Real Estate News & Updates from the Monadnock Region
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Strange, but True: Your House Price Drops but REO Properties go up in Price!

May 10th, 2012 | Posted by Dick Thackston in Mortgage News | News | Real Estate News - (0 Comments)

According to several industry sources the average value of bank owned, REO Properties, has actually increased in the last years while the value of non-bank owned real estate has dropped on average! There are several reasons in the realm of conventional wisdom as to why this is happening; the most common reason given is that REO properties are being bought up by investment groups and turned into rentals thus driving up the price of REO’s on average. While this certainly is a factor there are other factors that are probably more important to the change in real estate values that I see happening as a “boots on the ground REALTOR”.

Here’s how I see it. The initial wave of foreclosures was for the most part badly maintained and marginal properties: no real surprise that the most marginal home owners were the least able to maintain and upgrade their homes and least able to hang on through tough, tougher and tougher economic times. These homes languished off the market as so called “shadow inventory” for months and in many cases years due to a hostile regulatory and legal environment in which mortgage holders found themselves, thus slowing up the process of foreclosure, resale and return of these residential assets to productive use. No news there really. What the facts recently made public noted about rising REO prices and declining price on non-bank owned real estate indicates is not that we are “moving toward the middle” but in-fact indicate that we are continuing to crater the housing market in slow motion.

This pattern of rising REO value reflects exactly what many experienced REO REALTORS have noted over the last six to nine months: we are getting better quality inventory. The better quality inventory is the result of the economic damage moving up the food chain from the economic bottom into the middle and above. The middle class buyer that bought his house at a fair market price in 2009 is likely to find that when he goes to sell his home today it’s worth the same or a little less and that any improvements he made have added little or no value. So, if they can’t hang on and they can’t sell they let it go. Thus leading to a better class REO property and putting further and continuing pressure on the middle of the market.

What does it all mean? It means that there is no foreseeable improvement coming for non-REO properties and that REO properties will continue to dominate the residential real estate market. Warren Buffet is right: single family homes are likely to continue to be an excellent investment for those who can“buy and hold” but only for those who can buy and hold either as owner occupants or as investors looking at increasingly higher and higher rents over the foreseeable future.

 

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

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Whats Real Estate Gonna be Like in 2012?

January 5th, 2012 | Posted by Dick Thackston in Uncategorized - (0 Comments)

WHAT’S REAL ESTATE GONNA BE LIKE IN 2012? By Dick Thackston CRB, ABR, ABRM, Broker NH, MA & VT

2012 is looking like it’s shaping up to be the year of the buyer. The winter months so far here in the Northeast have been unusually busy with buyers poking around virtually ever listing – mind you it has not been hundreds or even dozens of buyers coming out to Open House like in the mid 2000’s but there’s been plenty of action. Over the holiday week virtually every REO listing I have has had one or more showings.

Conventional wisdom says that the buyers are going to remain primarily investors and first time buyers.

The investors were out in force in the month of December probing banks and making low offers hoping that banks would take massive price hits to get properties off their books and closed by 12.31.11. I don’t know of any of these offers that went anywhere, clearly these investors do not understand the obligations or objectives of asset manager’s or company’s working out REO inventory on behalf of investors. The truth is that it costs very little to hold a property and with rare exception the REO assets are priced to the market and there is NO incentive for REO assets to be dumped just because it’s the end of the year. As a practical matter most lenders run on fiscal years that don’t end on 12.31 so it’s just another day – many do not even use natural quarters of the year for the end of their businesses. That being said many excellent transactions were originated in the month that were great opportunities in the medium and long time frames. I had one experienced investor come into my office and talk for about forty-five minutes today about how he has changed his strategy to conform to the current climate.  Now mind you this man has been buying, selling and building houses in this region for over thirty years. Traditionally he has picked up land and renovation projects in the down turns and built new homes or renovated and flipped, but he has changed his tack for now. He can’t build profitably and doesn’t want to “build for practice” so he’s banking land assets and buying moderately poor condition homes and stabilizing them with the plan of renting them out. I asked him how many did he plan on doing and he said he’s done nine clean-up and rent outs in the last six months of 2011. His business model is to acquire single family homes and renovate for a total of $75,000 or less which gives him about a 20% gross return based upon is average rent of $1,200. Not bad when you look at your other investment alternatives.

