Thursday, May 27, 2010

Buying a Foreclosure? You Need a Strategy

Buying a Foreclosure? You Need a Strategy

By Guest Contributor Anne Steinhauer Chakos, Sales Associate, Coldwell Banker Residential Real Estate, St. Armands Office

Most buyers I have met in the last four years ask to see foreclosures. The banks refer to foreclosures as REO for Real Estate Owned. They are deals, right? Bargain basement prices on homes that the bank cannot wait to dump. Sweep in, make an offer and it's yours. Right?

Not always.

In my experience, I have found some banks use strategy of their own. They price a home a bit under market. This attracts lots of interest. They require the property to stay active on the market for seven days before they start accepting offers. In some cases, there is so much interest that multiple offers are made. The bank instructs the listing agent to ask for "highest & best" and then a winner is selected.

So what should you, the buyer, do in a multi-offer situation?

Have your own strategy.

It is critical you do not let emotion or competitiveness drive your actions. Instead, with the help of your real estate agent, determine a fair market price for the home. Next, decide what you are willing to pay for the home and stick with it. Make your initial offer a strong one. If you can pay cash, do it. If you are pre-approved, get full approval from your lender. Put at least 1.5% of the purchase in escrow upon seller acceptance.

What if the bank still comes back and asks for highest & best?

Don't panic. If you left yourself a little room on your initial offer price, then go up. If you went in at your highest price, but you left yourself some room on the close date, then shorten the close date, or up the escrow deposit. Here is what you don't do - don't believe this is the only house for you. There are others out there.

And if it is your dream home? Again, pick a price and stick with it. Do you plan to live there for the next 15 to 20 years? Then a $5,000 to $10,000 won't make difference in the long run. If you plan to finance the purchase, your lender won't lend for more than it is worth, so be prepared to pay the difference in cash.

Whatever the result, rest easy knowing you did your best.

Tuesday, May 25, 2010

Florida’s existing home, condo sales rise in April

Florida’s existing home, condo sales rise in April Related

NAR:

Existing-home sales continue to improve in April.



ORLANDO, Fla. – May 24, 2010 – Sales of existing homes in Florida rose 27 percent in April, which means that sales activity has increased in the year-to-year comparison for 20 months, according to the latest housing data released by Florida Realtors®. Another positive sign: Last month's statewide existing-home median price of $140,100 was 1 percent higher than the statewide median price in April 2009.

Existing home sales rose 27 percent last month with a total of 16,781 homes sold statewide compared to 13,244 homes sold in April 2009, according to Florida Realtors. Statewide existing home sales last month increased nearly 3 percent over statewide sales activity in March. Meanwhile, April's statewide existing-home median price was 2.3 percent higher than March's statewide existing-home median price of $137,000. It marks the second month in a row that the statewide existing-home median price has increased over the previous month's median.

"Buyers responding to the federal homebuyer tax credit before it expired helped to boost home sales across Florida," said 2010 Florida Realtors President Wendell Davis, a broker with Watson Realty Corp. in Jacksonville. "And buying conditions remain favorable, with a variety of housing options available in local markets at attractive and affordable prices. Plus, current mortgage interest rates are at historically low levels, which gives buyers more 'bang' for their buck."

Florida Realtors also reported a 55 percent increase in statewide sales of existing condos in April compared to the previous year's sales figure; statewide existing condo sales last month rose 2 percent over the total units sold in March. Though April's statewide existing-condo median price of $103,600 was down 3 percent compared to the year-ago figure, it was 6.9 percent higher than March's statewide existing-condo median price.



Seventeen of Florida's metropolitan statistical areas (MSAs) reported increased existing home sales in April while all but one MSA had higher condo sales. A majority of the state's MSAs have reported increased sales for 22 consecutive months.

Florida's median sales price for existing homes last month was $140,100; a year ago, it was $138,100 for a 1 percent gain. The median is the midpoint; half the homes sold for more, half for less.

Thenational median sales price for existing single-family homes in March 2010 was $170,700, up 0.6 percent from a year earlier, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $301,790in March; in Massachusetts, it was $280,000; in Maryland, it was $235,785; and in New York, it was $209,900.

