Mona's Real Estate Rumblings

So, when is spring? I heard on 95.1 Shine FM this morning that "many" consider March 1 the first day of spring as opposed to March 20. My calendar says March 20. Looking at the temperatures for the next week, it appears no day will be under 32 degrees. I am supposing that the gross error of global warming is giving us a premature spring? But then again....I think spring is when you see growths peaking up out of the ground and they certainly are. Yes, they are! So, I conclude that it is spring, with or without global warming!

FHA Policy Changes

Effective 4/5/2010, the mortage insurance premium is due to increase on FHA.  You will be hearing news about this, but it is not as bad as it sounds.  The impact on borrowers will be minimal considering the increase will be paid over the life of the loan.  There is a second step being proposed and that will be to increase the monthly mortgage premium.  This requires Congressional authorization since the annual MIP is already as high as the law with allow. 

No doubt the media will beat this drum.  In the overall scheme of things we are still looking at 5% interest rates.  Even if rates go up this year, they are projected at 6% (perhaps) by the end of 2010.

Get out there and take advantage of these rates!

Monster Storm

The Monster Storm and the Effect on Real Estate
By now I am wondering how to put signs into the ground. Having several listings lined up, perpetual delays (minor issues like unplowed roads and access to houses), and further threat of 4-6" on Valentine's Day makes predicing the effect on the spring market quite difficult. Carpet layers can not install in preparation of the listing going internet, children are perpetually home during snow days, not giving the break needed to finish painting the neutral colors I recommended. (Of course, they will probably be going to school into July at this point--beware the delay of the summer school's out family vacation).
We are managing the ratification of 3 contracts, despite the snow monster; however, now home inspections are a problem. How can an inspector adequately give information to a buyer when he/she can not even see the roof, the yard, and how the ground slopes toward the house? Not to mention the appraiser? One case has had the home inspection moved four times!.....ahh, this too shall pass.
As we approach our 4th snow this Valentine's Day (4-6"), not to mention that the next day is a holiday (President's Day) and we spend another off-school with the children, we are quite fortunate.
Yes--we have quiet time, we can plan, coordinate, finish up a class we are taking, get our marketing ready and help our clients shovel out a path to the front door. Quality time to do what we need to do to prepare for the spring wave.
Yes, there will be a spring wave of pent up buyers and sellers. It's coming, get ready, and in the meantime, throw some seed out for the birds and squirrels--they are quite hungry.

In my humble opinion, the market has opened up already for 2010! People are out looking, considering, and making decisions. While I would typically say it is early to get your home on the market, barring bad weather, I would advise that if you want to sell this spring be diligent about your preparation and get ready....the first half of the year will be quite strong....timing is everything. Interest rates should be going up the second half of the year. Call me if you need me or just shoot me an email.....



"Kindness is the only service that will stand the storm of life and not wash out. It will wear well and be remembered long after the prism of politeness or the complexion of courtesy has faded away."

The following information is quite valuable and rather then me picking it apart and trying to duplicate it, I will copy it in it's entirety and give credit to Sean Lyon @ Prospect Mortgage.

"False Illusions and What You Need to Know



Homebuyer Alert…



For prospective homebuyers who are on the fence about making a home purchase, the next few months represent a countdown of sorts for two reasons.



The first of these, the coming expiration of huge tax incentives, may be a bit more obvious to most borrowers. April 30, 2010 is the last day to enter into a home purchase contract and still potentially qualify for a federal income tax credit of up to $8,000 for first-time homebuyers and up to $6,500 for repeat homebuyers. The credit can be claimed only on contracts that close by June 30, 2010.



Secondly, beyond the waning benefit of the Federal income tax incentive, another form of stimulus will soon disappear, as the Federal Reserve winds down a program that has been keeping home loan rates artificially low.



Rate Alert…



The lowest rates of 2009 were driven down to their attractive levels because of the Fed’s Mortgage Backed Securities (MBS) purchase program. Home loan rates have an inverse relationship with the value of MBS. When these securities trade higher on the market, rates move lower and vice-versa. So when the Fed originally agreed to be a big buyer, it helped provide a market for MBS, which helped keep prices high and, as a result, helped push home loan rates low.



And while the Fed continues that program through the end of March 2010, the reality is that the Fed‘s “extension” was really more of a rationing intended to prevent home loan rates from spiking as the program is phased out. It’s sort of like weaning the market off of its life-saving treatment instead of forcing it to go cold turkey.



Already, some in the media have mistakenly reported the extension of the program through March as good news, telling consumers that rates will continue to decline, and remain low into the spring. This gives a false sense of security that homebuyers and refinancers simply cannot afford.



The problem is…



Those reports do not accurately report what’s going on or where rates are really headed. That can have a very costly impact on consumers who may miss out on historically low rates if they listen to these media outlets.



Here’s what’s really going on…



In May 2009, the Federal Reserve's purchases of MBS peaked at an average of $25 Billion per week. As of November, the average weekly purchases dropped down to $14 Billion. At the end of November, the Fed had already used over 80% of the allocated funds for MBS, meaning less than 20% remained to be used over four months.



Making the problem worse is that the Fed now has less money available to purchase MBS while at the same time, the supply of these securities has increased as a result of refinance and purchase activity that was triggered by lower rates.



Why is that important?



As the Fed now has fewer funds to last through the remaining months of the program, its ability to keep rates low will wane.