First time buyers are also out in force. They are of course first time buyers and have lots of information, most of which is bad, and lots of input from family, most of whom know less than the first time buyers. These folks are getting transactions together and they are closing, but it is very painful for them because regardless of the input from REALTORS who are actually trained as a buyer’s representative, (like me I am both an Accredited Buyer’s Representative and an Accredited Buyer’s Representative Manager through the National Association of REALTORS), they tend to listen to friends and family who bought homes at sometime in the past, and this is definitely not your Uncle Louie’s real estate market. Big changes for buyers are that no REO Manager will consider an offer that doesn’t have a high quality pre-qualification letter along with it – these REO managers don’t do wishful thinking, they want to know that the buyer can perform or they won’t consider tying up inventory. Other big changes are that when the REO contracts are accepted and they call for closing by a specific date there are penalties to the buyers for not closing on time or not completing inspections on time. The REO managers aren’t kidding when they say as is where is and close on time – this is very different from what most buyers came to expect in the last few years of the real estate boom. Most sellers and their agents became really flexible on dates and repairs because they knew intuitively no mater what the buyer wanted they were still making a killing on their property: that would not be the REO market – no matter what the REO’s are loosing money for the investors behind them and they are tremendous opportunities for the buyers who will live in them for a period of years and pay down there loans and sell later in a better time.

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So, Its a buyers market! Now What?

August 8th, 2011 | Posted by Dick Thackston in Buying Tips | Mortgage News | Real Estate News - (0 Comments)

By Dick Thackston

Its a buyer’s market – true – but what does that mean to you if you’re a home buyer? Are you looking to get “a great deal” and tell all your friends that you bought a house from a bank for $20,000 or are you looking to buy a home that you can live in and build equity and “have a life” over a reasonable period of time? Do you have the temperament of or for being an investor or do you not have the willingness or ability to take risks and experience losses? These are all REALLY, Really important questions you need to be able to answer if you thinking you want to play in this market.

First let’s consider what’s a good deal. Certainly you can buy a house for under $50,000. Many properties are being sold for small fractions of what they last sold for or were mortgaged for at the top of the market. DO NOT BE CONFUSED ABOUT WHAT THIS MEANS! These homes are in poor condition; most were not really qualified for the mortgages they had based upon condition but one of the characteristics of the B & C lending market of a few years ago was that they did not require homes to be up to speed. The loans were made on the hope that the borrowers would fix them up or that the housing market would inflate further or more likely both.

To buy these homes now for the most part you need lots of cash: cash to buy them and cash to renovate them. You also need to know that you may be years from getting your cash back. Normally lenders will require that your ownership and repairs be “seasoned” for at least a year before they will allow a new loan. Also, you will need to know that just because you want to make certain repairs that will “make it yours” it does not mean that you will be adding significant or any value in today’s real estate market. Roof’s, septic systems, electrical work, plumbing are all things that are expected by most home buyers to be in fair or better condition when purchasing home so you don’t get extra credit for those.

What if you miscalculate on your repairs? You eat the loss. That’s why these are called investor specials you and can win or loose. I work with several teams of investors who take on these projects. They are well capitalized and they have a plan for doing the work, they have studied each property sixteen ways from Sunday and if doesn’t look like it will work exactly as they have calculated they don’t do the deal. If your plan is to buy and work on it, will you really be prepared to live in a construction site for the next three to five years? The work always takes more time and money than the average buyer expects – even in normal times – and these are not normal times – and what typically happens is that people get bored or overwhelmed and the sell at or slightly above their costs and move on because home prices have inflated. There is no expectation that home prices will be inflating anytime soon. Most experts plan on housing to stay about where it is right now for at least another three or four years. It may get worse first.

