Posts in category: Financing and Lending

Recovery to Continue in 2014, Says NAR; Rates and Home Prices Predicted to Rise

By Nick Caruso

The real estate market will continue its road to recovery in 2014, with home prices rising 6 percent and mortgage rates hitting 5.4 percent. In addition, demand is predicted to plateau, all according to Lawrence Yun, chief economist and senior vice president of Research for the National Association of REALTORS®, who presented his 2014 market forecast during last week’s REALTORS® Conference and Expo.

Other factors aim to set the market back on the right path. Although there could be a possible negative impact due to rising mortgage rates, job creation and loosening underwriting standards should balance out 2014’s sales volume.

“There were two million jobs created in the past few months and we’ll see the same next year,” says Yun. “These people could potentially enter the market.”

Yun does not see, however, an increase in unit sales nationwide, as inventory levels remain an issue to keep an eye on. Currently, the nation is under one million and this number needs to increase 50-60 percent in order to get back to normal numbers.

“I don’t foresee that next year, but maybe we can at least make up half the needed gain to steadily reduce the inventory pressure,” he says.

While existing home sales are expected to remain flat at roughly 5.1 million units, new homes could rise by 25 percent from 430,000 to 510,000 next year.  This part of the market is still in recovery due to the difficulties for smaller builders to obtain financing. This should continue easing throughout the next year.

When prompted further about how the rising mortgage rate will affect sales and the market, Yun responded: “Assuming nothing changes further, I believe it takes about 10 percent right off the top in terms of people who qualified this year versus the same people who would qualify next year. If need be, NAR will be pushing for new legislation to clarify what QM and QRM are so that we don’t get hit by that 10 percent.”

With the housing market is recovering for most Americans, homeowners will be more concerned than ever about their home values in 2014. Actual price increases for 2013 was 11 percent, which is now expected to be a six percent rise next year. The way to relieve home price pressure is for more inventory to come into the market, says Yun.

“We were surprised by how fast inventory would decline, but there was always a fresh set of inventory trickling in as it went out,” he says.

Overall in 2013, investor activity has been normal, but numbers slightly declined. Though, more small-time investors entered the market, staying one step ahead of the population, consistently punching numbers to see what transactions made the most sense for them. “If investors remain active, it implies that housing is a good buy,” says Yun.

Despite some cautionary areas, the real estate market has its beacons of potential. The industry may not be back to its best numbers yet, but we are still heading in the right direction and making our way down that road to recovery.

“We’ve had a decent year this year and next year will be roughly the same.”

 
Reprinted with permission from RISMedia. ©2013. All rights reserved.

Are Dated Appraisals Holding Back the Recovery?

