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People look at my house, but no offers – What’s Up!?

May 3rd, 2013 | Posted by Dick Thackston in Mortgage News | News | Real Estate News | Selling Tips - (0 Comments)

There is often a lot of discussion about the impact of advertising and marketing schemes on the number and nature of offers on homes on the market. We’ve heard a lot in the last few weeks about how houses are “scarce” and buyers can’t find a house. This seems counter intuitive if house prices are still low and the housing market is still struggling to recover. Often time’s home sellers are sure that if they just change agents or if their agent would just run a bigger ad in the local newspaper or the Walls Street Journal that special someone will come and fall in love with their home – but they don’t, why not?

The work of a listing agent is critical in selling a home but it’s not because of the size or type of ads the agent runs or home many Open Houses the agent does that creates value – almost none of that matters. I have closely tracked lead calls into my office since October 2005 and most of the big real estate franchises have done the same, as has the National Association of REALTORS, and the overwhelming evidence is that buyers look for homes online. If they didn’t, Zillow and Trulia, (bad information that they contain and all), wouldn’t even exist. Good listing agents tell their clients, the Sellers, the truth and help them deal with the home selling market as it is, not as it was or they’d like it to be. Good listing agents help their clients understand that the tax assessment from four years ago is not what the house is worth now and probably never was what it was worth. (It is not unusual in my experience as a REALTOR in New Hampshire to find properties over assessed by as much as 40%. I can sight examples where properties sold for 20% of assessment.) The biggest single problem in determining an accurate market price for a home is Listing Agents not providing accurate information and not working with the home sellers to understand the competitive problems with selling a home. So when the Home Seller guesses about their home’s market value, consider the three biggest factors affecting values in a home based on current consumer preferences and lender requirements. (I had a woman today tell me she couldn’t put her house on the market because in 2005 one neighbor sold their house for 25% more than current conditions suggests, and in 2008 another neighbor sold their house for 50% more than current market conditions indicate.)

Current market conditions and demand are heavily impacted by the three biggest problems for Home Sellers in today’s real estate business: Listing Agents that share this information have good experience helping their clients and their clients understand what they are up against even if they don’t like it. The three issues for Home Sellers are: Functional Obsolescence, Economic Obsolescence and Deferred Maintenance – at the end of my article I have included examples of all three.

In the end the accuracy and success of any marketing plan depends on the agent and client allowing the reality of the situation to govern the transaction and get the listing price as accurate as possible – “denial is not just a river in Africa.”

Functional Obsolescence

Ceiling Heights <60”

Walk-through bedrooms

Bedroom without closet

Knob & tube wiring

Fuses or Pushmatic  CB

Less than 100AMP Service

Un-lined chimney

No washer & dryer hook up

Incomplete bathrooms

No heat on second floor

Two appliances on one flue

Incomplete insulation

Kitchen cabinets incomplete

Dirt floor in cellar

No bathroom on 2nd floor

Single Pane Windows

Old Linoleum

Economic Obsolescence

Store with apartment over

House with business

Business in residential area

Single family in business

Single family with small Apt

Mobile Home built <1977

Structure on Private  Road

Lead  Paint – Anywhere

Structure on Class VI  road

Any non-conforming use

Only wood or  coal heat

No insulation

Kitchen without cabinets

No Cellar or Crawl Space

Out House

Underground Tanks

Subfloors exposed

 

Deferred Maintenance

Roof shingles deteriorating

Peeling exterior paint

Leaking pipes

Broken windows

Wet basement

Chimney in need of pointing

Rotten sills

Sagging floors

Non-conforming septic

Heating system problems

Broken/inoperable doors

Exposed insulation

Broken kitchen cabinets

Sump pump or drains broken

Holes in walls & ceiling

Broken or missing screens

Damaged carpet & floors

 

 

By Dick Thackston

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Some Background on VA, (Veterans Administration) Loans?

March 11th, 2013 | Posted by Dick Thackston in Buying Tips | Mortgage News | Real Estate News | Real Estate Training - (0 Comments)

600px-US-DeptOfVeteransAffairs-Seal-LargeI thought it would be worthwhile for both the general public and service members to share some background information on VA Loans at this time. Many of our returning service members as well as members of the General Public are often not fully aware of how this excellent program works. I have edited a portion of my New Hampshire 40 Hour pre-Licensing Course here to help everybody have a little more information about the program.

The VA is authorized to insure loans for eligible veterans. Like the FHA the VA does not normally lend money, rather it guarantees loans made by VA approved lenders. Eligible veterans may purchase: multi-family homes up to four units, new condos or construction of condos, new or used mobile homes and lots for mobile homes, finance the construction of a new home on its own land, or the eligible veteran may also refinance existing loans.

To be eligible for VA financing the subject property must be owner occupied, the Veteran Borrower must have had 180 days of active military service and have received an Honorable Discharge from the service.

There are a few special characteristics of VA financing that are specifically built into the program to protect VA borrowers as well as the VA. Here are the big ones: The subject property must be appraised by a VA approved appraiser and meet special VA Loan specifications. Loan Specifications for a VA loan include: It can be from any regular lending institution that has been approved by the VA. Maximum loan is based on fair market value as determined by the VA appraisal or MCRV, (Maximum Certificate of Reasonable Value). The VA guarantees top 25% – eliminating PMI; no down payment is required: closing costs may not be financed with the exception of the VA Funding Fee, however there is no limit on seller contributions to the VA Buyer’s closing cost expenses. Should purchase price exceed appraised value, the difference must be paid in cash by the VA Buyer, the seller can decrease their price to match the VA appraisal or the VA buyer can withdraw from the contract without penalty from the seller. VA Loans have a maximum term of thirty years; no secondary financing is allowed on VA loans and there can be no pre-payment penalty on VA Loans. Co-borrowers on VA Loans must be married to the veteran or be Veterans themselves. (The VA does not recognize same sex marriages regardless of State Statues.) The Veteran must supply their Certificate of Eligibility – DD214.

