Jason Stuyvesant – Des Moines, IA Realtor

Another great article from Trulia for home buyers. This one is a list of the 10 most common documents you will need to buy a home. Starting to look into buying? Give me a call and we can find your dream house!

10 Pieces of Paper You Must Round Up to Buy (or Sell) a Home

Home buyers and -sellers alike often bristle with anticipatory irritation at the mere thought of all the paperwork they expect they’ll have to come up with to do their transaction, above and beyond the basic loan application, contract, disclosures and closing docs. And these worries start way in advance; it’s as though, before they even start visiting open houses, buyers begin to visualize – and dread – spending hours upon hours in the dank catacombs of the Vatican (à la Da Vinci Code) combing through ancient files, seeking some rare and precious artifact documenting their childhood dental history or genealogy.

In some respects, this vision of the experience of obtaining a home loan might not be far off – there are oodles of hoops through which to jump and, occasionally, the loan underwriter requests something sort of bizarre. But more commonly, there’s a pretty finite universe of documents you’ll really need to scrounge up to get your home bought – or sold. Here they are:

1. ID (e.g., driver’s license, state-issued ID, passport). Who must produce it? Buyers and sellers. Why? Uh, hello!?! Lender wants to know that you are who you say you are, buyers, and the title insurance company wants to make sure, sellers, that you actually have the right to sell the home. Funny enough, this commonly goes unrequested until you get to the closing table, when the notary requests to see it before signing, but some mortgage brokers and even some real estate brokers and agents may ask to see it earlier on.

2. Paycheck Stubs. Who must produce it? Any buyer financing their purchase with a mortgage. Sellers, usually only in the case of a short sale. Why? Buyers’ purchase price ranges are determined, in part, by their income. And short sellers have to prove an economic hardship.

3. Two months’ bank account statements. Who must produce it? Buyers getting financing; sellers selling short. Why? Buyers’ lenders now require proof of regular income and proof that the down payment money is your own. Short sellers? It’s all about the hardship.

4. Two years’ W-2 forms or tax returns. Who must produce it? Mortgage-seeking buyers and short selling sellers. Why? Banks want to see a stable, long-term income. They also limit you to claiming as income the amount on which you pay taxes (attn: all business owners!). And in short sales, again, they want documentation of every single facet of your finances.

5. Updated everything. Who must produce it? Buyer/mortgage applicants. Why? Because things change, and because the time period between the first loan application and closing can be many months – even years! – on today’s market. During the time between contract and closing it’s not at all unusual for underwriters to demand buyers produce updated mortgage statements, checks stubs, and such – and its quite common for them to call your office the day before closing to request a last minute verification of employment!

6. Quitclaim deed. Who must produce it? Married buyers purchasing homes they plan to own as separate property. Married sellers selling homes that they own separately, or joint owners selling their interests separately. Why? With the Quitclaim Deed, the other spouse or owner signs any and all interests they even might have had in the property over the the selling owner, making it possible for the title insurer to guarantee clear, undisputed title is being transferred in the sale.

7. Divorce decree. Who must produce it? Buyers and sellers who need to document their solo status or the property-splitting terms of their divorce. Why? Again, to ensure that the seller has the right to sell. Recently single buyers might need to prove that they shouldn’t be held to account for their ex’s separate debts or credit report dings.

8. Gift letters. Who must produce it? Buyers using gift money toward their down payment. Why? The bank wants to be sure the gift came from a relative, and is their own money to give. They also want the relative to confirm in writing that it’s a gift, not a loan – a loan would need to be factored into your debt load.

9. Compliance certificates. Who must produce it? Usually sellers, but sometimes buyers, by contract. Why? Some local governments require various condition requirements be met before the property is transferred, like some cities which require a sewer line be video scoped and repaired, cities which require a checklist of items be met before a certificate of occupancy be issued (usually relevant to brand new and really old homes, the latter of which are often subject to lead paint concerns) and energy conservation ordinances which require low-flow toilets and shower heads to be installed. Ask your real estate pro for advice about which, if any, such ordinances apply in your area.

10. Mortgage statements. Who must produce it? Any seller with a mortgage. Why? the escrow holder or title company will need to use them to order payoff demands from any mortgage holder who has to get paid before the property’s title can be transferred.

My focus in real estate is residential sales but I found this a very interesting read on commercial real estate and how it helps create jobs.

Commercial Real Estate: A Prime Driver of Job Creation

By Jed Smith, Managing Director, Quantitative Research

As the U.S. economy recovers from the Great Recession, the major issue continues to be the need for more jobs. Commercial real estate generates a significant number of jobs—both from new construction and from ongoing building operations. NAR projects a recovery in the commercial sector in the 2011/2012 time frame. That recovery could ultimately provide an additional 800,000 new construction jobs, plus additional operating jobs servicing the expanding building stock.

