The flood of bad news on home sales took a breather in August as sales, inventories and prices all moved in the right direction, though all three metrics have a very long way to go to return to normal levels.

In fact, August was the second-worst month for sales in more than a decade, second only to July, the worst month for sales in 15 years.

Existing-home sales rose 7.6 percent in August after falling precipitously in July, and they are still 19 percent below the level of a year ago. Sales reached a seasonally adjusted annual rate of 4.13 million in August from an upwardly revised 3.84 million in July, according to the National Association of Realtors’ report today.

Total housing inventory at the end of August fell slightly 0.6 percent to 3.98 million existing homes available for sale, which represents an 11.6-month supply at the current sales pace, down from a 12.5-month supply in July. A six month supply is generally considered normal.

The national median existing-home price for all housing types was $178,600 in August, up 0.8 percent from a year ago. Distressed homes rose to 34 percent of sales in August from 32 percent in July; they were 31 percent in August 2009.

A parallel NAR practitioner survey shows first-time buyers purchased 31 percent of homes in August, down from 38 percent in July. Investors rose to a 21 percent market share in August from 19 percent in July; the balance of purchases were by repeat buyers. All-cash sales slipped to 28 percent in August from 30 percent in July.

Also based on a survey of real estate practitioners, the Campbell index for first-time homebuyer traffic, issued earlier this month, also fell from 32.5 in July to 29.3 in August; this index had registered as high as 63.5 as recently as April. Current homeowner traffic in the Campbell index fell from 41.0 in July to 37.3 in August; this index had registered at 55.2 as recently as April.

Original Article

Posted in: Housing Market
Tags: current sales, existing home sales, first time buyers, inventories, market share, national association of realtors, sales pace

Mortgage lenders have raised standards on credit scores so high that nearly one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low.
That’s what an analysis of more than 25,000 loan quotes and purchase requests on Zillow Mortgage Marketplace during the first half of September concluded.

Borrowers with credit scores under 620 who requested purchase loan quotes for 30-year fixed, conventional loans were unlikely to receive even one loan quote on the Zillow platform, even if they offered a relatively high down payment of 15 to 25 percent. Nearly one-third of Americans, or 29.3 percent, has a credit score this low, according to myFICO.com.

Meanwhile, the lowest interest rates went to mortgage borrowers who were among the 47 percent of Americans with excellent credit scores of 720 or above.

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Posted in: Housing Market
Tags: conventional loans, credit score, low mortgage, mortgage borrowers, mortgage lenders, mortgage rates, purchase loan

Bill Joyce starts every short sale journey with “The Speech.” In a what’s-ahead warning to home buyers, the Roseville real estate broker promises prospective buyers that they will be tested and tortured. They will endure privations beyond all expectations. And then they might fail.
“All the things you normally expect are suspended,” Joyce says of changes sweeping across the distressed housing market. “There’s a new set of rules that apply here.”

That’s because short sales are back—and bigger even than during the troubled 1990s.

Short sales are a phenomenon that reappears like clockwork when real estate sours. Alongside repo listings, short sales are defining a new reality in which banks sell most area real estate, not your mom and dad moving to San Diego.

Even this far into the housing crisis, many real estate agents barely understand short sales. Buyers often endure waits of six months or more to close a deal. Neighbors dislike their vicious hits on property values. Banks, too, find short sales difficult, a minefield of competing parties and interests. Yet the method is necessary to unload their problem houses.

It all means that any buyer serious about getting a house in 2010 is likely to reckon with them during the search. Thousands of buyers have scored fabulous deals with short sales. Thousands of others have learned the ropes the hard way.

“That was the worst nightmare,” said Pauline Huerta, describing an offer she made last year on a house in Natomas, Calif. She and her husband, Felipe, waited nearly a year for a decision. But the $175,000 home that captured her heart went into foreclosure instead. “It caused us to wait and lose out on other homes,” Huerta said.

Eventually, the Huertas bought a house the old-fashioned way. Their offer was accepted in 10 minutes, and they moved in recently.

As a new century gets on its feet, the inexplicable dimensions, frustrations and utter surprises of short sales have done more than frustrate everyone connected with them. They’ve become part of local culture. Adventures in short sales are making their way into family stories to be told for years.

Maybe the homeowner filed for bankruptcy at the last minute. Or the buyer had the truck loaded and saw no sign an angry seller was packing to leave. Or at the last moment, a secondary lender asked for an illegal payment outside of escrow and scuttled the deal. Such short sale lore is a favorite blog topic.

Consider a recent post titled “Torture!” Chelsea Irvine of Sacramento wrote about being five months into a short sale, and waiting for action on her $160,000 offer in midtown.

“Every day I drive by the place and see it sitting there, getting older and more lonely by the day,” she wrote on her “Adventures at the Disco Ball Speakeasy” blog in June. “Sometimes I try to block it from my mind by blaring a little Jamiroquai or Stevie Ray. But no matter what I try,” she said, “my eyes always wander to my little shack by the road.”

