Real Estate News and Trends

I just read an article about buying foreclosures "on the court house steps". WHOA there buddy. They are off the mark. Here is a good example of an article that has no basis in reality. When a property is sold "on the court house steps", the initial bid is the judgment amount. So if the person was upside down, under water or any of those other words bandied about, then the minimum bid will likely be more than the actual value of the home. The mortgage balance, unpaid interest assessed, and legal fees are all part of that amount.

Initial listing prices are typically near the judgment amount when the property does go onto the market. Because many of these homes have challenges, the prices fall to far below market values. Some people being removed from their homes vandalize them as they are moving out.

An analysis I did for our MLS showed that for all foreclosures sold in DABR MLS for 2008, the eventual selling price was 2/3 of the initial list price. Lest you think the Realtors(r) are setting the inflated prices to fatten their commissions, rest assured, we are not setting the prices on foreclosures.

The article does mention a couple of pitfalls you may encounter when buying on the court house steps. Properties are often kept under lock and key until the sale. You are usually buying them sight unseen. The second major draw back the article mentions is the sale price is due in a short period. In IL you must pay the total sale price within 24 hours.

WCIA news aired a good story tonight. Two interesting bits of information I was able to glean: Champaign County's average home prices are almost double those of Vermilion County. The second interesting stat: home prices in Champaign County have declined by 19% compared with last year. Contrast that to the nearly flat pricing in Vermilion County. The one thing both markets have in common is that about 23% fewer homes have sold this year.

Want to buy a new home, but don't have a decent down payment? The NAR (National Association of Realtors (r)) announced that there has been a modification to the $8,000 tax credit, for 1st time home buyers. Stay tuned for further details as they unfold. I spoke with a local mortgage broker who indicated they don't have details, yet. But, I will let you know as soon as we know how the new program will work.

Three D's for Preparing your Home

Here are three simple steps in getting your home showing ready:

De-clutter, (Furniture, photos, nicknack's should be thinned out),
De-personalize (the photos to remove should be of the family),
Deodorize (my wife is a good example of some one who will walk away from an other wise nice home because of smell).

This is a simple thing people often forget in selling their home. Next to price, eye (or nose) appeal are almost as important as price. This article in Realtor (R) Magazine is aimed at agents; but, there are numerous tips for doing the little things to help your home show better. It's really worth a look.

One point from the article I thought was interesting and takes very little time is the letter about the home. I saw that in a home once and found it extremely interesting and helpful. In the home in question, the seller told about the history of the brick used on the patio. They were part of an old downtown building. She also high-lighted the refinishing project they had done on the maple floors by letting us know they were the original floors from the early 1900's. My buyer was impressed by the detail and love the sellers had put into the letter and the home.

The second point,one not mentioned in the article, is aroma, or more particularly, odor. If there are pets or smokers in the home there are a couple of things that can help neutralize the scents in stead of masking them (which sometimes creates even more pungent odors). You can pick up an ionizing are purifier. They leave a fresh scent reminiscent of the air after a thunder storm. (Some communities may have outlets where they can be rented.) The other is odor eliminating sprays and candles. We used to call them "odor eating" candles.

Your agent can market the home in every available venue, but if it isn't ready to show, all the fancy marketing in the world won't help. As Hillary reminded us during her presidential campaign, you can put lipstick on a pig, but ...

April Trends

The preliminary numbers for April in the Danville area are promising. I will have a more complete report on Monday. The initial numbers show our year to date (YTD) sales verses last year are still slow. But we are improving. The scary average selling values in March look like one of those one time blips. Our YTD average selling price is essentially flat (-.45%) as compared with last year.

Knowing What You Want

Ok, so you are prequalified or pre-approved for a new home. You know what your interest rate is going to be. You know what you can afford. What next? My first suggestion here is that you decide what you want. It seems like such a no-brainer. But, I have spent countless hours with buyer who said they would know the right house when they saw it. Two years later we're still looking.

I am not trying to denigrate any one here, but an agent can't truly help you unless you know what you're looking for. Make a list of wants and needs. Be as detailed as you can be. This will become helpful as we move on. Some things to consider in that list include geography (or school district) and condition you are willing to accept. Think about how the home will serve you for the next 5 years.

