Month: July 2012

The Difference Between Excellent and Perfect


 

Newton, MA.  real estate, top Realtor Newton, MA.  newtonmasshomesforsale.com

 

The Difference Between Excellent and Perfect

by The KCM Crew on July 31, 2012

Why does a buyer or seller look for a real estate professional in today’s new market reality? There’s plenty of information readily available for them to look at and analyze as they’re going through the process.

That’s just the point. Information being readily available causes confusion. That’s when people seek out professionals (whether it be a doctor, lawyer, or real estate professional) for an analysis of the information and their situation. Because of the wealth of information available, people are yearning for expert advice.

Don’t be afraid of those two words. Remember:

  • An expert doesn’t mean you’re going to give perfect advice.
  • An expert means you’re going to give excellent advice.

Here’s the difference:

If you go to a doctor with a serious illness, she can’t tell you how it’s all going to wind up in the end. She doesn’t know. If she did, that would be perfect advice.

However, your doctor can give you excellent advice in that she can tell you about your illness and your options, whether it be surgery or medications. She can also explain what she believes to be the best option for you based on your history, symptoms, and overall health. Ultimately, though, you’re going to make the final decision of whether you go through with the treatment plan.

Once you make that decision, your doctor will take you by the hand and walk you down the road to recovery. She will explain to you that there might be adjustments that need to be made to the treatment plan, because no one can know for certain how things will turn out. She might have to adjust your medications or increase or decrease your treatment schedule. But every step of the way, she’s there with you, helping you get to your ultimate goal. This is called excellent advice.

Similarly, if you went to an attorney, he can’t tell you how the case is going to end up or how the judge or jury will rule. That would be perfect advice. What a good attorney can do is explain your options. He might pick one or two options he believes to be the best ones to pursue. He will then leave you to make the decision on which option you want to take. Once you decide, he will help put a plan together based on the facts at hand. He will help you get to the best possible resolution of the case. And along the way, he’ll make whatever changes are needed. This is excellent advice.

Your role as a real estate professional is similar to the role of the doctor and lawyer. You can’t give buyers or sellers perfect advice because you don’t know what’s going to happen—you can’t predict the future. However, you can give excellent advice based on the information and situation at hand. You can guide them through the process and help them make the necessary changes along the way. And that’s exactly what your clients deserve…and want!

 

Mortgage Rates Crush Previous All-Time Lows


 

Newton, MA.  real estate, newtonmasshomesfor sale.com

 

Mortgage Rates Crush Previous All-Time Lows

Mortgage Rates are on an undisputed tear, moving more today than any day in the past 3 weeks of progressive movement into new all-time lows.  The week began much like the previous week ended, with concerns over the European financial system pulling all manner of ‘safe-haven’ bond yields lower, among them MBS (the Mortgage-Backed-Securities that most directly influence mortgage rates).

Once again, there was nothing on the domestic economic calendar and corporate earnings had little effect next to news that a third region in Spain will now request assistance from Spain’s central government.  Combined with a glut of generally gloomy news overnight, 10yr Treasury yields hit new record lows before domestic trading commenced.  The balance of the day has simply seen rates move in narrow, sideways patterns near these extreme levels.

 

Even though Friday had been fairly brisk in terms of the pace of improvement for mortgage rates, today was brisker in most cases.   Best-Execution rates for 30yr Fixed, Conventional loans are a foregone conclusion at 3.5% and there’s an even stronger case for 3.375% at some lenders.  That said, 3.5% continues to be a more efficient combination of rate and fee at most lenders.

(Read More:What is A Best-Execution Mortgage Rate?)

Long Term Guidance: We’d continue to advocate against trying to “get ahead” of current market movements due to the high degree of uncertainty.  In the past, we would have interpreted that advice as a suggestion to lock, but in the recently “low and sideways” environment, it’s probably better-read as a suggestion to go with the flow of gradually lower rates until we see the pattern definitively break.  It’s a reasonably safe assumption that European concerns will generally continue to apply downward pressure on rates although there are no guarantees that the right piece of news or economic event couldn’t mark “the turning point” at which rates bottom out.  On any given day, rates have been at or near all-time lows and in the grand scheme of things, unable to move lower as quickly as Treasuries for example.  So although there is potential gain from floating, it’s still a historically excellent time to lock if you’d prefer to take the risk off the table.