Buying the house you want may prove to be a paradox. The value of well maintained homes has not declined as much as the averages would lead you to believe. Why, you may ask, is this? Simple if people who bought their homes in the last ten years, for all the right reasons, still have their jobs, still like their neighbors aren’t dead or getting a divorce why would they sell in this market? They don’t. Remember that in our area,Central New England, unemployment is some of the lowest in the entire country – generally under 5%.

When you hear about the million houses projected to be going to foreclosure over the next year that sounds like a big number, but remember that home sales in this country have regularly topped 5 million in the last generation, so while the number of foreclosures is huge relative to all the homes that exist in this country that are privately owned, it’s a relatively small number. The truth here is that as a country we never expected to have any significant number of homes go to foreclosure.

What does that mean for you as a home buyer in this market? It means that if you want a home now you can get a good value but you need to know who you are how, much you want to spend, and how long you want to stay in a home before you think you might need to or want to sell. Prudence is certainly important and the most important aspects of buying a home in today’s world are that you plan on using it as a house not a piggy bank and know that it’s a place to live for three or more years, maybe the rest of your life, maybe a decade, maybe till the kids are out of school. You won’t make $10,000 trouble free dollars by painting the bedrooms neutral colors and selling the house in a year.

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HOW COME THE BANKS WONT ACCEPT THE OFFERS I MAKE ON THEIR FORECLOSURES? IVE MADE THREE OFFERS AND STILL NO DEALS!

March 28th, 2011 | Posted by Dick Thackston in Buying Tips | Real Estate News - (0 Comments)

By Dick Thackston

I hear this all the time. Many would be buyers, both investors and just plain home buyers, are looking at bank owned properties and are very excited about the obvious opportunities but can’t get a bank to accept their offer and they don’t understand why.

The first and most common reason is the “Uncle Louie Effect”.

The “Uncle Louie Effect” works like this: everyone has an Uncle Louie who could have bought the same house of kind of house twenty years ago for one half of whatever they are paying for a particular property. It doesn’t matter if it is land, an apartment building, a house in a subdivision or the Empire State Building, no matter what the deal is they could have done better or they know someone who just did better; because of this the buyer or potential buyer feels a competitive need to make an ridiculous offer.

Example: Bank owned property at 123 Happy Street has gone to foreclosure. The bank has cleaned the house out, obtained valuations from two local REALTORS. One REALTOR valued the house at $95,000 and the other valued the house at $105,000. The bank ordered an appraisal from a Licensed Appraiser, registered with the State Banking Commission who arrived at a price of $102,500. The bank puts the house on the market for $99,000. Mike and Mary Jones see the house in the Saturday paper and call their buyer agent to set up a showing. It’s just right, they want the house, they go home, they talk and they think “I wonder what we should offer, the last time the house sold it sold for $150,000 and the town has it assessed for $142,000.” They call Uncle Louie he says “Take 40% off the asking price, I wouldn’t give a bank more than 60% of what they are asking.” So that’s what they do. Mike and Mary have a buyer’s agent who tells them “You know it’s really a good price maybe you should offer something closer to the asking price.” But they ignore their agent’s advice because Uncle Louie said… So they offer $60,000 – just to be sure they aren’t paying too much and to their utter astonishment the bank does not accept their offer, does not counter, and sells the property to some one else. A few weeks later when they are sitting home in their apartment, (Oh, by the way their rent is $50 per month more than the PITI would have been on the house if they paid full price!), and they are looking at the Saturday paper and read the real estate transfers when they see 123 Happy Street was sold by the bank for $92,500. They immediately get on the phone and call their REALTOR, mad, and tell the REALTOR, “That house sold for only $92,500 – we would have paid that!” the REALTOR then meekly asks “Then why did you only offer $60,000?” The Uncle Louie Effect!

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The only thing that stays the same is change. -Anonymous

December 28th, 2010 | Posted by Dick Thackston in Mortgage News | Real Estate News - (0 Comments)

There are likely to be several good reasons that real estate will look better to both sellers and buyers in the next year / time of course will tell.

