Jude's Real Estate Rumblings

An article from Realtor Magazine Online, reports that according to NAR Chief Economist Lawrence Yun, home sales have stabilized over the last seven months and should increase slightly in the second half of 2008.  He added, "I believe 2008 will be the year when we have to clean up and recover from the subprime mess."  Yun also said while sales should begin to grow later this year, real improvement in the housing market won't happen until 2009, when sales should climb to 5.71 million units.  Thanks to Fed rate cuts, current borrowers with adjustable mortgages are in better shape.  Some adjustable loan borrowers may actually see their resets produce lower payments.  Yun said, "The Fed has done its job on resets; now it's up to Congress to encourage the home buying that will help stabilize prices."
http://www.realtor.org/rmodaily.nsf/pages/News2008051603

http://www.judesandvall.com

http://www.judesandvallloans.com

An article from the Denver Business Journal, reports that a recent national study that compares the current costs and future returns of owned and rented homes paints a bleak picture for homeowners in U.S. markets with housing bubbles, including metro Denver.  The study is called "The Cost of Maintaining Home Ownership in the Current Crisis: Comparisons in 20 Cities" and it states that homeownership in bubble-inflated markets remains "a costly and risky proposition," and that "most homeowners will leave their homes with large amounts of negative equity."  Two local housing analysts and an economist disagree and think the scenario isn't that bad for the Denver area.  Economist Patty Silverstein, president of Littleton-based Development Research Partners Inc. said, "If the basic premise of the study is that we need to pay attention to renters, I absolutely agree. ... But I don't agree that [the homeownership situation] is as dire as they suggest."  In the metro Denver area, the report shows a 66% gap between the $1,454 midrange monthly cost of owning a house and $876 average monthly rental costs.
http://www.bizjournals.com/denver/stories/2008/05/19/story13.html?b=1211169600^1636781

http://www.judesandvall.com

http://www.judesandvallloans.com

Whenever a buyer is purchasing a condo, it's important to point out that there will be buyer closing fees on the final HUD-1 that are not on the Good Faith Estimate (GFE), namely HOA transfer fees, HOA dues, HOA working capital, etc.  These fees do not get listed on the GFE because they are not related to the financing of the property, just as the Realtors' commission does not get listed on the GFE.   If the buyer has limited funds, these additional fees can present a problem because the buyer may not have enough money to pay them and still remain within the loan underwriting guidelines.  It's best to contact the HOA management company before making an offer to find out the amount of the HOA fees.  If everyone knows what they are up-front, the financing can be structured correctly and there will be no problems when the final HUD-1 is prepared.

http://www.judesandvall.com

http://www.judesandvallloans.com

Take some risks with your marketing, promote yourself everywhere, and be unique. Those were key messages from real estate trainer Terry Watson, who spoke at last week's REALTORS® Midyear Legislative Meetings about how to gain an edge in your marketplace.

"With 1.3 million real estate professionals, most of our advertising looks exactly the same," said Watson, also a broker for his family's real estate company in Chicago. But to get that word-of-mouth advertising that every practitioner should crave, Watson said it takes being bold and different.

Watson highlighted some of the following ideas to give your marketing more impact:

• Speak to customers' desires. Don't ask customers: "How did you hear about me?" Instead, you should be more interested in learning "What did you hear about me?" This will give you insight into why exactly they came to you and you'll be able to better tailor your marketing to what is most important to your customers.

• Go green. Being environmentally friendly is important to younger generations and it's a popular topic of today's media. Watson encouraged attendees to use it in their marketing and to earn their Ecobroker designation.

• Use better words. Customers don't care much about marketing that tells them you're in the million dollar club, how long you've been in the business, and other "me" types of promotion, Watson said. They care about how you can help them. So statements like "I sold 200 units this year" would have more impact if you said "I helped 200 families move into new homes." Also, use words to your advantage. For example, when you tell customers that they will be working with your "assistant," it makes it sound like you are passing them off to someone insignificant, Watson said. Instead, call your assistant a "specialist" or "partner." Also, use the word "bought" in replace of "sold" and "new price" instead of "price reduced."

• Beef up your Web site. Include your Web site's URL everywhere, including your voicemail, name tags at conferences, your e-mail signature, and your personal and business checks. Buy all domain names for common misspellings of your name. And give customers reason to keep coming back to your site: Have a recommended reading list of books, quotes of the day, humor section, photo gallery, and an area for testimonials from your customers, Watson recommends. Make sure your Web site has energy in its design

• Establish yourself as an expert. Write a book or a white paper. For example, you are trying to convince a customer who is facing foreclosure to work with you. Why would they want to? "I wrote the book on foreclosures!" Watson said. Or, if a book is too grandiose of an idea for you, write 10-15 pages on a subject for a white paper (possible topics: foreclosure, how to purchase a property, or expired listings).

• Take advantage of NAR's free resources. The Library section of REALTOR.org offers free access to eBooks and ProQuest, which you can use to scan real estate books, magazines, and journals. Also, downloadable NAR brochures can help you be a resource to your customers in learning about mortgages and other homebuying and selling issues.

• Get on social networking sites and blog. Be on Facebook, YouTube, Plaxo, MySpace, and LinkedIn. These social networking sites, when used for business purposes, can help promote yourself and elevate you higher on search engines, Watson said. Also, Watson encouraged practitioners to have a blog to build community on their Web site. Get inspired for blog posts by doing a search of what other real estate blogs are covering, highlight community events, or talk about common problems that you run across in your business (such as buyers continuously making lowball offers).

