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Foreclosure Increases Led by Just Four States and that’s Great News!

Published on June 30, 2008 in Uncategorized. 0 Comments

The Mortgage Bankers Association (MBA) recently released a Press Release showing the figures for foreclosures across the continental USA were the highest in the organization’s 55-year-long history of carrying out surveys.

The delinquency survey which the MBA carries out covers more than 44 million mortgages and it showed that the previous highest percentage of defaulting home owners recorded was in 2006 and it was 0.43%. This has now risen to 0.58% of all loans made.

Small as the percentage may be it shows that more than 286,000 loans entered the foreclosure process during the quarter in question.

You will ask me here, ok, where’s the good news? Well, gloomy as the figures may be they are actually pretty good because of all the States surveyed they all showed a decline in the overall number of foreclosures with the exception of states of California, Florida, Nevada and Arizona. In these four States foreclosures actually increased and they increased by a number large enough to actually make up for the dip in the other thirty-four States surveyed.

This means two things: 1. The dip in real estate is about to plateau and then we will see a steady incline as we head for the next growth period. 2. The increase in foreclosures in those four States is also a direct reflection of the robust real estate market they had there and the fact that they simply had more people than any other State buy their own home and borrow money to do it.

There is clear correlation on this: According to the MBA report California has 17% of the sub-prime ARMs in the country and more than 19% of the foreclosure starts on sub-prime ARMs. California, Florida, Nevada and Arizona have more than one-third of the country’s sub-prime ARMs and more than one-third of the foreclosure starts on sub-prime ARMs.

What is probably happening is that we now are beginning to enter the phase where the number of foreclosures is reaching a plateau prior to the market picking up and the four States in question are still locked in the shake up that releases new properties into the market and corrects house prices through the foreclosure mechanism.

The million dollar question is, of course, just how close are we to the end of the real estate market’s woes. Hard to tell. There are still figures coming through which may represent the tail end of foreclosures but that tail end could be both quiet substantial and prolonged. There are other factors affecting foreclosures and defaulting such as the ability to create new jobs in the economy and if that shrinks it affects home owners.

Overall we can see there is now light at the end of the tunnel and that is great news indeed. What we are not sure of yet is how long the tunnel is.

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The Foreclosure System Creates New Opportunities

Published on June 27, 2008 in Uncategorized. 0 Comments

If you are looking at the country’s latest real estate news and are wondering whether the bottom has fallen out of the real estate market and it’s maybe time you looked for something else to invest your money in, don’t!

The phrase “safe as houses” did not originate casually. Real estate has always been a great area to invest and though the market has suffered from occasional peaks and troughs these are an inevitable part of the progression rather than evidence that real estate is beginning to lose its glow as a great area to make money.

We are, at the moment, locked into a cycle of foreclosures which has grabbed newspaper headlines eager to catch on anything that will sell copies and it has resulted in a short-sighted feeding frenzy of negative publicity.

Now, this is not to say that an increase in foreclosures is good news. No. Foreclosures are problematic and they are accompanied by a certain amount of heartache and discomfort. They are, also, a vital part of the way our economic system works and act as a self-correcting mechanism which slows down and overheated market and returns balance to house prices.

Without foreclosures the following things would happen: 1. New house buyers would be squeezed out of the market as house prices would rise and rise. New house buyers are part of what drives the housing market so when they are squeezed out of the system it is never a good thing. 2. House buyers would be locked within their particular income bracket in terms of the house they could buy and they would never be able to move out of it. 3. Real estate investors would be unable to step in and jump-start a sluggish economy as there would be no opportunities.

Luckily, the way our economy is structured we have the foreclosure system which acts as a type of gear that allows us to shift down and speed up so we can scale up instead of getting locked in a one-speed market that is destined to run out of fuel.

Foreclosures present the smart real estate investor with the perfect opportunity to create win-win situations where he helps out homeowners stuck in a debt-trap, offers properties to new home owners at prices that allow them to get their foot on the property ladder at a much better level than they would otherwise have been able to afford.

In the process, real estate investors also benefit which is also a good thing for the economy at large. None of this would have been possible without the foreclosure system we have set up as a means of maintaining a balance in our economy.

