Tuesday, November 09, 2010

5 Reasons You Should Use a Real Estate Professional

Should you spend the money on a real estate commission or save that money by selling your home by yourself? That is a question many home sellers ask themselves. Today, we want to discuss why it is crucial to have a true professional guiding you through the minefield of challenges that exist in the current real estate market.

The housing market today is more challenging than it has ever been and seems to be becoming more difficult each day. What impact will foreclosures have on prices? Which loan products that were available just last month are no longer available? How do you convince perspective purchasers to pull the trigger on an offer when everyone is telling them that they should see another 100 houses before they make a decision? These are tough questions for a trained, experienced professional. The lay person would find it almost impossible to keep abreast of this rapidly evolving industry.

Here are five important reasons to use a real estate professional:

1. Pricing Is Difficult

Just a few years ago, you didn’t have to worry about overpricing your home. If it was too high, all you needed to do was wait as historic appreciation was taking place. The situation is quite different today. With experts calling for another drop in home values, overpricing your property will cost you time. In this market, time costs you money. A professional real estate agent will discuss how increasing inventory could dramatically impact the value of your property in the months to come. They will help you set the right price in today’s market.

2. Negotiating Ability Is Crucial

Buyers today have an almost unlimited supply of homes from which to choose. They realize that puts them in a great negotiating position. Most buyers are now being represented by an agent. Sellers need to also be represented by a professional expert trained to negotiate real estate contracts.

3. Mortgaging Is Key to the Deal

The biggest impact of the housing market collapse is that lending standards are much stricter today than they were a few short years ago. Rules are constantly changing. Even FHA has gone through a guidelines overhaul in the last several months. You need a real estate expert who has teamed up with a knowledgeable mortgage professional to make sure that the buyer in the deal is in fact capable of obtaining a mortgage. Losing time with an unqualified buyer costs you money in a market where prices are falling.

4. Your Family’s Safety

We have always found it puzzling that the same person that will lock every door and window and set the alarm today will then allow total strangers into their house tomorrow. The real estate industry trains its practitioners to take steps to protect themselves and their clients. Take advantage of putting a person between you and the person calling on an ad or yard sign.

5. You Probably Have More Important Things to Do

Selling a home could turn into a full time job. Learning the necessary disclosures, coordinating the dates of your closings, dealing with a challenge regarding your appraisal and re-negotiating the offer after an engineer’s report are just a few of the concerns you may face. You would probably be better of spending that time with the items important to you and your family and leaving the challenges to your agent.

Bottom Line

To make sure the sale of your home is handled professionally – hire a trained professional. In the long run, you will wind-up with more money in your pocket and have less challenges with the move.

Republished with permission. Courtesy of http://kcmblog.com.

Thursday, September 30, 2010

Almost 1 in 5 Chicago Mortgages are in Danger

According to an article in this morning's Chicago Tribune, 19% of residential properties with a loan, in the Chicago area, are at least one month delinquent on their mortgage.

What does this mean for homeowners? In short, we may be in real danger of further depressed home prices in the not too distant future, and continuing into the foreseeable future. Until the job market improves substantially, bringing the unemployment numbers back down, homeowners will continue to have difficult paying their mortgage every month, and will risk having to sell their homes "short", or worse, will be facing foreclosure. Both of these situations saturate the market with inventory, and put downward pressure on home prices across the chart.

Banks currently have a store of foreclosed homes that are not actively listed on the real estate market, called "shadow inventory". Often banks try to strategically release their inventory as to avoid driving down their own prices by creating a surplus of homes on the market. Its unclear how many homes are in this shadow inventory, but it numbers in the tens of thousands, if not hundreds of thousands in the Chicago market. The 1 in 5 delinquent loans referenced above would represent another 200,000+ homes at risk of adding to this supply.

I noted yesterday on our Facebook Page - Finnproperty - that foreclosure activity has already begun to pick up. If you're a homeowner considering selling your home in the next couple years, do not wait until prices have been further depreciated. Sell your home now, before prices take another dip, and while interest rates are still incredibly appealing to buyers!

Tuesday, September 14, 2010

Condo Associations Should Seek FHA Approval - Now

Recently I've had a few conversations with clients and Condo Associations about the prospect of getting themselves FHA Approved. It used to be a cumbersome process, with minimal reward, and Associations were content to let their prospective buyers seek "spot approval" if they were interested - taking the onus off the Association. Earlier this year, the Federal Housing Administration did away with spot approval, changed the rules of the game, and rescinded any pre-existing approvals, requiring Homeowners and Condominium Associations to getting themselves re-approved.

According to Baird & Warner Financial this morning, 32% of their new loans are FHA across the Chicagoland area, year to date. With about a third of all new buyers purchasing their homes with FHA financing, how can Condo Associations afford not to get FHA-Approved?

As recently as 2006, FHA loans accounted for only 1.7% of new mortgages. If you haven't been following the lending market closely, and who outside of my business does, you'd assume that there might be an uptick, but not of these proportions.

Home pricing is all about (capital S, capital D) Supply and Demand, and you don't have to read too many newspapers or listen to too many news broadcasts to understand that Demand is weak these days. With plenty of Supply, and limited Demand, these bodies simply cannot afford to cut off a third of potential home buyers, or they risk really damaging their market value through declining sales prices.

I recently read a great article on RISMedia.com that had this to say:
Management companies and homeowners associations constantly ask why their condominium developments should seek FHA approval. A recent survey of more than 12,000 home buyers conducted by the Home Buying Institute indicated that the vast majority of respondents (87%) planned to use an FHA loan for their purchase. Given the prevalence of FHA loans in today’s housing market, the simple answer is that unit sellers in an association without FHA approval are severely limiting the pool of potential buyers. Thanks to the law of supply and demand, fewer possible buyers mean units will often sit on the market for longer periods and sell for lower prices. Even non-sellers are affected as lower sales prices for neighboring units often result in lower appraised values for all units.
And the RISMedia Article concludes by saying:

Despite FHA’s easier down payment and credit qualifying guidelines, associations should not fear that FHA loans are risky and real estate agents should feel comfortable suggesting them as an option to their clients. “Full documentation” requirements ensure borrowers are fully vetted for their ability to afford the property in question. With the required income and asset reporting demanded by FHA, foreclosure rates have been historically lower than for those with any other type of loan—a fact that should give homeowners associations peace of mind.

Associations and management companies should further investigate and consider all of the benefits that FHA loans provide. Real estate agents should be prepared to help their clients navigate the process, as it will only help increase sales in a tricky market.

Condo Associations should not fear FHA Approval and FHA buyers, in fact they should embrace them. The FHA Loan product will assist thousands of buyers to purchase homes where they would not have otherwise tried, and buoy the market in these tough times.

Thursday, May 27, 2010

Would You Say Mortgage Rates are Pretty Good?

May 27, 2010, mortgage rates are the lowest of the year. How does that compare to prior years?
1963 through today.
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Source: www.mortgage-x.com
Reprinted with permission