John Beckett's Real Estate Blog

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If you’re considering selling your home, there are a number of factors you should consider regarding the resale value of your property. Some of these issues may devalue your home or scare some potential buyers away entirely, even if your home is an otherwise outstanding property! Consider these eight factors when listing your home.

1. Location, Location, Location
Many real estate television shows repeat this phrase over and over. Buying a home in an area that provides residents with access to services and effective transportation is important – though many buyers don’t wish to live too close to airports and busy roads for fear of noise.

Visual appeal is another concern. Cell phone towers and power lines can be seen as eyesores – or possibly even having potential health hazards. Local school closures can also deter potential buyers who have children or who are considering having children in the near future. Some buyers may be leery of purchasing homes that are on flood plains.

To ensure maximum resale potential, consider how many of these types of issues exist near the properties you’re considering. Remember, though, there’s no way of knowing exactly how a neighborhood will evolve over time.

2. Good Renovations Gone Bad
If your home looks like a DIY nightmare, this can definitely devalue your home. Though putting money into renovations generally increases the value of a home, poorly done renovations can have the opposite effect. If buyers feel that the renovations will have to be redone, there’s a good chance they’ll make a lower offer or keep looking for a move-in ready home.

3. Overly Creative Customization
That bright pink feature wall might have seemed like a good idea at the time, but the truth is that unusual paint choices – both inside and outside the home – can turn buyers off, even if your customization is the cutting edge trend in current home design magazines. Customizing spaces so that they may not be functional to future buyers, like turning the garage into a home gym or a granny apartment, might make some buyers reluctant to buy your property.

The same can be said for unique landscaping choices or renovations that are too high scale for the house. A professional chef’s kitchen or marble bathrooms in a modest home suited to first-time buyers won’t likely provide a good return on investment.

4. Unappealing Curb Appeal
The first thing potential buyers will see is the exterior of the property. If the house appears to be outdated or in poor repair on the outside, people will assume it is the same for the inside. Water features or swimming pools and overly landscaped green space may turn off some buyers since people tend to associate high maintenance yards with expensive upkeep and unnecessary headaches. Old fences and sheds can also devalue your home, especially if they look like they’re in dire need of replacement. Keep the gardens weeded and the lawn mowed so that potential buyers can see how nice the property is, inside and out.

5. Pets Gone Wild
Many people won’t mind buying a home that has had resident animals, but no one wants to live with constant reminders of former owners’ pets. Damage to carpets, walls or a strong smell of animals will put off some buyers – especially those with allergies. Consider letting your pets live elsewhere while the property is for sale. Also, a good cleaning and repairing of any visible damage will help to mitigate the potential devaluation of your home associated with pet ownership.

6. Not-So-Nice Neighborhood
A dodgy neighborhood with a high crime rate or homes on your block that look unkempt can scare potential buyers away. Even if your neighbors have unusual-colored homes or have made strange additions to their homes, this can be perceived by potential buyers as an eyesore.

7. Sinister Reputation
Well-known crimes, deaths or even urban legends associated with your house or neighborhood can decrease the value of a home immensely. Most people don’t want to live in a home where they feel that something awful has happened, much less move in with your alleged resident ghost! Though these kinds of issues may be out of your control, they may certainly have an impact on the resale value of your home.

8. Frightful Foreclosures
Many buyers are leery of purchasing foreclosures that are being sold on an “as-is” basis. The fear is that the home could be a money pit or require a huge amount of repairs before being move-in ready. Some good homes may be available through foreclosures, but it’s important to do your research, ask lots of questions and don’t be afraid to bargain. It’s also crucial that you get a home inspection so that you know exactly what you’re getting into. There’s a good chance that some work will be required when buying a foreclosure, but you may get great value for your money if you’re willing to put in a little work.

The Bottom Line
Neighborhoods change over time, so there’s no way to be totally sure when you buy a property how the area will look in the years to come. However, you should always make your best efforts to address any issues with your property that are within your control. Play up your home’s strong points and get involved with your realtor to ensure that any special features of your home and neighborhood have been highlighted.

Read at:  http://financiallyfit.yahoo.com/finance/article-112746-9669-2-8-factors-that-devalue-a-home?ywaad=ad0035&nc

Many people have either gone through foreclosure, a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership of the property, or know someone who has. RealtyTrac released its U.S. Foreclosure Market Report on April 15 for the first quarter of 2010. The report calculates foreclosure filings, including default notices, scheduled auctions and bank repossessions, and showed that 932,234 properties were involved in the first quarter. That was a 7% increase from the last quarter of 2009 and a 16% increase from the first quarter of 2009. An astonishing one in every 138 U.S. housing units received a foreclosure filing during the quarter. If you or a loved one are facing foreclosure, make sure you understand the process. While it varies from state to state, there are normally six phases of a foreclosure.

