Existing-Home Sales Resume Uptrend with Stable Prices

RISMEDIA, December 23, 2010—Existing-home sales got back on an upward path in November 2010, resuming a growth trend since bottoming in July, according to the National Association of REALTORS®. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 5.6% to a seasonally adjusted annual rate of 4.68 million in November from 4.43 million in October, but are 27.9% below the cyclical peak of 6.49 million in November 2009, which was the initial deadline for the first-time buyer tax credit.

Lawrence Yun, NAR chief economist, is hopeful for 2011. “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable,” he said.

Yun added that home buyers are responding to improved affordability conditions.

“The relationship recently between mortgage interest rates, home prices and family income has been the most favorable on record for buying a home since we started measuring in 1970,” he said. “Therefore, the market is recovering and we should trend up to a healthy, sustainable level in 2011.”

The national median existing-home price for all housing types was $170,600 in November, up 0.4% from November 2009. Distressed homes have been a fairly stable market share, accounting for 33% of sales in November; they were 34% in October and 33% in November 2009.

Foreclosures, which accounted for two-thirds of the distressed sales share, sold at a median discount of 15% in November, while short sales were discounted 10% in comparison with traditional home sales.

Total housing inventory at the end of November fell 4.0% to 3.71 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace, down from a 10.5-month supply in October.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said good buying opportunities will continue. “Traditionally there are far fewer buyers competing for properties at this time of the year, so serious buyers have a lot of opportunities during the winter months,” he said. “Buyers will enjoy favorable affordability conditions into the new year, although mortgage rates are expected to gradually rise as 2011 progresses.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.30% in November from a record low 4.23% in October; the rate was 4.88% in November 2009.

“In the short term, mortgage interest rates should hover just above recent record lows, while home prices have generally stabilized following declines from 2007 through 2009,” Yun said. “Although mortgage interest rates have ticked up in recent weeks, overall conditions remain extremely favorable for buyers who can obtain credit.”

A parallel NAR practitioner survey shows first-time buyers purchased 32% of homes in November, the same as in October, but are below a 51% share in November 2009 from the surge to beat the initial deadline for the first-time buyer tax credit.

Investors accounted for 19% of transactions in November, also unchanged from October, but are up from 12% in November 2009; the balance of sales were to repeat buyers. All-cash sales were at 31% in November, up from 29% in October and 19% a year ago. “The elevated level of all-cash transactions continues to reflect tight credit market conditions,” Yun said.

Single-family home sales rose 6.7% to a seasonally adjusted annual rate of 4.15 million in November from 3.89 million in October, but are 27.3% below a surge to a 5.71 million cyclical peak in November 2009. The median existing single-family home price was $171,300 in November, which is 1.2% above a year ago.

Existing condominium and co-op sales declined 1.9% to a seasonally adjusted annual rate of 530,000 in November from 540,000 in October, and are 32.2% below the 782,000-unit tax credit rush one year ago. The median existing condo price was $165,300 in November, down 5.5% from November 2009. “At the current stage of the housing cycle, condos are offering better deals for bargain hunters,” Yun said.

Regionally, existing-home sales in the Northeast rose 2.7% to an annual pace of 770,000 in November but are 33.0% below the cyclical peak in November 2009. The median price in the Northeast was $242,500, which is 9.2% higher than a year ago.

Existing-home sales in the Midwest increased 6.4% in November to a level of 1.00 million but are 35.1% below the year-ago surge. The median price in the Midwest was $138,900, down 1.1% from November 2009.

In the South, existing-home sales rose 2.9% to an annual pace of 1.76 million in November but are 26.1% below the tax credit surge in November 2009. The median price in the South was $148,000, down 2.6% from a year ago.

Existing-home sales in the West jumped 11.7% to an annual level of 1.15 million in November but are 19.0% below the sales peak in November 2009. The median price in the West was $212,500, up 0.4% from a year ago.

For more information, visit www.realtor.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

December 2010 Market Snapshot

The end is near. Another year is about to hike over the horizon and a new year will magically make its presence known. The years seem to slip by more quickly these days as we try to keep pace with the newest cell phone, computer or television. Technology has made things smaller, more efficient and quicker. We would die of boredom waiting for an old IBM 286 to boot up; all fifty pounds of it.

Despite all the changes in technology over the past couple of decades, the purchase and sale of real estate has remained pretty much the same. It is still a hands-on business. Ultimately, all the final decisions are made by humans, not computers.

The pace of a real estate market isn’t defined by the human element, though. Statistics rule here. How many homes have sold this week, this month, and this year? How does that compare with last year or the year before that? Are home values going up or down? How many homes are on the market for sale? All questions requiring statistical answers.

Here are some statistics compliments of Metrolist (the Denver Metro MLS). The year 2005 is used as a benchmark, since that has been the most active year for sales activity for the past six years throughout the Denver Metro and Northern Colorado real estate markets.

Through November/2005, there were 13,841 single family sales and 6,212 attached unit sales in Metro Denver. That compares to 9,944 single family sales and 4,006 attached unit sales through November/2010; approximately a 30% reduction in the number of sales. When looking at 2009 figures, single family home sales for 2010 are down about 13% (9,944 vs. 11,452); attached unit sales are down about 10% (4,006 vs. 4,450).

The number of Metro Denver active listings in November/2010 (4,956 single family; 2,737 attached units) vs. November/2005 (6,110 single family homes; 4,336 attached units) is down approximately 26%. November/2009 active listings were down compared to November/2010 figures (4,325 single family; 2,762 attached units).

Statistics can be confusing at times. They can be manipulated to represent a specific position or point of view. If looked at solely from the perspective of what the numbers are, they don’t lie. So, what do the numbers above tell us?

• Sales are down noticeably from 2005. They have trended down every year since 2005 for the Metro Denver market area.

• The number of active listings has vacillated when comparing the three years noted above. Over the course of the past few years, the number of active listings in the market collectively as a whole has decreased. Sellers have decided to (a) stay where they are and not move; (b) wait for the market to improve and then move; or (c) rent their home and move.

Real estate market values haven’t improved since 2005. The upper end of the market has experienced the greatest negative impact from the economy. The lower end of the market has been able to sustain itself. The government’s foray into assisting the housing market through tax benefits created some short-lived positive energy. Historic lows for home mortgage interest rates have helped people to refinance out of adjustable rate and interest only mortgages, but haven’t provided a noticeable shot-in-the-arm for home sales.

"What the improving economy means to home shoppers…"

"What the improving economy means to home shoppers…"

By Cynthia M. Parker, ABR®, SFR®, CDPE®

One plausible scenario….

