CNNMoney November 17, 2011
NEW YORK -- The head of the New York Fed, William Dudley, continued his push for more aid for homeowners Thursday, stressing the central bank is not yet "out of ammunition."
"We cannot be satisfied with the current state of the economy or the outlook for the next few years," said William Dudley, president of the Federal Reserve Bank of New York, in a speech at the U.S. Military Academy in West Point, N.Y.
Dudley stressed that helping the housing market may be the best way for the Federal Reserve to intervene in the economy. Buying more mortgage-backed securities, he said, is one potential option.
The Fed has already used its traditional tools to help the economy. By keeping interest rates at record lows since December 2008, it tried to make borrowing money cheap and spur spending from both businesses and consumers.
So far, those low interest rates have not been potent enough though to get the economy fully out of its slump, and since the Fed cannot lower rates any further than zero, it is stuck in a bit of a quandary.
That's why the Fed also launched two rounds of major asset purchases, known as quantitative easing, and recently initiated a program known as Operation Twist, as a way of bringing long-term interest rates, including mortgages, even lower.
In his speech on Thursday, Dudley made it clear that he believes the economy still has a long healing process ahead, and could need yet another boost.
Overall, Dudley forecasts that gross domestic product in the U.S. will grow only 2.75% next year, not enough to significantly bring down the unemployment rate. "I am deeply unhappy with the current forecast of prolonged high unemployment," he said.
Dudley also cited statistics that show about a quarter of homeowners who have outstanding mortgages are currently under water. He stressed that monetary policy can only do so much to help, and urged housing regulators and lawmakers to consider complementary policies to further aid homeowners.
The government, for example, could unload the foreclosed properties it now has on its books, for conversion into rentals, he said. That's a policy the Federal Housing Finance Agency is currently considering. Dudley also applauded the FHFA's recent decision to help some homeowners refinance at lower rates.
Federal Reserve still divided on the economy -
Dudley's comments come during a week filled with speeches from his Federal Reserve colleagues, many who disagree about what action the central bank should take.
Speaking just two days earlier, Dallas Fed President Richard Fisher, who has opposed more monetary stimulus, gave a more encouraging outlook on the economy, while Charles Evans, president of the Chicago Fed, urged his colleagues to focus on fixing the struggling job market.
Dudley urged outsiders to not view disagreement within the Fed as a cause for concern.
"Because reasonable people can differ over the costs and benefits of further action, you should not be surprised that there is vigorous debate among FOMC participants," he said.
The Fed's policymaking committee is next scheduled to meet on Dec. 13.
Thursday, November 17, 2011
Sunday, August 14, 2011
Short Sales: Are They Worth the Trouble?
For anyone who has braved the housing market in the past four years, short sales have become synonymous with high risk and high reward. But with so many discounted properties on the market today, are they really worth a buyer's trouble? Maybe -- if you have a lot of time and a strong stomach.
Yes, you can get a below-market price, say many realtors who specialize in short sales, but it's going to take patience because these deals are slow and difficult.
Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant -- and sometimes, vandalized -- property, a short sale isn't a distressed home that will sell at a rock bottom price. The homeowner is under water (meaning they owe more on the mortgage than the property is worth), and there's financial hardship such as a job loss. But to limit the damage to the homeowner's credit rating, they agree to stay in the house (often continuing to pay the mortgage bills) and to help sell it, at which point the bank has agreed to eat the loss. On average, statistcs show that short sales were going for nearly 10 percent less than the market price in the first quarter of 2011. (Foreclosures sold at a 35 percent discount.)
What makes the transaction tricky for the buyer is that you're negotiating not only with the homeowner but the bank -- and that creates three big headaches:
1. It takes time --
Normally, when you make an offer on a house, you'll hear back within days, or even hours. But banks move very slowly these days because their representatives are overloaded with cases. You might wait 30 to 60 days for a response, perhaps longer if there's a second mortgage on the property and therefore a second bank. The total process can easily take as long as six months from start to finish. For someone moving a family or relocating for a new job,that kind of timeline is incredibly difficult.
