Realtors® Applaud Appraisal Clarification as Good First Step

WASHINGTON (July 23, 2009) – The following is a statement by National Association of Realtors® President Charles McMillan:

“NAR and our 1.2 million members are pleased that the Federal Housing Finance Agency has instructed Fannie Mae and Freddie Mac to take action to clarify confusion over the new Home Valuation Code of Conduct for home appraisers implemented this past May.

“Our members were experiencing delayed and lost sales because of poor appraisals conducted often by inexperienced appraisers who were not familiar with the area. The ramifications were so great to our members and to the housing industry that I personally met with the New York Attorney General’s office and with the head of the FHFA to share our concerns.

“In those meetings I shared an NAR survey that found 76 percent of our members, representing both buyers and sellers, had experienced an increase in appraisal time since the new HVCC rules were enacted. Similarly, 71 percent of Realtors® noted an increase in the use of appraisers who were not from the local area. These factors often adversely affected the sale or the sales process, which occasionally resulted in the loss of a sale or a homeowner’s inability to refinance into today’s lower rates. I expressed our serious concern in the meetings.

“We took this information, and our concerns, to those organizations responsible for the changes and we are pleased that they listened. Today Fannie Mae and Freddie Mac issued clear guidance on two very important points that we raised in our meetings. First, the guidance states that lenders should use appraisers who have clear experience in the geographic area. Second, it clarifies that appraisers are not prohibited from talking to real estate agents.

“NAR has asked Congress and the FHFA to immediately implement an 18-month moratorium on the new HVCC rules to further address unintended consequences of this new rule. We will continue to push for this, but are pleased that this first step was taken today.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

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Investors Drive Foreclosure Prices Up

Daily Real Estate News July 21, 2009

Home shoppers in parts of the country with lots of foreclosures are finding it increasingly difficult to buy. Investors are bidding up prices thousands above the original asking price.Federal legislation slowing the number of foreclosures is adding to the problem by reducing the number of homes on the market. For instance, in Las Vegas, one of the areas where the bidding problem is greatest, home inventories are down 10 percent since March, according to the Las Vegas Association of REALTORS®.When a bidding war erupts, the problem is particularly difficult for traditional buyers because investors are usually cash purchasers. They can bid up a property without concern whether the appraisal will prevent them from getting a loan.Experts say the problem is not unlike the situation at the height of the housing bubble. "This market is about as abnormal as the hypermarket that we came out of a few years ago," says Jay Butler, director of the Realty Studies program at Arizona State University.

Source: The Associated Press, Jonathan J. Cooper (07/20/2009)

Home Lending Rates Falling Again

Rates on 30-year fixed mortgages fell to 5.14 percent for the week ended July 16, down from 5.20 percent a week before and 6.26 percent a year earlier, Freddie Mac reports.Interest on fixed home loans has fallen in four of the past five weeks, and Freddie Mac economist Frank Nothaft says rate activity during that time has lowered the monthly payment on a $200,000 loan by $56. Here’s a look at how other mortgage rates performed this week:
15-year fixed loans fell to 4.63 percent from 4.69 percent.
One-year adjustable-rate mortgages fell to 4.76 percent from 4.82 percent.
Five-year hybrid ARMs bumped up a notch to 4.83 percent from 4.82 percent.

Source: Grand Junction Free Press, Wyatt Haupt Jr. (07/17/09)

The Do's and Don'ts of Seller Disclosures

Bernice Ross, Thursday, July 16, 2009. Inman News

Almost every state in the U.S. requires both sellers and their agents to make disclosures about the condition of the for-sale home. How you make these disclosures can move your transaction forward or land you in a lawsuit.
The company I worked for in California once did a study to determine the factors that were most likely to result in litigation. There were three primary predictors: real estate clients who are attorneys, new construction, and hillside properties. They also found that the closer the property was to Century City (where there was a high concentration of attorneys), the more likely we were to be sued.

To avoid litigation when you sell your home, it's important to make a full and accurate disclosure about the condition of your property. When Realtors represent a seller, they typically use mandated forms from either their state or local association of Realtors.
Even with the forms, it's hard to know what to disclose. For example, do you have to disclose that the upstairs window is painted shut? What about that ceiling fan that works all right on the first two speeds but makes a terrible racket when you turn it on high? Is it necessary to disclose the 500 pounds of honey they pulled out of your attic last year because a huge colony of bees built a hive there?

Because there was such a high probability of being sued in Southern California, our company policy was that if you have to ask, "Do I need to disclose that?" the answer was always "yes."
An even greater challenge is selecting the correct language to use in making the disclosure. When speaking to a buyer or to your agent, you must be careful about what you say.
For example, a seller who had owned a property for a long period of time told the buyer that the property line was at the fence. The buyer purchased the property and was going to do a major remodel. When he had the property surveyed for the new building permit, it turned out that the fence was actually sitting on the neighbor's property.
It was off by 1 foot. The property line was 220 feet long. That mistake, due to the pricey nature of the area, cost the seller more than $100,000. If the seller was unsure about the location of the property line, the seller should have responded, "I don't know exactly. To determine the exact location, order a survey."

I once had a listing where there were brown spots on the ceiling. Everyone assumed there was a roof leak. The roofers couldn't find any evidence of a leak. What they did find was a huge beehive. Honey from the hive was leaking through the ceiling. If the cause was unknown, it would have been best to simply state, "brown spots noted on the master bedroom ceiling."
The way to properly disclose any type of issue with your property is to avoid attempts to diagnose what you do not know. In other words, unless you are a construction expert (and even then if you are the seller), it's best to note what you observe without guessing at the cause. Instead of saying that "the roof needs to be replaced," a better response is to state, "Damaged and missing shingles noted on roof."

We had several cases where our sellers were convinced that their house was haunted. Saying in writing that your house is haunted is probably not a great idea. Again, the best approach would be to avoid diagnosing. Instead, make objective observations.

For example, note that "lights flicker at night"; "the upstairs hallway becomes unusually cold for short periods of time, even in the summertime"; or "rustling noises noted in the attic and in the garage."

In these examples, the flickering lights could be due to an electrical problem; the unusual cold could result from a malfunctioning heating and air conditioning system; and the rustling noises could be rats or raccoons that have found their way into the home.

My experience has been that buyers will buy almost anything, provided that it's disclosed upfront. In fact, when I sold my last two properties, we paid to have our own physical inspection prior to listing the property. We also completed the repairs before we put the property on the market.

Our agent had a copy of the inspection report available for any buyer who wanted to see it. We also had all the receipts demonstrating the repairs had been made by a licensed contractor.
The challenge with doing an inspection ahead of time is that it can uncover major problems. It may be that your roof does need to be replaced or that the foundation needs to be reinforced. By doing your inspection ahead of time, you won't be ambushed by the discovery of a major problem while your property is under contract. You will need to disclose your report, however.
The situation is even more challenging when the buyer conducts an inspection and then cancels. In most states, you are probably obligated to disclose the report to future buyers. This is another reason it's smart to do your own report and address the issues ahead of time.

Remember, when it comes time to make disclosures about your property, avoid diagnosing, tell the truth, and order a home warranty to give yourself an extra degree of protection after the property closes.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of "Real Estate Dough: Your Recipe for Real Estate Success" and other books. You can reach her at Bernice@RealEstateCoach.com and find her on Twitter: @bross.

Mortgage Rates Drop This Week

Mortgage Rates Drop This Week

Interest on 30-year fixed mortgages, 15-year fixed loans, five-year adjustable-rate mortgages, and one-year ARMs all fell this week, according to Freddie Mac.

The average on 30-year financing slipped to 5.2 percent from 5.32 percent a week ago.

The 15-year mortgage declined to 4.69 percent, down from 4.77 percent.

Five-year ARMs were down to 4.82 percent from 4.88 percent.

One-year ARMs fell to 4.82 percent from 4.94 percent.

Source: Los Angeles Times (07/10/09)

Downpayment, Closing Costs Biggest Obstacles

Daily Real Estate News July 10, 2009

Most Americans still consider having enough money for downpayment and closing costs to be the biggest obstacles to buying a home, according to the 2009 National Housing Pulse Survey, an annual survey released Thursday by the NATIONAL ASSOCIATION OF REALTORS®.The survey, which measures how affordable housing issues affect consumers, also found job security concerns to be the highest in seven years of sampling. Two-thirds of Americans think job layoffs and unemployment are a big problem; eight in 10 cite these issues as a barrier to homeownership. “Homeownership is an investment in your future; however, saving for a downpayment and closing costs is still too great of an obstacle for 82 percent of house hunters looking to take advantage of the current market,” says NAR President Charles McMillan. “Monetizing the $8,000 first-time buyer tax credit for downpayment or closing costs on FHA-insured mortgages is a positive first step. Our hope is that the tax credit will be extended and expanded to all home buyers and will help bring stability to the housing market and enable more Americans to achieve the dream of homeownership."

Survey: Consumers Still Believe in Homeownership

Despite the challenges with the economy and housing market, 83 percent of Americans still believe buying a home is a good financial decision. Three-fourths of those surveyed also believe now is a good time to buy a home, a number that has increased steadily the past two years. In fact, one-third of renters are thinking more about buying home than they were a year ago. While Americans are seeing more stability in the real estate market, uncertainty persists. The number of those who feel buying and selling activity has stabilized or stayed nearly the same has grown significantly, from 18 percent last year to 26 percent this year. However the majority (58 percent) report that activity in their market has slowed. Regarding home sales, nearly eight in 10 say it’s harder to sell a home in their area today than it was a year ago, despite the fact that nearly three-fourths of respondents say home prices are less expensive. Large home inventories could be to blame; 44 percent cite concerns about the high number of homes and condos for sale in their area. While nearly three-fourths of Americans are concerned about the local drop in home values, respondents expect to see more stability in the near future. Nearly seven in 10 expect local home prices to remain about the same in the next three months; only 18 percent expect prices to further decrease. The drop in prices has improved affordability, and consequently, concerns about the lack of affordable housing are the lowest they’ve been in seven years of polling – 34 percent say it’s one of their biggest worries, down from 41 percent two years ago.

Foreclosures Among Top Concerns

Foreclosures remain a real concern among survey respondents. Slightly more than half (51 percent) say foreclosures are a big to moderate problem in their area. However, the rate of foreclosures is generally seen as stabilizing; 41 percent say the rate of foreclosures in their area is about the same as last year. Ninety-two percent of respondents said neither they nor members of their immediate family have experienced a foreclosure in the past year, yet it is still a personal concern for many. One in five respondents said they are very or fairly worried that they will have difficulty making their mortgage payments over the next year. Thirty-two percent say it’s a big or moderate worry that they, or a member of their family, may have their home repossessed or foreclosed because they are unable to pay rising monthly mortgage payments. In 2008, more than half of respondents (54 percent) were open to the federal government taking a more active role in overseeing mortgage and lending practices – the number dropped this year to 47 percent. This could be because 42 percent of Americans believe the country is back on the right track, more than double the number last year (16 percent).

Obtaining Financing Another Obstacle

Regarding financing, seven in 10 Americans cite a lack of confidence in their ability to be approved for a home loan as an obstacle to homeownership. The same number also say that banks are making it too hard to qualify for a loan (71 percent) and that fewer mortgage options offered by banks have made it harder for them to buy a home (71 percent). The perception of qualifying for a loan as a huge obstacle is especially high among minorities. “Home buyers need protection from risky lending products but also need access to mortgages at a reasonable cost. While there has been some easing of credit in the mortgage market, the availability of credit continues to be an issue for many qualified home buyers,” says McMillan. The 2009 National Housing Pulse Survey is conducted by American Strategies and Myers Research & Strategic Services for NAR’s Housing Opportunity Program. The telephone survey was among 1,250 adults living in the 25 most populous metropolitan statistical areas.

