Pending Home Sales Down

Pending home sales declined in September for the fourth month in a row, a signal to expect lower home sales this quarter and a flat trend going into next year, a trade group said Monday.

The pending home sales index, a forward looking indicator, fell 5.6% to 101.6 in September from a downwardly revised 107.6 in August and is 1.2% below last year's level, the National Association of Realtors says.

That the index is lower than last year marks the firs time that's occurred in 29 months, NAR says.

"This tells us to expect lower home sales for the fourth quarter," says Lawrence Yun, NAR chief economist. Even so, he expects prices to continue to rise, but at a slower pace -- echoing expectations of many housing watchers and other economists.

Higher mortgage interest rates and home prices curbed consume buying power, NAR says. The government shutdown also played a role, as government and contract workers were on the sidelines.

 

Reality TV is not really reality!

Have you ever watched those house buying shows on TV? My wife watches occasionally and I will come in and see a bit and it drives me crazy! It is certainly not life as I know it. So if you came to buy a house, and I tell you you I will let you choose out of 3 homes, how would that go over? Or you tell me you have a maximum budget of $300,000, and I proceed to show a house priced at $395,000?

And while I am on that subject of reality, all the automatic house payment calculators out there which fail to include taxes, hazard insurance and mortgage insurance. Or the on-line house value estimators, yes Zillow I am talking about you, which many times are not even in the right ball park.

I found this graphic from the KCM Blog that compares some of the myths vs. reality.

Bottom Line: Reality TV may be entertaining, but it is not reality! (And online payments and values can give some background but ask a professional before you start making a decision.)

Vacancy Report

The 3rd Quarter vacancy rates are in and it looks like a good solid market for landlords, many people have considered it over the years, perhaps now is the time to jump in!  I thank Park Place Property Management for the following charts.



 

Forbes: Buy Now or Pay More Later?

Even though no one at KCM actively lists or sells real estate, some of our readers believe that there is an inherent basis toward the real estate community in our writing. For that reason, we want to quote a third party source today.Forbes, in their online edition last week, spoke to the importance of buying a home now rather than waiting.

The article, Should You Buy a Home Now or Pay More Later?, explains:

“With mortgage rates creeping up toward 5% as 2013 draws to a close, potential home buyers have some decisions to make — and soon.

The danger for potential homebuyers isn’t that mortgage rates are nearing 5.00%; the real threat is that rates could go higher, to 5.50% or even 6.00% in 2014.”

The article spells out the financials consequences a buyer would face by waiting. ($67,746 on a $300,000 mortgage).

They gone on to identify four things a buyer should take into consideration before delaying a decision to purchase.

1. Rates will likely rise — and soon with 5% interest rates right around the corner.


2. The Federal Reserve will stop “tapering” causing rates to return to historically normal levels (6-7%).


3. Home values are rising


4. The autumn buying season is underrated “as you can take advantage of year-end tax breaks and the fall weather makes it an ideal time to move”.

Bottom Line

The financial advice Forbes gave to their readers was rather simple. Buy now or pay more later!!

Thanks to KCM Blog for this timely advice, and to Forbes. If you are ready to head the advice, give me a call or shoot me an email and I'll get searching for your new home TODAY!

 

10 Hidden Hazards When Buying Foreclosures

I have sold several foreclosures over the past few years, and buyer's have generally been pleased with their purchases with a minimum amount of surprises. (Some surprises never the less!) But one must always use caution and do their due diligence. The following article from KCM Blog lists 10 potential hazards of which a foreclosure should be aware.