According to NAR's latest outlook, two trends are influencing a broader stabilization of home prices in housing markets across the nation: months of increased sales activity and lower levels of inventory. "Foreclosures have been feeding into the inventory pipeline at a fairly steady pace and are being absorbed manageably," said NAR Chief Economist Lawrence Yun. "With home values stabilizing, a revival in homebuying confidence will likely help the housing market get back on its feet even as the tax credit impact disappears."

In Florida's year-to-year comparison for condos, 7,291 units sold statewide last month compared to 4,703 units in April 2009 for an increase of 55 percent. The statewide existing condo median sales price last month was $103,600; in April 2009 it was $107,200 for a 3 percent decrease. The national median existing condo price was $170,600 in March, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.10 percent in April, up from the average rate of 4.81 percent during the same month a year earlier, according to Freddie Mac. Florida Realtors' sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state's smaller markets, the Panama City MSA reported a total of 128 homes sold in April compared to 108 homes a year earlier for a 19 percent increase. The market's existing home median sales price last month was $160,000; a year earlier it was $156,800 for an increase of 2 percent. A total of 65 condos sold in the MSA in April compared to 53 units sold the same month a year earlier for an increase of 23 percent. The existing condo median price last month was $187,100; a year earlier, it was $172,900 for an 8 percent gain.

© 2010 Florida Realtors®

Tuesday, May 18, 2010

RPR and REALTORS®: It’s All About the Information

RPR and REALTORS®: It’s All About the Information
May 15, 2010 by Brian Summerfield · 2 Comments
Filed under: Breaking News, Midyear Meeting, NAR, Technology
By Brian Summerfield, Online Editor, REALTOR® Magazine

What makes REALTORS® relevant in the real estate industry? In a word, information. That’s why the REALTORS Property Resource™ is so important, Dale Ross, RPR’s CEO, told NAR’s Board of Directors Saturday at the 2010 Midyear Legislative Meetings in Washington, D.C.

“As REALTORS®, we have to know more about properties than anyone else,” Ross said. “Whatever has to do with that property, we need to have that info.”

The REALTORS Property Resource™, a database that will eventually cover every property in the United States, will pull in data from public records, prior transactions, MLSs, transfer taxes, and other relevant sources. It is one of NAR’s Second Century Initiatives.

In his update to the board, Ross said RPR is in “rolling beta” testing — meaning adjustments are made every time users provide feedback on the system — in 12 markets across the United States. The areas represented are evenly distributed geographically and have MLSs of various levels of size and sophistication, he added. The goal is to have RPR up and running for all REALTORS® by the end of next year, NAR CEO Dale Stinton said in a speech earlier this week.

Ross acknowledged some hesitancy on the part of some MLSs to adopt RPR. According to him, some have an enthusiastic, “early adopter” view, a second group has a wait-and-see mentality, and a third is not sold on the system at all.

However, Ross argued that RPR’s comprehensive data repository would make REALTORS® the go-to source for even the most information-savvy consumers.

“They have ways of finding that information if we don’t,” he explained, “so we need to be ahead of the curve.”

Thursday, May 13, 2010

Four Ways to Start Fixing Fannie And Freddie


Four Ways to Start Fixing Fannie And Freddie
MORTGAGES, HOUSING, REAL ESTATE, CREDIT, LOANS, LENDING, ECONOMY, RECESSION, GOVERNMENT, FORECLOSURES, CONSUMERS, FANNIE MAE, FREDDIE MAC
Posted By: Albert Bozzo | Senior Features Editor
CNBC.com | 13 May 2010 | 11:58 AM ET

With major housing finance reform now unlikely until 2011, there’s little that can be done to stop the massive losses at mortgage giants Fannie Mae and Freddie Mac , say analysts.

But there are some small fixes can be made before their future shape and size—or even continued existence—is determined.

1. Make A Timeline

Analysts say policymakers need a detailed time line with a hard deadline to avoid anymore postponement of the hard choices and difficult solutions needed to deal with a financial time bomb that has been ticking since the summer of 2008.

Fannie and Freddie were taken over by the government in September 2008 after the housing market imploded and the mortgages and mortgage-backed securities they held as collateral for their financing operations soured.

Since then the government has supplied about $125 billion in taxpayer funds to keep the institutions operating and the mortgage market functioning. The amount of financial aid is certain to rise, analysts say, and could wind up costing taxpayers $200-$400 billion.

