Though foreclosure statistics show that a large number of homes are still working their way through the system before they hit the real estate market, there is good news for homeowners facing foreclosure right now. Banks are willing to work with you on a loan modificaiton or short sale to avoid a foreclosure completely. However, if a homeowner has negative equity–as many in California do–there won’t be much help out there from your bank.

Allan Glass blogs about both the good and bad foreclosure news today:

“The good news in all of this is the apparent willingness banks are showing to attempt to work out foreclosure problems via loan modifications, or short sales.  If homeowners can’t find a solution to stay in their homes they may find an opportunity to minimize damage to their credit by avoiding a foreclosure via these means.  I would also expect that banks are preparing for bulk releases of residential assets, either defaulted loans or foreclosed assets in the coming months as prices continue to show signs of stabilizing, spreads between bank expectations and investor valuations decrease, and confidence is regained. The brown spot on the banana is the growing backlog of problem assets.  As the summer buying season winds down and banks look to right their balance sheets at year’s end, we could see increases in supply and dramatic decreases in demand.  for those of you who skipped economics 101, this is bad for value.”

Glass explains that, according to Foreclosureradar.com, more than 72 percent of foreclosure sales last month were actually delayed either through the lender directly, or due to a direct request from the borrower and lender. Additionally, he writes that a small percentage–10 percent– of foreclosure sales were put off due to filing bankruptcy, which is a more traditional tactic when a borrower is trying to postpone a foreclosure. These statistics are positive for homeowners, who may be exploring options if they are potentially facing a foreclosure.

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Mortgage interest rates rose for the the third time in just four weeks. The rise should set off alarm bells for prospective buyers still unsure about entering the market. While home values are not expected to gain much ground in the near future, mortgage rates are much more volatile and will probably continue this incremental climb. Economists have attributed the rise in rates to positive economic news. As the rebound continues, the historically low rates are also sure to rise.

Ki Gray gives his take on changing mortgage interest rates:

“What is interesting is that the current (small) upward movement in mortgage rates might be the beginning of the rise that many in the financial industry have predicted. If the economy continues to rebound this could be the beginning of mortgage rates steadily moving up to 10 percent or higher. This is of course dependent on the continued movement of the U.S. economy out of the current recession. While the government has made some statements about curbing inflation, it seems more concerned with making sure the U.S. exits the recession. Of the  four major indexes, three moved up this week. The 30-year note rose from 5.22 to 5.29, the 15-year mortgage rose from 4.63 to 4.68 and the 5-year ARM rose from 4.73 to 4.75. The 1-year ARM fell from 4.78 to 4.72.”

The potential for buyers to get a good deal in Real Estate will exist as long as values stay low. But to get unprecedented savings, buyers will have to act fast. Not only are interest rates set to rise, but the $8,000 tax credit from the Fed is set to expire this coming December.

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Finding ways to save money is on everybody’s mind right now. Consumers are wary about spending at a time when economic growth has slowed to a halt. For buyers looking for a home, using a REALTOR® who can help navigate the short sale or foreclosure process is saving them money in the long run. Some sellers, however, try to sell on their own, hoping to save money on the commission. Does this strategy really pay off?

Lee Dworshak wonders if homeowners can really handle a for sale by owner (FSBO):

“FSBOs tell us the biggest problem they have is their homes suffer from a lack of exposure. Most of them paid several hundred dollars for a weekend classified ad in the daily paper. They also bought a “For Sale By Owner” yard sign. But unless the market was sizzling, few got any buyers through the door. Why? The fact is, most legitimate buyers work with real estate agents! And real estate agents research the Multiple Listings Service to find homes for the buyers. Unless you are using a real estate agent, you’re not in the Multiple Listing Service. This exposure alone is worth a lot of money. The other problem FSBOs have is the buyers who are not working with real estate agents are usually not the serious buyers. People who are ready to buy use agents because they don’t have to pay their agent a fee, and agents have the resources buyers need to get good homes at good prices. Unfortunately, most of the buyers that are left over are merely ‘tire kickers’ and ‘low-ballers.’”

