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6November

Congess Extends and Expands Homebuyer Credit

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President Obama is scheduled to sign an economic package passed by Congress this week that will help millions of Americans who have lost jobs and have been unable to rejoin the workforce. It would also extend for seven months an $8,000 tax credit for first-time homebuyers that was enacted as part of the $787 billion stimulus package passed in February 2009 and is set to expire at the end of November 2009. The program would be expanded with a $6,500 credit for homebuyers who have lived in their current residences for five years.

The IRS reports that 1.4 million people applied for the homebuyer’s credit through August 2009.  The legislation would extend the program through June 2010, as long as the buyer signs a contract by the end of April 2010. It also offers a $6,500 tax credit to those who have lived in their current residence at least five years.

The measure doubles the income ceiling for eligible individuals to $125,000. Homes must cost less than $800,000 to qualify.

2November

Marketing a home (Part 1)…

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Marketing a house does not involve one act, but various measures. It does not only occur online and it certainly involves more than just placing a sign in the front yard and hoping for a sale. One of the first steps in marketing a house is to make sure the house is in presentable condition, which means that the home will be clean and decluttered. Stay tuned for additional marketing tips.

26October

HomeTelos LEO Program Achieves Market Success as Foreclosure Alternative

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US-TX, Dallas, October 21, 2009 – HomeTelos Loan Exit Option (LEO) program has demonstrated market success as an effective approach in avoiding foreclosure for borrowers, investors, and mortgage servicers.  The LEO pre-foreclosure home sale program is faster and has significantly higher closing success rates than traditional short-selling programs. The HomeTelos LEO system aligns the interests of borrowers, servicers and other interested parties through its unique workflow management system, which qualifies properties for pre-foreclosure sale.  When qualified, LEO then facilitates property sales through its dynamic online marketplace that brings motivated sellers & buyers together.   Mortgage servicers can better help borrowers avoid foreclosure through HomeTelos’ integrated and streamlined LEO system and processes.  Costly, frustrating, and ultimately unsuccessful sales efforts are avoided without heavy staff demands being imposed on servicing operations.    

Since LEO’s launch last year, LEO properties upon listing have averaged 37 days on market, 4 offers per property and sales prices that average 96 percent of list price.  A key to this success is real-time communication between real estate brokers, servicers and investors, allowing LEO to average only 3 days from  buyer’s offer submission to servicer’s acceptance or rejection.  According to a Florida borrower, “we were getting nowhere, losing our job then our home.  We appreciated the quick action in getting our short sale resolved in this market”.  LEO provides loan servicers with assurance that the property is widely marketed, offers represent real market value and that closing issues are resolved in advance.  Borrowers avoid foreclosure proceedings, critically damaged credit ratings and the threat of lender recourse for loan payment shortfalls. 

According to HomeTelos President Stephen Polley, “LEO’s success is driven by its breakthrough combination of innovative technology and re-engineered workflow processes for achieving the combined critical objectives of servicers, borrowers and other interested parties.  LEO provides a way for families under financial stress to have a mortgage option that allows them to relocate with dignity.”  

The Loan Exit Option (LEO) system process is patent pending.  

About HomeTelos, L.P.:  HomeTelos is headquartered in Dallas, Texas and specializes in the development and support of web-based solutions which support the management and marketing of real estate assets, including pre-foreclosures and foreclosures.  For more information, visit www.hometelos.com or call (888) 676-9200.

26October

Treasury Department to offer incentives for short sales

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The Treasury Department announced this month that it is close to finalizing an incentive program to encourage lenders and servicers to rely more on short sales as an alternative to foreclosure. 

There are two reasons that the government is looking at rewards for short sales – the high cost of the foreclosure process and the prospect of a new housing crash created by the lack of modifications that have been implemented under the Home Affordable Modification Program.  According to most figures, only 12% of troubled homeowners have been helped by the modification program. 

The incentive to push short sales as an alternative to the possibility of a new foreclosure avalanche is at the heart of the Treasury plan.  Because the homes are sold for current market value, the new owner is less likely to get “underwater”; owing more than the mortgage is worth.  That’s a key predictor of a borrower’s likelihood to default. 

