Twin Cities Real Estate

Less Foreclosed Properties

Foreclosures are selling.  We are seeing the number of sales increase in bank mediated properties, and this is very good.  It is good for the local real estate market.  Once these properties are off the market, we can see the value of traditional properties go up.

As a Realtor I get frustrated with the condition of  foreclosed properties and also how the bank handles purchase agreements.  Those of us in the industry would like to never sell a foreclosed house.  The reality is that buyers want the deal foreclosed properties have to offer and some buyers want to bring them back to life the way they want them to be and not another person.

The truth is they are out there in numbers in all price ranges and all neighborhoods.  We anticipate the growth rate of foreclosed houses to slow down and the market in the next 12 months might start evening out.  Please note the word might.  We live real estate day to day.

Is Snow Coming?

Have you gone out to get extra milk and eggs?  I don't get the fear that the media instills in those of us who live in the Twin Cities regarding winter snows.  Yes, I do think it is helpful to tell people their commute to and from work might be longer.  It is good to warn us to wear boots.  I don't know if we can dress the kids any differently.  Will a teenager wear more than tennis shoes and a hoodie?  This is not anything more to me than winter in the Twin Cities.

My take on it is that the weather people have not had that much of a winter to talk about, so they really get going when they see lots of purple on their radar screens.  It is not the best PR for our area.  The worst part is that when it all goes to Milwaukee or Madison, as it did last year, we can't send out a broadcast that says, "Just kidding."  The rest of the world confuses the Twin Cities with the tundra.  Some people just won't move here as they fear for their lives.  It did not help that "Grumpy Old Men" had people driving down our streets on a snow mobile.  Those who own those machines can tell you the lack of snow we have know in the recent years. 

Our vehicles get around pretty good in our city.  Why own a SUV if not for days like what we are to have tomorrow?  The plows will be out as the snow starts falling.  Pizza will be delivered to you if you call for it.  The malls will be open to receive people. It will have to be more than I can imagine to stop us. Stay safe, stay warm, and know that Sunday is March 1st.

Rental industry hit by the economy

Think the economy is only hurting the housing market concerning ownership, it is also effecting the rental industry. Rent had been rising and vacancy rates were falling. We all expected rentals to be the safety net for those who lost their homes. Not true, the economy has people going from their foreclosed home into a house of a friend or reltative.

The seller who takes the stand, "My house won't sell in this market but I'll rent it and sell it in a few years," might be in for a surprise. There are not renters out there who can afford to pay the rent.Selling now might be the lesser of all evils.

Apartment hunting is easier now than ever. The shaky economy is making even renters afraid to commit. Renters are doubling up. People are having trouble paying their rent. Finally, the inventory is growning more units available and new building have been built.

Home Theaters

Home theaters were a big rush for awhile, but they have really quieted down.  I imagine the economy has put a damper on them.  High end homes $500,000 like to boast them, but I still find many buyers think they are a waste of square footage.

In many cases the theater is located in the basement of the property so it can be dark and quiet.  That makes it logistically not so friendly to use on a daily basis or invite the friends down to.  I found in the lofts downtown many times the second bedroom became this unbelievable theater.  The 15x18 room was dark, had surround sound, a big screen or projected TV. a popcorn machine in the corner, wet bar, wine cooler, over-sized furniture, and a large bowl of M&M's on a table in the center of the room.  Remember, just steps away is the kitchen.  My buyer would ask how much money would it take to restore it to a den or bedroom.

In large homes the theater can be appreciated.  What becomes sticky is when an offer is written and the seller wants to break the theater apart in terms of dollars and cents and have the buyer pay for his technology.  The buyer many times does not appreciate the high end stuff and is not willing to pay for it.  Then the seller gets frustrated he has to take it all apart and repair the room.  In reality the "stuff" is four years old and he would like to design and new and improved theater in his next property.

Sellers need to know that when they go to sell value is perceived by the buyer and buyer might not pay what the theater cost to install.

Forecasting

Just when we think we are moving out of winter and into spring, we are shown how silly those  thoughts were.  As I was shoveling the many inches of snow this morning, I thought back to the weather report where the weather man said it would be a small snow and easily melt.  Forecasting the weather is like trying to tell people what will happen in the real estate market.

Trends, that is what we watch.  There are also indicators that help us forecast what is to come.  What I watch for is the following: interest rates, employment, consumer confidence, weather conditions, inventory. current sales, and anything in the media that might distract buyers and sellers.  Watching these indicators I can only tell people the future in real estate will be up and down.  This weekend rates fell to under 5% conventional and 5% FHA.  You could not ask for better rates.  We are seeing less houses come on the market.  That is good bad.  Sellers don't need any more competition, yet buyers need better houses to choose from.  Unemployment and concerns over layoffs is not good.  Best Buy is doing another round of layoffs.  We are back to winter and that sops buyers form being anxious to buy.  They love to dream about grilling out as they see houses.  The media is quiet right now.  The biggest thing today is who will get best actors at the Oscars on Sunday.  What is of concern to me is that in the month of December in the Twin Cities 49% of the sales were bank involved.  That is still indicating too many foreclosed properties and too many buyers looking for deals and not the higher end properties.

I would rather know the truth when someone is forecasting.  That way I can be prepared.  Sellers need to be prepared for longer market time and less dollars for their properties.  Buyers need to be prepared to act.  The climate for buyers is too good for them to remain as unmotivated as they are.  Remember, just like the weather can change so will the real estate climate.

