RSS Feed

Category Archives: banks

BILLIONAIRE SAYS REAL ESTATE IS BEST INVESTMENT POSSIBLE!

“Time is at once the most valuable and the most perishable of all our possessions.”~ John Randolph

Billionaire Says Real Estate is Best Investment Possible | Keeping Current Matters

Billionaire money manager John Paulson was interviewed at the Delivering Alpha Conference presented by CNBC and Institutional Investor. During his session he boldly stated:

“I still think, from an individual perspective, the best deal investment you can make is to buy a primary residence that you’re the owner-occupier of.”

Who is John Paulson?

Paulson is the person who, back in 2005 & 2006, made a fortune betting that the subprime mortgage mess would cause the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell. What do others think of Paulson?

According to Forbes, John Paulson is:

“A multibillionaire hedge fund operator and the investment genius.”

According to the Wall Street Journal, Paulson is:

“A hedge fund tycoon who made his name, and a fortune, betting against subprime mortgages when no one else even knew what they were.”

Why does he believe homeownership is such a great investment?

Paulson breaks down the math of homeownership as an investment:

“Today financing costs are extraordinarily low.”

The latest numbers from Freddie Mac show us that you can still get a 30-year mortgage for under 4%.

“And if you put down, let’s say, 10 percent and the house is up 5 percent,” as many experts predict, “then you would be up 50 percent on your investment.”

How many are seeing a 50% return on a cash investment right now?

Paulson goes on to compare the long-term financial benefits of owning versus renting:

“And you’ve locked in the cost over the next 30 years. And today the cost of owning is somewhat less than the cost of renting. And if you rent, the rent goes up every year. But if you buy a 30-year mortgage, the cost is fixed.”

Bottom Line

Whenever a billionaire gives investment advice, people usually clamor to hear it. This billionaire gave simple advice – if you don’t yet live in your own home, go buy one.


 

 

FSBO’s MUST BE READY TO NEGOTIATE

If you view all the things that happen to you, both good and bad, as opportunities, then you operate out of a higher level of consciousness.”~ Les Brown

FSBO’s Must Be Ready to Negotiate | Keeping Current Matters

Now that the market has showed signs of recovery, some sellers may be tempted to try and sell their home on their own (FSBO) without using the services of a real estate professional.

Real estate agents are trained and experienced in negotiation. In most cases, the seller is not. The seller must realize their ability to negotiate will determine whether they can get the best deal for themselves and their family.

Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to FSBO:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies which work for the buyer and will almost always find some problems with the house.
  • The termite company if there are challenges
  • The buyer’s lender if the structure of the mortgage requires the sellers’ participation
  • The appraiser if there is a question of value
  • The title company if there are challenges with certificates of occupancy (CO) or other permits
  • The town or municipality if you need to get the COs permits mentioned above
  • The buyer’s buyer in case there are challenges on the house your buyer is selling.
  • Your bank in the case of a short sale

Bottom Line

The percentage of sellers who have hired a real estate agent to sell their home has increased steadily over the last 20 years. Meet with a professional in your local market to see the difference they can make in easing the process.

WHAT TO DO IF YOU HAVE MULTIPLE OFFERS ON YOUR HOME

“We all have ability. The difference is how we use it.”~ Stevie Wonder

MP900439502

6 TIPS FOR CHOOSING THE BEST OFFER FOR YOUR HOME

Have a plan for reviewing purchase offers so you don’t let the best slip through your fingers.

You’ve worked hard to get your home ready for sale and to price it properly. With any luck, offers will come quickly. You’ll need to review each carefully to determine its strengths and drawbacks and pick one to accept. Here’s a plan for evaluating offers.

1. Understand the process.

All offers are negotiable, as your agent will tell you. When you receive an offer, you can accept it, reject it, or respond by asking that terms be modified, which is called making a counteroffer.

2. Set baselines.

Decide in advance what terms are most important to you. For instance, if price is most important, you may need to be flexible on your closing date. Or if you want certainty that the transaction won’t fall apart because the buyer can’t get a mortgage, require a pre-qualified or cash buyer.

3. Create an offer review process.

If you think your home will receive multiple offers, work with your agent to establish a time frame during which buyers must submit offers. That gives your agent time to market your home to as many potential buyers as possible, and you time to review all the offers you receive.