Interest rates will increase…it’s not a matter of if, it’s a matter of when.  Property values will rebound…again, not a matter of if, it’s when.  Now, while a 3% uptick over the term of a year, (which historically, is the national average) may not seem like much an increase, this combined with an increase in interest rates, will certainly make a significant difference in your buying power…and here’s how.

Say that your current interest rate (rate that you have been approved for, at least) is 4.75% on a 30 year fixed loan.  Right now, you would be able to purchase and your monthly payment, with interest, would be about $1,044.00 per month on a home with a loan amount of about $200,000.  A modest increase to 5.75% , (which is quite plausible for a year of recovery) would mean an increase to $1,168.00 per month, as reflected below.

So what does this mean?

Well, for one, if you are approved for a loan today at $200,000, but believe that you will save more for a down payment or wait for better market conditions, you may actually be losing vital ground.  An increase of merely 1.0% over one year could necessitate an additional $12,500.00 of down payment to offset the increase in interest rates, if you were not able to be approved for more.  So, you would have to reduce your buying power by 12k…and if you add in a modest 3% increase in home prices over the course of that same year, it could mean nearly $20,000.00 …in less sales price of your new home! 

In the Denver Metro area market, $20,000.00, give or take, makes a HUGE difference in the inventory available to you. 

Example...

 $                          150,000           200,000            250,000

4.75 %             $783.00           $1044.00         $1305.00                       

5.25 %             $828.00           $1104.00         $1380.00

5.75 %             $876.00           $1168.00         $1460.00

6.25 %             $924.00           $1232.00         $1540.00

6.75 %             $973.00           $1298.00         $1622.00

* The table above displays current interest rates that are anecdotal for several common loan types for the purchase of a single family primary residence amortized for 30 years and only show principal plus interest, NOT CURRENT RATES.  Many products are available. Refinance rates may vary from purchase rates. For additional information, please seek counsel from a licensed mortgage broker/banker, or call Cynthia: 303-300-8989 or email: Cynthia.Parker@remax.net for a list of top lending professionals, who will advise you accordingly. 

If you or anyone you know has further questions or would like more info on taking advantage of the current market now, call me: 303-300-8989.  I’d be more than happy to help!

Don't Blow Off Some Steam: 5 Steam Heating Maintenance Tips to Keep Your System in Good Shape

RISMEDIA, December 7, 2010—You’re doing yet another Saturday open house tour, and, it seems, you’ve finally stumbled upon your dream house. The living room is perfect, the ceiling moldings have character, the kitchen practically begs you to bake an apple pie. Then, you look down, noticing something horrifying in the corner, making a subtle hissing sound. No, it’s not a rattlesnake—it’s a radiator.

Don’t walk out the door just yet: The radiator doesn’t have to be your enemy. While they’re typically found in older homes, and generally possess more service issues than modern heating systems, steam heating systems are perfectly easy to live with if you put in a little work and trust a qualified professional for regular maintenance.

In steam-heating systems, water is heated to its boiling point (212º Fahrenheit), and steam rises by convection through pipes to radiators located throughout the house. The steam releases heat into the air, then condenses; gravity sends the water back to the boiler for reheating. In a one-pipe system, the same pipe distributes steam to various radiators and carries the condensate back to the boiler. In a two-pipe system, one pipe supplies the steam, and the other returns the condensate to the boiler.

No matter what type of system, the boiler is the star of the show—a steam-heating system is only as good as its boiler. Luckily, a boiler can last 50 years—even longer given regular maintenance and care. Below are a list of key monthly and yearly maintenance issues—some you should call in a professional for, and others you can do yourself (depending, of course, on your level of comfort with the task). If your home has steam heat, chances are many others in the neighborhood do too, so if you’ve just moved to the area, ask your neighbors about the best boiler service people in town—then keep these five maintenance guidelines in mind:

1. Test the pressure-relief valve every month during the heating season by depressing the handle (located on top of the boiler, this valve allows steam to escape if the pressure in the boiler exceeds a preset safe level). If no steam comes out or the valve does not completely close, call a professional to have the valve replaced. It’s critical that this valve always be functioning properly.

2. Have a professional drain the boiler once a year. (To drain the boiler, a hose is typically attached to the boiler when it’s cold, and water is led into a floor drain, while the boiler’s interior is flushed with fresh water. This is best left to a professional).

3. Make sure the pressure of the boiler is always between two-10 psi. If the steam-pressure gauge indicator on the boiler is not in this range, call for service.

4. Open the boiler’s blowoff valve (at the bottom of the low-water cutoff) once a month when the system is off, to drain out all the sludgy water that could clog the whole system.

5. Open the valves at each end of the boiler’s steam-pressure gauge once a month. The water level should be in the middle of the valve. If water is not visible, shut off the boiler, let it cool, open the fill valve on the water inlet pipe and add water. If your system has an automatic water fill valve, call a service professional.

Finally: While the boiler needs the most maintenance and care, it’s important to keep the radiators in good shape too. In order to retain heat and operate efficiently, most steam pipes are covered with insulation (used as a heat shield, around and under the radiator cover).

Never tamper with this insulation. Visually check the condition of what you can see; if it looks excessively cracked, dry or crumbling, have it serviced or replaced. Never add, remove or change existing insulation yourself, as doing it wrong can present a severe fire hazard; always call a professional. If you’re in the home-buying process: when it’s time for the home-inspection, choose an experienced, professionally trained home inspector who is familiar with steam-heating systems and can accurately evaluate the condition of the existing boiler and radiators.

Charles Furlough is vice president, Pillar To Post Professional Home Inspections.

For more information, visit www.pillartopost.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Garage Fire Safety – Common Sense Minimizes Risk

RISMEDIA, November 24, 2010—For many homeowners, a shiny new car is as integral a part of the home as the roof and the door—and it’s often right next to both. That’s because many people go to great lengths to protect the beloved car from the elements, chief of which is garaging it rather than leaving it out in the driveway. Garaging a car keeps it safe and snug—but, if the garage is attached to the home, some risks ensue. One major risk is fire. Most folks have plenty of combustible material in their garages, from gas and oil cans to cleaning products. Combine this with all the fuel and oil in your car, and one errant leak can ignite a devastating fire.

A less obvious, but just as dangerous, concern is carbon monoxide, which is potentially deadly. (In fact, now is the perfect time to check and make sure you have a CO2 alarm in your home and that it’s working). What makes carbon monoxide so scary is that it’s invisible—odorless, colorless, and tasteless—and it’s in your car’s exhaust. Always keep not only the exterior garage door open, but keep your car door open as well, when starting the car—the goal is to have as much ventilation directly to the outdoors as possible. Also, don’t idle the car in the garage; pull the car out of the garage as quickly as possible after starting the car. It sounds basic, but it’s easy to make mistakes and get distracted as soon as you get in the car.

