Wednesday, June 29, 2011

Fulton Homes to exit Chapter 11

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After a contentious and drawn-out bankruptcy proceeding, Tempe-based Fulton Homes has reached a settlement with its lenders that will allow it to emerge, after 28 months, from Chapter 11 protection.

A group of lenders led by Bank of America has agreed to withdraw a competing reorganization plan in exchange for company founder Ira Fulton forgiving $25 million in personal loans he made to the company.

The settlement Tuesday in Phoenix paved the way for the approval of Fulton's reorganization plan by U.S. Bankruptcy Judge George Nielsen and the company's return to normal operations.

Under terms of the reorganization, the lender group will receive an up-front cash payment of $57.5 million and will receive the balance of the total $163 million owed in installments over the next four years. An additional $2.2 million in miscellaneous debts will be paid when the plan becomes effective.

Fulton Chief Financial Officer Steve Walters said the company will emerge from Chapter 11 "completely solvent" and able to meet its operating expenses without relying on outside financing.

Fulton Homes will continue under principal ownership of the Fulton family, and its current management will remain in place.

The Phoenix-area homebuilder sought Chapter 11 protection early in 2009 after the recession put an end to the Arizona housing boom and sent real-estate values plummeting.

At the time, Fulton, with 21 active subdivisions in metro Phoenix, was one of Arizona's largest homebuilders.

Friction quickly surfaced between the company and its lenders, which at the time included BofA, JPMorgan Chase Bank, Compass Bank, Guaranty Bank and Wachovia Bank.

The banks initially wanted the 37-year-old company liquidated and sparred over its continued philanthropic endeavors.

Founder Ira Fulton and his wife, Mary Lou, are two of the state's most generous benefactors, pledging almost $160 million to Arizona State University alone.

The banks also objected to Fulton's insistence on being repaid approximately $25 million he claimed to have advanced the company in hard times. Under the reorganization, the debt will be converted into equity in the company.

The banks eventually filed a Chapter 11 reorganization plan and sought to wrestle control of the company from the Fulton family.

In April, the company and its lenders were ordered into mediation, which ultimately led to the settlement.

Walters said the company now is building in nine subdivisions in the southeast Valley and plans to open five more within the next nine months. It expects to sell about 300 homes this year and fully is on the road to recovery, Walters added.

Douglas Fulton, Ira's son and CEO, added that the company intends to continue to support philanthropic causes when it emerges from Chapter 11.

"We will continue our public-service campaigns," he said, "making the Valley a safer place for families and helping better the area's education system."


via azcentral

5 refi blunders to avoid

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When interest rates are low, plenty of homeowners rush to refinance before evaluating the true consequences of their actions. A mortgage refinance can benefit some homeowners, particularly if they intend to stay in their home for the long term or if they can significantly reduce their interest rate. Sometimes, though, a mortgage refinance can be the wrong move.

"People often make poor decisions because of what I call 'interest rate envy' around the coffee table," says A.W. Pickel III, CEO of LeaderOne Financial in Overland Park, Kan. "They jump at refinancing just so they can say to their neighbors that they got a lower rate."

Here are five of the worst mistakes homeowners make when refinancing.

Not Comparing the Real Rate
"Borrowers should shop around for a mortgage by comparing the APR (annual percentage rate) of each loan rather than the quoted interest rate," says Gregg Busch, vice president of First Savings Mortgage Corp. in McLean, Va. "You need to look at the true cost of the loan and compare it to your current APR to make sure you will really be saving one-half point or more on the new loan."

Busch points out that a lot of homeowners today find out that their home is worth less than they assumed when they have an appraisal.

"Fannie Mae and Freddie Mac have added fees on loans with a high loan-to-value, so borrowers need to re-evaluate the rate and fees before they decide to refinance," Busch says.

Borrowers who have little or no equity may qualify for a refinance under the government's Home Affordable Refinance Program, or HARP, available to those with a current mortgage owned or guaranteed by Fannie Mae or Freddie Mac.