The commercial real estate sector has been estimated to total 78.8 billion square feet of space in 2010. The sector consists of a variety of building types including office, retail, and warehouse space in addition to public assembly, educational, medical and other facilities. The five major types of commercial space–office, mercantile, education, and warehouse, and lodging—account for 53 billion of the 78 billion square feet of commercial space.

In the past few years the commercial sector – like the rest of the economy – felt the impact of the Great Recession. New commercial construction was down by 43 percent between July 2008 and January 2011. Sales of existing properties were down by approximately 80 percent between 2007 and 2010, and prices for existing commercial space declined by approximately 40 percent amid rising vacancies and declining rents. As part of the Great Recession, commercial sector vacancy rates increased between 2007 and 2010, accompanied by a decline in commercial construction. The value of new commercial construction put in place (on a 12-month basis) fell from a high of $356 billion in July 2008 to $203 billion in January 2011.

The Commercial Sector—New Construction, Existing Buildings and Jobs
The Bureau of Labor Statistics’ Establishment Survey provides information on construction employment generated by the commercial building sector. A total of 2.623 million jobs were available in January 2011 in construction and specialty trades, down from 3.445 million in March 2008. This employment should return once the economy recovers to its previous commercial expansion rate.

In addition to employment associated with construction of new space, the commercial sector also generates a significant number of jobs from building operations. The Institute of Real Estate Management (IREM, an NAR affiliate) collects data on building income and expenses for a variety of types of commercial buildings. This annual research effort encompasses approximately 10,000 projects and five types of buildings. A variety of standard expense categories are available, and the results can be used to benchmark building performance. Data are available at the national level, regional level, and for selected MSAs. There are five major reports: Conventional Apartments, Shopping Centers, Federally Assisted Apartments, Office Buildings, and Condominiums.

The IREM publications summarize operating expenses by type of expenses, with building types further broken out in terms of a variety of classifications, e.g., downtown/suburban, by age group, by rental ranges, by building types, by region, and by Metropolitan Area in some cases as well as at the national level. The IREM data are useful to building managers in assessing their building specific costs in comparison to an approximate peer group of similar buildings, permitting the evaluation of operations.

Data from IREM and other sources were used to estimate the number of jobs generated by day-to-day commercial building operations. The estimates were rough approximations, based on a variety of assumptions and national level data including building type, building condition (e.g., Class A, B, or C), location, and a myriad of other factors that affect employment requirements and operations expenditures.

Based on a requirement of approximately 51 operations/maintenance/management jobs per million square feet, for the five types of major buildings one can estimate a total of 2.7 million jobs.
Alternatively, based on average operations expenses of $6 per square foot (a number based on my understanding of the commercial sector in addition to IREM information), for the 53 billion square feet of major commercial space, one can estimate total operating expenditures of $320 billion. Allowing for a per employee cost of $100,000 yields an estimate of 3.2 million jobs.
Other types of commercial space will generate additional jobs, but probably at a significantly lower rate due to the nature of the space. Regardless of assumptions, however, it is clear that commercial space is a major driver of job creation — not surprising given the expanding services job sector of the economy. Commercial space is the “factory” for the services-oriented part of the economy.

Conclusions
Commercial real estate is a major job driver—both in terms of new construction and in terms of ongoing operations. It is also a sector in which jobs should come back relatively quickly once the economic recovery is in full swing. Many of the jobs are skilled operational jobs or require managerial and technical skills—not the “low-paying” much talked about in the media.

NAR currently has over 80,000 members focused on commercial real estate, and there are millions of additional jobs in the construction and operation of commercial buildings. The sector is expected to lag a residential recovery by approximately one year, given that economic recovery and job creation precede commercial real estate needs.

The National Association of Home Buyers recently stated that they feel the recovery of the housing sector will be fueled by young home buyers. Given the trends I see in the market I tend to agree. It seems a large majority of home buyers are first time buyers who are buying their first home. I think a lot of this has to do with the inventory of homes for sale on the market. People in older generations typically have a home to sell first and thus are not buying at as frequently as younger buyers. Have questions on this story or other housing matters? I would love to discuss. Give me a call today!

Original Article

RISMEDIA, March 21, 2011—Generation X—young families and adults ages 31 to 45—are likely to lead the home-buying recovery as it gets underway, according to real estate experts who spoke at an educational webinar produced by the National Association of Home Builders (NAHB) in partnership with Builder magazine.

These potential home buyers are most likely to think it’s a good time to get off the fence—and have strong opinions about the design features their new homes will include.

