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Archive for December, 2008

Nervous about buying New Construction from a struggling home builder?

J. Andrew English J. Andrew English
Wednesday, December 31st, 2008

It’s a concern of many right now. Today’s “incentives” offered by new home builders to help increase foot traffic are every where right now… but what happens if they go under? If you are buying new construction, you need buyer representation more now than ever before because of this very issue. If you have questions regarding a new construction purchase, call us and let us assist you. There are many different things to consider during your new construction purchase, however, let’s look at a few from from a generally forgotten perspective. Builders are going out of business each and every day. How does this affect their existing construction warranty’s? What happens if I am under contract to purchase a new construction home and the builder goes under? How do I get my earnest money back in this situation? There are many questions to ask before entering into a purchase agreement with a builder, regardless of the incentives being offered.

Do not be fooled into thinking larger home builders are immune from the current economic condition. The master planned area of Rhodes Ranch in Las Vegas was noted by Moody’s on Tuesday as currently having a negative outlook due to a serious grim liquidity situation. Current revenue and expected revenue for The Rhodes Companies LLC is not expected to cover existing required debt service. As a result, the company is burning cash reserves left and right. Always be certain to take your time and do your research before entering into a purchase agreement. Many incentives are placed with time restrictions to help induce the seller into making a drastic decision quickly. Relax, do your research, the incentives will still be there next week.

Refinancing Going Crazy

J. Andrew English J. Andrew English
Monday, December 29th, 2008

Most everyone is aware that rates are absolutely plummeting right now. Refinance Applications are going through the roof. The questions is, should you refinance your house? The thing that most people forget is that refinancing cost real money. Loan officers will try to slide by the fact that when you refinance, they are rolling the cost of refinancing on the back end of the note. What this means is that if you owe 200k and it cost you 5k to refinance, you now owe 205k. Just because you aren’t paying cash upfront for the service doesn’t mean it is free.

So when should you refinance? The first general rule is that you need to know you will be in your house at least a couple of more years. Calculate your monthly savings from your new projected monthly payment. Now, compare this with your total cost to refinance. How many months will it take you to recapture the total cost of refinancing? For example, if your total cost to refinance is 1200 and your monthly saving will be 100, you know it will take 12 months to break even on your refinance. Generally speaking, if you are recapturing your loss within a 2 -3 year period, it’s not a bad idea to consider refinancing.

Fannie Mae and ARMLS joining forces

J. Andrew English J. Andrew English
Friday, December 26th, 2008

ARMLS (Arizona Regional MLS) has announced a new partnership with Fannie Mae as of Dec 2008. The partnership will streamline and ease the short sale process for both agents and sellers. Buyer Agents will benefit from this new working partnership because it will take the guess work out of the short sale process. Buyer Agents notoriously stay away from short sales because of the countless number of short sales that never result in closed sales. This process should defeat this problem and help move existing inventory out of the market place. The concept of the program will go something this…

Fannie Mae and ARMLS have set up a pilot consisting of eligible properties for the short sale process. The pilot will pre-approve the short sale price. As a result, if a buyer agent submits an offer at this list price, the offer will be accepted. (assuming the offer meets other standard short sale procedures – such as no second lien, asset verification, etc..)

The greatest positive of this is that it gives the agent direct access to the lender who is servicing the loan. The biggest problem facing listing agents today is they are only allowed to speak with customer service reps at the lender who have absolutely no information on the how the short sale process works or what needs to completed for an approval to occur. If you are in the Phoenix Metro area or any market we handle and facing a short sale situation, give us a call at 800 657 6579. We have helped countless sellers sell their properties successfully through the short sale process.

How does Congress Realty handle buyer leads for my property?

J. Andrew English J. Andrew English
Tuesday, December 23rd, 2008

Our phone forwarding system sends all potential callers to you the seller directly. This allows the seller to work these leads for a potential owner to owner transaction. In the rare event a potential purchaser contacts us directly, we give the caller the seller’s phone #. Our program is designed to generate massive online exposure for our clients. As a result, it is not uncommon for our sellers to generate interest from a number of potential purchasers. Congress Realty distinguishes itself from the competition by not “stealing” these leads from the seller. (As our competitors do) Most Flat Fee companies are dependent upon using their listings to try and secure buyers. They do this by marketing the seller’s property online and then trying to work the potential buyers themselves. Congress Realty forwards each and every lead to the seller directly. In the event we receive an email lead from websites such as Realtor.com, we fwd these to the seller as well. Sellers can be confident that they are receiving each and every lead their property generates.

Virtual Tours

J. Andrew English J. Andrew English
Monday, December 22nd, 2008

A virtual tour can be a bonus to any existing or new listing. When an order is placed through our brokerage for a tour, the photographer will contact you within 1-2 business days. Once a time is set, the photographer will meet the seller at the property to take the shots. A min of 6 panoramic shots and 12 still shots are taken by the photographer. As a seller, you always want to be present for the shooting. This allows you to ensure the shots you want taken are completed. Once the tour is complete, the photographer will email our brokerae the VT link for the MLS. We then add this to the MLS asap. Realtor.com will pull the tour into their website within a day or so. This will appear in the form of the red spinning house icon. The advantage to our ordering the tour through our brokerage is the seller will have the property linked to Realtor.com for free, flyers, and more.