"The beauty of the HARP program is that it does not require an appraisal, so if you suspect you are underwater on your loan, this could be a good option," says Busch. "Just make sure you compare the rate and fees to see if the new loan is worth the cost."

Choosing the Wrong Loan
Pickel says the first step when deciding to refinance is to establish a clear objective.

"If you think you may lose your job but you have one now, your focus should be to lower your overall payment regardless of the length of the loan," says Pickel. "If you want to be debt-free by a certain year, then you need to find a loan that meets that objective."

Pickel says that sometimes, even with a lower interest rate, you could end up making higher monthly payments because wrapping in the closing costs has increased the size of your mortgage.

Every borrower should look at the cost of refinancing along with the financial benefits before choosing a loan, Busch says. Some borrowers forget that refinancing into another 30-year mortgage can add years of payments, especially if they have been paying on the current loan for a long time.

"A 10/1 ARM (adjustable-rate mortgage) or a 10-year fixed-rate loan can sometimes be a better choice depending on the individual borrower's circumstances," Busch says.

Not Shopping Around
While many borrowers compare loan offers from more than one lender, they can also shop for title services and save hundreds or sometimes thousands of dollars on their loan.

"Check at least three lenders and at least three title companies before choosing one," Busch says. "There can be an advantage to going to the same servicer that handles your loan now, because they may require less documentation, but I also recommend consulting with at least one other direct lender to compare rates and fees."

Ask the title company for a reissue rate on your owner's title insurance -- Busch says this can save as much as 35 percent on the premiums.

Refinancing When You Shouldn't
Charles A. Myers, president and CEO of The Home Lending Group in Jackson, Miss., says refinancing can be a mistake if you don't plan to stay in your home for several years.

"One customer wanted to refinance in order to improve his property and rent it, but he would have ended up with a larger mortgage and then needed a different loan because the property would no longer be his principal residence," says Myers. "The key is to make sure the refinance has a net tangible benefit to the homeowner."

Borrowers need to decide how long they intend to stay in the property and determine the break-even point when the savings outweigh the costs before choosing to refinance, Myers says.

Not Keeping Up With Borrower Responsibilities
Homeowners must rely on a lender to refinance, but they have obligations of their own that, if not met, could derail the mortgage refinance. Borrowers must have good credit to refinance, with most lenders requiring a credit score of 640 and above even for a loan insured by the Federal Housing Administration, says Myers.

Lenders can check the borrowers' credit again just before the closing, so you need to maintain good credit and avoid taking on new debt even after the refi has been approved.

"Check the lock-in date for the interest rate on your new loan to make sure you can close before the rate expires," says Busch. "Be sure to turn in all your documentation as soon as it is requested, because a delay could mean that your closing date must be pushed back."

Saturday, June 25, 2011

How credit scoring helps you

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Credit scores give lenders a fast, objective measurement of your credit risk. Before the use of scoring, the credit granting process could be slow, inconsistent and unfairly biased.
Credit scores – especially FICO® scores, the most widely used credit bureau scores – have made big improvements in the credit process. Because of credit scores:

People can get loans faster. 
Scores can be delivered almost instantaneously, helping lenders speed up loan approvals. Today many credit decisions can be made within minutes. Even a mortgage application can be approved in hours instead of weeks for borrowers who score above a lender's “score cutoff”. Scoring also allows retail stores, Internet sites and other lenders to make “instant credit” decisions.
Credit decisions are fairer.
Using credit scoring, lenders can focus only on the facts related to credit risk, rather than their personal feelings. Factors like your gender, race, religion, nationality and marital status are not considered by credit scoring.
Credit “mistakes” count for less.If you have had poor credit performance in the past, credit scoring doesn't let that haunt you forever. Past credit problems fade as time passes and as recent good payment patterns show up on your credit report. Unlike so-called “knock out rules” that turn down borrowers based solely on a past problem in their file, credit scoring weighs all of the credit-related information, both good and bad, in your credit report.
More credit is available.
Lenders who use credit scoring can approve more loans, because credit scoring gives them more precise information on which to base credit decisions. It allows lenders to identify individuals who are likely to perform well in the future, even though their credit report shows past problems. Even people whose scores are lower than a lender's cutoff for “automatic approval” benefit from scoring. Many lenders offer a choice of credit products geared to different risk levels. Most have their own separate guidelines, so if you are turned down by one lender, another may approve your loan. The use of credit scores gives lenders the confidence to offer credit to more people, since they have a better understanding of the risk they are taking on.
Credit rates are lower overall.
With more credit available, the cost of credit for borrowers decreases. Automated credit processes, including credit scoring, make the credit granting process more efficient and less costly for lenders, who in turn have passed savings on to their customers. And by controlling credit losses using scoring, lenders can make rates lower overall. Mortgage rates are lower in the United States than in Europe, for example, in part because of the information - including credit scores - available to lenders here. Knowing and improving your score can also lead to more favorable interest rates

via myfico

Friday, June 24, 2011

How much start-up cost required to become a Real Estate Agent?

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* These information are for reference only and apply in Phoenix area. Price are subjected to change without notice.


Pre-licensing cost:
  1. Attending Real Estate 90 hours class: ~ $400.00
  2. Attending contract writing class: ~ $55.00
  3. Fingerprint clearance card fees: $69.00
  4. Real Estate Salesperson Exam fees: $125.00 
Licensing cost:
  1. Licence application fees (after passing State Exam): $125.00
  2. Recovery Fund fees: $10.00
  3. Join a Board/Association (depending on your broker)
    • SEVRAR (Southeast Valley Regional Association of Realtors)
      • Local (Pro-rated quarterly) - $130.00
      • State (Pro-rated 2nd 1/2 year) - $155.00
      • NAR (Pro-rated Monthly) - $115.00
      • Application Fee - $100.00
          • Total - $500.00
    • PAR (Phoenix Association of Realtors)
      • Local (Pro-rated 2nd 1/2 year) - $130.00
      • State (Pro-rated 2nd 1/2 year) - $155.00
      • NAR (Pro-rated Monthly) - $115.00
      • Application Fee - $50.00
          • Total - $450.00
    • WeMAR (West Maricopa County Regional Association of Realtors)
      • Local (Pro-rated 2nd 1/2 year) - $100.00
      • State (Pro-rated 2nd 1/2 year) - $155.00
      • NAR (Pro-rated Monthly) - $115.00
      • Application Fee - $50.00
          • Total - $420.00
    • SAR (Scottsdale Association of Realtors)
      • Local (Pro-rated 2nd 1/2 year) - $110.00
      • State (Pro-rated 2nd 1/2 year) - $155.00
      • NAR (Pro-rated Monthly) - $115.00
      • Application Fee - $150.00
          • Total - $505.00
  4. ARMLS (Arizona Regional Multiples Listing Services)
    • One time Activations Fee: $50.00
    • MLS Access Fee: $240.00
  5. Display Key Lease: $169.61
  6. Broker Fees: varies (depending on individual Broker)
    • Application fees
    • E&O Insurance fees
    • Broker monthly fees (loyalty fees)
    • etc....

Wednesday, June 22, 2011

Borrowers Wade Back Into Adjustable-Rate Mortgages

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Wouldn't it be nice to have a mortgage where the interest rate begins with the number “3?”

More borrowers seem to think so, as more of them are opting for adjustable-rate mortgages, whose rates have become even more alluring compared with fixed-rate mortgages.

The rate on a 5/1 adjustable-rate mortgage — that is, a loan where the interest rate is fixed for the first five years and adjusts annually thereafter — is 3.23 percent on average, or about 1.35 percentage points less than a traditional 30-year fixed-rate mortgage, according to HSH.com, which publishes mortgage and consumer loan information.