Phase 1: Payment default

A payment default occurs when a borrower has missed at least one mortgage payment. The lender will send a missed-payment notice indicating that it has not yet received that month’s payment. Typically, mortgage payments are due on the first day of each month, and many lenders offer a grace period until the 15th. After that, the lender may charge a late-payment fee and send the missed payment notice. After two payments are missed, the lender may send a “demand letter.” This is more serious than a missed-payment notice; however, at this point the lender is probably still willing to work with the borrower to make arrangements for catching up on payments. The borrower would normally have to remit the late payments within 30 days of receiving the letter.

Phase 2: Notice of default (NOD)
A notice of default is sent after 90 days of missed payments. In some states, the notice is placed prominently on the home. At this point, the loan will be handed over to the lender’s foreclosure department in the same county where the property is located. The borrower is informed that the notice will be recorded. The lender will typically give the borrower another 90 days to settle the payments and reinstate the loan. This is referred to as the reinstatement period.

Phase 3: Notice of trustee’s sale
If the loan has not been brought up-to-date within the 90 days after the notice of default, a notice of trustee’s sale will be recorded in the county where the property is located. The lender must also publish a notice in the local newspaper for three weeks indicating that the property will be available at public auction. All owners’ names will be printed in the notice and in the newspaper, along with a legal description of the property, the property address and when and where the sale will take place.

Phase 4: Trustee’s sale
The property is placed for public auction and will be awarded to the highest bidder who meets all of the necessary requirements. The lender, or firm representing the lender, will calculate an opening bid based on the value of the outstanding loan, any liens and unpaid taxes, and any costs associated with the sale. Once the highest bidder has been confirmed and the trustee’s sale is completed, a “trustee’s deed upon sale” will be provided to the winning bidder. The property is then owned by the purchaser, who is entitled to immediate possession.

Phase 5: Real-estate owned (REO)

If the property is not sold during the public auction, the lender will become the owner and will attempt to sell the property on its own, through a broker or with the assistance of an REO asset manager. These properties are often referred to as “bank-owned.” The lender may remove some of the liens and other expenses in an attempt to make the property more attractive.

Phase 6: Eviction
The borrower can often stay in the home until it has been sold either through a public auction or later as an REO property. At this point, an eviction notice is sent demanding that any people vacate the premises immediately. Several days may be provided to allow the occupants sufficient time to remove any personal belongings, and then typically the local sheriff will visit the property and remove the people and any remaining belongings. Belongings may be placed in storage and retrieved later for a fee.

The bottom line
Throughout the foreclosure process, many lenders will attempt to make arrangements for the borrower to get caught up on the loan and avoid a foreclosure. The obvious problem is that when a borrower cannot meet one payment, it becomes increasingly difficult to catch up on multiple payments. If there is a chance that you can catch up on payments — for instance, you just started a new job after a period of unemployment — it is worth speaking with your lender. If a foreclosure is unavoidable, knowing what to expect throughout the process can help prepare you.

Read at: http://realestate.msn.com/article.aspx?cp-documentid=24721210

The nation’s housing inventory is cluttered with foreclosures, short sales and homebuilders willing to make a deal. If you’re in the market to buy a home today, you’re likely weighing the benefits of each type of property available for purchase. Don’t be fooled. Not all bank-owned foreclosures are sold at deep discounts. Not all builders are slashing prices. Short sales can be a crapshoot, with some buyers enduring months of waiting and still not getting the property. All things considered, it’s possible that your best deal is purchasing a traditionally sold existing home, so don’t count those out of the running. To get the most for your money, it’s important to understand the local market’s inventory; market dynamics will have a lot to do with how various types of homes are priced. Also, do some soul-searching to determine how much risk you’re willing to take and the amount of time and money you’re willing to invest in a home.

