Category Archives: Sellers

Pricing Home in Charleston to Sell

A first-quarter survey of home buyers and sellers done by HomeGain.com, a real estate services website, revealed that 76 percent of homeowners believe their home is worth more than the list price recommended by their real estate agent. To See Charleston SC First Quarter Sales

Home buyers usually have a better grasp of current market value in the area where they’re looking to buy than do sellers who own and live there. Buyers look at a lot of new listings. They make offers, know what sells quickly and for how much, and what doesn’t and why. HomeGain reported that homebuyers still think sellers are overpricing their homes.

* Your home is worth what a buyer will pay for it given current market conditions.

This may not be the same as your opinion of what your home will sell for, or what you hope it’s worth. Relying on emotion rather than logic when selecting a list price can lead to disappointing results.

The prime opportunity for selling a home is when it’s new on the market. This is when it is most marketable. Buyers wait for the new listings. Usually, listings receive the most showings and have the busiest open houses during the first couple of weeks they are on the market.

Real Estate Charleston SC

By: Inman News
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Charleston SC Home Sales Show Improvement

Charleston Trident Association of Realtors® — (May 9, 2012) – Median existing single-family home prices are firming in many areas of the low-country, while improving sales and declining inventory are creating more balanced conditions, according to the latest quarterly report by the National Association of Realtors®.

Last April, preliminary figures showed 776 homes sold at a median price of $175,000, following an almost equal number of property tours.

“The number of showings our REALTORS® are completing in 2012 is almost equal to the number of showings we saw in 2009, when the market was significantly depressed, but inventory was much higher. This tells us that the prospective buyers in today’s market aren’t just looking. They are serious buyers, making offers and closing transactions” said 2012 CTAR President, Herb Koger.

The national median existing single-family home price was $158,100 in the first quarter, which is 0.4 percent below $158,700 in the first quarter of 2011.  The median is where half sold for more and half sold for less.  Distressed homes2 – foreclosures and short sales which sold at deep discounts – accounted for 32 percent of first quarter sales; they were 38 percent a year ago.

Heading into what is typically the busiest season of the year, year to date figures reflect a market that is in the midst of sustainable, healthy growth. Inventory is 29% lower than it was at this time last year; sales volume is almost 6% ahead and prices have increased a healthy 4% from this time last year.

Total existing-home sales,3 including single-family and condo, increased 4.7 percent to a seasonally adjusted annual rate of 4.57 million in the first quarter from a downwardly revised 4.37 million in the fourth quarter, and were 5.3 percent above the 4.34 million level during the first quarter of 2011 when sales spiked. We are seeing more people coming back into the investment and second home market buying homes for sale in places like Isle of Palms and Sullivan’s Island.

Mount Pleasant SC custom home builder-owner of Sand Dollar Homes, said there are more opportunities in today’s market.  “Historically favorable housing affordability conditions are making it easier for buyers to enter the market despite the unnecessarily tight credit conditions,” he said.  “Housing supply and demand are roughly balanced with overall housing supply at the lowest level in six years, putting sellers on an even footing with buyers in most markets.”

CTAR REPORT

Berkeley County
170 homes sold at a median price of $154,945 in Berkeley County in April. This represents even sales and an increase in pricing compared with April 2011, when 170 homes sold at a median price of $145,000.

Charleston County
476 homes sold at a median price of $228,125 in Charleston County in April. This represents an increase in sales and pricing from April 2011’s 451 sales at a median price of $208,000.

Dorchester County
151 homes sold at a median price of $165,000 in Dorchester County in April. This represents a significant increase in both sales volume and pricing, as 129 homes sold at a median price of $147,490 in April 2011.

Should YOU Sell Your Home NOW?

Now it’s Oct. of 2011… I originally posted this piece below in 2010 in response to this “expert” from the Wall St. Journal who claimed then that home prices would be increasing. Evidently this “expert” was wrong. To further update you as to my opinion I still feel that anyone considering selling should do so now because the housing market is probably only going to worsen.  Fast forward to 2012 and I was correct. There is a thing called shadow inventory that have yet to hit the market up to some say million new homes. What do you think will happen to home prices then?

