Around St. Charles County

• Saturday May 2, Garden Tour and Plant Sale: 9 a.m. to noon, Saint Charles County Master Gardeners, University of Missouri Extension Center, 260 Brown Road, Saint Peters, Free
• Friday, May 8, American Cancer Society Relay For Life St. Charles: 6 p.m.-6 a.m., St. Charles West High School Saturday, May 16 and Sunday, May 17, 2009
• Saturday, May 9, St. Charles County Spring Garage Sale: Family Area parking lot, 8:00 am - noon, $5 per car
• Saturday, May 9, Lewis and Clark Heritage Days, Frontier Park, 9:30 a.m.-5 p.m. Saturday/9 a.m.-4 p.m. Sunday, Lewis and Clark Louisiana Purchase encampment reenactment, Crafts, food, museum tours, period music, children’s games, Fife and Drum Corps parade, Free
• Saturday, May 16, Charity Auction begins at 9 am, Harvest Ridge Elementary School Parking lot - 15 year anniversary Garage Sale of The Woodlands, Whispering Ridge, Heatherbrook, and Nantucket Place neighborhoods
  
• Saturday, May 16, Great River Rendezvous, 10 a.m.-3 p.m., Canoe and kayak race on the Mississippi River, Begins in Grafton and ends at Riverlands Migratory Bird Sanctuary, West Alton, Small registration fee donated to the Treehouse Wildlife Center of Madison County
• Saturday, May 16-Sunday, June 7, Greater St. Louis Renaissance Faire: Saturdays, Sundays and Memorial Day 10:00 am - 6:00 pm, Rotary Park, 2577 W. Meyer Rd., Foristell, Adults-$12; seniors and students, $9; children $6
• Wednesday, May 20, 2009 thru September 16, Music on Main: 5:30 p.m.-7:30 p.m., Food, drink and live music, Free
• Saturday, May 30, Helmet Safety Check for Kids: 10 a.m.-1 p.m., Children’s Hospital professionals, St. Charles City-County Library District, Middendorf-Kredell Library, Free
  

Going Green Clinches The Sale

Green is the hot color right now and should be your color too when you sell or buy a home. Becoming attuned to the current eco-movement will make a huge difference. As a seller, you will boost the value of your home with eco-friendly improvements and give your real estate agent more features to highlight that will set your home apart from the rest.

Buyers are much smarter about their home purchases and want lasting value for the money; an energy efficient system that saves on utilities; and a clean, healthy place to live. Given the current real market, a buyer has the upper advantage and green may very well clinch the sale.

Here are some smart eco-improvements that will attract buyers and sell your house faster.

Breathe Easy
Applying a fresh coat of paint is a standard way of freshening up a home, but you really don’t want that “fresh paint” smell. To make it more comfortable and physically healthy for potential buyers, use paint low in volatile organic compounds (VOCs). This paint is readily available and comes in a wide array of colors.

The Hogs In The Kitchen
Two rooms attract the most attention from buyers–the kitchen and the bathroom. Here’s where you can really shine and show buyers you care about their utility bills. Upgrade old appliances with new Energy Star certified models. While this may seem expensive on the front end, the replacements will more than pay for themselves on the back end and increase traffic.

Don’t Take It For Granited
While we’re in the kitchen, take a look at those countertops. But here’s the deal; don’t automatically assume that granite is the way to go for replacement. Granite countertops may still impress some buyers, but true trendsetters will be on the lookout for kitchens that incorporate some of the hottest new materials. So, what about paper? That’s right, paper. Compressed post-recycled paper sealed with resin makes an extremely durable countertop. It’s less expensive than granite–which is not a renewable resource–and has a warm, sleek feel. Maintenance is low too. A yearly application of mineral oil will keep the countertop looking fresh and new.

Drips Are Out
Leaky faucets, showerheads and old toilets are not selling points. Now’s the time to install low-flow faucet aerators and showerheads. Did you know that showers account for 22% of the individual water use in North America? That racks up really big water and utility bills and rates will continue to rise. Take a look at that toilet too. It’s the biggest water user in the house. By installing a low water usage unit, you can save around 2,000 gallons of water a year.

It Makes Scents
Potential home buyers get a feel for a property as soon as they arrive. To give your visitors a preview of what’s inside, arrange fresh plants new the front door. Especially effective are scented geraniums and herbs that offer an aromatic experience. To spruce up your landscaping, support your state and choose native Missouri plants that grow well in local soil and weather conditions. Inside, remove any chemical room fresheners and display herbs, especially in the kitchen.

Flaunt It
When you go green to sell your home, make sure that potential buyers know about your efforts. Discrete signs here and there, noting low VOC paint, Energy Star appliances, low water usage products and native plants show that you care about your environment and that of the new owner.

For sellers who use eco-friendly techniques, your property has an edge on the competition. Take advantage of these smart tips to be green and earn more green!

DAVE RAMSEY'S TOWN HALL MEETING A MESSAGE OF HOPE!