At 32% of the population of home-buying age—generally defined as those who are at least 30 years old, the Gen X population cohort isn’t the largest, but it’s the most mobile, said presenter Mollie Carmichael, principal of John Burns Real Estate Consulting in Irvine, Calif. “They are in full force with their careers and they need to accommodate growing families,” she said.

In sharp contrast, even though they constitute 41% of prospective home buyers, Baby Boomers continue to wait for the market to improve, and their decisions to delay retirement also delay their decisions to downsize into a smaller home, Carmichael said.

Most of the 10,000 buyers and potential buyers in 27 metro areas that the consulting company surveyed were optimistic about a new home purchase, with between 85% and 89% saying that it was a good time to buy a home. Only 13% said they thought home prices would continue to fall, further evidence that it’s “not all about price,” she said. “They want something compelling, from a design or personalization standpoint,” said Carmichael.

In addition, though the average home size is shrinking, a majority of prospective buyers said they would like a bigger home than the one they have. “These are first-time buyers or younger families looking for more room to grow,” she said.

Seventy percent said that they were willing to pay $5,000 more for a green home, but those responding to the survey said that they expected new homes to already have many green technology features. They also said they would pay a premium for dark wood cabinets, a separate tub and shower and a fireplace in the living room, and more preferred a great room over formal spaces.

And while community amenities are important to Gen X buyers, 46% said they prefer a home in a large-lot, suburban development, versus the 21% looking for a traditional or “walkable” neighborhood.

Webinar panelist Heather McCune, director of marketing at Bassenian/Lagoni Architects in Newport Beach, Calif., also emphasized that design will be important in generating sales in the emerging marketplace. “The notion of ‘build it and they will come’ no longer works. Design matters,” she said.

McCune said buyers are looking for homes with a connection between indoor and outdoor spaces, even in colder climates, to create the perception of greater home size, even if the space is only usable for part of the year. They also want more storage, an open floor plan and flexibility in the garage.

“While Gen X numbers are smaller than the birth cohorts before and after them, their numbers have been enlarged by steady immigration,” said NAHB Chief Economist David Crowe. “Gen X may wait longer than their predecessors to establish their own household or buy a home because of the recent recession impacts, but the trends are still likely to occur as they have for past generations.”

This is an interesting take on the potential of 10% minimum down payments across the board. If you are looking to take advantage of a less than 10% down payment program lets get started today while its still available!

Original Article

Higher Down Payments May Be the New Norm…. Permanently
Published on Monday, February 28, 2011, 2:03 PM Last Update: 2 day(s) ago by Preston Howard

At the height of the mortgage boom, required down payments were at an all time low. In June of 2006, the average down payment percentage on the purchase of a single family residence was 4%. If you had good credit and a heartbeat, there were lenders who would provide you with a 100% loan with no documentation outside of your name, address, and Social Security Number. Now, all of that is about to change. Serious talk is being floated around Washington D.C. that the return of the days of a minimum of 10% and an average down payment of 20% is swiftly approaching.

The Obama Administration has called for 10% minimums on Fannie/Freddie loans. Sheila Bair, Chairwoman of the FDIC has stated that she flat out wants 20% down payments. Many banks are already there. An analysis of major metropolitan areas reveals that the current average down payment is at 22%. Much of this is driven by the large commercial banks pushing for higher down payments to stem their losses and discourage delinquencies with borrowers having “more skin in the game.” In addition, this is also a form of pre-emptive planning as housing prices continue to fall. The thought is that lower leverage equals lower risk. This conventional wisdom holds true in the majority of cases as most property owners are less likely to walk away from a property in which they have made a significant investment. However, what happens to the individual who wants the “American dream” but no capital? Their option will most likely be a government agency.

As previously mentioned, Fannie/Freddie will require 10%. That’s half of the new norm, but depending on who you are and your price maximum, that’s still a lot of money. Then, there is the FHA and the VA. They have seen a lot of action over the last 2.5 years. In 2009/2010, 50% of all mortgages originated were made with FHA guaranteed funds. The caveat is that FHA funds have various financial handcuffs, e.g. tax impounds, forced insurance, upfront MIP fees, and higher interest rates. If a borrower puts down 20% or more on a non-government backed loan, the rates are usually lower, impounds aren’t required, and mortgage insurance is illegal. Essentially, a new “sub-prime” market is being created whereby those without sufficient down payments are forced to pay extra fees and incur higher rates, or continue renting.

