Tough New Rules Limit Refinancing Options

By Peter G. Miller

RISMEDIA, March 30, 2007-Imagine driving along the highway. You run over some glass and a tire goes flat. It's no problem because there's a spare in the trunk.

For the past several years real estate buyers have had a financial spare tire, a back-up system that was always there if times got tough. But now that spare tire is about to disappear, a vanishing act that will surprise some borrowers and bankrupt others.

What happened?

The "smart" play in real estate between 2001 and 2006 was to buy as much property as possible, finance with little or nothing down and then make the smallest allowable monthly payments.

Such a strategy made sense in a world where home values "always" rose and lenders provided ideal forms of financing, loans where initial monthly payments equaled no more than the cost of interest and sometimes less.

But now the game has changed. Freddie Mac — a major buyer and packager of mortgages — has announced that starting in September it will substantially change the way it purchases subprime adjustable-rate mortgages (ARMs). From this point forward loans with little down and tiny payments up front are going to be much tougher to get.

Freddie Mac will not buy subprime loans unless the borrower is qualified to pay for the loan at its fully-indexed and fully-amortizing rate and not merely an upfront and low-ball "teaser" rate.

Freddie Mac will require stronger proof of financial capacity. For most borrowers this will mean showing tax returns and W-2 forms.

Freddie Mac wants subprime lenders to collect money each month to assure that property taxes and insurance are being paid.

"Right now," says Jim Saccacio, chairman and CEO at RealtyTrac.com, a leading online marketplace for foreclosure properties, "the new Freddie Mac standards apply only to subprime loans, mortgages used to finance borrowers with high-risk credit records. However, the potential for excess risk also exists for loans for more-qualified borrowers. The result is that borrowers in every credit category would be smart to assume that mortgage standards are about to tighten throughout the marketplace."

Freddie Mac's rules are important because they create big profits for lenders. Freddie Mac buys loans from lenders-lots of loans. According to The New York Times the company has purchased subprime loans worth $184 billion.

The catch is that Freddie Mac only wants loans that meet its standards. If you're a lender you want to meet the requirements of Freddie Mac and other mortgage buyers because then your loans can then be quickly sold. Once sold, the cash you receive can be used to create new loans, new fees and new profits.

While the new Freddie Mac standards will plainly impact new borrowers, the real marketplace worry concerns those who now have loans but will need to refinance in the next few years.
Between 2001 and 2006 millions of properties were financed with interest-only and option ARM financing, loans which allowed borrowers to make low monthly payments during initial start periods, the first few years of the loan. Borrowers with such financing know-or should know-that once initial start periods end the loans can only be continued with far higher monthly payments, in some cases payments that will double.

Despite the potentially bankrupting impact of such larger monthly payments most borrowers did not worry and with some reason: As start periods ended properties could be refinanced so borrowers could get another few years of low monthly payments.

Now, however, the ground rules have changed.

First, if the original loan was obtained with a "stated income" mortgage application that contained-shall we say, "generous" and unchecked income estimates-new applications will demand verifications and proof. Without evidence of real income, borrowers will be unable to refinance.

Second, if the original loan application was obtained with a full-documentation application that had every number checked and verified.

In practical terms, suppose buyer Dixon qualified to borrow $200,000 in 2005. He now has the same income and credit, he can document everything, but his loan application will be judged on his ability to pay the real monthly cost of the loan and not just a payment based on an up-front teaser rate. The result? It may be that he can only borrow $175,000 in 2007.

This means Dixon cannot refinance unless he can also pay down a substantial chunk of his existing debt in cash-$25,000 in this example. Without the additional cash Dixon is effectively locked into his existing loan-the very loan that he doesn't want to pay or perhaps can't afford to pay once the "start" period ends.

For some borrowers the new rules mean existing loans-especially recent loans-cannot be refinanced. Unfortunately the alternatives to refinancing may also be unworkable because larger payments may be unaffordable; in slowing markets homes may not sell at a profit and rents may be insufficient to cover monthly mortgage costs. For too many borrowers, it will no longer be possible to delay mortgage problems by refinancing, an option that could have prevented foreclosure and bankruptcy.

Are the new standards too harsh? Did Freddie Mac do the right thing?

"Freddie Mac," says RealtyTrac's Saccacio, "deserves credit for being the first to make a terribly tough choice. It's the right decision, one that will be painful now but a strategy which will ultimately result in far fewer foreclosures, a reduced number of lender failures and smaller investor losses."

Peter G. Miller is the author of the Common-Sense Mortgage and is syndicated in more than 90 newspapers.

February 2007 Columbus Board of Realtor Statistics

Report finds subprime loan servicers practicing forbearance

Long-term benefits of modifying loan terms a matter of debate
Thursday, March 15, 2007 By Matt Carter Inman News

A new report by Standard & Poor's Ratings Services details steps subprime loan servicers are taking to help borrowers avoid foreclosure, but doesn't attempt to gauge how successful those efforts will be.

With estimates of more than $500 billion in adjustable-rate mortgages expected to reset to higher interest rates this year, the willingness of lenders to work with debtors to avoid foreclosure could mean the difference between a soft and hard landing for some U.S. housing markets in 2007.

Loan servicers, who not only collect payments from borrowers but also handle defaults, foreclosures and the sale of real estate-owned properties, can "minimize losses to investors while providing assistance to thousands of homeowners in dire financial trouble," the Standard & Poor's report said. There's plenty of incentive for lenders, too, since the foreclosure process can cost $40,000 per home or more.

But subprime loans -- which can include "exotic" mortgages like interest-only and pay-option adjustable-rate mortgages, as well as hybrid 2-28 loans and 80-20 piggybacks -- are more complex to administer than 30-year fixed-rate mortgages, the report noted.
Some borrowers have complained that it's difficult to communicate with their lender, and that some are unwilling to discuss alternatives to foreclosure such as modified loan terms or a short sale. Standard & Poor's said discussions with loan servicers about their efforts to work with borrowers were "encouraging."

"Sound, proactive management, along with ingenuity, planning, and investment in staff and technology have put most servicers in a solid position to help borrowers work through the substantial difficulties they may be facing," the report said. "All of the servicers we contacted said curtailing defaults and engaging in early-stage loss mitigation are paramount for minimizing investor losses and keeping borrowers in their homes"

The point of the report, said Standard & Poor's Servicer Analyst Robert Mackey, is that "major servicers really understand that early intervention and loss mitigation is a much better way to address this" than proceeding directly to foreclosure.

J. Michael Collins, president of Ithaca, N.Y.-based MortgageKeeper Referral Services Inc., said that when borrowers get into trouble, "they tend to panic."

From his perspective, "Servicing could improve, so that people are not scared of the lender."
MortgageKeeper helps lenders find help for troubled borrowers by maintaining a database of nonprofits in 15 cities that provide counseling and assistance. The company has received "a lot more inquires lately," Collins said. "There are a lot of folks in the industry trying to figure out solutions."

Subprime loan servicers seem to be moving more quickly than prime lenders in adopting a "customer-oriented" approach in response to the current rise in loan delinquencies and defaults more quickly than prime lenders, Collins said.

"There is probably more they could do in the early stages, and be less confrontational," Collins said. "Many are starting to go in that direction."

Servicing loans can be a labor-intensive job, and some lenders outsource the job to companies that rely heavily on loan processing software and overseas call centers to reduce costs.
"I think a lot of folks think of loan servicing as a cost," Collins said. "When the goal is minimizing costs, they miss that this is a place where you can get a lot of added value."

In the long run, cost-cutting measures could actually increase expenses if more loans go into foreclosure.

"If I'm a borrower, and get shunted to a call center overseas, how much do I feel the lender trying to work with me?" Collins said. "This sort of laser-like focus on cost-cutting can result in worse borrower behavior, and less likelihood of getting those payments and a resolution."
Mackey said lenders understand the importance of loan servicing.

"Any staff reductions you're reading about (in the mortgage lending industry) today is on the origination side," Mackey said. "The servicers are adding staff because of the complexity and the volume of loans having trouble."

In his report for Standard & Poor's, Mackey found that many loss-mitigation departments are trying to identify troubled borrowers in the early stages of delinquency, reviewing accounts that are current to determine if they may be headed for trouble. Servicers are trained to spot problems based on conversations with borrowers, assigning them risk profiles that help loan administrators make early contact.

Standard & Poor's found that Saxon Mortgage Services Inc. calls and writes borrowers facing ARM resets, and offers repayment plans to those with escrow shortages beyond the traditional 12-month period.

When a loan is still in the early stages of payment default, "Our staff is attempting contact every other day until the customer is reached and a status on the account is obtained and hopefully a payment taken or a short-term repayment plan established a promise to pay is made," Saxon executive vice president Stella Hess told Standard and Poor's.

Saxon has reduced the number of accounts each agent handles, allowing them to devote more time to borrowers in need of consultation, Hess said.

Before referring any delinquent loan to a foreclosure attorney, a committee at Saxon conducts a review to verify the company has taken every possible step to mitigate a loss and stave off foreclosure.

GMAC ResCap Vice President Mitch Oranger told Standard & Poor's the company is sending staff to cities around the country with high foreclosure rates.