Despite those mounting losses, neither the Obama administration nor the Democrat-controlled Congress have been willing to include Fannie and Freddie in a sweeping financial reform plan. Just this week, Congress voted to study the problem rather than move on it, putting a final resolution years off.


Still, analysts argue that some steps can be taken now. And the first is to list what the steps are and when they can be made.

"There's a giant dead-weight loss that can only be covered in one or two ways," says Alex Pollock of the American Enterprise Institute and a former CEO of the Federal Home Loan Bank of Chicago. "Either the debtholders take a loss or the taxpayers do."

2. Put Them on the Budget

That choice will be much more obvious, some argue, if Washington puts the balance sheets of the two firms on the federal budget.

"The loss should be accounted for," says Mar Calabria of the Cato Institute, a libertarian think tank, and a former senior Senate aide. "You're not changing the structure but you are giving some transparency."

Others worry that such a move could backfire.

"It effectively brings them further into the government fold and represents a new and more explicit nationalization," says independent bank analyst, Bert Ely.

A change in the firms' budget status might prompt swifter government action beyond what has happened to date. To date the only concrete step is an item in the financial reform regulation legislation calling for a study of the firms by Jan. 31, 2011, a year the Obama administration says it will offer its recommendations.


3. Lower Conforming Loans

One simple fix or experiment would be to reduce the ceiling for conforming or conventional loans, which qualify a borrower for federal guarantees. The current level for a single-family house --$417,000-- is double that of 1996. In high cost areas, the level is higher, reaching a maximum of almost $730,000.

That limit could be based on the median price of a home in a given metropolitan area,

"Start ratcheting down the conforming loan limit, year by year," says Pollock. "Guess what? Mortgages will be slightly more expensive but why would we want to subsidize mortgages? All you do is succeed in making housing prices higher."

Proponents say the change would take Fannie and Freddie out of more markets, leaving it strictly up to the private sector.

"It's kind of a back door way of trying to force them out of the business," says Ely.

Yet, even basic proposals such as this, touch a lot of nerves and trigger somewhat ideological debates.

Complete Economics & Government Coverage
"If we're going to experiment with the housing market let's experiment with the high end," says Calabria. "There's no rationale to passing on a subsidy" to higher income people.

"There's no wisdom in that," counters Melissa Cohn, founder and CEO of Manhattan Mortgage in New York City. "We're trying to support the value of real estate."

Whether it is small fixes or big ones, much of the current opposition in political, business and policy circles turns on how anything might endanger the fragile nature of the real estate recovery.

"I think transition measures have to be carefully designed," says David Min, associate director for financial market policy at the Center for American Progress. "The goal in the short-term should be to preserve the housing market so we don't have a double dip. And drastic change needs to be implemented slowly and only upon the re-emergence of private sector lending."

Skeptics say that's helped make a big problem even bigger.

At this point, some 96 percent of all U.S. residential mortgages are backed by the federal government. Fannie and Freddie are essentially embedded in the economy because they own or guarantee $5.5 trillion in mortgage debt, half the current market.

4. Better Lending Practices

Other small steps can be taken from a further tightening in lending standards to requiring larger down payments, particularly in the case of FHA loans.

"I think that's absolutely reasonable," says Cohn, the broker. "I think people need to have skin the game."

At this point, all agree that Uncle Sam can no longer afford to run the game and that Fannie and Freddie need to be made much smaller and more narrowly-focused government entities or essentially privatized through an orderly and gradual sale of their assets and assumption of debt.

"The fundamental problem is that there isn't any fix for them other than their ultimate dissolution," says Ely.

Slideshow: Million-Dollar Foreclosures
© 2010 CNBC.com
URL: http://www.cnbc.com/id/37109549/

Banks Ignore Delinquent Borrowers

Banks Ignore Delinquent Borrowers
FORECLOSURES, BANKS, HOME DEFAULTS, BANK LOANS, REAL ESTATE, REALTY NEWS, REALTY TRENDS
Posted By: Diana Olick | CNBC Real Estate Reporter
cnbc.com | 13 May 2010 | 12:55 PM ET
Some encouraging signs on the foreclosure front may not be as rosy as some are reporting.

RealtyTrac, the online foreclosure sale site, shows a 9 percent dip in the number of properties with foreclosure filings in April, month-to-month.