By Andrew King

Some of the most beaten down real estate markets are finally experiencing that long-awaited bounce back from the crash. Cash offers are yielding more sales. Pent-up demand is driving prices higher. But something’s missing.
Brokers in the faster markets, such as Nevada, California and Florida—where the soaring prices almost defied gravity leading up to the crash five years ago—are finding it hard to move all these homes, even though there are plenty of willing buyers. While the homes are available, the mortgages are not. More specifically, they say, the appraisals are not.
While a would-be buyer could be more than qualified to pay back a $1 million loan for an Arizona McMansion, in many cases, the banks can’t sell them that mortgage—even if the loan officer wants to—because the appraiser won’t sign off on that $1 million valuation.
“It happens a lot in an escalating market,” says Gino Blefari, president and CEO of a brokerage in the red-hot San Francisco Bay area. “You have to go back to the appraiser and say, ‘look, there were 27 offers on the property. Now that we’re having more sales, we’re better.’”
It’s becoming a heated issue across the country as low appraisals continue to squash real estate deals that already have the blessing of would-be buyers, sellers and banks.
At the heart of all the tension are the comparable properties, or “comps,” that appraisers use to base their valuation. The system is designed to keep everything fair and square for the buyer and seller while limiting the banks’ risk. However, conservative appraisals based on the most recent sales—deals made prior to the bounce—can inadvertently stall an otherwise healthy recovery.
To get around these appraisals, more and more buyers are using cash for the purchase and paying more than what they could have gotten with a mortgage. The practice has caught on so drastically—with cash deals accounting for 40 percent of all sales—that the latest national data shows a major reversal in the price of cash deals as they relate to mortgages.
This influx of cash deals, however, doesn’t always make it into an appraiser’s comp pool, skewing market realities and becoming a point of controversy.
“Cash investors are very aggressive,” says Mark Stark, CEO of a real estate group that has seen a huge increase in all-cash deals in Arizona and Nevada. While all-cash deals have usually comprised 7-10 percent of his business, he says that over the last 18 months, they have grown to 21.5 percent. A lot of this, he says, is due to institutional investors who have come into the market to take advantage of the low prices.
Speculation, bidding wars and rising home prices are generally seen as signs of a healthy economy, but Stark thinks that too many borrowers are being left out of the market due to overly conservative appraisals. The problem, he says, is that many appraisers are not taking these cash deals into account when they determine the value of a property—even though they are perfectly valid comps.
Appraisers will often throw out unrealistically low sale prices, such as those that result from a foreclosure or an arm’s-length transaction, when conducting an appraisal. They also throw out prices that are unrealistically high. But many real estate agents don’t think this should include cash deals from institutional investors.
John Brenan, director of appraisal issues at The Appraisal Foundation, a private nonprofit recognized by the government as the source for appraisal standards and recommendations, says that while the appraisal industry is regulated, there are still a lot of gray areas when it comes to comps.
He says that high comps should be thrown out only if they don’t truly reflect fair market value. An institutional investor should not be disqualified as a comp just because they’re a fund or someone who is looking to lease or flip the property. Brenan says an unusually high cash sale would get thrown out if someone paid significantly higher than what others recently paid for surrounding properties without a good reason.
“If someone paid an extra $50,000 on a property because it’s the exact color they wanted,” says Brenan, “that would not be a realistic example of the market and shouldn’t be counted as a comparable property in the appraisal.”
On the other hand, appraisers shouldn’t be using foreclosures or REO properties as comps either, Brenan says. Still, a block full of short sales can’t just be ignored when gauging the marketplace. “That (bad) sale in and of itself does not make a market, but it does play a role,” explains Brenan.
Brenan adds that appraisers should be looking at the most recent data available, but that might not necessarily include current events. Part of the tension has to do with the fact that appraisals represent a fixed point in time—what a house is worth on a particular day. It doesn’t always leave room for the greater economic trend.
“The appraiser is working off historical data,” Blefari says. “If it’s a cash deal, they should use it as a comp.”
Blefari emphasizes that the market has so much pent-up demand right now that it will drive prices higher through the end of the year and beyond. He says the recovery is completely genuine and appraisals need to reflect that.
Andrew King is an award-winning journalist with 15 years of experience with the Gannett newspaper company, appearing in The Journal News (Westchester, N.Y.), Asbury Park Press and USA Today. He also contributes to The Real Deal, TheLadders.com and TechPageOne.com.

Reprinted with permission from RISMedia. ©2013. All rights reserved

What is going on with today’s home values??!!       Whether you’re a buyer or seller in today’s market, it’s probable you’ll encounter appraisal issues!

Low inventory, likely due to AB284, has caused an all-out bidding frenzy for the few homes on the market today.   Prices are regularly being bid higher by anxious buyers, and prices set by sellers are often thousands of dollars above the recent comparable sales.    And when multiple bids drive a house price thousands of dollars above the listed price, appraisers are still coming in with values below the agreed-upon price.

Considering most comparable sales in the Las Vegas market are of ‘distressed’ properties that have been neglected and/or not maintained, in need of repairs, carpet, paint and landscape, we can see how a property in ‘good’ condition would appraise for less – strictly because the comps are lower.   And unfortunately, appraisers are not giving credit for the improvements and better condition of the non-distressed properties.

Appraiser reluctance to report local appreciation is becoming a significant obstacle.  Many appraisers are reluctant to make justified upward adjustments for superior property condition or upgrades, because they fear criticism that they are potentially overvaluing the property. Many Realtors® and loan officers feel that appraisers will go with a lower valuation so as not to upset overly-cautious reviewers at the appraisal management companies.

As Realtors®, we are increasingly seeing buyers who want a home that is move-in ready, and as their agents, we must prepare them to consider paying the difference between the appraised value and the agreed-upon purchase price.   The bottom-line is simple:    Buy a distressed property and immediately put $20,000+ into it, or, pay $10,000-$20,000 in appraisal difference to get the beautiful home that is move-in ready.

Lenders who finance the property use the ‘lower’ figure as the base for lending.  So, if the appraisal comes in $10,000 less than the agreed-upon price, that $10,000 is money you’d pay in addition to your regular down payment and closing costs.   In days past, sellers usually came down on their price to keep the deal together – – but today that is not the case.  Sellers are regularly standing their ground on the agreed-upon price because they know ‘someone’ will pay it.