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Five potential home re-sale problems

Published on June 26, 2008 in Uncategorized. 0 Comments

There are far too many factors that can influence your decision when you select a home to buy where you and your family can reside securely and in comfort. However, at some later stage in you life, you may want to resell your home. Most people would expect minimum 4% annual appreciation on the original price they paid to buy the house. Towards this end, you will have to undertake all minor repairs, anticipate and keep ready answers to all possible sales objections that your prospective buyers may raise. The price your home will fetch is related to its marketability. If your home has all the merits the buyers expect, then it will be the most sought-after home by all buyers, and, needless to say, your home will sell at the highest possible price in the market. Here are 5 potential re-sale problems:

The first likely problem may pertain to the site. There may be certain peculiar restrictions such as neighbors may have to trespass into your property, house expansion may not be feasible, major pipelines are running underground etc. .Inadequate outer space can be a serious problem, particularly if your home has much less yard area than other homes in the neighborhood. Prospective buyers will in all probability shy away.

The second problem may be with regard to the location. Homes located in remote or less developed areas and homes that are situated opposite office buildings or retail centers are less fancied by buyers. Buyers looking for family peace and domestic comfort want homes away from commercial areas. If your home has no direct street frontage or there is a building or some other construction in front of your home. It is a positive disadvantage. Intending buyers will certainly be put off. The general reaction by buyers to high tension wires crossing near you home is to summarily reject the house. Most prospective buyers will simply drive away if the approach road is steep. They would obviously want to choose an area that is elitist and reflect pride in ownership. There could be security problems in your area - drug dealers, thefts, and other safety aspects which will make your home not saleable.

The third problem, though seemingly peculiar but quite common, is whether your home has been in the market for sale for a long time. Is it because the price simply set too high or is there a problem with the house that is difficult to correct? A house can remain unsold in the market for a long time if lots of houses in the area are available for sale. This may simply be a supply and demand issue.

The fourth problem may be with regard to amenities. Poor water drainage may prove to be a serious problem. Talk with an expert about improving the drainage around the house, and evaluate any previous damage caused by flooding or rain water entering the house. There could be structural defects like loose fill on the lot, clay soil, drainage issues, or poor construction. Excessive remarks noted on your inspection report will indicate that your house was not maintained properly or was it was poorly constructed. Previous history of large insurance claims can pose a serious problem as there may be difficulty in obtaining insurance on the home.

The fifth likely problem may arise if the home that have excess acreage as most people feel safer buying one of the cheaper houses in the neighborhood instead paying for unwanted additional land. Badly designed floor plans that make living in the home uncomfortable will turn away buyers. Rooms that are disproportionate in size, poor access to the backyard, low ceilings, fewer windows, less ventilation and other layout issues will result in a re-sale problem.

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Foreclosures Revitalise Sluggish U.S. Economy

Published on June 25, 2008 in Uncategorized. 0 Comments

There are many reasons why foreclosures are opportunities for everyone if handled correctly. We are, currently, in the midst of a property market correction which has seen a reduction in available credit, more difficult financing and an increase in foreclosures as banks and financial institutions call in mortgages which have fallen behind in their payments and try to minimize their exposure.

Without a doubt on the face of it none of this looks great for our economy but before we leap into superficial opinions let’s look at the facts by dissecting the process of a foreclosure and what happens the moment a real estate investor acquires a house.

A property will not even be considered for foreclosure unless its owner has missed at least four monthly payments, sometimes more. The moment a property comes up as a foreclosure prospect its owner has become unable to keep it. He cannot service his debt and he cannot maintain the property. The bank or lender is not getting paid, the local economy is not benefiting, local house prices in the immediate vicinity begin to become affected by a property that’s failing to maintain the standards. The City may put fines which start to accrue on a daily basis because regulations are being broken. The property, in other words has become financially gridlocked and, in terms of what it does to its immediate micro-economy, has become a black hole.

This is exactly the process that a foreclosure stops and reverses. The moment a foreclosure comes into play a property that has been gridlocked and has been sucking money out of the economy, begins to pump money back in again. For a start the Real Estate Investor will pump money immediately into the system as they do the appraisal for the property, complete their due diligence and set up advertising and publicity.

Even if, at this stage, he sells the property without lifting another finger or doing anything else he will have sold it to someone who is prepared to do it up which means more money going into the economy in terms of DIY and upgrading of the house.

The Real Estate investor will have made money which is taxable and certainly he will need to spend some in order to maintain his lifestyle and office. If he is really successful he might expand which means hiring more staff decreasing unemployment and enabling more people to have jobs, benefiting them and the local economy.

The chain goes on and on and the more you analyze it the more clearer it becomes that foreclosures are part of our financial system for a very good reason. Without them property, money and jobs would be trapped, unable to escape from the downward spiral of depreciation and recession they would find themselves locked in.

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Why some houses do not sell?