Atlanta among best places to buy a home

Atlanta is the 13th-best American city to buy a house, Forbes magazine said in a new ranking of U.S. metro areas.Forbes also determined average price per square foot of housing space decreased 1.1 percent in Atlanta between February and March of this year, and that transactions declined 7.5 percent between March 2008 and March 2009.“While the majority of the nation’s housing markets are still working toward a bottom, some cities are boasting fundamentals that make them good places to buy a home now,” Forbes reported this week.The Forbes rankings seem geared more toward each market’s current and future potential as a place to buy a home, since some of the cities at or near the top of the list are among those hardest hit by the recession.The report ranked the 25 largest U.S. metro areas on the basis of change in price per square foot, frequency of real-estate transactions, and how evenly distributed home-sales activity is in a metro area.Denver is the best city to buy a home. Phoenix was ranked No. 2, followed by Boston, San Diego and Los Angeles.Forbes listed Las Vegas, Cleveland, Seattle and Detroit at the bottom of the 25 cities.“There, distressed sales have kept home values down and buyers away,” Forbes said.Forbes drew its data from March 2009 RPX Monthly Housing Market Report, distributed by Radar Logic Incorporated, a New York-based derivatives firm.Source: Forbes & Atlanta Business Chronicle

Tips for Negotiating a Mortgage Deal

Getting a mortgage loan these days can be a slow and frustrating experience.Here are some things that buyers should know as they go through the application process:

Ask for the “Good Faith Estimate” early. It won’t be released until it is officially “complete” and all the questions are answered. Push applicants to find answers right away to all the lender’s questions.
Suggest they read and ask questions about the fine print. Identifying and negotiating all the fees and charges can cut an applicant’s costs.

Shop title insurance. Point buyers toward Web sites like Closing.com, where they can comparison shop.

Get a commitment. Insist that the lender or loan broker agree that there won’t be any other charges on the HUD-1, which most borrowers don’t see until they are at the settlement table. "If [the lender] won't agree to that, you have to be a little suspicious," says Claire Fennessey, senior vice president of Entitle Direct.

Question flood insurance. If a property requires flood insurance, point buyers (and sellers) toward a civil engineering firm with experience with the Federal Emergency Management Agency’s resources to ensure that they aren’t paying too much. Eligibility for a preferred risk policy can cut costs substantially.

Source: Chicago Tribune, Mary Ellen Podmolik (07/05/2009)

Sellers: How to Make the Most of Your Homes Period Details

One of the major selling points of vintage homes is the attention to detail and fine craftsmanship only found in older houses. Learn how to make the most of the period details in your house to reap higher sales prices with these effective strategies:

Shine the Spotlight: Prepare your home in anticipation of taking plenty of photos. Pay attention to details and any unique features. If you have lived in your home for a while, ask friends or family to stop by and take a fresh look; it’s easy to forget how desirable your home is when you see it every day.

Provide Details: Was your house built with old yellow pine? Chances are it is virtually indestructible to most pests. What about the hardwood floors or gingerbread trim on the outside of the house? Any chance they are handmade? Cabinets, painted tiles and a variety of other common building materials have made a comeback in popularity. Take time to explain the history and benefits associated with each unique item of your home to prospective buyers. Not only does it set your home apart from the rest, but knowing the history helps buyers make that all-important emotional connection.

Appraise Items: If possible, hire an appraiser or perform a search for similar items to help demonstrate the inherent value of the items. For example, an old cast-iron tub in good condition can go for thousands; handmade lighting fixtures may range from a few hundred to thousands and many types of wood are not available at any price because of restrictions on harvesting and imports.

Happy 4th of July to All

H.R. 3044: To impose an 18-month moratorium on the Home Valuation Code of Conduct

McLean, VA - June 26, 2009 -

Last night, Representatives Childers (D-MS) and Miller (R-CA) introduced legislation calling for an 18 month moratorium on the Home Valuation Code of Conduct (HVCC). The National Association of Mortgage Brokers (NAMB) applauds the introduction of H.R. 3044. NAMB would like to thank Representative Childers (D-MS) and Representative Miller (R-CA) for their continued efforts and leadership on this issue.
"The introduction of this legislation is a victory for consumers and members of the industry alike," said NAMB President Marc Savitt, CRMS. "We thank Congress for recognizing the need to address the issue of appraiser coercion without causing undue harm to borrowers or diminishing competition in the marketplace."
NAMB has taken an active stance against the HVCC since its introduction in March of 2008. "We urge Congress to pass H.R. 3044 as soon as possible to ensure that more borrowers will not be negatively impacted by this de facto rule," stated Savitt. "In the period of time since its implementation, the HVCC has increased costs to consumers and decreased the quality of appraisals and has provided a level of uncertainty in an ailing housing market. Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo's rule."
NAMB looks forward to working with Members of Congress as this legislation progresses.