Loan Originator Perspectives

Ira Selwin, Vice President Of Secondary Marketing, US Mortgage Corporation

I have officially changed my thoughts from “Lock” to “Float”. I feel that right now is the time to float, but always have your Loan Officer ready to lock your loan at a moments notice in case things turn the wrong way.

Victor Burek at Benchmark Mortgage

If you have been following my advice(i said Friday don’t lock anything), it is the same today as it has been. Float until you are within 15 days of closing, then lock. Yes, rates might edge a little lower during that 15 days, but at some point you must lock. Don’t make the mistake of trying to time the bottom as the only way to know rates are at rock bottom is once they have passed, but then it is too late.

Julian Hebron, Loan Agent, Branch Manager, RPM Mortgage

Sticking to the plan I laid out last with all clients. It’s the safest way to manage a declining but unpredictable rate environment. Here it is: Locking purchases as they ratify to capture current lows for clients whose purchase contracts dictate a specific timeline. Decisions to lock refis are specific to each client. If they’ve recently closed a purchase or previous refi (thus rate is only slightly higher than current market), it’s either a float or a no-cost refi depending on breakeven math for closing fees spent previously. If they haven’t refinanced in awhile (thus rate is much higher than current market), it’s a lock—whether those locks are cost or no-cost also depends on math best suited to client profile and expected time horizon in the loan and/or home.

Today’s BEST-EXECUTION Rates 

  • 30YR FIXED –  3.5%, Some Approaching 3.375%
  • FHA/VA – 3.25-3.5% (varies more between lenders than conventional 30yr Fixed)
  • 15 YEAR FIXED –  2.75 – 2.875%
  • 5 YEAR ARMS –  2.625-3. 25% depending on the lender

Ongoing Lock/Float Considerations 

  • Rates and costs continue to operate near all time best levels
  • Current levels have experienced increasing resistance in improving much from here
  • Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally more risk than reward regarding floating
  • But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn’t always mean they’re done improving.
  • (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

 

 

 

The Difference Between a Short Sale and a Foreclosure


newtonmasshomesforsale.com

 

This week, we are looking at the advantages of a short sale over a foreclosure from five different perspectives: the Sellers’, the Neighborhoods’, the Banks’, Prices and the Children. – The KCM Crew

Real estate professionals are handling an increasing number of distressed properties. Which is a better alternative for the seller – short sale or foreclosure? Here are the advantages of doing a short sale:

It allows a more dignified exit from the home.

In a foreclosure, an official eventually comes to the home and tells the occupants to leave – immediately. In a short sale, the seller knows the closing date and can prepare in advance for the move. In many cases, their neighbors, friends and family needn’t even know of their financial difficulties.

The seller could possibly avoid a deficiency judgment.

In almost all distressed sales, the bank can legally go after the seller for the difference between the loan amount and the selling price (known as a deficiency judgment). Most banks will release the seller from this obligation in a short sale process.

A short sale has less of a negative impact on their credit report.

Once a short sale is completed, the sellers begin to clean-up their credit report. The timeline can be much longer as a foreclosure proceeds through the process.

(For more on this go to: Short Sale vs. Foreclosure: A Short Sale Always Wins)

The seller can return to homeownership more quickly.

If a family allows the house to go to foreclosure, it may take 5-7 years to again qualify for a mortgage. In the case of a short sale, the timetable can be 2-4 years.

There is a ticking clock on tax relief.

There is currently legislation, the Mortgage Forgiveness Relief Act of 2007, ensuring that homeowners who received principal reductions or other forms of debt forgiveness on their primary residences do not have to pay taxes on the amount forgiven. This legislation is set to expire at the end of the year.

Stunned Buyers are Finding Bidding Wars Are Back!


 

Newton, MA. Top Realtor, Newtonmasshomesforsale.com, Buyer and Seller Agent, Newton, MA

WSJ

A new development is catching home buyers off guard as the spring sales season gets under way: Bidding wars are back.