2. Your offer can't be contingent on selling your current home -
Banks generally won't accept offers on short sales if they're contingent on selling your current house to get the funds you need. Even if the buyer is already under contract, there are just too many things that can go wrong,and then all the dominoes fall. So unless you're a first-time homebuyer, you don't need the equity from your current home, or you're a real estate investor, it's unlikely that you can make a short sale work.
3. It's an as-is sale -
Banks also typically won't consider short-sale offers that have inspection contingencies in them. So you can either do your inspection before you make your offer -- which would mean spending $500 to $1,000 on the outside chance that you can make a deal (and less than a quarter of short-sale offers lead to a purchase ) -- or do what most people do, and go without an inspection.
As long as you're prepared for these hurdles, you may just land yourself a bargain. But make sure to work with a veteran Realtor because you want someone who knows the ins and outs of the process and can protect your interests throughout the negotiations. And since short sales aren't necessarily identified on Realtor.com or the part of the MLS data sheet that buyers see, always ask your agent whether any house is a short sale before bothering to look at it.
Then, if you fall in love with a house that's a short sale, get yourself a mortgage pre-approval -- another short-sale requirement -- and make a lowball offer. Sometimes you can do that without putting down any money, but if the bank requires a deposit, have your Realtor put language in the offer letter stating that if you don't have a response by a certain date (perhaps 60 or 90 days out -- however long you feel like you can wait), you have the option of retracting the offer and getting your deposit back. That gives you an out, just in case.
When the bank finally replies, it will more than likely counter with whatever value its' appraiser gives the house. The basic suggestion is
that you offer them 15 percent less than that, and see what happens.
Yes, you can get a below-market price, say many realtors who specialize in short sales, but it's going to take patience because these deals are slow and difficult.
Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant -- and sometimes, vandalized -- property, a short sale isn't a distressed home that will sell at a rock bottom price. The homeowner is under water (meaning they owe more on the mortgage than the property is worth), and there's financial hardship such as a job loss. But to limit the damage to the homeowner's credit rating, they agree to stay in the house (often continuing to pay the mortgage bills) and to help sell it, at which point the bank has agreed to eat the loss. On average, statistcs show that short sales were going for nearly 10 percent less than the market price in the first quarter of 2011. (Foreclosures sold at a 35 percent discount.)
What makes the transaction tricky for the buyer is that you're negotiating not only with the homeowner but the bank -- and that creates three big headaches:
1. It takes time --
Normally, when you make an offer on a house, you'll hear back within days, or even hours. But banks move very slowly these days because their representatives are overloaded with cases. You might wait 30 to 60 days for a response, perhaps longer if there's a second mortgage on the property and therefore a second bank. The total process can easily take as long as six months from start to finish. For someone moving a family or relocating for a new job,that kind of timeline is incredibly difficult.
2. Your offer can't be contingent on selling your current home -
Banks generally won't accept offers on short sales if they're contingent on selling your current house to get the funds you need. Even if the buyer is already under contract, there are just too many things that can go wrong,and then all the dominoes fall. So unless you're a first-time homebuyer, you don't need the equity from your current home, or you're a real estate investor, it's unlikely that you can make a short sale work.
3. It's an as-is sale -
Banks also typically won't consider short-sale offers that have inspection contingencies in them. So you can either do your inspection before you make your offer -- which would mean spending $500 to $1,000 on the outside chance that you can make a deal (and less than a quarter of short-sale offers lead to a purchase ) -- or do what most people do, and go without an inspection.
As long as you're prepared for these hurdles, you may just land yourself a bargain. But make sure to work with a veteran Realtor because you want someone who knows the ins and outs of the process and can protect your interests throughout the negotiations. And since short sales aren't necessarily identified on Realtor.com or the part of the MLS data sheet that buyers see, always ask your agent whether any house is a short sale before bothering to look at it.
Then, if you fall in love with a house that's a short sale, get yourself a mortgage pre-approval -- another short-sale requirement -- and make a lowball offer. Sometimes you can do that without putting down any money, but if the bank requires a deposit, have your Realtor put language in the offer letter stating that if you don't have a response by a certain date (perhaps 60 or 90 days out -- however long you feel like you can wait), you have the option of retracting the offer and getting your deposit back. That gives you an out, just in case.