4. Don’t take offers personally.

Selling your home can be emotional. But it’s simply a business transaction, and you should treat it that way. If your agent tells you a buyer complained that your kitchen is horribly outdated, justifying a lowball offer, don’t be offended. Consider it a sign the buyer is interested and understand that those comments are a negotiating tactic. Negotiate in kind.

5. Review every term.

Carefully evaluate all the terms of each offer. Price is important, but so are other terms. Is the buyer asking for property or fixtures — such as appliances, furniture, or window treatments — to be included in the sale that you plan to take with you?

Is the amount of earnest money the buyer proposes to deposit toward the down payment sufficient? The lower the earnest money, the less painful it will be for the buyer to forfeit those funds by walking away from the purchase if problems arise.

Have the buyers attach a pre-qualification or pre-approval letter, which means they’ve already been approved for financing? Or does the offer include a financing or other contingency? If so, the buyers can walk away from the deal if they can’t get a mortgage, and they’ll take their earnest money back, too. Are you comfortable with that uncertainty?

Is the buyer asking you to make concessions, like covering some closing costs? Are you willing, and can you afford to do that? Does the buyer’s proposed closing date mesh with your timeline?

With each factor, ask yourself: Is this a deal breaker, or can I compromise to achieve my ultimate goal of closing the sale?

6. Be creative.

If you’ve received an unacceptable offer through your agent, ask questions to determine what’s most important to the buyer and see if you can meet that need. You may learn the buyer has to move quickly. That may allow you to stand firm on price but offer to close quickly. The key to successfully negotiating the sale is to remain flexible.

By: G. M. Filisko

G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

NEW FANNIE MAE APPRAISAL PROGRAM: HELPING OR HURTING?

“What you get by achieving your goals is not as important as what you become by achieving your goals.” ~ Henry David Thoreau

New Fannie Mae Appraisal Program: Helping or Hurting? | Keeping Current Matters
Every home must be sold TWICE! Once to the buyer, and once to the bank appraiser if a mortgage is involved.

The second sale may have just become more difficult.
A new program announced by Fannie Mae may slow down the home-sale closing process by causing more disputes over prices between sellers and buyers.

In a recent Washington Post article they explained the basics of the program:

“Starting Jan. 26, Fannie plans to offer mortgage lenders access to proprietary home valuation databases that they can use to assess the accuracy and risks posed by the reports submitted by appraisers.”

“The Fannie data will flag possible errors in the appraiser’s work before the lender commits to fund the loan, will score the appraisal for overall risk of inaccuracy and may provide as many as 20 alternative “comps” — properties in the area that have sold recently and are roughly comparable to the house the lender is considering for financing but were not used by the appraiser.”

Using the additional information provided by Fannie Mae, the lender can then ask for an explanation from the appraisal company for any discrepancies and request an amended appraisal.

This added step in the process of determining the price of the home to be bought/sold, could add time to the closing process and cost to the appraisal for the additional work.

Why is this happening?

Fannie Mae wants lenders to make informed decisions when agreeing to the amount of a loan that a buyer will be approved for.

“Excessive valuations create the risk of future losses to lenders and investors if the borrower defaults and the house goes to foreclosure.”

What is the process now?

As a seller:
You’ve put your house on the market, picked an agent who has helped you determine that the best price to list your home for is $250,000, and found a buyer willing to pay that price. The appraiser comes to the home and agrees your home is worth the asking price and writes their report. Everything is working perfectly!

As a buyer:
You’ve found your dream home, in the right neighborhood, in the right school district, with the perfect yard, at the high end of your budget, but all the pluses are worth it. You agree on a price and start daydreaming about living in your new home.

What happens after January 26th?

The lender submits the appraisal report to the new Fannie Mae program and they come back with “lower-risk comps” that value the home at $230,000. The lender then turns to the appraisal company to justify the $20,000 difference, adding time and frustration to the process.

If the lender does not agree with the reasons for the price difference they will not lend the buyer the amount they need to purchase their dream home and the amicable, agreeable sale turns into a heated justification of the higher price. The buyer may even have to give up on the home if the funding isn’t there.

An article by Housing Wire shares the appraiser’s point of view:

“The bottom line, appraisers say, is this could lead to delays to closings and higher costs, as well as a depression of prices in markets where prices are rising.

