Real Estate Information Archive

Foreclosures and other distressed property might look like a good deal, but some buyers are discovering that they just don’t have the stomach for the problems that come with it.

Buyers of distressed property often must deal with severe vandalism, unpaid water bills and home-owner-association dues, hidden second mortgages, and mechanics liens.

Lenders are trying to make these purchases go more smoothly. J.P. Morgan Chase & Co. has twice as many employees as before handling short sales, while Bank of America Corp. now allows real estate practitioners to submit short-sale documents online. The U.S. Treasury Department is expected to soon issue streamlined guidelines to lenders on short sales.

An experienced real estate practitioner with training in selling foreclosures and short sales can make a big difference, but in the long run, buyers who don’t have much cash or aptitude for home repairs should think hard before trying to buy a distressed property.

As Jerrold Horning, a homebuyer in El Cajon, Calif., said, “I don’t think it’s worth the hassles.”

Source: The Wall Street Journal, M.P. McQueen (10/01/2009)

The Federal Housing Administration stepped up to guarantee low-downpayment mortgages for riskier buyers after the mortgage market crashed. Now with many of them in default, the FHA’s losses have mounted, and it’s possible that its reserves will fall below the 2 percent level required by law. If that happens, taxpayers may have to bail out FHA.

Some housing analysts say that this will lead to tighter restrictions on FHA mortgages.

"It absolutely changes the political dynamic once you have to ask taxpayers" for money, says Lisa Marquis Jackson, vice president for John Burns Real Estate Consulting.

The 10 states with the most FHA-insured mortgages are:

1. Texas
2. California
3. Florida
4. Georgia
5. Ohio
6. Illinois
7. Pennsylvania
8. Michigan
9. Virginia
10. North Carolina

Source: The Wall Street Journal, Nick Timiraos (09/05/2009)

The 2006 sale of Manhattan’s Stuyvesant Town and Peter Cooper Village for $5.4 billion was the most expensive real estate deal in U.S. history. Since then the property has lost more than half its value, while rent payments fail to cover even half of the debt service.

The tenants are suing the property management firm Tishman Speyer Properties saying that they illegally raised rents. A lower New York State appeals court ruled in favor of the tenants. Now the opponents are sparring in the state’s top Court of Appeals.

Meanwhile, analysts predict that the owner, BlackRock Realty, will blow through the $890 million they originally set aside for maintenance and will likely default early next year.

Source: The New York Times, A.G. Sulzberger, and Associated Press, Michael Hill (09/10/2009)

Bills to extend the maximum $8,000 tax credit for first-time home buyers, which expires Nov. 30, are pending in both the U.S. House and the Senate.

Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate Banking, Housing, and Urban Affairs Committee, is co-sponsor of a bill with Georgia Republican Sen. Johnny Isakson that would raise the credit amount to a maximum of $15,000.

Senate Majority Leader Harry M. Reid of Nevada favors an extension of the current credit. He was quoted by the Las Vegas Sun saying, "It's something we can get done."

Odds are that the credit will be extended and broadened to cover all buyers next year, but the chances of the amount increasing aren’t as good, observers say.

Source: Washington Post Writers Group, Kenneth R. Harney (08/22/2009)

Appraisals are becoming increasingly more complicated.  New guidelines designed to protect lenders against fraud have recently made the appraisal process more complicated. 

Here are some tips for overcoming the complications:

• Both the real estate practitioner and the owner should be present for the appraisal to make sure he/she doesn’t miss anything important.
• Ask questions to determine if the appraiser has identified the correct neighborhood boundaries and if he/she’s comparing the home to similar properties.
• Bring a copy of a recent tax bill and a survey of the property, and give them to the appraiser.
• Provide a list of improvements to the home.
• Offer your professional opinion about what makes this property worth more than other properties in the area along with any documentation available.

While low- and moderately-priced housing markets have taken off in many parts of the country, the higher-end market is still struggling. Sales are slow and more price declines are imminent, observers say.

Joshua Shapiro, chief U.S. economist at MFR Inc., points to management job losses and resetting adjustable-rate mortgages held by prime borrowers, and concludes, "You put all that together, it leads me to believe that the next leg down on home prices is going to come from the top."

Analysts at J.P. Morgan Chase & Co. recently predicted that the higher-priced housing market won’t recover until at least 2012, and peak-to-trough declines could surpass 60 percent, compared to 40 percent for the rest of the market.

Source: The Wall Street Journal, Nick Timiraos and James R. Hagerty (08/03/2009)

I wanted to offer some clarity regarding the First-Time Home Buyer Tax Credit of up to $8,000.  It actually expires on December 1st of 2009.  That leaves 120 days from now to find, purchase and close on a house if you want to take advantage of the credit.

We are keeping a close eye on Washington.  So far, despite rumors of  potential extensions and expansions of the Tax Credit, there has yet to be anything proposed.

If you or anyone you know is interested in buying a home, please don't hesitate to contact us for information.  You are also welcome to use our powerful, free home search tool and to our free home buyer reports.

Forbes recently did an article in attempts to answer the question, "Where are the best cities to live in the United States if you want to work hard and get ahead?"

Forbes examined the nation’s 40 largest metropolitan statistical areas and based on the number of Forbes' 400 best big companies and 200 best small companies that are headquartered in each, it identified what it considered places with the most opportunity.

The magazine says it took this route because the best big companies provide opportunities for those who seek to be employees, and the rate of success of small businesses indicates how the area treats entrepreneurs.

Here are the top 10:

1. Houston
2. Dallas
3. Minneapolis
4. Pittsburgh
5. Boston
6. Washington, D.C.
7. Austin
8. St. Louis
9. Kansas City, Mo.
10. New York

Source: Forbes, Lauren Sherman (06/19/2009)