Luckily, there’s no need to panic over these risks—you can minimize them. Just use common sense, and rest assured that you have a whole bunch of codes on your side. Those codes, and the builders who put them into practice, can help to greatly minimize the risk. Here’s a rundown of U.S. national fire codes for attached garages in single-family homes:

-Half-inch gypsum board is required on the garage side of any walls that the garage and house share, as well as any walls that support a ceiling in the garage that is connected to the house. This gypsum board helps prevent fire from igniting wall studs and quickly spreading to the house.

-Any garage ceilings common to the house must contain fire-resistant 5/8 Type X gypsum board.
-The door from the garage into the house must be fire-resistant; it must either have a 20-minute burn rating or, if not rated, must be solid and 1 3/8 inches thick. Lastly, this door must not open onto a room used for sleeping.
-The garage floor must be non-combustible.
-No supply or return air registers or ducts may be in the garage, under any circumstance. Any duct-work that passes through the garage with no openings (the only kind, as no openings are allowed) must be sealed with fire-stop caulking. The ducting material must be 26-gauge steel.

Note that these are national codes; many local codes, which usurp national codes where applicable, are even more stringent. And if you are worried about remembering the above when buying or selling a home, don’t worry—you don’t have to. Just choose a good home inspector, who will know all the rules regarding garage safety. Your only other job, besides exercising common sense, is to drive carefully and enjoy your new wheels.

Charles Furlough is vice president of Pillar To Post Professional Home Inspections.
For more information, visit www.pillartopost.com.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Cynthia M. Parker earns the coveted CDPE®, Certified Distressed Property Expert Designation

Cynthia M. Parker, Broker Associate with RE/MAX Alliance, has been awarded the coveted CDPE ®  designation.

Cynthia, who has been affiliated with RE/MAX for 4 years and licensed for over 6 years, has been helping buyers and sellers in her community, reach their goals.  "I was helping people make sizable profits during the boom time and I feel an obligation to help distressed homeowners during the toughest times of their lives.  I have been certified in other distressed courses and wanted to take my learning further so I could best be equipped to help.  I believe you have to continuously be educating yourself in order to consult at your highest and best."

The Certified Distressed Property Expert®, or CDPE, designation is one of the premier designations for the REO and default industries.  If you or someone you know are having a difficult time due to their home financing and experiencing economic hardships due to the home mortgage payment, give Cynthia M. Parker a call: 303-563-9700 or email: Cynthia.Parker@Remax.net.

Inspection Objection Deadline

Inspection Objection Deadline is the contractual time line in the Colorado Contract to Buy Sell, in which the buyer has the right to conduct their inspections of the physical condition of the property and inclusions, at Buyer’s expense.   This includes the physical condition of the property, the physical condition of the inclusions, any proposed or existing transportation project, road, street or highway, or any other activity, odor or noise (whether on or off the Property) and its effect or expected effect on the Property or it's occupants is unsatisfactory in Buyer’s subjective discretion.
And yes, subjective discretion means just that.

November 2010 Market Update

Trend:  The general direction followed by a road, river, coastline, or the like.

            Real estate markets and economies are trend oriented.  They have a tendency to follow specific paths.  Sometimes those paths are a gently rolling road merrily going along.  Other times those roads are fraught with hurdles i.e. rock slides, floods, snow storms, etc.  When those occur, it takes time to clean-up the resulting mess.

 

            That’s where the real estate market and economy are today; in a clean-up mode.  Cleaning-up a financial market not fraught with rock slides, etc., but with fraudulent business practices, greed and stupidity.  Many people have suffered.  Others have prospered.  There is always money to be made in difficult times.

            The Federal Reserve has attempted to expedite the clean-up by pumping a gazillion dollars (that’s a lot) into the economy.  All that is left for them to do now is to start giving money away.  I would surmise the “free money” line would be slightly longer than the current unemployment line.

            After the clean-up has occurred, life isn’t the same.  Things have changed.  People’s perceptions have changed.  They have become more astute, more aware and more conscious of the circumstances of their lives.  They are more analytical and patient.  A knee-jerk reaction is no longer their immediate response.  They attempt to think things through more clearly before they make a decision, be it to buy a home, buy a new car or even where to eat dinner.

            In many ways, that is how the Metro Denver real estate market has evolved.  It is a collective group of buyers and sellers attempting to make wise decisions.  Is this the best time to sell my home?  Is this the best time to buy a home?  Will mortgage interest rates continue to improve or will they “trend” up?  These are all legitimate questions.

            Through October, the 2010 Metro Denver real estate market is trailing 2009 in the number of sold listings.  Single family home sales are down about 11.86% (9,226 vs. 10,467).  Attached units are off about 7.39% (3,722 vs. 4,019).  Overall, the single family and attached unit market is down 10.62% year-to-date compared to 2009.

            For October/2010, the number of active listings (single family homes and attached units) was down 6.75% from September figures (8,233 vs. 8,789).  The 2010 year-to-date Absorption Rate for single family homes and attached units dropped from 202 days at the end of September to 193 days at the end of October. 

        

            As we enter the fall i.e. Indian summer and the winter, real estate activity typically begins to wane.  Inventory levels should decrease as sellers decide to take their home off the market for the holiday season and regroup next spring.  Buyers continue to look for bargains, but they have one foot in a hibernation mode.

            There are some positives to consider in the road ahead for the Metro Denver real estate market.  Although the number of sales for 2010 will be down compared to 2009, the Absorption Rate continues to remain relatively stable.   It is possible the real estate market has reached a plateau; the final clean-up is in sight.  That’s not to say there still aren’t some rock slides or snow storms out there waiting to wreak havoc, but the dark days appear to be less frequent as the national and local economies regain their footing.

Around the Home: Energy Saving Tips for Fall

  RISMEDIA, November 13, 2010—(MCT)—As autumn settles in and we set back the clock, rake the leaves and stoke the furnace, we have a lot of assumptions about the most environmentally friendly ways to proceed. But are those assumptions right? We’ve gathered a bushel of answers to some popular, autumn household eco questions. 

Q: What is the most environmentally friendly way to dispose of my leaves?

