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Tag Archives: business of real estate

Mortgage Rates Lowest in 50 Years… according to Freddie Mac

Friday, 19 August 2011 08:00
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Freddie Mac

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Freddie Mac issued their Primary Mortgage Market Survey yesterday, and the rates are unbelievable.  Let me click off a few quotes from the Press Release.

30-year fixed-rate mortgage (FRM) averaged 4.15 percent with an average 0.7 point for the week ending August 18, 2011, down from last week when it averaged 4.32 percent. Last year at this time, the 30-year FRM averaged 4.42 percent.

15-year FRM this week averaged 3.36 percent with an average 0.6 point, down from last week when it averaged 3.50 percent. A year ago at this time, the 15-year FRM averaged 3.90 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.08 percent this week, with an average 0.5 point, down from last week when it averaged 3.13 percent. A year ago, the 5-year ARM averaged 3.56 percent.

1-year Treasury-indexed ARMaveraged 2.86 percent this week with an average 0.6 point, down from last week when it averaged 2.89 percent. At this time last year, the 1-year ARM averaged 3.53 percent.

I guess that is the upside of economic stagnation.  And when combined with the amazing prices on homes in the market right now, it makes for a GREAT time to buy property.  Assuming that you don’t have to sell first.

And that is the flip side.  Many would be buyers are sidelined because they can’t afford to sell their current home.  The best they can hope for is to re-finance with the low rates… of course, that isn’t helping those that have a need to relocate.

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Wayback Wednesday… THIS Should be the Centerpiece of What the NAR Does for Consumers!

Wednesday, 10 August 2011 08:00
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Logo of the National Association of Realtors.

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To begin with, the NAR is the National Association of REALTORS®.  Their “job” is that they represent real estate agents legislatively.  For lack of a better phrase, they are our trade group and kind of like a trade union.  I’m not fond of everything that they do, but I do feel that they have a place.

One of the stated missions of the NAR is to protect consumers.  There are a few ways that they go about this, including requiring members to live up to a Code of Ethics.  And while I think there are some weaknesses in the Code of Ethics, it is something.  Another thing that the NAR does is provide (often self-serving) market stats and interpretations to the public… through the media.

Also along the lines of consumer protection, the NAR sometimes mentions… seemingly in passing… cases of Eminent Domain abuse by various federal, state and local governments.  Governments abusing their Right of Eminent Domain is something VERY basic…  It goes to the heart of Property Rights, that when we purchase a piece of property, we OWN it and can enjoy it as we wish.

Four years ago I had a post about Eminent Domain abuses that were going on at that time.  I wish I could say that things are better, but they aren’t.  In fact, some localities are looking at their tax base and wondering how they can tweak it in order to bring in more revenues.  Unfortunately, for many politicians, that means pushing people out of their homes in order to bring about some grand new plan.  And in some cases, there are politicians that are on the receiving end of some generous “thank you notes” from the developers hired to bring about the grand plans.

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Wayback Wednesday… Dirty Little Secrets…

Wednesday, 27 July 2011 08:00
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A tablet with the phrase "For sale by own...

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There are a couple of Dirty Little Secrets in Real Estate.  I wrote about one of them a few years ago this week.  Those people that want you to sell your home “FSBO” through them for a flat fee have one of those secrets.  They don’t care if your home sells.  They get paid whether your home sells or not…  In fact, I’ve been to presentations where some of these companies were talking about their business model.  It was mentioned that if the house DOESN’T sell, they have a chance to double down on the revenue.

But that isn’t the only secret.

Another one is that your real estate agent is only guessing at the “market value” of your home.  And the same holds true for appraisers, adjusters and anyone else that is pegging a “value” to a home.  There is only one way to determine an accurate type of value for a home, and that is replacement value.  But that isn’t market value.  See, the problem is that market value is determined by a buyer and a seller agreeing on the price of a house.  And it is valid at the closing table… for THAT buyer and THAT seller.  The second that title changes hands, that value starts becoming vaporous again.  Some of us are pretty good at guessing what the market value MIGHT be, but it is a guess.

I don’t want that to sound self-serving.  If you really want, I’ll sell your house for a flat fee.  We can agree on everything right up front… what is going to be done, when it will be done, what is or isn’t included…  You’ll even get a healthy discount for going that way.