If you have any concerns about selling your home in Charleston you better start to sell it sooner than later, because as the banks begin to trickle out their foreclosed homes, this will keep the market soft. Furthermore, rates are likely to increase in the next few years which will also deter those considering buying homes to get cold feet or be able to afford less.

(Below Written 05/2010)

It’s been a while since I have posted an opinionated piece because most of my posts are more geared toward news and information for the public and how it pertains to the industry of real estate. However in this case, I couldn’t shake this ludicrous idea by a writer at the Wall St. Journal. I have always respected the Wall St. Journal, but this one has me baffled.
I have been in the real estate industry for going on 14 years now-  (12 years in mortgage financing),  and 5 years as a real estate agent Considering most of my experience has been financially related I tend to follow those trends the most seeing as there wouldn’t be sales of real estate without money to finance them. Let’s face it, there aren’t that many people liquid enough to pay cash so truthfully it all revolves around money. Even insurance revolves around money and is a great indicator of overall economic health. Each property has to be insured, each business, each profession has to have insurance, and yes mortgages have insurance.

With that said, the piece from the Wall St. Journal by James Hagerty goes like this: U.S. home prices will begin a gradual recovery by next year, according to a survey of 92 economists and other housing analysts by MacroMarkets LLC.” They then go onto write; “The analysts surveyed by MacroMarkets on average expect home prices, as measured by the S&P/Case-Shiller national index, to rise about 12% in the five years ending Dec. 31, 2014. As of Dec. 31, that index was down about 28% from its peak level in mid-2006”. 

Obviously I am assuming that Mr. Hagerty is just going off research and information given to him by MacroMarkets and these 92 economists, but I can’t believe the editors of the Wall St. Journal let this go to print. I can’t lay all the blame on the Wall St. Journal because they are apparently getting their info from these economists. I am sure out of 92 economists they most likely have many more years then I analyzing data, but let’s look at the facts and you decide for yourself.

National Mortgage News (an industry news subscription service) sends me monthly emails about the latest data coming from multiple outlets such as: National Association of Mortgage Bankers, national appraisal companies, commercial finance institutions, etc. Remember financing/economics tell the facts about what’s really happening.  Of 11 articles 7 of them were negative, but a few are really telling.

I am just going to give you the blurb “gist” of the piece.

1.)    Residential delinquencies climbed to yet another new high at March 31 with 10.06% of all mortgagors behind on their payments, according to new figures released by the Mortgage Bankers AssociationThink about it… If delinquencies are on the rise, as they have been continuously for almost 3 years how are home prices going to go up? When people are having to short sale their homes, get foreclosed on or bank sales increase, then home prices will inevitably continue to fall.

2.)    Loan applications to buy new or existing homes plummeted 27% last week, reaching a 13-year low, according to new figures released by the Mortgage Bankers Association. If loan applications plummeted on purchases by 27%… Well you don’t have to be a rocket scientist to see that home prices aren’t going to go up if there aren’t any sales.

3.) The loan buyback plague continued on unabated in the first quarter with three seller/servicers, accounting for about three-fourths of the industry’s repurchases, according to an analysis done by National Mortgage News. Here is how this works. When I loan is originated by a company, they then sell that loan to a larger institution (usually Bank of America, US Bank, Wells Fargo, just to name a few). If those loans under perform and have too many delinquencies within the first year then the originating company has to buy that loan(s) back. Another scenario is; if the purchaser audits the file after purchasing it and doesn’t like something in the file they can also force the seller to buy it back. Why is this bad? If the buy backs are due to delinquencies then that means those home owners can’t afford their payments, or lost their job, etc. Therefore, eventually their home will have to be sold and most likely for less than they paid for it. Subsequently sending home prices down.

My last bit to this post has nothing to do with the news articles written by the National Mortgage News, but about financing, FHA, VA, and FNMA. Our government is currently at a 94% debt to income ratio and can barely pay it’s bills. Meaning the U.S. really doesn’t have money to be buying mortgages from banks, and to decrease their risk of having delinquent loans they will have to increase the amount of money buyers will be required to put down, resulting in less people that qualify to buy. Secondly, the U.S. Fed recently quit buying treasury bonds (security instruments backed by mortgages), and If little to no one is buying mortgage backed securities in large quantities then  eventually mortgage rates will increase, subsequently, making it harder for people to qualify for home purchases. The less people qualify the less sales will happen therefore sending home prices down. Simple supply and demand.