By Dick Thackston CRB, ABR, ABRM, BrokerNH, MA & VT

A Brief History of VA (Veterans Administration) Loans

The original Servicemen’s Readjustment Act, passed by the United States Congress in 1944, extended a wide variety of benefits to eligible veterans. The loan guarantee program of the Veterans Administration has been especially important to veterans. Under the law, as amended, the Veterans Administration is authorized to guarantee or insure home, farm, and business loans made to veterans by lending institutions. Over the history of the program, 18 million VA Home Loans have been insured by the government. The VA can make direct loans in certain areas for the purpose of purchasing or constructing a home or farm residence, or for repair, alteration, or improvement of the dwelling. The terms and requirements of VA farm and business loans have not induced private lenders to make such loans in volume during recent years.

The Veterans Housing Act of 1970 removed all termination dates for applying for VA-guaranteed housing loans. This 1970 amendment also provided for VA-guaranteed loans on mobile homes.

More recently, the Veterans Housing Benefits Improvement Act of 1978 expanded and increased the benefits for millions of American veterans

Despite a great deal of confusion and misunderstanding, the federal government generally doesn’t make direct loans under the act. The government simply guarantees loans made by ordinary mortgage lenders (descriptions of which appear in subsequent sections) after veterans make their own arrangements for the loans through normal financial circles. The Veterans Administration then appraises the property in question and, if satisfied with the risk involved, guarantees the lender against loss of principal if the buyer defaults.

In association with the VA’s program, the Service members’ Civil Relief Act protects service members from financial woes on their home loan that may occur as a result of active duty commitments, freezing their interest rates at 6%.

What is the VA and what do they do?

A VA loan is a mortgage loan in the United States guaranteed by the U.S. Department of Veterans Affairs. The loan may be issued by qualified lenders.

The VA loan was designed to offer long-term financing to American veterans or their surviving spouses (provided they do not remarry). The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment. Eligible areas are designated by the VA as housing credit shortage areas and are generally rural areas and small cities and towns not near metropolitan or commuting areas of large cities.

The VA loan allows veterans 100% financing without private mortgage insurance or 20% second mortgage. A VA funding fee of 0 to 3.3% of the loan amount is paid to the VA and is allowed to be financed. In a purchase, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less. Since there is no monthly PMI more of the mortgage payment goes directly towards qualifying for the loan amount, allowing for larger loans with the same payment. In a refinance, veterans may borrow up to 90% of reasonable value, where allowed by state laws.

VA loans allow veterans to qualify for loans amounts larger than traditional Fannie Mae/Freddie Mac conforming loans. VA will insure a mortgage where the monthly payment of the loan is up to 41% of the gross monthly income vs. 28% for a conforming loan assuming the veteran has no monthly bills.

As of January 1, 2006, the maximum VA loan amount with no down payment is $417,000 and can be as high as $625,500 in certain high cost areas. VA also allows the seller to pay all of the veteran’s closing cost.

http://en.wikipedia.org/wiki/VA_loan

 

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FHA Financing – the New Deal’s Most Enduring Legacy.

February 15th, 2013 | Posted by Dick Thackston in Mortgage News | News | Real Estate News - (0 Comments)

720px-US-FederalHousingAdmin-Logo.svgThe Federal Housing Administration is the most enduring legacy of the New Deal and second only to the Sherman Anti-Trust Act in its positive impact on the lives of the average American and consumer; both have remained intact for multiple generations and have become established in our cultural expectations about the economy and our society. The FHA was one of the earliest parts of the New Deal passed by Congress and signed into law by President Franklin D. Roosevelt in the first hundred days of his administration. The purpose of the FHA was to stabilize the US Housing market after the devastating effects of the bank failures and illiquidity of the first years of the Great Depression. Prior to the creation of the FHA most home mortgages were either demand notes, mortgages that could be called at any time by the lender/bank, or were single year balloon notes that were due with interest at the expiration of one year with the traditional expectation that the loan would be re-negotiated with the bank at the end of the year at whatever the then current market rate for interest rates on mortgages so that banks and thrifts making loans on homes would not be stuck with mortgages at below market interest rates.

 

From 1933 to the mid 1980’s the FHA functioned more or less unchanged. FHA mortgages could be made on any single family home or multi-family home up to four units with a government guarantee that the FHA would make any approved lender whole in the event of a default. Much like today’s real estate market, real estate prices went into free fall in the early years of the depression due to the inability of home owner’s to cover the demand calls by banks and thrifts that called the mortgages resulting in previously unheard of numbers of Foreclosures which only resulted in further depressed prices which only resulted in further drops in prices – the proverbial downward spiral. The FHA stemmed the tide of these foreclosures by allowing home owners to refinance with long term thirty year loans, (yes this is the basis of the modern thirty year mortgage), and allowed FHA mortgages to be assumed by anyone if the existing owner no longer could afford or wanted the house. In the mid-1980’s the FHA changed it’s rules and no longer allowed carte blanche assumptions of home mortgages as a way of moving the government “out of the housing market”. This move however has not served the public well as the easy assumability of FHA mortgages stemmed the tide of foreclosures in many earlier recessions and prevented wholesale implosions of housing as we have had in the last few years.