I just finished listening to Dave Ramsey, as did one million other listeners to a message that he entitled " A Message of Hope". It was wonderful to hear a voice of reason in the these days of media hysteria that do little more that create FEAR in most Americans. Ramsey reminded listeners that FEAR is False Evidence Appearing Real and that God didn't give us a spirit of fear. He went on to compare the past two recessions with the present economy and noted that unemployment and interest rates were much higher then than now. David reassured the audience that ,yes, foreclosures are up but that 60% of the foreclosures are in 5 states and that real estate is local. These are the exact words that our office and the local Realtor Association have been tirelessly touting all year! Ramsey reminded listeners that interest rates are at record lows and home prices have never been lower and that there has never been a better time to buy. THANK YOU DAVE RAMSEY!

SCHNEIDER Real Estate Co-Owner and Public Relations chairman for the St Charles Association of Realtors, Merle Schneider, has tirelessly been trying to get the message out to anyone who will listen in a power point presentation "Market Crashing or Window of Opportunity". I'm thrilled that a million plus people tuned in to this Town Hall Meeting and I personally thank Dave Ramsey for believing in America, Capitalism and Main Stream America! Ramsey believes that it will be Real Estate that will drive the economy back up and encourages everyone not to panic and quit listening to all the negative reporting of doom and gloom.

With Affordability Up, Home Buyers Return to the Market

RISMEDIA, April 11, 2009-Thanks to record low mortgage rates and declining home prices, 55 million families - or half of all U.S. households - can afford today’s $200,000 median-priced new home, according to figures released by the National Association of Home Builders (NAHB). “That’s an increase of 17 million households from conditions just two years ago and the best housing affordability number we have seen in years,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “We are now seeing the first signs that buyers are returning to the marketplace.”

Based on data from the U.S. Census Bureau comparing home prices, mortgage rates and minimum income needed to purchase a median-priced home in February 2007 and February 2009, a typical family today can purchase a house with $20,000 less in household income and save nearly $500 per month on their principal, interest, taxes and insurance. The number of households that can afford to purchase a home today is 55.4 million, compared with 38.4 million two years ago, according to figures compiled by NAHB.

“With affordability up dramatically, reports from our builders in the field indicate that foot traffic in new homes is on the rise and consumer interest is increasing with each passing day. These are encouraging signs that the housing market may be finally reaching a bottom,” said Robson.

Entering the crucial spring home buying season, there are other signs that buyers are starting to return to the market.

Single-family permits were up 11% in February 2009, new and existing home sales also posted gains and the huge inventory backlog is being slowly whittled down. In a survey for Century 21 Real Estate last month among prospective first-time home buyers who indicated they were likely to purchase a home in the next two years, a majority - 78% - said that now is a good time to buy a home. Of those responding to the online poll, 68% said that now is a better time to buy than six months ago.

Another sign that consumers are considering jumping back into the housing market is the growing interest in the $8,000 first-time home buyer tax credit included in the recently enacted economic stimulus package. During February and March 2009, 1.5 million visitors logged on to NAHB’s consumer website, www.federalhousingtaxcredit.com, to learn more about the tax credit. Further, a new survey commissioned by Move, Inc. found that nearly 20% of those who plan to purchase a home this year are doing so to take advantage of the tax credit, which expires at the end of November.

“With home values in many markets at the lowest level since 2003, an $8,000 tax credit available to first-time home buyers, fixed-rate mortgages under 5%, and an outstanding selection of homes to choose from, buyers are starting to recognize that this has the makings for a one-time opportunity to break into the market,” said Robson.

Housing is a critical component of the U.S. economy, accounting for about 15 cents of every dollar spent in this country, so any upturn in the housing market should be viewed as good news for the overall economy, said Robson.

Construction of an additional 500,000 single-family homes - the difference between today’s anemic construction rate and one that would move closer to meeting the underlying demand for housing - would generate 734,000 jobs and $35 billion in wages in the construction industry and another 790,000 jobs and $37.7 billion wages in manufacturing, trade, and service sector jobs, he noted.

Additionally, another half-million housing starts would bolster the tax base for government, generating $45 billion in federal, state and local tax revenues. And the benefits go well beyond the completion of each home. Within the first year after buying a home, those half million households will spend about $2.5 billion more on appliances, furnishings and property alterations.

“Clearly, housing will be central to any economic recovery we experience in the months ahead,” said Robson.

Contact me for St. Charles Real Estate information.

(Source RSIMedia April 11, 2009)

6 Landscaping Tricks That Wow Buyers

In today's market, sellers have to work harder to persuade buyers that their property is worth the bite.

Landscape designer Michael Glassman has cooked up a recipe for guaranteed curb appeal.

1. Add splashes of color. With every changing season, a landscape should provide a new display of colors, textures, and fragrances. "It’s best to use one or two and repeat them," Glassman says. Example: white iceberg roses that bloom in spring, summer, and fall as a backdrop; in front, a contrasting punch of purple salvia or lavender that will flower at the same time; and as an accent, a crape myrtle tree that provides changing leaf colors in fall and interesting branches come winter.