Yes; there may be some tiny bits of data compared to the rock bottom days of a year or two ago that might lead economists to believe the trend is for prices to go higher, and yes home sales might have been increasing over the last couple months. However, the increase in home sales is due to one reason and one alone. The home buyer tax credit was about to expire so those people that were otherwise too afraid to purchase finally had reason to. Now that the credit is gone, so goes the buyers.

The overall picture in my opinion is not good, not good at all. As a whole the real estate market is posed to continue to slide, and as the U.S. economy continues to flounder the housing outlook is sure to follow. I am not a pessimist by nature so don’t get me wrong. Yes, everyone should stay positive and believe we can make a change for the better. Believe me I want nothing more than to be wrong, but being realistic is something I am, and the facts point me in that direction.

Follow up: Again I am not sure where the 92 economists where getting their info from..Latest from the Case-Shiller index on 05/25/2010

“The housing market may be in better shape than this time last year, but, when you look at recent trends there are signs of some renewed weakening in home prices,” said David M. Blitzer, chairman of the Index Committee at Standard & Poor’s. “In the past several months we have seen some relatively weak reports across many of the markets we cover.”

A separate Case-Shiller index that is released quarterly and covers the U.S. showed home prices fell a seasonally adjusted 1.3% in the first quarter of the year compared to the fourth quarter of 2009.

If you are thinking about selling your home in Charleston, Mount Pleasant, Isle of Palms, Sullivans Island, Daniel Island, Folly Beach or the surrounding areas please contact me and I will gladly meet with you to discuss your options.

Realtor VS Real Estate Agent

Those of us in the industry as licensed real estate professionals know the difference between the two, but does the public know? That is the question. And, do they really care? Studies show the answer is no. Let me start by saying as I type this article I am a member of the NAR but that really is because it is my company’s policy that I am to sell with them. Otherwise, I wouldn’t be.

So; what is a REALTOR®? A licensed real estate agent that is a member of a national association that pays yearly dues to say they are a realtor. So in short, it is just a made up word for an organization. Period. There are benefits as a real estate agent sometimes to be a member of the NAR (National Association of Realtors), but none for the clients. They would like you to believe there are by trying to convince the public it’s better practice to do business with an agent who is a member, but it’s my opinion it makes no difference.

What is a real estate agent? (as defined by wikipedia) a person or organization whose business is to market real estate on behalf of clients.

A licensed real estate agent who has gone through the schooling and training necessary to sell real property as defined by the governing body with which gave them their license.

In the state of South Carolina, the LLR or labor licensing board is the governing body that handles the issue of real estate for SC, and the laws pertaining to it.

Does it matter if someone is a realtor? NO. A real estate agent non-member is just as qualified to sell as a realtor.

So; next question? What makes a good real estate professional?

We must first go through the qualities that best describe the duties necessary to be a great real estate agent. Since, being a real estate agent is more or less just being your own business on behalf of your client, we need to lay out the qualities of a great business or business person.

1.)    Marketing knowledge/experience

2.)    Negotiation skills

3.)    Organization

4.)    Hard work ethic

5.)    People/personality management

6.)    Technology knowledge

7.)    Business experience

Granted, these are a bit generic, but they are the fundamentals nonetheless.

So I ask again, does being accredited by a made up organization created for profit really make you more qualified to sell real estate? No.  In my opinion having business experience is much more important to me. You can go to real estate school, and take a one day class put on by the NAR and can be 18 years old with no professional or business experience whatsoever to be a member. Do you think that person is going to be better qualified then someone who has ran their own company, worked in some sort of professional environment for years? Most likely; not.

James Schiller is Charleston’s best Real Estate Agent

Saving Your Home From a Foreclosure

Well it goes without saying that we are in tough times economically as a country, and even more so as it pertains to real estate. With all the bad news we hear about real estate and the economy there is some good news to report. Even though our government is has made many mistakes with our money recently it appears as if those in the white house are doing their best to help homeowners.

