Thank God I Didn’t Buy Gold at $400 an Ounce

Posted on July 27, 2011 by Bill

Thank God I Didn’t Buy Gold at $400 an Ounce

by The KCM Crew on July 27, 2011 · 0 comments

in For Buyers,Pricing

We hope that headline grabbed you. The reason we used it was to bring some perspective to the debate as to whether or not homeownership is a wise investment in today’s troubled market. A family should never look at the purchase of a home simply as a financial investment. It is so much more than that. But, even if we look at it as only an investment, we must look at it in the long term. Let’s use gold as an example.

Gold had dropped from over $400 an ounce to $250 an ounce (a 40% decline) from February 1996 to August 1999. People were so glad they hadn’t bought at $400 an ounce.

Lord William Rees-Mogg, the current Chairman of The Zurich Club, in 1997 said:

“No investment has been so thoroughly exploded as gold; most people think that there will no more be another gold boom than there will be another boom in tulip futures in The Netherlands.”

Everyone knows what happened next. The proclamation of gold’s death was rather premature. Gold rose from $250 an ounce to over $1,500 an ounce in the next twelve years.

If we look at real estate in the long term, we can see that it has been a great vehicle for building family wealth. The Federal Reserve’s Survey of Consumer Finances, conducted once every three years, provides a snapshot of family income and net worth. There survey has shown every time that homeowners’ net worth far exceeds that of renters. Here is the breakdown of the last several surveys:

  • 1998 – Homeowner net worth exceed renters by 31%
  • 2001 – Homeowner net worth exceed renters by 36%
  • 2004 – Homeowner net worth exceed renters by 41%
  • 2007 – Homeowner net worth exceed renters by 46%

The 2010 survey is not out yet but the National Association of Realtors’ has estimated that number to be approximately 41% in 2010. You may be thinking this is no longer the case based on the current fall in home values which have dropped back to 2000 – 2002 prices.

Harvard University just completed a study that showed:

“Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.”

Bottom Line

We are not predicting that real estate will see the same levels of appreciation that gold did. However, we do believe that the real estate market will rebound strongly.

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Posted on July 26, 2011 by Bill

Distressed Property Sales: Down…But Not Out

by The KCM Crew on July 26, 2011 · 0 comments

in Foreclosures,Pricing

There has been much written about the falling inventories of distressed properties in many market places. Some have looked at the decreasing percentage of distressed property sales reported by the National Association of Realtors over the last four months as a sign that we are finally cleaning out the last remnants of the foreclosures. If you look at the numbers, it could seem that way:

  • March: 40% of all sales were distressed properties
  • April: 37% of all sales were distressed properties
  • May: 31% of all sales were distressed properties
  • June: 30% of all sales were distressed properties

However, in reality the falling percentage of distressed property sales is not an accurate indicator. The reason the percentages are falling is because many homes are currently tied up in the process of foreclosure.

An article in HousingWire quoted James Zeldin, EVP Default Resource on the issue:

“I would absolutely expect an increase in inventory over the next 12 to 18 months. I’m personally expecting that a lot faster. I believe we’re going to see macro forces pushing these institutions to do more REO liquidation.”

Once these properties are cleared through the foreclosure process, the inventories of distressed homes will again increase and the percentage of sales will again begin to climb.

Bottom Line

We are working our way through large numbers of distressed properties every month. However, there are many more which will come to market in the next year to eighteen months.

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ALTA pushes for title insurance requirement within QM definition – HousingWire

Posted on July 26, 2011 by Bill
Monday, July 25th, 2011, 5:05 pm

As the debate continues over what should constitute a qualified mortgage in the lending process, the American Land Title Association is urging the Federal Reserve Board to require the inclusion of title insurance in the final draft of the qualified mortgage standard.

The qualified mortgage requirement, which is part of the Dodd-Frank Act signed last year, is the subject of much debate in Washington since the final definition of QM will have a great impact on what type of loans can be originated.

ALTA sent a letter to the Federal Reserve this week saying the history of legal title to the collateral should also be analyzed as part of the qualified mortgage requirement.

"Prudent underwriting of a borrower’s ability to repay would require that a creditor evaluate the title to the collateral to determine what outstanding debts will need to be satisfied before the creditor can obtain the first lien mortgage," said Anne Anastasi, president of ALTA.

"A title search and examination backed by a title insurance policy is a crucial underwriting feature that ensures that the borrower will have the ability to repay the mortgage by verifying their ownership of collateral and identifying any liens superior to the creditor’s mortgage," Anastasi said.

Anastasi explained that not all debts tied to a title can be viewed in credit reports, especially since some of those debts are secured by liens on the property that only show up through title searches and examinations.

Other trade groups and real estate firms voiced opposition to the QM rule's current construction, saying the QM standard and the qualified residential mortgage rule are somewhat redundant and need to be efficiently coordinated and streamlined.

