Friday, September 28, 2007

NAR Reports August Existing-Home Sales Fall Due To Temporary Mortgage Problems

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In a press release for the National Association of Realtors entitled, "August Existing-Home Sales Fall on Temporary Mortgage Problems," Walt Molony cited news that existing home sales has fallen due to the problem of mortgage unavailability in the market. This problem was described as "peaking," which attests to this issue being far from over. Or is it?

"Total existing-home sales – including single-family, townhomes, condominiums and co-ops – were down 4.3 percent to a seasonally adjusted annual rate1 of 5.50 million units in August from a level of 5.75 million in July, and are 12.8 percent below the 6.31 million-unit pace in August 2006" (Molony).

According to Molony, Lawrence Yun, a Senior Economist at the National Association of Realtors, said he had expected the decline that resulted from a rise in cancelled and postponed sales transactions; which occurred when loan commitments fell through. This trend is expected to continue through September. However, Molony cited a different perspective from NAR President, Pat V. Combs, when she said that the outlook is actually improving:

"'Mortgage interest rates have been declining and loan availability is improving,' she said. 'Movements to enhance the FHA loan program and to raise the limits for conventional financing could provide additional relief, and it looks like the worse of the mortgage availability problem is behind us...The abundant choice of homes is permitting buyers to better negotiate price and terms. There are good opportunities in the market now, especially for first-time buyers'" (Malony, Combs).

Read full press release: "August Existing-Home Sales Fall on Temporary Mortgage Problems"

Saturday, September 22, 2007

The Tale of Betty Buyer, As Told by Carla Muss-Jacobs

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Every now and then someone comes along and offers up an anecdote that really cuts to the chase of why certain things are important, such as buyer agency--and most importantly--exclusive buyer agency. Carla Muss-Jacobs is an EBA in the Portland area, and she has written such an anectdote in her article entitled, "What Buyers Do Wrong." While she presents the scenario in a general and non-specific manner through her character "Betty Buyer," she clearly describes the common mistake that many homebuyers make when divulging too much information to representatives of the seller--often times not realizing how they have compromised themselves, and their negotiating position:

“The Tale of Betty Buyer: Betty goes out on Sunday just to get the paper. But while out, she sees an Open House sign in the neighborhood and drops in. The listing agent greets her, and Betty seems very impressed with the place. She tells the listing agent that she lives in the neighborhood and saw the For Sale sign go up a week ago. The agent tells Betty this is the first Open House, and it’s going really well – quite a few people have been in to tour...Betty didn’t seem to find any flyers outside, and wondered how much they listed the place. The listing agent tells her, and Betty is surprised....‘WOW – I can afford this! I just got qualified online. But, I’m good to go for $50,000 more!’...Yeah! It happens just like this. A buyers’ anxious, nervous energy can get the best of them. They talk too much. Not only did Betty show an interest in the home, but she also told the listing agent she can buy it . . . and not only that . . . but can spend $50,000 MORE!”

Cite Source: "What Buyers Do Wrong" by Carla Muss-Jacobs, EBA in Portland Oregon.

Carla also suggests two rules for buyers to live by:

"Rule #1 as a Buyer: You Have the Right to Remain Silent!"


"Rule #2 . . . obtain a BUYERS AGENT, and if you really want to do yourself a favor, obtain an EXCLUSIVE BUYERS AGENT!"

For more information, check out Carla's full article,"What Buyers Do Wrong."

Friday, September 21, 2007

Good Article: Careless Buyers Making Deal-Killer Mistakes

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An interesting article by M. Anthony Carr entitled, "Careless Buyers Making Deal-Killer Mistakes," discusses a couple of scenarios regarding the ways that buyers can sabotage themselves in a real estate transaction:

"Buyers can get great deals in today's market, but they must not be overcome with unnecessary fear, or make financial decisions that could harm their financial standing" (Carr).

