Real Estate News and Commentary

April 6, 2010October 5, 2019

Check your ego and get out of your way

If you’re going to sell your home this spring, “check your ego.” Having a high self esteem is a good thing; however, having an over-inflated worth of your home can cost you money and aggravation.

Listing your home at a realistic price can decrease the home’s “days on market,” and reduce the probability that you would have to significantly lower the list price down the road. Last year, many home owners who were unwavering in their belief that there home was worth more than what the market would bear found that selling their homes took longer and ultimately accepted a price much less than they had hoped. Other home owners who were determined to sell at the higher price eventually exasperatedly withdrew the listing.

Last week’s release of the Standard and Poor’s/ Case-Shiller Home Price Index for January 2010 (standardandpoors.com) revealed that home prices continue to fall; although the silver lining is that the rate of price depreciation is not as steep as it was a year ago. The composite index of 20 metro areas is down 0.4% from December 2009 to January 2010 and down 0.7% from a year ago; nationwide average home prices are at 2003 levels. The Washington DC metro area fared much better than other metro areas; Washington metro area home prices only fell 0.2% from December 2009 to January 2010, however home prices increased 3.5% from the same time last year!

Statistics reported by the Greater Capital Association of Realtors (GCAAR.com) support the findings of the S&P/ Case-Shiller Home Price Index. Average home prices for single family homes in Montgomery County fell between December 2009 ($480,931) and January 2010 ($451,255). Data compiled and reported by the Metropolitan Regional Information Systems, Inc. (MRIS.com) also substantiate these data, such that the median area home prices decreased comparing data from January 2009 to January 2010. However, home prices slightly increased in February 2010.

Many home owners remain confused about the unstable real estate market due to ambivalence caused by the reality of a downward market conflicted with their own value assessment of their home. Needless to say, home owners may find it more difficult to come to terms with the reality that today’s depreciated home prices have fallen to 2003/2004 levels (as indicated by S&P/Case-Shiller Home Price Index), especially if they attempted to sell their home last year. Additionally, home owners are disserved by over-aggressive real estate agents who will say anything to get the listing; including telling the home owner that the home can sell at a much higher price, when the comps clearly suggest otherwise.

Obviously, selling your home is ultimately your decision. Since the decision to sell may hinge on many factors including the sale price, consulting with several different Realtors about neighborhood comparables can give you a good command over the neighborhood data as well as a realistic range of sale prices. If another factor of your sale is the purchase of another home, remember that real estate is relative such that the home you may purchase may be just as good of a buy as your home will be to another home buyer.

Clearly you should not sell your home if you are content living there. But if you are in the position to sell your home and want a successful sale- get out of your way.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of April 5, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell

April 2, 2010July 6, 2019

A continuation of a bifurcated market or signs of stability?

The S&P/Case-Shiller Home Price Index was released last week, revealing a reduced decline of annual data in the composite 10 and composite 20 indices. The Washington DC metro area index showed a slight decrease of home process from December 2009 through January 2010; although showed an increase of 3.5% compared to the same time a year ago.

The index compiles and tracks home price data in twenty metro regions across the country. The data has been the “gold standard” of home price indicators for many years. However, the index revealed last fall and winter the emerging trend- the two tier market. Does the existing peak to valley ratio of the index indicate an ongoing trend of the two tier market, having distressed properties selling for much less than owner re-sales? Or is it an indicator that price differences between distressed properties and owner re-sales are becoming less significant?

As the spring market is gearing up, many home owners are preparing to list (or re-list) their homes for sale hoping for a chance to get top dollar; many home owners have decided to wait until conditions are better for them. However, those selling have most likely come to terms with the fact that home prices are on average equivalent to 2004/2003 home prices. Many are eager to see if last August’s “bump” in the S&P/Case-Shiller Home Price Index was aberrant due to a slumped market or a trend of the bifurcated market.

By Dan Krell
Copyright © 2010

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

March 30, 2010October 5, 2019

Benefits for delinquent home owners while reducing foreclosures

by Dan Krell © 2010

Additional assistance for financially challenged home owners was announced last Friday (March 26th) by the U. S. Treasury (ustreas.gov). To assist struggling home owners keep their homes and lessen the number of foreclosures, the expansion of the Home Affordable Modification Program (HAMP) will address unemployed home owners, negative equity, second mortgages, and “premature” foreclosures.

Unemployed home owners take heart. You may be afforded a mortgage forbearance period of at least three months (not to exceed six). Once you find employment you will be considered for a permanent HAMP mortgage modification if you stay current on your forbearance payments and your monthly mortgage payment is more than 31% of your monthly income. You will have to provide proof of income and the modification must meet the standard net present value (NPV) test (The NPV test compares the cash flow of a modified mortgage to the cash flow of an unmodified mortgage). However, if you do not find employment during the mortgage forbearance period, you will be considered for the Home Affordable Foreclosure Alternatives program.

If you are looking to regain some of your home’s equity, you may now have a vehicle to do so through a HAMP mortgage principal write down. Participating lenders will be offered additional incentives to provide onetime mortgage principal write downs when mortgage balances exceed 115% of the home’s value. An alternative principal reduction plan will be combined with a HAMP mortgage modification and may be permanent as long as modification payments are timely for three years.