A: The best option is to leave a coat of leaves on your lawn and chop them up with your lawn mower to create a layer of mulch that will break down and give your lawn nutrients. This is most easily done when the leaves are dry and crunchy rather than when they are thick and soggy.
Place the rest of the chopped leaves around outdoor plants as ground cover and in your compost heap.
Burning leaves creates undesirable emissions, and it’s illegal in most municipalities. Tossing them out in sealed non-biodegradable plastic bags sends them to landfills where they can’t decompose properly and will leak harmful greenhouse gases.
Blowing them around with a leaf blower creates carbon emissions and noise pollution while eating energy and stirring up allergens. A leaf blower can be useful to push foliage to the street or curbside in municipalities that offer street leaf sweeping. A rake also works just fine for this, however. Collected leaves are taken to farms or composting sites, according to local officials.
In municipalities that don’t have leaf-sweeping days, pushing leaves into the street, “can clog the drains in the street creating blockages and other problems,” Chicago Department of Streets and Sanitation spokesman Matt Smith said.

Q: What’s the best way to save electricity on lighting despite fewer hours of daylight?

A: In these darker months the No. 1 thing you can do to save money on your lighting bills, experts say, is switch from incandescent bulbs to compact fluorescent bulbs. CFL bulbs can reduce your lighting energy usage up to 75%. Still, some consumers worry about potential mercury exposure if the bulbs break and are bothered by the harsh white glow of fluorescent bulbs. Some of these concerns are allayed by widely available plastic-coated, shatterproof CFLs and bulbs on the lower end of the lighting spectrum that are designed to mimic the warmer tones of standard incandescent bulbs.
CFL bulbs, however, cannot be thrown out in the regular garbage. Instead, they must be recycled properly through municipal hazardous-waste collection programs or brought to participating stores that offer a recycling program.

Q: I like saving money by cooking cheaper cuts of meat in a slow-cooked stew. Are slow cookers the most energy efficient way to do this?

A: Slow cooker users may assume that because the appliance has a lower wattage (70-250) than a conventional electric oven (roughly 2,000), that they save energy. But Doug Cote (www.stretcher.com), a writer for the “Dollar Stretcher” website, notes that while slow cookers’ heating elements stay on continuously, electric ovens cycle their elements on and off as needed to maintain temperature, often only about one-fourth of the actual cooking time.
Assuming you would use a slow cooker on high for twice as many hours as you would use your electric oven, the energy usage could come out equal. Efficiency can also be affected by the number of other things you can cook simultaneously in your oven, how much heat you lose when you open it and how efficient and well-insulated the oven is. The short answer: there is no clear winner in this fight.
Even more energy efficient for cooking smaller dishes is the toaster oven. And most energy efficient of all, for things that it can cook well, is the microwave.
Still, as online energy adviser Michael Bluejay (aka Mr. Electricity) points out, in terms of preserving money, energy and the environment, what you eat matters much more than how you cook it. Meat and dairy require much more energy to produce than plant-based foods, and switching to a plant-based diet, even once a week, can make a significant impact on your pocketbook, energy usage and carbon footprint.

Q: I love using a fireplace but have heard that you actually lose more heat than you gain. How can I make my fireplace more efficient?

A: While fireplaces can be aesthetically pleasing, they are one of the most inefficient heat sources available, according to the EPA. Because most of your warm air goes up the chimney, experts have typically seen only a 10-20% heat return from wood logs, in the best-case scenario. Burning traditional logs can also greatly diminish indoor air quality with unhealthy gases and particulate matter, even when the fireplace is properly maintained.
Better options: If you choose to build a fire in your home, make sure your fireplace is in good shape and equipped with heat-retaining features (including blowers, intake tubes and radiant grates and inserts). And use fake logs. Now that many artificial logs have gone “green,” turning from petroleum-based binders to vegetable paraffin, they release 75% less carbon monoxide and 80% less particulate matter than real wood, according to the EPA. Plus they burn hotter, giving you a better chance of deriving some heat from them.
If you want to use recycled material, consider buying so-called “java” logs made out of used coffee grounds. Or roll your own logs using old newspapers, a broom handle and some water, as recommended by the EPA. But be sure to first remove glossy inserts that can emit unhealthy fumes.

Q: What’s the best way to stay warm in my house while saving money?

A: Other than closing leaks, changing air filters once a month, insulating well and sealing your doors and windows, the best and most efficient way to stay warm, experts say, is by keeping the heat local. Set your programmable overall thermostat very low—especially at night while you are sleeping and during the day when you are out of the house—and keep your personal space cozy with space heaters, warming bricks, hot water bottles, heating blankets and heated slippers.

That said, space heaters should be used with extreme caution—especially around small children—and you should opt for those with the latest safety features, such as automatic shut-off when they tip. Keep them away from combustible materials and high-traffic areas of your home, and plug them directly into the wall instead of using an extension cord. Oil-fueled radiant heaters are considered to be some of the safest because they never get hot enough to ignite a fire. If used properly, the energy used by space heaters will amount to far less than it would cost to heat an entire home.

This doesn’t mean you should shut off central air registers in certain parts of the house. That can damage your HVAC system by creating too much pressure and overheating your furnace. If you want to close off some rooms, consult a specialist to see what works best for your particular system.
If you think it’s cheaper to maintain a constant temperature rather than letting your house cool when you’re out and then warming it up when you’re home, think again. The U.S. Department of Energy estimates that for every degree you turn down your thermostat for an eight-hour period in the winter, you can expect a correlating percentage of energy savings.

(c) 2010, Chicago Tribune.
Distributed by McClatchy-Tribune Information Services.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Maximizing Space-How Much Do You Really Need?

When planning your home décor, it is vitally important to understand your space needs. Do you have enough room to open any doors? Can you walk from one side of the room to the other without climbing over the furniture? Here are some rules to keep in mind when you plan your room update:
 

1. Living Room – Keep in mind that for good conversational and traffic flow, keep at least 4-10 feet between sofa and chairs. Place your coffee table between 14-18 inches from the sofa (although I would only use 18 inches if you have long arms!).

2. Family Room – To the above rules about sofa and chair placement, add the viewing area needed for a television. To view a 30 inch TV screen, the sofa or chair should be at least 90 inches away (but not so far that you have to change your glasses prescription to view!). To create an easy flow in any room, there should be traffic lanes which are at least three feet wide.  

3. Dining Room - A seated adult at a round or square table usually occupies a depth of about 20 inches with at least 12-16 inches more to pull back a chair. Rectangular tables need at least 24 inches per person and about 32-36 inches clearance between table and walls. On the serving side, the table to wall distance should be at least 44 inches.
 

4. Bedroom – For maximum comfort, the distance from the bed to the wall should be at least 24 inches. To allow any door to open easily, there should be 36 inches between the bed and the door.
 

