Homebuyers: To get the house, get there first!

Housing inventory is stiflingly tight in many locations, making it a challenge to find, much less land, your dream home.

The number of available houses in the hottest markets has dropped dramatically over the past year, says the National Association of Realtors: In the Boston area, for one, inventory levels are down 29% vs. 2012. And Denver, Seattle, and San Francisco aren't far behind.

"Some homes are flying off the market in a matter of days," says Paul Bishop, VP of research for NAR.

Shopping in a popular spot? You'll have to go beyond the usual sellers' market tactics, such as getting prequalified for a mortgage. These strategies will help you find homes first, stopping a bidding war before it starts.

Go unlisted

One way to head off the competition is to look for so-called pocket listings, homes that are for sale but don't show up on the multiple listing service, where brokers post available properties.

Owners may choose not to list because they want to keep details about their houses private, or simply because they don't want to deal with staging the home and taking photos, says Zillow contributor and agent Brendon DeSimone, who works in New York and California.

To find these homes, you'll need a well-connected broker. "You want someone who has an inside track," says DeSimone. Agents who have experience with pocket listings should be able to tell you about examples of off-the-radar houses they've handled in the past, as well as any they are currently aware of (keep in mind that pocket listings are most common in areas with tight inventory).

A caution: Buyers considering an unlisted property should be on the lookout for defects and check that the price is in line with the area, says San Francisco broker Samuel Cadelinia. Owners sometimes use this low-profile method to avoid calling attention to a problem or to see if they can sell for more money.

Get the real-time scoop 

Many would-be buyers depend on automatic search, a regular roundup of listings sent out by the local MLS. But by the time these emails go out to shoppers, included homes may have been online for hours or even days.
Ask your agent about real-time MLS alerts, emails that are sent the moment a new listing goes live. While not yet in all markets, the alerts are available in the San Francisco Bay area, Las Vegas, Columbus, parts of Connecticut, and more.

Agents often have a home for 24 hours or so before entering it into the MLS, so your broker may be able to give you a heads-up on a house he just received. To increase your chances of getting that call, tell him that you'd like to be notified immediately, and be sure he knows exactly what type of house you're after.

See through bad listings

Don't be scared off by a hideous paint job, bad lighting, or unflattering photos. "Sometimes sellers don't listen to agents about getting the house ready for sale," says DeSimone.
In a tight market, he says, it's worth checking out marginal listings to avoid missing a badly packaged gem -- just factor in the price of any project required to bring the home up to snuff.

Set your search criteria a bit higher than your target price; you'll likely catch some overpriced homes that may eventually go for less. How will you know? The number of days on the market is one telltale sign, says Cadelinia.

For example, if most homes in the area are gone within a month but this one's been on the market for two, the owner may be willing to consider a lower offer. If the listing is new, get a sense of how realistic the cost is by comparing it with the recent sale price of similarly sized houses in the same area.

Spot would-be sellers

Finding a home that's not for sale but might be soon is tricky but not impossible.
One strategy: Ask your agent to search expired listings, says Mark Cenci, a Chillicothe, Ohio, realtor. Owners who tried to sell a couple of years ago may not be up on rising home values (June median home prices were 16% higher than two years prior, says the NAR) and might be swayed by what you're willing to pay.

Rental properties are another prospective target, since landlords may also be out of touch with current prices. Sure, it's a reach, but in this market, says Cenci, "you need to explore every option."





 

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First Published: October 14, 2013: 3:47 PM ET

National Foreclosure Settlement Rules Tweaked Amid Complaints

The $25 billion national mortgage foreclosure settlement is getting tweaked, to address numerous complaints that mortgage servicers are falling short in their dealings with struggling borrowers.

When it was announced in February 2012, the settlement sought to compensate borrowers for wrongs they experienced in the foreclosure process. Equally important was the development of new mortgage servicing standards that applied to the nation’s five largest servicers, Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally/GMAC.

But homeowners, housing counselors and state attorneys general have complained that the banks are not complying with many of the 304 standards they agreed to as part of the pact with the Justice Department, state attorneys general and the five companies.

Those standards “were supposed to eliminate headaches for borrowers, but homeowners continue to report problems,” said Illinois Attorney General Lisa Madigan, whose office is a member of the settlement’s monitoring committee.

The changes announced Tuesday night by the committee, many of which were agreed to only by Bank of America and Wells Fargo, seek to correct those issues.

Under the new procedures announced Tuesday night, all five banks will give homeowners 60 days, instead of 30, to submit additional documents that might help them secure a loan modification before the home goes into foreclosure or moves toward a foreclosure-related sale. The banks also have promised to do a better job of overseeing employees who work with borrowers.

Two servicers, Bank of America and Wells Fargo, also agreed to adopt other policies, such as being more specific about what missing information they need from homeowners. Currently, if a borrower sends in a document but forgets to sign it, the servicer may send a letter saying the document is missing, rather than just telling the homeowner that they forgot to sign it.

