Real Estate Success Tips

This morning I taught a class about being successful in Real Estate. Through agent discussion these were the top ten tips for success.

1. Personal Relationships
2. Build Trust
3. Communication/Follow Up
4. Market Updates/Market Knowledge
5. Referrals
6. Communicating the process/buyer counseling sessions/setting the expectations
7. Asking for the order
8. Customer Care/Clients #1 priority
9. Technologically Savvy
10. Professionalism

Others that made the discussion: Identifying Motivation, Setting Goals, Tracking successful activity, providing options.

Today there was excellent discussion. On April 8th I will be speaking at the Washington State University to the Finance, Insurance, and Real Estate organization. I will cover this material more thoroughly and provide a summary.

What drives interest rates and an update of the current mortgage market

The mortgage market has an interesting dichotomy. The reason rates go up and down is not simple to explain but here is a good tip from HSH Associates Financial Publishers.

The answer is that rates are moved by a number of related factors, and believe it or not, you -- Joe or Jane Consumer -- are one of those factors.

Mortgage money can come from many sources, including deposits at banks and brokerages, but most comes from investors through what is collectively known as the "capital markets." This is where investors interested in purchasing certain kinds of debt instruments -- bonds, in this case -- come to buy these items.

In order to attract investors, sellers of bonds must compete with one another to get their money. They do this by offering a variety of " instruments" (also called "product") with differing structures of risk and return over given periods of time. These offerings compete with other investments which are reasonably similar in performance, such as US Treasuries, corporate bonds, foreign bonds, and others.

Mortgage market makers serve not one client, but two: investors, who want the highest possible return on their investments, and the homeowner or homebuyer, who wants the lowest possible interest rate. Simultaneously, rates need to be high enough to attract investors but low enough to attract borrowers. (http://library.hsh.com/read_article-hsh.asp?row_id=85)

This information was extracted from an email from Tom Rhea from Pacific Guarantee Mortgage, our in house mortgage brokerage. Great information in regards to the mortgage market and its recent behavior.

The last two days have been a wild ride for mortgage rates. We had big time improvement on Wednesday afternoon and the 4.5% coupon moved into territory not seen since December and overall rates improved to the range of 4.75% - 4.625%. At the start of the day yesterday that lasted for just part of the morning as lenders were flooded with locks and we started to see price changes around 10:30am that continued into the afternoon and here we are today with rates back in the same range as they were early in the week. The conforming 30 year fixed base rate is at 4.875% and the FHA 30 year fixed rate is at 5.00%. This is again another example of why it is so important to have your clients approved and in position to be able to take advantage of the short term movement, the people that either could not contact their loan officers or we not aware of the change missed the boat.

I wanted to give you some information on Condominium financing as some of you may not be aware of changes that have gone into place recently that are making financing more of a challenge for consumers. Fannie Mae has added restrictions making it more difficult for developers to sell their units and making it more expensive for everyone to purchase. Fannie Mae has stopped guaranteeing mortgages in condo buildings where fewer than 70% of the units have been sold, up from 51% which was the previous guideline. In addition, the company won’t back loans for sales in buildings where 15% current owners are delinquent on association fees or where more than 10% of units are owned by a single entity. The new policy became effective March 1st, 2009 and most lenders have started to implement these guidelines. The new rules protect borrowers from buying units in buildings that have a high risk of failure while also preventing the companies and taxpayers from throwing good money into troubled developments. Developers have been petitioning for exemption from the occupancy rule but so far no exceptions have been made. In addition fees for condo loans are scheduled to increase next month. Buyers without at least a 25% down payment will have to pay closing – cost fees equal to .75% of their loan amount regardless of the borrowers credit score. And Fannie Mae says these fees are necessary to protect against higher default rates. So when you are working with potential buyers who are looking for a condo please make sure that you take these changes into consideration and share with your clients.