The company aims to make early contact with troubled borrowers, which can require verifying borrower information and authorizing skip-tracing even as a new loan is being boarded to its system, Oranger said.

In 2003, ResCap partnered with the City of Chicago, Neighborhood Housing Services of Chicago, the Federal Reserve Bank of Chicago, and others to form HOPE, a loss-mitigation effort that has expanded to 10 cities.

ResCap's foreclosure prevention team is also providing similar services in 12 other markets where foreclosures are rising and local partners want to provide local counseling to homeowners.
At Irvine, Calif.-based Option One Mortgage, all loans are eligible for loss mitigation, even those with first-payment defaults. Option One has opened satellite offices in areas with high foreclosure rates such as Detroit, Columbus, Ohio, Atlanta, Houston and Philadelphia.

Collins said Mortgage Keeper is talking to its lender clients about expanding its database of counseling and assistance programs for borrowers to another 10 cities. In discussions with lenders on where the need is greatest, California, Tennessee and Florida have emerged as likely candidates, Collins said.

Although Standard & Poor's did not attempt to gauge the effectiveness of efforts to assist borrowers, a report released Tuesday by the Center for American Progress looked at several foreclosure prevention programs.

The programs examined in "From Boom to Bust: Helping Families Prepare for the Rise in Subprime Mortgage Foreclosures," included a mortgage foreclosure program in the Minneapolis-St. Paul area.

The program, created in 1991, provided counseling for 4,200 households and mortgage assistance to a smaller number.

A 2005 study found that 60 percent of households receiving services and 70 percent of those that received assistance loans were current on their mortgages 12 months after receiving services.

Most homeowners receiving services were able to reinstate their mortgages in approximately 9.5 months and pay back their assistance loans, and the rate of foreclosure by families served by the program dropped from 11 percent to 6.8 percent.

But the drop could have been because of the growth of nontraditional loans offered to borrowers with no equity and a state law prohibiting creditors from collecting deficiency judgments, which made lenders more willing to restructure loan terms.

Some experts think efforts by loan servicers to mitigate losses may have contributed to the current crisis in subprime lending, by obscuring the true risk of securities backed by mortgages and sold on Wall Street.

In a recent paper, "How Resilient Are Mortgage Backed Securities to Collateralized Debt Obligation Market Disruptions?" Joseph R. Mason and Joshua Rosner point out that loss mitigation may have long-term risks, citing studies that suggest the rate of re-default FHA loans with modified terms may be as high as 25 percent.

The Department of Housing and Urban Development requires servicers of FHA-guaranteed loans to attempt loss-mitigation strategies, Mason and Rosner note. Government-sponsored entities Fannie Mae and Freddie Mac have reported a success rate of nearly 50 percent in such efforts, they write.

"Given that subprime servicers have implemented some of the most aggressive approaches to servicing delinquent loans, it would be surprising if their workout ratios have not kept pace with the (GSEs)," they say.

These mortgages can be placed in pools of loans that back securities purchased by Wall Street investors, who may not be fully aware of the added risk of default, Mason and Rosner said.

"While the industry and HUD have frequently stated the social benefits and business savings of loss mitigation, scant data exists to analyze the ultimate effectiveness of these programs," they wrote.

As a result, historical data on delinquency and default may understate risk. That, combined with the lack of loan-level data about loss-mitigation efforts makes it difficult for investors in mortgage-backed securities to properly gauge their risk.

The rollover of nonperforming loans is considered one of the main causes of the savings-and-loan crisis of the 1980s, they noted, and can "create greater systemic risk" in the banking and financial industries.

The Standard and Poor's report, "Subprime Loan Servicers Step Up Loss Mitigation Efforts To Avoid Foreclosures," recognized such dangers.

If forbearance plans and loan modifications "are not prudently underwritten, delinquencies will only worsen," the report concluded. "Competent mortgage servicers should focus their most seasoned default management personnel on loss-mitigation negotiations, and that staff should receive continuous training. Senior management should closely monitor recidivism rates and forbearance break rates to ensure that the decisions being made by staff are sound and provide long-term solutions."

"I hope borrowers understand that it's always their best bet to contact the lender sooner rather than later," said MortgageKeepers' Collins. "The consumer psychology is often, 'I can take care of this tomorrow.' The longer they put it off, the harder it's going to be."

***

What to Expect from a Home Inspection

Agents frequently discuss home inspections with home buyers, since inspections are a valuable tool for them to use in deciding if they can afford a prospective home in its current condition. But inspections are also valuable tools for sellers, who can use pre-listing inspections to develop a check list of repairs to make before the home goes on the market – and while there are no time constraints relating to a pending transaction. Even sellers who don’t have time for repairs can benefit from a pre-listing inspection, because they’ll be able to anticipate what the buyer’s inspection will uncover and can use that knowledge with their Realtor® to set the best price possible.

Sellers frequently ask their agents how they can prepare their home for a buyer’s inspection. Aside from holding a pre-listing inspection, remind sellers that they can take the following steps to ace a buyer’s inspection:

Outside impressions: Advise the seller to clean the home’s exterior, and remove soil or mulch from contact with exterior siding. They’ll want to clean roofs or gutters, and double-check how water flows from downspouts and other pipes. Sellers should trim trees and bushes and remove roots that are near the home’s exterior or foundation. They may also wish to paint or repair weathered siding, bricks, and trims around doors and windows. All external wall penetrations should be caulked.

Interior efforts: Tell sellers to clean and replace heating and cooling filters or, at the very least, clean them. They’ll need to test smoke detectors and replace burned-out light bulbs. They should clean the chimney, fireplace, or wood stove, and have furnaces and air conditioners serviced. Moving furniture or storage belongings may be necessary so that an inspector can easily access attics, crawl spaces, the garage, and areas of the basement that contain major home systems. Sellers should keep utilities running if the home is vacant, and make sure windows will open and shut properly. Sellers may want to add insulation and ventilation to attics and make sure crawl spaces are dry.

Bathroom and kitchen work: Sellers will want to make sure plumbing works without leaking or perpetually dripping. They may also need to caulk around tubs or other fixtures. They should check that ventilation systems (range hood, bathroom fans or ventilation systems) work, and clear under-sink areas so an inspector can access pipes.

Gather documents: Before listing the home, sellers may want to organize service records and warranties for appliances in one place. This can help an inspector or buyer see what repairs were made to various home systems and how often or well various home systems and appliances were maintained. Sellers may wish to make a note of any warranties that are transferable to a new owner.

© 2005-2007 WIN Home Inspection. WIN Home Inspection is a registered trademark of World Inspection Network International, Inc., a franchisor of home inspection services.

A flood of foreclosures, but should you invest?

Experts caution potential buyers to do their homework
By Amy Hoak, Marketwatch

CHICAGO (MarketWatch) -- The number of homes in or nearing foreclosure is growing, and some investors are taking advantage of the bargains created.

But even with a steady stream of distressed properties coming on the market, jumping into foreclosure investing is dangerous, especially if you are not familiar with the process or new to real estate investing.

"Some people are using the phrase 'tsunami;' there's going to be a tsunami of foreclosures," said Dave Jenks, co-author of "The Millionaire Real Estate Investor." "For the people who are pros at dealing with foreclosures and have the infrastructure of information and wherewithal ... they will take full advantage of this."

Consider these recent statistics: 1.05 percent of mortgages were in the foreclosure process in the third quarter of 2006, according to the Mortgage Bankers Association. The foreclosure rate increased from 0.99 percent in the second quarter; the rate was 0.97 percent in the third quarter of 2005.

And RealtyTrac reported last week that the number of homes entering the foreclosure process increased by 19 percent in January, compared with December's numbers. Compared with January 2006, the number of homes in the process is up 25 percent. In 2006, a total of 1.2 million homes entered the foreclosure process, 42 percent more than 2005.

See Top Cities for Foreclosures

While there are opportunities to purchase homes at reduced prices in many markets, they're "cautious opportunities," said John Anderson, owner/broker of Twin Oaks Realty in Crystal, Minn., a suburb of Minneapolis.

Above all, you can't assume that just because a home is heading for foreclosure means that it is automatically a good deal, Anderson said. Remember, even for pros, foreclosure investing involves some risk, as does any purchase of "real estate as an investment, as opposed to a home (in which to live)," said Rick Sharga, vice president of marketing at RealtyTrac.

Doing the math

The transaction has to make sense financially, figuring in the costs of getting the property back into marketable condition, the value it's going to have at resale and the length of time it's going to take to find a buyer -- if you do, in fact, plan on reselling immediately instead of holding it to rent out or live in. It's also important to know if there are liens on the property.

Adding to the complexity of the investment are the various state and county foreclosure laws and regulations throughout the country. "This is hard work," said Daryl White, a foreclosure investor in Valencia, Calif. "Forget about 'If I can do it, you can do it'" lines from late-night television infomercials, he added. White, a subscriber of Foreclosures.com, a foreclosure listing service and educational Web site, uses a spreadsheet to figure the costs associated with investing in a particular property. When his analysis is complete, he can decide what to pay for the property.