Irvine’s journey ended well. She closed escrow in July. Now in the throes of home improvement, the legislative assistant for a lobbying firm says, “I love the house. It’s one of the reasons I stuck with it.”

In short sales, lenders accept a sales price below what they’re owed. For a bank, that’s often cheaper than foreclosing and reselling the house in an unstable market. Typically, sellers in short sale situations are behind on payments and owe way more than the house is worth. Selling short is a way to move on with their lives—minus the more serious credit damage of foreclosure.

In his “speech,” Joyce warns buyers to drop any ideas about themselves as center of the universe. In short sales they’re just bit players in a larger drama.

“The buyer is really sort of along for the ride in somebody else’s transaction, this loss mitigation situation between the seller and the lender,” he said. Joyce said it’s all about “a borrower negotiating a solution with the lender. The buyer is not the primary party.”

JPMorgan Chase spokeswoman Eileen Leveckis said the primary party is the owner of the loan, usually an investor: “That’s really the No. 1.” The seller’s role “is to prove a hardship,” she said.

Beyond sellers, a secondary lender—maker of the down payment or home equity loan—is also involved and usually wants as much money as possible.

J.K. Huey, a senior Wells Fargo executive heading the bank’s short sale unit, said short sales take so long because the bank must negotiate deals with investors, secondary lenders and mortgage insurers. Amid the large-scale meltdown in U.S. housing markets, Wells Fargo stands in line to negotiate short -sales agreements with these parties alongside all the other major lenders. “Everybody is trying to minimize their losses,” Huey said.

Though banks say they want the fairest deals possible, their inner short sale workings remain mysterious, even exasperating, for front-line agents. Agents with street smarts in government short sale programs, lender eccentricities and ways to overcome obstacles are banding together to share war stories.

In Roseville, Calif., about 15 short sale specialists from El Dorado, Placer and Sacramento counties gather monthly as the “Masterminds” to discuss what works. Agents talk about rising at 4 a.m. to be first in line for their negotiating counterparts inside the banks. They share accounts of flagging e-mails to pop up on a negotiator’s screen. Anything that stands out helps.

“They’re flying by the seat of their pants. They’re overwhelmed. One told me he had 303 files on his desk,” said Sacramento agent Mary Assadi.

Among major threats to getting a deal done is a secondary lender refusing to release a lien. Agents say it happens often: The lender that financed the down payment or home equity loan balks at the short sale unless the buyer or seller kicks in a couple of thousand dollars extra. Worse, the secondary lender might want that to be kept secret from the primary lender.

Former University of California-Davis faculty member Carol Rubin encountered such a request for a secret $5,000 payment early this year when buying a short sale property in Newcastle. Without the money, the secondary lender would scuttle the short sale and push the property into foreclosure, she was told. Her agent balked at the request. The California Association of Realtors says it’s illegal for parties in a real estate transaction to withhold details from the others involved.

Rubin said the lender also asked the seller for the money. Eventually the primary lender agreed to the request when informed and saved the deal.

“I got the property at a very good price and in record time for a short sale,” said Rubin. “But it was a nerve-wracking process that was driven by forces that don’t exist in normal sales between buyer and seller.”

Most real estate agents believe short sales will continue for years as the market rebalances. But few believe they will become much easier.

Original Article

Posted in: Short Sales
Tags: fabulous deals, Foreclosure, home buyers, Housing Market, new reality, property values, prospective buyers, real estate agents, real estate broker, short sale

When buying a home, you do not only have to make a down payment, but you will also have to pay for the costs of closing. Closing begins when you sign a contract of purchase and ends around eight weeks later. These are a plethora of fees. Your mortgage lender will usually give a good faith estimate of the costs of closing when you ask them for a loan.

Below are some of the most common charges and fees that you can expect during closing:

1. Points—is a term for loan origination fees where a point equals one percent of the amount of loan and will go to the lender.
2. Mortgage Broker Fees—since brokers handle most loans, many loans include this fee. This could include points and broker processing fees.
3. Tax Service Fees—is a kind of service that keeps an eye on the property tax and helps the lender make certain that you are updated on your tax payments and protects their investment.
4. Credit Report—is a routine part of the loan application process where the lender will pull out your credit report to find out if you are a risk as a borrower. This will cost up to $60.
5. Document Preparation—you will have to pay some high fees since preparing loan documents before was long and detail-oriented. Even though the process is easier these days through computers, the fees remain high.
6. Wire Transfer Fees—while this may not be a big fee, most lenders will include this. They have taken advantage to charge fees for the process of transferring money.
7. Appraisal Fees—payment that goes to the appraiser who will inspect the home. It is an important step in the mortgage application process since it allows lenders to determine that the home is worth what they are lending you to purchase it.
8. Flood Certification—your lender should find out if your potential home is near a federal flood zone area, so they must pay an outside party to certify about this information.
9. Title Insurance—a title company is involved in researching the history of the home and a title insurance policy is drawn up to protect both borrower and lender from future losses due to claims against the home or title.

