Our Federal Government is pondering many ideas to assist in the recovery of our economy. Their main focus today is on the revival of the housing market and helping people who are in danger of losing their homes. As so often happens, however, one good thing leads to one ridiculous thing.

Our government is currently planning to assist homeowners who meet specific requirements for this federal aide. In order to qualify for this special program, a homeowner must be 90 days delinquent on a home that is their primary residence. In addition, the homeowner must owe at least 90% or more of the home’s current value. Income qualifications must also be met. Your mortgage must be guaranteed or owned by the agencies Freddie Mac and Fannie Mae or be held by a participating loan group.

The advantages extended to this specific group of people are, if they can document their income, that they will be eligible for reduced monthly mortgage payments, including property taxes, association dues and insurance. They will also be eligible for lower interest rates. There are several ways in which this can be accomplished, but they all result in a great advantage to the homeowner.

Now, for the negative side of this offer by our government. Homeowners who have been faithfully struggling to make their mortgage payments are now seeing how foolish they have been. Assuming they meet the other requirements, all they have to do to benefit from our new policy is to not make their mortgage payments for the next three months. Isn’t this wonderful? We are instituting a policy that encourages responsible people to forego making their payments so they will qualify for government relief and lower interest rates, longer payment periods, etc. What is our government thinking in encouraging people to become irresponsible so that they can benefit from government relief? The reward may be even greater than we realize. When these people receive reduced interest payments, the money never has to be repaid. Who wouldn’t stop making their mortgage payments if this was the reward?

]]> http://www.real-estatethoughts.com/2008/12/26/does-this-make-any-sense/feed/ http://www.real-estatethoughts.com/2008/12/17/homes-for-sale-during-the-holidays/ http://www.real-estatethoughts.com/2008/12/17/homes-for-sale-during-the-holidays/#comments Wed, 17 Dec 2008 18:50:47 +0000 admin http://www.real-estatethoughts.com/?p=47

If you have been trying to sell your home for sometime, you will probably not want to take it off the market for the holiday season. This is an especially difficult time to sell as people often have holiday plans on their minds, rather than home viewing. Serious buyers, however, must continue to search as they are generally dealing with a specific time limit.

Decorations will most likely compliment the house as long as they are not overdone. Be careful to decorate tastefully, but consider cutting back on what you might ordinarily do. Choose garland, candles, white lights, etc. rather than singing Santas and dancing snowmen.

Speak with your agent and be certain he is providing motivated buyers, such as families who are relocating and must find a home. Review your pricing with him to be sure that the home is priced right for the current market.

Curb appeal is generally less in the winter, so make an effort to have everything clean and as pleasing as possible. Show potential buyers a very nice photo of the home during the spring or summer when all is in bloom.

Verify that your agent has a video tour of your home on the web. This is a wonderful tool for those relocating, as they can choose and eliminate many homes prior to visiting the area.

Work at making your home especially warm and cozy during the holidays. When showing the house, consider soft classical music in the background, turning up the heat or turning on the fireplace, and providing homemade seasonal snacks.

The news on home values has been consistently bad for almost two years.  Articles are written about the price of homes on a daily basis and everyone has to have been exposed to these facts.  Yet, somehow, homeowners who have decided to sell their homes, continue to believe that all of those facts do not refer to their home.  They actually believe that their home has retained its’ value and, in some cases, they feel that their homes have actually increased in worth over this period of time.

Real estate professionals are consistently reporting how difficult it is to get sellers to understand today’s market and the current value of homes.  They continue to believe that they know the true worth of their home and expect it to be listed at that price.  When all arguments fail, the listing agent generally goes ahead and lists the price that the homeowner wants.  The house, of course, sits on the market without a potential buyer.

One realtor reported on a customer who fought her about the price.  It took Comparative Market Analysis figures, an appraisal, and a great deal of persuasion to get the homeowner to realize that his price was not in line with today’s values.  They wanted their home listed at $525,000 and it recently sold, after only two weeks on the market, for $380,000.  This is an extremely large drop in price but it is happening everywhere.  Of course, the upside of this situation is that they will get a lot more home for their money today when they go to purchase another home.  The only ones who truly are benefiting from the current housing market are the first-time homebuyers if they can obtain the necessary financing.

As strange as it may seem, having a lovely home in a great location that is priced right does not necessarily translate to a quick sale for the owner. The missing link is that, if high speed internet is not available in the area, many people will not even consider purchasing the home. A number of people have sold their home in one area and moved further away from work and school just to be certain that they would have access to high speed internet.

Of course, the only person who can truly understand this is someone who has lived with dial-up for many years and knows the frustrations it can bring. However, many of those who already have high speed access do realize that they would never want to revert back to dial-up, so they, too, would not consider a home that did not have availability to good internet service.