These actions have resulted in the financial world of two extremes: those with a 20% down payment who get all of the perks, and those without the capital who get all of the fees. I foresee a great demand for something in the middle to be created. It may take some time to materialize as the methods of filling the void in the past have faltered. Mezzanine financing above 80% CLTV is currently non-existent. Currently, cities are broke so the availability of the Housing Finance Agency’s “silent seconds” is scarce. The private market hasn’t been incentivized to fill the gap, so the void with the need to be filled will remain, and hard money is too expensive. I believe that if the American public was aware and takes a close look at this new reality, protests will ensue, lobbying will occur and something will be done, as the “charges for some, but not for all” mantra can’t continue for too long. Eventually, a product or solution will be produced, as the margin between 3.5% and 20% is too wide, the demand is heavy and the pending increases in Fannie/Freddie costs are too real.

Preston Howard is a mortgage broker and Principal of Rose City Realty, Inc. in Pasadena, CA. Specializing in various facets of real estate finance, he can be reached at howardpr@rosecityrealtyinc.com

We all watch the news. We hear how bad the housing market is and what the government needs to do to recover it. I am in agreement with the author of the following article (Original Article) who says there is no such thing as a bad market, just different ones! Take a look and let me know your thoughts!

Why There’s No Such Thing As A Bad Real Estate Market

“Down” and “depressed” – according to the news, that’s the real estate market these days. And thanks to continuing tight credit and sluggish job growth, the United States isn’t likely to see anything like a booming real estate market for many years. But although reports about today’s real estate market sound grim, here’s something you probably haven’t heard: there’s no such thing as a “bad” real estate market. Let’s take a look at some of the patterns the real estate market can fall into, who is hurt by them and who stands to benefit.

Homeowners Vs. Investors
The difference between investors and the average home buyer is that investors don’t have to buy a property – because they don’t need to live in it. This gives them a lot more ability to profit in different types of markets, because they are able to buy when real estate prices are down, and sell when they are up. Home buyers don’t have this much flexibility, but what they can take from real estate investors is how they look at the market. Like any good investor, a real estate investor looks at the market strategically, and decides whether to buy or sell based on the potential to benefit. The bottom line is, what the media is saying about the market doesn’t enter into the equation.

Buyer’s Market
When the news is reporting grim figures about real estate and housing prices it’s hard to be enthusiastic about jumping into the real estate market. But investors could have said the same thing about investing in the stock market in 2009, when the S&P 500 dropped to its lowest point in more than 10 years; however, those who chose solid companies during the low point saw major gains when the market rebounded through 2010.

A real estate buyer’s market occurs when there is more property for sale (supply), than there are buyers (demand), forcing prices down. While this type of market is bad news for homeowners who want to sell their homes, it’s great for those entering the real estate market. In this case, new homebuyers have the opportunity to buy properties at a low point. The lack of competition in the market will also allow them to take their time choosing a property, and provide them with some bargaining leverage.

Because in some cases home prices may not rebound for a long time, buyers need to choose their homes carefully and look for areas where homes are truly undervalued – and not just cheap. Buyers should also weigh the fact that they’ll have to pay to live somewhere – whether they buy or rent – so even a property that maintains its value may provide significant savings over time.

Homeowners may also fret about this type of market, but unless they are looking to sell, they shouldn’t. Sure, this affects their net worth on paper, but it’s just like holding a stock in a down market: the price only matters if you plan to sell.

Sellers’ Market
A seller’s market is just the opposite of a buyer’s market: low supply and high demand for available properties drive prices up. This is the type of real estate market the United States experienced before the market crashed in 2009, when bad loans and rising interest rates conspired to make runaway prices unsustainable. For those who managed to cash in on big gains in real estate prices by selling their homes at the peak, this was a great market. For those who were buying those homes, it was a disaster.

But just like a buyer’s market can best be taken advantage of by those who are entering the market, the seller’s market is best for those who are leaving it – or at least downsizing. After all, even if the value of your home increases by 100% over the time that you own it, this won’t be money in your pocket if you have to buy another house in the same area, as their prices will have all increased at a similar rate. For empty-nesters who are looking to downsize (or perhaps even rent) or for those who are making a move to a less-expensive area, the peak of a seller’s market is the ideal time to sell.

Balanced Market
In a balanced, or neutral, real estate market buyers and sellers are equalized. This tends to happen when interest rates are affordable, but not too low and real estate sales remain stable over an extended period. This type of market doesn’t offer an extreme benefit to either buyers or sellers; sellers’ profit will depend on when they entered the market, while buyers can eke out a more profitable arrangement by choosing a home that may be undervalued (such as a fixer-upper). But many buyers are also just satisfied to purchase a nice home at what they consider a “fair” price.

Whether you’re a buyer or a seller in this type of market, don’t expect miracles: in a balanced market an accurately priced house will sell for very close to the price it is listed for.

What Type of Market Is This?
The problem for many people comes in determining just what state the real estate market is in at any given time. Here are a few indicators that will help you figure it out.