Appraisers complain that if they have to justify every step of their comps for their valuation, rather than those coming from the one-size-fits-all evaluation from Fannie, it will delay closing, throw off buyer and seller timetables, and delay real estate broker commissions.”

Bottom Line

The fear of some real estate practitioners is that if appraisers feel as though they are constantly being second-guessed, they may become more conservative in their assessments, impacting home values and slowing growth in the market.

NAR CAUTIONS AGAINST MID CHANGES

“Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one.” – Thomas Paine


Obama is at it again! Now he wants to cut the mortgage interest deductions for those he calls wealthy – individuals making over $200,000.00 or couples making over $250,000.00.  I don’t happen to fall in that tax bracket, but many of my friends do.  I think this is an outrage and so very unfair.  You can read more by clicking on the following links:

NAR Cautions Against MID Changes

http://speakingofrealestate.blogs.realtor.org/

5 EVENTS THAT ROCKED HOUSING IN 2011

5 EVENTS THAT ROCKED HOUSING IN 2011

“A bank is a place that will lend you money if you can prove that you don’t need it.” –  Bob Hope

Re-printed from Trulia
January 3, 2012|Tools & Trends|No Comments
Jed Kolko, Trulia’s Chief Economist

5 events that rocked housing  in 2011; by Jed Kolko

Government, lending changes, and forces of nature all shook the housing market in 2011. They had both an immediate impact and slow-burning effects. They set the stage for a bumpy 2012 with more foreclosures, political battles and local market risks – which will affect the industry and how agents do business.

1) Robo-Signing Reverberations

The “robo-signing” scandal – where banks were accused of approving foreclosures with incomplete or incorrect documentation – exploded in October 2010, but where are we now? Banks want a settlement in order to avoid costly, drawn-out lawsuits. One is shaping up that could reduce loan balances or interest rates for current homeowners, give payments to people who lost their homes and establish new mortgage servicing standards for the future.

Even if you think there’s money coming to you because you lost your home, don’t start spending against your settlement windfall just yet. One estimate from the Wall Street Journal is for a settlement of $25 billion if all states participate. Another report from TIME says that will translate into $1,500-$2,000 for households who were mistreated in the foreclosure process. A couple thousand dollars will give people some breathing room, but it won’t change anyone’s financial lives. And, be patient: it could be months before a deal is reached, an administrator is in place and the details are finalized.

Until that’s all figured out, here’s the immediate drama: who’s in and who’s out? Some states might hold out for a better deal or decide to sue these mortgage servicers directly, as Massachusetts has. California was the first and most vocal state to back out, and New York, Delaware, and Nevada have spoken out, too.

What Really Mattered: The threat of robo-signing lawsuits made banks gun-shy about pursuing foreclosures in 2011, which left many homes stuck in the foreclosure process. But once a settlement is reached, we’ll see a rush of foreclosures in 2012.

What It Means for Agents: More foreclosures will hurt prices and consumer confidence. Short sales could be harder to get approved if the foreclosure process gets easier.

2) The Debt Ceiling and the Budget Deficit

The federal government is running a deficit — it is spending more than it collects in taxes and other revenue – so it borrows to cover the gap by issuing debt. When there’s a deficit, we add to the pile of debt. To shrink this pile, the government needs to collect more than it spends (or, if you prefer, spend less than it collects) and use the surplus to reduce the debt.

In August, the government played a game of chicken over whether to raise the debt ceiling – which is really just a formality acknowledging that the deficit requires issuing debt to keep the government going. However, the right way to deal with the debt is to reduce the deficit – not by fighting over the debt ceiling.

Long before the debt ceiling debate and Standard & Poor’s federal credit-rating downgrade, we all knew that the federal budget was in bad shape. The debt ceiling debate rattled the markets and consumer confidence temporarily but interest rates stayed low. The important effect was that Congress created a bipartisan supercommittee to tackle the deficit – but it couldn’t reach agreement by its November deadline.

What Really Mattered: The deficit-reduction supercommittee teased us with some policy proposals that will surely rear their heads again. One idea that both Republicans and Democrats didn’t totally disagree about was reducing the mortgage interest and other tax deductions. If and when that happens, high-income homeowners with mortgages would pay a lot more in taxes.

What It Means for Agents: Scaling back the mortgage interest deduction would lower the offers buyers – especially high-income buyers – will make on homes. And some buyers will drop out of the market if the deduction, which favors homeownership, shrinks or vanishes.