The real estate market has reached the point where areas with faster service become the ideal “location”, and those with slower service move down on the list of favorites. Location used to be determined by such factors as school district ratings, easy access to work, beautiful neighborhoods, and proximity to family. Today, however, you must add to that list high speed internet access. It is a requirement for many and may just be moving up to the top of the list for prime locations.

A new coat of paint can make a large difference in the appearance.

Be sure that all counters are clear of clutter and consider installing some useful storage options.

Think about new lighting for dark corner areas.

Attractive window treatments can greatly improve the appeal of the room.

Remove all personal clutter and invest in a few new decorative items.

When you are ready to put the house on the market, or are looking for a new home for yourself, consider these suggestions:

Understand your local market so that you can be certain your home, or the one you are considering purchasing, is priced right.

Look for cosmetic repairs and do the work yourself to save money.

Be aware of which features will help sell a home quickly.

Do not procrastinate if a quick sale meets your needs.

When considering a purchase, be sure you have a realistic budget in place.

Order a professional inspection of the property being considered and be well aware of your financing options.

In today’s market environment, it has become much more imperative that the market analysis be based on very recent sales.  Because the market has rapidly decreased in value, only sales information for the past 90 days is considered acceptable by banks and mortgage companies considering the financing of a property.  In the past, comparative pricing from the past year was more than acceptable.  The current market fluctuation has determined that this information must be much more current so that it reflects an accurate picture of the market in that specific area as it is today. 

One of the current issues is that, if a person signs a contract for a piece of property and then has an appraiser value the property, a much lower appraisal will cause the buyer to request a lower price, even after the contract has been signed.  This is happening on a regular basis and home values are decreasing because of it.

CMA’s have long been a tool used to evaluate the current value of a property.  Only today have the restrictions become so rigid, requiring that the sale used for comparison be very current.  In some cases, appraisers are coaxing real estate agents to give them sales prices that have not yet been recorded so that they can include them in their CMA’s.

We’ve been hearing for years about employees who show many symptoms of illness while at the office, but feel just fine soon after they leave the building.  No, they are not allergic to their jobs.  Many, however, are getting ill from their working environment.  Buildings containing mold, emitting chemicals from carpeting and paints, and those that have poor ventilation systems are often known as “sick buildings”.  Unfortunately, it is very difficult to prove that your building is making you sick, so many employees suffer in silence so they can retain their positions.

Even though these illnesses are often valid, they are generally met with suspicion.  It should be within your rights to ask that the building be tested for air quality if you find you are only sick while in this building.  Consider trying to work from another location if possible to test if the problems still exist. 

An employee who associates illness with their job performance is likely to have lower morale which will eventually lead to higher turnovers of employees.  It is in the employer’s best interest to resolve the issue so that employees will again be motivated to work at maximum efficiency.    

Mostly available to people 62 and older, reverse mortgages allow homeowners to convert the equity they have in their home into cash.  Rather than making mortgage payments to the bank each month, the reverse is taking place.  The bank sends money to the homeowner.  There is a choice of a lump sum, a line of credit, or monthly payments.  When the homeowner dies, moves, or sells the home, the loan is due and payable.  If in some cases the sales price is less than the balance, the homeowner is not required to supply the difference. 

Limits in the past have ranged from $200,000 to $362,790, but the new law has increased the limit to $417,000.  The age of the homeowner is a factor in how much can be borrowed.

In the past, an origination fee of 2% was charged.  Under the new law, however, origination fees will be calculated at 2% of the first $200,000 and 1% on the rest up to a cap of $6,000.  There are additional fees involved in obtaining this type of mortgage and costs can run as high as 10% of the home’s value.  If a person is planning to move within a short period of time, a reverse mortgage would not be right for them.  However, if a homeowner is committed to remaining in their home forever, this could be an excellent opportunity for them to live more comfortably. 

There are many ways to reduce energy costs. The following could well result in possibly a 30% reduction in your heating and cooling costs so it is definitely worthwhile considering these suggestions:

An HVAC system that is older than 10 years is probably not running very efficiently. You should consider updating to a more energy-efficient current unit.

Insulation should always be checked and added at the beginning of the fall season.

Be sure that you have closed off the space between the foundation and cladding. Many overlook this area and it has the potential to be very costly.

Confirm that you have vapor barriers underneath the crawl space and over insulation in the attic.

If you have old and poor fitting windows and doors, consider replacing them with today’s energy efficient products. If this expense is not realistic right now, consider sealing up all of the gaps with caulk and hanging very heavy insulated curtains or window shades as a temporary solution.

Check for drafts by electrical switches and outlets and use additional insulation if necessary to prevent cold air from entering the room.

Check weather stripping and replace any caulking that is no longer providing the required seal.

Consider Energy Star appliances if you can possibly afford to replace the existing ones. If this is not feasible, be certain that you only wash full loads of dishes and clothing.

Replace air filters regularly as dirty filters will cut down on efficiency.

Consider investing in a programmable thermostat which will automatically set the proper temperature and eliminate waste.