Don’t Blame The Lenders

 Posted by at 5:05 am
Oct 192011
 

I’m actually having some fun these days working with a buyer client and lender to put together some “unconventional” financing by today’s standards. But it also makes me a little crabby when I hear people whining about lenders and blaming them for everything that’s wrong with the economy and real estate.

But then again I also smiled when I heard what Greg Rand, CEO of OwnAmerica, had to say on “Rand on Real Estate”–his radio talk show. Admittedly he focuses on the commercial market, but he also makes a point that’s worthy of some thought. Lenders aren’t trying to make things difficult; they are simply returning to standard lending practices they were using a few years ago.

 

 Buying Real Estate, Financing, Home, Market Information  No Responses »

Home Inspections…

 Posted by at 6:40 am
Oct 112011
 

Home inspections are always a good idea for buyers… and they actually can benefit sellers! But a home inspection is not a pancea–there are things that can go wrong with the process. The “House Detective” is nationally syndicated columnist Barry Stone–he writes a great blog and answers some tough questions. There’s some interesting reading even if you’re not considering buying a home!

 Buying Real Estate, Camp, Camp, Home, Home, Home Ownership, Selling Real Estate  No Responses »

Low Downpayment Buyers Note!

 Posted by at 9:59 am
Aug 302011
 

Occasionally taking what appears to be a minority position has its rewards! Several months ago I posted a plea for some objectivity regarding the proposed Qualified Residential Mortgage Requirements. While much of the industry is predicting doom and gloom over the proposed requirements, there’s much to be said in favor of them.

Well, in an article published by RIS Media, I’m joined by a writer who at least somewhat shares my perspective. He offers an interesting twist, however, by pointing out an impact of the doom and gloom predictions. “It seems the speculation and debate surrounding QRM is causing some low-downpayment home buyers to believe they will not be able to obtain financing.”

Interesting–and it makes sense. Those who are crying that these new requirements will “kill” the real estate market, are actually contributing to the depression?

What’s actually needed right now is concrete, objective information. Yes, underwriting standards are higher, but at the same time rates are at historic lows. Those lows mean lower payments and lower payments mean more people can qualify based on debt ratios. Prices are lower. There’s a lot going on that makes it feasible for many more people to buy and “low down payment” mortgages are not going to cease to exist.

The best advice for potential real estate buyers is ”turn off the television and put down the newspaper and contact a real estate and/or mortgaging professional and get some credible information regarding your specific situation.”

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Real Estate vs Home Ownership vs…

 Posted by at 10:05 am
Aug 242011
 

Ultimately, it's about decisions!

In an article titled “The Emergence of a New Real Estate Industry” Greg Rand offers some interesting statistics from a number of sources.  One that I found particularly interesting was the observation that according to the U.S. Census 34% of households are renters–and that number is growing at a significant rate. He also quotes a survey conducted by Move, Inc. suggesting that investors (as differentiated from home owners) are three times more likely to buy a house in the next three years.

He uses this statistics to support his conclusion that a new industry is emerging. While it’s not clear to me what he thinks that industry is, he seems to be suggesting it’s about a lot more than home ownership.

I’m not sure if I take issue with him, but I would opine that one of the problems with this business has been the narrow view the industry has taken. We’ve tended to think that “real estate” is all about owning a home and that’s something everybody should strive to do. (We’ve acknowledged that there are investors, but have tended to put them into the commercial segment.) In short, we’ve never even pretended to offer “full service” because we still think the real estate business is about selling properties.

This is a short term outlook in an industry that thrives on the long term. If all we do is decide we should be serving investors as well as homebuyers (I would think we’d benefit from clearly identifying the difference between them), we’re still going to miss the boat.

Our ads need to stop reading, “If you want to buy or sell, call me!” What they need to say instead is “If you want to make an intelligent decision about real estate, call me.”

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 Permalink  Posted by at 7:00 am
Aug 062011
 

The PinchME Promotion is underway… the fundamental idea behind it to make it easy for folks who are interested in a second home. You can try out the search routine here.  Contrary to the slogan, not every one can afford a second home. But if you can afford one,  it is a great time to buy. You might want to check with your bank or mortgage lender before you get too deep into shopping… if you are seriously interested, let me know–I’ll be glad to “hook you up” with a lender and we’ll see if we can make your dream come true.

 Buying Real Estate, Camp, Financing, Home Ownership  No Responses »

USDA/Rural Housing Fee Changes

 Posted by at 10:58 am
Jul 312011
 

I’ve never really pretended to “keep up” with all the mortgage and financing programs and their changes… thankfully, I’m able to depend on a few really good folks to keep me informed or work with clients when the need arises. One of those folks is Ron Taplin at Alpine Mortgage. (You’ll find a link to him in the “Buying Real Estate” Section on the left sidebar.)

Ron recently advised that there are some significant changes coming (effective October 1, 2011) to Rural Housing Fees. You may hear that the “up front fee” is being reduced and that is true: from 3.5% to 2.0%. But that is also not the entire story. There will also be a new annual fee: .30% per year for the life of the loan based on the unpaid balance.

Depending on how long you expect to keep your mortgage, this could be a significant increased cost even though the upfront rate is being reduced by over 40%. The short analysis is that if you are considering buying a home using this type of financing, you’ll want to get moving and get your commitment before October 1st.

 Buying Real Estate, Financing, Home  No Responses »

Bugs in the Well?

 Posted by at 9:38 am
Jul 072011
 

Buyers who are purchasing a home or camp with well water are wise to make their purchase contingent on a satisfactory water test. There are, of course, various types of tests for different substances. The most common problem we see with these tests is the presence of bacteria–particularly in systems that have been idle (such as camps) for sometime.