When the bank finally replies, it will more than likely counter with whatever value its' appraiser gives the house. The basic suggestion is
that you offer them 15 percent less than that, and see what happens.
Saturday, July 2, 2011
The Tax Man Doesn't Want Housing to Recover
Housing is not likely to recover if property taxes keep going up. Many feel that cash-strapped governments should look elsewhere to fill their budget gaps.
During the housing boom, governments enjoyed windfalls from property taxes tied closely to home prices. But since the real estate bubble burst, the revenue stream officials had come to rely on to help pay for everything from education to roads has dried up. Officials have responded by embarking on everything from delaying road projects to freezing hiring and salaries and cutting public employees.
In addition to cutting expenses to cover budget shortfalls, governments have been forced to look for ways to raise more money. And increasingly, that's resulting in higher property taxes – which experts warn could actually hurt more than help public finances. Everything from high unemployment to record foreclosures are already hampering the real estate market, and since higher taxes add to the costs of a home, it could also make owning even less appealing.
In a 2011 survey of U.S. counties, 15% reported raising such taxes – an increase from the 10% reported during the previous year. The survey by the National Association of Counties also found that property taxes, which account for almost three-quarters of all tax revenue collected by municipalities, was one of the biggest reasons why governments were experiencing revenue shortfalls.
Last year, Miami-Dade County raised rates to deal with a $444 million budget gap in the face of plunging property values. So did the city of Austin, TX. And earlier this month, the Philadelphia City Council hiked up its tax rate for a second year in a row to help bail out its cash-strapped school district. More broadly, the amount of money state and local governments collected from property taxes between 2006 and 2008 surged from $364.5 billion to nearly $410 billion, according to the U.S. Census Bureau.
To be sure, the tax bump isn't happening everywhere. At a time when millions of Americans are still jobless, many elected officials haven't mustered the political will to raise costs for homeowners and would rather delay road projects instead. It seems Miami-Dade County Mayor Carlos Alvarez learned this all too well when voters in March ousted him out of office following several missteps culminating in the city's hike on property taxes.
But for governments trying to make up for the shambles of the housing market, those same efforts could very well prove self-defeating. If not for their political career, then likely the housing market.
"Given the situation we've been in for the past few years, increasing property taxes is not likely to aid in the short-term recovery of the housing market," says McKay Price, real estate finance expert at Lehigh University.
But a rise in property taxes doesn't always lead to a fall in home prices. It depends how much taxes are raised and if the additional tax dollars go toward things that support property values, such as good schools, parks, roads and other public infrastructure.
Many governments are faced with a dilemma. Following years of too much spending, officials find themselves having to rapidly cut services. In the National Association of Counties survey, nearly half of respondents reported delaying purchases and repairs, as well as capital investments to address revenue shortfalls. About 41% reported halting new hires, 45% froze employee salaries and pay, while 52% gave furloughs. About 34% reported delaying infrastructure repairs, while 31% delayed construction projects.
For municipalities considering asking homeowners to pay more, it might be time to start thinking more in the long-term.
During the housing boom, governments enjoyed windfalls from property taxes tied closely to home prices. But since the real estate bubble burst, the revenue stream officials had come to rely on to help pay for everything from education to roads has dried up. Officials have responded by embarking on everything from delaying road projects to freezing hiring and salaries and cutting public employees.
In addition to cutting expenses to cover budget shortfalls, governments have been forced to look for ways to raise more money. And increasingly, that's resulting in higher property taxes – which experts warn could actually hurt more than help public finances. Everything from high unemployment to record foreclosures are already hampering the real estate market, and since higher taxes add to the costs of a home, it could also make owning even less appealing.
In a 2011 survey of U.S. counties, 15% reported raising such taxes – an increase from the 10% reported during the previous year. The survey by the National Association of Counties also found that property taxes, which account for almost three-quarters of all tax revenue collected by municipalities, was one of the biggest reasons why governments were experiencing revenue shortfalls.
