
1. Realize that the price a homeowner can get for
their home today
is greater than it will be on
May 1st.
Any buyer who is not in contract on April 30th this
year will miss out on the Home Buyer Tax Credit ($8,000 for a
first-time buyer and $6,500 for the move-up buyer). That does NOT
mean houses will not sell after April 30th. It means that the buyer
will demand a better price.
If you need to sell, sell now.
2. Realize more and more experts are predicting a
surge in interest
Some examples:
Guy Cecala, publisher of Inside Mortgage Finance:
"There is no question rates have been kept
artificially low by the Fed's heavy buying. My opinion is that
rates will go up a full percentage point initially."
(meaning that 30-year fixed conforming loans, now
hovering around 5 percent, would hit 6 percent)
Christopher Thornberg, principal at Beacon
Economics:
"Clearly, when they (the Fed) stop printing all
that money, it's going to be a shock to the system. I have to
assume that when they pull back on it, it will cause a 100- to
200-basis-points rise. When they start selling off the stuff they
purchased, which by my guess would come early next year, that would
cause another 100- to 150-basis-points rise."
(meaning rates of 6 percent or 7 percent originally
and then 7 percent to 8 percent or higher within a year)
If you want to take advantage of the low mortgage
rates, do it now.
3. Read past the headlines!
Main street media, in their quest to get information
out, are not reporting the whole story. Here are two examples:
Headline based on Case Shiller report:
Reports Suggest Housing Market Stabilizing
Founder of the report Professor Case:
"I'm worried. Everyone's worried. If prices sink 15 percent
from here, which is a possibility, and the 2008 and 2009 loans go
bad, then we're back where we were before - in a nightmare ... The
probability is very high of a serious double dip."
Headline based on RealtyTrac report:
Foreclosures down 10%
Actual report said:
"January foreclosure numbers are exhibiting a pattern very
similar to a year ago: a double-digit percentage jump in
December foreclosure activity followed by a 10 percent drop
in January. If history repeats itself we will see a surge in
the numbers over the next few months as lenders foreclose on
delinquent loans where neither the existing loan modification
programs or the new short sale and deed-in-lieu of
foreclosure alternatives works."
4. Check out the KCM blog and the KCM Crew page on
Facebook.
Sharing great real estate information with the consumer is crucial
to being seen as a trusted advisor in today's rapidly evolving
market. You can get several articles a day to share at the KCM Crew business page and you can get a deeper explanation of today's hottest issues on
the KCM blog. Use this
information in your emails, newsletters, post cards and blogs.
5. Know that April 30th will not be Armageddon.
The real estate industry will NOT come to a
shrieking halt after the government exits the market this spring.
Five million homes will sell this year. That means there will be
ten million commissions earned this year. Just make sure you earn
your share. Your attitude and commitment will determine your
success this year - nothing else.
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There seems to be a long held American belief
currently under attack. For over two hundred years, homeownership
in this country was a desire of almost every American family.
Recently however, more and more people have been
pontificating on the fact that owning your own home should never
have been held in such high regard. As Realtors, we must defend the
belief in homeownership.
We don't want to overstate our concern as we know
that the majority of Americans still hold homeownership sacred.
Trulia just did a survey showing seventy seven percent of those
questioned still believe that owning a home is a part of the
American dream. Yet, it does concern us that, while people are
being forced from their home due to economic difficulties, some are
claiming that homeownership never should have been the goal anyway.
Let's spend a few moments looking at the financial
benefits of owning a home.
You may ask why we would make this argument today
knowing that housing is in the midst of one of its worst times
ever. Well, quite frankly, the last ten years have not treated the
homeowner that badly. Obviously, people who purchased a home
in 2006 and 2007 have seen their value depreciate over the last two
or three years. But, real estate was never seen as a good
short-term investment.
If we look at housing values over the last 10 years,
we find that even through these tough times real estate has
averaged over fifty percent return as an investment.
The chart below compares real estate to other
investments over those ten years.
Then why this challenge today? Well, in the middle
of the last decade, when prices were appreciating in some areas by
as much as 20% annually, many got caught up in the belief that
housing values should double every few years for the rest of
time. That belief created all sorts of reckless behavior.