2. Size trees and shrubs to scale. These should be planted in the right scale for the house so that they don’t block windows, doors, and other architectural features on the home’s facade. A large two-story house can handle a redwood, Chinese pistache, sycamore, or scarlet oak, but a one-story cottage is better paired with a flowering cherry, crabapple, or eastern redbud. Too many trees cast too much shadow and cause potential buyers to worry about maintenance and costs.

3. Maintain a perfect lawn. A velvety green lawn demonstrates tender loving care, so be sure sellers’ homes don’t have brown spots. Some rocks, pebbles, boulders, drought-tolerant plants, and ornamental grasses will generate more kudos, especially in drought areas.

4. Light up the outside. Good illumination allows buyers to see a home at night and adds drama. Sellers should use low-voltage lamps to highlight branches of specimen trees, a front door, walk, and corners of the house. But less is better. The yard shouldn’t resemble an airport runway.

5. Let them hear the water. The sound of water appeals to buyers, and you shouldn’t just reserve this for your backyard. A small fountain accented with rocks provides a pleasant gurgling sound, blocks street noise, and is affordable.

6. Use decorative architectural elements. A new mailbox, planted window boxes, and a low fence wrapped in potato vines add cachet, particularly during winter months when fewer plants blossom. Colors should complement the landscape and home. Just don’t overdo it: Too much can seem like kitschy lawn ornaments.

Source: Michael Glassman, landscape designer, Michael Glassman and Associates, Sacramento, Calif., www.michaelglassman.com

Survey: Households Say Now Good Time to Buy

More than three-quarters (78 percent) of potential first-time home buyers say that now is a good time to buy a home, despite widespread concern about the economy.

Out of the 1,000 prospective U.S. first-time home buyers surveyed in early March for the CENTURY 21 First-Time Home Buyer Survey, 68 percent think now is a better time to buy than six months ago.

Prices are the driving motivation for potential first-time home buyers with more than eight of ten first-time home buyers (85 percent) saying they consider current home prices affordable and 73 percent citing that taking advantage of current prices is a major factor in their decision to buy.

Interestingly, potential first-time buyers are still split between “being willing to consider an offer now” (42 percent) and “waiting for prices to go down before they seriously consider making a purchase” (48 percent).

“Current pricing, rates and incentives, such as the First Time Homebuyer Tax Credit, provide tremendous opportunities for first-time home buyers to get into the market,” said Tom Kunz, Century 21 Real Estate president and CEO. “Our research shows that while consumers still have concerns about the future of the economy, many are actively considering their options as we move into the spring selling season.”

Among the survey’s other key findings:

• Bargains in the marketplace are providing additional options for buyers to consider. 56 percent of potential first-time home buyers are considering purchasing a foreclosed or short sale home, and 63 percent are open to purchasing either a “fixer-upper” or “as-is” home.

• When asked to rate the features that they look for when choosing a home, price is the primary consideration with 87 percent saying this feature is “very important,” followed closely by neighborhood safety (80 percent) and the condition of the home (71 percent).

• Having enough money for a down payment is a top concern of potential first-time home buyers as nearly half (46 percent) said they are “very worried” about the issue.

• Most respondents (86 percent) are in the market for single family homes.

Source: Century 21

Foreclosures VS Short Sales

Elizabeth Kayser, Esq.
Kayser & Associates, LLC
Short Sale Negotiators
St. Louis, Missouri
(314) 402-1788
attykayser@sbcglobal.net