Last year, Miami-Dade County raised rates to deal with a $444 million budget gap in the face of plunging property values. So did the city of Austin, TX. And earlier this month, the Philadelphia City Council hiked up its tax rate for a second year in a row to help bail out its cash-strapped school district. More broadly, the amount of money state and local governments collected from property taxes between 2006 and 2008 surged from $364.5 billion to nearly $410 billion, according to the U.S. Census Bureau.
To be sure, the tax bump isn't happening everywhere. At a time when millions of Americans are still jobless, many elected officials haven't mustered the political will to raise costs for homeowners and would rather delay road projects instead. It seems Miami-Dade County Mayor Carlos Alvarez learned this all too well when voters in March ousted him out of office following several missteps culminating in the city's hike on property taxes.
But for governments trying to make up for the shambles of the housing market, those same efforts could very well prove self-defeating. If not for their political career, then likely the housing market.
"Given the situation we've been in for the past few years, increasing property taxes is not likely to aid in the short-term recovery of the housing market," says McKay Price, real estate finance expert at Lehigh University.
But a rise in property taxes doesn't always lead to a fall in home prices. It depends how much taxes are raised and if the additional tax dollars go toward things that support property values, such as good schools, parks, roads and other public infrastructure.
Many governments are faced with a dilemma. Following years of too much spending, officials find themselves having to rapidly cut services. In the National Association of Counties survey, nearly half of respondents reported delaying purchases and repairs, as well as capital investments to address revenue shortfalls. About 41% reported halting new hires, 45% froze employee salaries and pay, while 52% gave furloughs. About 34% reported delaying infrastructure repairs, while 31% delayed construction projects.
For municipalities considering asking homeowners to pay more, it might be time to start thinking more in the long-term.
Friday, May 6, 2011
GFEs Not Working Out as Expected
The federal government spent years designing a tool to help consumers shop intelligently for mortgages -- comparing lenders' rates, terms and total settlement costs -- but mostly consumers ignore it or don't use it.
A new survey of 1,000 American consumers suggests that the "Good-Faith Estimate" (GFE) disclosures that all homebuyers and refinancers receive at loan application to facilitate comparison are not getting the job done.
Federally mandated GFEs spell out the lender's charges, all anticipated fees for title insurance, escrow and settlement services, plus other key costs. The most recent version of the GFE, released at the beginning of last year, contains space for consumers to take one lender's estimates and get competing quotes from as many as three others. It also requires lenders to stand behind their estimates within a nominal tolerance.
But the survey found that the GFE may not be improving shopping as intended. After receiving the disclosure, 56 percent of buyers say they did no comparison shopping among other lenders. 12 percent used the form to contact just one additional lender, and 10 percent weren't sure whether they actually used the GFE at all.
Forty-nine percent of buyers said the GFE disclosure was too omplicated,
"a waste of time," or they weren't sure. Just 37 percent rated it "useful." The survey had a statistical margin of error of plus or minus 3.2 percent.
Between 2003 and 2008, the Department of Housing and Urban Development proposed modifications to the GFE, but critics said the revised disclosure was too lengthy -- three pages -- and predicted that it would become just another part of the paper blitz that cascades over buyers and mortgage applicants. As it turned out, not only has it failed to simplify consumer shopping, it's actually confusing shoppers.
Meanwhile, Congress has shifted responsibility for GFEs and other consumer mortgage disclosure issues to the new Consumer Financial Protection Bureau, which is scheduled to spring to life in July. The bureau has announced that streamlining the GFE and combining it with federal truth-in-lending disclosures will be one of its high-priority projects.
But given the glacial pace of federal rulemaking, the three-page GFE is likely to remain in use for many months -- maybe a year or more -- before any new streamlined version takes its place. So if you seriously want to shop intelligently for a home loan, read your GFE. And use it to compare costs -- line item by line item -- among multiple lenders.
A new survey of 1,000 American consumers suggests that the "Good-Faith Estimate" (GFE) disclosures that all homebuyers and refinancers receive at loan application to facilitate comparison are not getting the job done.