Many purchased homes well beyond their financial
means. Others decided that they would gamble on future values and
interest rates by taking exotic mortgages to allow them to purchase
a McMansion and worry about the cost at some later date. And others
used their house as an ATM, withdrawing their equity in the form of
a home equity loan, in some cases, on an annual basis.
Previous to this, homeowners realized that a house
was a home first and then a pretty good long-term
investment. They might have borrowed against the house to put a
child through college, finance a wedding, or pay for medical bills.
In the last few years however, people regularly
refinanced to buy "new toys" (a new car, a boat, matching
ATVs, etc.). Or, if it was for a medical procedure, it would
just as likely be voluntary cosmetic surgery as a life saving
operation.
We realize that there were some people who were
caught in difficult situations and others who got terrible advice
from people they trusted. Their current situation is no fault of
their own. My heart goes out to those people.
Our hope is that, in these difficult times, the
same people make sure they get good counsel. That means we, as
realtors must offer our help. For example, we hope people think
long and hard before they willfully default on their mortgages.
They should try a modification first and, if that is
unsuccessful, they should look for assistance in doing a short
sale. A short sale will allow them to rebuild their credit more
quickly, and enable them to purchase a home again in half the time
it would take if they go through foreclosure.
For over 200 years, Americans were eager to purchase
property because they knew that on a long-term basis it would
create wealth. That concept is alive and well in this country even
today.
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This section is
dedicated to helping families find an alternative to foreclosure,
and helping them return to the goal of homeownership more quickly;
therefore, we are emphasizing the brochure developed by the
National Association of Realtors (NAR) that nicely summarizes the
existing HAFA Program.
On November 30, 2009, the Obama Administration
released guidelines and uniform procedures for its Home Affordable
Foreclosure Alternatives Program (HAFA). Modified HAFA rules for
loans owned or guaranteed by Fannie Mae or Freddie Mac will be
issued in coming weeks. HAFA does not apply to FHA or VA loans.
About HAFA:
HAFA, which will help homeowners who are unable to retain their
home under the Home Affordable Modification Program (HAMP),
provides incentives in connection with short sales and
deeds-in-lieu of foreclosure.
About the Program:
The program complements HAMP by providing a viable alternative for
borrowers (the current homeowners) who are HAMP eligible but
nevertheless unable to keep their home. It uses borrower financial
and hardship information already collected under HAMP, and allows
borrowers to receive pre-approved short sales terms before listing
the property.
The program prohibits the servicers from requiring a
reduction in the real estate commission agreed upon in the listing
agreement (up to 6%). It also requires borrowers to be fully
released from future liability for the first mortgage debt and, if
the subordinate lien holder receives an incentive under HAFA, that
debt as well (no cash contribution, promissory note, or deficiency
judgment is allowed). One of the key components to the program is
that it uses a standard process, uniform documents, and
timeframes/deadlines. The program will provide financial
incentives: $1,500 for borrower relocation assistance; $1,000 for
servicers to cover administrative and processing costs; and up to a
$1,000 match for investors for allowing a total of up to $3,000 in
short sale proceeds to be distributed to subordinate lien holders.
You can download a copy of NAR's HAFA Brochure and NAR's Text-Only version of the Brochure. If you'd like more information on HAFA and more
detailed FAQs, visit www.realtor.org/shortsales.
If you'd like more information about short sales,
you can visit our "Short Sales" tab on
the KCM Blog.
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My father was talking about having the courage to be
strong with your friends and family when they are involved in
questionable behavior of any kind. People might not react well when
we tell them the truth. But, we should not let that stop us from
telling it to them anyway.
I was sitting with the leadership team of a prominent real estate
company recently when the subject of price adjustments came up. The
feeling amongst some of the managers was that agents did not want
to talk to sellers about price reductions because they were afraid
they might "hurt the sellers' feelings". The President of
that company then said "By trying not to hurt their feelings,
we might be hurting their families."
Boy did that
sound like my pop!!
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"Be who you are and say
what
you feel, because those who mind don't matter and those who matter
don't mind."
~ Dr. Seuss
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