 

The following is an excerpt from my New Hampshire 40 Hour pre-licensing class.

Congress created the Federal Housing Administration (FHA) in 1934. The FHA became a part of the Department of Housing and Urban Development’s (HUD) Office of Housing in 1965.

When the FHA was created, the housing industry was flat on its back:

  • Two million construction workers had lost their jobs.
  • Terms were difficult to meet for homebuyers seeking mortgages.
  • Mortgage loan terms were limited to 50 percent of the property’s market value, with a repayment schedule spread over three to five years and ending with a balloon payment.
  • Americawas primarily a nation of renters. Only four in 10 households owned homes.

During the 1940s, FHA programs helped finance military housing and homes for returning veterans and their families after the war.

 

In the 1950s, 1960s and 1970s, the FHA helped to spark the production of millions of units of privately-owned apartments for elderly, handicapped and lower income Americans. When soaring inflation and energy costs threatened the survival of thousands of private apartment buildings in the 1970s, FHA’s emergency financing kept cash-strapped properties afloat.

The FHA moved in to steady falling home prices and made it possible for potential homebuyers to get the financing they needed when recession prompted private mortgage insurers to pull out of oil producing states in the 1980s.

By 2001, the nation’s homeownership rate had soared to an all time high of 68.1 percent as of the third

quarter that year.

The FHA and HUD have insured over 34 million home mortgages and 47,205 multifamily project mortgages since 1934. FHA currently has 4.8 million insured single family mortgages and 13,000 insured multifamily projects in it

s portfolio.

In the more than 60 years since the FHA was created, much has changed and Americans are now arguably the best housed people in the world. HUD has helped greatly with that success.

What is the FHA and What do they do?

How is FHA funded?

FHA is the only government agency that operates entirely from its self-generated income and costs the taxpayers nothing. The proceeds from the mortgage insurance paid by the homeowners are captured in an account that is used to operate the program entirely. FHA provides a huge economic stimulation to the country in the form of home and community development, which trickles down to local communities in the form of jobs, building suppliers, tax bases, schools, and other forms of revenue.

 

 

What is the Federal Housing Administration?

The Federal Housing Administration, generally known as “FHA”, provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.

What is FHA Mortgage Insurance?

FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. The lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner’s default. Loans must meet certain requirements established by FHA to qualify for insurance.

Why does FHA Mortgage Insurance exist?

 

Unlike conventional loans that adhere to strict underwriting guidelines, FHA-insured loans require very little cash investment to close a loan. There is more flexibility in calculating household income and payment ratios. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In most cases, the insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property -whichever is longer.

By Dick Thackston CRB, ABR, ABRM, Broker NH, MA & VT

http://www.hud.gov/offices/hsg/fhahistory.cfm

 

Photo Credit: http://en.wikipedia.org/wiki/File:US-FederalHousingAdmin-Logo.svg

 

 

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What’s up With Fannie Mae? (Federal National Mortgage Corporation)

February 1st, 2013 | Posted by Dick Thackston in Mortgage News | News | Real Estate News - (0 Comments)

I had the opportunity to hear former Presidents Bill Clinton and George W. Bush speak at the annual Five Star REO Conference in Texas late last summer. (REO is an acronym for Real Estate Owned which is what foreclosures and bank owned properties are technically called.) Both Presidents Bush and Clinton spoke about the importance of housing to our economy and to the American way of life. Clinton spoke in relatively more detail about the future of Fannie Mae. He indicated that while the exact future of Fannie Mae is by no means clear, the service that it provides to both lenders and the economy in providing liquidity to home mortgage lenders is crucial to maintaining a vibrant and relatively free housing market in the United States.

In the last several years there has been much criticism of Fannie Mae, (and its sister company Freddie Mac),  for having provided too much liquidity to lenders – under pressure from Congress – and the liability it has created for the United States Government. There can be little question that Fannie Mae worked as planned and backed the entire United States housing market, and as bad as things have been the last several years in housing, the situation would have been much worse had Fannie Mae not existed.

In the fall of 2008 the United States Treasury placed both Fannie Mae and Freddie Mac under conservatorship and liquidated the Preferred Stockholder’s equity position. The majority of Preferred Stockholders were banks and pension funds, thus spreading the damage. Common stock in both Fannie Mae and Freddie Mac remained listed and traded on the New York Stock Exchange until mid 2010 when the stocks were delisted. Both stocks continue to be traded over the counter but have lost substantial value. Conservatorship does not mean the Treasury owns Fannie Mae or Freddie Mac, ownership is still vested in the common stock shareholders, however conservatorship does mean that the common stock shareholders have lost all control over the operations of these institutions; a situation that will remain until such time as the conservator, the United States Treasury, determines the best course of action to take with these institutions. At this time the ultimate status of Fannie Mae is indeterminate. Congress has considered a number of actions to take but has not reached any agreement and has no legislation pending to resolve Fannie Mae or Freddie Mac’s future. Fannie Mae and Freddie Mac remain ill-liquid and under government conservatorship at this time, bankruptcy, revocation of charter and or break-up into smaller entities have all been considered.

 

By Dick Thackston CRB, ABR, ABRM,BrokerNH, MA & VT

About Fannie Mae

Fannie Mae is a government-sponsored enterprise (GSE) chartered by Congress with a mission to provide liquidity, stability and affordability to the U.S.housing and mortgage markets.