Mortgage rates will remain at historic lows. No doubt interest rates will increase but will still remain at historic lows probably in the 6% range which is well below the historic home mortgage rate of the last forty years which has averaged out closer to 10%. Despite indecision and jawboning in Washington as to what to do about both Fannie Mae and Freddie Mac realistically there will be no economic recovery without housing and there will not be without a secondary market with out Fannie Mae and Freddie Mac. Probability is that nothing concrete will be changed in the coming year which is actually good since the proposals originating from the talking heads in Washington are almost all bad, all anti-housing and all likely to lead to a worse rather than a better housing picture therefore nothing is likely to be done.

At the end of the day we are still Americans and as a group we still want to own homes. Probably the approach to home ownership in some regions of the country will be more basic than it has been in many years, (people will go back to buying housing for well housing rather than speculation), but this is probably a good thing in the long run which would lead to greater stability in the lending sector and more confidence in the consumer sector which will bring more of the average home buyers off the sidelines if they don’t fell like they will loose their house once they buy it. (Fannie Mae has recently done a survey that shows the majority of Americans still believe a home is a safe and usable investment.)

Builders and lenders will begin putting new inventory into the system. Builders have not been able to build profitable for several years and many have been saddled with inventory that appears to be going away. Lenders have put most of their “trash” inventory on the market in the last two years in hope that they could force it through the system as buyers would have little or no choice which in many cases was true. It appears that lenders are making plans to release a significant volume of properties after the New Year that is likely to be of a more competitive quality and well priced.

There is talk of tax cuts. For now the current tax code is in place that allows the interest and taxes on both a principal residence and secondary residence to be deducted from most peoples taxes. The Pushme-pullyou activity makes this too close to call but it would appear that the minds set of the new congress forming in a few days is more likely to manipulate the economy through the tax code than the failed one time direct action that we’ve seen in the last two years. Watch and see but something will probably happen here by late spring for the better.

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News From NAR: International Interest in U.S. Homeownership Increases, Realtors Report

July 9th, 2010 | Posted by Dick Thackston in Real Estate News - (0 Comments)

Saul Klein, e-PRO Real Estate Educator San Diego, CA

Jul 08, 2010

International Interest in U.S. Homeownership Increases, Realtors Report

WASHINGTON (July 7, 2010) – International home buyers are increasingly
attracted to property in the U.S., according to the National Association
of Realtors’ 2010 Profile of International Home Buying Activity.
Several factors, including the strength of the dollar, the value and
desirability of U.S. real estate, and the emerging economic recovery,
continue to drive international interest in owning a home in this
country.

“While all real estate in the U.S. is local, the same is not true for
property owners,” said NAR President Vicki Cox Golder, owner of Vicki L.
Cox Real Estate in Tucson, Ariz. “The U.S. continues to be a top
destination for international buyers from all over the world. Foreign
buyers understand the value of owning a home in this country and can
rely on Realtors® to help guide them through the complex process of
buying property in the U.S. With expertise, knowledge and experience,
Realtors® have a global perspective.”

The survey, released today, covers the period between April 1, 2009, and
March 31, 2010. During that time foreign buyers, including those with
residency outside the U.S. as well as recent immigrants and temporary
visa holders, are estimated to have purchased $66 billion of U.S.
residential property, or 7 percent of the residential market.

Slightly more than a quarter of Realtors®, 28 percent, reported working
with at least one international client in the past year. This is a
significant increase from the 2009 report, when 23 percent of Realtors®
worked with foreign clients. Eighteen percent of all Realtors® were
estimated to have completed at least one sale, compared to 12 percent
last year.

“Several factors have contributed to an increase in international buyer
interest in the U.S.,” said Golder. “A large majority of Realtors®
report the changes in value to the U.S. dollar have had a strong impact
on the international real estate business. In addition, perceptions
abroad about trends in the U.S. real estate market have led many
international clients to believe purchasing a home in the U.S. is more
affordable than in their country and holds more value.”

