The Housing Market Shows Signs of Recovery or Does It?

Finally, after a debilitating plunge the housing market is showing signs of a recovery. Statistics show that home sale prices have steadily rose for the last few months but that rosy picture is still tainted from the on-going foreclosures and layoffs. Homebuyers have mega incentives at their disposal to purchase new and resale homes and many have taken the opportunity to breathe life into the housing market but we are not out of the woods just yet.

According to the Case-Shiller Price Index, compiled by Standard & Poor, July had an outstanding increase of 7.2 percent in home sales which accounted for the largest jump in the last ten years. It makes you want to breathe a sigh of relief and the increased numbers show improvement but let’s really take a closer look at this recovery before bringing out the balloons and party favors.

A third of the recent increase in home sales is first-time home buyers taking advantage of the federal tax incentives and these first time homebuyer tax incentives end in November. Another third are on account of foreclosures that unfortunately will not end anytime soon.

While the country is becoming excited about the recent influx of home sales the Case-Shiller national housing report explains this surge of home sales; Looks like the lower the price tag the higher the sales and homes selling for over $250,000 are still down.

Prospects for a full recovery look good but slow coming; more foreclosures are on the horizon. Sub-prime creative loans were all the rage in the mid-2000’s and the focus was on interest-only payments but the time is quickly coming for those payments towards the principal with ballooned interest rates. Are homeowners ready for this? Not all of them. Could this mean a new wave of foreclosures? Yes!

Interest-only creative sub-prime loans were a resourceful way of buying more than you needed and more than you could afford. Homebuyers could purchase a home and pay the interest while delaying any payments towards the principal for several years. However; not only are those principal payments coming due but now the payments will increase double and triple the amount. While homeowners were certain their salaries would have increased and career goals had been met, during this downturn in our economy most have been sadly disappointed.

So we’re looking at this surge of home sales as the beginning of a recovery but the tax credit will be eliminated in the next two months and we’re still facing layoffs and foreclosures…it’s too soon to call it but for homeowners looking to buy, it’s still advantageous to get a new home now.

Home Warranty Plans Can Save Buyers and Sellers Repair and Replacement Fees

After all the trauma of seeking your dream home homebuyers rarely think about what could possibly break and that could cover a multitude of items. As a home seller just think of the peace of mind you could have by purchasing a warranty package for the unknown. And what an enticement; purchasing a resale property with a protection plan in place. Homebuyers will be more willing to deal.

Any unexpected repairs and replacement costs can quickly add up and put a dent in your pocket. With a slow moving real estate market warranties make homes that are for sale more attractive to prospective homeowners.

Your home could be pristine, kept in an elegant manner but nothing lasts forever. The best well maintained home will need some form of upkeep one day and most resale homes have some of the original appliances. Homeowners never intend for something to stop working but face it, everything comes to an end at some point.

Home warranties are inexpensive insurance plans that provide a specific coverage if an appliance malfunctions. This could mean repairing or replacing the appliance depending upon the type of coverage you purchase. All plans differ including the exclusions and out of pocket fees, so it’s best to compare various home warranty packages.

Typically a home warranty will cover items like:

•             Dishwashers

•             Microwaves

•             Refrigerators

•             Stoves, Ovens

•             Garbage Disposals

•             Water Heaters

•             Washer and Dryers

•             Air Conditioning

•             *Furnace/Heater (some packages include this as an add on for an additional fee)

Items that are not usually covered:

•             Septic tanks

•             Window a/c units

•             Pools

•             Garage doors

But buyers beware; each warranty package will include a denial of coverage clause; this will apply if the homeowner fails to take proper care of the item. Improper conditions, unusual wear and tear and improper installation will usually negate the contract however; because every package is different you should pay close attention to contract exclusions.