The goal, he said, is to buy at 30 percent below the after-repaired market value -- half of the discount allows him to cover such expenses as holding costs and repairs while the other half earns him a profit. The formula is taught through Foreclosures.com. In the "changing market" he's in, near Los Angeles, he has to factor in that houses are taking about three to five months to sell, which adds to his holding costs, he said. But even in a cooling market, a home that is priced right will sell, said Alexis McGee, president of Foreclosures.com. It's important, she said, to pay careful attention to prices of comparable houses that are selling in a particular neighborhood to get an idea of what return an investment can bring. In fact, many who have had success in real estate investing will also recommend not depending on a strong market for a good return, Jenks said. "Most of the really good investors will tell you never rely on appreciation to make a deal work."

Homeowners in trouble

There are a couple of key reasons for the uptick in foreclosures, said Sharga, whose site also lists homes in the foreclosure process. For one, a slower housing market has stretched out the time it takes for a home to sell, making it tougher for families who must sell to strike a deal in time to avoid the foreclosure process, he said. Also at play is the rise in interest rates on adjustable-rate mortgages, at times squeezing "people who have overextended themselves in the first place."

Those looking to buy a home in the foreclosure process can do so during a few different stages. Some investors, including White, prefer purchasing homes prior to the actual foreclosure. Others make the investment later in the process, at a foreclosure auction. If the property is unable to be sold by the bank at a desired price, an investor can deal with the institution in buying what is called a real estate owned property, or REO. Each point has its own complications, so tread slowly and do your homework first, Anderson said. He recommends beginners start out by sitting down with a real estate agent who has experience in the arena, someone who has done it before.

Dealing with a preforeclosure, for example, often involves negotiating with a distressed homeowner -- and doesn't always shape up to be a comfortable situation."They (homeowners) don't want to be bothered or may not be as reasonable as they are under normal circumstances," Sharga said.

On top of that, there are a number of "foreclosure rip-off artists" who have taken advantage of people when they're most vulnerable, he added. White said he's often battling a negative image because people "don't see the white knight part of it," when, in fact, the sale of a preforeclosure home could help homeowners keep negative marks off their credit histories and also get at any remaining equity.

As a Realtor working with investors, Anderson said his first thought is to try and find a way to keep the homeowner in the house. If a sale must take place, he recommends the seller have fair representation before proceeding -- to ensure they get a fair deal.

Professional Marketing, Superior Results!

Help-U-Sell is a FULL SERVICE real estate marketing company that provides the same services as traditional real estate brokerages, while utilizing a more comprehensive and effective marketing system. This allows us to help you sell your commercial, multi-family, office or raw land property, or even a business enterprise, faster, while at the same time, significantly lowering your transaction costs. At Help-U-Sell, we charge a low set fee, payable at closing.

The chart below illustrates the significant savings potential that we can deliver to our clients, compared to a traditional real estate practitioner charging an industry average six percent commission.


The bottom line: We can help you to keep more of your equity!



Considered to be the fastest growing set fee real estate company in America, with over 850 franchise offices across the US, we are members of: The Columbus Board of Realtors; the Ohio Association of Realtors; and the National Association of Realtors. We regularly use the Multiple Listing Service (MLS) as a component of our marketing system.

Additionally, we have “unbundled” our services so that clients have the opportunity to choose only the services they need, while not paying for services they may not want. In this way, they can save thousands, or tens of thousands, and better protect their equity position. Also, we are the only company in the area that Guarantees in writing to advertise our clients properties weekly during the entire term of the listing agreement, or until sold. The result, the potential for a faster sale at a much lower cost. A better way to sell real estate!

If you have any further questions regarding our services, or you’re ready to put our marketing program to work for you, simply give us a call at 614.447.3050. You can also visit our website for additional information.

We look forward to having the opportunity to work closely with you in the sale of your property.

Existing-home sales rise 3% in January

ECONOMIC REPORT
By Rex Nutting, MarketWatch
Last Update: 10:13 AM ET Feb 27, 2007

WASHINGTON (MarketWatch) -- Sales of existing U.S. homes rose 3% to a seasonally adjusted annual rate of 6.46 million in January, the highest in seven months, the National Association of Realtors reported Tuesday.

It was the largest percentage gain in two years. Sales were down 4.3% year-on-year. Economists surveyed by MarketWatch were expecting sales to rise to about 6.30 million. See Economic Calendar.

Resales of single-family homes rose 3.5% to 5.69 million annualized, while condo resales fell 0.1% to 767,000 annualized.

The results were "surprisingly strong," said David Lereah, chief economist for the real estate trade group. Lereah said he couldn't be confident that the bottom had been reached, because unusually warm weather earlier helped to boost sales in January.

Inventories of unsold homes on the market rose 2.9% to 3.55 million, a 6.6-month supply.

The median sales price fell 3.1% year-over-year to $210,600. "The price correction is working," Lereah said. Prices fell the most in the West, which had been the hottest region for price appreciation. Median prices are down 4.6% in the West, which could reflect slower sales in relatively high-priced California and faster sales in cheaper areas such as Utah, Idaho and New Mexico.

In a separate report, Standard & Poor's said national home prices rose 0.4% year-on-year, according to the Case-Shiller index, which compares sales of the same homes over time. See full story.

Revisions to historic data show the pace of sales in December was slightly higher than previously reported at 6.27 million vs. 6.22 million. The supply of homes on the market was revised down to 3.45 million from 3.51 million.

Regionally, sales rose 5.6% in the West, 4.8% in the Midwest, 2% in the South and were unchanged in the Northeast.

In other reports, the Commerce Department said orders for durable goods plunged 7.8% in January. See full story.

The consumer confidence index rose to a five-year high of 112.5 in February from 110.3 in January, the Conference Board reported. See full story.

Rex Nutting is Washington bureau chief of MarketWatch.

Warm U.S. weather to prevail in March - Potential good news for the real estate markets.

The following article from WSI Corp. (WSI Corporation is the world's leading provider of weather-driven business solutions with top clients including CNN, FOX, NBC, American Airlines, Delta, and FedEX. WSI's innovative products, services and software satisfy the professional weather needs of the most demanding media, aviation, energy trading and utility customers in the world) forecasts warmer than usual temperatures for March for most of the nation.

This is potentially important news for the midwest as it could lead to a resurgence of Buyer activity in the local markets as the cold weather spell that we have experienced since mid-January fades away. As we saw a high-degree of activity in the first two weeks of January when temperatures were warmer than usual, I predict we will see a step-increase in buyer showings and offers as we move into next week and then into March. Along with the warmer temperatures, mortgage rates are continuing to weaken, with 30 year fixed rates falling below 6% for the first time in several months.

As I believe buyer activity will accelerate, it is imporant for sellers to recognize that it may be in their best interests to prepare and list their properties sooner than they may have been planning. Typically many sellers wait until late March or even April to put their properties on the market. If a potential seller waits another 30 to 45 days, I am afraid they will miss the potential wave of buyer showings that I expect to occur over the next several weeks.

If you are either buying or selling, please contact us so we can assist you in your efforts. We have marketing programs for sellers that can potentially save them thousands versus a traditional real estate transaction based on a 6% commission structure.

As well, we offer a buyer credit program wherein buyers who agree to work with us on an exclusive basis can receive a credit at closing of up to 20% of our commission, for properties listed in the Multiple Listing Service, that are offering a 3% co-op, and that are not listings of Help-U-Sell North High Realty.

We stand ready to serve and positioned to save our clients thousands.

Vito Boscaino
Help-U-Sell North High Realty
office: 614.447.3050
http://northhighrealty.helpusell.com


"Warm U.S. weather to prevail in March: WSI
Mon Feb 19, 2007 9:33pm ET

NEW YORK (Reuters) - Temperatures will be above normal in most parts of the United States through March, spelling a mild end to the winter heating season, private forecaster WSI Corp. said on Monday.

After deep cold in late January and into February that spiked demand for heating oil and natural gas, March temperatures will average above normal in all regions of the country except part of the South, WSI said.

"The warmer March outlook should help to keep gas inventories at or above the five-year average," WSI said in a press release.

April will average warmer than normal in the Northeast and the Northwest, but cooler than normal in the middle of the country, WSI said in the release.

Winter weather can have significant impact on world oil prices by altering demand for heating fuels. A recent spell of frigid temperatures in the United States that began in late January pushed crude prices back near $60 a barrel.

© Reuters 2007. All Rights Reserved. "

Title Insurance for the Buyer

The title is what gives you ownership of a property. As the buyer you want a clear or clean title — one that doesn’t have liens for unpaid taxes against it or claims of ownership by dear Aunt Millie or a surprise easement through the backyard to reach power lines or a cell phone tower.

As for your lender, he wants to know that the loan is going to a legitimate transaction — the seller really does own the property and therefore can sell it to you.

The Title Search

In other words, nobody wants an unpleasant surprise after the settlement. So a couple of things happen. First, a title search is conducted. Public records are examined manually or by computer or both. It depends on how pertinent records are kept in your area. The searcher looks at deeds, will, and trusts, tracing the history of the property back many, many years. Among the important questions are whether all past mortgages and liens have been paid.

Does anyone hold an easement? Are there any pending legal actions? But what if the title search misses something and it comes back to bite after you’ve moved in? This could happen. Buyers have even been known to lose their houses because of clouded ownership — some past problem that wasn’t discovered.