Hopefully this information will be helpful to you and I will continue to try and provide some of these guideline changes in my updates. Here is the rest of the market report:

Yesterday there was talk about how even the chatter of inflation can spook Bonds and yesterday's sell off was sparked by inflationary talk and that theme is continuing again this morning. Once again, if you have clients on the fence, you must explain to them that should inflation talk continue, it will be hard to see mortgage rates move much lower.

At 12:00pm ET, Fed Chairman Ben Bernanke will be speaking about the economy with the topic being "The Financial Crisis and Community Banking." This talk could have an impact on the markets later today.

The New York Fed is continuing its Mortgage Backed Securities purchase plan as it bought $19.67B from March 12 through March 18. The Fed increased its purchase plan by $750B to $1.25T on Wednesday and will run through 2009. The Fed has purchased almost $235B since the program began. (Tom Rhea PGM)

The NASDAQ and S&P 500 both fell today. The question of where is the best investment for my retirement and where should I put my money is still being tossed around. The stock market is at record lows as is the Real Estate market. I believe both of these markets will gain strength together in the near future. Keep an eye on both markets, consumer spending and job growth. All four will be the keys to building a stronger economy on all levels (city, state, and national).

Purpose of this blog

Thank you for all taking the time to read this blog. My goal is simple. To provide up to date information on the current King County and Pierce County real estate market. My vision is for this to be a resource for individuals interested in the real estate and mortgage market. Topics will range from county trends, mortgage rates and impressive inventory that I come across when showing homes to family and friends.

I would love to field questions from everyone in regards to all aspects of real estate. If you are able to please select the follower button located to the left of this thread. I will do my best to answer all questions and provide insight of what I am seeing available on a day to day basis. Included in this blog will be comments from showing homes in different areas (similar to the Graham post after I showed homes earlier this week.) Also I will include recaps of real estate courses and seminars that I attend.

I believe now it is more important than ever to do research before buying or selling a home. Thank you for taking the time to read this over.

The Business of Foreclosures and Shorts Sales Recap

Yesterday I attended a seminar by Howard Hegwer, an excellent instructor, on the process of selling and listing short sales and bank owned homes. We covered the current saturation of short sales and foreclosure properties on the market, the causes of these distressed homes and how to implement these areas of expertise into our business plans.

Foreclosure is simply defined by nolo.com as the forced sale of real estate to pay off a loan on which the owner of the property has defaulted. These current trends that Howard shared are shocking.

Over 3 million American homeowners received foreclosure notices in 2008. That is over an 80% increase from 07 and over a 225% increase from 2006. Broken down on a nationwide level that is 1 in every 54 homes received a foreclosure notice. Another shocker is the states that were hit the hardest in 2008, I know you are all thinking obviously Arizona, California and Florida right. You are correct that they have been hit the hardest but from 2007 to 2008 the largest percentage of change in foreclosures was Maine (896% change from 07), Washington DC (438%), New Hampshire (436%) and Vermont (372%) respectively. Washington pulled in the middle of the pack, ranked 28th in the nation with 26,058 total filings in 2008, a 71% increase from 2007. (RealtyTrac.com)

Howard also provide information on the myths of foreclosure. Foreclosure always represents a great investment deal, instant equity, homeowners are never at fault, they are motivated to sell etc. I admit that I have always seen foreclosures as a way for instant equity. From what I am seeing in our area that holds true.

We also covered short sales in our time. Simply put a short sale is when the outstanding liens are greater than the value of the home. The homeowner or the lender will end up short on the sale and taking a loss. Many people ask why do banks and lienholders take less than the amount owed? This is a great question. Lenders allow short sales to avoid; costs of attorney fees, the process of eviction, damage to the property and the costs associated with resale and most importantly it is faster than foreclosure. Some sellers have ended up staying in their homes for over a year without their home going to auction. The costs keep piling up.

As REALTORS we realize that we are not lawyers or tax advisers. We recommend you speak to either or both before considering selling your home short or letting it go to foreclosure. The biggest factor of these distressed sales it the emotional aspect. Sellers don't want to default or admit that they took on more than they could handle. Sometimes short sales and foreclosure are the only option.