Forbes.com – Top 5 Cities Where Home Prices are Hitting Bottom

Top 5 Cities Where Home Prices are Hitting Bottom

1. Las Vegas, Nev.
Las Vegas-Paradise-Pahrump, Nev., Combined Statistical Area
Change: 24 percentage points
Homes with Price Reductions, 1/1/2009: 54%
Homes with Price Reductions, 9/11/2009: 30%
Moody’s Economy.com forecasts that five years from now, home prices in Las Vegas will have risen by 3.53%

2. Phoenix, Ariz.
Phoenix Lake-Cedar Ridge, CA Metropolitan Statistical Area
Change: 18 percentage points
Homes with Price Reductions, 1/1/2009: 58%
Homes with Price Reductions, 9/11/2009: 40%
Moody’s Economy.com forecasts that five years from now, home prices in Phoenix will have risen by 7.44%

3. San Diego, Calif.
San Diego-Carlsbad-San Marcos, Calif., Metropolitan Statistical Area
Change: 15 percentage points
Homes with Price Reductions, 1/1/2009: 45%
Homes with Price Reductions, 9/11/2009: 30%
Moody’s Economy.com forecasts that five years from now, home prices in San Diego will have risen by 25.41%

4. Miami, Fla.
Miami-Fort Lauderdale-Miami Beach, Fla. Metropolitan Statistical Area
Change : 12 percentage points
Homes with Price Reductions, 1/1/2009: 43%
Homes with Price Reductions, 9/11/2009: 31%
Moody’s Economy.com forecasts that five years from now, home prices in Miami will have dropped by -2.93%

5. Los Angeles, Calif.
Los Angeles-Long Beach-Riverside, Calif., Combined Statistical Area
Change: 10 percentage points
Homes with Price Reductions, 1/1/2009: 45%
Homes with Price Reductions, 9/11/2009: 35%
Moody’s Economy.com forecasts that five years from now, home prices in Los Angeles will have risen by 12.36%

Are Homeowner Appraisals becoming helped or hindered by the new HVCC Law?

Every homeowner wants to ensure they get the valued home he/she pays for but has government oversight hindered the appraisal process? Homeowners rarely understand the behind-the-scenes home buying game and what it truly takes to purchase the home. Everyone plays an important role but recently tales of coercion on the part of the mortgage industry has lead Congress to introduce a new law; the Home Valuation Code of Conduct (HVCC). It has changed the process for getting an appraisal completed on a home.

The well-intentioned law both protects homeowners from shady double dealing and in-turn has put many appraisers out of business.

Before May 1^st mortgage brokers, lenders and real estate agents could use well-known appraisers to thoroughly appraise a home; with a new law enforced, only mortgage lenders can now order up appraisals. It all sounds like a great idea since the mortgage lender is the one risking the loan – why shouldn’t they be the one to order the appraisal to protect them, right?

Well the problem was more about the “good ole boy’s network” and long-time relationships providing whatever the need called for.  If a certain broker needed an appraisal he or she would call up XYZ Company and send out long time associate “Charlie” to do the appraisal.  The broker made it clear that the home was worth $500,000 and the appraisal needed to be worth the same.  Low and behold, the appraisal came in at that amount. XYZ got their inflated appraisal fee and everyone was happy…even if the basement of that appraised home was flooded, damaged and covered up…”Charlie” still appraised it at the value the mortgage broker had asked for because if he didn’t he knew future business would dry up.

The new HVCC requirement.

In simple terms, HVCC requires that appraisal management companies be used in the ordering of appraisals. Loan officers and realtors, who in the past could choose the appraiser, are no longer allowed to do so. The result, many argue, has been appraisers being used in areas where they may lack in-depth market knowledge. From the appraisers perspective, they are being forced to do appraisals for less money outside of their normal geographic area of expertise. Remember homeowners, you get what you pay for.

How will homeowners be impacted by this new HVCC law?

The Pro’s – homeowners will still get an appraisal which should not delay closing on their homes.

The Con’s – are homeowners getting a comprehensive appraisal that really benefits them? Or are they receiving quick, fast and in a hurry reports for the lender’s sake?

Of course, many lenders and appraisal companies deny this and until there is any concrete proof to the allegations the new code is in effect. Homeowners who feel their best interests are not being met can always discuss their issues with their realtor or lender who can help provide possible solutions.

Investing in Short Sale Properties

With the greater number of property foreclosure incidents occurring across the whole of United States, more and more people are being forced to short sale their homes in order to avoid foreclosure auction, thereby losing home. Short sale is proving to be highly beneficial to all these homeowners by settling their due mortgage at a much lesser rate than what they actually owe to the bank or the lender organization, that is, less than the loan balance. Moreover, since they are under the threats of facing foreclosure and obviously are short of real money, they can hardly avail the traditional means of selling their homes through realtors or to other prospects. The obvious choice for them remains property, thereby avoid foreclosure short sale and it is to this beginning that the real estate industry in the US is gaining on some real momentum.