Federally mandated GFEs spell out the lender's charges, all anticipated fees for title insurance, escrow and settlement services, plus other key costs. The most recent version of the GFE, released at the beginning of last year, contains space for consumers to take one lender's estimates and get competing quotes from as many as three others. It also requires lenders to stand behind their estimates within a nominal tolerance.
But the survey found that the GFE may not be improving shopping as intended. After receiving the disclosure, 56 percent of buyers say they did no comparison shopping among other lenders. 12 percent used the form to contact just one additional lender, and 10 percent weren't sure whether they actually used the GFE at all.
Forty-nine percent of buyers said the GFE disclosure was too omplicated,
"a waste of time," or they weren't sure. Just 37 percent rated it "useful." The survey had a statistical margin of error of plus or minus 3.2 percent.
Between 2003 and 2008, the Department of Housing and Urban Development proposed modifications to the GFE, but critics said the revised disclosure was too lengthy -- three pages -- and predicted that it would become just another part of the paper blitz that cascades over buyers and mortgage applicants. As it turned out, not only has it failed to simplify consumer shopping, it's actually confusing shoppers.
Meanwhile, Congress has shifted responsibility for GFEs and other consumer mortgage disclosure issues to the new Consumer Financial Protection Bureau, which is scheduled to spring to life in July. The bureau has announced that streamlining the GFE and combining it with federal truth-in-lending disclosures will be one of its high-priority projects.
But given the glacial pace of federal rulemaking, the three-page GFE is likely to remain in use for many months -- maybe a year or more -- before any new streamlined version takes its place. So if you seriously want to shop intelligently for a home loan, read your GFE. And use it to compare costs -- line item by line item -- among multiple lenders.
How to Sell Your Home in Tough Times
If you're in the market to sell your home, you probably feel you can't catch a break. Nearly five years into the housing bust, when many experts thought the real estate market would at least have stabilized, sales and prices are still dropping in most of the country.
In February existing-home sales tumbled 9.6% from the previous month, and the median price of a single-family home dropped to $157,000 from $163,900 the previous year, according to the National Association of Realtors.
You can't count on things turning around soon, either. At the current sales pace, it would take 8.6 months to clear out the 3.5 million existing homes listed today.
With the boost from the recent homebuyer tax credit gone, anyone who decides or is forced to put a house up for sale enters a market where houses often linger a full six months -- even a year -- without any bites.
Put part of the blame on stiff competition: Foreclosures and Short Sales, which accounted for 39% of sales in February, sell for about 15% less than conventional homes.
Fortunately, there is one glimmer of good news. Bargain hunters, too, know that home prices are down some 32% from their peak. In a recent survey, three-quarters said that it was a good time to buy a home. But translating that interest into an actual sale can require some extreme measures.
It's not enough to show buyers your house is a deal: You have to convince them it's a total steal. That means slashing your price, bringing in a pro to pretty it up, and creating a killer website for your home. Here's how to do it right.
Slash Your Price -- Bigtime,
Sellers are still loath to accept the extent of the toll the bust took on their homes' value. Many also give in to the temptation to list the property above fair market value to see what happens. Big mistake. About a quarter of sellers in the past year initially listed too high and were forced to knock the price lower. Even in cities that have held up well, 25% of sellers resort to at least one price cut, and often two.
Think you can always drop the price if your home doesn't sell? Bigger mistake. The first 30 days on the market are the most important. That's when your place attracts the most attention and gets the most showings. So You often end up with less than you would have if you priced it right to begin with,. So get aggressive right out of the gate.
Undercut your competition. Today there's a big gap between what sellers want and what buyers are willing to pay. Ask your realtor to show you what houses similar to yours have sold for in the past three to six months. If more than a couple of the comparable properties were foreclosures or short sales, look closely at the photos and descriptions of those former listings. Distressed homes should be included in your comps if they are in move-in condition.
Once you have a handle on your likely sale price, list your home a bit beneath that. You don't have to undercut by much to attract attention, because that price will probably still be about 10% or 15% below what other homes are listed for. Even if you're competing with lots of foreclosures and short sales, your price should generate enough interest to attract more than one bidder, pushing up the final price to where it should be.