Knowing how much space you really need in a room can make planning your
space much easier. Be sure to measure your room height and length, the size of
windows and check to see of your room is “true” or square before you place your
furniture. Doing so will help avert a potential disaster like buying a king-size bed
for a queen-size room!

Pamela Cole Harris
http://www.homeandgardenmakeover.com
http://www.diy-homedecor.com.

Renovations Halted by Recession Leave Homes in Limbo

RISMEDIA, November 4, 2010—(MCT)—Ralph and Gloria Dickerson began a $150,000 expansion of their Englewood, N.J., house in 2004. But the work dwindled to a halt several years ago, and foreclosure proceedings were started on the house last year. The property now sits empty, with exposed insulation wrap outside, peeling paint inside and signs on the lawn announcing: “For sale by owner.” When home renovations stall, properties like this turn into white elephants. If they go on the market, their unkempt state scares off many potential buyers. And in the meantime, neighbors fume at the eyesore in their midst.


“Are the neighbors upset? That’s the understatement of the year,” said Charles Klatskin, an industrial real estate broker who lives near the Dickersons’ house, in a neighborhood of large, graceful homes assessed at $1 million and up.

Municipal building codes generally require that home additions and renovations be completed within a certain period, and building officials typically fine homeowners who don’t comply. But enforcement can be tricky.

“How can you make someone spend money on their homes if they don’t have it?” asked Gary Montroy, construction official for Mahwah, N.J. In the most extreme cases, involving safety issues, the town can levy fines of up to $2,000 a day, he said. In one such case, Montroy is dealing with a homeowner who left a big job incomplete—including a pool that is not properly protected by a fence. After several years of fines, the homeowner now owes the town more than $350,000. The house is worth about $800,000, Montroy said. “We sent him violation notices; he ignored them,” Montroy said. “He has financial issues; I understand that. But all he needs to do is put up a chain-link fence. I don’t care about ‘pretty.’ I care about ‘safe.’”

Montroy says that if the homeowner puts up the fence, he will negotiate the fine to a more affordable level—probably around $10,000, he said. If this homeowner doesn’t comply, he said, the town could foreclose on the property to pay the fine, or the Municipal Court could order him jailed.

Some owners try to sell their unfinished homes. But that’s also complicated. Barbara Ostroth of Coldwell Banker in Oradell, N.J., for example, has a listing for a half-renovated house. The owners started an ambitious updating project more than 10 years ago, but the work stalled when the couple split up. Though the house has central air conditioning and three renovated bathrooms, some of the rooms remain stripped to the framework.

Now the three-bedroom house is on the market for $307,000. A contractor estimated completing the job would cost $80,000-$90,000, Ostroth said. “The buyer for this house is not someone who’s in the $300,000-$325,000 price range,” she said. “The buyer is in the upper-300s price range, with the imagination to see how it can be completed. The buyer has to be willing to take that on.”
Some half-finished renovations end up so badly damaged by rain and snow that they can’t be salvaged, building officials say. Beyond that, many buyers just don’t want the trouble of completing a renovation when there are plenty of move-in-ready houses on the market.

“Most buyers do not have the vision to see a partially finished home become a reality,” said Jay Shapiro, an agent with Prominent Properties Sotheby’s International Realty in Tenafly, N.J. He has worked with buyers who considered, and rejected, such homes. “Many buyers today do not have the time, skills or inclination to finish a home on their own,” Shapiro said. “If the buyer is neither a professional nor skilled in home improvement, trying to get the right contractor to price, execute and finish the job both on time and to the buyers’ satisfaction is fraught with danger.”
While these homes wait for a buyer, neighbors can feel exasperated by the lack of progress on the reconstruction. That’s certainly the case near the Dickerson house.
According to public records, the Dickersons got a building permit in June 2004 for a second-story addition, expansion of the kitchen and dining room and addition of a “hearth room” and deck on the first floor. They estimated the cost at $150,000, and started work.

Scott Mager and his wife bought the house next door to the Dickerson house in December 2005, and have seen no progress on the renovation since then. In fact, he said that he got the city to reduce the assessed value of his home, based on the condition of the Dickerson house. His home is currently assessed at $2.4 million, down from $2.5 million in 2009. “The fact that I have this thing next to my house is reducing its value significantly,” said Mager, CEO of a New York building-maintenance company.
The city Building Department has issued violation notices on the property and is continuing to investigate, according to Englewood Mayor Frank Huttle. “These situations shouldn’t arise, but obviously they’re there for a reason; obviously, the property owners must have some issues,” he said. “Action needs to be taken, because the property can’t stay in the state it’s in.”

The house, which is assessed at $1.66 million, was on the market for just under $2.5 million in 2007 and 2008, according to the former listing agent, Mary Lenk of Prominent Properties Sotheby’s International Realty in Alpine, N.J. Its current asking price could not be determined, because calls to the phone number listed on the “for sale by owner” sign were not returned.
Ridgeview Builders of Kearny, N.J., worked on the addition, but owner Jose Abreu said the Dickersons failed to pay all they owed him.

Abreu went to court and got a judgment against them for $13,400 in early 2008, but is not optimistic about his chances of collecting. “It looks like they don’t have anything for us to go after,” he said. His lawyer, James Cleary, said that since the home is in foreclosure, the lender’s claim would come before the builder’s.
The foreclosure proceedings were started in March 2009 by Merrill Lynch Credit Corp., which wrote a $1.2 million mortgage on the property in 2004. The law office representing Merrill Lynch said the case has not been resolved yet.

(c) 2010, North Jersey Media Group Inc.
Distributed by McClatchy-Tribune Information Services.
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Around the Home: Heating Bills Predicted to Rise 2.5 Percent This Winter

By Ruth Mantell
RISMEDIA, October 30, 2010—(MCT)—U.S. households will spend 2.5% more on heating fuels this winter than last year, with fuel prices rising "moderately," even as slightly milder weather is expected, the Energy Information Administration (EIA) said recently. Average household spending for space-heating fuels from Oct. 1 to March 31 is expected to total $986, up $24 from last year. Households heating primarily with natural gas are expected to spend an average of $27 more this winter, up 4%. The gain in spending represents a 6% increase in prices, with a decline of 2% in consumption. Natural gas is the primary heating fuel for about half of U.S. households, the agency said. Meanwhile, households who heat their homes with electricity can expect to spend an average of $18 less, or 2%. The spending decline reflects a 4% dip in consumption, partially offset by 2% growth in prices. Electricity is the second most common heating source and is especially common in the South. Those consumers primarily using heating oil will spend $220 more, a 12% increase, the agency projects. Those heating with propane are expected to spend an average of $136 more, or 8%. Henry Margusity, senior meteorologist for AccuWeather.com, said overall temperatures are projected to be milder from about Dec. 1 to March 31. "It's going to add up more on the mild side, which is good news for consumers," Margusity said. "There won't be a big, deep freeze over the country for an extended period of time. We are probably not going to see weeks of brutally cold weather." On a regional basis, temperature projections vary widely, EIA noted. The Northeast is projected to be 5% colder than last year, but the South is expected to be 15% warmer. (c) 2010, MarketWatch.com Inc. Distributed by McClatchy-Tribune Information Services.  RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

6 Reasons Why It's Smart to Buy a Vacation Rental Home Now

RISMEDIA, October 23, 2010—Lately, you've been thinking a lot about investing strategies. You have a small nest egg that needs to grow, but frankly you don't trust the stock market. And while real estate has been somewhat of a rocky road in recent years, it's still a solid long-term investment strategy—and clearly we're in a buyer's market. But you aren't really interested in being a landlord. So what can you do?

