees, employees not trained to do what they had to do = big time slow down in the process + lots of errors and corrections = more lost time, etc.!

To qualify, the home owner has to have suffered “financial harm.” And…who’s to prove harm; the home owner, of course.  And…how many documents will have to cross hands?  And…how long will this take?  Another very expensive attempt by the Govt. to solve the problem, and hey…they’re trying, but the plan is not carefully thought out and organized.  Where will they get the new employees who will understand all this and who’ll be qualified to decide who suffered “financial harm?”

What it will do and do well, is slow down the entry of more foreclosure homes, harming the traditional sellers, as prices will continue to drop.  Oh boy?!

(Check out Martin Hutchinson’s, take on this one.  Google him up and read what he has to say.)

By  the way, this only covers people who bought before 3/’09.

Last month, new home bldg was down for the 4th straight month. And, 16 Trillion of home equity has been lost since ‘06.  With the unemployment problem, and many people living in fear that they’ll be the next to get their walking papers, where are the buyers?

If you can buy Real Estate now, you’d better get busy…find what you’re looking for and buy it.  Do you know, some sources are predicting the high side chance of a housing shortage, in the next 10 years?  If you buy now, and that does happen, you will have made a smart choice…your equity will really climb!

Another reason to buy; % rates have to go up. Even if they go down, say a half point, from 3.99% to 3.49%, that will only reduce a mtge payment by about 30 cents per thousand of mtge.  So, a 200k mtge could be $60 per month less, if you did wait and that did happen.  But…what if the rates go back to the 6% level by the time you buy?  You’d pay $1.23 more per thousand = $ 246 more per month, than at the 3.99% rate.  BUY NOW!

The other side of the coin, selling a home…if I wanted to sell, I’d get it on the market pronto, before a rate change is the next thing that slows sales down. If you don’t sell asap, you may have to wait it out for another five to ten years to get anywhere near the price you want.

An article I read said, Citi bank sent out 346 million credit card offers in the 3rd Q, this year.  Can you believe it?  The banks have all the answers?  Very weird, when over 55 banks were shut down by regulators this year…so far!

What’s your opinion on all this, how’s the economy working for you or your business these days…and…do you have any Real Estate stories you care to share with us?  Good or bad, we’d love to hear what you have to say.  Hit the “comments” below and let’s hear from you!

Ed

Investors are waiting in line for the opportunity to buy REO packages they can fix up to sell or rent out…but…Fannie Mae says there are no plans to offer them to these investors.  Put in the hands of investors, to sell or rent out, leads to more jobs.  Isn’t that a good idea?  Homes priced where first time buyers can get in a home, not a worthwhile idea?

And BOFA, with Buffet’s $5 billion infusion, after the enormous bank bail out…what are they up to?  Oh, payback for all the help?  Cutting 30,000 jobs…that’s the pay back?  You OK with that?

And Barney and the boys want to make the banks more accountable, offering them more ‘Regs’ that slow the whole process down and increase the cost to do business, screwing up the economy more yet…what the hay?  Barney wanted to “roll the dice a little longer,” back in 2003.  Apparently, the Fed and other powers did too?  A 30 page paper written by analyst, Josh Rosner, after his research of nearly a decade and after he read the study by Graham Fisher & Co., pointed out that the reckless underwriting at that time, would lead to a catastrophe of enormous proportion in the years ahead.  He wrote that this would lead to run-away prices in the housing market that would then lead to negative equity, most folks would not be able to withstand.  Did Barney and his cohorts take heed?  How about Fannie Mae, did anyone there take this seriously?  Well, at least one person read it.  But, then, she made an angry call to Graham Fisher & Company, harping that they were messed up and that they should have called her at Fannie (she is Jayne Shontell, and was head of investor relations at Fannie), before it got around.  She’s probably since then, made an apology call to them and commended them on their insight?  Yeah, right!

Care to know more? Read pages 219 - 237 of “Reckless Endangerment,” in fact, read the whole book, you’ll be glad you did!  Get the names of many of the other “Playa’s,” Playa’s that played with our money, not theirs, Playa;s that made big time money in the game, and it was a game!