The value a Realtor brings to a sale is commonly undervalued untill a homeowner tries to market, negotiate, and draw up papework by themselves. While it is understandable a seller would want to save money, it’s likely they will realize that by trying to save money in the short term, they have had to invest countless hours learning how to navigate a complicated process on their own.

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First-time buyers purchasing in desirable areas are choosing the low-maintenance lifestyle of condominiums. Condos let a buyer make a well-priced investment, while getting to take advantage of shared amenities like pools and gym rooms. In major cities where condo owners only use their condos for vacation or temporary business use, they can rent out the space to visitors. This arrangement is called a condotel– being one part condo, one part full service hotel. However, getting financing on a property like this can be tricky due to the uncommon usage.

Jeffrey Gilliam explains more about condotels:

“So what makes a condo-tel? Actually, any number of things. I have heard many times that a project is not a condo-tel because it doesn’t have an on-site rental desk. While an on-site rental desk would classify a project as a condo-tel the absence of one does not make it immune. (1) If they have a website that advertises rentals, it is a condo-tel. (2) If an owner is required to rent per the bylaws, it is a condo-tel. (3) If it has daily maid service, it is a condo-tel. So if a project doesn’t have any of these things, then it is okay with Fannie and Freddie and is fixed-rate financing available? Not necessarily. There is another classification we use for condominiums and this is the term ‘warrantable.’ Warrantable refers to whether it can be warranted as sellable to Fannie or Freddie meaning it meets their criteria for an acceptable condominium project. So what makes a condominium ‘non-warrantable’?”

A condotel is a perfect way for a condo owner to leverage the management of their property to bring in income when they are away. With all of the amenities luxury condos are being built with, they make the perfect location for a temporary stay. As Gilliam points out, the issues surrounding these properties make financing difficult. While there are banks willing to take the risk of financing a condotel, they are doing it with a slight premium to a 30-year fixed-rate mortgage.

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First-time buyers purchasing in desirable areas are choosing the low-maintenance lifestyle of condominiums. Condos let a buyer make a well-priced investment, while getting to take advantage of shared amenities like pools and gym rooms. In major cities where condo owners only use their condos for vacation or temporary business use, they can rent out the space to visitors. This arrangement is called a condotel– being one part condo, one part full service hotel. However, getting financing on a property like this can be tricky due to the uncommon usage.

Jeffrey Gilliam explains more about condotels:

“So what makes a condo-tel? Actually, any number of things. I have heard many times that a project is not a condo-tel because it doesn’t have an on-site rental desk. While an on-site rental desk would classify a project as a condo-tel the absence of one does not make it immune. (1) If they have a website that advertises rentals, it is a condo-tel. (2) If an owner is required to rent per the bylaws, it is a condo-tel. (3) If it has daily maid service, it is a condo-tel. So if a project doesn’t have any of these things, then it is okay with Fannie and Freddie and is fixed-rate financing available? Not necessarily. There is another classification we use for condominiums and this is the term ‘warrantable.’ Warrantable refers to whether it can be warranted as sellable to Fannie or Freddie meaning it meets their criteria for an acceptable condominium project. So what makes a condominium ‘non-warrantable’?”

A condotel is a perfect way for a condo owner to leverage the management of their property to bring in income when they are away. With all of the amenities luxury condos are being built with, they make the perfect location for a temporary stay. As Gilliam points out, the issues surrounding these properties make financing difficult. While there are banks willing to take the risk of financing a condotel, they are doing it with a slight premium to a 30-year fixed-rate mortgage.

Click through to read Jeffrey Gilliam’s full post.