Cite Source: "Careless Buyers Making Deal-Killer Mistakes"

Thursday, September 13, 2007

New Program FHASecure to Help Borrowers Caught Up in Mortgage Crisis

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Some good news came today--new FHA program, FHASecure, to help homeowners who are in the throes of delinquency that resulted from the current mortgage crisis:

"The FHASecure plan is designed to prevent foreclosures among homeowners who fell behind because the rates went up on their adjustable-rate mortgages. About 60,000 "delinquent-yet-creditworthy" mortgage borrowers will be able to refinance into FHA-insured home loans in the next year or so, an official with the Federal Housing Administration says."

Basic things to know about the new FHASecure program:

1. The program is available only to borrowers who made all their payments on time during the six months before the ARM rate was adjusted upward. The definitition of "on time," according to FHA guidelines is less than 30 days late.

2. According to the article, "Borrowers can get FHASecure loans even if they are up to six months behind on the payments on their non-FHA ARMs. But borrowers have to prove that they fell behind because of the rate reset and not for another reason, such as a job layoff."

3. FHA has maximum loan limits, which can be found here: FHA Loan Limit Finder

Read full article for more information about FHASecure.

Monday, September 03, 2007

Virtual Buyer Agent Not Telling the Whole Story

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There are many new business models popping up in the real estate industry. Some that are very consumer focused, and others that only try to be, but do not fully understand the scope of what a Realtor is supposed to do—specifically a Realtor who specializes in buyer agency, and more specifically a Realtor who specializes in exclusive buyer agency. It’s called advocacy.

Advocacy means that a professional takes the time to understand what their buyers are looking for, they preview properties to help buyers save time, they look for red flags, and they are supposed to recommend various inspections based on the red flags that they observe. Red flags that may not have been picked up by the buyer—had they gone by themselves. Buyers need to understand that they can negotiate rebates with any buyer’s agent, but sacrificing advocacy is a big mistake.

One particular virtual real estate company on the web entices buyers with a 75% rebate offer—spreading inaccuracies, as another well-known discount broker has done recently. For example, they say that buyers cannot look at properties on their own when they go with a traditional Realtor, or inadvertently, with a Realtor who exclusively serves buyers only. This is not true. Buyers can arrange and coordinate with their agent on how they should go about looking at properties on their own. The company claims that its’ agents do not depend on commission, and therefore, not influenced by commission. However, the company itself—which is the broker—does depend on commissions. How else can their business survive?

While the inaccuracies are plentiful, the major drawback of this company is that they do not preview properties and attend showings. Therefore, they cannot point out red flags that can go unnoticed if not picked up by a general inspection. They do not offer buyer advocacy, but rather, send buyers off to fend for themselves with minimal service. Perceived savings can become diluted if something is missed, goes wrong, and a lawsuit results. A buyer’s advocate will point out red flags and recommend various types of inspections to further investigate potential problems. A buyer's advocate will assist buyers at every step. Sometimes, a property will require more than a general property inspection, and these specialized reports are beyond the scope of a general property inspection—for example, geotechnical reports, and reports from structural engineers. If an agent does not go to the property, they cannot spot red flags. If they cannot spot red flags, they cannot recommend further investigation.

“A red flag can be anything that alerts you to a potential problem or that just doesn’t seem right…Noting red flags in a transaction may result in the buyer’s request for repairs, but it is far better than overlooking them, which can leave the buyer and seller vulnerable to a lawsuit, as well as the real estate agents, their brokers, and the general property inspectors.” (Nichols p.17)

Barbara Nichols, “The No-Lawsuit Guide to Real Estate Transactions”

Bottom line—there is much more to real estate than searching for properties on the Internet. The Internet is a wonderful time-saving tool for buyers and sellers alike, but it is most powerful when used in conjunction with the full services of a real estate advocate.

Inform and empower yourselves, but have an advocate on your side at every step of the way. Unless you are a seasoned real estate buyer, a self-service real estate option can be risky. If you would like to have a rebate…negotiate for it--if it's legal in your area--but don’t sacrifice the advocacy you would not otherwise receive from a self-service business model.