There is a new program to help those who can’t afford their homes any longer quickly sell their homes (that’s relative) without being forced into foreclosure. It’s called (HAFA) or Home Affordable Foreclosure Alternatives program.

You can read the pasted details of the program from RISmedia.com website:

HAFA is designed to simplify and streamline the use of short sales and deeds-in-lieu of foreclosure by improving the process. Specifically, HAFA will:

• Complement HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
• Use borrower financial and hardship information already collected in connection with consideration of a loan modification under HAMP.
• Allow borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
• Prohibit the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6%). This is to ensure the seller/borrower can still utilize the expertise of a real estate agent.
• Require borrowers to be fully released from future liability for the first mortgage debt and if the subordinate lien holder receives an incentive under HAFA, that debt as well (no cash contribution, promissory note, or deficiency judgment is allowed).
• Use standard processes, documents, and timeframes/deadlines.
• Provide financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis; up to 3% of the unpaid principal balance of each subordinate loan).

HAFA is a complex program with 43 pages of guidelines and forms. To help everyone better understand the process, below are some frequently asked questions that address the basics.

What is HAFA?

Initially announced on May 14, 2009, with guidance and standard forms issued on November 30, 2009, the program will help owners (referred to below as borrowers) who are unable to retain their home under the Home Affordable Modification Program (HAMP). A borrower (the current owner) may be able to avoid a foreclosure by completing a short sale or a deed-in-lieu of foreclosure (DIL) under HAFA. The guidance and forms released on November 30 do not apply to loans owned or guaranteed by Fannie Mae or Freddie Mac. Those enterprises will issue their own HAFA guidance and forms.

Who is eligible for HAFA?
The borrower must meet the basic eligibility criteria for HAMP:
• Principal residence.
• First lien originated before 2009.
• Mortgage delinquent or default is reasonably foreseeable.
• Unpaid principal balance no more than $729,750 (higher limits for 2 to 4 unit dwellings).
• Borrower’s total monthly payment exceeds 31% of gross income.

How is the program being implemented?
Supplemental Directive 09-09 (November 30, 2009) gives servicers (those who process payments) guidance for carrying out the program. All servicers participating in HAMP must also implement HAFA in accordance with their own written policy, consistent with investor (lender) guidelines. The policy may include such factors as the severity of the loss involved, local market conditions, the timing of pending foreclosure actions, and borrower motivation and cooperation.

A short sale agreement (SSA) will be sent by the servicer to the borrower after determining the borrower is interested in a short sale and the property qualifies. It informs the borrower how the program works and the conditions that apply. After the borrower contracts to sell the property, the borrower submits a “request for approval of short sale” (RASS) to the servicer within 3 business days for approval. If the borrower already has an executed sales contract and asks the servicer to approve it before an SSA is executed, the Alternative RASS is used instead. The Servicer must still consider the borrower for a loan modification.

What are the steps for evaluating a loan to see if it is a candidate for HAFA?
1. Borrower solicitation and response.
2. Assess expected recovery through foreclosure and disposition compared to a HAFA short sale or DIF.
3. Use of borrower financial information from HAMP. (May require updates or documentation.)
4. Property valuation.
5. Review of title.
6. Borrower notice if short sale or DIL not available (to borrowers that have expressed interest in HAFA).

What are the HAFA rules regarding real estate commissions?
The guidance states that a servicer may not require a reduction in the real estate commission below the amount stated in the SSA. The SSA states that the servicer will pay the commission as stated in the listing agreement, up to 6%. If the servicer has retained a vendor to assist the listing broker, the vendor must be paid a specified amount from the commission. Neither buyers not sellers may earn a commission in connection with the short sale, even if they are licensed real estate brokers or agents. They may not have any side deals to receive commission indirectly.