No bites within 30 days, take out the ax, and make a big move. Make a giant cut -- as much as 10% of the asking price, and even more in an area where prices are still falling. That should be enough to warrant a second look from buyers who passed the first time, and to bring in a new pool of potentials who are hunting in the lower price range.
Play hardball. It's okay to reject low-ball offers if a buyer won't budge. But if a buyer is willing to negotiate, stay cool and counter-offer.
Hire a Stager
Staging, increasingly popular with homeowners trying to sell mid-range houses, can extend from simply rearranging existing furniture to repainting, replacing fixtures, and bringing in new furnishings. The goal: to highlight the house's best features while making it as easy as possible for buyers to imagine themselves living there. Find the right stager. The ASP designation is a plus -- it indicates the stager has gone through some basic training -- but it isn't essential. Establish a budget and ask the stager to work within it. Stagers typically charge $150 to $400 to walk through your home and give recommendations for each room. You can then execute the plan yourself or hire the stager to do it for an hourly fee, usually $100 or so, plus the cost of any new paint or furnishings.
Find the Right Hook -
These days it's going to take far more than a FOR SALE sign in the front yard and a spot on the multiple-listing service to get potential buyers in the door. That means getting the word out in a creative fashion -- and finding a realtor who is willing to do the same.
Create a great website. You also want to get your listing on alternative sites like Craigslist or even Facebook. About 90% of buyers begin their search on the Internet, according to the National Association of Realtors. Make sure your home's online presence has a dozen or two photos.
Throw money at buyers. Incentives can perk buyers' interest just as much as price cuts. Many buyers will agree to a higher price if their upfront costs are lowered, since they often run short on cash. If you can afford it, offer to cover the buyer's closing costs or pay the first year's property taxes or condo or homeowner association dues. Or, you might be able to bring buyers to the door by tossing in an unusual bonus, such as a $1,000 gift card (throw in one for the buyer's agent as well); a belonging they mentioned loving, such as the pool table or plasma TV; or a $5,000 credit to use in the home as they wish. (You can even pay upfront points so that they can get a lower mortgage rate, if you can swing it.)
In 2009, when Karen Mauro put her small, historic two-bedroom Orange County, Calif., home on the market she thought it would be a tough sale. Realtor Lisa Blanc listed the property at $467,500 and spread the word not only through the MLS listing but also with an update on her Facebook page. A Facebook friend of Blanc's passed the info to someone she knew was looking for that kind of house. Within a week, Mauro had an offer for $460,000.
Stay away -- far away. Disappear (along with your dog, if possible) for all showings and open houses so that prospects can imagine themselves in your house -- an impossible task when your family is vegging on the couch.
In February existing-home sales tumbled 9.6% from the previous month, and the median price of a single-family home dropped to $157,000 from $163,900 the previous year, according to the National Association of Realtors.
You can't count on things turning around soon, either. At the current sales pace, it would take 8.6 months to clear out the 3.5 million existing homes listed today.
With the boost from the recent homebuyer tax credit gone, anyone who decides or is forced to put a house up for sale enters a market where houses often linger a full six months -- even a year -- without any bites.
Put part of the blame on stiff competition: Foreclosures and Short Sales, which accounted for 39% of sales in February, sell for about 15% less than conventional homes.
Fortunately, there is one glimmer of good news. Bargain hunters, too, know that home prices are down some 32% from their peak. In a recent survey, three-quarters said that it was a good time to buy a home. But translating that interest into an actual sale can require some extreme measures.
It's not enough to show buyers your house is a deal: You have to convince them it's a total steal. That means slashing your price, bringing in a pro to pretty it up, and creating a killer website for your home. Here's how to do it right.
Slash Your Price -- Bigtime,
Sellers are still loath to accept the extent of the toll the bust took on their homes' value. Many also give in to the temptation to list the property above fair market value to see what happens. Big mistake. About a quarter of sellers in the past year initially listed too high and were forced to knock the price lower. Even in cities that have held up well, 25% of sellers resort to at least one price cut, and often two.