Published on June 25, 2008 in Uncategorized. 0 Comments

Selling a house can prove a daunting task unless you are familiar with the things that need to be done before letting people know your house is for sale. There is no magic formula to sell the house and you need to do careful planning and meticulously spruce up your home.

Despite best efforts, some houses do not sell and there must be certain valid reasons for this. Of course real estate agents will tell you that there is buyer for every home. The one most likely reason is your expectations are unreasonable and the house is overpriced. All prospective house buyers know the market value of a house and will simply turn away if you quote anything exorbitant. So, the right thing to do is to lower the price after studying the market conditions and knowing what prices houses in the neighborhood are fetching.

Most real estate agents, real estate investors and prospective buyers will see your listing within 30 days and the first thing they notice is the expected price. Even if the indicated price is marginally more, they will lose interest and will not pursue further. Some real agents also play tricks that delay the sale. Sometimes, they are the ones who ask you to inflate the sale price. They generally use the over-priced properties to sell their own listed properties.

Another reason for delay in selling your house may be because the house was ill-maintained. Remove all personal photographs from the walls and all personal collections from the showcases. Prospective buyers are not interested to see your possessions but imagine their own photos on the walls and their own belongings all over the house. People have a habit of collecting huge piles of junk which is an eyesore to any visitor. Get rid of all the junk or donate them if they are still useful. Make sure the kitchen and toilets are particularly neat and .clean. All prospective buyers have a tendency to open and view kitchen and bathrooms. If a buyer finds everything organized, he will believe you would have taken good care of the house all along. Carry out all minor repairs lest the buyer lest these things distract a buyer into changing his decision. Remove all unwanted furniture that blocks free passage when the buyer comes to inspect the house. Mow the lawn and keep the sidewalks clean as the first impression a buyer gets is the best impression.

The location and neighborhood of you house are of paramount importance. The buyer will obviously expect schools, shopping, hospital, and other similar facilities near the house. If your house is not in a proper locality, you can not be blamed.
All you can do is to extend some concession in price or offer seller financing or a lease option with rent credit.

Another key factor is engaging the right kind of real estate agent. The wrong type of agent will encourage you to overprice your home, fail to screen for potential buyers, not responding to interest from other agents. If your agent is apathetic, other agents may not share their prospective buyers list.
Computers and the Internet have dramatically changed the real estate marketing scenario. According to the National Association of Realtors, more than one-third of all home buyers use the Internet for deciding their purchase. Your agent will have to do your listing in color to show to clients and communicate with clients through emails.

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Foreclosures Have Led to Tighter Lending by Mortgage Companies

Published on June 24, 2008 in Uncategorized. 0 Comments

The number of foreclosures coming into the U.S. market have led to a large number of defaulting borrowers and a credit crunch which has made it harder for new borrowers to borrow more money. Read at face value these are all signs of an economy about to go into a tailspin, but is it really like that?

In real estate nothing ever occurs in a vacuum and this case is absolutely no exception. There is always a knock-on effect on things which means that no bad situation can lead to a worse one without also sowing the seeds for its own improvement. While this may sound, at first, paradoxical, it is actually very logical.

Let’s examine the current state of the foreclosure market. Home owners are defaulting and, as a result, foreclosures are coming to the market at auctions and then, if they fail to sell, become the property of the bank which will try to dispose of them in a variety of different ways in order to reclaim at least some of its money.

The banks and the lending institutions are, at the same time, tightening up on lending, which has led, according to the latest figures released by Experian, the credit check company, to up to half of all credit card applications being refused and more than a 20% increase in rejections in mortgage applications.

Now you will ask how is it possible to view the increase in foreclosures and the fiscal crunch as a positive thing and the answer has to lie in our examination of the effects. While, for instance credit rejections have risen, there is still a sizeable majority getting through and these represent low-risk, rock-solid borrowers who will go ahead and purchase a home they can afford to repay.

By the same token, the increase in foreclosures is fuelling movement and interest in the driving engine of the real estate market: the new home buyers and real estate investors looking for value homes which will appreciate in price.

So, while the credit crunch is forcing a tightening of the market it is also creating the conditions which will help it grow again. More and more of the borrowers approved have the credit necessary to support the backbone of the market, and with an influx of homes being sold off at below market rates there should, in future, be enough low priced homes appreciating in value to lead to a further jump in equity and create the buzz which is needed to sustain interest and momentum in a market.

And all this because right now we are facing both a credit crunch and an increase in foreclosures. The real estate market is ran along the lines of a very organic model and by the looks of it, it is pretty robust.

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