Even if you aren’t considering selling your property, an occasional water test is a good idea. You’ll find some easy to understand information at the University Maine Cooperative Extension website–you can download two brochures for free. One will explain the testing process–this can be a “do it yourself” project. The other will explain the process used for disinfecting your well if bacteria is found. The direct links to the well information are:

How to test your well.

How to treat your well.

“Disclaimer” — One of my volunteer positions is president of the executive committee for the Piscataquis County Extension. Even so, I can say with some objectivity that your local extension office is a great resource… as is extension in general. In fact, that’s one reason I agreed to accept the positon. If you’re thinking about moving to a new area, visit the chamber of commerce and the extension office. There’s lots to learn!

 Buying Real Estate, Camp, Camp, Home, Home, Selling Real Estate  No Responses »

Couple Forecloses on Bank!

 Posted by at 6:02 am
Jun 092011
 

No, the headline is not a mistake. Turnabout IS fair play. It seems that Bank of America (BAC) foreclosed on the wrong house in St. Petersburg Florida–a house which had been bought for cash and had no mortgage. The homeowners spent some 18 months trying to convince BAC of their error, racking up attorney’s fees and other costs in the process.

Ultimately, BAC admitted the error. But in yet another example of the sorts of fiascos surrounding the foreclosure business, they failed to pay the homeowners the court ordered costs. Ultimately, the homeowners went back to court and “foreclosed” on BAC’s branch office in Naples–a judge agreed to allow them to seize bank assets for the unpaid debt. They and their attorney showed up at the branch office with a moving van and a court order. Apparently the branch manager was “visibly shaken” by the order, but BAC found a way to pay up within hours.

If you are currently involved in a short sale or foreclosure, you’ll want to read the entire article. An important piece of this fiasco is that the homeowners bought the home as a foreclosure. There is some speculation that their names got “transposed” during paperwork. This is not the first time things like this have happened. It’s a wonderful story of man biting dog, but it’s also fair warning to anyone involved in foreclosures or short sales.

Read USA Today’s version of the story.

 Buying Real Estate, Financing, Home, Real Estate Business  1 Response »

Where Have All the Buyers Gone…?

 Posted by at 3:06 pm
May 212011
 

Okay… would you like to play the numbers game again? The Maine Real Estate Information System issued a press release recently informing us that for the month of April, unit sales of single family homes was down nearly 24% over the previous year. Part of the explanation for this huge drop was that last year’s numbers were “skewed by the homebuyer’s tax credit…”  Obviously, that’s a tough statement to disagree with but it does raise the question “by how much of the decrease can we blame on last year’s tax credit?”

Opinions are easy and it’s mine that last year’s tax credit for the most part rewarded people who were intending to purchase a home anyway and probably succeeded in “condensing” those transactions into a tighter time period. (In other words, if we’d left things alone most of those sales would have taken place anyway—just not necessarily at the time they did.

In another attempt to rationalize the downward sales trend, lenders are coming under fire because lending standards have become stricter and “frustrating.” Again, that’s a tough statement to disagree with, but it wasn’t too many months ago everyone was blaming lenders for not having strict enough standards.

Speaking of standards, here’s an interesting observation from the Real Economy Watch by Stephen Cook:

For the month of April, 45% of foreclosed properties were damaged and not inhabitable without renovation. Because mortgage financing is generally not available for foreclosed properties that need major repairs, investors often buy these properties for cash. Fifty-five percent of damaged foreclosed properties were bought by investors in the month of April, while only 27% were bought by first-time homebuyers.  (These are national numbers, not Maine.)

Maybe I’m not asking the right people, but I’m not sure why or how we should fault lenders for not making loans to people who might be considered “poor risks” on properties that are considered poor risks. If there’s an explanation Continue reading »

 Buying Real Estate, Market Information, Real Estate Business, Selling Real Estate  No Responses »

I Thought I Owned It!?

 Posted by at 7:22 am
May 022011
 

One thing that no longer comes as a surprise to me is the occasional prospective listing client who, it turns out, doesn’t actually (legally) own the property he or she wants to list for sale. Sometimes it’s a mere technicality; sometimes a misunderstanding. These issues are often referred to as “title defects” or “title problems.”

These situations also can affect buyers. During one recent transaction where I represented the buyer we discovered the “seller” ( a corporation) no longer existed–it seems the owner(s) of the corporation dissolved it and took title personally. The good news was they had done it properly. The bad news was they hadn’t told anybody–including their listing agent.  I didn’t point out to him that technically he was no longer the listing agent since his contract was with a non-existent corporation.

Some of the more common are created by confusion over similar names, missing heirs or surviving children left out of a will, wills not probated, signatures of minors or people of questionable competence. Undischarged mortgages and tax liens are also fairly common.  In short, there are a lot of things that can “go wrong” when title is transferred from one owner to another. Sometimes these escape notice for several transactions.

So what happens if somebody comes knocking on your door and announces they believe they have a claim against the title to your property?

You did buy title insurance, right? When you did the Title Insurance Company ordered a title search of public records to determine whether or not someone other than you might have an interest in the property.  Any discovered risks were either mitigated (or excepted) prior to your purchase. That policy is your protection against legal fees and any losses you might suffer based on a claim.

The “even better” news is that most of these policies cover you after you’ve sold the property! But wait, there’s more! You only paid one premium, at closing. (If you financed the property, there were two policies involved–a lender’s policy and an owner’s policy. The lender’s policy covers the lending institution’s interest for the life of the loan.) If you are in the market for a real estate purchase, make sure you understand the concept and buy some peace of mind!

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