I just read in the WSJ, that 500,000 foreclosures are sitting on the bank’s books now…and…it’s estimated that 4 to 5 million home owners are now more than 90 days delinquent.  What’s your best guess…how many of these home owners will pull it out, survive this financial dilemma? My best guess is 5% to 10%.  Ask any bank auditor what they think.

Have they learned from past mistakes?  FHA will now go as high as 52% for the debt to income ratio, used to underwrite a mortgage, provided, the applicant has good credit. You OK with that?  Let’s look at a scenario.  Take a couple with two kids, making a combined income of $75k/yr.  52% of that = $39k/yr.  But that’s on gross wages.  If they pay just 10% for Fed and State income taxes, they have $5,625/mo, less $2,925/mo for their mortgage payment and all other debt = $2,700 left over for all other living costs.  If their health and life Ins. is no more than $1k/mo, utilities no more than $200/mo, food for four no more than $800/mo (USDA moderate budget), $125/mo for auto Ins., they still have $575/mo left for; auto and home upkeep, clothes, school supplies and or tuition, entertainment, savings, vacation, emergencies…get the picture?

So, the game is still on…what were they thinking then, what are they thinking now?

There is some good news though; if you can buy real estate now, there is a huge inventory of “Super Deals” out there today, and will be for years to come.

What do you think?  We’d love to hear from you.

Ed

Boy ‘O Boy ‘O Boy…They think you should pay through the nose….and…for what?

Care to read about a sad, sad story, a story about greed and misery for both the sellers and buyers?  Take note; don’t let something like this happen to you!

When a home is sold, especially in this deranged and busted up market these days, the buyers often request that the seller pay a % of the buyers closing costs…generally 3%.

For example, say the home is sold for $300k and the buyers want the seller to pay 3% ($9,000.00) for their closing costs.  If the sellers go along, that means the sellers are actually getting only $291k for the home.

Now…the selling agent is getting the predetermined commission of 2.7% of the selling price , and the listing agent is getting 3.3%, if the listing agent is charging the norm of 6%.  (Obviously not a MetroHomesMarket.com listing…our top end is just 5%.)

So, you tell me, should the listing agent charge his sellers 3.3% of the sale price…or…3.3% of the gross net to his sellers, the $291k they’re actually getting.  Should the listing agent charge a commission for money the sellers don’t get?  Should the selling agent expect to get paid a commission for the $9k the sellers aren’t getting?  what’s reasonable, what’s fair, your call here.

Whadja decide?  

Here’s what we think; commissions should be based on the gross net to the seller, the $291k. But, I can tell you, 99.9% of the Realtors out there expect to be paid a commission for the money the seller doesn’t get.  When we list and sell a home, our fee is based on gross net to the sellers.  We can’t imagine the audacity of Realtors taking their clients down, for money their sellers don’t get.  We can’t imagine a selling agent expecting commission on money the sellers gave up.  When representing a buyer, we don’t expect the seller to pay us commission on money they’re giving up.

Know what?  They pull this greedy act all the time. 

When you list with a Broker, other than MetroHomesMarket.com, tell them that when you sell, you will not pay commission on any “seller paid concessions.”  Not to the listing nor to the selling Broker.  Get it in writing!

I had  a deal recently, where the sellers’ gave all they had or could give in the transaction, and the buyers’ did the same.  But the selling agent insisted they get paid on the $10,050 that the sellers’ contributed for the buyers’ closing costs = 2.7% x $10,050 (the sellers were contributing for the buyers’ closing costs) = $271.35  Wow!  Wow!  How did they earn this?

Let us know what you think…drop us a line below.

One more thing…your call again: When the market was really swinging and prices were inflated, many agents still charged 7% to list a home, even though they were knockin down big commissions for “Bubble” prices.  So, here we are today, with deflated prices, and guess what…many of them are now charging 7% because, as they say, “deflated prices have reduced our commissions, so we have to charge more.”  Does that work for you?  We’d like to know, shoot us your take on all this stuff.

We’re here to help both buyers and sellers win.  Our Fee-For-Service approach will help you save thousands, whether you’re buying or selling.  Give us a call, can’t hurt to talk?

Ed Klein (651-770-5000)