Details of the plan continue to be worked out, but one proposal has been to offer lenders $1000 for the short sale, and the same amount for deed-in-lieu transactions.  Additionally, borrowers would also be in line for incentives, possibly as much as $1,500 in closing fees, and 2nd lien holders could receive up to $1,000.

19October

4 Important Things You Should Know When Purchasing a Home

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Purchasing a home is one of the most important personal and financial decisions you can make.  If you are about to make this decision you should take the time to get educated about the process because there are a lot of legal and financial ramifications involved.  Here are four basic, but important things, you should know and do before signing a contract to purchase a home. 

1.  Choose the Right Lender and get Pre-Approved.  This has always been the most important thing to do before buying a home, but today it is even more important with all of the recent changes and restrictions in lending.  The bottom line is this:  if your lender cannot close your loan on the day of closing you cannot purchase your home.  Most importantly, if this happens on the day of closing, you will be in default and can be sued in a court of law.   All real estate contracts have default language and you should read those paragraphs and know the penalties for default before signing. 

When choosing a lender, the worst thing you can do is go online and choose a lender that you know nothing about.  The best thing you can do is ask your real estate agent to recommend a lender.  Good real estate agents have established relationships with two or three reputable lenders and they can give you a good referral.      

Choosing the right lender is also important because they can determine up front if you even qualify to purchase a home.  Otherwise, unless you have the cash to purchase a home, you cannot buy a home without a loan.  If you are not pre-approved you will waste your time and the agent’s time looking for a home.  Any good real estate agent will require a pre-approval letter, or proof of funds for a cash purchase, before they start showing your homes.   This is customary and reasonable. 

2.  Choose a Good Real Estate Agent.  Next to choosing the right lender, you should choose a good real estate agent to represent you.  This is always a tough decision because there are no real standards or criteria to follow.  You can often find a good referral from friends or family who have used them and had a good experience.  Try to choose an agent with at least 2 or more year’s experience.   The most important factor is their real estate education.  There are numerous opportunities for agents to learn but not all of them take advantage of those opportunities.  Try to choose an agent that is knowledgeable and education-minded.  It is also a good idea to choose an agent that is part of a larger brokerage firm; that way if legal issues arise they usually have a good support system for resolving issues or for mediation.  

3.  Termination and Contract Deadlines.   Once you are under contract you should always know your contract deadlines.  As a buyer there are usually several options for you to terminate the contract without losing your earnest money.  Once those deadlines have passed, you “may” still be able to terminate, but you will forfeit your earnest money, which in most cases can be $1000 or more.  A few of the basic termination deadlines are financing deadlines, the option or inspection period, receiving HOA information, the survey or the Seller’s Disclosure Notice.   The financing deadline is very important because after that time period passes, you cannot use financing as a reason to terminate – which is the most common reason buyers terminate.   Most financing deadlines are 14 to 21 days after the contract is signed and executed, whereas the contract deadline is normally 30 to 45 days after it is signed.  That means if your lender determines on day 30 they cannot close your loan, you could lose earnest money.  It is important also that you inform your lender of the financing deadline.  Always look over your contract and highlight the phrases that contain the words “… this contract shall terminate.”  That way you’ll know all you termination options.
 

4.  Know Your Cost.  Before signing a contract, always know what your out-of-pocket costs will be.  As a buyer, there are thousands of dollars of costs associated with a home mortgage and your lender, by law, is required to provide you with a Good Faith Estimate (GFE).  The Good Faith Estimate will break down all of the costs associated with your mortgage, as well as, show you what your monthly payment, taxes and insurance will be.  You should look over the GFE carefully and have your real estate agent look over it to make sure the costs are reasonable and customary.  In addition, you should look over it to see how much money you will be required to bring on closing day and most importantly, how much your monthly mortgage payment will be.  You should know these costs before you even begin to look at houses.  That way you will know if you have the cash necessary to purchase a home and most importantly, if you can afford the monthly payment.  During the pre-approval process you should tell your lender how much you can afford for a monthly payment and how much cash you have for a down payment and for closing costs.  Once your lender knows this, they can give you the price range of homes you need to look at in order to stay within that monthly payment.  As a buyer, it is your responsibility to know the costs and what you can and cannot afford. 