Fannie Mae operates in the U.S.secondary mortgage market. Rather than making home loans directly to consumers, we work with mortgage bankers, brokers and other primary mortgage market partners to help ensure they have funds to lend to home buyers at affordable rates. We fund our mortgage investments primarily by issuing debt securities in the domestic and international capital markets.

Fannie Mae was established as a federal agency in 1938, and was chartered by Congress in 1968 as a private shareholder-owned company. On September 6, 2008, Director James Lockhart of the Federal Housing Finance Agency (FHFA) appointed FHFA as conservator of Fannie Mae. In September 2008, we also entered into an agreement with the U.S. Department of Treasury that was most recently amended in December 2009. Under the agreement, Treasury will provide us with capital as needed to correct any net worth deficiencies that we record in any quarter through 2012. The agreement is intended to ensure that we are able to continue providing liquidity and stability to the housing and mortgage markets.

Fannie Mae has three lines of business – Single-Family, Multifamily and Capital Markets – that provide services and products to lenders and a broad range of housing partners. Together, these businesses contribute to the company’s chartered mission to increase the amount of funds available in order to make homeownership and rental housing more available and affordable.

 

Early History
The FHA Administrator chartered Fannie Mae on February 10, 1938. The impetus for creation of Fannie Mae was twofold: the national commitment to housing and the inability or unwillingness of private lenders to ensure a reliable supply of mortgage credit throughout the country. The primary purpose of Fannie Mae was to purchase, hold, or sell FHA-insured mortgage loans that had been originated by private lenders. After World War II, Fannie Mae’s authority was expanded to include VA-guaranteed home mortgages.

1954 Charter Act
The Charter Act of 1954 provided the basic framework under which Fannie Mae operates today but did not remove it from direct federal control. The act removed government backing for borrowings used to fund Fannie Mae’s secondary market operations. It stipulated that Fannie Mae be exempt from all local taxes except property taxes, and provided for the Federal Reserve Banks to perform various services for Fannie Mae. The 1954 Charter Act also defined the path by which Fannie Mae’s secondary market operations would be transferred to the private sector: proceeds from gradual sales of common stock were to be used to retire Treasury-owned preferred stock in Fannie Mae.

1968 Charter Act
The 1968 Charter Act split Fannie Mae into two parts: Ginnie Mae and a reconstituted Fannie Mae. Ginnie Mae would continue as a federal agency and be responsible for the then-existing special assistance programs, and Fannie Mae would be transformed into a “government-sponsored private corporation” responsible for the self-supporting secondary market operations. The reconstituted Fannie Mae was to be stockholder-owned and managed. Fannie Mae retired the last of its government stock on September 30, 1968, and transformation to a government-sponsored private corporation was completed in 1970.

The 1968 Act provided the authority to issue Mortgage-Backed Securities (MBS).

The Act also established a regulatory structure to ensure Fannie Mae’s adherence to its public purpose. It provided for continuing HUD oversight of Fannie Mae, granting “general regulatory power … to insure that the purposes of this Title are accomplished.”

Emergency Home Finance Act of 1970
The Emergency Home Finance Act of 1970 created Freddie Mac and authorized it to create a secondary market for conventional mortgages. Parallel authority and limitations to deal in conventional mortgages were given to Fannie Mae.

To alleviate credit concerns raised by acquisition of conventional mortgages (that lack federal backing), several eligibility restrictions and/or risk sharing requirements were imposed on the mortgages Fannie Mae could buy.

The new law also required the HUD Secretary to provide prior approval of Fannie Mae’s “purchase” or “dealing in” conventional mortgages (later interpreted by HUD regulations in 1995 to require specific approval of new and different conventional “programs”).

Secondary Mortgage Market Enhancement Act of 1984
The Secondary Mortgage Market Enhancement Act of 1984 (“SMMEA”) clarified and modified several of HUD’s regulatory powers over Fannie Mae. It required HUD to respond within 45 days to any request for new program approval made by Fannie Mae under the Charter Act (with a 15-day extension permitted) and authorized Fannie Mae to purchase and deal in subordinate lien mortgages.

Financial Institutions Reform, Recovery, and Enforcement Act of 1989
The Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) of 1989 made regulation of Fannie Mae and Freddie Mac consistent. Until 1989, Freddie Mac was owned by the Federal Home Loan Bank System and its member thrifts and governed by the Federal Home Loan Bank Board (later reorganized into the Office of Thrift Supervision). FIRREA severed Freddie Mac’s ties to the Federal Home Loan Bank System, created an 18-member board of directors to run Freddie Mac, and subjected it to HUD oversight.

Also, the GAO and Treasury were instructed to conduct studies of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. These studies laid the foundation for comprehensive regulatory modernization for both Fannie Mae and Freddie Mac in 1992.

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992
The Federal Housing Enterprises Financial Safety and Soundness Act (“FHEFSSA”) of 1992 modernized the regulatory oversight of Fannie Mae and Freddie Mac. It created the Office of Federal Housing Enterprise Oversight (“OFHEO”) as a new regulatory office within HUD with the responsibility to “ensure that Fannie Mae and Freddie Mac are adequately capitalized and operating safely.” OFHEO is funded by assessments on Fannie Mae and Freddie Mac and is authorized to act without HUD oversight on a range of regulatory issues enumerated in the statute. FHEFSSA established risk-based and minimum capital standards for Fannie Mae and Freddie Mac. And, it established HUD-imposed housing goals for financing of affordable housing and housing in central cities and other rural and underserved areas.