Christine Karpinski has a suggestion: Purchase a vacation home and rent it out to travelers.

"Vacation homes are almost always a good investment," says Karpinski, director of Owner Community for HomeAway—one of the world's leading vacation rental marketplaces—and author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment.

"First, if you're looking for a good long-term investment, real estate tends to be a good bet," she adds. "Second, vacation properties have the ability to pay for themselves, and owners often earn a profit in rental income. Third, the investment comes with the desirable perk of having a place at the beach or in the mountains to call your own. And finally, there has never been a better time to buy a vacation home—it's like the planets have all lined up perfectly."

If you are interested in purchasing a vacation home, Karpinski describes why there's never been a better time to go vacation rental house hunting:

There have never been so many properties on the market. For potential home buyers, there is a silver lining to the slow economy and the housing crisis: Most vacation markets are chock-full of buying opportunities. Once you've pinpointed the vacation rental market that is right for you—The coast? The mountains? A ski resort area?—you will likely have a lot of properties to choose from.

Prices aren't going to get much better. In fact, they're the lowest they've been in five to ten years. If you're pretty sure you want to buy a vacation home "someday," you might want to quit procrastinating and pull the trigger, says Karpinski.

Interest rates are very favorable for purchasing. Today, mortgage interest rates are low. Bottom line: Take advantage of them while they last.

You have access to the best real estate professionals. Anyone connected to the housing market who managed to survive the housing crash had to be at the top of his or her game. That means the agents left standing today—including the ones you'll be working with in your search for the perfect vacation home—are possibly the best of the best.

It's never been easier to rent your vacation home. As mentioned earlier, vacation home rentals have never been more popular. More and more consumers are choosing to stay in cozy condos, cabins, and chalets instead of cramped, impersonal hotel rooms when they travel. And as market demand has surged, organizations have sprung up to help connect vacation homeowners with these potential renters.

If you buy now, you can be ready for the 2011 peak season. It's true that the longer you wait to buy, the likelier it is that interest rates could rise. But there's another reason not to procrastinate: If you buy now, you'll have time to get your property ready for peak rental season. Experienced vacation homeowners often find that the rental fees generated during the twelve weeks between Memorial Day and Labor Day pay their mortgages for an entire year—and most inquiries come in between January and March.

"Even turnkey properties aren't really turnkey," notes Karpinski. "To get your property up to your standards, there will very likely be things you will want to spruce up. Rooms might need repainting. Decorating will need to be done. And the yard might need some work. Buying now will provide you with a cushion of time to get the home ready for your guests, take great photos for your property listing, and start marketing it to potential renters."

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Single-Family Housing Starts Rise 4.4 Percent in September 2010

RISMEDIA, October 21, 2010—Nationwide housing starts edged up 0.3% to a seasonally adjusted annual rate of 610,000 units in September, due entirely to a 4.4% gain in the single-family sector, according to U.S. Commerce Department figures.

"Builders are cautiously responding to the small improvement they are seeing in interest among potential home buyers," noted Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "However, as consumer demand for new homes rises, a major limiting factor for a housing recovery continues to be builders' inability to access credit for new construction."

"Today's numbers are in line with our latest builder surveys, which indicate that stability is slowly returning to the new-homes market following the declines we saw upon expiration of the home buyer tax credits and the slowing of economic growth this summer," added NAHB Chief Economist David Crowe. "Builders are receiving more inquiries from potential customers and are carefully responding to renewed consumer interest, although their limited access to credit for new housing production is definitely hampering this process."

All of the increase in housing production in September was due to improvement on the single-family side, which posted a 4.4% gain to a seasonally adjusted annual rate of 452,000 units—the strongest level since May of this year. Multifamily starts, which tend to exhibit greater volatility on a month-to-month basis, recorded a 9.7% decline to a 158,000-unit rate following a big increase in August.

On a regional basis, starts activity was mixed, with two regions posting gains and two posting declines for September. The Northeast and South registered gains of 2.9% and 4.8%, respectively, while the Midwest and West registered declines of 8.2% and 3.6%, respectively.

Permit issuance, which can be an indicator of future building activity, declined 5.5% to a seasonally adjusted annual rate of 539,000 units in September. This dip was due entirely to a 20.2% decline to a 134,000-unit rate on the more volatile multifamily side, while single-family permits remained virtually unchanged, edging up 0.5% to a 405,000-unit rate.

Regionally, permits fell across the board in September, with the Northeast posting a 1.5% decline, the Midwest a 4.3% decline, the South a 4.7% decline, and the West a 10.6% decline.

For more information, visit www.nahb.org.

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Alternative Earnest Money Deadline

In the Colorado Contract to Buy Sell, the Alternative Earnest Money Deadline is the time that you have to deliver Earnest Money, to the Seller, Seller's Agent, of Title Company.  In order to have a "contract", consideration has to be rendered.  Earnest Money is that consideration.  Allowing for a contingent delivery date of earnest money (the consideration), enables the buyers and sellers to deliver contracts via electronic deliver and still have an enforceable contract. 

October Economic Snapshot

Over the course of the past eighteen months, the Federal Government implemented the Homeowner Tax Credit Program. The Federal Reserve lowered the Federal Funds Rate for member banks to borrow funds to nearly zero percent. Home mortgage interest rates have fallen to the lowest level in more than fifty years. Now, members of the banking industry are taking a sabbatical by not foreclosing on homes. All of these factors were/are designed to stabilize and stimulate the housing industry. Despite all these efforts, the housing market continues to quietly drift along.