Think you can always drop the price if your home doesn't sell? Bigger mistake. The first 30 days on the market are the most important. That's when your place attracts the most attention and gets the most showings. So You often end up with less than you would have if you priced it right to begin with,. So get aggressive right out of the gate.
Undercut your competition. Today there's a big gap between what sellers want and what buyers are willing to pay. Ask your realtor to show you what houses similar to yours have sold for in the past three to six months. If more than a couple of the comparable properties were foreclosures or short sales, look closely at the photos and descriptions of those former listings. Distressed homes should be included in your comps if they are in move-in condition.
Once you have a handle on your likely sale price, list your home a bit beneath that. You don't have to undercut by much to attract attention, because that price will probably still be about 10% or 15% below what other homes are listed for. Even if you're competing with lots of foreclosures and short sales, your price should generate enough interest to attract more than one bidder, pushing up the final price to where it should be.
No bites within 30 days, take out the ax, and make a big move. Make a giant cut -- as much as 10% of the asking price, and even more in an area where prices are still falling. That should be enough to warrant a second look from buyers who passed the first time, and to bring in a new pool of potentials who are hunting in the lower price range.
Play hardball. It's okay to reject low-ball offers if a buyer won't budge. But if a buyer is willing to negotiate, stay cool and counter-offer.
Hire a Stager
Staging, increasingly popular with homeowners trying to sell mid-range houses, can extend from simply rearranging existing furniture to repainting, replacing fixtures, and bringing in new furnishings. The goal: to highlight the house's best features while making it as easy as possible for buyers to imagine themselves living there. Find the right stager. The ASP designation is a plus -- it indicates the stager has gone through some basic training -- but it isn't essential. Establish a budget and ask the stager to work within it. Stagers typically charge $150 to $400 to walk through your home and give recommendations for each room. You can then execute the plan yourself or hire the stager to do it for an hourly fee, usually $100 or so, plus the cost of any new paint or furnishings.
Find the Right Hook -
These days it's going to take far more than a FOR SALE sign in the front yard and a spot on the multiple-listing service to get potential buyers in the door. That means getting the word out in a creative fashion -- and finding a realtor who is willing to do the same.
Create a great website. You also want to get your listing on alternative sites like Craigslist or even Facebook. About 90% of buyers begin their search on the Internet, according to the National Association of Realtors. Make sure your home's online presence has a dozen or two photos.
Throw money at buyers. Incentives can perk buyers' interest just as much as price cuts. Many buyers will agree to a higher price if their upfront costs are lowered, since they often run short on cash. If you can afford it, offer to cover the buyer's closing costs or pay the first year's property taxes or condo or homeowner association dues. Or, you might be able to bring buyers to the door by tossing in an unusual bonus, such as a $1,000 gift card (throw in one for the buyer's agent as well); a belonging they mentioned loving, such as the pool table or plasma TV; or a $5,000 credit to use in the home as they wish. (You can even pay upfront points so that they can get a lower mortgage rate, if you can swing it.)
In 2009, when Karen Mauro put her small, historic two-bedroom Orange County, Calif., home on the market she thought it would be a tough sale. Realtor Lisa Blanc listed the property at $467,500 and spread the word not only through the MLS listing but also with an update on her Facebook page. A Facebook friend of Blanc's passed the info to someone she knew was looking for that kind of house. Within a week, Mauro had an offer for $460,000.
Stay away -- far away. Disappear (along with your dog, if possible) for all showings and open houses so that prospects can imagine themselves in your house -- an impossible task when your family is vegging on the couch.
Thursday, April 21, 2011
Better Business Bureau Warns of Mortgage Lawsuit Mailings
If you receive an official-looking letter from an out-of-state law firm asking you to fork over a hefty upfront fee to join a "mass joinder" lawsuit to force your mortgage lender to reduce your monthly payments, chances are good, you've been targeted by a new nationwide mortgage scam.
The Better Business Bureau and others are warning homeowners to beware of these solicitations, which represent the latest twist on a scheme - the advance fee mortgage scam - to con homeowners struggling to make their mortgage payments out of upfront payments of $5,000 or more.