From California to Florida, many buyers are increasingly competing for the same house. Unlike the bidding wars that typified the go-go years and largely reflected surging sales, today’s are a result of supply shortages.

[BIDWARS] Peter Earl McCollough for The Wall Street JournalDebbie and Bill Wetherell received multiple offers for their home.

“It’s a little surprising because we thought bidding wars were done with,” said Andy Aley, who is looking to buy his first home in Seattle’s Beacon Hill neighborhood. The 31-year-old attorney was outbid this year when he offered up to $23,000 above the $357,000 listing price and agreed to waive inspections and other closing conditions.

Competitive bidding in the current environment isn’t producing huge price increases or leaving sellers with hefty profits, as occurred during the housing boom. Still, the bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump.

An index that measures the number of contracts signed to purchase previously owned homes rose in March to its highest level in nearly two years, up 12.8% from a year ago and 4.1% from February, the National Association of Realtors reported on Thursday.

“We very much believe we’ve hit bottom,” said Ivy Zelman, chief executive of a research firm, who was among the first to warn of a downturn seven years ago. Earlier this week, she raised her home-price forecast for the year, calling for a 1% annual gain, up from a 1% decline.

The Wall Street Journal’s quarterly survey found that the inventory of homes listed for sale declined sharply in all 28 markets tracked. Real-estate agents consider a market balanced when there is a six-month supply of homes for sale. At the height of the housing crisis, in 2008, there was an 11.1-months’ supply. In March, there was a 6.3-months’ supply.

Inventory levels in many markets were at the lowest level in years. At the current pace of sales, it would take just 1.5 months to sell all the homes listed in Sacramento, Calif., and 2.4 months to sell all the homes listed in Phoenix. San Francisco and Washington, D.C., each have 3.4 months of supply, while Miami has 4.1 months of supply.

Other markets have plenty of homes. Chicago, for example, has 9.4 months of supply, while New York’s Long Island has 16.1 months of supply. Even in those markets, the number of houses for sale is edging down.

Increased competition is frustrating buyers and their agents. “We’re writing a record number of offers, but we’re not seeing a record number of closings and that’s because it’s so competitive,” said Glenn Kelman, chief executive of real-estate brokerage Redfin Corp. in Seattle with offices in 14 states.

Nearly 83% of offers that Redfin agents have made on behalf of clients in the San Francisco Bay area this year and 71% in Southern California have had competing bids. Redfin represented a buyer that made the winning bid on a Gaithersburg, Md., home earlier this month after agreeing to adopt the dog of the seller, who was relocating and looking to find a new home for “Buddy,” a white toy poodle.

Inventories are declining for a number of reasons. Some sellers, unwilling to accept prices that are still down from their peak by one-third, are taking their homes off the market in anticipation of higher prices down the road. Meanwhile, investors have been outmaneuvering consumers for the best properties, often making cash offers that are quickly accepted by sellers.

In addition, some economists say that inventory levels are being held artificially low because Fannie Mae, Freddie Mac and the nation’s biggest banks have been slow to list for sale hundreds of thousands of foreclosed homes they currently own. The lenders slowed down foreclosure sales and repossessions after record-keeping abuses surfaced 18 months ago.

Banks and other mortgage investors owned nearly 450,000 foreclosed properties at the end of March, and another two million mortgages were in some stage of foreclosure.

Inventories could rise, putting more pressure on prices, if the banks and other lenders step up their efforts to sell their properties. Real-estate agents say they aren’t concerned. “There’s an enormous appetite for foreclosures. Release the inventory. It will sell,” said Richard Smith, chief executive of Realogy Corp., which owns the Coldwell Banker and Century 21 real-estate brands.

[BIDWARS]

The declining inventory of older homes is spurring sales of new homes. New home sales are up 16% so far this year, compared with a year ago, while inventories of new homes fell in March to their lowest level since record keeping began in 1963.

Meritage Homes Corp., a builder based in Scottsdale, Ariz., reported Thursday a 36% increase in orders for the quarter ending in March versus the previous-year period.