There have been spurts of activity. The Metro Denver real estate market was UP in sales activity at the end of June/2010 as compared to the end of June/2009 for attached units (+16%) and UP for single family homes (+8%). But those numbers have dropped since the Homeowner Tax Credit Program ended in late April/2010. Through September/2010, single family home sales are down about 5% Y.T.D. compared to Y.T.D. 2009; and down around 4% for attached units. Thus, the Metro Denver real estate market hasn’t sustained itself.

One of the best indicators of real estate market activity is the time it takes for the market to absorb itself. A healthy real estate market is thought to be around six months of available inventory. That time frame provides buyers with an adequate selection of homes and sellers with a reasonable amount of time to sell. The current “absorption rate” for the Metro Denver real estate market stands at approximately 198 days. The absorption rate in September/2009 was at 154 days. As we enter the fall and winter, the absorption rate should be around the same level as inventory levels and sales dwindle.

The question now becomes, “What’s next?” What magic elixir can the Federal Government and banking community pull from their proverbial hat? The answer isn’t putting more lipstick on the pig, because you still have a pig. The answer always comes back to one four-letter word; the word that drives the economy and fosters the housing industry. That word is “jobs”. Jobs are the Holy Grail; the path to redemption; the pot of gold at the end of the rainbow. Without them, you have a stagnant economy, which naturally leads to a declining housing market.

Bank of America Moratorium to End in State Soon

InsideRealEstateNews- October 18, 2010-Bank of America has begun processing foreclosures in 23 states, but Colorado is not one of them.

“Colorado is one the 27 states,” in which the foreclosure moratorium is still in effect, BofA spokeswoman Jumana Bauwens told InsideRealEstateNews today in an e-mail. However, the moratorium in Colorado likely will not be in effect much longer. ”We have no specific date yet, but likely (it will end) in the next few weeks,” Bauwens added, regarding resuming foreclosures in Colorado.

 BofA halted foreclosure actions in all 50 states on Oct. 8, in the wake of allegations that foreclosure applications by it and other banks were not handled properly. One problem was the wide-use of “robo signers,” that automatically signed documents, instead of properly reviewing them.

 BofA, in a press release released on Monday, said that that it has reviewed its process for resubmitting “foreclosure affidavits in the 23 judicial states with key stakeholders, including our largest investors. Accordingly, Bank of America today began the process of preparing foreclosure affidavits for submission in 102,000 foreclosure actions in which judgment is pending.”
 Colorado, unlike the majority of states, exclusively uses the public trustee system for processing foreclosures, as opposed to a court system.

 State by state review

 Next Monday, BofA anticipates “affidavits will be resubmitted to the courts. Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states. We will continue to delay foreclosure sales in the remaining 27 states until our review is complete on a state by state basis. We anticipate over the course of this pause, less than 30,000 foreclosure sales will have been delayed. As was the case for our judicial state review, our initial assessment findings show the basis for our foreclosure decisions is accurate. Our decision to review our process and later, to extend our review to all 50 states, has been an important step to give customers confidence they are being treated fairly.”

 In the Denver area, there are only 415 homeowners with BofA loans facing foreclosure, according to an analysis by SKLD Information Systems. A poll on InsideRealEstateNews found that those who voted were about equally divided on whether BofA made the correct decision by temporarily halting foreclosure actions. Some experts feel that it only delayed the inevitable, threatens to worsen the foreclosure crisis, is is a slippery ethical slope, as it not fair to owners still making their mortgage payments, and it was a politically motivated decision. Others, however, believe that banks that helped to create the collapse of the housing market by making irresponsible loans, must follow the letter of the law when undertaking something as serious as foreclosing on a home. Also, some argue that a moratorium on foreclosures will give banks and borrowers more time to find an alternative to returning their home to the lender.

 Contact John Rebchook at JRCHOOK@gmail.com.

What Foreclosure Freeze Means for First-Time and Move-Up Buyers

RISMEDIA, October 14, 2010—Thousands of first-time and move-up buyers who hoped to make a foreclosed property their new home now face uncertainty, anxiety and possibly remorse as they worry that closing on their desired property could be in jeopardy. For many, the dream of homeownership could turn into agony if their home purchase is indefinitely delayed by a moratorium on foreclosures declared by some banks, the National Association of Realtors said. The moratoriums are needed, banks say, to review all of the foreclosures in their portfolios to make sure they’re in compliance with the law and that titles are clear.

NAR warned that a prolonged review process would have a damaging impact on many communities and hinder the nation’s economic recovery.

“As the leading advocate for homeownership issues, we understand that many lenders need a time-out to review their actions to ensure that homeowners are not improperly foreclosed on and that the lenders are following regulations and state laws. After that, the foreclosure process must resume quickly to return stability to families, the housing market and the economy,” said NAR President Vicki Cox Golder.

Over the past few months, NAR has met with officials of top banks to discuss market issues. NAR urged banking leaders to seek resolution quickly through loan modifications and the short sale process rather than through foreclosure. “We stand ready to help lenders develop better short sale procedures,” Golder said.

“There are valid foreclosures that should move ahead quickly, and we shouldn’t lump them in with mortgages that are suspect. That would cause deep problems in an already fragile market and throw many families into uncertainty,” Golder said.

Golder said that she is receiving reports from Realtors that the moratorium is already creating some anxiety among purchasers as transactions are being delayed and that some foreclosure listings are being removed from the market.

Compounding the problem is that the requirements for foreclosure vary by state, and practices to meet these requirements vary by firm. NAR is working with regulators, such as the Federal Housing Finance Agency; and encouraging them to identify and quickly address process problems.

In a letter to the U.S Treasury Department, the U.S. Department of Housing and Urban Development, and the Federal Housing Finance Agency, NAR stated the hope that banks would complete their foreclosure review expeditiously to assure that the rights of borrowers are protected and remove doubt that buyers will receive clear title to their purchase.

“NAR has long urged the lending industry to take every feasible action to keep families in their homes with a loan modification and, if that is not possible, to give them a ‘graceful exit’ through a short sale. These options are far better than a foreclosure, and nothing has driven this point home more clearly than the questions being raised about foreclosures. Lenders should place additional resources into processing loan modifications and short sales,” NAR wrote.

A year ago, NAR instituted a special short sale training program for its Realtor members to work more closely with banks in expediting mortgages at risk by resolving them through short sales and loan modifications. More than 51,000 Realtors have been certified in the program.

For more information, visit www.realtor.org.

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Homeowners Insurance: Winter Prep to Keep Costs Down

RISMEDIA, October 11, 2010—Fall is the perfect time for homeowners to ensure their house is prepared for winter weather. A home should be winterized so it will be able to sustain damage severe weather may bring for those living in these climates. Additionally, if a house is winterized and damages do occur, the homeowners insurance policy will cover the house against the weather damage. HomeownersInsurance.net offers advice so people can prepare for winter weather and help avoid potential costly issues.