Complaints from homeowners who paid thousands of dollars for mortgage assistance are a familiar story at the BBB. Few, if any, of these people got help. Many ended up worse off than before the so-called mortgage modification companies entered their lives.
The Federal Trade Commission recently issued rules banning the collection of upfront fees by mortgage-relief firms, a rule that exempts attorneys under certain conditions. And the California Department of Real Estate warned last month that some businesses were trying to take advantage of the lawyer exemption loophole to charge consumers advance fees for mortgage assistance suits.
The BBB offers the following tips for homeowners seeking mortgage assistance:
Call your bank or mortgage company before turning to a third party.
Beware of marketing companies, lawyers or other groups asking for fees to join a class action or "mass joinder" lawsuit against a mortgage holder. The chances of actually getting mortgage relief from such suits is slim at best.
Beware of any company that promises to help you modify your mortgage in return for an advance fee. As of January 31, 2011, this business practice is illegal, except under certain circumstances.
Beware of any company asking you to pay for a forensic loan audit. These audits may not help you reduce your loan rates or mortgage payments.
Before sending any money or signing a contract, check BBB Business Reviews at www.bbb.org or by calling (314) 645-3300.
The Better Business Bureau and others are warning homeowners to beware of these solicitations, which represent the latest twist on a scheme - the advance fee mortgage scam - to con homeowners struggling to make their mortgage payments out of upfront payments of $5,000 or more.
Complaints from homeowners who paid thousands of dollars for mortgage assistance are a familiar story at the BBB. Few, if any, of these people got help. Many ended up worse off than before the so-called mortgage modification companies entered their lives.
The Federal Trade Commission recently issued rules banning the collection of upfront fees by mortgage-relief firms, a rule that exempts attorneys under certain conditions. And the California Department of Real Estate warned last month that some businesses were trying to take advantage of the lawyer exemption loophole to charge consumers advance fees for mortgage assistance suits.
The BBB offers the following tips for homeowners seeking mortgage assistance:
Call your bank or mortgage company before turning to a third party.
Beware of marketing companies, lawyers or other groups asking for fees to join a class action or "mass joinder" lawsuit against a mortgage holder. The chances of actually getting mortgage relief from such suits is slim at best.
Beware of any company that promises to help you modify your mortgage in return for an advance fee. As of January 31, 2011, this business practice is illegal, except under certain circumstances.
Beware of any company asking you to pay for a forensic loan audit. These audits may not help you reduce your loan rates or mortgage payments.
Before sending any money or signing a contract, check BBB Business Reviews at www.bbb.org or by calling (314) 645-3300.
Wednesday, March 30, 2011
Your Mortgage Checklist
Whether you are interested in buying a home or getting a lower interest rate on your current mortgage, the following items will most likely be required by the lender to determine eligibility or to process the loan.
With underwriting guidelines being more conservative than ever, it is essential to provide all documentation upon the initial loan submission - if you wish to acquire a new mortgage as easily and efficiently as possible.
(Provide clear, legible copies of the following for each borrower).
Here is the Checklist that would cover most applicants:
- driver’s license
- 2nd I.D. - such as social security card, passport, car registration
- most recent paystubs covering 30 days
- all 2009 & 2010 W2s
- 2009 & 2010 Federal tax returns (all pages, all schedules, state returns not needed)
- 2 year history of part-time, bonus, or overtime income (if applicalble)
- a recent statement (all pages) of your 401K, IRA, - or other retirement account(s).
- 2 months’ most recent monthly checking account statements, & liquid Stocks, Funds, etc. (all pages, not internet summary)
- If self-employed, name and tel. number of your accountant
- recent homeowner’s insurance bill
- recent property tax statement or bill
- recent HOA/Common Charge bill (if applicable)
- copy of your most recent monthly statement or payment coupon for your current 1st mortgage
- copy of most recent payment coupon for your 2nd mortgage / homequity line (if applicable). If your homequity line has a zero balance, provide a copy of the original note.
- copy of a recent statement for any other account that is intended to be payed off through this transaction (if applicable)
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