The Housing and Economic Recovery Act of 2008
The Housing and Economic Recovery Act of 2008 (‘HERA’) strengthened governmental oversight of Fannie Mae and Freddie Mac. It established the Federal Housing Finance Agency (FHFA), which replaced OFHEO and HUD as Fannie Mae’s safety and soundness and mission regulator. Among other things, FHFA has broad authority to require Fannie Mae to hold capital above statutory minimum levels, regulate the size and content of our portfolio, and approve new mortgage products.

 

http://www.fanniemae.com/about/index.html

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Will VA Financing be a Factor in the 2013 Residential Real Estate Market?

January 23rd, 2013 | Posted by Dick Thackston in Mortgage News | News | Real Estate News | Uncategorized - (0 Comments)

VA Financing may be a significant factor in the residential real estate market in 2013. VA Financing has been a factor off and on again over the years based upon the number of eligible Veterans in the population. In the south where there are large numbers of large military bases, as well as a large number of military retirees and eligible ex-military civilian retirees, VA Financing has been a fairly consistent factor in the residential real estate market, but in the Northeast as well as other sections of the country with minimal active military, VA Financing has not been a significant factor in many years.

Why has VA Financing not been a factor? Well, it has to do with who can obtain VA Financing. VA Financing has a very limited pool of people that can take advantage of the program. The way the program works is a lender makes a loan to an eligible individual and the VA guarantees the loan; if the VA borrower defaults on a loan, the lending institution is typically made whole and the VA takes responsibility for the loan and its costs, but the VA rarely if ever actually funds the initial loan. VA Loans can be sold by the initial lender to other lenders, or investors, or held in the initial lender’s portfolio as well, but in the last thirty years the majority of VA Loans have been sold into Ginnie Mae loan pools, so the loans are effectively funded on the secondary market like most other home loans today. VA Loans will be a growing factor in the 2013 market because of the large number of VA eligible service members that have been created by our country’s recent overseas military engagements and the way these engagements have been handled. The US military called heavily upon National Guard and Reserve forces over the last decade more so than at anytime since World War II as a proportion of our military. Traditionally Reserve and Guard Troops do not have enough active time in the military to be eligible for VA Financing or other benefits, but since the military chose to use Guard and Reserve troops in our most recent military campaigns a much larger pool has been created, especially in New England where Reserve and Guard Troops have significant repeated tours of duty, many of whom where on continuous rotations through conflicts. While New England does not have any really large military installations when compared to say, Georgia or South Carolina, we do have a long tradition of Reserves and Guard Troops – going back to Lexington and Concord in the Revolutionary War – the military needed to take advantage of it to execute its plans. This has meant that all these men and women now have 180 or more days of continuous active military service which is the minimum threshold for VA eligibility.

So here’s who’s eligible for a VA Loan: Veteran’s with 181 days or more of continuous active military service that have been honorably discharged from the armed forces of the United States, their spouses and/or their unmarried widows or widowers. VA Loans can only be used to purchase a property that is intended as a principal residence of the VA borrower; they can not be used to purchase an outright investment property. VA eligible borrowers can use their eligibility to purchase a multi-family property in which they intend to occupy one or more of the units as their home as long as the property has four or less units. VA eligible borrowers do not have to pay off or refinance the VA loan if their circumstances change and they no longer choose to occupy the property they financed through the VA due to an unforeseen circumstance.

VA Loans have some unique features which typically makes them the very best for an eligible borrower to purchase an eligible property: VA Loans do not require any down payment; there is no limit on the amount of seller concessions that may be paid by a seller on behalf of a buyer – I have had VA purchases where the seller paid all the buyers closing costs, pre-paid items and paid off the buyers credit cards and car loans!

VA Loans currently are not available to domestic partners that are unmarried or same sex couples that are married unless both individuals are eligible for VA benefits. Often in this situation if one party is eligible (if they have enough income) the home is just purchased in a single buyers name and an equitable right to the property is transferred over to the non-eligible domestic partner after closing, however the VA buyer will always be the only oblige on the mortgage to the VA.

 

By Dick Thackston CRB, ABR, ABRM, Broker NH, MA & VT

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What’s a Home Buyer Seminar About?

January 5th, 2013 | Posted by Dick Thackston in Mortgage News | New Real Estate | News | Real Estate News | Real Estate Training - (0 Comments)

Home buyers, particularly first time home buyers, spend lots of their time trying to figure out where to turn when the “itch” for home ownership strikes. Searching the web for information through websites, looking at listings on line, filling out qualification worksheets on mortgage sites is a lot of their process. It doesn’t hurt but often times it leaves them short of the practical information they actually need to find a home that suits their purse and personality.

 

When real estate industry analysts contact home buyers they consistently say that they want “the most knowledgeable” or “a real expert” however the process of finding an agent often does not lead buyers to either. Most buyers’ use a rather random selection process often times they ask friends or relatives for recommendations. Sadly the most common source of finding a real estate agent is calling the listing agent on a property who with very rare exception works for the seller. To be sure seller’s agents can be helpful to buyers and are required to be honest and disclose know material defects in properties they have listed but they do not owe any level of advocacy to a buyer. Certainly it is not unusual for a buyer to contact a listing agent and develop a relationship that is more than satisfactory and get a good value on the property that the selling agent has listed nor is it unusual for a buyer to initially contact a selling agent about a property that is listed and not move forward on that property but choose to work with that listing agent as a buyer agent on other properties – all good out comes – but the most effective method for a buyer to conduct a home search is to find a trained buyer agent near the beginning of their home search who will work with them from beginning to end.