Attorney at Law

OVER HALF OF FORECLOSURES SHOULD BE
SHORT SALES USING REALTORS, NOT FORECLOSURES
Short sales produce financial and nonfinancial rewards for all key players including the economy:
 Protect homeowners’ credit
 Keep properties occupied v. vacant properties (blight)
 Produce a happy buyer
 Minimize losses to lenders
 Allow Lenders to avoid having take back more distressed properties which results in the deepening national financial crisis.
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What is a “SHORT SALE?” Millions of homeowners are behind on their mortgage and can no longer make their mortgage payment due to either job losses, divorce, bad loans they should have never been placed in, an ARM that’s resetting higher, etc. Up to recently the only generally accepted option was foreclosure. That is usually not the ideal solution even if it does erase the mortgage lien since, 1) it does not preclude the bank from seeking a deficiency judgment against the borrowers (a personal judgment that is collectible after the conclusion of the foreclosure) and 2) a foreclosure devastates the homeowners credit. . . not good for realtors either as they are effectively removed from your client base.
Solution: Short Sale. Get the lender to accept an amount below the mortgage payoff and waive the deficiency against the homeowner. In most cases, all closing costs are built into the deal where the lender pays the closing costs. On occasion the Seller will need to bring cash to the closing table. Everything is case by case basis. Lenders generally demand fair market value for the property – which in a short sale is significantly below the mortgage balance.
Credit implications
The number one reason a distressed homeowner should proceed with a short sale is to protect their ability to obtain financing in the future. Most short sales result in a “settlement” status on their credit report as opposed to “foreclosure”. Fannie Mae and Freddie Mac guidelines are much more favorable to borrowers with short sale on their credit report, typically allowing a borrower to obtain financing for a new home within a couple of years. In sharp contrast, a foreclosure remains on a credit report for seven years, making it very difficult to finance another house, a car, open a new business, or even qualify for credit cards. Any loans received will most likely bear very high interest rates.
A Short Sale offers a fresh start, eliminating debt, while minimizing damage to credit and avoiding eviction proceedings.
What services are provided as part of the Short Sale Fee?
A crucial part of the SHORT SALE process is negotiating the terms of the short sale. In order to provide the best possible result, we gather the relevant information from the seller, prepare a hardship package to submit to the bank, perform a preliminary title search on the property to determine what liens, mortgages and taxes are due on the property if one has not already been done, and negotiate with the bank in an attempt to have them accept a lower payoff on the mortgage than is currently due…potentially avoiding the credit impact and economic ramifications of a foreclosure or bankruptcy. Most importantly, regular updates and status reports are provided to realtors and homeowners as to the short sale process. Communication is everything and will never be compromised. We will be a team in the short sale process requiring a continuous flow of communication.
• Prequalifying the homeowner
• Assemble excellent lender packages
• Directly and immediately respond to negotiators' calls and emails
• Immediately provide well-written market narratives and critical analyses proving price
• Ensure that appraisers and bank BPO agents understand the subject property's challenges
• Immediately provide additional documentation required by the lender
• Keep the parties well-informed and in the deal
• Document all tasks in detail for transaction-saving reference
• Provide creative solutions to negotiators' demands such as promissory notes and cash contributions
• Use 12 years of negotiations skills as an attorney and mediator to ensure success
Why allow my firm for your short sale negotiations?
There are many articles out there that say it is extremely important to get an attorney to handle your negotiations. The lenders have their attorneys, you should have yours. Short sales involve a myriad of legal issues, timelines, and landmines that can kill the deal, and result in devastating consequences for the buyer, seller, and realtor. The process of obtaining approval for a SHORT SALE is lengthy…taking as much as 8 to 12 weeks. The first step is to prequalify your client/seller. Lenders in most cases pay the negotiators as part of the closing costs on the HUD. The realtor still receives their commission but avoids the burden and hassles of dealing with negotiating a short sale.
Convincing the Lender
The bank will have to be convinced that the seller deserves to be approved for a short sale. They will need to disclose to the mortgage lender financial hardships, including layoffs, loss of jobs, divorce, medical issues. Some or all of the following would be required: hardship letter signed by the homeowners, 2 yrs tax returns, recent pay stubs, bank statements, authorization for the negotiator to discuss the mortgage with the lender. Lenders also request listing history, recent sold properties, repair estimates and photos, second mortgage payoffs if any, and other lien information. Lenders will furnish their requirements as to sellers’ assets, liabilities, income, and obligations. Our hardship package aims to fit within each Lender’s parameters. Each lender has different parameters, a different short sale policy. The contract must not be contingent upon the sale or closing of another property, also the seller cannot do owner-financing or carry-backs. The Lender often times verifies with the buyers lender that they are pre approved with no contingencies. Also, properties with multiple mortgages, 2nd liens are not the best short sale candidates but it can work.
Short sales may take longer to close than more conventional sales, so plan accordingly. However, it is well worth it. Again, the alternative – foreclosure.
How is a sales price determined?Most lenders will request a BPO (broker’s price opinion) or full appraisal of the property. In some cases they will use a drive-by value or a computer analysis comparing other similar homes that have sold. In this real estate market, this is very difficult – there are few sold homes! This is where the negotiation begins. Some factors negotiated are such things as close proximity to power lines, railroads tracks, busy streets, high numbers of neighborhood foreclosures (blight), declining market, repairs needed, the banks loss severity rate in a foreclosure to justify our offer price. Also negotiated hard is the lenders’ Loss Severity Rate.
Loss Severity Rate (What is this?)
Let me talk a little bankalese here (not legalese). This is the rate of loss a lender incurs in a foreclosure. Here’s an example: In a foreclosure, the bank recoups only a portion of the mortgage balance plus they incur significant property preservation costs (aka maintenance costs), legal fees, liquidation costs, additional “carrying costs”. The ‘net’ the bank receives after a foreclosure sale is divided into the total costs or ‘balance’ due which is now much higher than the original mortgage balance . . .resulting in the Loss Severity Rate. This rate has climbed to 40% of more. Much higher than a short sale!
Closing
Once an agreement is reach, the lender issues a short payoff to the realtor and the title company being used for the short sale closing. This letter will state the closing date, names of the parties, a Release of any deficiencies incurred by the lender, and any cash or promissory notes required from the seller. I am not the closing attorney and I do not go to closings. The title company continues to be the closer.
When is it too late?In Missouri, the foreclosure process can happen quickly, therefore a short sale must be identified before the seller receives a Notice of Foreclosure. The bank cannot delay foreclosure by more than one week in Missouri, however, the lender may cancel or “continue” foreclosure proceedings only if we have an accepted contract. Short sale candidates need to be identified and counseled before a Notice of Foreclosure is received. However, if a Notice has been received recently, let us still counsel the homeowner, then we’ll see what we can do about securing an accepted contract quickly and we will communicate with foreclosure department and attorneys. There are instances where we may be able to get a short sale through before the Trustee Sale.
Short Sale vs. Bankruptcy
 Lenders cannot consider a short sale if the borrower is in an active bankruptcy. The bankruptcy would have to be discharged or dismissed prior to the lender considering a reduced payoff.
 There are many bankruptcies that are filed to save a homeowner from the deficiency judgment or shortage in the sale of their home – when really all they needed was a short sale of their home!
 A bankruptcy stays on the homeowners credit report for 10 years.
 Bankruptcies typically only delay the inevitable. . . a foreclosure. Then the homeowner has both a bankruptcy AND a foreclosure on their credit report. The worst case scenario for anyone.
Short Sale vs. Foreclosure
 Foreclosure is devastating to one’s credit report. Someone who goes the short sale route generally can buy a home in less than 2 yrs, compared 5 yrs + after a foreclosure. Many employers run credit checks on prospective employees and foreclosure is one of the top items that will put a potential new hire in jeopardy. Also, current employers may run credit checks and a foreclosure can put a current position in jeopardy. Security clearances (law enforcement) and government positions can be jeopardized by a foreclosure. Additionally, interest rates will be markedly high on credit cards and any credit with a foreclosure or a deed in lieu on one’s credit report.
 The lender can still pursue the former homeowner with a Judgment for any deficiency after the property sells under foreclosure. This deficiency most likely will tack on attorney fees, costs to sell the property, and many other related fees such as property preservation fees, insurance and the like.
 Foreclosure effectively reduces your potential clients as buyers as it is rare to secure financing for another home for a long time after a foreclosure is reported on one’s credit report. So, not only did you not make a cent off of that foreclosure. . .you just lost another potential client.
 From the lenders standpoint – see Loss Severity Rate above! Enough said.
Taxes
The Economic Stabilization Act extends the Mortgage Forgiveness Debt Relief Act to 2012.