3) The Expansion of HARP

In October, the Federal Housing Finance Agency (FHFA) said seriously underwater homeowners will be able to refinance through the Home Affordable Refinance Program (HARP). Originally, refinancing under HARP required a loan-to-value of less than 125% — that is, you couldn’t be more than 25% underwater – but that rule goes away for fixed-rate mortgages. But there’s a catch! Loans must be guaranteed by Fannie Mae or Freddie Mac, and – more importantly – borrowers must be current on their payments and must not have missed a payment in the last 6 months.

What Really Mattered: Some seriously underwater borrowers who fell behind on their payments in hopes of negotiating a loan modification are now kicking themselves because those missed payments make them ineligible to refinance. But those who can and do refinance will have lower monthly payments and extra money to spend — which will help stimulate the economy.

What It Means for Agents: Even if easier refinancing may not affect the home-purchase market directly, it will stimulate the economy a bit, which will raise housing demand and give buyers more confidence.

4) Natural Disasters Cause Insurance Disaster?

In 2011, several tornadoes, floodings and a hurricane temporarily halted what little construction there was to begin with, but this was just a short-term slowdown. The bigger long-term effect was the near-collapse of the federal government’s National Flood Insurance Program (NFIP). Still struggling financially under debt amassed after Hurricane Katrina, the NFIP’s insurance premiums don’t fully cover insurance claims when disaster strikes. August’s Hurricane Irene and its flood damage returned this problem to center-stage.

What Really Mattered: In flood-prone areas, you can’t get a mortgage if you don’t have flood insurance. Without NFIP, housing markets in these areas would skid to a stop. Could the program actually expire? It could, but as part of last week’s payroll tax agreement, the program got a last-minute extension until May 2012. No doubt, the political fight over this program’s long-term future will continue in into next year.

What It Means for Agents: Those working in flood-prone areas should be aware of private-sector flood insurance options for buyers in case the federal program lapses after May. And agents in these areas should follow the debate over NFIP on websites and blogs that cover the insurance industry.

5) Lowering the Conforming Loan Limit

Starting in October, the government lowered the upper limit for loans backed by Fannie Mae or Freddie Mac or insured by the Federal Housing Administration (FHA) from $729,750 to $625,500. Why? Government agencies now back or insure most loans, but it’s time to make the housing market less dependent on the feds. Lowering loan limits is one step in that direction; however, the real estate industry has urged the government to push the loan limits back up. And you know what? They scored a half-win in November, raising the loan limit back up for FHA loans but not for Fannie and Freddie.

What Really Mattered: Mortgage lenders are willing to charge lower rates for loans that are backed by Fannie or Freddie; with a lower conforming loan limit, a small number of loans that used to qualify for federal backing no longer do. As a result, homes that are now on the wrong side of the conforming loan limit will see fewer potential buyers and lower sales prices. This will matter more in California, New York, and other high-cost areas.

What It Means for Agents: Agents need to know the local loan limits, which may be different for FHA insurance and Fannie/Freddie backing. Homes for which loans will be above the new limits might see less buyer interest and price reductions.

DON’T WAIT UNTIL IT’S TOO LATE!

“For most folks, no news is good news; for the press, good news is not news.”  – Gloria Borger

You hear the bad news everywhere you turn. It’s on the television, the Internet, the radio and in print headlines. A lot of negative coverage has been devoted to today’s housing market.  What you don’t hear is the good news about the real estate market and the many reasons why the current real estate market may be beneficial to you.

Bad news sells newspapers and gets high television ratings; therefore, the media has no reason to report the upside of today’s real estate market to the average American. This is where I come in. For example, did you know that approximately 30 percent of homeowners own their home free and clear?

The current market also affords some great opportunities for those looking to purchase a home. First-time homeowners, move-up buyers and investors can all benefit from low home prices, and historically low-interest rates, making now a great time to lock in a long-term mortgage. Also, the large selection of homes and low sales prices make it a great buyer’s market. And did you know that if you buy in a rural area –Alachua, High Springs and Newberry qualify as rural areas –  you may qualify for a USDA loan, which is a 100% loan – a “no money down” loan.

Ultimately, though, these favorable conditions will go away. As inflation rises, so do interest rates. If you are looking to become a homeowner, you need to strike while the iron is hot!

%d bloggers like this: