Real Estate News & Updates from the Monadnock Region
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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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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 do Banks Expect from Agents that Handle REO Properties?

August 17th, 2012 | Posted by Dick Thackston in Uncategorized - (0 Comments)

What is an REO? REO stands for “real estate owned” – it is a class of property owned by a lender. Most consumers don’t realize it but lenders that have REO Properties have very strict guidelines for the agents that work for them as Neighborhood Listing Agents helping dispose of REO inventory. The first tasks that REO Agents are charged with by lenders are to make sure that all transactions are done in compliance with all applicable local, state and Federal laws. The last things anyone wants in the REO industry is to have a property tied up or a sale to fail do to non-compliance with the rules. Legal issues, tenancy status, zoning and code violation, recording of deeds etc often make the initial phase of getting properties on the market slower than many anxious buyers would like, particularly if a buyer has targeted a property for some time. Any title issues need to be resolved no matter how long it may take even though it may be mind numbingly long to the uninitiated buyer. That being said, in the case of all these things, consumers are well served to be patient – as a general rule any problem not resolved prior to closing can come back to haunt an REO homebuyer tenfold after closing, and the REO seller’s work diligently to resolve these issues. After the legal issues, there are three basic areas that all REO sellers’ have made of super importance and abundantly clear to their agents: these are Information Security, Anti-Blight Campaigns and Relocation Assistance Programs.

Information Security is a huge concern to all of us in today’s hyper technological world of money and transfers; we’ve all heard horror stories about identity theft. REO Seller’s, who use the internet extensively to manage their assets, don’t want consumer data lost or used inappropriately. Most non-REO trained real estate agents are part-time and do not have extensive computer skills – many “do business the way we always have” and actually can be dangerously ambivalent to the level of private information. REO Sellers know that part-time and “old time” real estate agents are on the top of the target list for professional identity thieves and want to know that the REO Agent’s they hire are doing all they can to protect consumer’s personal information. REO Agent’s typically are required by the bank’s that list REO properties with them to follow these basic policies: 1. Maintain lockable file cabinets. 2. Have a clean desk policy – meaning files are left out of unsecured storage when they are not in use. 3. Confidential documents should be shredded not just thrown in the garbage. 4. Use encrypted e-mails when sending personal information. 5. Never send copies of checks, checking account numbers, Social Security numbers or credit information over the internet. 6. Avoid clicking on unknown links. 7. Maintain written Security Policies and make sure they are understood and enforced within the organization.

Anti-Blight Campaigns have become significant factors in the REO business over the last few years. Banks with REO Properties and Foreclosed homes do not want consumers to be go down the street and be able to pick out the REO’s do to lack of yard care and basic maintenance. Fannie Mae and Freddie Mac as well as many large regional banks know that the money they spend on maintenance will be paid back to them many times through quicker, easier sales requiring less discounting of price. Code Violations, unsecured properties, health and safety issues are all issues that the Full Time Professional REO agent is supposed to handle for the REO Seller. The REO agent is the number one point of contact and serves as the eyes and ears of the REO seller in neighborhoods. REO sellers are increasingly following up with random property checks and requirements for weekly dated photos to be sent to assist in verifying that the lenders REO’s are properly cared for and marketed.

Cash for Keys and Relocation Assistance Programs once unknown are now common place in the REO Industry. These programs are designed to help the occupants of homes that have gone to foreclosure move on. Many times REO properties are occupied by the former owners who have become what is legally know as “Tenants at Sufferance”. Many times they occupied by the friends, relatives or tenants of the Former Owners, any and all of whom need to have their occupancy resolved before the property can be sold as an REO. It is not unusual for an owner to have moved out of a property after it has gone to Foreclosure and rented it after the Foreclosure – this is not actually a valid lease – but the occupants needs still have to be addressed in some form. Most REO institutions have strict policies for agents who negotiate with occupants of Foreclosed Properties: 1. The owner’s of REO are making a Relocation Assistance Program/Cash For Keys offer to encourage occupants to leave as soon as possible – less time than an eviction would take. 2. REO Institutions have a range of offers that a REO Agent can make general determined by the property type location and condition. REO agents are not allowed to offer less than these amounts. 3. REO agents are expected to deal with occupants honestly ethically and fairly but remember they do work for the REO Investor and must keep the REO Investors interests first.

 

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

 

 

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A Little More About – Royal Barry Wills and the Great American Cape

July 24th, 2012 | Posted by Dick Thackston in News - (0 Comments)

The architecture and style of Royal Barry Wills and its impact on real estate and housing trends in modern America is with out peer. Wills’ unique use of traditional designs and signature use of specific design elements merits our special attention.

The Cape style home traditionally is thought of as being symmetrical in design. This is particularly true of the front elevation which is expected to have a Front Door centered on the elevation balanced by two equal sized windows equally spaced on either side of the Front Door. This is the definition for most students of Cape Design of a “Full Cape”. Capes with windows only on one side of the Front Door are considered “Half Capes” and Cape style homes with un-equal numbers windows on either side of the Front Door are considered “Three Quarter Capes”.

The evolution of these three design styles, Full, Three Quarter & Half Capes, makes perfect sense when you understand the configuration of life styles and economics in New England as the region developed in the seventeenth, eighteenth and early nineteenth Centuries. As settlers moved into a region and developed homesteads it was important to establish shelter relatively quickly so Half Capes were often how home homesteads were started. While the smaller size seems intuitively to provide for quicker construction because there would be less to build, and it is, one of the major drivers in choosing a Half Cape as an initial Homestead was the cellar. Cellars were integral parts to the homestead as the provided for a secure cool comparatively dry place to store food. New England’s soil is as a rule rocky so digging a cellar hole by had can be quite time consumptive and potentially hold up a building project to a dangerous extent – remember these people were living in tents or lean-to’s until the house was finished. Extensions and additional rooms could be added later. It is very common to go into the cellar of early capes in the Monadnock Region of New Hampshire, Western Massachusetts and Vermont and see that the basement and framing of the home reflect the fact that the home was built one side then first and balanced out later.

Another feature typical of early Cape style homes is the large central chimney. Commonly these were built right behind the front door and offered one or more fireplaces in each if the first floor rooms of the home. The side with the larger Kitchen Fireplace, which often has a baking oven built in it, normally is the side of the home that was built first in the early Capes. As heating technology improved at the end of the eighteenth and beginning of the nineteenth centuries new construction moved away from large central chimneys in favor of smaller single flue chimneys inside the home’s walls to facilitate the use of interior stoves for both heating and cooking. At the same time many Capes with large interior multi-flued chimneys where either being built down into the Rumford style or, more often than not, simply blocked off to accommodate a stove pipe. (One of the most fascinating parts of early Capes is the “Indian Room” that is formed by the backs of all the fireplaces and generally accessed by a hidden panel, generally only a few square feet in area. It is less likely that these spaces were used to hide from Indians than to hide and store food.)

Progressive spacing of the clapboards on an early Cape was quite common as well. The method of spacing the clapboards nearest the ground closer together and then ever father apart also had very practical origins in the early Cape Style home. Putting the clapboards closer together at the bottom of the wall accomplished two purposes it provided slightly more insulation against the snow but more importantly it provided ever so slightly a pitch to the wall that directed snow and ice to run off away from the homes sills and preserve them in many cases for two hundred or more years. Many novice owners of old Capes have changed the original design of exterior walls and found that their sills that had been sound for centuries rotted out in a few years.

Royal Barry Wills used all these traditional aspects of the Cape in his designs and each of them are considered part of his signature: use of graduated spacing of clapboards, large central chimneys, and connecting and balancing half Capes, three quarter Capes and Full Capes together to create lovely practical and well designed homes in the mid-Twentieth Century.

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

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Royal Barry Wills and the Great American Cape

July 16th, 2012 | Posted by Dick Thackston in Uncategorized - (0 Comments)

The architecture and style of Royal Barry Wills and its impact on real estate and housing trends in modern America is with out peer. Wills career and impact spanned the mid section of the twentieth Century starting in the 1920’s boom years and running into the early 1960’s. Housing trend varied widely through-out that time period due to economic and social changes all too numerous to mention through out those years but the clean simple lines of Wills designs and his focus on the traditional Cape style home and its flexible and elegant design are both consistent and unique.