Qualified principal residence indebtedness is defined as acquisition indebtedness, the dollar limitation is $2 million with respect to the taxpayer’s principal residence. Acquisition indebtedness generally means indebtedness incurred in the acquisition, construction, or substantial improvement of the principal residence of the individual and secured by the residence. It also includes refinancing to the extent of the original debt (not any cash that was taken in the refi). So, the amount unpaid to a lender in a short sale is technically considered income to you. HOWEVER, for the tax years 2007 through 2012, the government is waiving any tax liability on that phantom income. The lender will send you and the IRS a copy of Form 1099-C "Cancellation of Debt," reporting that forgiven debt as income. To make sure you are not taxed on the amount, you will have to file Form 982, "Reduction of Tax Attributes Due to Discharge of Indebtedness." Forms can be downloaded free from http://www.IRS.gov. Be aware, that forgiven debt on vacation homes and rental properties may be taxable, unless you can prove insolvency.

This document is not intended to give tax advice. It is advisable to confirm the current tax laws with each case with a CPA or tax attorney.

'Psychological' Blueprint Helps House Hunters

Environmental psychologist Toby Israel, author of a new book, Some Place Like Home: Using Design Psychology to Create Ideal Place, says people’s childhood homes have a profound effect on what kinds of homes they like best.

Before anyone buys, builds, rents or remodels, Israel believes they should consider what kinds of living spaces satisfy them, she says.

One exercise she recommends for anyone searching for a home is to draw a timeline of all the places they've lived for six months or more and circle those that they liked the best, then describe why. She calls the result a "design psychology blueprint" that can help a real estate professional identify what a client really wants.

Source: Star-Tribune, Jim Buchta (03/14/2009)

First-time Buyers Drive February Sales

Existing-home sales increased in February, reversing losses in January, according to the latest report by the NATIONAL ASSOCIATION OF REALTORS®. However, sales activity remains relatively soft, reflecting additional layoffs and buyers waiting for housing provisions in the economic stimulus package to take effect, according to NAR.

Existing-home sales— including single-family, townhomes, condominiums and co-ops—rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Existing-home sales are 4.6 percent below the 4.95 million-unit level in February 2008. Seasonal adjustment factors are more volatile in winter months, but sales rates over the past few months show dampened sales activity, according to NAR.

Lawrence Yun, NAR chief economist, says first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges.

“Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” he says. “Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.”

Home Buyer Tax Credit Increases Activity

NAR President Charles McMillan says home shopping activity has picked up with housing affordability at a record high.

“The number of buyers looking for homes rose 5 percent in February, and also was 5 percent above a year ago,” he says. “It appears most of the increase in buyer traffic occurred in the latter part of the month after the $8,000 first-time buyer tax credit was put in place. At the same time, mortgage purchase applications have risen, so we expect to see sales picking up around late spring.”