 

What is it that’s special about buyer’s agents? Truly it depends on the agent. Things that buyers should look for in a buyer’s agent are: Do they have specialized buyer side training? (ABR, ABRM, CBR); Have they ever actually worked as a buyer agent before and closed a sale representing just the buyer?; Do you get along with them and do they understand your needs and situation?; Do they know about financing options and how to help the buyer through a variety of financial scenarios in a purchase situation? To name just a few points that are important.

 

Developing a relationship with a buyer’s agent should address certain general areas as well. Is the buyer’s agent familiar with the process involved in selling distressed properties in your market? Distressed properties continue to be major factors in most markets while the tide of foreclosures seems to ebbing a bit there are still plenty. In addition to foreclosures distressed properties can also be short sales and auction properties areas not always more familiar to agents than to the general public.

 

Home buyers Seminars can be an excellent no commitment needed means for buyers to hear about the home search process and have the chance to interact with buyers agents who have the background and expertise to work with buyers on an exclusive basis. Attending a home buyer seminar allows the exchange back and forth between agents and buyers and allows agents to help buyers figure out where they need to begin and what questions to ask when looking at a home and picking an agent. Home buyer Seminars should include information for buyers on distressed properties, financial qualifications any new construction in the market place as well as a basic understanding of agency law and the process of searching for a home.

 

Our next free Home Buyers Seminar is Wednesday, January 9, 2013 at our office at 149 Emerald Street, Keene, NH. Call (603) 357-2121 for reservations.

 

By Dick Thackston CRB, ABR, ABRM, Broker NH, MA & VT

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What’s 2013 Look like for Homebuyers?

December 21st, 2012 | Posted by Dick Thackston in Mortgage News | New Real Estate | News | Real Estate News - (0 Comments)

Well, we all lived through the end of the Mayan Calendar! So, what next?

December has been unseasonably busy. Primarily its been new buyers coming into the market that are just beginning to look not just buyers that have been in the search for sometime wrapping up their searches. This is exciting news! It’s been many years since we’ve seen a genuine uptick in homebuyer traffic this late in the year. This tells me that we likely to have a busy Spring real estate season. There has been much new about “the Fiscal Cliff” but it appears to me that the increasing numbers of people coming through my company’s doors just don’t care and don’t relate to issues like “the Fiscal Cliff”.

 

The potential Homebuyers that my staff and I are talking to are people that have been waiting for several years to buy at “the right time” and they perceive that opportunity is likely to be passing them by if they wait too much longer. Most Homebuyers we are seeing are expressing their concern about missing a closing window of opportunity of low home prices and low interest rates. Often the challenge, at this point, is not finding a credit worthy Homebuyer but finding a home that is in financeable condition for a reasonable price.

 

To be sure Bank/Lender Owned REO properties represent a large section of the market probably 25-30% of the home market in Central New England unfortunately a very high percentage of these properties cannot be financed with out obtaining special re-hab financing such as an FHA 203K loan. These properties remain especially attractive to first time homebuyers however, lenders are slow to make these loans and many times first time buyers do not realize the extent of the work needed or they anticipate they can “do it themselves” which is often impractical from a lender’s perspective.

 

So here’s how the Spring real estate market is likely to sort itself out. Buyer’s will be coming through the door in increasing numbers through the first three months of the year and then volume of buyers is likely to level off and stay constant through mid-June. Houses in good locations, in good condition, in good price points are likely to sell in days and weeks rather than months and years. There will be “clinkers” in all neighborhoods that just won’t sell or have interest because of some flaw that the Home buying public will walk away from either price or condition most likely. Clean houses will sell at a 10% premium over the same house in the same neighborhood and investors and “flippers” will still be an active part of the market buying these properties at significant discounts and returning them to the market in 60-90 days.

 

The most active price range is likely to be between $145,000 and $170,000 in our area and it very likely that there will almost no homes available in the range from $100,000 to $135,000. There will be junk properties under $100,000 which will be selling basically for lot value but the range just of $100,000 is likely to evaporate quickly as it’s too low for a good house and too high for a junk property. The most active markets, as measured by rate of turnover are likely to be anything in Swanzey, which never has enough inventory, Marlborough or Troy followed by the largest volume of sales in the City of Keene. In Vermont properties in Bellows Falls and Saxton’s River are likely to take off in price as will Brattleboro. In Sullivan County Newport has already seen an explosive 24% increase in housing prices in the last year and Claremont is not far behind. Winchendon and Athol will probably see ten to fifteen percent increases in home prices over the next year.

 

By Dick Thackston CRB, ABR, ABRM, Broker NH, MA & VT

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Is there an Upside to Looking for a Home in The Winter Months?

December 3rd, 2012 | Posted by Dick Thackston in Mortgage News | New Real Estate | News | Real Estate News - (0 Comments)

Real Estate tradition, in this part of the country says that “…there’s no point in having your house on the market in the winter between Thanksgiving and the Super Bowl…” I’ve always thought this was a silly myth and have always advised my clients – both buyers and sellers of the fallacy of this thinking. I started my real estate career on December 12th, 1982. I was offered a position with a new home builder in Glen BurnieMaryland in the winter when a really good interest rate on a home mortgage was around 13%. I’m pretty sure the real reason I was hired was not any great expectations about me doing a bang up job but, because I was “dumb enough” to take the job in mid-winter with minimal commitment from the builder, and the regular staff was all going on a company paid tour of Mexico. Being a recent college graduate and not being familiar with all the “Facts of life”, as known by the real estate industry, I did not know that no one was supposed to be out buying houses in December of 1982. I sold twelve homes that month – who knew!