The driver of that dip is a big drop in new notices of default.

The final stage of foreclosure, that is bank repossessions (REO) shot up to a new record high, up 45 percent from a year ago.

When I first read the report I thought, okay, we knew there was a big pipeline of loans that would not get modified and would have to come out the end at some point; now is that point. The fact that fewer loans are going into the pipeline should be our focus, and that's a positive. That's what I thought until I interviewed RealtyTrac's Rick Sharga.

"People are sitting in their houses not paying their mortgages, and the banks are letting those delinquencies extend longer and longer periods of time before they put them in foreclosure," Sharga told me.


That, he adds, is the main reason we're seeing lower numbers of new defaults.

The borrowers are in default, but the banks aren't paying attention, so they don't show up in the numbers.

He goes on -

"The fact that we have six to six and a half million loans that are either seriously delinquent or in foreclosure also suggests we are not nearly out of the woods. If we just started to absorb that inventory at the pace we're currently seeing new foreclosure proceedings we have about a 50 to 55 month supply of loans that yet have yet to be processed, so we have a way to go before we are out of the mess."
I know you're all going to tell me that Sharga works for a company that makes its money selling foreclosures, so he's going to play the bear side.

Take it for what it's worth.

But Sharga makes a compelling point when it comes to redefaults on loan modifications.

A lot of folks are either falling out of the trial modification period or not qualifying in the first place, and those loans are moving quickly to bank repossession.


California-based mortgage analyst Mark Hanson adds perspective with a look at "cancelled foreclosures."

These are not tracked by RealtyTrac, but they "bite right out of Notices of Default and foreclosures, so to get a real idea of how 'credit' is doing, you have to add a certain percentage back."

That's because Hanson believes the redefault rate on these modifications will be at the very least 50 percent 6-19 months out.

Questions? Comments? RealtyCheck@cnbc.com

© 2010 CNBC, Inc. All Rights Reserved

Friday, May 7, 2010

Business As Usual on Fat-Finger Friday

Wow, we are sinking to new levels of idiocy now.

The MSM would have you believe that the tremendous sell-off in the markets was just a trading error. If it was a trading error, then these markets SUCK! Are you telling me we put TRILLIONS of dollars, including our retirement savings, into a system that can be completely thrown into chaos because a single guy hits the wrong button on a single transaction? It’s a good thing Faisal Shahzad isn’t still working on Wall Street anymore, or he could have just pushed a button and caused a lot more damage that way than he did with a faulty car bomb…

This is financial terrorism, folks, retail traders were stopped out and margined out while the pros made Billions picking up the pieces. Don’t worry though, if you are rich enough and connected enough, the Nasdaq will reverse your losses but if they really wanted to make amends, they would cancel the day’s trading for ALL traders. My Members don’t care, we were, of course, in cash and generally short on our fun plays so we made out like bandits or, should I say, like banksters! Heck we even used our cash to do some bottom fishing in that ridiculous sell-off.

This market didn’t just sell off because of a trading mistake. Whatever really happened, it happened because there were no real buyers when the selling came - something I have been warning would happen during the last 3 months of low-volume run-ups. I keep using the house of cards/Jenga metaphor and that’s exactly what we have so be very careful when the same idiots who have been telling you BUYBUYBUY are now telling you to "come back in - the water’s fine." We all know how that advice worked out in Jaws…

I’m certainly NOT saying not to buy now. We dumped our short yesterday, as I told members during Chat to take the ridiculous money we were getting for the day and run:

2:17: Well you can assume today is a very nice move down and get out now. Tomorrow, even if jobs are bad and we head lower, then you can still flip to a June spread. Don’t foget that VIX keeps climbing as we head lower. Also, don’t forget how nice it is to be in cash and not care what happens tomorrow!
2:43: If you need them (our very successful DIA puts) for protection then just lighten up. You can sell some or you can cover by selling SOME May $104 puts for $2.90
2:50: I’d say wheeee but this is just scary now! We broke below 10,000? Wow, things are just going insane now and we still have an hour to go.
2:54: You’re playing for a meltdown and this is a meltdown so not much to do about it. This is such total BS it’s incredible! Good time to do some bottom fishing at these crazy lows. Volume is pretty good now, 273M on Dow at 2:50 but 5% lines held and now we’re bouncing to -4% so watch those lines. What a crazy day!
3:11 (to a Member who still had some long positions): Don’t start capitulating unless you have to, this was a forced move that can’t be real but, of course. Money coming out of bonds now, rates ticking up a bit. People back to bargain-hunting stocks.
Same comment, answering whether bears should take profits: YES. YES TO ALL BEARS, TAKE PROFITS ON A 5% ONE DAY MOVE!!!!
I know - wow, what a flip flopper, right? Actually 10,200 was our established buy line, the level at which we intended to flip bullish if it held on a sell-off but we sure didn’t expect to see it break and be retaken yesterday! Of course we have our stopping disciplines for taking profits in our Members’ Strategy Section but the action was so fast and furious that it was really just about controlling greed and taking profits as they were offered on the way down. The bid/ask spreads on options went so crazy that we were sometimes getting ridiculous prices for our puts and sometimes trapped in bearish spreads by the ridiculous prices of the puts we sold (which is still the case and gives us opportunities in today’s trading).

Today and next week our Members will be concentrating on selling options to the panicked retail investors, just like the big boys. We can pick beaten-down companies like Transocean (RIG) or Massey Energy (MEE) who had the mining disaste,r and put on what we call a buy/write play like this:

Buy MEE at $33.50
Sell 2012 $30 calls for $11.20 (net $22.30)
Sell 2012 $30 puts for $8.30 (net $14)
So our entry on MEE is net $14 and we are obligated to buy another round at $30 for an average entry of $22 if MEE finishes below $30 at Jan 2012 expiration. If MEE finishes over $30, we collect $30 from the person we sold the call to and we have a 114% profit in 20 months. This is what we do in hedge funds - we hedge! We’re not buying options, we’re selling them to people who think they can beat the markets and are willing to bet that MEE will go below $22.30 or above $38.30. In this particular case, we also think it will go above $38.30 but, rather than pay $8.30 for the call contract, we are HEDGING our belief in a way that protects us all the way to $22 (a 33% drop from today’s price) but pays us a better percent return than if the actual stock hit $65. Is that so complicated?

That’s what we do at PSW and today is a good time to review my "How to Buy Stocks For a 15-20% Discount" where we reveal my secret hedge fund techniques. Why do I do this? Because the people who put money into a hedge fund don’t do it because they don’t know how to trade - they do it because they are busy making other money or enjoying their lives instead of putting up with this market nonsense every day. Due to ridiculous regulations, it’s not realistic to set up a hedge fund for small investors so, for what it’s worth, I do my best to teach people how to use these strategies in their own trading. The BEST time to do this is when the VIX is high and I WILL be putting together a Buy List this weekend to select a couple of dozen sticks (we already grabbed 5 on yesterday’s dip) that are good candidates for the hedge.

I strongly recommend that anyone who has ever considered options at least try this strategy with one stock in your portfolio. If it works out, you’ll have at least one tool that you have learned how to use that will serve you for the rest of your life!

Meanwhile, nothing is better and nothing is fixed and don’t believe a word they say about "fat fingers" causing the crash. This crash was caused because a little boy finally pointed out that this Emperor of a rally actually has not clothes and all the MSM analysts who have been fawning over the magnificence of the rally are once again revealed to be nothing but fools, yet no greater fools than those who follow them…

So Asia blah, blah and Europe blah blah - I’ll go back to talking about fundamentals over the weekend. But watch the lack of reaction to 290,000 April Job gains this morning and then you decide if yesterday’s drop was a "mistake" or not. Greece may be solved, Greece may not be solved - if you have unhedged cash at work in the market over the weekend you will either be lucky or you won’t, but we will have cash and we will take advantage of whatever situation presents itself next week.

Have a great weekend,

- Phil
About the author: Philip Davis Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a... More

Thursday, May 6, 2010

Let's be honest about blogs and other 'time-sucks' | Inman News

Let's be honest about blogs and other 'time-sucks' | Inman News

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Open for Business!



We are finally open for business after we've recently acquired our new business, a real estate franchise from Coldwell Banker. We will hopefully soon start posting some interesting stuff as soon as we are settled down somewhat.

Until soon!

Tamara Herz and Ferdinand de Greef
Coldwell Banker Action Realty