Real Estate Investing

Home sales did worse than expected in August and signal that a housing market recovery could still be a distant dream rather than a short-term reality.  Not only did existing home sales drop 2.2 percent, but the median existing home price fell 9.5 percent to $203,100, according to FinancialTimes.com. 

Even more grim, the number of properties in a distressed sale is astounding,

“There has been no meaningful change in the level of activity since late last fall,” said Ian Shepherdson of High Frequency Economics.“The NAR estimates that 35 per cent to 40 per cent of all sales are of distressed property, so underlying private activity is weaker than the headlines and there is little sign of imminent improvement.”

Meanwhile investigations are underway into the cause of the subprime lending mess said to be the first domino to fall in the liquifying economy.

Federal investigators have expanded their investigation into the collapse of the subprime mortgage market to include Fannie Mae, Freddie Mac, Lehman Brothers and AIG - four companies at the heart of the market turmoil.

Enforcement officials are under growing pressure to hold companies and individuals responsible for the worst financial crisis since the Great Depression.

These investigations may help to satisfy some of the anger felt by many Americans over what appears to be a bailout for irresponsible financial management.  No matter the fault, however, the rescue plan may not be enough to give housing the boost it needs for a strong recovery.  MSNBC.com reports,

Despite the Bush administration’s historic and head-spinning $700 billion rescue of the financial industry, it will do little to ease lending standards so more homebuyers can qualify for loans, nor has it had much affect on mortgage interest rates so far.

Houses are sitting empty all across the country and the longer the homes remain dormant, the more value they lose.  Vandals, gangs, and mother nature tend to turn neighborhoods with high foreclosure rates into blighted areas.  The Christian Science Monitor recently told about a man arrested for building a new house made entirely of pilfered materials.  The story went on to say,

As the housing dominoes fall far from Wall Street, growing urban “ghost towns” of vacant houses are resulting in a costly crush of weeds, trash, and dereliction on a scale unseen in American cities since the Great Depression, economists say.

With all this brewing, I’m wondering why there isn’t more talk about a moratorium on foreclosures - at least for a month or two to allow the government and investigators time to sort through the loans, to keep homes from being abandoned and empty, and to allow everyone to take a deep breath and settle down a bit.

This is most certainly not a sellers market.  I’m advising people to stay put if they can and wait for the real estate market to recover.  It could be one year, it could be three years but it WILL return.  When you consider the three basic needs for survival - food, clothing, and shelter - (shelter = housing), you know that real estate will eventually bounce back.

But you may be in your house for some time before you’re ready to sell.  If this is the case, remodeling may be an option to consider to make yourself more comfortable.  Realtor magazine just published an article featuring thrifty solutions for an outdated kitchen.

1. Add space and light be removing a wall.
2. Don’t move the plumbing.
3. Unclutter the countertops with special hardware.
4. Buy ready-to-assemble cabinets.
5. Consider a variety of countertop materials.

Read the entire article here for more details about these savings.

If you want to know what NOT to do, visit the Bad Remodel site.  Although it hasn’t been updated in some time it remains quite entertaining!

Over at Shak & Jill, I mentioned that sometimes Realtors turn down listings.  There are a number of reasons agents say no including bad price, no motivation to sell, and sometimes plain old meanness (on the part of the seller).  But I began thinking about buyers I’ve stopped working with as well, and the reasons why.

1. Does not have the ability to buy.  We always want to find buyers who are ready, willing, and able.  Without that trifecta of goodness all coming together, buying does not happen.  Usually it’s the “able” part that’s the deal breaker.  You can’t have a recent bankruptcy and foreclosure and expect you can walk right into a new home because you now have a “clean” record.  It doesn’t work that way, especially now that mortgage companies are finally stricter about who they lend to.
2. I don’t like working with you if I have to pull the car over for you to throw up since you drank too much the night before.  Yes it happened.  Ultimately, I didn’t fire the buyer and he ended up being a pretty good guy, but he sure got close that day to losing his Realtor.  He was so remorseful and humiliated that I found it in my heart to help him find a home.
3. If you think you’re going to buy a $150,000 home for $60,000, then I’d probably ask to refer you to another agent who specializes in cheap skates.
4. Lookie-Loo.  Sometimes people just want to get in a car and drive and drive and drive all day.  They make me want to drive off a cliff.  Seriously, this goes back to Number One… the “Ready” part of ready, willing, and able.
5. Can’t make a decision.  It’s rare that I break out the ol’ standby - the 80-10-10 Rule - but sometimes it’s necessary.  If you get to the point that you look at dozens of homes without a single offer being written, you need to be reminded that if you LOVE 80% of the home, don’t like 10% but can live with it, hate 10% of it but you can change it, then this house is right for you.  Yes sometimes there is a perfect house, but if it’s perfect someone else already lives there.
6. Unrealistic expectations of craftmanship on inexpensive home.  If you’re buying a home for $150,000, don’t expect a jacuzzi in the bathroom with raining showerheads, tile flown in from Italy, and hand-sewn carpet.
7. The complainer who is never happy.  No sirree, I don’t like people who thrive on criticism rather than focusing on the positive.  While you do want to notice if there are problems in the home so you can be in a good negotiating position, you can be honest with your Realtor and say sometimes that you love it.  We are there to serve YOUR best interests, so don’t go showing your hand to the other agent.  We are there to work with you, for you, on your behalf.

Happy house-hunting!