If you’re seeking to refinance your HAMP eligible mortgage but your loan balance exceeds 115% of your home’s value, you may qualify for a FHA refinance in conjunction with a lender mortgage principal write down. The new loan may not exceed 97.5% of the value of the home (current FHA borrowers are not eligible). The refinance may also qualify to consolidate a first and a second loan under these circumstances.

If a second mortgage is giving you trouble, it may now be eligible for a modification if your first mortgage was already modified through HAMP and your lender participates in the Second Lien Modification Program.

Finally, further protections have been added to assist you if you are pursuing a HAMP modification or seeking bankruptcy protection. In an effort to prevent “premature” foreclosure sales while home owners are seeking modifications, lenders are advised to increase communication with home owners (through telephone and mail) as well as requiring a written certification that the home owner is not HAMP eligible prior to conducting a foreclosure sale. Additionally, home owners who have pursued bankruptcy protection will no longer be excluded from HAMP programs.

Although the HAMP enhancements will not be up and running immediately, the full program is expected to be available by the fall (with pieces implemented gradually). Additionally, mortgage principal write down programs may take some time to implement; however some lenders may already have similar programs in place.

To qualify for these new programs, home owners must be HAMP eligible (and meet other specific requirements). Unfortunately, reports of these programs on the internet and other media outlets are sometimes incomplete, incorrect and/or exaggerated; it is highly recommended that you check the fact sheets on the Making Home Affordable (www.makinghomeaffordable.gov) website as well as talking to a Making Home Affordable counselor.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of March 29, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell

March 26, 2010June 28, 2019

The next round of homebuyer tax credits may be a local incentive

As the home buyer tax credit is set to expire very soon, many are wondering if the credit will be extended again. Earlier in the year, proponents have pointed to increased home sales as a direct result of the home buyer tax credit. However, a a Wall Street Journal article (blogs.wsj.com/developments/2010/03/18/has-the-home-buyer-tax-credit-extension-flopped) points to a recently revised Fannie Mae 2010 housing forecast that indicates the current home buyer tax credit has not been as effective as the credit in 2009.

Fannie Mae’s “March Economic Developments” states:

“There are many reasons why we believe the second tax credit will be much less effective than the first. The 2009 first-time homebuyer tax credit may have dried up the pool of qualified first-time homebuyers. In addition, while the tax credit was extended to cover repeat buyers, the amount of the credit was smaller than that for first-time homebuyers. The tax incentives may not be enough to induce many homeowners to move, given that current homeowners generally must incur commission costs to sell their current homes, a cost not incurred by first-time homebuyers.”

Although there is doubt over the federal home buyer tax credit, states like California that have been hit hard by foreclosures are offering home buyer incentives. Yesterday, Governor Schwarzenegger signed into law yesterday the extension and expansion of the California home buyer tax credit, commenting that the credit is expected to stimulate the economy and put many of the vacant homes back “on the tax role.” Now California home buyers can take advantage of a California tax credit of $10,000 for the purchase of a new home or their first home until December 31, 2010.

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

March 24, 2010July 25, 2019

Home Listing Photos: revealing more than ever

If you’ve been looking at home listings online, I’m sure you’re drawn to the photos. In an effort to distribute information to agents and consumers, the real estate industry has embraced cutting edge technologies that include embedding photos in home listings. Multiple photos and virtual tours can make it seem as if you are actually in someone else’s home, but sometimes the pictures (or lack thereof) can be more revealing of a home’s shortcomings.

Nothing helps a home sale more than multiple quality photos in the listing. The photos help home buyers see the home from the convenience of their office or family room. Both the exterior and the interior can be viewed without actually visiting the home. Realtor Magazine (published by the National Association of Realtors) has published many articles on the importance of using multiple photos in home listings and marketing to help them sell faster. If your home is on the market (or you are thinking of listing it soon) take note of this April 2nd, 2008 article (“How Photos Help Sell Homes”) which indicated that the days on market is drastically reduced when there are multiple quality photos: “A property with a single photo spent 70 days on the market (DOM) on average, while DOM fell to 40 with six photos, 36 with 16 to 19 photos, and 32 with 20 photos…” The same article also reports that your home will probably sell for more if your agent posts multiple quality photos compared to posting only one photo; “listings with one photo sold for 91.2 percent of the original price, while homes with six or more sold for 95 percent of the original price…”

Although you might think that with the availability of technology allows having multiple quality photos to be standard practice among real estate agents, either through hiring a professional photographer or taking the photos on their own. The fact is that many agents still do not take advantage the technology (for various reasons).

What’s more troubling than not having photos in your listing is having exaggerated photos in your listing. Yes, some agents go to the opposite extreme of using photo editing software to “stretch” the truth in their photos. Some try too hard to emphasize features such that the photos look bizarre and occasionally cartoon-like. Although Article 12 of the National Association of Realtors Code of Ethics states that “Realtors shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations…”, it is becoming more common to find embellished photos.

Home buyers are savvy and can spot “enhanced” photos, often wondering what is being hidden in the photo. Like the listing without photos, home buyers generally skip those listings where they encounter “enhanced” photos. A common complaint from home buyers is, “the rooms look larger in the virtual tour.”

If you’re planning to list your home, make certain that your listing agent uses the technology available to them to give your sale every possible edge; but make sure there are no extra “enhancements” that may turn buyers away. The bottom line is that your sale has a higher probability of attracting home buyers when you have multiple, high quality, and accurate photos of your home.

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.