Title Insurance

The way to avoid losing everything is to buy title insurance, which is available from title insurance companies, title agents, or, in some states, attorneys.

Title insurance is a one-time, up-front investment with rates based on the purchase price of your home and the type of policy you buy. Some are more comprehensive than others. The policy protects you by making the insurance company liable for most claims against your ownership. If a critical document was overlooked during the title search and you actually lose the house, you’ll likely receive damages — but only if you bought an owner’s title policy at closing. You can see why experts advise you to do this.

Make sure you understand the policy you’re buying — what it covers and what’s excluded. The owner’s policy should cover your full sales price. If you want a policy that covers the value of your home as it increases, ask about adding an inflation rider. Your lender wants a policy, too. He or she won’t even loan you money unless you buy a separate lender’s title insurance policy to cover the bank’s interest in your property. The lender’s policy should be for the amount of the mortgage.

Shopping for Title Insurance

The only time you can purchase insurance is at closing. Whether buyer, seller, or both pay for the coverage varies according to local custom. In some areas the seller buys the owner’s policy and the buyer pays for the lender’s policy. Both policies take effect on closing day. A congressional subcommittee hearing on title insurance in early 2006 looked into why consumers were paying so much for title insurance. They found the industry rife with joint ventures between title insurance companies, real estate brokers, and lenders and heard that these deals are a factor contributing to rates higher than they should be. The Federal Citizen Information Center Web site offers advice on title coverage and cost savings from the Department of Housing and Urban Development.

Buyer's Tip: You need a clear title on closing day and two title insurance policies — one to cover the owner, the other the lender.

How to Take Title

Many home buyers, especially first-time buyers, are at the closing ceremony signing the mysterious documents when the closing agent asks how they want to take title to the property — sole owner, joint tenancy, tenants-in-common ... Oops! Another new subject that sounds like a foreign language. Will this never be over? Don’t let your eyes glaze over. This really is important. There are tax and estate considerations to ponder prior to deciding. And you also need to ask whether you need to protect your home from, say, a lawsuit against your business or a malpractice suit against a partner or spouse. Here are three of numerous ways to take title:

Sole owner - An unmarried person buying a house alone has the easiest task. Title is taken as a sole owner in the individual’s name.

Joint tenancy - When a married or unmarried couple buy a house together, things get more complicated. If they choose to take title with joint tenancy, each has the right of survivorship. If the spouse or partner dies, full ownership goes to the survivor. There are tax advantages for the survivor as well, regardless of marital status.

Tenants-in-common - When two or more individuals buy a home together as tenants-in-common, they are partners who may own unequal shares and who can sell their shares of ownership independently. Buyer's Tip: Decide before you attend the closing how you wish to take title to the property. Consult an accountant, real estate attorney, or estate planner to learn the advantages and disadvantages of each type of ownership.

Recording the Deed

When you have title to your property, you own it. But the deed is the written document used to transfer the title from seller to buyer. It is only when the deed is recorded at the appropriate county office that your ownership is official. Here’s what happens. On the day of closing, buyer and seller sign numerous documents and the closing agent disburses the money.

Then, depending on the time of day and practices in your area, someone from the title company takes the deed and other documents that must be recorded to the county office. This is usually done first thing in the morning or at the end of the business day. A recording fee is paid. The county recorder assigns each document a number and records the time of entry to the minute. A copy is made for the county file. Your real estate transaction is now part of the public record.

The Keys, Please

Your sales and purchase contract spells out when you can take possession of your new home. But ask your real estate or closing agent whether you’ll get the keys to the house at your closing ceremony or after the deed is recorded. If you live where all parties gather with a closing attorney to sign documents, you might leave the meeting with keys. But if your seller is signing paperwork after you, it might be later in the day or even the next day before you get the keys, garage door opener, and security alarm codes.

Home Pricing Strategies

Just as a football coach has a bunch of different plays to choose from and use throughout a game, you have a variety of strategies in how you can determine the price of your home. No one strategy can stand alone, but used together they can narrow the best possible price for your home.

Review Comparables

After sizing up the landscape, comparables play the biggest role in setting the price. Considered part art, part science, “comps” are regarded as the single-best tool in determining a home's value. There are some tricks determining which comps are the best; see the article on Picking the Best Comps for help. You can view comps on your property or anyone else’s on Zillow.com, simply by entering an address, though Zillow and other valuation sites are really just a first step, and data from any of these sites should always be triangulated with data from the MLS or other real estate listing sites.

Look at Unsold Homes

Homes on the market that haven’t sold yet are also a consideration, although not a strong one, since it’s unproven whether the house will bring the money it’s asking. But, look at the active competition. Find a home most similar to yours and find out how many days it has been on the market . If the house has been sitting for a while (more than 30 days), you will see the market is not convinced that is the correct price for that home. Once you see the “Sold” sign, find out how much above or below the list price it sold for. This will give you a good idea of how the market is behaving and how aggressive you can be in setting a price.

Use Square Foot Pricing

Some neighborhoods are a mixed bag of architecture, style, and size, which means if you can’t find another home similar to yours, you can use square foot pricing. How? Take 3–5 homes as similar to yours as possible, add up the square footage, and divide by the number of homes. This will give you an average per square foot for your comps. Then, add up the sold price of each home, divide by the number of homes to get the average. Lastly, divide the average sold price by the average square foot to get the average price per square foot. Once you have the average price per square foot, multiply it by your home’s square footage. This is just another tool to help you price your home.

Example:
Step 1: Find the average sq. ft. of comps
Home 1 – 1,950 square feet
Home 2 – 2,400 square feet
Home 3 – 1,800 square feet
Home 4 – 2,050 square feet
Total – 8,200 square feet 8,200 / 4 = 2,050 sq. ft. 2,050 is the average sq. ft. of your comps

Step 2: Find the average price of comps
Home 1 – $310,000
Home 2 – $410,000
Home 3 – $299,000 Home 4 – $325,000
Total – $1,344,000 $1,344,000 / 4 = $336,000 $336,000 is the average price of your comps

Step 3: Divide the average price by the average sq. ft.: $336,000 / 2,050 = $164/per sq. ft. $164 is the average price per sq. ft. of your comps

Step 4: Set the price of your home: Take $164 and multiply it by your square footage to get a price. For example, if you have a 1,975-square-foot home, multiply it by $164 (e.g., 1,975 sq. ft. x $164 = $323,900). Bingo! Your home’s price: $323,900!

Get a Comparative Market Analysis (CMA)

If you’ve used the three strategies above, but still need reassurance, go to a real estate agent — or, two or three — and ask them for a CMA. Whether you use the agent to sell your house or not, they will be more than willing to provide a CMA in hopes of getting your listing. It shouldn’t cost you any money to get one.

Get an Appraisal

If you really need extra assurance, hire a professional appraiser. An appraiser will cost approximately $250–$400, depending on your home size and uniqueness of the property. They will come to your home and itemize the number of rooms and amenities (e.g., swimming pool, fireplace, etc.) and will pull comps from other nearby homes that sold recently. Once they have completed their review of your home, the comps, and the market, they will furnish you with an appraisal. This will be an estimation of your property’s fair market value.

Preparing to sell your home

Springtime is usually the time when most homeowners who are moving or relocating, place put their house on the market. Getting your house in good condition before you sell can demonstrate pride of ownership and could possibly get you a higher sales price for your home. A home that is visually appealing and in good condition will attract more potential buyers particularly those driving down the street. You should view your property through an outsider's eyes.

Are the lawn and shrubs well maintained?

Are there cracks in the foundation or walkways?

Are the gutters, chimney and walls in good condition?

Are garbage and debris stored out of sight?

Strong curb appeal will lure potential buyers inside, where you have to live up to their expectations. There are a lot of easy improvements you can make to your home's interior without incurring major expenses. A major cleaning is mandatory. Your windows, floors and bathroom tiles should sparkle. Shampoo dirty carpets and clean tubs and showers. Give the interior or exterior a fresh coat of paint.

Next, get all of your mechanical systems serviced by qualified contractors. Service your air conditioning system, clean your furnace, repair plumbing leaks, and correct any electrical switches or outlets that are not working.

Most people buy homes because they have outgrown their existing house or apartment and need more space. You can create more space, even in smaller houses, by eliminating excess furniture and removing unnecessary clutter from the garage, basement, attic and closets.

Before you put your house on the market, arranging for a professional home inspection can provide expert help in the pre-sale process. While buyers will often want their own inspection, you will be far ahead of the game to have an impartial expert check your house beforehand.

Inspectors can provide lists of needed repairs and, most importantly, give you an early warning of any potentially major problems that are likely to creep up when a buyer's inspector gets involved.

Remember, cosmetic changes do not have to be expensive. In fact, costly home improvements do not necessarily offer a good return on your investment when you sell. It is attention to the basics - anything that says "this home has been carefully maintained" - that will help you get the price you want.

Paying Mortgage Points a Smart Investment

Returns are 'astonishing,' so why don't more borrowers take advantage?
Monday, February 05, 2007By Jack GuttentagInman News

"I read recently about a study that says that most people would not profit by paying points on a mortgage. Do you agree with that?"

No. The much-cited study by Yan Chang, senior economist at Freddie Mac, and Abdullah Yavas, research director of the Institute for Real Estate Studies at Penn State's Smeal College of

Business, claims that most borrowers don't hold their mortgages long enough to make paying points a good investment. The study based its conclusion on the life of fixed-rate mortgages (FRMs) that were originated and terminated during the period from 1996-2003. But almost two-thirds of the loans in their sample were still in existence at the end of the period, and they are bound to have a longer life than those that were paid off. Further, the study did not cover adjustable-rate mortgages (ARMs), which in today's market provide the most attractive opportunities for paying points.

Even if the study was right, what "most people" would profit from is beside the point. What matters is whether you would profit from it.

Well, then, how do I know whether or not it makes sense for me to pay points?
Points are an investment on which the return consists of lower mortgage payments in the future, and a lower loan balance if the loan is paid off before term, which almost all are. The investment makes sense for borrowers who have the money and find the return high enough to be attractive.

The standard view is that the borrower's time horizon must be quite long to make points worthwhile -- I have made this statement myself many times. However, when I recently calculated rates of return for different types of mortgages, I found that the standard view holds only for FRMs. On ARMs, the returns are high over periods equal to the initial rate period.

For example, while the return over seven years was only 8 percent on a 30-year FRM, on a 7-year ARM it was 22 percent. On a 3-year ARM, the return over three years was 17.5 percent. I found this so astonishing that 10 days later I looked again to be sure I hadn't made a mistake.

Sure enough, I hadn't.

Do most borrowers pass up this opportunity?

They do. In the sample selected by Chang and Yavas, less than 15 percent paid points.

Borrowers are predisposed against an increase in their cash outlays at closing for a benefit that will accrue in the future. Nobody tells them what the rate of return on investment might be. Often, they aren't even offered the option.

Mortgage brokers and loan officers don't encourage borrowers to pay points. Points make it more difficult for loan officers working for lenders to earn an "overage" -- a price above the lender's stated price, which the loan officer usually shares with the lender.

Similarly, if borrowers pay points for a lower rate, mortgage brokers are forced to disclose their own fees upfront where borrowers can see and possibly question them. The broker can't avoid disclosure when his fee must be added to the points. It is much better to steer the borrower to a loan with a rate high enough that the lender will pay points to get it, referred to as a "yield spread premium," or YSP. Then the broker can pay himself out of the YSP, which existing rules permit to be disclosed in ways that usually mean nothing to the borrower.

How can borrowers be sure that the option to pay points will be made available to them?
One of the advantages of shopping for a mortgage online is that the alternative rate/point combinations appear on the screen. The rates of return shown above were calculated from data shown by one such lender, Amerisave, an Upfront Mortgage Lender. Upfront Mortgage Brokers will also provide the required data. Since their fee is set upfront, they have no financial interest in which rate/point combination the borrower selects.

How do I find the rate of return?

You need two price quotes for the loan type you want. One is the rate/point combination with points closest to zero. The other is the combination for the lowest rate available. Using calculator 11c or 11d on my Web site, enter the two rate/point combinations and the period you expect to be in your house. Presto, you have the rate of return.

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

For a local central ohio perspective please contact:

Vito Boscaino

Owner / Realtor / MBA

Help-U-Sell North High Realty

4485 North High Street

Columbus, Ohio 43214

Our office:http://northhighrealty.helpusell.com or call 614.447.3050If you have any other questions please click on this link to contact me:Contact Me Link

Our Heavy Internet Advertising Has A Purpose......

In the latest National Association of Realtors Profile of Home Buyers and Sellers, based on a survey of 7,500 home buyers and sellers, 80 percent of home buyers used the Internet in searching for a home, up from 77 percent in the 2005 survey and 74 percent in 2004. And the 2006 survey found that 24 percent of buyers learned about the home they purchased from the Internet, which is even with the 2005 survey and is up from 15 percent in 2004.

Courtesy of Inman News

Fed Keep Interest Rates Unchanged as of January 31, 2007

By MARTIN CRUTSINGERAP Economics Writer

WASHINGTON (AP) -- The Federal Reserve, faced with a strongly rebounding economy, left interest rates unchanged on Wednesday while repeating concerns about inflation.
The central bank voted to leave the federal funds rate, the interest that banks charge each other, at 5.25 percent, where it has been since last June.

That decision had been widely expected given an economy that is exhibiting better-than-expected growth. While the Fed had been expected to start cutting rates later this year, economists are now worried that the central bank may feel the need to resume raising rates for fear that inflation pressures will not keep easing.

The rate action was supported by a unanimous 11-0 vote of the Federal Open Market Committee, the panel of Fed board members in Washington and regional bank presidents who meet eight times a year to set interest rates.

At the previous four meetings, Jeffrey Lacker, the president of the Richmond Fed regional bank, had dissented in favor of a further boost in rates. However, he is not a voting member of the FOMC this year.

The action means that banks' prime lending rate, the benchmark for millions of consumer and business loans, will remain unchanged at 8.25 percent.

Should home buyers make backup offers?

What to consider when making this type of offer
Monday, January 29, 2007By Dian HymerInman News

Missing out on a home you'd like to own can be heartbreaking. But, not all home sale transactions close, so you might have a second chance. Or, you could consider making a backup offer.

A backup offer is an offer that is negotiated like any other offer until the buyers and sellers reach a price and terms that are mutually acceptable. A unique term of the agreement is that it is accepted as a backup offer subject to the collapse of a previously accepted offer that is in primary position.

In an active, low inventory market, a seller might receive multiple offers and accept more than one backup offer. In this case, the backup offers would be ranked. For example, backup offer #3 would be subject to the collapse of backup offer #2 and backup offer #2 would be subject to the collapse of the primary offer.

Backup offers also come into play in softer markets. The best listings at the best prices attract the most buyer attention regardless of market conditions. Even in a slow market a prime listing can sell quickly. If you're a little late to the table and no one else beat you to it, you might look into submitting a backup offer. But, first, consider the pros and cons.

One disadvantage is that you may be tempted to postpone looking at any other listings until you find out if the first deal goes through. By doing so, you could potentially miss out on other good properties.

HOUSE HUNTING TIP: If you decide you want a property enough to accept a backup position, continue to look at new listings that fit your parameters. Also make sure that your contract includes a provision that allows you to withdraw from the contract without penalty at any time up until you are notified that your offer is in primary position.

Another disadvantage of being in backup position is that your commitment to buy the property could strengthen the primary buyers' resolve to continue with the transaction, even when issues come up like property defects that might otherwise kill the deal.

Be aware that the sellers may have the right to renegotiate their contract with the primary buyers.

Because of these drawbacks, many buyers shy away from making backup offers. They prefer to wait on the sidelines to see what happens with the first contract. A benefit of this approach is that the sellers might be easier to work with after having had a deal fall apart.

There is, however, a risk in this approach. An attractive listing could draw serious interest from other buyers. If so, one of them might end up in backup position and preclude you from buying the property

When there's an accepted backup offer, a listing doesn't come back on the market when the primary contract fails. The backup buyer is elevated to primary position without giving other buyers a chance to buy the property.

Before deciding whether or not to make a backup offer, try to find out how much interest there is in the property. If there are other buyers serious about the property, it might be worth your while to submit an offer for a backup position.

The other risk of waiting to see if the first deal collapses is that you could find yourself in competition with other buyers who are also waiting to see what happens.

A lot of time and emotional energy goes in to making any offer. Some buyers would rather save this effort for a listing that is definitely available to buy.

THE CLOSING: The best stance to adopt if you're a backup buyer is: If it's meant to be, it will happen.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

Copyright 2007 Dian Hymer, Courtesy of Inman News 01.29.07

December 2006 Home Sales - Central Ohio

Buyers controlled the Central Ohio real estate market in 2006

(January 24, 2007) Residential home sales slowed down in 2006 but still managed to end as the third highest year on record. Sales dropped only 4.5 percent below last year and just 1.5 percent from the total sales in 2004 according to the Columbus Board of REALTORS®.

Mortgage interest rates peaked at 6.5 percent last summer and then dropped to under six percent for the remainder of the year. Buyer interest, oddly enough, followed the same trend, peaking mid summer and then dropping steadily throughout the second half of the year.

Most notable in 2006 was the significant number of homes listed for sale. Throughout the course of the year, inventory levels were anywhere from 12 to 31 percent higher than the previous year. In July of 2006, there were 18,859 residential homes on the market, the highest number on record for central Ohio.

"Buyers controlled the market in 2006," said Brad Bennett, 2007 President of the Columbus Board of REALTORS®. "Although lower than the year before, home sales were still very healthy. Not, however, healthy enough to satisfy the sizeable number of owners wanting to sell their homes. With such a high level of supply and not enough demand, buyers held the stronger hand when negotiating for a home last year."

Under the circumstances, it comes as no surprise that homes took 11 days longer to sell last year and the average price of a home in 2006 was 1.8 percent lower than the year before.
Fortunately, inventory levels began receding during the second half of 2006. At the beginning of 2007, there were over 15,600 homes on the market. Although this is still 11.6 percent more than were listed the previous year, it is considerably lower than the levels during most of 2006.