Costs of closing will differ from state to state and how you negotiate. While buyers usually pay most fees, sellers could pay some too. Often, buyers often get lenders to contribute as well. Keep in mind that lenders who are offering a “zero-closing cost” loan will usually charge a higher rate of interest. A professional settlement agent will orchestrate the closing. The agent will file the documents and pay taxes on your behalf and makes certain that the task is done and recorded as specified by law.

There are some states where the agent must be a lawyer while in others; it is an independent settlement or an escrow company, which is licensed by the state to hold the necessary documents and the money as well.

Posted in: Home Buying
Tags: appraisal fees, document preparation, flood certification, good faith estimate, loan documents, loan origination fees, mortgage application, mortgage broker fees, mortgage lender, tax payments, title company, title insurance

If you are a first time home buyer who is toying with the idea of purchasing your own place, refrain from jumping into it blindly. While buying your first home is certainly an exciting prospect, the whole experience can be made much more enjoyable and less stressful if you go about the project with a straightforward plan.

Find your price range: Before you do anything else, make an appointment with your bank to find out how to get pre-approved for a mortgage. A pre-approved mortgage will let you know the absolute limits of what you can afford to spend on a house which will, in turn, let you know what properties that you can reasonably look at buying.

Pick a buyer’s agent: Ask friends and family if they have any recommendations, but take the time to interview any agents who you are interested in using. Just because someone worked well with your brother, doesn’t mean they will necessarily have a compatible personality with you. It is a good idea to hire a buyer’s agent who has at least a few years experience and has a specialty in any kind of niche market you’re interested in buying into like condos, farms, or luxury properties.
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Posted in: Home Buying
Tags: first time home buyer, pre approved mortgage

When you plan to buy a house, it is just expected that you get too excited about it. However, some do not get this much excitement. When you on the process of choosing a house, you can be confused with all the houses you see in the market. It becomes harder if you find a property that you like but you will have to do all sorts of repairs. To be able to stay away from committing common home buyer’s mistakes, consider some of the tips explained below.

Generally, buyers have several issues to deal with when they begin the home purchase process. They experience mixed emotions during the entire activity. The best way to conquer this is to be aware and be knowledgeable about the condition of the real estate market.

At first, every home buyer must go through the pre-approval procedure. The buyer will know how much house he can afford. Some of the aspiring home buyers do not like to be pre-approved because they know they have enough resources to purchase such property. However, these people who refuse to do it end up doing the wrong move.

Get all the relevant facts about the mortgage to stay away from making mistakes. The figures of the estimates will help you determine your budget too. You will know your limitations on your budget and how much costs you should only incur during the purchase process.

Your lender can greatly help in letting you understand the terms and conditions of the agreement. You have to clear things out with him so you will not have any problems about the contract later on. Do not sign the papers if you still have something on your mind that you want to clarify. Sometimes things which are not completely clarified can be the root cause for complicated problems later on. Thus, the home buyer ended up dealing with different issues on his new house.

Home purchase is always a complicated activity. It gets more complex if you do not have complete understanding of the real estate market. Before you embark into the main process, you should make the necessary preparations for a more organized approach on home buying process. Remember you are making major investment and it will involve your hard-earned money. As much as possible avoid committing mistakes. Carefully plan every step that you make so you will not have to deal with other issues later on.

If you want to have a successful home purchase process, follow the tips above for a simpler and easier home investment activity.

Original Article

Posted in: Home Buying
Tags: approval procedure, home buyer, home buyers, mortgage, pre approval, real estate market

Most homeowners know that staging is an important part of selling your home but not everyone realizes that it can be done poorly or way overdone so that many benefits are completely lost. While it might seem pretty straight-forward hiring a stager—or even doing the work yourself—home staging can be trickier than you think.

From looking at MLS listings, you can easily see that some homeowners are unaware of even the most basic staging strategies. Even before you consider hiring a professional stager there are some simple steps that you can take to either perform a do-it-yourself staging or prepare to have a professional put the finishing touches on the staging of your home.

The first step in staging should be to de-clutter your home. Box up all of your knick-knacks and put any unnecessary furniture and seasonal items into storage. Excess belongings in your home can make it look smaller at best, or at worst like a hoarder lives there. A large amount of excess belongings can also make it difficult for prospective buyers to see what the bones of your home really look like, as well.
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Posted in: Sell Your Home
Tags: clutter, home staging, neutral tones, prospective buyer, selling your home

It is not always the best solution to transfer or buy a new house simply because you are tired of how it looks. You might be bored of the atmosphere at home and you are looking some place where it would give you a totally different experience. Well, there are several ways on how to cope with this boredom. Remodeling your place can be a great and feasible solution. In fact, you do not need to hire an interior decorator just to materialize this plan. There a lot of DIY home improvement ideas which you can apply to your house for a totally different set up.

You can always improve any part of your house which you think is already too outdated. You might want to consider the basement first then slowly go up until you reach the attic. But do not get too much excited about it. There might be countless ideas which go over your head right now and you do not know where to start. So, to keep it organized, just read the pointers below for few DIY home remodeling ideas.
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Posted in: Home Improvement
Tags: home improvement ideas, interior decorator, painting, remodeling project, wallpapers