Buyer’s Market
-A lot of houses are on the market and staying there for an extended period of time compared to previous months or years.
-”For Sale” signs are staying up longer.
-Sale prices are declining.

Seller’s Market
-Few houses are on the market, and those that are put up for sale sell very quickly compared to previous months or years.
-”For Sale” are up for a short time before a “Sold” sign is attached.
-Sale prices are rising.

Balanced Market
-The number of houses on the market is consistent with previous months or years (it is consistent over time).
-Turnover is stable. (Some sources say this means home sell within 30-45 days, but this may depend on where you live).
-Sale prices have flattened are consistent over time

The Bottom Line
Your home is not exactly and investment – you need somewhere to live, so you can’t base the decision to buy or sell entirely on economics. That said, by being aware of what kind stage of its cycle the real estate market is in can sometimes help you find the best times to enter and exit the real estate market. The most important thing for people to remember is to look at the market objectively and strategically, because a “bad” market good just be the best thing for you.

Read more

Below is an excerpt from an article by Andrea V. Brambila for Inman regarding the Top 10 real estate markets to watch in 2011. The greater Des Moines area was voted #3! Its a great time to buy in Des Moines and there is no time like the present! Once this information starts to spread we will have out of state buyer snatching up all the good deals so lets get started today. Give me a call or shoot me an email and we can discuss your needs and budget. I also have a network of lenders to make sure and get that right mortgage loan for you. Talk to you soon!

Original Article

3. Des Moines, Iowa
Total population (2009): 562,993
Median sales price (Q4 2010): $151,300
Median sales price % change (Q4 ’09-Q4 ’10): 5.5%
Sales volume (# units sold year-to-date in Nov. 2010): 8,916
Sales volume % change (Nov. 2010 vs. Nov. 2009): -31%
Unemployment rate (Dec. 2010): 6.1%
Foreclosure activity rate (2010): 1 in 79 units
Walk Score: 51

Unemployment in the Des Moines area is at 6.1 percent and projected job growth for the area through the third quarter of 2011 is the second highest of the markets chosen: 3.1 percent.

A high concentration of insurance, finance and technology jobs have fueled growth in the area, according to Brian Wentz, an agent at Burnett Realty in Clive, Iowa. Major employers include Principal Financial Group, Wells Fargo Home Mortgage, Nationwide Insurance, John Deere, Pioneer Hi-Bred International, Wellmark Blue Cross and Blue Shield, and Meredith Corp., which operates Better Homes and Gardens magazine.

“These positions typically pay well, and have attracted a bright mix of younger, up-and-coming employees — many with newer families — as well as many established employees who relocate here from other markets,” Wentz said.

“Additionally, the state of Iowa is experiencing a population shift away from the more rural communities, toward larger communities with more opportunity for education and employment, with Des Moines seeing the biggest benefit,” he added.

The Des Moines area saw its population rise 10.1 percent from 2005 to 2009, compared with 6.5 percent at the national level. Single-family building permits issued rose 22 percent between 2009 and 2010, compared with 3 percent nationally, according to NAHB. The area’s median sales price rose 5.5 percent between fourth-quarter 2009 and fourth-quarter 2010.

A conservative approach to finances during the housing boom helped mitigate the effects of the downturn in the area, according to Tyler Osby, a certified mortgage planner at Fairway Independent Mortgage.

“Des Moines is a very ‘steady Eddy’ community,” Osby said.

“Even though (we) had some folks buying homes with NINJA (no income, no job, no assets) loans, we still had people being very skeptical of buying because of our conservative culture and still slow appreciation rates.

“I think in other parts of the country buyers were putting homes under contract purely because it was a get-rich-quick solution. When you see home prices rising that quickly, it seems like you’d be passing up a great opportunity to not buy,” he said.

“I personally think the biggest issue that other parts of the country are experiencing is the type of loans people were using to get financing. More specifically, the pick-a-payment option-ARM programs. I never did a pick-a-payment loan in Iowa, and I can’t imagine many homeowners in Iowa did.”

More foreclosures are likely to come on the market, “but I don’t see (that) pushing home values much lower,” he said. The market’s delinquency rate remained essentially flat November 2010 compared to the same month in 2009, at 4.8 percent, according to CoreLogic.

Are you thinking about buying this year but are worried about your credit score? We all know that our credit score is a make or break in the loan process. This article has some tips you can follow to improve your credit as you get ready to buy. Also, I have several lenders that I work with who can get you a mortgage loan in a variety of different credit situations. Give me a call today and lets get you out of the rent trap! Preapproval is free so why not see what you can do? There are even loans where you can have no down payment!