California sales spike

J. Andrew English J. Andrew English
Friday, December 19th, 2008

Overall Sales throughout the entire state of California will post a sales increase of 12% in 2008 as compared to 2007. This sales spike is certainly the result of falling prices throughout the past 18 months. The dramatic increase tells us that prices are reaching levels that are leading buyers back into the market. Distressed sales represented about 19% of all sales in 2008. These are sales where the seller can no longer make payments, is in the process of foreclosure, or owes more on the property than that actual value.

The credit market had a lasting impact on 2008 as well. Over 20% of all escrows opened eventually failed. The # 1 reason reported for the failures concerned changes in the credit market. The unstable credit market led to a slight drop in first time buyers, as this figure slipped about 3%. The best news is that 2nd mortgages dropped substantially. Less than 10% of all homes purchases utilized second mortgages. (down from 30% in 2007 and a whopping 40% in 2006) FHA loan related sales soared from 2% in 2007 to nearly 19% in 2008.

Reno, Nevada Market Update

J. Andrew English J. Andrew English
Wednesday, December 17th, 2008

A quick update for the Reno, Nevada market.
Sales in November 2008 were up 16% from November of 2007. Homes listed under 300k still account for the majority of all sold activity. Available inventory has increased to about a 12 month supply at the moment.

Average Days on Market for sold properties in the month of Novembers based on price point:

Under 300k – 120 days
300-500k – 150 days
500k-1mil – 140
1 mil+ – 300 days

Pending Data for the month of November:

Currently 700 pending sales
550 of which are listed under 300k
100 of which are listed b/w 500k-1mil

Conclusions to draw:
700 current pendings is a great # all things considered. The negative is of course that a large portion of these are short sales and may never actually close. To put this in perspective, the highest sold # within a 30 day period I have seen reported is about 425 units. (within the last 6 months) (thus the reason for my excitement regarding the 700 pendings)

President of the GLVAR painting a rosy picture of the market

J. Andrew English J. Andrew English
Monday, December 15th, 2008


I am an avid believer that people intelligently investing in real estate right now are going to profit in large amounts in the long term future. That being said, Patty Kelley in the Q&A above is trying to paint a rosier picture in Las Vegas than what is probably accurate. Consider that Patty has a biased interest in the topic at hand. She needs the public percecption to change in Las Vegas in order to keep membership numbers high at the GLVAR. It’s no secret Realtors(R) are dropping like flies out of the business. This directly impacts her organization’s funding. While her statements are not false, they are deceptively misleading. The fact is that Las Vegas has seen an increase in the # of sales, however, 2/3 of these are bank owned or shortsales. Don’t get wrong, Las Vegas will rebound strong in the future and prices will rise once again. Las Vegas is a wonderful place to live and the economy certainly has the potential for strong future growth. However, Las Vegas residents deserve to be told that this correction may not happen magically in 2009 as suggested by the GLVAR. In order for a correction to take place, foreclosures need to be moving, (which is happening) builders need to stop building, (happening now) but resales also need to post stronger sold figures. (which is beginning to happen) These three patterns together will then need to drive down overall supply #’s to balance with current demand at that point in time.

Are things getting better in Southern Nevada? Absolutely yes. When will the market return to 2003-2005 like numbers…. no one really knows however things are certainly moving in the right direction, albeit slower than Patty Kelley might want you to believe.

Mortgage Rates dropping and other notes.

J. Andrew English J. Andrew English
Friday, December 12th, 2008

The big news in lending over the past few weeks is the remarkable drop in rates. Many believe rates will drop towards 4.5% for primary residence purchases. While this may not fuel purchases in the winter, refinancing will skyrocket between now and February. Loan Applications were up nearly 112% at the start of the month.

On another note, foreclosures were down nearly 7% in Nov as compared to Oct. This is a bit misleading, as most lenders don’t want to foreclose during the holidays. It is likely that you will see a large spike on January 1st of foreclosure filings.

Pending home sales data has been released for the month of October and pending sales were only down about 1% as compared to Oct 07. This is well above the predicted 3% that economist had forcasted. Considering the financial crisis on wall street during Sept and Oct, this is really an impressive number.

Cashier Check versus Official Check – Arizona

J. Andrew English J. Andrew English
Wednesday, December 10th, 2008

When a buyer comes to the closing table, they need “good” funds to close the transaction. Going into closing, the escrow officer will notify the buyer how much they need to bring with them to close the transaction. “Good” funds are typically referring to a wire transfer or cashier’s check. “Good” funds help speed up the closing. For example, in order to close within 1 business day of signing, the buyer must not bring an official check from the bank. This will delay the closing process. In the event your bank will not produce a cashier’s check, ask your bank about their wiring procedures.

Cashier Check – Preferred type of check for closing – allows for same day or next day closing
Official Check-  can not be accepted for next day closing-can delay closing for up to 5 days.

The same above holds true for a seller bringing cash to the closing table. (in the event the seller owes more on the property than the agreed price)