The market is flooding with properties that are priced quite down to earth and this is providing the real investors of the US and overseas with some valuable opportunities to earn some real cash. In fact, the earnings you can expect from investing in short sale property can vary anywhere between $25,000 and $200,000 or beyond, the sum being contingent upon your investment, your investment pattern, the location of investment and so on and so forth. Most of the times, you can expect to get a short sale property at only 60% of the original rate, which you can sell in the open market, after necessary refurbishments, to earn you over 30% of the price value of the property under concern.

However, how much profit you make is determined by your vision and certain aspects that you need to keep in mind in order to make a deal worthy of investment. Let yourself be open to several options in investment, although keeping in mind what would fetch you more returns and which would not. Deciding on a particular property for investment is of crucial significance as your choice can make or break a deal in no time at all. Always predicate your choice of property on the ability to make profit out of it – for instance, take into consideration the location of the property and how viable it will be in the open market, when you intend to sell it at a later point in time.

Assess the property of your concern very well before you opt to buy it. For example, consider the number and extend of repairs and refurbishments you will need to do in a particular property to make it viable to a general buyer. Remember, every dollar you put in for repair or refurbishment is a part of your investment and it will definitely affect the returns you wish from it. However, if you foresee good profit opportunities, investing after a property will not be a bad deal. For this you need a general understanding of the real estate market and its forces. It is advisable to consult a short sale expert agency for their assistance in this domain. From negotiating with a seller to that with the concerned mortgage authority – the short sale experts – they will best help you address every aspect involved in the closing of a successful real estate deal.

A Down Market is the Best Time to Move Up

Have you thought about moving up to that dream home lately? With our sour real estate market still reeling from shock, homebuyers are still in the market to move-up to a bigger home at an affordable price. No, the housing markets are not looking that great and that means the perfect opportunity for you to move-up to that home you’ve always wanted.

Just two years ago prices were obnoxiously high but now…Buy, Buy, Buy is the only motto you should know. Interest rates are still at a low and it’s a buyers market. You won’t see home prices and interest rates as low as this for years to come.

When we do come out of this financial spiral and level off, the housing market is going to once again thrive and you’ll be left with higher priced homes, high interest rates and overbearing marketing tactics.

What makes this the Perfect Opportunity to move-up to a bigger home?

I know you’ve noticed these prices lately. Remember what those same prices used to be just two years ago? $400,000 and $500,000 and $900,000 for the home you always dreamed of.  Now, you can move-up to a bigger home that’s lower than its original valued price and it’s move-in ready.

These homes were already overpriced and now owners must sell them at the current market value.  Sure, they will take a big loss, but it’s either sell or continue to make the loan payments themselves.

Not only will you get a bargain on the price of your dream home but the interest rates are unbelievably low which makes your mortgage payment affordable.  Even your down payment on a bigger home will be less simply because the price has been reduced.

Everything about this real estate market is a win-win no-brainer.  Just think that same home you only dreamt about owning used to cost $500,000 and now you can steal it away for $350,000.

Furthermore, this bargain of a home will only increase its value back up to what it was originally worth.  You buy a bigger home and give the market time to recover and within the next few years you’ll instantly increase your new home’s value by thousands of dollars.

The market will recover and housing will boom again and although that sounds optimistic it won’t be great for those that waited to move into a bigger home. Higher interest rates, more profitable bank fees for lenders – and you can count on that when we do recover – and  inflated home prices will follow.

And everyone is in the market to buy. Even the government backed loans accept blemished credit so what excuse do you really have to hold back and not move up to a bigger home?

Everyday interest rates fluctuate and you’ll want the lowest most affordable rate to buy the most house that will benefit you and your family. Get it now before it slips through your fingers.

12th Annual Real Estate Investors Convention

We’ve got an all-start lineup this year on rental properties, lease/options, partnering, landlording, wholesaling, apartments, owner financing and more!

Tickets are selling fast for this event, so don’t get left out!