Those two companies also agreed to escalate loan modification applications when a customer is being asked repeatedly for more documents. And they will use an online portal to submit documents and create a direct contact for the housing counseling agencies working with struggling homeowners.

The committee continues to discuss additional service improvements with the three other banks, according to Natalie Bauer, a Madigan spokeswoman.

In May, Madigan said she saw an “alarming” pattern of potential violations of loan modification servicing standards. Among them: In 60 percent of files reviewed by her office, servicers did not notify borrowers within the required five days that their applications for a loan modification were missing documents. And in 45 percent of the files reviewed, servicers asked homeowners for documents multiple times.

In his June report on the settlement’s progress, independent monitor Joseph A. Smith Jr., said four of the five banks were failing to comply with the servicing aspects of the settlement.

At the time, Shaun Donovan, secretary of the Department of Housing and Urban Development said the “deep and pervasive problems” in mortgage servicing were unacceptable.







Copyright © 2013 The Chicago Tribune. Distributed by MCT Information Services.

Strength of Housing Recovery Questioned

The recovery in the U.S. housing market could run out of steam if it depends on investors to carry it along, an economic report explains.

In a report titled “Opening the Credit Box,” Moody’s Analytics economist Mark Zandi and Urban Institute market analyst Jim Parrott say rising home prices and interest rates will force the recovery to rely on first-time buyers, as investment buyers will begin to back away.

But first time buyers are not yet in a position to keep the recovery strong, Zandi and Parrott claim.

The Housing Wire reported Monday that the housing market’s recovery has produced some positive data. Zandi and Parrott report home prices are up 15 percent from two years ago and housing starts have doubled since their low point in the 2008-09 recession.

However, the average credit score among first-time home buyers is near 750, about 50 points higher than it was 10 years ago, the report said.

“Lenders have reassessed how much risk they are willing to take on, in part because they were burned badly in the crisis and in part because they have come to recognize a range of costs associated with riskier lending not fully appreciated before,” the report says.

The costs that are now influencing lenders include the expenses associated with handling distressed loans, potential costs of litigation and risks to a firm’s reputation, the report says.

Succinctly put, lending is tight. “Lenders are only willing to make loans intended for purchase by Fannie [Mae – Federal National Mortgage Association] or Freddie [Mac – Federal Home Loan Mortgage Corp.] or insurance by the FHA [Federal Housing Administration] if there is little prospect of default, so that they do not expose themselves unwittingly to the risk that they will bear the cost,” the report says.

 





Copyright © UPI 2013

FHA, VA Loans ‘Safe’ During Government Shutdown

Contrary to widespread media reports, new Federal Housing Administration (FHA) single-family home loans will be processed if the expected government shutdown occurs at midnight.

Florida Realtors® confirmed details contained in a Housing and Urban Development (HUD) contingency plan posted online. According to George Gonzalez, a deputy press secretary at HUD, the Office of Single Family Housing will endorse new loans and maintain the minimum operations necessary to support FHA’s existing portfolio through the FHA Call Center and the National Servicing Center’s Call Center.

Already scheduled closings on multi-family projects with firm commitments will proceed. Some services, such as the processing of change orders or construction inspections, will be affected during the first 10 business days of the shutdown.

VA home loans will continue to be processed as well, according to the U.S. Department of Veterans Affairs. Florida Realtors could not confirm by press time if this includes new loans as well as loans already in the system. The Veteran Benefits Administration, which oversees loans and the National Call Centers, among other things, employs 21,237 people. Funding is available to support all employees for some period of time.

Flood insurance

In other news, Florida Realtors continues to follow efforts to delay implementation of the Biggert-Waters Act of 2012, which will trigger crippling flood insurance rate increases for thousands of Florida property owners.

Late last Friday, Florida Congressman Rich Nugent introduced legislation to delay increases in flood insurance premium rates until an affordability study required under the act is completed.

“The legislation will also require that if the study finds the new rates are not affordable, then the Florida Emergency Management Association must make recommendations about what changes Congress should make,” according to a statement Rep. Nugent issued on his website.  Congress would then be required to vote up-or-down on the recommendations. If either chamber rejects the changes, the new flood insurance rates would be delayed for at least six months.

Finally, the National Association of Realtor’s (NAR) Flood Insurance Presidential Advisory Group meets later this week in Washington, D.C. Florida Realtors’ interests are represented by members Dean Asher, 2013 Florida Realtors president; Moe Veissi, past president of Florida Realtors and NAR; and Orlando Realtor and NAR Director Bob Caldwell.






© 2013 Florida Realtors®

New Home Sales Jump 7.9% in August

Americans stepped up purchases of new homes in August after cutting back in July, suggesting that higher mortgage rates may not be slowing the housing recovery.