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Despite signs of stabilization in the past months, the foreclosure numbers for July remind everyone that the housing market, and the economy as a whole, is still in recovery. The rise in foreclosures is not an anomaly. In fact, many analysat predicted July would see a rush of foreclosure listings as the government’s moratorium on foreclosures ended. While the moratorium undoubtedly helped some families who were in line for loan modifications, it only prolonged the inevitable for others. As in months past, the states with the highest foreclosures were California, Florida, and Nevada.

 Bob Phillips explains more about the concentration of foreclosures:

“Foreclosure tracker RealtyTrac reports that the number of foreclosures nationwide rose 7 percent on a month-to-month basis last month. However, three states dominated the foreclosure list, tallying more foreclosures between them than the rest of the country combined. California : 30.0 percent, Florida : 15.7 percent, and Arizona : 5.4 percent. On a per household basis, the states ranked 2, 3 and 4. Only Nevada’s foreclosure rate was higher. Now, we point out these statistics for two reasons. The first is to remind you that foreclosures can be highly local. For all of the foreclosure-related stories that run in the papers and on TV, defaults make a much larger impact on home values in some areas versus others. And, second — foreclosures can represent a terrific buying opportunity. Not every foreclosed home is in pristine condition, but there is a plethora of affordable housing out there, suitable for first-time buyer, move-up buyers and investors, too.”

Foreclosures continue to offer great opportunities in desirable areas that were once out of reach for first-time buyers. As long as lenders can keep up with loan applications and banks can process the REO sales, it is likely the increase in inventory will be only a temporary hurdle towards recovery.

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Despite signs of stabilization in the past months, the foreclosure numbers for July remind everyone that the housing market, and perhaps the economy as a whole, are still in recovering. The rise in foreclosures is not an anomaly. In fact, many analysat predicted July would see a rush of foreclosure listings as the government’s moratorium on foreclosures ended. While the moratorium undoubtedly helped some families who were in line for loan modifications, it only prolonged the inevitable for others. As in months past, the states with the highest foreclosures were California, Florida, and Nevada.

Bob Phillips explains more about the concentration of foreclosures:

“Foreclosure tracker RealtyTrac reports that the number of foreclosures nationwide rose 7 percent on a month-to-month basis last month. However, three states dominated the foreclosure list, tallying more foreclosures between them than the rest of the country combined. California : 30.0 percent, Florida : 15.7 percent, and Arizona : 5.4 percent. On a per household basis, the states ranked 2, 3 and 4. Only Nevada’s foreclosure rate was higher. Now, we point out these statistics for two reasons. The first is to remind you that foreclosures can be highly local. For all of the foreclosure-related stories that run in the papers and on TV, defaults make a much larger impact on home values in some areas versus others. And, second — foreclosures can represent a terrific buying opportunity. Not every foreclosed home is in pristine condition, but there is a plethora of affordable housing out there, suitable for first-time buyer, move-up buyers and investors, too.”

Foreclosures continue to offer great opportunities in desirable areas that were once out of reach for first-time buyers. As long as lenders can keep up with loan applications and banks can process the REO sales, it is likely the increase in inventory will be only a temporary hurdle towards recovery.

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News about the economy continues to send mixed messages. The Fed sounds optimistic as they declare this week that “economic activity is leveling out,” supported by stabilizing housing prices. Yet others report more softening as retail sales fall and jobless claims rise. While these reports reflect changes on the national level, a REALTOR® ’s business backs into a niche market, one that can follow the trends of the nation, or one that can be much hotter or colder than the average. Given that they are on the front lines, a Realtor can have a unique perspective on what is going on in the economy.