Lured in by the attractive rates, about 12 percent of the $325 billion in new mortgages made were adjustable-rate loans, known as ARMs, in the first quarter. That compares with 9 percent of new mortgages issued in the fourth quarter of last year, according to Inside Mortgage Finance, a newsletter that tracks the mortgage industry.

During the housing boom, borrowers — especially those with spotty credit histories — took out ARMs in droves. In 2006, 45 percent of mortgages issued were ARMs. But we all remember how that movie ended: Just as many of these borrowers’ loans were about to reset to a much higher rate, the housing market crashed and many people couldn’t refinance into another loan with a more manageable monthly payment. In many cases, borrowers didn’t fully understand what they were signing up for, since the loans carried complex features that either weren’t disclosed or were hard to comprehend. Others simply got in over their heads.

“By and large, the ARM market was polluted by the abuses that went on with subprime mortgages,” said Guy Cecala, publisher of Inside Mortgage Finance, adding that “prime” mortgages sold to borrowers with solid credit histories tend to have much clearer terms. Now, “both borrowers and lenders are getting more comfortable with ARMs again.”

The ARMs being used most frequently are known as hybrid ARMs, which means there’s a period, say three or five years, where the interest rate is fixed. That offers some protection against a spike in interest rates, but there’s still the possibility your payments may rise to a less manageable level later (and that you won’t be able to unload your home if you need or want to sell).

Consider a borrower with good credit who needs a $200,000 mortgage. A 30-year fixed mortgage will carry a rate of about 4.49 percent, which translates into a $1,102 monthly payment. But the borrower could save about $128 each month by taking out a 5/1 ARM with a 3.375 percent rate, which translates into a payment of $884 per month. Over five years, that’s a savings of about $7,680.

“If you know you will sell the home within five years, then it’s a no-brainer,” said Rick Cason, owner of Integrity Mortgage, a mortgage firm in Orlando, Fla., who provided the numbers. “But most people are unsure about what the future holds for themselves or the housing market.”

That’s why it’s important to understand the inner-workings of the ARM, if you decide to go that route. All traditional ARMs have caps and floors, which state how much the rate can change over the life of the loan.

For instance, the typical 5/1 ARM has what’s known as a 5/2/5 cap, explained Mr. Cason. Here’s how that translates into English, using the loan with an initial 3.375 percent rate: The first “5” determines how much the rate can increase (in this case, five percentage points) above the initial rate during the first year after the fixed period is over (So it can climb as high as 8.375 in year 6).

The “2” is the maximum amount the rate can change in any year after that. And the last “5” is the maximum amount the interest rate can adjust from the original rate over the life of the loan. So, at least in this case, the loan wouldn’t rise above 8.375 percent. But all borrowers should make sure they can afford to make payments based on that higher rate, should the worst case actually happen.

Now you can see why Elizabeth Warren wants to make sure all of this is explained in plain English.

When Mr. Cason walks his clients through the details, he said most of them decided to stick with the stodgy but reliable 30-year fixed loan. “Fixed rates are too low without the risk of adjustment in the future,” he added. “I am not seeing many people in Orlando choose an ARM product.”

Home sales fall to 2011 low; few 1st-time buyers

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WASHINGTON – Fewer people bought previously occupied homes in May, lowering sales to their weakest point of the year.

Home sales sank 3.8 percent last month to a seasonally adjusted annual rate of 4.81 million homes, the National Association of Realtors said Tuesday. That's far below the roughly 6 million annual sales rate typical in healthy housing markets.

Since the housing boom went bust in 2006, sales have fallen in four of the past five years. Analysts say they expect sales to level off at about 5 million a year. That's not much better than the 4.91 million homes sold last year, the worst showing in 13 years.

The depressed housing market has weighed on the broader economy. Declining home prices have kept people from selling their houses and moving to find jobs in growing areas. They have also made people feel less wealthy. That has reduced consumer spending, which drives about 70 percent of economic activity.

One sign of the housing industry's struggles is that fewer first-time buyers are entering the market. The number of first-timers ticked down to 35 percent of sales last month. In healthy times, they drive about half of sales.
First-time buyers are critical because they tend to improve their properties and invest in their communities, a combination that raises home values. And their purchases allow sellers to move up to pricier homes.