Write to Kerri Panchuk.

via housingwire.com

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Home Loan Modification and Companies Offering this Service: Buyer Beware

Posted on July 22, 2011 by Bill

Yesterday was a hard day for me, I have to admit.  I get frustrated watching people get ripped off.  I had two people call the office, both behind on their mortgage and facing foreclosure.  Both had forked over money to some company, $1,500 and $1,000, to have these fly by night used car/solar sales/Amway wannabees modify their loans.  Of course the homeowner is calling me several steps closer to losing their home and significantly lighter in the wallet with NO RESULTS.  Last night I was surfing the net and I came upon a guy who wanted $50 to write a “successful hardship letter”. 

     Do me a favor… Don’t be someone else’s money tree!

     You are in enough trouble without forking over $50 for an e-book of outdated information or information I put here on this site for free.  I want you to be educated about your options.  They call it distressed homeownership and there are a lot of people who want to pile on and take the rest of your money.  Don’t let them.

     Lawyers are not smarter than other people, lawyers are not nicer people than other people, they may make your stomach turn based on a few experiences you have had – but they have one thing going for them, they are lawyers.  Lawyers practice law and a distressed homeowner is in the legal fight of their life.  Apart from possibly writing a will or God forbid being badly hurt in an accident this will be the biggest legal issue you will ever face.  Who do you want to work with?

1. Fly by night internet guy or “I will modify your loan” guy – Zero education – Zero continuing education – little oversight.

2. Real Estate Agent – 75 Hours Education – Not yet, 2013 will start – some regulatory oversight

3. Attorney – 3500 Hours Education – Continuing Ed Required to keep licensure – heavy regulation

     Don’t think to hard, it is not a trick question!

     I am both a realtor and an attorney so I am not knocking relators.  Realtors help people effectively buy and sell houses.  Attorneys deal with legal issues.  Would you under normal circumstances let your Dentist perform open heart surgery on you?

     It angers me when hardworking people who have been swept under in this economy are robbed of even more money or fail to get the right advise about their situation. 

     If you are going to short sell your house insist on having an attorney work with you on the deal.  My fees are paid at closing, nothing out of your pocket up front.  Now is the time to regrow your own money tree not fertilize a strangers’.

via avvo.com

I strongly endorse the use of an attorney who is experienced in the modification and short sale process. I am very proud to have Jim Schroeder, Esq., this article’s author, affiliated with our real estate company, Keller Williams Realty Atlantic Shore. We are pleased to have Jim assist our clients through this difficult process. You can obtain further information at Jim’s site: http://www.southjerseyshortsaleattorney.com/

Bill Wagner
Broker/Owner
Keller Williams Realty Atlantic Shore
200 Tilton Road, Suite 5
Northfield, NJ 08225
609-432-8005

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Short Sale hits the Luxury Market | South Jersey Short Sale Attorney

Posted on July 14, 2011 by Bill
Contact Mr. Schroeder if you are facing possible foreclosure action against your home or are considering a short sale. Real Estate agents cannot advise you of the legalities regarding entering a contract to sell real estate. Protect your rights by speaking to a real estate attorney.

Short Sale hits the Luxury Market

Posted by on Jun 10, 2011 in General Information, Short Sale Process | 0 comments

The short sale wave is an equal opportunity disaster as this New York Times article explains.

Luxury Homes and Short Sales

The homes I am currently working with run the gamut from starter homes in already depressed areas to up and coming areas with 2-5 year old homes to beautiful waterfront properties.  The point is for the buyer and the seller it is all available.

Sellers should consider they will be competing to sell their homes with plenty of other short sales in their price range and with similar amenities to offer the prospective buyer.  Having an aggressive agent who knows your area will increase your chances of getting your home sold quickly and efficiently.

Buyers can expect to pay about 10-15% less for a short sale than a conventionally sold home.  The trade off is the process may take 60-90 days longer and there are some additional concerns with a short sale which you should discuss with your attorney.  An example is the even greater role good inspections will play in your deal as short sales tend to have a few more issues due to deferred maintenance.

South Jersey buyers should reconsider making a lowball offer.  I am finding banks more and more willing to do deed in lieu with sellers if they feel they are not getting close to the price they need to get for their investors.  Again, talking with a good attorney and real estate professional will help you hit the sweet spot on your offer – enough to interest the banks but far enough below comparables to help you close on the house you want thousands below what you would have paid for the same house but for the short sale scenario.

Sellers – get started early on your paperwork and get a good agent and attorney

Buyers – learn the process, manage expectations, get good inspections and make a reasonable offer

 

 

 

 

The information posted on this blog is intended for educational purposes and does not create an attorney client relationship. Please call Mr. Schroeder if you own or want to own property in the seven southern counties of New Jersey. Mr. Schroeder holds a license to practice law and a real estate license in New Jersey. He also is licensed to practice law in the District of Columbia but does not engage in any real estate work in the District.

via southjerseyshortsaleattorney.com

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