Here we go again.

Tuesday, September 23rd, 2008 | Investment, Money, Real Estate, The Economy | No Comments

As Congress sits around throwing accusations, people are being hurt. The only thing that I see that could be worse is that Congress does something about the economy. I was watching our Phoenix market begin the turn around. Sales were increasing, inventories were beginning to decline and BOOM! The rug gets pulled out from the buyer’s plans with the dramatic changes in seller participation.

The lower priced properties are the most important sector of the housing market. Putting people in properties with monthly payments at or below rent payments is a winning program. The average rent in Phoenix is over $800 per month. Moving into a $100,000 home makes both social and economical sense. But NO! These folks must have at least $3,500 additional money sitting in the bank for 90 days or borrowing only from family members. Remember, there are significant costs involved with moving in.

This change is only putting a band-aid where there is no cut. The band-aid is cutting off economic blood flow to the real estate market body. Of course Congress could do much more to really trash the economy. There were four significant economic downturns between 1890 – 1929. The downturns rebounded quickly and the country was stronger. In the early 1930s, Congress did the opposite of what should have been done, And the whole world felt the pain. We could still be in that depression if we hadn’t put our men to work on the battlefield. War is definitely the worst way to manage economic down turns.

Let’s put the seller and other assistance programs back in our real estate market.

Tags: economic, Phoenix housing market, Phoenix housing. real estate investing

The short sale is anything but short!

Wednesday, September 17th, 2008 | Money, Real Estate, The Economy | No Comments

The news is reporting home values have declined by 27%. This number changes from month to month, but regardless of the percentage, in almost every neighborhood, Home values are below the high spike of 2006. For you who expect to live in your homes for at least five more years, this housing price fluctuation has very little to do with your life. For those who want to purchase a home, it is almost like after Christmas shopping. Unfortunately many folks who must sell their homes are SOL. Many of these folks have mortgages that are higher than the present value of the home. One way out while avoiding foreclosure is a “Short-Sale’”

I have really been discouraged with the short sale process. (Selling a home below the mortgage value) It seems like lenders are unwilling to do what is necessary to get a sale done. Many banks seem to think it a privilege to buy their vacant home and expect a buyer to wait for months for a decision. I can’t remember any of my real estate associates ever describing an easy short sale. Many short sales take months to complete with special bank generated forms and endless attempts to contact a decision maker. It is not uncommon for me to send 5 copies of personal information in a purchase contract to a bank fax or email before the banks admit they received one contract. What are these folks doing with all this personal information? And after doing 5 – 10 times the work of a normal sale, the bank expects me to cut my commissions.

The people hurt the most are never considered during all this ineptitude. A seller is not considered. Now everyone seems to think the seller just shouldn’t have purchased the property. The bankers are the real experts. They have whole departments with educated staff to evaluation properties on a professional level. The seller, it seems to me, trusted the lender to some extent. Now, he is upside down, looking at having to carry FORECLOSURE on his record. I would have expected that the lender and seller would try to partnership to minimize the loss to both. Unfortunately, it appears that redundant processes and understaffed departments slow the sale process which creates more loss for everyone.

While a file is gathering dust on a desk, the home owner’s life becomes uncertain. Some of these folks live in this home and don’t know when they can leave. Some are investors (considered a dirty word by the politically correct) who are watching their entire life savings dwindle away with an upside down situation.

The buyers are no better off. Imagine if you are trying to purchase your first home. You have a lease that ends in 45 days. What are you supposed to do?  Sit on the street with all your posession until someone finally decides to look at your offer?

Only a banker, a government bureaucrat, or someone in Congress could design a system this bad!

Tags: mortgage, Phoenix mortgages, short sale