Even though bidding wars are pushing prices higher, many homes are still selling for prices far lower than a few years ago. Increased demand is “entirely affordability driven, which tells me there will be strong resistance to price increases” by buyers, says Jeffrey Otteau, president of Otteau Valuation Group, an East Brunswick, N.J., appraisal firm.

Rents are rising at a time when mortgage rates have fallen to very low levels. The result is that the monthly mortgage payment on a median-priced home is lower than any time since the 1990s. Freddie Mac reported on Thursday that mortgage rates fell to 3.88% for the average 30-year fixed rate mortgage, near its lowest recorded level.

Rates are “so low that we can afford a house that was out of our price range before,” said Aarthi Srinivasan, who is looking with her husband for a home around Palo Alto, Calif., one of the country’s hottest real-estate markets.

Ms. Srinivasan says she fears that prices are being bid up too quickly. She says she had her “aha moment” earlier this year while touring a 50-year-old house that needed extensive remodeling. The home, listed at $1.1 million, received nearly 10 offers and eventually went under contract for more than $1.3 million to a buyer who hadn’t even viewed the property.

“There are only so many buyers who are going to be in such a hurry, so we’re hoping it’ll top off soon,” she says. On Monday, they offered to pay more than the $1.2 million list price for a four-bedroom, bank-owned foreclosure. They haven’t found out if they made the top bid.

On the other side of those transactions are sellers like Debbie and Bill Wetherell, who had 17 offers in four days for their four-bedroom home in Danville, Calif. “I was floored. It was so fast, it was surreal,” says Ms. Wetherell. The home sold on Wednesday for $796,000, more than $50,000 above the asking price.

Still, the sale is for nearly $180,000 less than what they paid for the house in 2005. Ms. Wetherell’s husband has commuted to Reno, Nev., for five years and they have decided to relocate.

Housing markets face other headwinds. More than 11 million homeowners owe more than their home is worth. It is a big reason that the “trade-up” market has been stalled. These homeowners can’t sell their current homes, let alone come up with the down payment for their next home.

Mortgage-lending standards remain tough. Real-estate agents say an unusually high share of deals are falling apart because homes won’t appraise at the price that buyers have agreed to pay sellers.

Still, borrowers with stable jobs are looking to make deals. Kelly Pajela-Fu and her husband offered to pay the asking price of $600,000 for a four-bedroom home in Marblehead, Mass., within a day of the property hitting the market.

“We just knew this house would go quickly,” says Ms. Pajela-Fu, a 31-year-old doctor who had lost out on an earlier offer. Their strategy to avoid a bidding war paid off: The sellers accepted their offer before having an open house.

 

 

Newton Real Estate Market’s Biggest Problem—Lack of Inventory!


Newton, MA. Realtor, Buyer/Seller Agent Newton, MA.  Newtonmasshomesforsale.com

Summer 2012 Real Estate Trends

You may have already heard these from many sources,Case Schiller Index, WSJ, but here is another article highlighting the 5 Real Estate trends (some good, some bad) to look out for this summer:
Newton has only 130 single families listed for sale and 166 are under agreement.  A steady market is  between 200 and 215 active listings, this is a supply and demand business.  When Under Agreements outpace current inventory we are in an accelerating market.  There are MANY buyers out there.  I put a Brookline condo on the market last week and more than 6o people came to the open house…we had 4 offers by Monday and it is under agreement.  Houses in good, crisp condition sell for a premium and houses with deferred maintenance  sell at a discount.  If electric, boiler, roof, and plumbing need updating buyers will discount for that.  If you can afford to fix the infrastructure of the house–by all means do it!

5 Housing Trends in Summer 2012

  • Inventory-continues to be an issue in certain markets, like ours!
  • Steady Home Prices-most experts predict 3% in home prices over next 18 months
  • Interest Rates-will continue to hover around 4%
  • HARP-is helping borrowers qualify
  • Appraisals-issues will continue throughout summer
What does this mean?  Now is the right time to sell-and to buy-there is no guarantee how long these circumstances will last, don’t waste time at the beach-get in the house hunt!(If you have not reviewed your mortgage rate in the past few months it may make sense to look again, fixed rates are well under 4% for most situations, be sure to tell your friends too) –
*Summer 2012 should be very busy with little vacation time for those of us in the industry!