McMillan notes that more potential buyers are learning about the tax credit, just as the traditional spring home-buying season begins.

Existing-Home Sales Rise in February

The national median existing-home price for all housing types was $165,400 in February, down 15.5 percent from a year ago when the median was $195,800 and conditions were close to normal. The median is where half of the homes sold for more and half sold for less.

“Given the downward distortion in price comparisons due to distressed sales, it’s important for owners to keep in mind that this doesn’t equate to a similar loss of value for traditional homes in good condition,” Yun says.

Housing inventory: Total housing inventory at the end of February rose 5.2 percent to 3.80 million existing homes available for sale, which represents a 9.7-month supply at the current sales pace, unchanged from January. In the six months prior to February, the total number of homes for sale had steadily declined from a record level last July.

Single-family home sales: rose 4.4 percent to a seasonally adjusted annual rate of 4.23 million in February from a level of 4.05 million in January, but are 3.6 percent below the 4.39 million-unit pace in February 2008. The median existing single-family home price was $164,600 in February, down 15 percent from a year ago.

Existing condominium and co-op sales: increased 11.4 percent to a seasonally adjusted annual rate of 490,000 units in February from 440,000 units in January, but are 13.1 percent lower than the 564,000-unit pace a year ago. The median existing condo price was $172,200 in February, which is 18.7 percent lower than February 2008.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage edged up to 5.13 percent in February from a record low 5.05 percent in January. The rate was 5.92 percent in February 2008. Last month’s average mortgage rate was the second lowest since data collection began in 1971. Last week the rate further declined to 4.98 percent.

Regional Breakdown

Yun says a recovery in the West is much stronger than expected. “Strong sales gains in the West are led by California, where the median listing price is beginning to rise for the first time in three years,” he says.

Here's how existing-home sales fared across the country:

• Northeast: jumped 15.6 percent to an annual pace of 740,000 in February, but 14.9 percent below February 2008. Median price: $251,200, down 4.8 percent from a year ago.
• Midwest: increased 1 percent in February to a pace of 1.04 million but 14 percent lower than a year ago. Median price: $131,000, which is 7.8 percent below February 2008.
• South: rose 6.1 percent to an annual pace of 1.74 million in February but 11.2 percent below February 2008. Median price: $146,700, down 10 percent from a year ago.
• West: increased 2.6 percent to an annual rate of 1.2 million in February and remain 30.4 percent higher than a year ago. Median price: $204,600, which is 30.3 percent below February 2008.

Source: NAR

When your mortgage application is rejected

Don't be surprised if your friendly lender, the one who invites you to sit down and apply for a mortgage, ushers you politely out the door empty-handed after you've chatted a bit.

The sudden chill isn't personal. The Mortgage Bankers Association, or MBA, in Washington, D.C., estimates that about half of all mortgage applicants are now being turned down. Though refinancing approvals remained static, the acceptance rate on mortgage applications suffered a 10 percentage-point drop, from 63 percent in the first half of 2007 to 53 percent in the first half of last year, according to mortgage data tracked semi-annually by the association. Since then, further tightening of credit standards means at least half of mortgage-seeking consumers can't squeeze through to acceptance, says MBA spokeswoman Carolyn Kemp.

Instead of yielding to shame, anger or any of the usual emotions associated with rejection, today's consumers who are intent on buying or refinancing should adopt a pragmatic stance, since clear-eyed determination may eventually land them a loan.

Here's how:

1. Get a read on the reason
If you've submitted a formal application, federal law dictates that you're entitled to a formal rejection.

Expect an "adverse action" notice, spelling out the reasons for turning you down, which these days is likely to state that the loan amount you're seeking is too large compared to the current appraised value of your home, says Joe Theisen, president of the Wisconsin Mortgage Professionals Association and branch manager of Fairway Independent Mortgage Corp. in Madison, Wis.

If it's not your home's value that's the issue, it may be your personal credentials, such as your creditworthiness, work history or debt load.

When credit is the issue, an adverse-action notice is required, naming the credit reporting agency that provided the data on which the lender based its decision, according to Federal Trade Commission rules. You're also entitled to a free credit report; see the FTC Web site for more information.

Given the odds of acceptance, a lender may not require you to pay a few hundred dollars to submit a formal application, which includes the cost of a professional appraisal on the property. Instead, he may pull a credit score, and tell you what you're likely eligible for, says Marc Savitt, president of the National Association of Mortgage Brokers.

2. Find a fix
Qualifying for a mortgage isn't a black-and-white issue. Rather, different loans at varying rates may be available, depending on how risky a lender thinks a particular mortgage will be. If you don't qualify at 5.5 percent, for instance, you may be able to get the nod for a loan at 6 percent or 6.5 percent.

However, many borrowers, especially those who are refinancing, need a certain rate to reach the monthly payment they want. Not only are rates higher for risky loans, but there are now upfront "point" charges dictated by Fannie Mae and Freddie Mac, the two big mortgage guarantors currently under government control, Savitt says.