Bank-owned properties

Foreclosures reclaimed by the bank, often called bank-owned properties, are often sold at a discount. However, the size of the discount depends on the market you’re in. A recent report from Zillow.com found that the typical discount for bank-owned properties, compared with a traditionally sold home, averaged 20% to 30%. According to separate data from RealtyTrac, an online marketplace of foreclosure properties, the average discount on bank-owned properties was 34% in the first quarter. There is more than one reason why the selling price of a foreclosure is lower than a traditional home. The seller is typically a bank, and would like to move (the property) off the books as quickly as possible. A traditional seller is interested in getting a certain price and is willing to stay in the market. Also, the condition of the home can be an issue. A buyer who wasn’t able to make mortgage payments also probably wasn’t able to keep up with needed maintenance. One of the biggest mistakes homebuyers make when buying a foreclosure is underestimating how much it’s going to cost to repair it. It usually costs a lot more than you think, you can add value to a property by rehabbing it, but probably not more than the cost you put into it. For the lower price, buyers also need to accept that they’re most likely purchasing a home that has been sitting vacant, which comes with its own set of issues because small problems — a leak, for example — can become big ones if no one is there to notice them. These homes also may have limited seller disclosures, because the owner — the lender — hasn’t been living in the home and thus has less information to disclose. Home inspections are generally recommended regardless of what type of property you’re buying, and they’re essential in the case of a bank-owned property. Location matters, too, in the pricing of a bank-owned foreclosure. In places with the highest incidence of foreclosure, bank-owned properties garnered the smallest discounts, compared with traditionally sold existing homes. The places that did not have very many foreclosures right now had large discounts. Another way to look at it: A homeowner aiming to sell his home in a market where a large percentage of sales are foreclosures will likely have to price it like a foreclosure just to be competitive.

Short sales

Short sales offer some of the best deals. A short sale is when the seller owes more on the mortgage than the home is worth, and the lender agrees to accept less for the property to make a sale. But even if you save money on a short sale, you could pay in other ways. Although lenders and government programs are trying to speed up the process required to complete a short sale, a buyer could still wait months just to find out he or she failed to get the home. The home is discounted partly because of the uncertainty that the buyer experiences. You need to understand there’s a reason why they’re less money — you have to play the game, you have to be patient. The market generally discounts short sales by 5% to 8%, compared with traditional sales.

New homes

In many markets, the supply of new-home inventory is dwindling. That has caused pricing in the new-home market to stabilize. That is, fewer bargains may be available for new-home buyers. There is less flexibility on the builders’ side to negotiate prices, plus with supply more in control, there’s not as much urgency to drop prices to move the homes that are currently sitting on the market. Buyers typically pay a 20% premium for a new home, compared with a traditional (nondistressed) existing home, but that also varies by location. That isn’t to say builders won’t find other ways to make a deal. They’re still willing to throw in incentives, like finished basements, as a way to sell a home. But if you’re looking to get the lowest price on a home, this might not be the best route. And if there are distressed sales in new communities you’re considering, proceed with caution. A lot of foreclosures in the area will drive down the prices of nonforeclosure homes, and that can extend to new-home inventory. It’s not impossible to find foreclosures and vacant properties in communities that aren’t even finished yet.

Read at: http://realestate.msn.com/article.aspx?cp-documentid=24884570

Americans who are brave enough to buy a home despite persistent predictions of a double dip in housing may want to contact the federal government, as the recession and financial crisis have turned Uncle Sam into one of the largest owners of real estate in the United States.

Rising foreclosures

The housing bust has led to an unprecedented number of foreclosures in the U.S. In May, 322,920 foreclosure notices were filed against homeowners, and more than 3 million homes have been seized over the last five years from delinquent borrowers. While most homebuyers may assume that banks are the only source of foreclosures, the U.S. government also owns many residential properties because of its role in buying and guaranteeing mortgages. Many of these properties are held because of the conservatorship established in 2008 over the government-sponsored enterprises popularly known as Freddie Mac and Fannie Mae.

Freddie Mac

The Federal Home Loan Corp., or Freddie Mac, owned approximately 45,000 multifamily and single-family homes at the end of 2009. The company put a gross value on these properties of $5.13 billion. Freddie Mac obtained these properties by being the highest bidder at foreclosure auctions when the properties were used as collateral for loans owned by the company, or when owners just transferred the property to Freddie Mac without going through foreclosure. Freddie Mac is furiously attempting to dispose of these homes, and has been fairly successful; the company’s average holding period for real estate is less than one year. The company markets the homes through HomeSteps, where buyers can search by state and city.

Fannie Mae

The Federal National Mortgage Association, or Fannie Mae, is also a large owner of foreclosed property. The company owned more than 86,000 single-family homes at the end of 2009, with a value of $8.5 billion. These homes are concentrated in states that were ground zero of the housing bust, with 28% of its inventory in California, Nevada, Arizona and Florida. Fannie Mae also markets these homes intensively, and sold 123,000 in 2009. The company’s official website to sell homes is called HomePath, where buyers can look up inventory near their location.