"The good news is activity is up," comments Bennett. "We're hearing from many agents that calls and showings are picking up. There are already more homes under contract this month than were sold during the entire month of January last year."

"It used to be that housing activity woke up after the Super Bowl. But, in central Ohio, housing comes to life after the National Championship!"

Radon - A Brief Overview

RADON – What it is – What it does

You can’t see or even smell it because it is colorless and odorless gas. Radon is a decay product of uranium and occurs naturally in the soil and rock and Radon levels will vary from home to home, new or old. Other sources of Radon are well water & some buildings. The only difference from home to home is the level of Radon concentration.

The Health Risks of High Radon Levels

When radon decays within your lungs it releases energy that can damage lung tissue and lead to LUNG CANCER over the course of your lifetime. Not everyone exposed to elevated levels of radon will develop lung cancer. Your chances of developing lung cancer from radon gas depend mostly on:

Ø how much radon is in your home

Ø the amount of time that you spend in your home

Ø whether you are a smoker or have smoked

According to the EPA, radon causes an estimated 7,000 to 30,000 lung cancer deaths in the United States each year.

What can you , Mr. and Mrs Homeowner do ?

Have your home tested. When shopping for someone to test for radon levels in your home, ask if they have been certified by NRSB, National Radon Safety Board, to assure that testing is done accurately, and according to EPA standards and guidelines.

For more information about Radon just call or email me. Also, check out the EPA’s website for detailed radon facts at: www.epa.gov/radon.html

Greg Etter is a Certified and Licensed Home Inspector. He is president of Home Worx, a Virginia based Home Inspection and testing frim. He is also a licensed real estate agent, staff member and contributor to Virginia Advantage Realty, LLC dba Help-U-Sell Olde Dominion, News and Information Services. He can be contacted by email at greg@husoldedom.com .

Courtesy of: Mike Ognek- HUS Owner

The Short Sale

Homeowners who purchased their residence within the last several years and are now in a position where they need to sell their home for financial reasons, relocation, or any number of other life events may find themselves in a “Short Sale.” A “Short Sale” is when the market will not support a price that is equal to or higher than the current owners debt on the property plus any Realtor fees, taxes, and closing costs. In other words, the seller will have to bring money to closing in order to sell the home. Many homeowners who find themselves in this position feel they have no way out of this property and will be forced to allow the mortgagor or trustee to foreclose. Fortunately, there are ways to avoid foreclosure and reduce the damage to their credit ratings.

First, lets expand on the “Short Sale” concept with an example:

Mr. and Mrs. Smith purchased their home in November of 2005 for $400,000. They obtained 100% financing with an interest only payment for 5 years. One year later, November 2006, they are notified that Mr. Smith has lost his job and they can no longer afford the payments. Mr. and Mrs. Smith decide that selling is the best option for them, so they meet with a Realtor and discover the identical homes in their neighborhood are selling for only $369,000. If they were to sell the home for that amount, they would have to make up the difference between the sales price and their mortgage, or $31,000. In addition, they would also be responsible for paying taxes, closing costs, and Realtors commissions; approximately $23,000* more for a total of approximately $54,000. The Smiths do not have the money to pay for this shortage; they are in a “Short Sale” situation.

In this example, this couple is experiencing a financial hardship that will create an inability to maintain their monthly mortgage payments. There are steps they should take in order to make an informed and financially correct decision.
Get Qualified Financial and Legal Advice

The first step the Smiths should take is to contact an accountant or Enrolled Agent (EA); a professional accountant or EA will assist them in evaluating their financial situation and creating a true picture of their financial health. Without this true picture, they are not basing their decisions on accurate information and can not truly incorporate any tax consequences into their decision making process.

The accountant will include all liabilities such as short and long term debt as well as assets such as retirement funds, other properties, and personal property in the evaluation of their financial condition. They should then evaluate the tax and overall financial consequences of a short sale with the Smiths and make recommendations on an appropriate course of action. This information will also be necessary for the lien holders to evaluate the potential for a short sale.

Next, the Smiths should speak to a credit professional. There are lawyers and non-profit agencies that specialize in credit issues. The Smiths need to understand the ramifications of a short sale with regard to their credit file and rating.

If, after analyzing the risks, consequences, and benefits, the Smiths decide they should still investigate the potential of a short sale, they should continue by contacting additional professionals to assist them.

Speak to a Realtor who is familiar with Short Sale Situations

There are many options when choosing a Realtor, from fee structures and advertising methods to levels of experience and specialties. In this case, their decision must be based on several factors. First, they need to find a Realtor who is willing to accept less than the traditional 6% commission, because in a short sale situation the mortgage holder will most likely require that as part of their terms for accepting less than agreed to in the terms of the note. Choosing a company that employs a set fee model, such as Help-U-Sell, will allow them to have the benefit of a full service real estate firm, while reducing the amount of potential financial liabilities.

In order to get the best service available, they should also choose a Realtor with experience in dealing with short sales. As the real estate market has seen record growth over the last several years, it may be difficult to find a Realtor who has experience in this area. As we progress further into deteriorating market conditions, many more will be faced with the opportunity to assist in the coordination of such a sale. The Smiths should ensure the agent they choose has done so or has access to a team leader, supervisor, or broker who has.

Coordinate with Lien holders

The Smiths lien holders must be contacted prior to placing the home on the market. A thorough analysis of whether or not the Smiths are candidates for a short sale approval will be done and that decision must be made before the home is offered for sale. If the lien holders refuse to entertain accepting a short sale, the owners could be placed in a situation where they would be held liable for the difference between the sales price and amount owed at closing. In this example, the Smiths would not be able to do that and could possibly be in default of the sales agreement. Confirming the lien holder will entertain a short sale does not guarantee they will accept the offer to purchase; they are not obligated to do so.

Many Lenders have established “Short Sale Departments” to assist sellers with the process. All offers will have to be submitted to the lender for approval before the contract is fully ratified. In order to protect the Smiths, their Realtor should ensure that all offers include a “Third Party Approval” contingency for the sellers. In doing so, if the lender ultimately rejects the terms of the offer or denies the short sale entirely, the Smiths are protected from defaulting on the sales agreement.

Attract the Right Buyers

The contract process for a short sale can be time consuming; not all buyers have the liberty to endure the elongated time line associated with it. In most cases, the sellers lien holders will have to approve the contract, as they will be “taking a loss.” This can sometimes take 30 days or more. The lien holders will evaluate the sellers overall financial situation in their decision process. Until they approve or reject the contract, the buyers will be waiting to move forward on locating another property, unless other wise specified in their offer. Most buyers have defined time periods for locating and closing on a home. This may preclude them from meeting those deadlines and therefore from purchasing the property.

Often one of the first ideas a seller in this position has is to locate an investor. The myth is investors like to purchase properties where the owners are “desperate.” Although that may be true, in a short sale the offer price still has to be satisfactory to the lien holders. An investor certainly would have the tolerance for the time involved, but the margin of profit would most likely not be adequate. If we return to the Smiths example, a desirable sales price for the investor would be well below market value, in this case $369,000. Lets assume the investor wants a 20% return, his offer price would be around $295,000. After fees and commissions, the bank would net approximately $277,000 or $123,000 less than the Smiths owe; the lien holders will most likely not accept an offer with those, or similar, terms.

Although it can be difficult to attract buyers of this nature, the sellers and their Realtor should clearly state the fact this is a short sale and requires third party approval to all interested parties. Doing so will avoid that surprise for otherwise qualified buyers as the negotiations progress. Explaining how the process will transpire to any prospective buyers allows them to plan ahead and evaluate whether or not their timeline allows their participation. In addition, the buyers Realtor may also have to accept less than traditional commission for the lien holder to accept the offer.

Closing an Offer

Throughout the ratification and closing process, all parties will need to stay well informed and up to date on all aspects of the transaction. This includes the lien holders, closing company, sellers, buyers, and agents. After ratification and lien holder acceptance, the seller should once again meet with their professional financial advisor to recalculate potential tax consequences with the actual amounts in the transaction. It is likely there will be tax issues that need to be addressed and it is beneficial to begin that process early.

*Assumes traditional real estate commission of 6%. Costs are approximate based on average expenses. Does not include buyers closing costs.

**Nothing is this article should be construed as legal or financial advice. For legal/financial questions, seek a the advice of a professional advisor.

Article courtesy of Mike Ognek, Help-U-Sell Olde Dominion http://husoldedom.squarespace.com/

For local perspective on the central Ohio real estate market, please contact us:

Vito Boscaino
Owner / Realtor / MBA
Help-U-Sell North High Realty
4485 North High Street
Columbus, Ohio 43214

Web: http://northhighrealty.helpusell.com
Office: 614.447.3050

Contact Me: http://northhighrealty.helpusell.com/Consumer/Content/Forms/ContactMe.aspx

Will Multiple Listing Services (MLS) remain relevant?

The reality is that the historical MLS model is fundamentally broken, and will soon be dead unless the MLS organizations recognize that innovators are essentially re-writing the rules of the game and changing consumer expectations (both buyers and sellers) on how, where, and to what degree of detail real estate listing information is made available to the public at large.