The Commerce Department says sales of new homes increased 7.9 percent to a seasonally adjusted annual rate of 421,000. That comes after sales plunged 14.1 percent in July to a 390,000 annual rate.

The rebound in new-home sales could ease worries that higher rates have started to dampen sales. Still, some buyers could be racing to close deals before rates rise further. The average rate on the 30-year fixed mortgage has risen more than a full percentage point since May.

New-homes sales were 12.6 percent higher in August than a year ago. The pace remains well below the 700,000 consistent with a healthy market.







Copyright © 2013 The Associated Press, Martin Crutsinger, AP economics writer. All rights reserved.

Rising Interest Rates Could Impact Fla. Real Estate

Rising interest rates could dampen the recovery of Florida’s real estate market a bit, a new University of Florida (UF) survey suggests.

A look at the second quarter of 2013 found that the general investment outlook for all market sectors declined for the first time in two years – and it will continue to weaken as rates continue to go up. For the study, UF surveyed 145 real estate analysts, investors, brokers and others.

Interest rates on loans are based on U.S. 10-year treasury interest rates, which jumped 66 basis points between the start and end of the second quarter. As of last week, it was up 130 basis points, says Timothy Becker, director of UF’s Bergstrom Center for Real Estate Studies, part of the Warrington College of Business Administration.

“In the end (higher lending rates) make deals harder to do. As you increase the interest rate, you have to get more rental growth and higher occupancy in order to make the numbers work,” he says.

“There are a lot of deals being done right now, that’s why the market has really picked up; things are recovering and people can charge more rent,” he says. “But as those interest rates start to tick up and if they continue at this pace, it’s going to get to the point where it’s difficult to make deals work at the current rental rates.”

Expert outlooks by real estate sector:

• New single-family and condo development declined slightly but remained positive.
• Multi-family properties continue to be positive. Rents and occupancy will increase but at a slower rate.
• Office markets improved for Class B space (older properties,) but declined for Class A (newer properties).
• Retail properties continue to be positive with growth in rents and occupancy driving optimism, but increasing interest rates and declining consumer incomes will have impact.
• Land investment increased across all property types with most reaching survey highs.

“The apartment market has been probably the best sector for the past couple years,” Becker says. “It is reflective of the changing dynamics of peoples’ tastes, so the younger generation wants to rent longer. But it’s also reflective of what happened in the housing market – people got foreclosed on their houses; they had to go somewhere, so they moved into apartments.”

The housing market is starting to come back, particularly for homebuilders, but Becker says it will be interesting to see the impact of interest rates over the next few quarters.

“If you need that low interest rate in order to buy the house and make the payment, then it’s going to push people into a lower price home; or they may decide not to do it and wait until they can put up a bigger downpayment,” he says.

Interest rates have been artificially low for a long time because the Federal Reserve has been pumping money into the marketplace, but that’s expected to end because of the improved overall economy and a fear of inflation.

A political stalemate at the federal level over raising the debt ceiling and funding the government also could affect investments.

“Markets hate uncertainty. They just don’t like it when they can’t plan for the future,” Becker explains. “Any time we see nonsense from Congress, it just shakes people’s confidence. They rein back investment and kind of wait it through.”

On the positive side, Florida’s population is still growing and tourism keeps increasing.

“Developers certainly like the fact that we’re growing – I think that, overall if you look at the graphs, it’s a positive report,” Becker said. “We’re still in a good position; things are still getting better. There is just a bit of uncertainty that the market needs to navigate as it moves forward.”






© 2013 Florida Realtors®

Is it Better to Underprice or Overprice a Listing?

Some real estate agents price a property lower than nearby homes, hoping that a bidding war will break out. New research, however, suggests that setting the initial asking price 10 percent to 20 percent lower than comparable residences lowers the sale price by about $117 to $187, according to research published in the May issue of the Journal of Economic Behavior & Organization.

On the opposite end, an initial asking price 10 percent to 20 percent higher than comparables can yield a slight gain – $117 to $163 – in sales price.

The study, based on analysis of nearly 15,000 property deals in Delaware, New Jersey and Pennsylvania over a four-year period, pointed to “anchoring” as reason for the final sale price difference.

“Anchoring” refers to people’s tendency to rely on the first piece of information offered – the anchor – and to interpret additional information that follows based on the data they heard first.

In terms of real estate, “buyers (who heard that a seller wants a bit more money than similar nearby homes) will turn to the good attributes that justify the high price,” explains Grace Bucchianeri, a former University of Pennsylvania professor and co-author of the study.

She and former Penn lecturer Julia Minson also discovered that real estate agents usually recommend underpricing, in part to reach a deal earlier – an approach that saves the agent time and money.

The study, however, did not look at a listing’s time on market based on whether the seller overpriced or underpriced the property.

 






Source: Wall Street Journal (08/09/13) P. M3; Tanaka, Sanette

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