What else should I know?
• The deal must be “arms length.” Borrowers can’t list the property or sell it to a relative or anyone else with whom they have a close personal or business relationship.
• The amount of debt forgiven might be treated as income for tax purposes. Under a law expiring at the end of 2012, however, the tax may not apply. Forgiven debt will not be taxed if the amount of forgiven debt does not exceed the debt that was used to acquire, construct, or rehabilitate a principal residence. Check with a tax advisor.
• The servicer will report to the credit reporting agencies that the mortgage was settled for less than full payment. There will be a negative effect on credit scores.
• Buyers may not reconvey the property within 90 days after closing.

When does the program end?
Short Sale Agreements must be executed and returned to the servicer no later than December 31, 2012

5 Steps to a Successful Shortsale

Info From :http://rismedia.com

Key #1:The listing agent must know the proper step-by-step process for shorting various types of loans, as the process for shorting an FHA loan is different than the process for shorting a VA or Conventional loan.

Key #2:The listing agent must know what documentation is required to make up a complete short sale package for the lender they are working with and how to submit that package in a format that will get the lender’s attention, satisfy their requirements, and get an approval.

Key #3:The listing agent must know how the lenders calculate what they have to “net” in the short sale transaction, so that they can then effectively price the property in MLS to generate an offer that will be relatively quick, but sufficient to meet the lender’s requirements, as well as cover all of the seller’s closing costs and the broker commissions.

Key #4:The listing agent must know what terms the lender will and will not approve in a buyer’s purchase offer.

Key #5:The listing agent must know how to establish his/her credibility and an effective rapport with the loss mitigation rep who ultimately holds the key to the short sale getting approved and closed.

Rules for financing investment homes

Reserve requirements vary depending on the number of financed properties owned (including primary residence):

1-4 financed properties 0wned:

  • 2 months of reserves on the subject property if it’s a second home.
  • 6 months reserves on subj. property if it’s an investment property plus 2 months reserves on each other second home or investment property.

5-10 financed properties owned:

  • 2 months of reserves on the subject property if it’s a second home.
  • 6 months of reserves on the subject property if it’s an investment property plus 6 months reserves on each other financed second home or investment property.

Note: Freddie Mac’s guidelines are *currently* 6 months PITI.

Other underwriting changes for investment properties include:

  • 70% LTV for purchase of 1-unit and 70% for 2-4 units.
  • 720 minimum low-mid credit score.
  • No history bankruptcy or foreclosure in the past 7 years.
  • Rental income must be documented with two years tax returns.
  • Borrowers required to sign form 4506 (which you can expect on ALL loans these days–including owner occupied).

Don’t forget that there is a significant price hit of 0.75% to fee from Fannie and Freddie with investment properties on top of the credit score/loan to value adds (LLPA). Seller contribution is limited to 2% of the sales price with investment property.

Underwriters will be very strict on investment properties in today’s real estate climate so be prepared.

If you are thinking of buying investment property contact me and we can discuss your options before we go house hunting.

The ABCs of Short Sales

This information is from the National Association of Realtors. Hopefully it helps you.

What is a short sale?

A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.

Why is the number of short sales rising?

Due to the recent economic crisis, including rising unemployment, and drops in home prices in communities across the nation, the number of short sales is increasing. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses.

A short sale can also be the best option for a homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.

What challenges have short sales presented for REALTORS®?

The rapid increase in the number of short sales, and the short sales process itself present a number of challenges for REALTORS®. Major challenges include:

  1. Limited experience
    Many REALTORS® are new to the short sales process; a difficulty which is compounded by many lenders’ lack of sufficient and experienced staff to process short sales. Even if the REALTORS® are experienced, most servicers are under-staffed and still not adequately trained, making negotiating a short sale particularly difficult.
  2. Absence of a uniform process and application
    Currently, both short-sales documents and processes are lender-specific, making it very difficult and time-consuming for REALTORS® to become knowledgeable and efficient in facilitating these transactions. 
  3. Multiple lenders
    When more than one lender is involved, the negotiations are much more difficult. Second lien holders often hold up the transaction to exert the largest possible payment, in exchange for releasing their lien, even though in foreclosure they will get nothing.

As a result of these challenges our members have reported difficulties with: unresponsive lenders; lost documents that require multiple submissions, inaccurate or unrealistic home value assessments, and long processing delays, which cause buyers to walk away.