MLS organizations deal in data. However they are proprietary entities that apply arbitrary controls and rules to how data is handled managed and ultimately made visible to interested parties.

We can all see that every day new web based service providers (lets call them listing services or engines) and aggregators (those taking a variety of sources of data and subsequently knitting it together, think Zillow or down the road, Google) are providing increasingly robust and feature filled sites that tear down the barrier walls that MLS organizations have always hidden behind. Consumers do not care by which specific path their property data is taken into the public domain, what they do care about is that the data related to their property that is listed for sale is presented in the maximum level of detail, with visual tools (think videos, pictures and mapping functions), and the greatest possible transparency for potential buyers. Sellers understand that Buyers want lots of information, that is easily accessible, and that comes without obligation. Buyers want maximum personal control over their selection sorting and decision process until they are specifically ready to physically view a property or make a purchase offer.

These buyers and sellers will also want the ability to offer as much or as little compensation to intermediaries as they deem necessary. They will not necessarily think in terms of + or – 6%. They will see what others are offering, they will evaluate how their homes compare and they will factor in their selling criteria and need for representation or not, and assign a value to what they believe they need to do to be competitive. Some may offer far less than 6%, others may offer far more. Again the market will determine what is appropriate in any given transaction.

The market will ultimately define and determine who wins and who loses. MLS organizations that try to retain and defend their artificially defined “Area” will find themselves slowly squeezed to death. Those entities (MLS or otherwise) that provide complete accurate data in a timely fashion, and in variably configurable formats that consumers can manipulate depending on their wants and needs, will win.

Realtor’s or more broadly, professional real estate practioners, will always have a place in the market, however they will NOT be the FUNNEL. As professional advisors they have a role to play for those consumers who desire assistance on either side of a transaction. Consumers will evaluate what level of service they are willing to pay for and from those providers of services they wish to choose from. Again, a transparent market will self-determine who gets compensated and at what levels. Those who provide superior value added service and advice will be compensated accordingly. Those who simply previously acted as a data funnel into and out of an MLS database will be eliminated from the market.

For more information and perspective on the central Ohio real estate market please contact me at:

Vito Boscaino
Owner / Realtor / MBA
Help-U-Sell North High Realty
4485 North High Street
Columbus, OH 43214

Email: northhighrealty@helpusell.com

Office: 614.447.3050

Web: http://northhighrealty.helpusell.com

Blog: http://northhighrealtyhelpusell.blogspot.com

What is happening out there?

Inman News readers report on markets
Thursday, January 11, 2007 By Matt CarterInman News

Real estate professionals would be lost without statistics. Records of sales volume and price in their local markets, the number of homes for sale, the sales price of individual properties -- all are all vital in helping sellers price their homes and buyers negotiate the best deal.

But statistics say more about the past than they do about the future. The numbers can lag behind weeks or even months, and the first indications of what many in the industry are hoping to see -- renewed buyer interest -- may not be captured by any statistic. Brokers and agents will see increased traffic to their Web sites and more phone calls, e-mails and pages long before the results of that activity show up in closely watched statistics.

To get a grass-roots feel for whether that's happening, last week Inman News Publisher Bradley Inman posed this question on the Inman News blog: "What is happening out there? The market is turning UP, we hear from our sources. Were the bears wrong, are buyers ringing you up, asking for listings and combing the Web probing your inventory? If so, we want to hear from you NOW!"

The post sparked dozens of comments, which can be read in their entirety (and commented on) here. To make it easier, we've rounded some of the best (non-anonymous) posts and organized them by region.

Although anecdotal, many of these responses show optimism about the potential for a turnaround. Some who wrote remind us that all markets are local, and that many areas have not seen a downturn.

In areas where times are tough, there's a familiar refrain: the reason homes aren't selling is because sellers haven't come to grips with the fact that price appreciation has slowed or reversed. If interest rates go up, expect that to be an even bigger issue as buyers find the same monthly mortgage payment buys less house

Many of the most pessimistic posts were left anonymously.

One observer in the Washington, D.C., area said, "You have got to be kidding me. Are things turning up? … We just came through the most spectacular and speculative real estate boom in the history of the world, prices went up 100 percent or more in most urban areas, and the market has given back maybe 5 percent in those areas, and you are asking if the market is done
correcting and things are turning up?"

Low interest rates encouraged speculation, the post continues. The media "helped people catch real estate fever; and it built on itself like a Ponzi scheme. The whole thing was without merit."
Now, the anonymous poster said, "We have a lot of inventory to work through, which is still growing and will continue to thanks to increasing foreclosures and speculators dumping more and more property on the market; and in most urban areas there is two to five years of new supply still coming on in the overbuilt condo market; and interest rates are expected to go up this year. That does not sound like a recipe for a real state recovery."

But most of those who identified themselves were optimistic, if not upbeat, about their local markets.

Andrew Waite, publisher of Personal Real Estate Investor Magazine, said advertising sales and contracts with real estate vendors can "predict a lot of forward behavior," as can subscription trends.

"We have broken records in both categories in (the fourth quarter of 2006) and into the first issues of '07. Life is good and getting better," Waite says. "The illusion is looking at a highly inefficient market and trying to apply economic metric that fit commodity markets. It does not work."

What others around the country are saying:

California

Catherine Myers, a certified residential specialist with Alain Pinel Realtors, in Walnut Creek, Calif., says things are looking up in Contra Costa County, east of San Francisco. "I've had more Web inquiries at my site www.diablovalley.net this week than I had in all of December," Myers says. "My listings are getting showings, a stale listing got an offer, and our office had one of the best Decembers on record. I think as the December numbers start to filter out to the public it may spur these reluctant buyers into action. No, the sky is not falling, and if we can sell off some of this stale inventory we'll be in great shape for spring. There are some great deals out there now."

In nearby Berkeley, Ira Serkes of REMAX Bay Area reports putting two homes on the market in December, which were "well presented, well marketed, (and) well priced. We received five offers on one, and nine offers on the other. So, I'd have to say that it is (and has always been) a normal market! Well-priced homes sell, others don't!"

South of San Francisco in the heart of Silicon Valley, San Jose-based Michelle C. Carr-Crowe, owner of Judy Carr & Associates Inc., says she has 35 pre-approved families who want homes in the neighborhood she specializes in, but there are only five homes available there.

"Unless truly motivated, potential sellers want to wait and see how someone else does rather than spend the time and effort to prepare to sell -- only to sit unsold," Carr-Crowe says.

"Roughly one-third of those are move-ups (meaning they'll sell when we find the right home), one-third will buy only a specialized property and neighborhood … (and) one-third are hoping for special bargain (prices from 2002), and the last tenth are still refining what they want/need.
Carr-Crowe said her buyers are pre-approved and can make significant down payments of $100,000 to $400,000, but "are conservative and concerned about the market and buying too much house/mortgage."

The last home she sold "was aggressively priced," and she received 15 offers, selling as-is for nearly 10 percent over the $898,000 asking price. "I'm just looking for more sellers!" she says.
Elizabeth Weintraub, Lyon Real Estate

Elizabeth Weintraub reports "a buzz stirring" in the Sacramento housing market.
"It takes buyers a while to get moving, and often I see a lull between market changes and action, but buyers are beginning to venture forth," Weintraub says. "Interest rates are low, inventory isn't as high as it will be in April, and sellers who are willing to wheel and deal are making deals."

In the last two weeks, she's received three calls on two pending sales. "When was the last time that happened? Those buyers asked to be put on a waiting list for similar inventory. Guess I better get busy and take more listings! The holidays are over. It's time to get back to work," Weintraub says.

Weintraub says that while 2007 may be the Year of the Boar in China, she's calling it the "Year of the Buyer. I predict buyers will rule all year long."

If a home hasn't sold after a few weeks, it's priced too high, Serkes says.

Down in Southern California, Linda Slocum of Vintage Sotheby's International Realty in Valencia said the housing market in the north end of Los Angeles County seems to be stabilizing.

Many of the bigger price decreases in the area were due to unrealistic pricing in the first place, she said -- like homes with comparable sales at $775,000 priced at $950,000.

"Some builders are having trouble selling new construction, but most of these are not in the most popular sections of town," she said. "Lennar didn't have much trouble cashing in on $1.3 billion recently for the sale of their majority interest in the largest upcoming development in the region, Newhall Ranch. Much of the funds for this came from CalPERS," a retirement fund for government workers.

Also in Valencia, Bob Haas of Pacific Real Estate Network he doesn't see a recent trend other than "the typical end-of-year flurry."

"As I see it, we have the press still saying the sky is falling, most sellers still overpricing, buyers are still sitting waiting for the bottom without understanding that if (interest) rates go up 1 percent … their payments will increase dramatically" even if prices come down 10 percent.

Buyers base their purchase decisions on "monthly payment and the interest-rate terms, and conditions on home loans over the past two months have been fantastic and continue to be very good while the market allows the buyer to negotiate an extremely aggressive price," Haas writes. But "the press has done a terrible service to the public buy not informing them of these facts."

Haas predicts the next round of price reductions will be driven by higher interest rates, "which by all financial indicators (are) coming, it is just a matter of exactly when and by how much."
Charles Ritz of Tarbell Realtors in Rancho Cucamonga, Calif., says business is slow in the Inland Empire region east of Los Angeles.