You are also entitled to a free copy of your credit report once every 12 months. There are a lot of sites that will try to sell you something with a report but this one is no obligations and will give you a free report to know where you stand.
https://www.annualcreditreport.com/cra/index.jsp

Here is another sign that the time to buy is now! Came across this on LinkedIn via New York Times. If 30 year fixed mortgages became more expensive would you still purchase? Why not make those dreams a reality today and get in while rates are low and inventory is high? Thinking about selling? It would be a great time to get on the market while buyers can still get favorable loans. Lets talk about it today!

Without Loan Giants, 30-Year Mortgage May Fade Away
Original Article

How might home buying change if the federal government shuts down the housing finance giants Fannie Mae and Freddie Mac?

The 30-year fixed-rate mortgage loan, the steady favorite of American borrowers since the 1950s, could become a luxury product, housing experts on both sides of the political aisle say.

Interest rates would rise for most borrowers, but urban and rural residents could see sharper increases than the coveted customers in the suburbs.

Lenders could charge fees for popular features now taken for granted, like the ability to “lock in” an interest rate weeks or months before taking out a loan.

Life without Fannie and Freddie is the rare goal shared by the Obama administration and House Republicans, although it will not happen soon. Congress must agree on a plan, which could take years, and then the market must be weaned slowly from dependence on the companies and the financial backing they provide.

The reasons by now are well understood. Fannie and Freddie, created to increase the availability of mortgage loans, misused the government’s support to enrich shareholders and executives by backing millions of shoddy loans. Taxpayers so far have spent more than $135 billion on the cleanup.

The much more divisive question is whether the government should preserve the benefits that the companies provide to middle-class borrowers, including lower interest rates, lenient terms and the ability to get a mortgage even when banks are not making other kinds of loans.

Douglas J. Elliott, a financial policy fellow at the Brookings Institution, said Congress was being forced for the first time in decades to grapple with the cost of subsidizing middle-class mortgages. The collapse of Fannie and Freddie took with it the pretense that the government could do so at no risk to taxpayers, he said.

“The politicians would like something that provides a deep and wide subsidy for housing that doesn’t show up on the budget as costing anything. That’s what we had” with Fannie and Freddie, Mr. Elliott said. “But going forward there is going to be more honest accounting.”

Some Republicans and Democrats say the price is too high. They want the government to pull back, letting the market dictate price, terms and availability.

“A purely private mortgage finance market is a very serious and very achievable goal,” Representative Scott Garrett, the New Jersey Republican who oversees the subcommittee that oversees Fannie and Freddie, said at a hearing this week. “No one serious in this debate believes our housing market will return to the 1930s.”

Still, powerful interests in both parties want the government instead to construct a system that would preserve many of the same benefits, with changes intended to minimize the risk of future bailouts. They say the recent crisis showed that the market could not stand on its own.

“The kind of backstop that we have now, if it didn’t exist, we would have had a much more severe recession and a much sharper fall in home values,” said Michael D. Berman, chairman of the Mortgage Bankers Association, which represents the lending industry.

Hanging in the balance are the basic features of a mortgage loan: the interest rate and repayment period.

Fannie and Freddie allow people to borrow at lower rates because investors are so eager to pump money into the two companies that they accept relatively modest returns. The key to that success is the guarantee that investors will be repaid even if borrowers default — a promise ultimately backed by taxpayers.

A long line of studies has found that the benefit to borrowers is relatively modest, less than one percentage point. But that was before the flood. Fannie, Freddie and other federal programs now support roughly 90 percent of new mortgage loans because lenders cannot raise money for mortgages that do not carry government guarantees.

One prominent investor, William H. Gross, the co-head of Pimco, the major bond investment firm, has estimated that he would demand a premium of three percentage points to buy such loans — a cost that would be passed on to the borrower.

Proponents of a private market want the government gradually to withdraw its support, allowing investors to regain confidence. They argue that interest rates would eventually settle into roughly the same patterns that held before the financial crisis.

Some supporters of government backing also like the idea, believing that it will demonstrate the need for a backstop.

“I myself am eager to see whether there needs to be a guarantee,” said Representative Barney Frank of Massachusetts, a crucial Democratic voice on housing issues.

Fannie and Freddie also make ownership more affordable by allowing borrowers to repay loans with fixed-interest rates over an unusually long period. A person who borrows $100,000 at 6 percent interest will pay $600 each month for 30 years, compared to $716 each month for 20 years.

The 30-year loan first became broadly available by an act of Congress in 1954 and, from then until now, the vast majority of such loans have been issued only with government support. Most investors are simply not willing to make such a long-term bet. They prefer loans with adjustable rates.

Alex J. Pollock, a former chief executive of the Federal Home Loan Bank of Chicago, said such loans would remain available in the absence of a federal guarantee, but they might be harder to find. And lenders might demand a larger down payment. Or a better credit score.