Other agencies

Another source of homes owned by the government is the Department of Housing and Urban Development. HUD obtains its properties through foreclosure auctions on Federal Housing Administration-insured loans. HUD has a website at hud.gov/homes. Next up is the Federal Deposit Insurance Corp., which owns its inventory through its role in seizing failed banks. The FDIC owns single-family homes but also has a large number of other properties, including industrial and commercial properties and raw land. The Veterans Affairs Department and the Agriculture Department also play roles in financing and guaranteeing home loans, so both own single-family home and other properties. Buyers can look for their dream home through these agencies as well.

Buyer beware

Buyers shopping for homes from the government should be aware of the disadvantages of the process.  Many agencies offer properties “as is,” with no warranties on their condition. There is also little flexibility on negotiating the terms of the contract if the government accepts your offer. Fannie Mae, for example, does not accept offers for houses that are contingent on a buyer selling a currently owned home.

Read at: http://realestate.msn.com/article.aspx?cp-documentid=24796144

Homebuyers and sellers who expect an appraisal to sail through to closing without a hitch may be surprised to discover that home appraisals today can be problematic. The reasons for the change are complex, but there’s no question that mortgage lenders have started to demand more reviews and do-overs. Rob Johnson, vice president of lending at San Diego Funding, a mortgage company in San Diego, attributes the increase in home appraisal reviews to lender-specific requirements imposed because of past problems with certain types of home loans. For example, a mortgage lender might demand more scrutiny of an appraisal if the borrower has a marginal credit score or high debt level relative to income or if the property was a foreclosure that was fixed up and flipped by an investor.

Appraisals may lag home prices

Home prices are also a factor. When prices are on the rise, perhaps because buyers have bid more in a multiple-offer situation, appraised values might still be lower. The reverse is also the case. “Any time you have a market in transition, appraisals aren’t going to keep up because the appraisal is based on historical data,” Johnson says. nadequate “comps” can present problems as well. (“Comps” are recent sales of nearby homes that are similar, or comparable, to the home that’s the subject of the appraisal.) The mortgage lender may deem the comps inadequate if the homes were too far away or were sold in such nontraditional circumstances as a short sale or foreclosure or if the sales occurred too long ago. If the comps aren’t sufficient, the lender may order a review or second home appraisal to verify that they were chosen correctly. “If (the appraiser) can’t find three comps within that area and has to expand, that is where you start to get appraisal reviews or secondary appraisal requirements to make sure the appraisal was valid or that (the lender) was comfortable,” Johnson says. The term “second appraisal” generally refers to a new, start-from-scratch valuation. An appraisal review could be a “desk review,” in which the appraisal gets a second look by an office-bound person, or a “field review,” in which the appraisal is subject to another drive-by or in-person inspection of the property. A review is more common than a second appraisal.

New guidelines distance lenders from appraisers

Leslie Sellers, president of the Appraisal Institute in Chicago, says a lender might order a new home appraisal if the first one was based on factual errors or the appraiser wasn’t competent in the area. Some second appraisals, he adds, result from a misunderstanding of the Home Valuation Code of Conduct, guidelines that were meant to prevent undue pressure being placed on appraisers to inflate home valuations, but that may have caused some lenders to cut off communication with appraisers. “The banks are thinking they can’t even talk to the appraiser,” he says.

Sellers can offer comps to appraiser

An appraisal review can cost several hundred dollars while a second appraisal generally involves a second full fee, says Sara Schwarzentraub, owner of Inter-State Appraisal Service in San Diego. These costs usually are paid by the buyer. “It’s commendable that the lenders are being cautious and having stricter criteria to protect themselves, because in the long term that protects everybody, but it does make it more costly,” she says. Home sellers can offer the appraiser information that might affect the appraiser’s opinion of the home’s value. This information is best handed over before the appraisal is prepared. “If you know of a sale that’s similar to your house and it was a foreclosure, short sale, divorce or anything of that nature, make the appraiser aware of that,” Sellers says. Real-estate brokers can help buyers and sellers find comps to offer the appraiser, Johnson says. If the broker believes comps may present a problem, the buyer and seller can plan accordingly. “A good real-estate agent is aware of these issues. Many times, an agent will call us and say, ‘I know we are going to have problems with comps on this,” he says. Neither the buyer nor seller can choose the appraiser, but Sellers says buyers can insist on a minimum competency, which he defines as having local market knowledge and being certified as well as licensed. Buyers and sellers also can agree on longer time frames for the home appraisal contingency and closing date. Schwarzentraub says that asking for a 45- or 60-day closing, rather than 30 days, is not unreasonable. Buyers are entitled by federal law to a copy of any appraisal for which they’ve paid a fee. Buyers should look over the appraisal and notify the lender of any errors that could have affected the appraiser’s opinion of the home’s value.

Read at: http://realestate.msn.com/article.aspx?cp-documentid=24569959