• Always be marketing. "Everything is a marketing opportunity," Watson said. The back of a business cards is often one of the most forgotten marketing spaces with most business card backs blank, Watson said. He recommended using the back of your business card to put a quote, a selling or buying tip, or motivation to visit your Web site (e.g. "To view, an article on ‘7 mistakes buyers and sellers make' visit ... ).

• Have more fun. Be more upbeat and use humor in your marketing to get attention and make yourself memorable. "Start having more fun," Watson told the crowd. "It tells customers you are in more control of your market, and it'll make customers want to work with you."

- By Melissa Dittmann Tracey for REALTOR® magazine online

www.judesandvall.com

As the use of FHA financing increases dramatically, the use of seller-funded down payment gifts is also increasing.  We're getting many questions regarding the verbiage that is required in a sales contract if the seller is contributing the mandatory 3% FHA down payment.  Here it is:  

"Seller agrees to contribute 3% of the purchase price, plus a processing fee of $499, to The Nehemiah Program.  Seller also agrees to pay __% of the purchase price towards Buyers' closing costs, pre-paids, and FHA non-allowables."

 The seller is allowed to contribute up to 6% of the sales price for the down payment, plus an additional 6% towards the buyers' closing costs.  Typically, a seller will only pay the 3% + $499 processing fee to Nehemiah if they need to pay the downpayment to get the house sold.  The amount of the closing costs depends on the loan, so always call us first before assuming the closing costs will be covered by a certain percentage of the sales price.

 Nehemiah only requires that the above verbiage be in the contract, and that one disclosure be signed by the sellers.  We take care of everything else.  This is the easiest down payment assistance program available.

 And remember that a seller can pay the down payment alone, the closing costs alone, or both.

http://www.judesandvall.com

http://www.judesandvallloans.com

An article from the Rocky Mountain News, reports that according to a study by Sam DePizzol and Greg Holm, both of CB Richard Ellis, today's office lease rates are 49% of what they were in the early 1980s.  They say given the tight capital markets, there seems little chance that speculative building, with little pre-leasing, will go forward.  Holm and DePizzol do not expect a big drop in downtown lease rates, but they do expect a stable office market the next two to three years.  Executive vice president of the Metro Denver Economic Development Corp., Tom Clark, agrees that with conservative underwriting standards, lenders won't provide money for office construction without substantial pre-leasing.
http://www.rockymountainnews.com/news/2008/may/21/denver-office-market-stable-report-shows/

http://www.judesandvall.com

America's largest downtowns have become some of the best places to hide during the housing downturn. Here's a rundown of home-pricing trends in the central core of a sampling of the country's largest cities:

• Chicago The city's prized Gold Coast neighborhood had record sales prices in the last year, but bargains abound in the city's periphery. In Bronzeville, a gentrifying community, prices have dropped to as low as $85,000. Chicago's desirable North Shore suburbs are continuing to do well: Prices are up, though sales volume has declined.

• New York Manhattan neighborhoods like SoHo, the Lower East Side, Greenwich Village and the Upper West Side are all up in the last year. Brooklyn is also holding up well. Meanwhile, sales in New Jersey and Connecticut commuter suburbs are down 8 percent from the peak in mid-2006.

• Boston Prices in the core part of the city are flat or slightly higher over the past year, though sales are taking longer. However, Condo prices in suburban Brookline, one of the most desirable neighborhoods, are down about 7 percent. City neighborhoods like Jamaica Plain and West Roxbury are up about the same amount.

• San Francisco Prices are up strongly in the city's favorite neighborhoods, including the Financial District, Telegraph Hill and Russian Hill. Distant suburbs have weakened. Sales in Alameda and Contra Costa, across San Francisco Bay, are down 18 percent and 27 percent respectively.

• Los Angeles Without an active downtown residential core, L.A. is an anomaly, Riverside and San Bernardino counties are down sharply. Lower-priced homes in Palm Springs have lost about 24 percent of their value. Less-affluent cities like Ontario and Chino are down between 15 per cent and 31 percent. But prices are up in posh areas like Brentwood, Westwood, and the Hollywood Hills

Source: The Wall Street Journal, Jeff D. Opdyke (05/20/2008)

http://www.judesandvall.com

An article from RealtyTimes.com, reports that the best news in real estate the first few months of 2008 has concerned mortgages.  Interest levels have continued to hover near 6% for 30-year fixed-rate loans, people who want to buy or refinance at this time will find interest rates not terribly far-removed from the historic lows seen in 2003.  The mortgage rates today are important because they show that lender confidence in the U.S. real estate market remains strong.  Lenders are willing to extend credit to U.S. homeowners, despite the large number of foreclosures.  With the new lender policies, be prepared for more paperwork, larger down payment requirements when you buy and the need for more equity when you refinance.
http://realtytimes.com/rtpages/20080521_millerreport.htm

http://www.judesandvall.com

An article from CNNMoney.com, reports that according to the latest Housing Opportunity Index released by Wells Fargo and the National Association of Home Builders (NAHB), 53.8% of all new and existing homes sold nationwide during the first three months of 2008 were affordable to families earning the median household income of $61,500.  NAHB president, Sandy Dunn, said in a press release, "Three factors combined to substantially increase housing affordability.  Mortgage rates returning to near the record low levels of a few years ago, a $2,500 rise in family income nationwide (from 2007 to 2008) and lower house prices."
http://money.cnn.com/2008/05/20/real_estate/big_improvement_in_home_affordability/index.htm?postversion=2008052013

http://www.judesandvall.com