International buyers came from 53 different countries around the world.
The top four countries were Canada, Mexico, the U.K. and China/Hong
Kong. With 23 percent of international buyers coming from Canada, the
country has remained the largest buying group in the past three years.
Foreign buyers from Mexico have been steadily increasing. In 2010 Mexico
replaced the U.K. as the second largest buying group with 10 percent of
buyers. Buyers from the U.K. decreased from 10.5 percent in 2009 to nine
percent in 2010. Eight percent of recent buyers came from China/Hong
Kong.

Two factors important to international clients when purchasing property
in the U.S. are proximity to their home country and the convenience of
air transportation. Florida typically attracts European, Canadian and
South American buyers while the East Coast draws Europeans. The West
Coast brings Asian buyers and the Southwest attracts Mexicans.

International buyers were reported in 39 states in 2010, but a slight
majority of the total buyers are concentrated in Florida, California,
Arizona and Texas. These four states account for 53 percent of purchases
and have remained the top destinations for the past three years, with
Florida and California remaining the top two destinations.

The median price paid by international buyers for a home in the U.S. was
$219,400, a decrease from 2009′s median price of $247,100. However, the
median price paid by foreign buyers was significantly higher than the
overall median market price, which was $172,500 in 2009. On average,
foreign buyers tend to purchase closer to the upper end of the market;
16 percent of the total international purchases were for homes priced at
more than $500,000. According to Realtors®, this was because
international buyers are typically looking for a second home.

A majority of international buyers, 66 percent, purchased single-family
detached homes. However, more international buyers purchased a condo
than did their U.S. counterparts, at 23 percent and 7 percent,
respectively. Only 44 percent of international buyers used a mortgage to
pay for their home, compared to 92 percent of domestic buyers.
Fifty-five percent of foreign buyers paid all cash. Realtors® reported
that a majority of international buyers use all cash because of the
difficulty in establishing international credit in the U.S. Over
one-third, 34 percent, of potential foreign buyers was unable to
complete transactions because of financing problems in the U.S.

The National Association of Realtors®, “The Voice for Real Estate,” is
America’s largest trade association, representing 1.1 million members
involved in all aspects of the residential and commercial real estate
industries.

….
Information about NAR is available at www.realtor.org. News releases are
posted in the Web site’s “News Media” section in the NAR Media
Center.

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“I want to buy this foreclosure, but the condition is awful!”…

November 2nd, 2009 | Posted by Dick Thackston in Mortgage News | Real Estate News - (0 Comments)

It seems hard to believe that some of the best deals in the home buying market can’t be purchased by the average person who would use them as a home for their family. Because of condition a substantial portion of Lender Owned Homes can’t be financed. This has been true for years.                  

Hope is now on the horizon with foreclosure filings at record levels — default notices, scheduled auctions and bank repossessions were reported on 937,840 properties in the third quarter, a 5 percent increase from the previous quarter and an increase of nearly 23 percent from Q3 2008 – the government through the Federal Housing Administration, FHA, has taken positive action.

FHA is ramping up its 203K program for the first time in years. The FHA 203K program allows homebuyers to finance a home that is at least one year old and get additional money to fix it up and bring it up to standards. The FHA doesn’t just give borrowers a blank check however, what it does is provide a system of draws against work calculated into the original mortgage when the home is purchased.

If you’re buying a bank owned or other property that will need substantial repairs the 203K process allows you to obtain bids and calculate approximate needed repairs prior to purchase and then after closing use the money to pay licensed contractors. It’s important to note that the program is not designed for “do it yourselfers” since in the process you will be expected to get real bids from real contractors. Helping you in negotiations for a Lender Owned Home and finding financing that will work well in the sale is just one of the critical ways Dick Thackston and his team can help you.

Helping buyer’s find and purchase, defaulted properties, REO’s, has been a big part of Dick Thackston’s business since – well it feels like forever! Dick works with the other 34 New Hampshire, Vermont & Massachusetts agents in his 3 offices helping buyers find and close on Short Sales and REO properties. To see all the homes on the market today in New Hampshire, Vermont & Massachusetts visit www.dickthackston.com or give him a call today at 603.283.0622.

 

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What the heck are “BULK REO SALES” & why would I care?

October 8th, 2009 | Posted by Dick Thackston in 1 - (0 Comments)

What the heck are “BULK REO SALES” & why would I care?