On the buying end this is an excellent route to go if you have the time and energy and an experience agent to represent you. Howard extensively covered the offer process and the challenges that most agents will face and be able to get past.

I've said it time and time again, if you have the time and the patience, purchasing a distressed home can be an excellent way to get the home you want at a lower than market value price. Each property, city, is different but we are seeing some homes sell well below market value. There are many factors to consider when buying or selling a distressed home. Speak with your local REALTOR that you refer to for more information. If they are interested in short sales and bank owned homes contact me for additional information.

Also if you are a real estate agent looking for an excellent instructor I highly recommend Howard Hegwer Seminars, http://www.hegwerseminars.com/.

Bank Owned/Short Sale Seminar Initial Thoughts

Just got out of a six clock hour class on selling and listing bank owned and short sales. First thoughts are:

1. Why are agents so nervous to list and sell short sales?

2. How can I change my business model to accomadate for the influx of these distressed homeowners?

I believe, now more than ever, explaining the buying process of these distressed homes to buyers is the key to eliminating the negative energy that spreads with the idea of short sales and REO properties. By gathering the necessary information at the beginning, remember preparation breads success, these can be closed in a timely manner.

This discussion and a summary of the seminar will be properly documented tomorrow.

OTHER THOUGHTS

Consumer spending increased in February thus showing signs of a healthier economy. We will see what news comes about with the WAMU debacle and how that will effect consumer views. Rates still are below 5% on a 30 year fixed conventional loan and right at 5% on an FHA loans.

Graham Real Estate

Today I went and showed homes to a buyer in Graham. The search criteria was for homes under 280K with at least an acre of land. We came across a bank owned home and a short sale that were both on level lots.

The home that proved to be superior was a bank owned home. I always prefer these over short sales (The other was a short sale). This home was absolutely dialed in. The front yard was huge and back yard was at least .6 of an acre. This rambler was 1500 square feet and the garage was huge, three car. Let me know if you want me to send this listing your way.

For those of you that prefer homes on secluded lots with plenty of space for BBQ's and bonfires, Graham is an excellent option.

Market Update March 17th

This week began with our county date trends showing a major decrease in Pierce County inventory of the last 12 months, down 15%. King County stayed relatively even with a slight 1% increase in inventory since February 2008.

This tells us two things; the first obviously being the health of the King County real estate remains stronger than Pierce County, which has been a previous trend. Also it tells us that the decrease in inventory is due to the extensive competition from Bank Owned and Short Sale listings. These distressed homes are currently making up close to half of the YTD sales in the Auburn, Bonney Lake, Buckley and Sumner area.

From my experience appraisers have not used these distressed homes to formulate appraisals in the past but now they are. Sure the educated buyer is aware that short sales can be tricky and challenging to close but for 10% or more below competition they can be worth the wait, same with banked owned homes. This is why I let buyers know that bank owned homes, when in good condition, are always a good route to go. They offer the same instant equity and are available to close faster.

Today's sellers need to be aware that their homes can and will sell but they have to be in selling condition. In the past seller's have been able to put a sign up and their property has sold within a month or two. Unfortunately market times and competition have increased. Today these seller's need to be educated on the current prices in their neighborhood and surrounding comparables. Also they need to establish planned price drops for their home so they will stay with the market and get behind the trend.

Remember if your home is not getting any showings, your priced to high. If you are not getting any offers, your priced to high. Lower the price until you are getting showings and offers are coming in. It's that simple.

Rates are good today once again. It appears an FHA 30 year fixed rate loan is at 5% and 4.875% for conventional loans. Remember there still are areas in North Pierce and South King County offering zero down financing through the USDA Rural Loan Program.

Keep educating yourself on the mortgage market and the housing trends. I am sure you will see that within the next six months is a wonderful opportunity to buy.