That would be a very good thing, said Mr. Pollock, now a fellow at the American Enterprise Institute.

Longer terms make ownership affordable only by increasing the total cost of the loan, because the borrower pays interest for a longer period. Moreover, Mr. Pollock noted that over the last several years, borrowers with adjustable-rate loans paid less as interest rates fell, while those with fixed rates kept paying the same amount for devalued homes.

“One of the reasons that American housing finance is in such bad shape right now is the 30-year mortgage,” he said, noting that such loans are not available in most countries. “For many people, it’s not at all clear that that’s the best product.”

Fannie and Freddie also allow a wide swath of the American public to borrow money at the same interest rates and on the same terms. Borrowers who did not meet their standards were forced to pay higher interest rates to subprime lenders, but the companies essentially persuaded investors to treat a vast number American families as if they were interchangeable.

They took messy bunches of loans, with risks as variable as snowflakes, and created securities of uniform quality, easy to buy and sell. The result was one of the most popular investment products ever created.

And in its absence, experts on housing finance say that fewer borrowers would qualify for the best interest rates.

Susan M. Wachter, a real estate professor at the University of Pennsylvania, said a new government guarantee was needed to preserve a homogenous market.

“There needs to be a systematic way of preventing” fragmentation, said Professor Wachter. “That’s what we need a bulwark against. Because if there isn’t, it will occur.”

The government seems least likely to maintain a final set of benefits — leniencies in loan terms that taxpayers effectively have subsidized for borrowers.

Fannie and Freddie slashed the requirements for down payments in recent years, saying that they were helping people with minimal savings become homeowners. Two-thirds of the borrowers whose loans were guaranteed by the companies from 1997 to 2005 made a down payment of less than 10 percent. But borrowers who invest less default more often. The Obama administration has said that it wants the companies to demand a minimum down payment of 10 percent.

A quirkier example is the ability to “lock in” an interest rate. Fannie and Freddie permitted lenders to make such promises at no risk because the companies had already obtained commitments from investors. In the companies’ absence, borrowers seeking rate locks may need to pay for them.

Getting ready for spring cleaning? Thinking about listing your home with the change in weather? Here are some great ideas for the process. The time to sell is now! Activity is up and buyers are out looking. Call today and lets talk about getting your home on the market to take advantage!

Here is another great article from Tara-Nicholle Nelson on Trulia. This time its a list of things sellers can do to improve their chances of buyers choosing their house. Lets discuss further today and get your home on the market!

Original Article

We’ve talked about surprising home features buyers LOVE, and about why buyers aren’t biting on today’s market, despite it being highly affordable. But we haven’t talked much about the characteristics of sellers, listings and homes that turn buyers all the way off. Well, not until now!

Here are 6 big-time homebuyer turn-offs that make buyers cringe at the thought of your home, and action steps you can take to prevent your home from being an offender:

1. Stalker-ish sellers. I know you think you’re being helpful, walking the buyer through your home and pointing out the wagon-wheel light fixture you made with your own two hands, the custom mural of a stingray you paid top dollar to have painted across your living room wall and the way the sounds of happy schoolchildren running across the front yard of your corner lot to get to the school in the next block lifts your spirits. However, the buyers might be trying really hard to ignore, minimize or figure out how to undo the very features of your home you hold dear. They also may want or need to have personal space and conversations with their mate or their agent while they’re viewing your home – you being there, especially walking right alongside them while they’re in your home, prevents them from being comfortable about doing this, or discussing all the things they would change if the home were theirs. In my experience, the more nitpicky a buyer gets about a house and the more detailed their list of things they would change, the more serious they are about considering making an offer on this place.

What’s a Seller to do? Back off. Let your home be shown vacant, or leave the house when people come to see it. If you need to be there, at least walk outside or go sit at the coffee shop down the way while prospective buyers view your home. If the buyers have questions, their people will contact your people.

2. Shabby, dirty, crowded and/or smelly houses. You already know this one. Yet, buyers constantly marvel. The buyers who come to see your home are making the decision whether to choose your home for the biggest purchase they’ve ever made during the worst economic conditions most of them have ever experienced. Your job is to get your home noticed – favorably – above the sea of other homes on the market, many of which are priced very, very low.

What’s a Seller to do? Other than listing your home at a competitive price, the only tool within your control for differentiating your home from all the foreclosures and short sales is to show it in tip-top shape. Pre-pack your place up, getting rid of as many of your personal effects as possible. Do not show it without it being completely cleaned up: no laundry or dishes piled up, countertops freshly washed, smelly dogs (I have a couple who smell on occasion – no judgment – but don’t show your house with pet odors) or litter boxes cleaned and/or out of the house.