 

They kept me on when they came back.

 

Anyway enough about me, here’s the point. The winter can be a truly breath taking good time for residential real estate. The transactions are typically quick, clean and fast.

 

Top Reason # 1 for doing real estate in the winter: Residential real estate can be a bit like driving down a turnpike for buyers, sellers and agents, because as there are more people on the road traffic tends to slow down and small bottlenecks become more pronounced. When the highway is very crowded many people make mistakes or get frustrated and everyone on the road suffers. So to buy real estate in the winter buyers have a slightly more limited pool of inventory to pick from but they have a much better pool of inventory. Typically the sellers who have their homes on the market in the winter are serious sellers, they are not putting their home on the market to “try things out and see what happens” they want or need to sell and are generally more prepared to handle issues reasonably.

 

Top Reason # 2 for doing real estate in the winter: Good properties just don’t sit around as long. Think of it this way: if a buyer has been thinking about looking for a home and has been scanning the web for months or has been out looking or a home with an agent or even made some offers that fell through due to any number of reasons, when a good property comes on the market these folks can see it and generally will snap it up. There’s an old saying in retail sales: an educated consumer is the best customer. These real estate consumers are self educated and well educated. Buyers at this time of year can pick out a deal and don’t wait.

 

Top Reason # 3 for doing real estate in the winter: There’s simply less competition. Look back at reason # 1: would you rather drive down a crowded highway in rush hour or a busy highway on a sunny day. The psychic effect of having a well negotiated clear transaction with less pressure is huge. Many times it takes home buyers and sellers years to recover emotionally from a messed up transaction. Yes there are the Holidays but you’ll also have an open road.

 

Remember it’s still a home, it’s not really supposed to be just an investment. You aren’t going to steal a house if you’re a buyer and you aren’t going to be the only game in town if you’re a seller – ultimately both buyers and sellers can and do wait if they don’t get what they feel is fair. All the regular rules apply to transactions, but residential real estate in the “Off Season” can be very worthwhile.

 

 

Technology is likely to have a significant impact on the structure of the real estate industry in the coming recovery for a number of reasons. Real estate transactions have basically two related and separate parts the seller side and the buyer side.

 

The Buyer Side will not be as greatly impacted by change as the seller side due to some factors which are basic to the process. The impact of technology on the buyer’s side will primarily be on the media not on agents and buyers. Most people who have been involved with the real estate industry over the last ten or fifteen years have known that print advertising has declined in efficacy dramatically. Virtually all buyers begin and continue their home searches on line. Broker and real estate franchise that have been tracking the source of their business for many years have seen that buyer leads that came primarily from print advertising before the internet have seen the number of viable leads from print advertising drop to a very small number of viable buyer leads. The last and most effective use of print advertising has become open house events or very short term immediate demand sort of inventory like rentals. Buyers still however require the assistance of a licensed real estate agent to help them work their way through a real estate transaction and access and view properties as well as negotiate and consummate a real estate transaction. Fees for trained and competent Buyers Agents are likely to remain in the 2.5% to 3.5% of the transaction price that they have been in for many years due to the high time consumption and relatively high failure rate that Buyer Sides of transactions experience.

 

The Seller’s Side of real estate is likely to see the greatest changes. For a decade or more before the Great Recession large banks had been trying to repeal laws that barred them from providing real estate services such as listing and selling homes for their customers. Now as a result of the unprecedented number of foreclosures in the hands of banks they have become The Dominant Sellers of real estate in theUnited States. Fanne Mae and Freddie Mac established 6% as the official normal commission that they would accept on both short sales and foreclosures and required that commissions be spit equally between buyer’s side and seller’s side in a real estate transaction. Every real estate agent in the United States has been trained that establishment of “Normal” or “Set Fees” has an anti Trust violation since the late 1970’s however the big banks and Fanne Mae and Freddie Mac have been seen as exempt from these laws. This has resulted in a situation where the majority of listings that sell are listed by Bank/Lenders that own them at a nominal rate of 6% with local real estate agents and agencies but using a conduit of  third party companies that collect hefty referral fees on their listings leaving the selling agencies to work with 1.5% to 2% of the actual sales price rather than the 3% to 4% that they have historically have had to work with since the end of World War II. These agents and agencies have been able to do this because of the downward changes in their cost structure do to the changes in technology.

 

It is unlikely that as non-institutional home sellers are able to re-enter the home selling market as prices stabilize and even rise in the foreseeable future that the advantage to both consumers and Realtors of lower fees on the listings side of real estate transactions will be lost, that have been made possible by the reduced operating costs possible for Realtors due to the changes in technology.

 

By Dick Thackston CRB, ABR, ABRM, Broker NH, MA & VT

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Will Technology Make the Real Estate Recovery Different from Past Recoveries?

November 26th, 2012 | Posted by Dick Thackston in New Real Estate | News | Real Estate News - (0 Comments)

 

First off, let’s be clear about this so called recovery every talking head in the media keeps talking about – it’s not your parents or grandparents recovery. It might be your great-grandparents recovery though! No economic downturn has had such a damaging effect on American Home ownership since the 1930’s and that effect is not going to go away anytime soon. This has been different from the 1930’s in that in the 1930’s destruction of housing values was pretty much across the board from Rich to Poor; in the current event the damage was primarily at the bottom and middle with homes over $750,000 – $1,000,000 range actually increasing in price during the period of this downturn. Since the end of World War II housing downturns have been generally short lived, in the eighteen to twenty four month range, and primarily inventory adjustment events in this case which began in the third quarter of 2005, the downturn has been primarily a loss of confidence – a much harder basis to recover from in all cases.