To get a good rate, some borrowers may be able to make changes — like lowering the amount of the loan they seek.

When a borrower isn't far from the qualifying mark, he may be able to reapply and be approved relatively quickly. For instance, if you're within reach of a 740 credit score, which is usually required for the best rate, you might pay down a balance on a credit card and hit the target, Theisen says.

3. Seek out other opinions
Not every lending firm adheres strictly to the same playbook, and one lender may approve what another rejects, says Savitt, who recently had a borrower with good credit turned down for a low down payment, government-insured loan, but found another firm giving the green light.

A local "community bank," meaning a smaller, hometown institution, may be more flexible, contends Diane Scriveri, chief lending officer at Bogota Savings Bank in Teaneck, N.J., and vice chair of the affordable housing committee of the New Jersey League of Community Banks.

"Because we're local, we may know home values better. We still use independent appraisals of course, but we may look at comparable (home values) differently because we know what's really happening in different neighborhoods," she says.

Credit unions, which only offer loans to consumers who qualify for credit union membership, may also be more forgiving, says Tony Emerson, president of the Credit Union League of Connecticut.

"It would be foolhardy to suggest that in every case, you can go to a credit union and get a loan," Emerson says.

Still, he says, some credit unions may judge loan eligibility based upon the unique relationship they have with their members. For instance, many credit unions offer membership to employees of specific companies and would know more about a member's job stability, he says.

4. Give it another try
The Mortgage Bankers Association is predicting that 30-year fixed rates will hover near the 5 percent range through 2009. So if predictions hold and interest rates stay relatively low, you should have time to try again if the factors behind your rejection improve.

Fortunately, a rejection shouldn't bring down your credit scores, says Craig Watts, public relations director for Fair Isaac Corp.

Making a formal application and then reapplying more than a month later could lower your score, but only by about 5 points. Most scoring systems allow consumers to make multiple mortgage applications within a 30-day period without any negative impact on their credit score. But mortgage inquiries older than 30 days will count as a single inquiry if they're made within a 14-day or 45-day window, depending on the scoring model used.

(March. 22, 2009, Bankrate.com via MSNBC.com)

4 Questions You Need to Answer Today

1. Why are the prices of homes dropping substantially in today’s market?

Prices are dropping because of the anomaly that occurred during the market boom. Professor Karl Case of Wellesley College and contributing author of the Case-Schiller Home Prices Indices, a quarterly nominal housing price report, looked closely at the appreciation of median home value over five-year increments dating back to 1980 (see chart: "Appreciation Went Into Overdrive"). His research shows that home values appreciated 26.5 percent on average for the 20-year period from 1980 through 2000.

In the six years that followed, average appreciation was 89 percent. Prices are now adjusting to the inconsistent and unsustainable growth that occurred during the first six years of this decade. In other words, the market is not on the decline. Rather, it is moving toward stability, which will mean healthier markets in the future.

2. How do I determine the direction of prices in my market?

Although there are no steadfast rules to determine future pricing, months’ supply of inventory (total inventory divided by the number of houses sold per month) is a great guideline. A normalized or balanced market has five to six months of inventory. If 100 houses sell a month, there should be 500 to 600 houses in active inventory.

Based on this principle, if you have one to two months of inventory, double-digit appreciation is likely to occur. Lack of supply will cause potential buyers to clamor over the few homes that are for sale, which in turn drives prices higher. On the other end of the spectrum—where many markets are right now—there is a seven- to eight-month inventory. With this abundance of supply, there simply aren’t enough buyers to support the number of homes for sale.

Current economic conditions will also have an effect on the direction of pricing, as pricing is directly connected to average income. Traditionally, the national average sales price of a home is two-and-a-half times the average household income. Through the boom years of 2004, 2005, and even into 2006, that ratio was distorted, reaching up to four times the average income. We’re now getting much closer to the 2.5 ratio. However, with unemployment rising, prices may have to drop further to stay in line with the average American family income (see chart: "Lots of Listings = Depressed Prices").

3. Why should I buy now?

Any investment consideration, whether it be real estate, gold, or fine art, follows a predictable cycle with nine stages (see chart: "The Stages of a Market Cycle"). Let’s start with optimism, the period in which many people are excited about buying a home. When the market is strong, people’s purchases quickly increase in value, which leads to euphoria, which can lead to rash decision making.

From euphoria starts a downward cycle. As prices start to fall, buyers go into denial, with statements such as "I’ll be in the house a few years, so this won’t be a challenge." After denial comes fear, as prices continue to fall, followed by panic, despondency, and depression. After depression comes hope and then optimism (back to stage one).

The point of maximum risk for any investment is during the euphoria stage. The point of maximum opportunity is at the lowest point, between despondency and depression. That’s exactly where we are in many real estate markets today. Clients who are motivated and qualified to buy will be able to look at the market cycle chart and understand why now is the best time to invest in real estate.