Purchasing a home is a big decision and there are numerous other things that are important as well, and trying to navigate the process on your own is not a wise decision.  Just as you would hire an attorney to represent you in court or a doctor to treat a serious illness, you should choose a real estate professional and a reputable lender to represent you and provide you with good professional real estate advice.   

12October

Broad Improvement in Home Prices

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According to the Case-Shiller Home price index, published 9-29-2009, there has been Broad Improvement in Home Prices.  Data through July 2009 shows that, although still negative, the annual rate of decline of the 10-City and 20-City Composites improved compared to last month’s reading.  This marks approximately six months of improved readings in these statistics, beginning in early 2009. F igures continue to support an indication of stabilization in national real estate values.  For more information visit the S&P/Case-Shiller Home Price Indices

5October

HomeTelos LEO: On the Cutting Edge of Something Great!

Comment from a Platinum performing agent in Los Angeles, CA:  “Nothing is forever in this business and your ability to adapt to the changing marketplace will ensure your survival.  I think the move to focus on LEO is a brilliant move.  I think your company is on the cutting edge of something great.  I don’t see REOs flooding the market.  I see a measured pace for REOs especially as the number of workouts and short sales continue to increase.  I think the LEO program will be a great success in California.  I recognize that it’s a privilege to work with your company.

29September

For Sale By Owner … Are there downsides to this approach?

A “For Sale by Owner” is a homeowner, who decides to sell their property without a real estate professional. There are some downfalls to this approach for a homeowner, which may include limited advertising and lack of knowledge in the real estate field.

A homeowner can advertise in newspapers, online, and host an open house. A real estate professional can offer the same and give your property exposure to their real estate network, in addition to other services. Realtors have access to the Multiple Listing Service also known as MLS. This system allows other realtors throughout the area to pull up properties for sale, in an area their buyer may be interested in looking. This opens up maximum exposure for the homeowner.

Lack of knowledge in the real estate field can cause a home to be over priced in a competitive market. In turn, an overpriced home can sit on the market for months. A real estate professional has expertise in the local real estate market. They are able to provide efficient market analysis to price the home according to the market. This can eliminate costs and unwanted time for the homeowner.

Limited advertising and lack of knowledge in the real estate field are only a few downsides to selling a home without a real estate professional. Hiring a real estate professional can maximize property exposure, reduce unwanted costs, and eliminate unnecessary time on the market.

25September

HomeTelos LEO Program Announcement

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HomeTelos LEO launched its pilot program in 4Q 2008.  The pilot results have been extremely encouraging.  Participating brokers have sold most of the properties assigned at current market prices, while averaging only 29 days on market!  Most exciting have been the positive responses we’ve received from homeowners, brokers and title companies who have experienced the successful results of a completed short sale.  Here are a few of their comments…

  •  “The homeowner was cooperative.  The property was well maintained, the pricing was in line with my BPO and, the sale occurred quickly…I think this program is great”!!! 
  • “Overall experience was very good. Communication from the HomeTelos team was great”!
  • “The ease in which we were able to get answers from the lender via HomeTelos exceeded my expectations”!

Expansion of the HomeTelos LEO Program is imminent, but for good reason lender resources have been focused on keeping people in their homes over the past few months, delaying the referral of many potential leads.  In the meantime HomeTelos plans to add an additional loan servicer and continue expansion of the program in the months ahead.

Working together, we will help families, lenders and our markets achieve better outcomes by avoiding foreclosures.  Visit www.hometelos.com for additional information on the HomeTelos LEO Program and pre-approved short sales.

31August

How To Determine The Market Value of a Home, Part 2

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In Part I of this article we said the market value of a home, like anything in the market, is determined by what a buyer is willing to pay.  Fortunately, in the real estate world there is a standard and proven method for determining “approximately” what that amount might be.  This method is called a “Comparative Market Analysis”, also known as a CMA. Understanding the CMA is essential for sellers as they decide what price to list their home and for buyers, as they decide what price to offer. 