Homeowners must first inspect their house thoroughly so that possible issues can be avoided. The most important interior areas are the furnace and fireplace. HVAC professionals can inspect the furnace and clean out the ducts. Furnace filters should be replaced on a monthly basis to keep ducts clean.

Any flammable materials around the furnace should be removed.

If there is a hot-water radiator, the valves need to be opened slightly to bleed. When water is seen, they can be closed. If propane is used in the home, the tank will need to be filled. These should all be inspected to be sure they are working properly.

If there is a fireplace in the house, the screen or cap on the top of the chimney should be secure to keep out any birds, squirrels or rodents. The chimney should be cleaned by a professional occasionally because buildup of soot can cause fires. The damper should open and close properly and the mortar between the bricks should not be cracked. Any cracks should be fixed so heat does not seep into areas it should not be in, creating a fire hazard.

The next step in preparing for winter for safety and insurance purposes is to examine the exterior. Damage may not be evident immediately during winter months, and may only be noticed with the first spring rain. The doors and windows should be checked for cracks, and then fixed. If the homeowner has a basement, shields can be placed over the window wells for protection from snow melt. Any worn shingles or roof tiles should be replaced so melted snow does not seep into weak areas. Gutters and downspouts should also be unclogged and leaf guards should be installed.

Debris should then be cleared from the foundation to look for further cracks to repair.

For more information visit www.homeownersinsurance.net.

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Will Foreclosure Freezes Fix the Housing Market?

RISMEDIA, October 6, 2010—(CBS MoneyWatch)—On Friday, Bank of America announced that it would suspend foreclosures in 23 states while it amended filed paperwork. That makes B of A the third major bank in two weeks to put its foreclosure process in limbo. Two days earlier J.P. Morgan Chase announced it would freeze foreclosures on more than 50,000 homes currently in receipt of a foreclosure filing. Last week, Ally Financial Inc. (the former GMAC Mortgage) also froze foreclosures.
 All three banks have admitted to problems in the processing of foreclosures, including the use of so-called “robo-signatures,” employees who job it is to solely sign foreclosure docs without reviewing the paperwork.

Today, Ohio’s Secretary of State Jennifer Brunner asked federal prosecutors to investigate foreclosure irregularities in her state. Ohio has been pushing lenders to do better. On September 17, Ohio Attorney General Richard Cordray announced that the state court had affirmed its case and legal strategy of holding loan servicers accountable in the foreclosure crisis.
So will Chase’s and Ally’s foreclosure freeze ultimately fix the housing market? That’s one theory put forth in today’s New York Times. But, I’m not so sure. What will happen in the short run is that all of the banks will put a moratorium on the foreclosures. Law firms that have become foreclosures processing machines in places like Florida, will have a lot of extra time on their hands.
 I suppose, in the best of all worlds, slowing down or freezing foreclosures might actually force lenders to take a harder look at ways they might keep folks in their homes, like doing more loan modifications. That would reduce the so-called “shadow inventory” and keep housing values from crashing again.

Again, that’s the best possible scenario. I think it’s too soon to tell. And, there’s a lot that’s going wrong with the economy right now (jobs, anyone?) which could complicate the view in any rose-colored glasses.
 Right now, those who have Chase and GMAC on the top of their loans are getting a reprieve.
 Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and The Equifax Personal Finance Blog, and is Chief Content Strategist at RealtyJoin.com, a community for real estate investors.
 RISMedia welcomes your comments and questions. Email realestatemagazinefeedback@rismedia.com.

The Short Sales Pipeline: What’s Being Done to Get Them to the Table

RISMEDIA, October 2, 2010—(MCT)—Despite industry and government efforts to make short sales—transactions in which the lender agrees to accept less than the mortgage amount owed by the homeowner—easier and more quickly accomplished, improvements are coming up, well, short. In some cases, the difference between the two numbers is being forgiven by the mortgage lender. In others, the homeowner must arrange with the lender to settle the rest of the debt.

Theoretically, short sales are less costly to a lender than foreclosures. There are fewer legal costs involved, for example. But the chief attraction of a short sale is that there is a buyer for the house, while a foreclosed property can sit in a lender’s portfolio for months.

That’s why the Obama administration in March appended short sales to its efforts to reduce foreclosures for homeowners who fail to make the grade for the federal Home Affordable Modification Program.

The new program, known as Home Affordable Foreclosure Alternative, is set to end December 31, 2012. Under its terms, a lender must offer a short sale in writing to a borrower within 30 days after the borrower is either ruled ineligible for mortgage modification or has been deemed unable to sustain payments in a trial plan.

Lenders are offered incentives for each completed sale. So far, the results have been less than definitive.

“We haven’t heard of any noticeable shifts” in the process that would indicate an improvement, said National Association of Realtors spokesman Walt Molony.

Anecdotally, the association has received fewer complaints about delays, he said, but there are no data to back that up.

Twenty-three percent of residential property owners nationally are “underwater” on their mortgages—that is, they owe more than their homes are now worth, according to CoreLogic Inc., of Santa Ana, Calif., which tracks foreclosure information.

For such homeowners, a short sale can also be the best option, real estate experts say, because it may not hurt their credit history as much as a foreclosure would.
As a result, the homeowner may be able to qualify for another mortgage sooner once they get back on their feet financially.

Yet real estate agents continue to have problems getting short sales through the pipeline.

Carolyn Sabatelli, an agent in Media, Pa., with 37 years’ experience, said she had so much trouble bringing short sales to the settlement table, she thought she was doing something wrong. Then she attended a short-sale seminar sponsored by Wells Fargo & Co., “and after listening to the complaints of about 200 agents, I realized that it was not me, but the system.” Recently, Sabatelli said, she wrote a $299,000 offer from a qualified buyer for a $289,000 short sale. The lender rejected it.

Difficulties aside, short sales can be great opportunities, said real estate agent Cheryl Miller. “Listings have to be priced attractively in order to generate activity; otherwise, buyers pass over them,” said Miller.

Even as short sales continue to lag, the number of agents with special credentials for handling such transactions is building.

“There’s been a rapid growth in the number of Realtors with the ‘Short Sales and Foreclosures Resource’ certification,” Molony said.

Though the certification was launched at the Realtors association’s November convention, by the end of February, 20,000 members had received it, he said.

By August 31, he added, that number exceeded 50,000, making it the “fastest-growing and most popular NAR certification.”

(c) 2010, The Philadelphia Inquirer.

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