Register now at http://www.realestateconvention.com

Do You Know What Affects Your Credit?

I’ve been preaching for years that you can buy real estate with no credit, and I did so for many years when I got started (since I had bad credit at the time).  But, now that I have credit, buying and financing is much easier, I admit.  So while lack of credit should not hold you back, at the same time you should work to improve your credit so when the opportunity presents itself you can use your credit as a tool for financing good deals.

Here’s a great article on credit:

http://finance.yahoo.com/banking-budgeting/article/107618/win-at-the-credit-scoring-game.html?mod=bb-creditreports

Zero in on motivated sellers

When investing in real estate, you want to focus your efforts on motivated sellers. This is true especially if you are just starting out. and dealing with motivated sellers makes the process go even faster, which means cash in your pocket sooner rather than later.

Motivated sellers are people who MUST sell their homes. So…what motivates a seller to have to sell his home? Financial distress for one. Maybe he is behind on payments. Maybe he is facing foreclosure. Maybe even bankruptcy. Maybe he is facing a huge medical bill. Or a divorce settlement is looming on the horizon.

Positive reasons can force the need for a quick sale. A job relocation and not wanting to deal with a vacant house, let alone rent it out and have the value plunge. Getting married and having no need for two houses.

You may think you are taking advantage of these homeowners. Actually, you are doing them a favor. Think what happens if the homeowner does not make the sale. He could be foreclosed upon, or worse, forced into bankruptcy. Or an empty house could be destroyed by vandals. Renters could wreak havoc on the value of the house.

It’s easy to see, then, that these sellers need you. You are, in fact, a savior of sorts.

O.K., now how do you find these motivated sellers? Some tips:

1. Build a website, or have one built for you, announcing that you buy houses. Not a techie? Then have someone from www.elance.com build one for you.

2. Run classified ads in your local newspaper. Place your classifieds in dailies, weeklies, even free newspapers. Hint: advertorials(looks like editorial copy; reads like an ad; purports to educate but is really an ad)

3. Set up bandit signs, those little signs on stakes and phone poles, announcing that you buy houses for cash, fast. Warning: Don’t get carried away creating these until you find out they are legal in your area. If they are not, you can always place them after 5P.M. Friday evening through Sunday evening, because the sign police are not out and about then.

4. Put signs on your car. You are now a rolling billboard. You’d be surprised how many people will approach you when you are parked somewhere.

5. A bit more expensive, but take out a Yellow Pages ad. Hint: Use the advertorial approach to stand out from competitors.

6. On line, go to classified ad sites, especially free ones, like www.Craigslist.org

7. Once you get going, and can afford it, going the direct mail route can be quite profitable.  Mail to people within a zip code (shotgun marketing) or get a list of particular people, such as those in foreclosure (targeted marketing).

The bottom line is you can’t sit around waiting for deals to come to you, you must go out and find them and/or do things to get people to call you.  90% of sellers are not motivated, so be patient and be willing to weed through a lot of unmotivated sell

Is the Recession Over?

Jim Kramer announced this morning on the Today show that the recession is over?  Is it?  Not really sure, but one thing is certain – housing prices are not going up.  Foreclosures are still up from last year and housing prices may continue to sag in some parts of the Country.  However, this is still a great time to buy because you can get discounts of 30-50% off retail and finance with historically low interest rates.  Nobody rings a bell at the bottom of the market, and once the newspaper headlines say “Real estate is back” you are about a year too late.

What’s working in today’s market?  Three things:

1. Buy and Hold Long Term. If you purchase at the bottom of the market AND at a 40% discount off retail, it’s hard to go wrong.  Over 10-20 years you will accumulate serious appreication, wealth, and cash flow.  (more info –>>> http://www.buyandholdrealestateseminar.com)

2. Buy and Flip. Despite the morons in the media, this is a great market for flipping houses.  Buy low, sell low.  The low end of the market (starter homes) are in short supply and demand is high for these homes.  Buy at 60 cents on the dollar, fix it up, sell for 90 cents on the dollar and you can’t go wrong.

3. Owner Financing.  Selling houses with owner financing is an excellent way to create cash flow when banks aren’t lending.  Buy a property, fix it up, sell for FULL price with a wraparound land contract.  There’s no management headaches, but the checks come in every month!