Until our inventory issues are worked-out, we don’t see a quick end in sight to these issues.    If you’re a buyer in today’s market, prepare to pay a little extra $$ above appraisal to get a great house.      You need professional help:  Call a New Home Resource Realtor® today!    You can reach Joanna Piette, Denise Moreno, or Heather Brockhurst today at 702-365-1000 !!   Don’t waste another minute!

The Mortgage Debt Relief Act is soon to expire!   And Congress has not mentioned a word about extending it…..     NOW is the time to get your short sale completed!

 Let me first remind everyone that we’re not attorneys,  and do not profess to understand this Act nor the law it its entirety.     Seek professional legal and tax advice for any and all of your questions or concerns!

 In a short sale, debt “forgiven” by the lender is subject to income tax,  because it is treated by the IRS as regular income.   With Las Vegas prices as they were during the “Boom Years” of 2004-2007, this figure is astronomical for most homeowners;  hundreds of thousands of dollars in forgiven debt could be considered taxable income.    

 The Act relieves qualifying homeowners from the obligation of paying taxes on mortgage debt forgiven from a short sale or foreclosure.     

 First enacted in 2007, the MDRA was extended once in 2009, but is set to expire this year on 12-31-12.    This means your short sale must be CLOSED by then, or any forgiven debt could be taxed as regular income.    There is qualifying criteria associated with the Debt Relief Forgiveness Act, so please seek professional legal and tax advice to see if you qualify.   

 Potentially millions of people could find themselves liable for a huge tax bill if the government doesn’t renew the MDRA by the end of 2012.    This bill may expire!     Since many short sales take an average of six months to complete, homeowners are simply running out of time.       Those  considering a short sale of their home need to act QUICKLY (like today!) in order to take advantage of a potential tax break. 

 Real Estate Brokers who are “Certified Distressed Property Experts” (CDPE) have undergone additional training specific to short sales.       The Broker at New Home Resource, Joanna Piette,  is a Certified Distressed  Property Expert / CDPE, and she can help. 

 Contact a professional Realtor® at New Home Resource today at 702-365-1000.     We will help you get through this!!

The assembly bill known as AB284 became effective 10-1-11 and dramatically reduced the number of foreclosure filings in Nevada.       Just as a disclaimer, we’re not attorneys and don’t even pretend to explain nor understand the whole of the law.

To put it as simply as possible, the bill requires lenders to file an affidavit regarding the possession of the defaulting homeowner’s mortgage note & deed.  This affidavit would be filed along with the “Notice of Default” (aka NOD), and failure to comply is now a Class C Felony.   The NOD is the act that really allows the lender to physically foreclose at a future date.   So you can see that the whole thing is a domino effect – one must happen before the other, before the other, etc and the end result of an REO listing is directly affected by this new bill.

Literally thousands upon thousands of eventual-foreclosures are piling up on the bank’s books, while the banks work toward meeting the requirements of AB284.      “When” these will all hit is anybody’s guess.

Today, we have a staggering few 4,500+/- properties listed on MLS – – – 487 of which are ‘REO’ (foreclosed) properties.     All of the others are traditional sales, short sales, and/or investor ‘flips’.     This low inventory has caused a buying frenzy wherein the lower-priced properties are receiving multiple offers within hours of listing.   One of New Home Resource’s $210,000 listings received FORTY (40) offers!

The name of today’s game is overbidding and patience.    Buyers are regularly agreeing to pay over the appraised value to not lose the property they’ve come to love.  Gone are the days of sellers reducing their prices to meet low appraisals.       Every good buyer’s agent is counseling their buyers as to these facts of today’s market and the probability of paying more than appraised value to keep the home in escrow.

What does all this mean?   This is not all bad!!!      First of all, in recent years, property values have been horribly, horribly undervalued – – we’re simply bringing the market back into line, one property at  a time.    Even paying a few dollars more for something is well worth it – the property is being bought at a fraction of where it sold just a few years ago!    Even at these prices, we are stealing homes!!   Interest rates are at an all-time low where you can OWN a gorgeous home for less than rent.

Just make sure you’re using a knowledgeable, professional Realtor® who knows today’s market, has excellent relationships with fellow listing agents and who can give you the best advice for your situation.      You should be using a NEW HOME RESOURCE agent!    Call Joanna Piette, Denise Moreno, Penny Womack or Debbie Sullivan today!  702-365-1000

Current inventory on the Las Vegas market is quite low today,  which has caused a home-buying frenzy unlike we’ve seen in years!