Information is a powerful motivator

Convincing a buyer to buy now is like telling someone they would like a root canal.  Buyers feel rates will drop to 4% and that prices will still go lower.  Some person who works at the cube next to them (this person is not a Realtor) tells them they know it will get better.  What they forget to tell the buyer is that it could not be as good tomorrow.

The Fed's are offering words that sound encouraging at first reading.  They are buying Mortgage Backed Securities. Some feel this program will mean lower interest rates.  On second reading you will see they are buying FNMA 30 year 5.5% and 5.0% bonds, which don't have much of an impact on present interest rates.  Go to

http://www.newyorkfed.org/markets/mbs/index.html

and learn more.

With rates at present low levels, many of the mortgages in these FNMA 5.5% pools are being bought up by the Fed and will be refinanced and paid, thus giving the Fed a quick recoup on some of their investment.  This action most likely will not reduce the present interest rates that are very good.

Waiting for the rates to drop on a loan today could mean saving $30.00 a month.  Waiting could mean rates could go up and that qualifying could get more strict.  Now is the time to buy.  Yes You Can.

Valentine's Day

This Realtor is madly in love with her husband and has been so for 32 years.  It can be a challenge when you work every day of the week and whatever hours your client needs you, to keep your love alive, but we do it.  Today is Valentine's Day.  The day we show how much we love another person.  Well, Charles and I are both working.  It is  Saturday in the heart of our buying season.  Does that mean we don't show our love for one another? No.

Yesterday we cleared our schedule from 11:00 am on and had our Valentine Date.  We had the best time as no one else was celebrating.  We were like kids playing hooky.  Our cell phone were off, we did not check email, and we just had a day of doing silly things that made us happy.  The world of real estate did continue without us.  That night when I turn my email back on I found an agent who stated she would have a purchase agreement to me Saturday on one of our properties, I had a seller who wanted to sell, and I had 8 showings on my properties for Saturday.

I do work constantly, but I do sneak time to make sure I am taking care of myself and the people I love.  As Charles and turned out the light last night with our silly dog between us we both said "This is good.  This is just how we want it"  May you have a lovely Valentine's Day.

Short Sales

What is a short sale?  Sometimes on the multiple listing states the property is a short sale, but it need not state this.  A short sale occurs when the current market value of the property is not sufficient to pay all debts and obligations secured by liens on the property.  A short sale requires the seller to enter into short sale agreements with each creditor who has a lien against the property.

The short sale  is the most complicated of all the bank sale types.  The seller most likely still is living in the property.  The property is usually being well kept.  The problem is that the bank has not taken steps towards agreeing to sell the house for less than the mortgage amount.  They do not start those steps until a purchase agreement is received by them. The purchase agreement must state within it that the agreement is contingent on the bank accepting the terms of a short sale.  If there are several lien holders, you will usually find  the first lien holder is easy to work with (they have the best chance of getting their money back) and the lien holders that follow are more difficult as they are not likely to see their money back.  In fact those further down the line many times force the property into foreclosure.  To a buyer this means you can wait 60-90 days before you hear from the lien holders as to the acceptance of the offer.

Sort sales can be a great opportunity for a buyer to buy a property in fairly good condition at a lower price.  The buyer does need to patient to hear if their offer is accepted and they must buy the house in "as is condition" without any warranties.

The Mud Season

Mud season and selling houses is challenging.  This is the start of our mud season and it lasts till almost the end of April. I call it mud season as some days we are in winter and then the next day we can be in spring.  Our yards go from looking pretty after a new fallen snow to a look of slush after warm temps and bright sunshine has melted it away.  It is difficult to present a house as appealing when it looks like the end of a bowl of ice cream.

On a warm day it is a good idea to get the Christmas decorations down and the browning wreath off the front door.  I know the deer might be frozen into the front lawn, but when possible get him out of the first look at the house.  This is when it is wonderful to have pictures on file of the property in other seasons that can be used to show the buyers how it looks in better times.  I will tell sellers when I meet with them and they think they are a year or two out in selling to take digital pictures and save them on a CD.  They can be used at the time the property is listed. 

A listing agent can never depend on a buyer to use their imagination.  They only believe in what they really see.  Showing agents have a tendency to be not very helpful when it comes to seeing the future.  I have tried using a hair dryer to get the snow gone, but believe me it does not work.

A Chart that Best Explains the Real Estate Rebate

HOMEBUYER TAX CREDIT

FEATURE	CURRENT LAW	HOUSE VERSION H.R. 1	SENATE VERSION (Isakson-Lieberman Amendment)
Amount of Credit	Lesser of 10 percent of cost of home or $7500	Same as current law	Lesser of 10 percent of cost of home or $15,000, but only for purchases beginning the date the President signs bill.
Eligible Property	Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence	Same as current law	Same as current law
Refundable	Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.	Same as current law	No. The credit can reduce tax liability to zero, but if purchaser’s tax liability is less than the amount of the credit, the unused portion is not refunded to purchaser.
Income Limit	Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000, respectively).	Same as current law	None.
First-time Homebuyer Only	Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase	Same as current law	No . All purchasers, not just first-time homebuyers, are eligible for credit.
Recapture/Repayment	Yes. Portion (6.67% of credit) to be repaid each year for 15 years, starting with 2010 tax filing. If home sold before 15 years, then remainder of repayment amount recaptured on sale.	Yes and No. Repayment will apply to 2008 purchases. For 2009 purchases, the credit will not be repayable UNLESS the home is sold within three years of purchase.	Yes and No. For 2009 purchases, the credit will not be repayable UNLESS the home is sold within two years of purchase. Repayment will continue to apply to all 2008 purchases and 2009 purchases before date of enactment.