As the Fed's program winds down and ends, we’ll likely see two things happen.



First, we will probably see higher levels of volatility—with rates sometimes shifting dramatically in the middle of the day. That means it is more important than ever for buyers to work with a knowledgeable mortgage professional who has a finger on the pulse of the market at all times and can provide trusted, proven advice.



Second, since MBS will have less support from the Fed, rates are likely to rise over time.



In short, while rates are still very good, they may not be for long.



What should you do to protect yourself?



First and foremost, work with a knowledgeable mortgage originator who studies and monitors the market.



Second, don’t be fooled by media stories that only report the headlines and don’t understand the underlying implications of the Fed’s actions. If you ever hear something in the news but aren’t sure what it means to your situation, feel free to call or email me for in-depth answers and advice.



Finally, if you haven't yet explored how the current rate environment might benefit you or someone you know, let’s arrange a time to sit down and discuss your unique situation as well as your short- and long-term goals. Remember, rates are still very good, but they may not be for long.

Mona, where are you?

OK, I am convicted. I have not posted in a while--but I have good reason....First time home buyers are keeping me busy.  I have shown more property in the last two months than I have the first part of the year.  Buyers are anxious to spend their hard earned dollars on a great buy in a home to benefit from the Homebuyer Tax Credits. Now, existing homeowners can benefit!

Now we have more news.  Congress has extended and expanded the tax credit.  The modifications are effective 12/1/09-04/30/2010.

First time buyers:  Up to $8,000 in tax credits with income limits being increased from $75,000 to $125,000 for singles and $150,000 to $225,000 for marrieds.

Current homeowners:  Eligible for $6,500 (marrieds) who have used the home sold as a principal residence consecutively for 5 of the previous 8 years.

Amazing!  And the feds have promised to hold down the interest rates.

So.....I will try harder to be faithful to my blog.  Gotta go now....off to show property!! :-)

My best always to you!

Mona

www.monalacovey.com

Mistake #7 -- Last, but certainly not least, finding the right Realtor!

Goodness, I should have put this at the beginning rather than at the end.  In this case, I saved the best for last!

Gauge the first conversation with your Realtor.  Is she friendly, open, and honest?  Does she have knowledge of your market place?  Chances are the same impression you have is the same impression a future buyer will have.  A good agent attracts people and builds rapport--the first step in selling your house!  Does the agent have a success track record?  Is the agent dealing with you one on one or do you get turned over to a team member and never talk with your agent again?  Don't misunderstand me, teams are a good thing for routine tasks, but if you have a special need can you get your listing agent on the phone?  Does your Realtor network with other top agents?  Does she have presence with her marketing?

I have a list of other criteria, which I will be happy to share with you.

A Realtor works for you.  Let me know when I can show you the detail!  As they say, proof is "in the puddin' "...... and in results.

Mistake #6: Not Knowing Your Rights & Responsibilities

Hello again.  It is very important that you read your paperwork and are knowledgeable of the details of your real estate contract.  These contracts are legal documents and are binding.  They can occasionally be complex, as the contracts in Maryland are a prime example.

Not being aware of your contact terms can cost you thousands of dollars.  Be clear on what you are committing to in your contract.  Your agent will go over the details with you as you review the contract, but the ultimate responsibility is yours.

Read carefully and ask questions!  Anticipating problems is the best way to conquer them!

Mistake #5 -- Trying to sell to a "looky loo".....

Okay, so what is a "looky loo"?  A "looky loo" is a someone who just likes to look at houses and is not a serious buyer.  Some may call them "professional shoppers".

A prospective buyer who shows interest because of a for sale sign may not be interested in your property.  They are more interested in seeing decorating ideas, or just, simply, want to see the inside of your home.

Your REALTOR should be able to distinguish realistic potential buyers from mere lookers.  REALTORS will usually find out the general financial condition of the buyer.  The REALTOR should do a general qualification and then direct the buyer to a mortgage lender for credit reports and a letter of pre-qualification or pre-approval.  If the buyer is serious, they will generally follow this direction.

Listing agents, in general, can not qualify every buyer that comes in the door.  That is up to the buyer agent.  Prequalification also has the added benefit of informing the buyer of the specifics of their requirements, i.e. the amount of their monthly payment, cash needed, and how to negotiate the best deal.  A good REALTOR will do this, for the benefit of their client and to not waste their own time.

Mistake #4: Trying to "hard sell" the house (both agents & owners!)

This is a tough one to swallow sometimes.  Real estate agents are "salespersons", right?  Wrong. 

Buying a house is always an emotional and difficult decision.  As a result, the buyer should be allowed to examine a property comfortably.  We can not pressure the buyer forcefully; and frankly, have you ever tried to look at something you wanted to purchase, but the salesperson kept talking with you.  Annoying, isn't it?

We are counselors.  We guide, we do not force feed.  Let the buyers see the house, point out subtle amenities or things they may not have seen.  Be receptive to questions.  Getting answers is a great reason to follow up, after the fact.

And owners....I know this is tough, but step to one side or run an errand during the showing....the buyers won't say a word while you are there.  Let them comfortably absorb the house and its features.  The listing agent should have a brochure handy for the buyers to take with them, to remind them of the features.

Timing is important.  The right buyers + the right timing + the right price positioning + the right terms + the right agents = successful transaction for you.

Best always!
Mona