Any given property today will REGULARLY have multiple offers within days of listing, and often sell for MORE than the listed price!   

What’s a buyer to do?   First and most importantly,  get your loan prequalification.   Every offer today requires “proof” that you can buy the property so getting in order your financing is truly step #1 of this process.     I like to suggest Cheryll at Premier Mortgage Lending to our buyers because her lending knowledge and level of service is just flat-out amazing.    You can reach her at Cheryll@PremierMortgageLending.com.  

Then, get yourself a Realtor that specializes in buyers, like an agent from  New Home Resource!   We understand the market, have excellent relationships with many listing agents,  and utilize all of the necessary and cutting-edge programs to produce offers & get your signatures.  In this craziness, you can’t afford to have any delays – for any reason.   Acting quickly is the best plan!

   And last, but not least, make your strongest offer first.   Remember that there is much competition,  and you don’t want to lose the home of your dreams over a few thousand dollars.   Your New Home Resource agent can help you decide upon the most appropriate offer for the property.   

Don’t hesitate – with prices and interest rates at all-time lows, TODAY is the time to invest in a new home!!

Never before today in my real estate career have I encountered so many folks who are buying property, sight unseen. 

In today’s busy, busy world of real estate purchases, more and more out of state and foreign buyers are wanting to invest in the Las Vegas housing market.  I personally think NOW NOW NOW is the time to buy!  I could be wrong, but just live daily around these incredible prices,  and I can’t help but  think we should all be gobbling It up like candy.     

I’m apparently not the only person who feels this way about Las Vegas real estate 🙂

However, this concept becomes an issue for buyers not living in Vegas – how can they jump on the “purchase today” bandwagon  when they aren’t here to physically visit the home and consummate the purchase?    

Hire a stellar Realtor, that’s how!!  

You need to work with a Real Estate Agent and agency you trust to provide you with all the information available about the property.    One who directs you to websites where you can learn about the area schools, the amenities,  and the crime statistics/rates.  One who responds to your emails and phone calls.    Develop a trust and rapport with your Realtor and together, you’ll put together the deal that works best for you. 

Buying real estate isn’t a simple task, whether or not you live in Las Vegas or Timbucktoo.    Enlist the help of a New Home Resource agent and you won’t go wrong !

As Realtors, one of the first things we do is make sure the buyer in our car has the ‘ability’ to buy:  either they have cash funds to purchase, or they need financing.   Buyers who’ve had a short sale or a foreclosure often think it’s the end of the road for them…. that due to their impaired credit,  they’ll not be able to buy a home for several years.     Well, look no further!      

Las Vegas-based company Premier Mortgage Lending is able to help homeowners who’ve had a recent short sale or foreclosure, and get them into a home – – at today’s incredibly low prices!      The buyer must qualify with at least 20% down and a stable job, regular income and debt ratios that work with traditional loan types, but credit may be overlooked.      Premier Mortgage offers a free prequalification service – – if you or anyone you know has impaired credit, but does have a stable job, regular income and at least 20% down, please urge them to call Premier Mortgage Lending today at 702-485-6600.

Wow!    What a time to buy a house!   Do you realize that today’s interest rates are below 5%?   This is an incredible time to buy!      If you’re renting for $1,000 per month, at today’s rates,  you could spend that same $1,000 on OWNING a $200,000 home.    Call New Home Resource today and let us help you BUY your dream home!!

Above is based on:

$200,000 sales price

$40,000.00 down payment

$160,000.00  loan amount

 $998.00  PITI/assuming taxes at 166.00 and insurance at 40.00

4.25% interest rate/4.306 APR

Have your financing ready to go!!

Today’s lending environment has changed. Gone are the days of simply “fogging a mirror” as proof of life to obtain a home loan.

Lending in the past few years has become MUCH more detailed and complex  – your lender will require much from you, and they’ll need 45 days to get you to the closing table.

Of course, you may use anyone you wish. We like to recommend our sister company Premier Mortgage Lending; a local lender with over 75 years of combined lending experience. You may find their link to the right on our home page.

ALL offers today require some type of “proof” you can buy the home. This comes in the form of a loan approval letter from a reputable financial institution. With over 20,000 (!!) listed properties on MLS today, it’s certain you’ll soon find one to buy.  Without that “evidence”, your offer cannot be seriously considered by the seller, and you’ll lose out to someone else who was prepared. And THIS is why your agent says “Get Prequalified First”!!

To make your homebuying experience a pleasant one, have your financing ready to go!!