10 Hidden Hazards When Buying Foreclosures  Buying a foreclosed home can seem like a dream. What could be better than getting a home for a fraction of the market value? Some may even say that the deals sound like they could be too good to be true. In some cases, those doubters aren't too far off the mark. There are some hidden dangers in buying foreclosure properties that, if you're not aware of them, could be disheartening and disappointing. If you are pursuing this route in buying your new home, be sure to look out for these hazards and hidden costs. Destruction of Property – A sad truth about foreclosure properties is that they have often been purposely destroyed. Sometimes the homeowners do this out of frustration over losing their homes, or out of simple carelessness when they realize their home is irretrievably gone after too many missed mortgage payments. If the homeowners have not destroyed the property themselves, there is also a chance that the home has been vandalized by other people because it has been left sitting empty. Poor Maintenance – If homeowners were unable to afford their mortgage payment, they almost certainly were unable to perform routine maintenance on the property. Problems can be as minor as a few leaky faucets, or as major as damaged roofing or central units. It May Be Unclean – A house being left unoccupied for a significant amount of time can mean it will be unclean, either through neglect on the part of the former owners or normal depreciation as the property is left uninhabited and not looked after. When a homeowner is selling the home, they will scrub the house clean or hire a cleaning service to entice buyers. A foreclosed home will not have this benefit. Depending on how long it was left and what condition it is in, there may even be vermin or termites to deal with. Undesirable Renovations – Sometimes homeowners were in the middle of a renovation when they lost their ability to pay their mortgage, so you can wind up with a half finished project on your hands when you purchase the property. There is also a chance that a garage or basement was turned into a living space to rent out in order to try and offset the cost of the mortgage. No Electricity – There is a good chance the electricity will be off in the foreclosed home, so you will have a hard time seeing what you are buying. Depending on the weather it may also be very hot or very cold in the house, and vacancy can take its toll on appliances left behind. Personal Property Left Behind – Many homeowners leave items behind, either because they now have no place to put them or because they were locked out of the house before they could retrieve them. You will now be left with the job of disposing of these items if you decide to purchase the property. Lack of Landscaping – More than likely, nobody has been maintaining the lawn of a foreclosed home. You may have a yard full of dead grass or a lawn so overgrown it seems like a jungle! Your foreclosed home will almost certainly require some degree of upkeep when it comes to to the landscaping surrounding the structure. No Disclosure – Because the owner of the property is a bank and the bank has not actually lived in the house, they have no idea what problems or issues there may be in the home and they have no obligation to tell you even if they did. You will have to get your own home inspection done to uncover potential issues. Stripped Bare – You may find your new foreclosed home completely stripped of appliances, copper piping, and anything else that might be worth money. Many times the previous owners do this to try and make back some money on their lost home. Other times, the home was broken into and robbed after the previous owners left. Judgments and Liens – Foreclosure properties can sometimes come with titles encumbered by judgments or liens that you may have to pay off to close on the deal. In short, buying a foreclosed property can be a great way to save money. However, be sure to look into all the potential costs involved before making a final decision. Do the math to determine if you will really wind up saving, or if the property will end up costing you when all is said and done.

 

 

TO DO LIST-when buying a home.

Keep ALL copies of your: Paystubs Bank Statements Tax Returns W2's Make ALL your payments on time Keep employment stable Document your assets Get Pre-Approved so you know how much home you can afford Save money for your down payment and closing costs Talk to your family about a gift if you will need one. If necessary, ask family members for gift funds for your down payment and closing costs Track and be prepared to provide sources of all large deposits Work with a reputable real estate professional

I found this to be a brief but useful reminder. Thanks to Sohayl Saboori of Eagle Home Mortgage.

Strategic Defaulters in Fannie and Freddie's Crosshairs

Fannie Mae and Freddie Mac are looking to collect unpaid mortgage debt from “strategic defaulters,” those underwater home owners who skipped out on their mortgages even though they had the ability to pay.

If a home is sold at foreclosure but the proceeds don't cover the outstanding balance of the home owner's loan, the mortgage giants can pursue judgments against the home owner forcing him or her to pay the deficiency. And the Federal Housing Finance Agency, which regulates Fannie and Freddie, is pushing them to step up their efforts to do just that.

The FHFA says Fannie and Freddie haven’t been aggressive enough in going after strategic defaulters, and the inspector general's office notes that the GSEs could cut their losses by making it more of a priority. The inspector general’s office estimates that Fannie and Freddie could recoup billions of dollars if they made strategic defaulters pay up. So far, the office has found that Freddie Mac did not refer 58,000 foreclosures — estimated deficiencies of $4.6 billion — for collection.

Some states do not allow deficiency judgments, but in more than 30 states and the District of Columbia, they are permissible. The FHFA says it will more closely monitor how effective Fannie Mae and Freddie Mac are in collecting deficiency judgments.

What I read was that Idaho allows deficiency judgements, BUT they must be filed within 90 days of the foreclosure. (I am not an attorney and am only repeating what I have read, I do not know if it is accurate and you are encouraged to consult an attorney if this may apply to you.) So you should beware if you are looking at a coming up short-sale or foreclosure and you have the ability to pay the debt.