Real Estate Investing

I had the privilege this morning of listening to Steve Murray, owner of REAL Trends (a leading source of analysis and information of the residential real estate industry) and editor of LORE Magazine which features success stories about some of the top agents in the nation.  Murray said REAL Trends has been tracking and predicting real estate data for years, including the 50 percent fall in the number of units sold from the peak 2005 to 2008.

In 2005, 8.3 million homes were sold. In 2008, that number had dropped to 5.4 million units.  The amount this drop in volume cost is estimated at $1 TRILLION.  Murray said 2009 is the floor with sales expected between 4.9 and 5.4 million units. We all now know the primary cause was due to the epic fail in consumer confidence coupled with NINJA loans = No income, no jobs, no assets.  Murray believes housing sales will resume their upward track in 2010 to 2011 and that housing prices will recover as sales increase.

Meanwhile, we will continue to see strategic defaults - or people who walk away from their mortgages when they 1) can’t afford the payments on 2) a house that’s no longer worth what’s owed.  These people will simply be OUT of the housing market for several years, however we wil see a gradual increase in housing sales and values in teh next five to ten years because the nation adds 1.2 to 1.4 million new households per year.

While we look to another year of flat real estate, you’ll see the exceptional agents flourish because superior service, transparency and trust mean more now than ever before.  It is really kind of an exciting time to watch who will be thriving this time next year.  Buyers and sellers will always go to the agents with the professional dedication and commitment to continue providing professional service.

I was cruising my Google reader - trying to save up the LOL Cats for a quiet, boring day - when I saw a post by Monosyllabic Pedantry about the flooding in Georgia last week.

I’ve been kind of grumpy lately over some of life’s usual problems, work, money, etc. Then I saw the pictures from the flood and thought, “Life’s pretty good. At least my house isn’t under water”

It must be terrible to experience a flood, hurricane, fire, or other disaster that would take its toll not just on your personal belongings but also on the home itself.  An uncle of mine once lost his home to a tornado.  When he and his wife rebuilt it, less than six months later a fire went through it - his home was completely destroyed again.  Now they live in a basement home … they never built UP again.

When you’re ready to BUY a home, the insurance history is very important to know.  When your insurance agent agrees to provide coverage, the insurer will pull what’s called a CLUE Report - or the claim history of the home.  Miranda Marquit - who writes for the loan chapter of Banks.com - described more about the CLUE Report at Bizzia.com.

One of the things that surprises many people is that they have a separate insurance score. When it comes to getting property insurance, companies can look up your CLUE (Comprehensive Loss Underwriting Exchange) report and see what claims you have made on your insurance. This information is used to develop a score that insurers can use to help determine the cost for your coverage — or if you can even qualify for coverage.

I once heard an agent tell about a home his buyers had planned to purchase.  There was a faint smoke odor in the home, which they thought may have been from the fireplace.  When the CLUE Report was pulled, however, it was revealed that the home had burnt and instead of the support beams and framing being replaced (they were all singed and burnt, too), the sellers had just slapped new drywall over them.  Once the CLUE Report revealed the fire claim, the evidence of this malfeasance was found in the attic rafters.

My advice to buyers is once they are in a BINDING contract to purchase a home, contact an insurance agent immediately to purchase the home owner’s policy.  You won’t pay for it until closing and during the time it takes to close, the insurance company may discover a claim against the home that you’ll want to know about.

Photo by Wonderlane via Flickr Creative Commons.

Although short sales have become fairly commonplace in the last year, lenders have parameters that must be met to qualify to sell a home “short” of the payoff amount.  Parameters that *most* banks require, that is.  Some still don’t pay attention.  In a very illuminating post by Pacita Dimacali, an East Bay, North CA real estate agent in Alameda, one specific lender gets a pretty powerful dressing down.  She also writes on ActiveRain what conditions are defined as “hardship”:

HARDSHIP conditions include, but are not limited to:

Unemployment
Reduced income
Divorce
Separation
Medical bills
Too much debt
Death of spouse
Mortgage payment increases
Business failure
Job relocation
Illness
Damage to property
Military service
Incarceration

A friend of mine qualifies at least four of the 14 items listed here, but also deals with this bank that’s mentioned as being one of the worst for short-sales.  I think she’s bound for foreclosure before they ever get the paperwork done for a short-sale.  I hate that she’ll go through this, but she is not alone - there are a lot of people who sympathize with her position. In fact one commenter wrote (regarding the bank),

I know many say had our all-wise government just let the banks go ahead and fail it would have caused world-wide disaster. Well, I wish they had stayed out of it and let the chips fall where they may. No one comes to my aid or yours if we make bad decisions. As for the world-wide disaster, I think the banks are causing it themselves right now.

They do not care. That’s all. The top brass got their bonuses and that’s all that really mattered.

Read the entire article along with the comments.  Very very enlightening and I’m all about informing the consumer!