Scott Voak wants to know where you think the economy is going:

“With this post, I am looking for a few responses. I am interested in getting your interpretation (or “take” if you prefer) on where we are heading economically because the articles I am reading seem to be telling different stories in the same article. On August 8th, the San Diego Union Tribune ran a New York Times News Service article that seemed to be telling a different story depending on what part you read: * Headline - ‘Job numbers hint rebound in the works.’ Interpretation - Sounds good, the recession might be behind us. * Sub-headline - ‘Big loss in July is still the lowest since last summer.’ Interpretation - Wait a minute. Last summer was right before the meltdown. Maybe this isn’t that good. My question is, what do you think is really happening?  It looks to me like things are getting worse at a slower pace and somebody is trying to say that means we have seen the worst of it, when in actuality, the hole we have to climb out of keeps getting deeper. Would love some opinions by people who know - or think they might know a little!”

Many Realtors follow the economy in great detail. Having knowledge of the complexities that affect the world around them, like why mortgage rates fluctuate, is a great help to their business and their clients. Voak is reaching out to those in the hopes of finding answers from his fellow Realtors and other people who may have some insight.

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REALTORS®  are seeing more and more bank-owned properties go into multiple offers. Unfortunately for them, and their clients, many of these properties are sold to investors and not first-time buyers hoping to find a great deal. Many times, banks choose to sell to investors over buyers becuase the investor can make a cash payment. This situation has led to some negative feelings toward investors, especially when they come into an area, buy up a large amount of properties in and don’t use Realtors to relist the properties once they are flipped.

Pat Palmer has another view, and shares why we need good investors in the market:

“We need to have more investors in the market and we need them flipping properties. There, I said it. I know it won’t be long until the riotous crowds start descending on me. But before they do, let me explain. Investors aren’t the scourge of the earth. Well, at least not most of them. They are looking to buy an under-valued asset. No different than a stock or a bond fund. And here’s why investors are helpful in this market: There are hundreds of thousands of REO and short sale properties on the market. Values will not be going up until demand at least equals supply. In the ever-tightening lending markets, investors fill a void by paying cash. It’s very true that they may take a potential buyer out of a transaction, but that buyer should be putting offers in on multiple homes, thereby taking two properties off the market. Investors buy up a lot of the very distressed (read: completely trashed) properties. These are units that, due to health and safety issues, cannot be financed anyway. Investors buy these up cheap, and fix the inherent problems. At this point,the unit has now gone from total disrepair to some form of turn key for a buyer.”

With the amount of toxic assets the banks are holding on to, it may not be a bad thing when an investor can afford to buy homes in bulk. Even though they may take good deals from buyers and commissions from Realtors, the long term goal for everyone is market stabilization. Having investors buy up properties, turn them, and sell them for more than the bank would have will only help that goal.

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The fiduciary responsibilities of an agent to a seller obligates the agent to act in the selle’rs best interest at all times. This role covers a wide range of duties, but the main theme centers around the agent doing everything possible to gain an advantage for the seller, whether that be over the buyer or competing properties. On the other side of the coin are the responsibilities of the seller. While sellers aren’t obligated by a code of ethics or fiduciary duties, there are ways a seller can be proactive to help sell their own home.

Matt Malouf gives sellers some tips to help sellers be more proactive:

“Think like a team player. Yes, your real estate agent is the professional, but that doesn’t mean you aren’t an integral part of it all. Without you making that decision to sell your home, the transaction couldn’t take place! Be sure to ask questions. Ask about the marketing plan and brainstorm with your real estate agent on any additional ideas you might have. Ask how you can help with the whole process. Talk to your neighbors. Statistics consistently show that your neighbors living right next to you are your best advertisements. Your neighbors can be some of the best word of mouth marketing you get. Wouldn’t you love to be able to pick out who lives next door? Well, so would your neighbors. Yes, your neighbors will see when the sales sign shows up in your front yard. But unless you are close friends with these people, they have never been in your home.”

There are countless stories from REALTORS® about homeowners who have hindered, not helped, the sale of their own home. Whether they have been inflexible with showings or the price, it sometimes seems as if sellers don’t really want to sell their home. Sellers who are proactive will take Malouf’s advice to place themselves in the shoes of a buyer and fix any issues before they occur.

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