Cape style home take their name from the Cape Code region ofMassachusettswhere these dynamic little homes first appeared as such in our country. Capes first appeared in the seventeenth century and where vaguely patterned after English farm houses but with several modification that make the quite different. Capes were and are built with low profiles which early settlers learned by experience was the best way to reduce wind damage in Cape Cod’s windy weather, much lower than a traditional English farm house. Capes while typically built with a post and beam construction like an English Farm House but were built with the timbers inside protective clapboard siding rather than with exposed beams and wattle & dub or stucco walls as in England. This is due again primarily as a result of the significant weather differences between New England and Old England. Early settlers realized immediately that their homes would both last longer and be much warmer in winter if they enclosed the structure in subsiding and clapboard. (It is interesting to note how practical early builders of Capes were in New England. Older Capes subsiding is typically straight cut lumber where you can see that the tree was not squared up but simply sliced and laid in courses reversing the direction with each board so they fit together.) The clapboard exteriors provide greater insulation than the solid stucco walls of English farm houses because of the dead air space between the exterior clapboard and subsiding and the interior split lath and plaster. (Split-lath is typically made from a sheet of walnut that is nailed and split into a “Z” pattern with plaster laid over it.) The bottom of interior walls typically had wainscoting installed to provide yet one more layer of insulation at the bottom against the often heavy winter snows.

Royal Barry Wills began his architectural career in Boston providing advice and writing newspaper columns in the Boston papers. Wills saw the efficiency and flexibility of the Cape design at that time which had long fallen out of favor with Americans as the style was viewed as an “old fashioned farmer’s house”. Wills changed this by completing designs that incorporated modern features and designs that were both modern and creative. His signature on a design was typically a large center chimney that raises the eye up and to the center of what might otherwise appear to be a rather low lying building. By adding box dormers to the front he was able to visually crenelate and break the roof line while adding light to the interior second floor rooms and by adding shed dormers to the back he was able to use the second floor space in a much more comfortable way for modern living and furniture. Hyphenating additions and garages with breezeways was another typical design technique that we take for granted today that was a Wills creation as well as his use of telescoping designs that used one or two apparent additions of increasingly smaller capes across the front that allowed the building to add space while not adding to proportions or  building mass.

 

The great American Cape as we know it today is largely a gift of Royal Barry Wills efforts to create visually appealing housing designs that are both creative and inexpensive to build that allow well proportioned interior space that draw upon traditional American home designs.

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

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What is New Hampshire’s Current Use Law?

May 14th, 2012 | Posted by Dick Thackston in News | Real Estate News - (0 Comments)

On July 1, 1973 the Current Use Law became effective in New Hampshire.  The Current Use law was designed to keep New Hampshire’s rural character in tact while allowing owner’s to use the land quoting from the preamble to the law itself: “It is hereby declared to be in the public interest to encourage preservation of open space, thus providing a healthful and attractive outdoor environment for work and recreation of the state’s citizen’s, maintaining the character of the state’s landscape, and conserving the land, water, forest, agricultural and wildlife resources.”

The effect of the Current Use law has been to provide a lower tax rate on larger tracts of land so that property owners would not be forced to subdivide and sell off their property in order to cope with large property tax bills. By keeping land in an undeveloped condition family farms have been preserved as well as woodlands, wet lands and other tracts that might well have been lost over the last thirty-nine years.

Over half on the land in New Hampshireis enrolled in the Current Use program and it has been the foundation of the State of New Hampshireprivate property based land conservation program.

The following are characteristics of the State of New Hampshire’s Current Use Program:

Generally speaking a parcel must be of at least ten acres, exceptions to this are wetlands of any size, tree farms of any size and parcels of less than ten acres that produce more than $2,500 in agricultural products. Open undeveloped land that is less than ten acres as well as any area covered by buildings does not qualify for Current Use.

If an owner acquires abutting parcels of less than ten acres the additional parcels can be added and would qualify for Current Use or if an owner has a number of abutting parcels of less than ten acres each but the entire contiguous amount owned is ten or more acres then the property is eligible for Current Use.

What is a contiguous parcel? Contiguous parcels under the Current Use Law are defined by the NHSPACE.org website as “more than one parcel of land, which is connected, even if a highway, rail bed, river or water body divides it. This means land that touches any of your property boundaries, or is across the road or on the other side of a pond, stream or river, on both sides of railroad tracks, or across a political boundary.”

If a property owner enrolls his property in Current Use it does not mean his land is now “Open to the Public”. When a property owner enrolls his property in Current Use it is still private property – remember the focus of this law has been keeping New Hampshirelarge undeveloped tracts in private hands – the property owner still has the right to determine how his property will be used just as he would if it were not in Current Use.

For more details on New Hampshire’s Current Use Law visit NHSPACE.org

 

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

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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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