Technology is likely to have a significant impact on the structure of the real estate industry in the coming recovery for a number of reasons. Real estate transactions have basically two related and separate parts: the seller side and the buyer side.

The Buyer Side will not be as greatly impacted by change as the seller side due to some factors which are basic to the process. The impact of technology on the buyer’s side will primarily be on the media not on agents and buyers. Most people who have been involved with the real estate industry over the last ten or fifteen years have known that print advertising has declined in efficacy dramatically. Virtually all buyers begin and continue their home searches on line. Brokers and real estate franchises that have been tracking the source of their business for many years have seen that buyer leads that came primarily from print advertising before the internet have seen the number of viable leads from print advertising drop to a very small number of viable buyer leads. The last and most effective use of print advertising has become open house events or very short term immediate demand sort of inventory like rentals. Buyers still however require the assistance of a licensed real estate agent to help them work their way through a real estate transaction and access and view properties as well as negotiate and consummate a real estate transaction. Fees for trained and competent Buyers Agents are likely to remain in the 2.5% to 3.5% of the transaction price that they have been in for many years due to the high time consumption and relatively high failure rate that Buyer Sides of transactions experience.

The Seller’s Side of real estate is likely to see the greatest changes. For a decade or more before the Great Recession large banks had been trying to repeal laws that barred them from providing real estate services such as listing and selling homes for their customers. Now as a result of the unprecedented number of foreclosures in the hands of banks they have become The Dominant Sellers of real estate in the United States. Fannie Mae and Freddie Mac established 6% as the official normal commission that they would accept on both short sales and foreclosures and required that commissions be spit equally between buyer’s side and seller’s side in a real estate transaction. Every real estate agent in the United States has been trained that establishment of “Normal” or “Set Fees” has an anti Trust violation since the late 1970’s, however the big banks and Fannie Mae and Freddie Mac have been seen as exempt from these laws. This has resulted in a situation where the majority of listings that sell are listed by Bank/Lenders that own them at a nominal rate of 6% with local real estate agents and agencies but using a conduit of third party companies, that collect hefty referral fees on their listings, leave the selling agencies to work with 1.5% to 2% of the actual sales price rather than the 3% to 4% that they have historically have had to work with since the end of World War II. These agents and agencies have been able to do this because of the downward changes in their cost structure do to the changes in technology.

It is unlikely that as non-institutional home sellers are able to re-enter the home selling market as prices stabilize, and even rise in the foreseeable future, that the advantage to both consumers and Realtors of lower fees on the listings side of real estate transactions will be lost, which have been made possible by the reduced operating costs possible for Realtors due to the changes in technology.

 

By Dick Thackston CRB, ABR, ABRM, Broker NH, MA & VT

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The Elections Over! So now what for housing?

November 13th, 2012 | Posted by Dick Thackston in New Real Estate | News | Real Estate News - (0 Comments)

After what feels like an election cycle that has lasted forever (over eighteen months in New Hampshire) perhaps we can get on with the business of running our lives and business in a stable environment. While I’m not a great fan on what has happened over the last four years in Washington, at least we know where we are and given no great new changes in the economy or in Washington and there are some realities that are pretty apparent.

Clearly, housing has bottomed and there are signs of a kind of stability in residential housing. The majority of sales are Bank/lender owned properties; a record number of which are selling for cash. My own experience is that about thirty percent of sales are cash. I have spoken with other REALTORS in our area a few have reported cash sales as high as forty percent and a few have reported cash sales of around twenty-five percent, but all are in agreement the cash sales represent a huge chunk of the residential business at  this time. The drivers here are the truly low interest rates that savers can earn on any cash reserves they may have, the difficulty in obtaining financing generally and the difficulty in obtaining financing specifically on bank/lender owned properties due to the generally poor condition of these properties. The Federal Reserves continued commitment to keeping interest rates low into 2014 means this is likely to remain a major part of real estate sales into the future.

The end of the loan modification programs from Fannie Mae and Freddie Mac means that the message is clear to borrowers: if you want to keep your house you must pay the mortgage. These programs were almost criminally maladministered and sent mixed messages to home owners. Many homeowners stopped making their mortgage payments so that they could take advantage of these programs and actually ended up loosing their homes. The disappearance of these programs is likely to stabilize the housing market more than any other single event. More stable housing market = fewer foreclosures = better prices = housing recovery, although it will still take years to work through the backlog of homes in various stages of foreclosure.

The current administration remaining in office in Washington is also probably good news for housing and the average home buyer. It is more likely that the current administration will act to support the concept of a secondary market for home mortgages through Fannie Mae and Freddie Mac. Proposals put out by some of the more conservative supporters of the Republicans in the last election cycle to dismantle Fannie Mae and Freddie Mac and to have required huge down payments would have been a greater drag on housing and the economy than any of the various proposed limitations on interest deductions on home mortgages. Any thing that eases housing lending will be good for a recovery in housing.

Banks/lenders have been far more proactive about foreclosing on properties in recent weeks and months. They have been quicker to act on delinquencies and been quicker to act in putting properties on the market than at anytime in the last five years.

The primary focus in housing sales for the foreseeable year or more is likely to be bank/lender owned properties. Until a significant share of the foreclosure back log is burned up through new sales, foreclosures will be the driving force in house prices leaving little or no room for price increases through this and most regions of the country with first timers and investors being the primary source of buyers.

 

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

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