3. Irrational seller expectations (i.e., overpricing). Buying a house on today’s market is hard work! On top of all the research and analysis about the market and situating their own lives to be sure they’ll be able to afford the place for 5, 7, 10 years – or longer, buyers have to work overtime to separate the real estate wheat from the chaff, get educated about short sales and foreclosures and often put in many, many offers before they get even a single one accepted. The last thing they want to add to their task lists is trying to argue a seller out of unreasonable expectations or pricing. And, in fact, there are so many other homes on the market, buyers don’t have to do this. When they see a home whose seller is clearly clueless about their home’s value and has priced it sky-high, most often they won’t bother even looking at it. If they love it, they’ll wait for it to sit on the market for awhile, hoping the market will “educate you” into desperation, priming the pump for a later, lowball offer.

What’s a Seller to do? Get real. Get out there and look at the other properties that are for sale in your area and price range. Get multiple agents’ take on what your home should be listed at, and don’t take it personally if their recommendation is low. If your home has much less curb appeal or space or is much less upgraded than the house across the way, don’t list it at the same price and expect it to sell. If you owe more than your home is realistically worth, you may need to reexamine whether you really want or need to sell, or consider a short sale, if you simply have to sell. Don’t be tempted into testing your market with an obviously too-high price, unless you’re prepared to have your home lag on the market and get lowball offers.

4. Feeling misled. Here’s the deal. You will never trick someone into buying your home. If the listing pics are photo-edited within an inch of their lives, or your home is described as an “approved” short sale when, in fact, the bank approved another offer, now withdrawn, but will require a new offer to go through any sort of approval process (even a truncated one), buyers will learn this information at some point. If your neighborhood is described as funky and vibrant, as code for the fact that your house is under the train tracks and you live in between a wrecking yard and a biker bar, prospects will figure this out. If the detailed information about your home, neighborhood or even transactional position (e.g., short sale status, seller financing, etc.) is misrepresented, the sheer misrepresentation will turn otherwise interested buyers off. If you authorize your agent to “verbally approve” the buyer’s offer, don’t go back the next day demanding an extra $5,000. In cases where the buyer feels misled, whether or not that was your intention, running through the buyer’s mind is this question: If they can’t trust you to be honest about this, how can they trust you to be honest about everything else?

What’s a Seller to do? Buyers rely on sellers to be upfront and honest – so be both. If your home has features or aspects that are often perceived negatively, your home’s listing probably shouldn’t lead with them (like the ad I recently saw with the intro line: “this place is a mess!”), but neither should you go out of your way to slant or skew or spin the facts which will be obvious to anyone who visits your home. Make sure you know what the listing of your home reads like, before it’s published to the web, and that a prospective buyer will not feel misled by it.

5. New, ugly home improvements. Many a buyer has walked into a house that has clearly been remodeled and upgraded in anticipation of the sale, only to have their heart sink with the further realization that the brand-spanking-new kitchen features a countertop made, not of Carerra marble, but brand-new, pink tiles with a kitty cat in the middle of each one (I saw this once, people – no joke). Or the pristine, just-installed floors feature carpet in a creamy shade of blue – the buyer’s least favorite color. New home improvements that run totally counter to a buyer’s aesthetics are a big turn-off, because in today’s era of Conspicuous Frugality, buyers just can’t cotton to ripping out expensive, brand new, perfectly functioning things just on the basis of style – especially since they’ll feel like they paid for these things in the price of the home.

What’s a Seller to do? Check in with a local broker or agent before you make a big investment in a pre-sale remodel. They can give you a reality check about the likely return on your investment, and help you prioritize about which projects to do (or not). Instead of spending $40,000 on a new, less-than-attractive kitchen, they might encourage you to update appliances, have the cabinets painted and spend a few grand on your curb appeal. Many times, they will also help you do the work of selecting neutral finishes that will work for the largest possible range of buyer tastes.

6. CRAZY listing photos (or no photos at all). Here at Trulia, we’ve seen listing photos that have dumpsters parked in front of the house, piles of laundry all over the “hardwood” floors touted in the listing description, and once, even the family dog doing his or her business in the lovely green front yard. Listing pictures that have put your home in anything but its best, accurate light are a very quick way to ensure that you turn off a huge number of buyers from even coming to see your house! The only bigger buyer turn-off than these bizarre listing pics are listings that have no photos at all; most buyers on today’s market see a listing with no pictures and click right on past it, without giving the place a second glance.

What’s a Seller to do? Check your home’s listing on Trulia and make sure that the pics represent your home well. If not, ask your agent to grab some new shots and get them online (and say pretty please, pretty please!).