 

One of the big keys to success for many in the Default Servicing world, the polite term for foreclosed properties, is Bulk REO, (Real Estate Owned), business. Bulk sales have always been around but are now expected to play an even larger part in the market than ever before. In today’s Default Servicing world where lender’s and investors – such as Fannie Mae and Freddie Mac – are looking a staggering numbers of REO’s. Bulk sales to investors are seen as one of the quickest most efficient ways to get properties off the books and cash into the lender’s hands with the least amount of trouble.

Most REALTORS are just not familiar enough with the idea, let alone the process, to help their client participate in Bulk Sales.

Bulk Sales can be put together in packages with as few as six properties. The key is to learn how to get direct with the sellers of assets. Most folks haven't a clue as to how to find sellers let alone how to work with them.

Typically the negotiations in Bulk Sales revolve around the number and location of the properties. Let’s be clear working the Bulk Sale business is not for the faint of heart. These are the properties that lenders are least interested in managing and liquidating. Bulk Sales are cash on the barrel-head no refunds, excuses or problems basis and if you don’t like it once you bought it too bad.

All that being said there is tremendous opportunity for profit.

 There are two basic paths purchasers use when looking at Bulk Sales: buy rehabilitate and hold or buy rehabilitate and flip. Totally up to the purchaser of the package; either plan can be tremendously profitable; either can be tremendously risky; the seller really doesn’t care.

Defaulted properties, REO’s, have been a big part of Dick Thackston’s business since the S&L Crisis of the early 1990′s and Bulk Sales are likely to have a bigger impact than ever before on real property values in the region – in many cases Bulk Sales will even improve values in towns by drying up excess inventory. Dick works with the other 34 New Hampshire, Vermont & Massachusetts agents in his 3 offices helping investors’ liquidate and buyers find REO properties.

 

Helping you in negotiations for Bulk Sales is just one of the ways Dick Thackston and his team can help you when they help you buy a Lender owned – REO property.  To see all the homes on the market today in New Hampshire, Vermont & Massachusetts visit www.dickthackston.com or give him a call today at 603.283.0622.

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Real Estate Market Update

March 11th, 2009 | Posted by Dick Thackston in News | Real Estate News - (0 Comments)

Well, you can’t say things aren’t interesting in real estate and the economy right now. The real estate market in Cheshire County and the Monadnock Region of New Hampshire and Southeastern Vermont has taken some hits in the last three years but no one can say that opportunities don’t exist for the savvy investor or first-time buyer.

 

Real estate markets, as a rule, die from the top down and recover from the bottom up which makes certain aspects of the stimulus package potentially just what the doctor ordered for any first-time buyers who are looking to buy and hold a home for the long term.

 

The seemingly huge number for foreclosed properties as also provided great opportunities for investment buyers that are looking to flip or hold and rent properties as well.

 

The housing market remains tight through-out the region because of the large number of homes vacated as a result of foreclosure on top of the region’s historically limited housing inventory has actually driven rents up through out the area.

 

The largest drop in employment in the United States since 1949 has lead to several government programs. The “Making Home Affordable” program is designed to help as many as 7 million families remain current on their mortgages. The program has two main parts the first is to help homeowners with a solid payment history on existing loans owned by Fannie Mae & Freddie Mac but have been unable to take advantage of today’s favorable rates because their homes have lost value, the other is a loan modification to help at risk homeowners avoid foreclosure by reducing monthly payments.

 

Federal Reserve Chairman, Ben Bernanke, said this morning in a Q&A session with the Council on Foreign Relations was optimistic about the American economy. He did point out at one point that his record or predicting the end of the current downturn has not be correct so far although he still believes that markets should stabilize by year’s end and 2010 should be a year of recovery.

 

Stabilization and recovery are unlikely to have double digit rates of increase in housing values until there is major economic growth or 1970’s style inflation or perhaps both which would solve problems for home owners that over mortgaged. This may in fact be the best route out of the current problems for both homeowners and a government that have found themselves deeply in debit with limited options.

 

 

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