Instead, the market has been saturated with foreclosures, which force prices down. Sales of homes at risk of foreclosure fell in May. But they still made up 31 percent of all purchases. And many pending foreclosures are backlogged in the courts or held up by state and federal probes into questionable foreclosure practices by lenders.

Until the glut of foreclosures are cleared and people think it's a safe time to buy, "it is unlikely that home prices can recover on a sustained basis," said Steven Wood, chief economist at Insight Economics.

Bigger required down payments, tougher lending rules, heavy credit-card and student-loan debt and a shortage of desirable starter homes are keeping many would-be buyers away. Even some who do have enough money for a down payment and a solid credit history are holding off, worried that home prices will keep falling.

Investors are filling some of the void. They are spending cash to scoop up deeply discounted homes in hard-hit areas of Phoenix, Las Vegas and TampaLast month, investors accounted for 19 percent of all sales.

All the while, previously occupied homes are cheap and in great supply.

Re-sold homes are a bargain compared with new homes. The median sales price for a previously occupied home in May was $166,500. The median price of a new home is nearly 31 percent higher than the price for a re-sale — around twice the normal markup.

The gap is largely due to the flood of foreclosures and short sales. (Short sales occur when lenders accept less than what's owed on the mortgage.) A record 1 million homes were lost to foreclosures last year. And foreclosure tracker RealtyTrac Inc. expects 1.2 million more will be lost this year.

Another problem for the housing market is the glut of unsold homes. In May, the supply fell slightly to 3.72 million homes. At last month's sales pace, it would take more than nine months to clear those homes.
Homes priced for less than $100,000 are selling briskly, but more expensive homes are having trouble finding buyers. Analysts say a healthy supply can be cleared in six months.

The situation is worse when taking into account the "shadow inventory" of homes, economists say. These are homes that are in the early stages of the foreclosure process but, because of backlogged courts or the government probes, haven't hit the market for re-sale.

Sales fell across most regions in May. Sales dropped 6.4 percent in the Midwest, 5.1 percent in the South and 2.5 percent in the Northeast. There was no change in the West.

Saturday, June 18, 2011

What is Short Sale?

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A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.

Process
In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the borrower. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. Neither side is "doing the other a favor;" a short sale is simply the most economical solution to a problem. Banks will incur a smaller financial loss than would result from foreclosure or continued non-payment. Borrowers are able to mitigate damage to their credit history, and partially control the debt. A short sale is typically faster and less expensive than a foreclosure. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Lenders often have loss mitigation departments that evaluate potential short sale transactions. The majority have pre-determined criteria for such transactions, but they may be open to offers, and their willingness varies. A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from an appraisal, Broker Price Opinion (abbreviated BPO), or Broker Opinion of Value (abbreviated BOV).

Lenders may accept short sale offers or requests for short sales even if a Notice of Default has not been issued or recorded with the locality where the property is located. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from mortgage failures that in part triggered the financial crisis of 2007–2011, they are now more willing to accept short sales than ever before. For "under-water" borrowers who owe more on their mortgage than their property is worth and are having trouble selling, this presents an opportunity for them to avoid foreclosure as a result.

Additional parties
Multiple levels of approvals and conditions are very common with short sales. Junior lien-holders - such as second mortgages, HELOC lenders, and HOA (special assessment liens) - may need to approve the short sale. Frequent objectors to short sales include tax lien holders (income, estate or corporate franchise tax - as opposed to real property taxes, which have priority even when unrecorded) and mechanic's lien holders. It is possible for junior lien holders to prevent the short sale. If the lender required mortgage insurance on the loan, the insurer will likely also be party to negotiations as they may be asked to pay out a claim to offset the lender's loss in the short sale. The wide array of parties, parameters and processes involved in a short sale makes it a relatively complex and highly specialized type of real estate transaction. Not surprisingly, short sale deals have a high failure rate and often do not close in time to prevent foreclosure when they are not handled by a knowledgeable and experienced professional. Short sale negotiators, Realtors who are short sale certified (a National Association of Realtors designation), loss mitigation specialists, and real estate lawyers who specialize in short sales are often brought in to handle these deals. Quite often, the average consumer is not aware that the lien holder pays the Realtor commissions, often exacerbating the difficulties.