What is being done to address or eliminate these challenges?

On May 14, 2009, the Obama Administration announced its upcoming Foreclosure Alternatives Program. Among other things, the new program:

  • Establishes financial incentives for servicers, sellers, and second lien holders to encourage the completion of short-sale transactions.
  • Requires that a timeline, of no fewer than 90 days, be set to allow a homeowner to sell a home, without threat of foreclosure action.
  • Requires the short sale agreement to specify reasonable and customary real estate commissions and costs to be deducted from the sales prices. (The servicer must agree not to negotiate a lower commission after receiving an offer.)
  • Will provide standardized documents, including short-sale agreements and offer acceptance letters.

The Foreclosure Alternatives Program is anticipated to launch in late July.

For more information on all the short-sales provisions included in the program, see NAR’s Short Sales Incentive Summary and the government’s Foreclosure Alternative Program fact sheet (PDF 44K).

Ten Ways to Turn off a home buyer

Well, even though the jobs report wasn’t as bad as expected that still doesn’t mean our country is out of the quagmire yet. Especially when it comes to housing. Some figures estimate 1 in every 400 homes is being foreclosed on, and there is expected to be as many as 10 million short sales over the next 5 years. 

What does this mean for you as a seller? Losing a buyer for something not related to a serious disagreement over price is careless. So here are the 10 things you need to be careful of when trying to sell your home. 

  1. Dirt -Hands down, our panel agrees: Nothing turns off a buyer quicker than a dirty house.
  2. Odors – Buyers, it’s said, buy with their noses. Make sure your home smells fresh and inviting.
  3. Old fixtures – Want buyers to roll their eyes? Leave old fixtures on your doors and cabinets. Faded, worn, broken, outdated, and ugly fixtures will surely turn away buyers. Sure you can replace them, but people want to move right into a house without having to do work.
  4. Wallpaper – Your grandmother may have had it in every bedroom. Your mom may have loved it as a room accent. But today’s buyer wants no part of wallpaper.
  5. Popcorn acoustic ceilings – Times change, and with them home decor styles. Acoustic popcorn ceilings, once the must-have for fashionable homes in the ’60s and ’70s, now badly date your space.
  6. Too many personal items – Psychologically, when buyers tour a home, they’re trying it on to see how it fits, just as they would a skirt or a pair of pants. If your house is cluttered with too many personal items, it’s like the buyer is trying on those clothes with you still in them. A fit is unlikely.
  7. Snoopy sellers – Its best not to be at the home when there is a showing. Buyers want to walk and anaylze at their own leisure without the sellers 2 cents every few minutes. Its perceived as a hard sell. If you must be there, only be there to answer questions about the home and nothing else. Pretend to be invisible. 
  8. Misrepresenting your home – Misrepresenting your house online in the Multiple Listing Service is a sure way to really upset buyers and their Realtors. If I show up with my buyers and the house is NOT what the sellers agent says it was on MLS I am going to be upset and so is the buyer for wasting our time and gas to go see it. 
  9. Poor curb appeal – Much is made of curb appeal, and for good reason: It’s your home’s handshake, the critical first impression that lasts with most buyers. This one is HUGE deal. People want to come home to a beautiful home when they drive up, and the first impression people get of you is your home from the outside. 
  10. Clutter – Whether inside or out, less is more when it comes to clutter.

Some of this information gathered from: Bankrate.com

Buying and Selling in 2009

Well it’s been a tumultuous year to say the least in the real estate biz. With loans being hard to come by, products falling by the waste side, underwriters asking for your first born, and home values plummetting: buying now can be a nightmare. Good news is mortgage rates are wonderful right now, unless of course you are looking at expensive homes because jumbo loan rates aren’t very appealing.

Dana Dratch of Bankrate.com sums up the first quarter of 2009.

In 2009, sellers are battling shrinking home values and a constricting pool of available buyers. Buyers are sensing opportunities on home prices and home mortgages — if they have the credit, job security and ready cash to qualify.

Those in the best shape are homeowners who don’t have to sell and homebuyers with good credit, a stash of cash and working knowledge of their mortgage options.