4. Is homeownership really a good way to build wealth?

According to NAR, home values appreciate 4.5 percent annually on average. That’s a great return; however, very few buyers pay in cash. Most try to put as little cash down as possible. The amount of cash buyers put into their home determines their return on equity, which is the total return on the cash they initially invested. So the return on equity can be astronomical. It’s easy to see that real estate isn’t just a good investment; it’s a great investment.


Source: Steve Harney specializes in negotiation and leadership training. He has been in the industry for more than 20 years, first in sales and then as broker-owner of a 500-associate real estate company. Visit him at www.KeepingCurrentMatters.com.

How Big is Your…

How Big is Your…

…following?

Is it more important to have a lot of people following you on Facebook or Twitter, or a smaller group with whom you interact more frequently? This seems to be the new debate of the social media world. With a lot of interest in Social Media as a potential source of business, some really traditional behavior has entered this untraditional venue.

People that used to assemble huge mailing lists now assemble huge numbers of followers using different techniques or APIs rather than building relationships. Auto DMs on Twitter that say “Thanks for following I look forward to exchanging much valuable information” seems to have taken the place of actually seeing if you have something in common with the people in your community.

On Facebook, you have people asking to be your friend that have nothing in common with you, or whom you have no relationship to. And then sending you information on their services and products in a space that is really not designed for that. Twitter has numerous APIs that offer to find people to follow you, and social media gurus who suggest manipulating the Twitter system to increase the number of people in your distribution chain.

Me, I find that offensive and I have lately been terminating the relationship if it seems to be completely commercial. I want the social network to be social. I want to choose my trusted advisors rather than have them thrust information on me at their convenience.

Are You All Hat and No Cattle?

We have all heard that you need to “sell the sizzle not the steak”, but are you all sizzle and no steak? Do you have lots and lots of followers and very little dialogue? Is there anything in your interaction that brings value to your community?

If the effective part of social networking is gaining the trust of your community so that they are predisposed to do business with you when they are ready, then the size of your following should be substantially less important than the quality of your interaction and the focus of the community’s needs.

If you contribute to the conversation, provide content and information for your community members, and become an influencer in that community, I would submit that you have a more effective grasp of the benefits of social media than the person who has a huge number of people following them that don’t react to their posts and tweets.

Grow Organically

We see large important social media influencers with large groups of followers and confuse the form with the substance. The audience came because they were important, they didn’t become important because they got an audience.

They got that huge audience because they had things to share that people wanted to hear. They had knowledge about topics that people wanted to learn about. They generated interest because of the way they spoke or the way they wrote, or who they were in real life.

So connect with the people you know, or the community where you live, and particpate in the conversations they are interested in. You need to overwhelm them with what you know not who you know.

(Source agentgenius.com)

How Will Foreclosure Affect Credit Scores?

The amount of damage to a credit score caused by foreclosure, deed in lieu or a short sale during 2008 and 2009 may be mitigated by the slower economic times, say some credit and legal experts.

FICO may have to adjust its credit scores to lessen the impact of a foreclosure in the last two years, says Todd J. Zywicki, a professor of law at George Mason University.

''It just seems obvious that a foreclosure in 2008 or 2009 doesn't have as much information value as a foreclosure five years ago,'' he says. ''To the extent that foreclosure doesn't predict future behavior as much as it did in the past, you'd expect that the FICO algorithm would change to adjust for that.''

One of the country’s largest credit unions Golden 1 has already figured out a way to lend to people with a foreclosure on their record by offering a mortgage repair loan specifically for those who have lost a home to foreclosure and who want to buy a new one.

BECU, another large credit union based in Washington State, is about to present a program to fellow lenders, ''How to Lend to the Newly Credit Impaired.”

Source: The New York Times, Ron Lieber (03/14/2009)

Mortgage Rates Drop Below 5%

Freddie Mac reports a drop in the 30-year fixed mortgage rate to 4.98 percent during the week ended March 19 from 5.03 percent the prior year, marking the lowest rate since 4.96 percent in mid-January.

Experts say rates could fall further in response to the Federal Reserve's announcement that it will add $1.2 trillion to the economy to alleviate the credit crisis.

Source: Tulsa World (Okla.) (03/20/09)

4 Tips to Make a Home More Inviting

Model homes are important tools for builders because they help buyers fall in love with a home.

Phyllis Ryan, president of the model-home division of Interior Concepts, a Maryland design firm that specializes in furnishing new homes, has some tips that might benefit anyone who is selling a home.

• A stylish kitchen appeals to many buyers. If a sellers has upgraded cabinets and granite countertops, that’s good. If they don’t, it may help to display some stylish touches like an espresso machine, a retro toaster or just some luscious fruit.
• Lots of light makes spaces feel larger. Turn on all the lights even during the day and add a few extra lights if necessary.
• The master bedroom should seduce a buyer. Play soft jazz, pile the bed high with a cushy comforter and pillows. Stack plush towels in the bathroom.
• Add drama to a bottleneck or a dead end space. Prop an oversize mirror against the wall. It visually ops a space and adds drama.

Source: Washington Post, Elizabeth Razzi (03/14/2009)