Consent
Short sales are different from foreclosures in that a foreclosure is forced by a lender, whereas both lender and borrower consent to a short sale. However, this consent may be revoked at any time as short sales are entirely voluntary transactions for both parties. The borrower may decide to remain in the property and attempt a refinance or modification of their mortgage loan, or may refuse to cooperate with the lender's demand for financial documentation or a cash contribution, and thereby ensure foreclosure. Similarly, lenders can refuse to evaluate or approve a short sale offer, generally due to disapproval of either the buyer's offer amount or high closing costs, which reduces the lender's net proceeds. All short sale contracts should include a contingency clause specifying that the contract is contingent upon approval of the seller's lender(s).

Changing consent can present a perilous situation for potential buyers. It can waste considerable time and money for a prospective buyer who anticipated a sale. Typically, deposits with the bank will be refunded but money for paid inspections or other services cannot be.

There are several defenses against this. If the seller has moved out of a property, that is a clue that they have no intention of staying or negotiating further with the bank. "Bank Approved Short Sales" are advertised by real estate advertisements, indicating that a real estate broker has verified the selling bank's position. This still does not guarantee acceptance, and it often does not take junior lien holders into account, but it is better than situations where the bank holding the mortgage has only been lightly involved in the borrower's decision.

Credit implications
Short sales are a type of settlement, and they adversely affect a person's credit report. The negative impact may be less than a foreclosure, but in some cases the effect is the same. Unlike bankruptcy line items, short sales DO show on a credit report like Experian, TransUnion, or Equifax and remain on your credit report for 7–10 years. Some people may have some credit available to them within 18 months or so. Depending upon other credit information, it is possible to obtain another mortgage 1–7 years after a short sale.

While lenders sometimes forgive the remaining loan balance, other lien-holders likely will not. Further, it is possible for a lender to omit updating a credit bureau to zero out a mortgage balance after a short sale. However, willfully misrepresenting information on a credit report can constitute libel in some jurisdictions, and lenders may be sued in civil court for engaging in this behavior.

Approval timeline
Short sale time frames vary from state to state, bank to bank and file to file. Each lender has their own process for review of a short sale and the amount of documentation that is required. The collection and review of each file can vary depending on the borrower’s financial situation and supporting documents the lender requires. Other factors that can significantly affect the approval time frames include the number of lien holders, the investor that owns the loan, if there is Mortgage Insurance (MI) on the loan and the amount of the write off.


source: wikipedia

Friday, June 17, 2011

What's Not in Your FICO® Score

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FICO scores consider a wide range of information on your credit report. However, they do not consider:
  • Your race, color, religion, national origin, sex and marital status. US law prohibits credit scoring from considering these facts, as well as any receipt of public assistance, or the exercise of any consumer right under the Consumer Credit Protection Act.
  • Your age. Other types of scores may consider your age, but FICO scores don't.
  • Your salary, occupation, title, employer, date employed or employment history. Lenders may consider this information, however, as may other types of scores.
  • Where you live. 
  • Any interest rate being charged on a particular credit card or other account.
  • Any items reported as child/family support obligations or rental agreements.
  • Certain types of inquiries (requests for your credit report). The score does not count “consumer-initiated” inquiries – requests you have made for your credit report, in order to check it. It also does not count “promotional inquiries” – requests made by lenders in order to make you a “pre-approved” credit offer – or “administrative inquiries” – requests made by lenders to review your account with them. Requests that are marked as coming from employers are not counted either.
  • Any information not found in your credit report.
  • Any information that is not proven to be predictive of future credit performance.
  • Whether or not you are participating in a credit counseling of any kind.