I don’t mind being open about this industry.  Dirty laundry HAS to be aired in order to get clean.  This isn’t GIANT dirty laundry, but I think it is something that needs to be disclosed.

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Wayback Wednesday… Add-on or Get Out?

Wednesday, 13 July 2011 08:32
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I’m not getting this question nearly as much as I used to… but it is still a valid question for many “would-be” buyers (or sellers)…

Should I improve my current home, or just buy a new one?

It isn’t nearly as easy of an answer as it might first seem.  Here is my take on it 3 years ago.  But there are some changes…  Read the old post if you have a moment, then come back and finish this one.  I’ll give a few highlights.

Let’s say that you live in a house that has eroded from $250,000 to $225,000 (10%), and you are looking at a house that went from $500,000 to $450,000 (also 10%).  If you took the $25,000 loss on your existing home, you would save $50,000 on the step up home.  So, you are $25,000 ahead.

Home of Benjamin Harrison, 23rd president of t...

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Well… the house that you might have taken a 10% loss on 3 years ago might be staring at a 25-30% loss now… maybe more, maybe less.  But (this is important) that might be starting to change… might… depending on your neighborhood and even the style of house.  So, we might start seeing some of those great deal disappearing.  At the same time, we might find that a few more prospective sellers can get out of their current home without losing their shirts.  If you can’t afford to sell, then the deals are irrelevant.

Also, in the old post I mentioned interest rates… they were around 6% then, and they are around 4.5% now.  This CAN’T last.

Combining these two items, home affordability hasn’t been better in a VERY long time.  But, you still have to be in a position to make the move… be able to sell your home (and either have equity or the ability to pay off the balance.

Also in the old post I talked about not building too far outside of the “neighborhood norms”.  If the average house in your neighborhood is a 3-4 bedroom, 2-3 bath ranch, building a 6 bedroom two story home is NOT going to pay you back.  I’m not saying that you can’t do it (but check local ordinances and covenants, THEY might say you can’t), I’m saying that you shouldn’t expect to be able to sell it without pain.

Even if you NEVER plan to sell the house, think about resale.  I have sold more than one “I’m never going to move from here” homes for sellers.  Life changed and so did their needs.  They went and bought new “I’m never going to move from here” homes.  Even if you are right… you are never going to move from here, at some point, somebody in the family is likely to sell the house.

 

If you decide that you want to move up (or down or sideways), give me a call.

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Wayback Wednesday… A Foreclosure Mitigation Too Good to be True…

Wednesday, 06 July 2011 08:35
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Showing how the rapid rise in in mortgage cred...

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I don’t know about you, but I have heard the stores and even seen the occasional late night TV ad talking about getting out of your mortgage for free.  Two years ago, I wrote about how it was the latest scam being pulled on people facing foreclosure.  And be aware… it is nothing but a scam.

Here is the “meat” of the old post…

Here is the way it works (and it all sounds so legit…):

  • Mr. and Mrs. Consumer buy a house and get a mortgage from MonsterMegaMortgageCompany (MMMC).
  • MMMC sells their mortgage to Investor Pool #1.
  • Then it is bundled and sold to IP#2… and #3 and #4 over a span of a few years.
  • Mr. & Mrs. Consumer start having problems, and despite everything they are facing foreclosure.
  • To try to get help they contact a “Foreclosure Mitigation” Law Firm that fights the foreclosure by filing a “missing title” lawsuit.
  • The law firm (or other entity) charges an up-front fee (maybe $2000) and then monthly fees (maybe $1000 or $1500)… as well as a contingency fee upon settlement of either 50% of the reduction or 75% or 80% of the value if the mortgage were completely eliminated.
  • After stringing along Mr. & Mrs. Consumer for a few months or longer (collecting fees), they fail to actually prosecute the case.
  • Mr. & Mrs. Consumer lose their home…

According to a few of the sources I looked at, their are no recorded examples of any suit of this type EVER being resolved in the consumer’s favor.

There are also a couple of links.  As an update, there are a couple of stories over the last few years of judges setting aside mortgages because the holder could not produce the right paperwork.  But, you have a better chance of getting hit by lightning.  The lenders have gotten smart and are making sure their paperwork is better… and in the few cases that I have heard about mortgages being set aside, the lenders also committed fraud in ginning up the paperwork… and that isn’t likely to happen many more times.

Follow the link above and visit the old post…  It’s lonely.

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