So How Do You Really Feel About Foreclosures?

One of the hot topics regarding real estate is foreclosures. Are there really a lot of them and are they a good deal. In a recent online survey by Harris Interactive on behalf of Trulia.com, there are some interesting observations regarding whether you, the buyer, would consider purchasing a foreclosure and of those surveyed whether or not they thought there was any negative aspects involved in purchasing one. Here are the facts.

Interest in foreclosures is on the rise. The amount of searches conducted for foreclosures have more than tripled in the first quarter of 2008, rising by 214%. The survey was conducted in late April of 2008 and shows that over half would consider purchasing a foreclosed home.

Do buyers feel there are negative aspects in purchasing a foreclosed home? Yes, 69% of those surveyed said they believed there were with the negative aspects believed to be 69% cited hidden costs, 35% considered the prospect as risky and 33% mentioed the possibility of the home losing it’s value. These are all valid concerns and should be addressed. The following list of guidelines should help. Read more

New Mortgage Legislation - Will it Help?

In recent days, new legislation has been announced, that is projected to help as many as 1.2 million homeowners. Read more

The Sky is not falling in Rockwall Texas

Contrary to what we are bombarded with on a daily basis, the real estate market in Rockwall, Texas is not crashing down around us. I knew that what I had seen, in my personal experience, that there had been no real decline in sales in our area. So, I set out to find out if the media was out of the loop or me. Before you stop me for media bashing, I must say that the reports that we receive are typically nation wide and even the local media may be looking at the Dallas/Ft. Worth area as a whole. We know that certain areas in the U.S. were experiencing an insane growth pattern and the bubble had to break at some point, which it has in parts of California and Florida, and these numbers tend to skew the overall numbers. The good thing about the Texas real estate market is that we may not experience the huge boom, but we do for the most part have a steady growth pattern that does not tend to shatter.

Now, back to the research. I set out to get the statistical data that would back up my theories and was able to locate some interesting information from the Texas Real Estate Information System. I won’t bore you with a lot of numbers but here are the ones that seem to tell the tale. Looking back through 2004 in Rockwall County, here is what I discovered in single family sales. This does not take into consideration condos and townhomes or vacant lots.

Now, maybe it’s not so bad after all, is it? Over the last four years, we have seen the sheer numbers of homes sold increase by about 29% and the price/foot increase by about 7% not to mention the amount of new listings or pending sales. All the while, the days on the market remain pretty constant. So, if your wondering how’s the real estate market in Rockwall, it’s alive and well.

Why Traditional Marketing is Obsolete

What is wrong with the way it has always been done when it comes to marketing? Traditionally, in the past, it was thought that if you got your name out in front of the public, telling them of how great a person you are or how great your product is, people would begin to believe it. Today, that is just not the case. Tooting your own horn not only is not well received, but destroys credibility along with it. Read more

Why so many foreclosures?

 Why are we seeing so many foreclosures lately?  Is it the economy? The jobless rate? Or, maybe just tough times?  Not really, although these things do come into play.  A lot of it stems back to some creative loan practices from the past few years. 

Here’s what was happening.  First loan guidelines were very relaxed so that almost anyone who wanted a loan could get one, but at what cost?  Well, first there are the adjustable rate mortgages (ARM’s) that started at a lower rate the buyer could afford in order to get the buyer into the house.  Many of these buyers had less than desirable credit and were told to keep their credit clean for a couple of years and then, before the rate went up, re-finance to a better fixed rate that  they could afford.  Unfortunately, many of these buyers were not able to re-finance and were stuck in the ARM with escalating rates that they were now not able to afford any longer.  Oh, and by the way, did we mention that many of these loans were 100% and had all or most of the closing costs rolled in?  Since there was no down payment involved and the home has not had time to accrue that much equity, they are now upside down in the home not being able to sell it for enough to cover the amount owed.  Not being able to afford the new higher payment coupled with not enough equity left many with the only choice they knew to make and walk away losing their home to foreclosure.  This alone is not the only culprit, but the primary one in my opinion.

Briefly, here are a couple of other things that have come into question recently.  One, is the “Stated income stated asset” loans.  These were granted to people who were non W-2 earners who had good credit.  The problem is, that these people were not able to prove their income or assets and an amount was given that would qualify them for the loan some of these amounts were falsified and the buyer could not really afford the payments, many of these were also 100% as well.  As a side note, there are some lenders being charged with fraud because of this.  The other loan that has caused some issue is the “Interest only” loan.  This loan is good for investment properties where the  borrower has no intention of keeping the house for a long period of time and will be turning a profit on it.  Unfortunately, some people bought homes not intending to sell quickly and were making interest only payments.  The downside to this is that many of these are negative amortization loans and the principal balance instead of going down was actually going up.  Again putting the seller in an upside down situation.

Hopefully the next time someone asks “why are there so many foreclosures lately?” you will now have a good answer.

Which Home Improvements Have the Best Return

If your thinking about remodeling your kitchen or bath even thinking of a pool, you probably want to get your investment back when you sell your home. But when it comes to payback value on home improvements, some are more profitable than others. Typically, kitchen and bathroom projects payback pretty nicely with installing a pool coming in last.

These numbers are given as guideline only, but will hopefully help you decide where you will spend your money. Some things to consider are, current market conditions and how well the improvements fit the neighborhood. If most of the homes have three baths and your has two, it would definitely help to add that bath when it comes time to sell. You can over do things as well. Adding too much to a home in a neighborhood where the homes have less will make it very difficult to get your money out of the project. And finally the popularity of the project will affect the return. Making it too individualized can be a detriment. Some things you just have to say “I’m doing for my own enjoyment” and not expect a return on investment but rather just the cost of enjoying the update.

Here are some percentage guidelines to follow:

Kitchen remodel - 90%

Bathroom addition - 90%

Add a room - 55%

Add a deck - 70%

Add a pool - 45%