Thursday, June 16, 2011

Holding fast at $115,000

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Could $115,000 be metro Phoenix's rock-bottom home price during this crash?

The region's median home price has been hovering around that figure for the past six months. This steady price trend demonstrates the least volatility the Valley has seen in home values in almost a decade.

Data from the Information Market, a real-estate research firm, shows that the median price of all existing-home sales has been $115,000 for every month since December, except February, when it was $116,000.

Now, this median price isn't going to thrill longtime homeowners in the Phoenix area. The record for resale-home prices was set in September 2006, when it hit $267,000. And home prices haven't been this low since 1999. But at least the region's median hasn't dropped any lower so far this year.

Many metro areas in the U.S. experienced a double dip in home prices during March and April of this year. The Phoenix area did not. The region's double dip came late last year, when the median fell from $121,000 in November to $115,000 in December.

The area's previous rock-bottom price during this housing downturn was in April 2009, when the median fell to $119,000 from $122,500 in March. During the second half of 2009 and 2010, prices had been climbing steadily from that April low until December.

Recent key real-estate indicators, including data on foreclosures and listings of homes for sale, have been heading in the right direction. That may signal the housing market could start to recover this year, so home prices may begin slowly to increase again.

- Foreclosures dip: Pre-foreclosures, or notice of trustee sales, are one of the best forward-looking indicators for the housing market.

In May, there were 4,221 pre-foreclosure filings in Maricopa County, Information Market reports. That's basically flat from April's level, the lowest number of pre-foreclosure filings since December 2007.

Last month, there were 4,212 foreclosures, or trustee sales, completed. Phoenix-area foreclosures artificially fell below 3,000 in November due to short-term lender moratoriums that expired in December.

But the best sign for metro Phoenix's housing market is pending foreclosures. The number of residential-foreclosure filings being processed is down to about 27,400. Two years ago, there were 42,000 foreclosures pending.

Wednesday, June 15, 2011

8 Factors That Devalue a Good Home

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If you're considering selling your home, there are a number of factors you should consider regarding the resale value of your property. Some of these issues may devalue your home or scare some potential buyers away entirely, even if your home is an otherwise outstanding property! Consider these eight factors when listing your home.

1. Location, Location, Location
Many real estate television shows repeat this phrase over and over. Buying a home in an area that provides residents with access to services and effective transportation is important - though many buyers don't wish to live too close to airports and busy roads for fear of noise.

Visual appeal is another concern. Cell phone towers and power lines can be seen as eyesores - or possibly even having potential health hazards. Local school closures can also deter potential buyers who have children or who are considering having children in the near future. Some buyers may be leery of purchasing homes that are on flood plains.

To ensure maximum resale potential, consider how many of these types of issues exist near the properties you're considering. Remember, though, there's no way of knowing exactly how a neighborhood will evolve over time.

2. Good Renovations Gone Bad
If your home looks like a DIY nightmare, this can definitely devalue your home. Though putting money into renovations generally increases the value of a home, poorly done renovations can have the opposite effect. If buyers feel that the renovations will have to be redone, there's a good chance they'll make a lower offer or keep looking for a move-in ready home.

3. Overly Creative Customization
That bright pink feature wall might have seemed like a good idea at the time, but the truth is that unusual paint choices - both inside and outside the home - can turn buyers off, even if your customization is the cutting edge trend in current home design magazines. Customizing spaces so that they may not be functional to future buyers, like turning the garage into a home gym or a granny apartment, might make some buyers reluctant to buy your property.

The same can be said for unique landscaping choices or renovations that are too high scale for the house. A professional chef's kitchen or marble bathrooms in a modest home suited to first-time buyers won't likely provide a good return on investment.