There are fewer homes in escrow and more on the market than in resent history, Ritz says, and prices have been dropping in the past couple of months by 1 percent to 2 percent.
For prices at the lower end, Ritz recommends having the "seller offer at least 2.5 percent to buyer's agent and the home will sell quickly."

Florida

Sally Daley, broker-owner of Daley & Company Real Estate, says buyers still control the Vero Beach market, even after last year's 20 percent price correction. There's been wholesale investor pullout, Daley reports, "with a whopping two to three years of inventory on our barrier island, as many sellers continue to price their homes to pre-correction levels and buyers say 'no.' "
Slow market conditions in the Northeast United States -- a key feeder market for the barrier island's second-home-buyer segment -- "clog our market with buyers from equally slow areas ready and willing but unable to buy until they sell up North," Daley says.

But Daley reports a big uptick in buyer interest on the company's Web site as buyers "get off their proverbial fence of indecision." Prices have moderated up a bit from their low after last year's big correction, "but it is still a great time to be a buyer here!"
Spring is traditionally the strong season for sales, but a return to normal inventory levels could also depend on action by the state's new governor on "the insurance and property tax elephant in the living room," Daley says.

Realtor Kevin Orak of The Selby Group in Flagler County said the area is "surrounded by water on all sides and actually still affordable for those looking to live in the Sunshine State." The past few months "have been absolutely dismal," but Orak says his phone has begun to ring again.

"Buyers have plenty of inventory to choose from and we are waiting longer for buyers to make a decision," Orak says. "I am staying upbeat and this has been chance for those of us who want to work in this business full time to change our way of thinking regarding pricing, advertising, etc."

Carolyn Burns, RE/MAX Partners
Fort Lauderdale broker-associate Carolyn Burns, of RE/MAX Partners, offers a similar assessment.

"In south Florida, buyers have the luxury of being picky and choosing the best-looking house in the best condition and in the best location," Burns says. "They can ask for closing costs credits and get them. Sellers that have the luxury of getting an offer should thank their real estate agents for presenting their homes in the best light, and take the first offer they get."

Burns says Florida is experiencing "a crisis" of high property taxes and enormous increases in property insurance, "which is deterring buyers from getting properly qualified with their mortgage payments (PITI) to purchase the type home they want."

The homes that are selling are either priced very reasonably -- between $300,000 and $350,000 -- or newly constructed, high-end homes in the $700,000 to $1.5 million range built to withstand hurricanes. Houses priced in the middle, between $450,000 and $550,000, are taking six to nine months or longer to sell, Burns reports.

"Patience is needed to stick it out, and work with our sellers to be realistic in pricing -- even pricing back to 2005 prices, if necessary," Burns advises. "A seller in denial is not going to help matters. Agents need to work harder to hold open houses for maximum exposure. Houses on lockboxes don't sell like they used to."

Marcus Burke at CondoMetropolis in Orlando says central Florida has "much inventory and slow sales," but isn't worried about the long term. "With a thousand folk a week moving here and the baby boomers still to come, I think central Florida won't suffer for too long ... unless of course, we get a another Wilma."
South

Flynn Taylor of Keller Williams Lanier Partners does business in northeast Georgia's Habersham and White counties -- a bedroom community for Atlanta.

"(Home builders do) not seem to be concerned about the market," Taylor says. "New subdivisions are cropping up all around (with homes) in the $200,000 range. Buyers are anticipated from the Atlanta area and from Florida."

There was a "definite slowdown" in the third and fourth quarters of 2006, and the region always sees decreased activity from December through February, Taylor says, "but being a bedroom community of Atlanta will help our market carry on in 2007."

Dianne Dunn of Keller Williams Realty in New Bern, N.C., says eastern North Carolina had only "a minor setback last year," with prices continuing to appreciate. The area is a haven for retirees and second-home owners looking for a moderate climate and less hectic pace of living, she said.

Dunn said the market started tempering in the second quarter of 2006, "and the last three months were fairly slow. During the week between Christmas and New Year's, I had three listings sell, and we're experiencing great buyer activity, and numerous showings as we start 2007!"

Southwest

Linda DeVlieg, broker-associate at Albuquerque Real Estate, reports the "pitter patter of buyer feet are starting to be heard again."

Good homes priced well are still selling, DeVlieg says, and the ratio of new listings to pendings is "growing a smaller gap than it was a few months ago. I see things improving and looking up."

The only downside, DeVlieg says, is in new construction. "I believe that the builders are suffering from the over-sell to investors in the last 18 months, and buyers are reluctant to go as far out as it takes to get to the new developments; more infill building is moving buyers closer into town," she says.

Midwest

In the western suburbs of Chicago, Eric Rogers says single-family resales lost steam in December, but inventory continued to decrease from a high this fall. Rogers, a Realtor with Century 21 Pro-Team in Aurora, Ill., analyzes local market conditions on his Web site. He thinks the market is seeing "the beginning of the end of the downturn," with home values are about where they were in January '05.

Vito Boscaino, owner of Help-U-Sell North High Realty in Columbus, Ohio, says inquiries from sellers and buyers picked up after the holiday. An interesting trend is that many buyers making inquiries of late are not represented by an agent, he said.

Direct inquiries are "great for our listing clients as it provides them with the opportunity to potentially sell their homes while paying a low-set fee with no co-op commission to be paid," Boscaino reports. "This positions them to capture the maximum level of savings versus a standard 6 percent commission that a traditional agent would generally charge."

Matthew Benedict, RE/MAX Metropolitan
Matthew Benedict of RE/MAX Metropolitan in Utica, Mich., says the metro Detroit area " has an overload of inventory, including a ton of bank repos." That makes it "a good time to buy and take advantage of the market. Its funny, when the market is peaking and homes are overpriced everyone wants to buy. Yet when there are some tremendous values out there, buyers are on the fence. The time to buy is now! I have noticed an increase in buyer inquires and showings on our listings. The market is turning."

Northeast

Marabeth Gildersleeve of Coldwell Banker Residential Brokerage in Glastonbury, Conn., says inventory is down, but that's partly because of expired listings in the month of December. "Right now there is not much out there," Gildersleeve reports. It "will be interesting to see what happens in the next month or two with inventory, which will tell where the market is going." In the mean time, sales are off about 15 percent, but closing prices are up 1.5 percent, she says.

Geri Sonkin of RE/MAX Hearthstone in Merrick, N.Y., reports "a definite difference in the Long Island market." Sonkin said she began to notice the change in November, when buyers were out in greater numbers than they had been in many months. "When checking with my colleagues, their experience seemed to mirror mine. Inventory, growing at an alarming rate earlier in the year, has trimmed back as well. There is no doubt, however, that buyers are still in the driver's seat since their options are many."

Earni Young, who writes about real estate for the Philadelphia Daily News, says the market there is faring better than the rest of the East Coast, "primarily because our housing prices are far lower than in New York City or Washington, D.C."

"Our luxury condo and townhome market consists primarily of empty nesters moving in from the surrounding suburbs, a smattering of New Yorkers and Washingtonians willing to commute by Amtrak," Young says. Nevertheless, sales have slowed and there is currently a three-month inventory of unsold homes.

Several large condo projects either are on hold or are being revamped as rentals, but a number of new projects are in the pipeline.

"Despite the gloom of those who can't seem to remember what the real estate market was like pre-1998, our current market is not bad," Young says. "The difference is that homes that once sold in three days with multiple bids, now take three months to pull in the first offer."
West/Pacific Northwest

Craig Pattberg an investor and Realtor with AllPro Realty Group Inc. in Midvale, Utah, reports the region has been immune from the slowdown in the market, with prices on the rise and inventory low.

"Here in the Salt Lake Valley of Utah we experienced a 19.4 percent appreciation for the fourth quarter of 2006 over 2005. We are 43.2 percent over the fourth quarter of 2004."

It takes an average of 32 days for homes to sell, with a three- to four-month inventory, and an average sales price of $284,193.

"Hot!" Pattberg says of his market.

In Portland, Ore., Patrick Brown of Windermere Cronin & Caplan Realty Group says he's seeing a "big jump in activity" in the below-$300,000 market, but his $600,000-and-over listings "are getting no showings."

Brian Quilty, president of Online Land Sales LLC, says sales through the company's Web site, Landbidz.com, are "good," with "a steady increase in demand" for land in rural Nevada and Texas. Prices "seem to be rising," Quilty said.

In Sioux Falls, S.D., Harlan TenNapel of Ameri/Star Real Estate said there has been no downturn. Although there inventory is three, four months and more, that represents a balanced market, he said.

"We are seeing most price ranges still have a 3-4 months' supply of homes, with a few price ranges considerably out of that range," he said. "I was always taught in my 27 years (in the business) that if you have a 3-4 months' supply you have a balanced market. It is not a buyer's market, and it is no longer a seller's market, it is a balanced market as a whole."

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If you need assistance with you real estate needs, please do not hesitate to contact me:

Vito Boscaino
Help-U-Sell North High Realty
4485 North High Street
Columbus, OH 43214

email: northhighrealty@helpusell.com

web: http://northhighrealty.helpusell.com

office: 614.447.3050