“There are going to be great opportunities out there,” says William Poorvu, author of “Creating and Growing Real Estate Wealth” and professor emeritus at Harvard Business School in Boston. The question is: Is it right for you?

“Whether it’s Bernie Madoff or your own mortgage broker, at a certain point you have to rely on your own judgment,” he says.

Nationwide, home prices fell in the first quarter of 2009, but the exact amount is debatable. The National Association of Realtors, or NAR, puts the figure at 13.8 percent year-over-year. Another yardstick, S&P/Case-Shiller Home Price Indices, logs the decline at 19.1 percent year-over-year.

The number of new homes being built is also down. Housing starts, which averaged 1.3 million annually from 2000 to 2003, dropped to a seasonally adjusted 458,000 in April, according to the National Association of Home Builders in Washington, D.C.

You don’t have to be a buyer or seller to realize that homes are sitting on the market. In April, the inventory of unsold homes would have taken 10.2 months to clear at the current sales rate, according to the NAR. That’s down from almost 12 months in 2008, but higher than the industry’s historical norms of six to seven months, says NAR Chief Economist Lawrence Yun.

Some homes are selling

Lets sell your home

Lets sell your home

It’s not all doom and gloom. Fred Soule sold his home in Fort Wayne, Ind., after just two weeks. While he got $5,000 less than he’d hoped from the sale of his 4-year-old, three-bedroom house, he broke even when he bought another home across town. Soule negotiated the price on his new home based on what he was getting from his own sale, and the deal made it worth it, he says.

Soule also had a secret weapon — staging. His sister and brother-in-law, big fans of TV home fix-up shows, coached him on decluttering his house and getting it sale-ready. Soule moved out a lot of his nonessentials, cleaned out the garage and even rented a storage unit.

On the buy side, his new purchase — a never-been-lived-in, bank-owned home — was originally marketed at $174,000. He paid $150,000.

Jeanette Prose wasn’t so lucky. Her 3-year-old, three-bedroom home in Hollister, Mo., was on the market for 16 months, and she finally accepted $15,000 less than her original asking price. It took another three months to close.

But she was also buying, and her seller was willing to negotiate. “We got a good deal, so everybody was happy,” she says.

Prose and Soule both want to stay in their new homes for more than a few years. And that, according to many real estate experts, is the hallmark of a smart buyer, especially for those who are buying in areas where home values may not have hit bottom.

Opportunities for first-time buyers
While the total number of buyers is down, there is a larger slice of buyers who are shopping for homes for the first time.

“We estimate that half of the homebuyers (today) are first-time buyers,” Yun says.

Credit the triumvirate of low interest rates, lowered home prices and an $8,000 tax credit for first-time buyers who become homeowners before the end of this year.

“It’s a great time to be a first-time buyer,” says Eric Tyson, co-author of “Home Buying for Dummies.” “In many parts of the country, this may be the best buying opportunity in a generation.

“It’s a good time to trade up because the higher-end market in many areas is weaker than the entry-level market,” he says.

Still, buyers are facing intense scrutiny when it comes to their ability to afford a home. Lenders are examining not just credit, but job stability, down-payment amounts and how much cash buyers will have available after buying a home.

In the past, lenders would offer the same rates to anyone with credit scores in the upper ranges, but that’s changing, says Jack Guttentag, professor emeritus of finance at The Wharton School of the University of Pennsylvania. Lenders are differentiating between buyers who have a 760 FICO score and those who have a 780 — all the way up to 800, he says. “That’s a big shift.

Buyers aren’t the only ones under the microscope. The home must pass muster, too. Dick Gaylord, immediate past president of the NAR, remembers one home where the buyer had to wait “a little longer to get the loan” after the lender ordered a fresh home appraisal.

If you’re planning to move in the next year or two, “it’s probably not the time to buy a house,” he says.

In some areas, home values are still sliding. Worst hit in the past year was Cape Coral/Fort Myers, Fla., where homeowners saw values sank 59.1 percent since the first quarter of 2008, according to NAR statistics. Other heartbreakers were in California — the Riverside/San Bernardino area, down 39.9 percent, and Sacramento and surrounding areas, down 34.5 percent.