            So,what is a comparative market analysis?  Let’s begin with the first word, “comparative”.  As you have probably noticed, most neighborhoods or subdivisions are made of a group of homes that are similar in age, construction, style and size.  You probably also noticed that each neighborhood is different and unique from another neighborhood and some are more desirable than others.  The first step in determining market value is finding and comparing homes that are “similar” to your home if you are a seller, or similar to the home you are considering purchasing, if you are a buyer.  From this point forward we will refer to your property as the subject property. 

            For example, if your subject property is a single story brick home with 1800 square feet, carpet in the living areas and bedrooms and tile floors in the kitchen, Formica counter tops in the kitchen, light fixtures and plumbing fixtures from the original construction in 1995 and the original standard builder fence that is now 14 years old, then you will need to find 3 or 4 homes that have recently sold in that same neighborhood that have those same amenities.  You will not want to compare it to a home that has been updated with granite counter tops, all new fixtures, wood floors and a new board-on-board fence.  If you do, you will find that the updated home sold for significantly more than the homes that are similar to your subject described above. This is a common mistake many sellers make.  They see an updated home in their neighborhood sell for $200,000 and think they can sell their home for the same price when their home is not really “comparable”. In reality, if they looked at homes that have recently sold that are similar to their home with no updates or improvements; they would discover those homes “sold” in the $175,000-$180,000 range instead of the $200,000 range.  So, it is very important to compare apples to apples when determining the market value of a property.

            Now that you know how to properly compare similar properties, you are ready to look at the actual “market data”, the next word in comparative market analysis.  You will need a real estate agent to assist you with this part, as well as, for preparing a Comparative Market Analysis, because they have access to the market data in the area of your subject property.  Most communities have a multiple listing service (mls).  This is the database system that contains all the properties currently listed for sale with a broker in an area.  Many online sites, which post for sale properties, sometimes pull their data from the local mls.  Once a property is sold and closed, the listing agent changes the status to sold and enters the sold price in the mls for that particular property.  Only real estate agents have access to the mls, therefore, only they have access to the sold data.  When a real estate agent prepares a CMA for you, it will usually be divided into four categories: 

1.    Similar properties that are currently listed for sale.  Actives.

2.    Similar properties that have recently sold.  Solds.

3.    Similar properties that have sales pending.  Pending or Option Contract

4.    Similar properties that have failed to sell.  Expired/Withdrawn/Cancelled. 

             All four categories are important, but the most important category of all is the “Sold” properties.  Comparing similar homes that have “sold” will give you an “average price per square foot” of what homes like your subject are selling for.  The price per sq. ft. is determined by dividing the sales price by the square footage.  For example, if a home was 2500 square feet and it sold for $200,000, then the price per square foot would be $200,000/2500 = $80 per sq.ft.  If another similar home sold for $195,000 and was 2400 sq ft, the price per sq ft would be $81. You then take the price per square foot of 3 or 4 similar homes that sold and average them, to get an “average price per square foot.”  Once you know the “average price sq/ft”, then multiply that number by the square footage of your subject.  This is the approximate market value.  One final note, you should only compare properties that are within 300 to 400 square feet of your subject, plus or minus.   

            Finally, the third word, “analysis.”  A real estate agent analyzes the CMA and all the variables to determine what they think is a good estimate of value for the subject property.  In their analysis, they consider many things like the number of days on the market, how many properties are currently listed, how many listings have expired and most of all, they make adjustments to the 3 or 4 sold properties chosen to make them like the subject.  The analysis part requires the skill of an agent because they know how to make those standard adjustments for amenities, and in addition, they know the local real estate market.  This is another good reason to always use a real estate agent when buying or selling a home. 

            This basic method of valuation is also used by appraisers as they determine the appraised value of a home.  If a home does not appraise for the loan amount, then a lender will not lend you the money to purchase a home for more than its “market value”.  One final important fact about a comparative market analysis is, it is an opinion of value; it is not an exact science.  If you ask three different real estate agents to do a CMA on a subject property, you will get three different opinions.  If they are good agents however, the opinions will usually be close in value.  

I hope this explanation of market value has been helpful.  The CMA gives you an idea of what buyers have been paying in the market, but as I said in Part I of this post, market value is always determined by what a buyer is willing to pay and what a seller is willing to sell for.  If you can understand this key element in the valuation process, you will be a much more educated and savvy seller or buyer.