The five major considerations aer:
I Location
II Size
III Condition
IV Features
V Price

I Location: There are a few obvious considerations here. What is the school district? How far from work are you? There are some don't an agent can't get involved in. Some won't even talk about items that are public record for fear of getting into Equal Housing areas of concern. The best bet when it come to "that neighborhood", whatever that means for you, is to check the local news paper, the local crime stats, etc. It will help you identify the area and you won't scare your agent because he (she) is afraid of being accused of "steering".

A couple of other items to consider: Is there something nearby that might cause stress in your life? A high traffic area, railroad tracks, a manufacturing facility, etc. While on the surface it may seem like a little thing, if you are a day sleeper because of work, a school playground too close, might keep you from getting the rest you want. You hang outs: do you think you must buy your groceries daily from only one source. Is church important in your schedule and your congregation like family? Again, if you're a creature of habit, it might bring stress into your life when your new home is farther away than you would like.

A TIP: Visit the neighborhood during a variety of times on different days. Look for the traffic patterns, unusual activity, etc. If you think you like the neighborhood because it's quiet. Driving through on Friday @ 9PM, might reveal whether your hard working neighbors are party animals that will be keeping you up all night and trashing your yard with their empties. Or an after school drive by may reveal what looks like a nice place to raise the kids has no one for them to play with.

II Size Size will encompass a lot of things. In the preliminary investigation, try to make it as general as you can. While room sizes, number of rooms, SF, etc all play a roll, making the criteria too rigid may cut out places that could work. Floor plans may make home with 2400 square feet (SF) less functional than some some with 2000 SF. A finishable basement or attic may make a cute little home one in which a family has room to grow. So this are ways around some of those standards.

III Condition: Some time ago, I would have said that foreclosures or "fixer-uppers" would be a deal breaker for my family because I don't have the time or skill set to do many types of renovations. But there are some possibilities here. With a good contractor and the right starting price a house in need of work might get you a beautiful home. If it's a Fannie Mae you can check into whether it qualifies for Home Path Renovation financing. For Owner occupied or other foreclosures the 203 K loans previous mentioned might be a viable alternative. So that home that needs a new roof and carpet through out may work after all.

A quick example: I recently sold a listing in need of significant repair. Floors were shot and the casement (cranking) windows wouldn't seal. The home was in the most sought after school district in our county. Selling price:$28,500. Repairs: $15000 Total cost: $43000. As repaired appraisal: $71,000. This young single mom with no one to help repair a project house will be moving in to her new home in just a few weeks after closing. The catch: do you have time to wait? If so, this is definitely worth considering.

IV Features: Too me this is something I can do with out. Most features can be modified to achieve what I want. But I have known of buyers who didn't want to waste time on homes without fireplaces. The husband said his wife had always dreamed of having a fireplace where she could curl up with a good book and drink coco. He wanted their retirement home to fulfill that wish. The type of heating or air units may also be flexible because they can be changed in time.

V Price I drop this down this list because it had its own day.

By prioritizing wants and needs you can reduce the time it takes to find the right home. It will also help you know the trade offs your willing to make. Can we double the kids up for a little while since there small, knowing we have room and to finish their rooms in the attic? The other benefit of prioritizing wants and needs is it will reduce the stress involved in getting into your new home.

News in Review

Looks like the Feds are letting go of some of the repair money. For mortgages with an 80% 20% split CNN is reporting the Obama administration will be release funds to have the secondary lenders recover what they are losing. The net effect should lower mortgage payments for a few million borrowers.

Here's a story that highlights the importance of knowing what's happening locally. CNN reported prices continue to fall. But remember they are using data from 20 metro markets. The numbers are not a fair reflection of our numbers. And then there's this jewel. If you're as tired of doom and gloom as I am don't read this. It's another reminder of why I encourae people to look closer to home for their news and trends.

I spoke with a mortgage lender today who said they are as busy as they where in 2005. This article talks about the high number of mortgage apps. So why are home sales so soft? What these headlines and the lenders are telling is that most of the activity is from refinancing.