When Richard B. King recently sold his home in Long Beach, Calif., it sat longer than he anticipated and he accepted $263,000 less than his original asking price.

“The market went down,” he recalls. Neighbors kept lowering the prices, so “we kept lowering our price to be competitive. It’s a matter of, do you want to sell the place or not?”

Some towns are seeing home values increase. Best off was Cumberland, Md., where median home prices went up 21.1 percent since the first quarter of 2008, along with the tri-city area of Davenport, Iowa; Moline, Iowa; and Rock Island, Ill., which jumped 13.8 percent. Columbia, Mo., also rose 6 percent, the association says.

One big factor affecting home values stems from the large number of distressed sales. Roughly 40 percent to 45 percent of today’s sales are foreclosures or short sales, Yun says. Historically, that figure usually hovers around 5 percent, he says.

Mary Rubin recently helped a family member buy a $255,000 mortgage foreclosure in Ft. Myers for $116,000. While it was in excellent condition, the house was never worth the original $255,000, she says.

Buyers can be choosy
Buyers have a lot of selection. Consequently, they can be choosier. Homes with eye and price appeal will draw activity, says Dorcas Helfant-Browning, chief executive of Virginia Beach-based Coldwell Banker Professional, Realtors.

Conversely, “fixer-uppers are a tough sell,” says Ron Phipps, broker/Realtor with Phipps Realty in Warwick, R.I. “The issue is you can buy a really fine home in great condition for the same price.”

And the transition from homeowner to home seller is a mental adjustment. “Sellers, in a lot of cases, have not come to grips with the fact that their houses have dropped in value,” says Glen Lazovick, chief sales and business officer for Mid-Atlantic Federal Credit Union. “If you don’t have to sell, now is not the time to sell. If you want to sell your house, it has to be priced well and look great.”

Buyers also are looking beyond the closing table, Phipps says. “People want to know what the utility cost is, what the insurance is, what the flood insurance is. People want to know what the real cost of ownership of the home is.”

Trying to time the market
These are unusal times for buyers and sellers.

Today, you find extremely motivated sellers facing foreclosures and short sales. At the same time, “a number of markets are heating up,” becoming attractive to investors and first-time buyers, says Nic Retsinas, director of the Joint Center for Housing Studies at Harvard University.

But the traditional market of willing buyers and sellers is still stalled, “and I suspect it will be stalled until we get some sense that the real economy is starting” to recover, Retsinas says.

For those who want to buy, most housing experts are singing the same song: Clean up your credit, save your money, shop for a mortgage and get preapproved. And while trying to time the market’s rock bottom is impossible, trying to lock in a low interest rate is smart, says Gaylord.

Gaylord advises clients to shop around and put in multiple mortgage applications. “If one lender can’t help you, there are 50 others to look at and talk with,” he says.

Shopping for foreclosures can offer some good deals, but they also carry risks. “I’ve heard plenty of stories about people … showing up and finding the homes have been stripped of anything of value,” says Zigas.

Another strategy also is pushing down prices, if you can complete a deal. Short sales are where the homeowner gets permission from the lender to sell for less than the mortgage but closer to the current value. But some in the industry say it is taking months to close on them.

On top of these market conditions is the potential for them to worsen. “The danger of being underwater arises today from price declines,” Guttentag says. “That’s where the risk is. I think the concern about price declines is a major deterrent.”

Instead of worrying about market timing, look at your own time line. “Accept the fact that there may be some price depreciation short-term,” says Guttentag. And plan to be in the home at least two to three years to give it time to bounce back.

Shopping for a refi
Lower interest rates have had another side effect. It has boosted refinancing traffic. Homeowners with decent credit are divesting themselves of higher or adjustable rate loans for fixed lower rates.

Lower interest rates “are helping middle-class homeowners who want to save a couple of hundred a month on the mortgage,” Poorvu says.

These days, when it comes to financing, most buyers also are opting for the tried and true 30-year, fixed-rate mortgages. “It’s 98 percent of the market now,” says John Mechem, spokesman for the Washington, D.C.-based Mortgage Bankers Association.

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