4. Unappealing Curb Appeal
The first thing potential buyers will see is the exterior of the property. If the house appears to be outdated or in poor repair on the outside, people will assume it is the same for the inside. Water features or swimming pools and overly landscaped green space may turn off some buyers since people tend to associate high maintenance yards with expensive upkeep and unnecessary headaches. Old fences and sheds can also devalue your home, especially if they look like they're in dire need of replacement. Keep the gardens weeded and the lawn mowed so that potential buyers can see how nice the property is, inside and out.

5. Pets Gone Wild
Many people won't mind buying a home that has had resident animals, but no one wants to live with constant reminders of former owners' pets. Damage to carpets, walls or a strong smell of animals will put off some buyers - especially those with allergies. Consider letting your pets live elsewhere while the property is for sale. Also, a good cleaning and repairing of any visible damage will help to mitigate the potential devaluation of your home associated with pet ownership.

6. Not-So-Nice Neighborhood
A dodgy neighborhood with a high crime rate or homes on your block that look unkempt can scare potential buyers away. Even if your neighbors have unusual-colored homes or have made strange additions to their homes, this can be perceived by potential buyers as an eyesore.

7. Sinister Reputation
Well-known crimes, deaths or even urban legends associated with your house or neighborhood can decrease the value of a home immensely. Most people don't want to live in a home where they feel that something awful has happened, much less move in with your alleged resident ghost! Though these kinds of issues may be out of your control, they may certainly have an impact on the resale value of your home.

8. Frightful Foreclosures
Many buyers are leery of purchasing foreclosures that are being sold on an "as-is" basis. The fear is that the home could be a money pit or require a huge amount of repairs before being move-in ready. Some good homes may be available through foreclosures, but it's important to do your research, ask lots of questions and don't be afraid to bargain. It's also crucial that you get a home inspection so that you know exactly what you're getting into. There's a good chance that some work will be required when buying a foreclosure, but you may get great value for your money if you're willing to put in a little work.

The Bottom Line
Neighborhoods change over time, so there's no way to be totally sure when you buy a property how the area will look in the years to come. However, you should always make your best efforts to address any issues with your property that are within your control. Play up your home's strong points and get involved with your realtor to ensure that any special features of your home and neighborhood have been highlighted.

via yahoo finance

Wednesday, June 1, 2011

Phoenix-area housing market shows signs of price stability.

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The Phoenix-area housing market is still stuck in the mud, but at least it's no longer sinking in quicksand.

That was the reaction of two local housing analysts to the latest S&P/Case-Shiller report on home prices in the nation's 20 largest metro areas.

The quarterly report, released Tuesday, said home prices double-dipped throughout much of the nation, reaching 2002 levels in March, based on the latest data available.

The report listed the Valley among the worst-performing areas in terms of median home-price change during the period from March 2010 to March 2011. The median sale price on an existing home in metro Phoenix decreased 8.4 percent, second only to Minneapolis, which had a 10 percent decline, the report said.

However, the Phoenix area was one of the best performers with regard to the most recent month-over-month price change measured by the Case-Shiller study, from February to March. The Valley's median home-resale price decreased 0.5 percent during that one-month period, making it the fifth-best metro area in terms of price retention.

The Phoenix area's recent performance boost in home-value retention reflects that prices have essentially stabilized since January, local analysts said, following an artificial price increase and subsequent decline caused by the introduction and expiration of an $8,000 federal income-tax rebate for first-time homebuyers.

Aside from the tax rebate's temporary effects, the Phoenix area's median home price has been stable, albeit low, for quite some time, said analyst Tom Ruff, founder and principal of the Information Market, based in Glendale.

5-month standstill
"It's barely moved in two years," he said.

In April 2009, the median home-resale price in Maricopa County reached its first post-bubble low point of $119,000, Ruff said.

After rebounding to a high of nearly $135,000 in April 2010 - the final month for buyers to qualify for the tax rebate - prices once again fell, reaching a new low of $115,000 in January.

According to the Information Market's research, the figure hasn't budged from that spot in five months.

Meanwhile, some national housing analysts, reacting to Tuesday's report, predicted home prices nationally will decline by an additional 5 percent by the end of the year.

Ruff took issue with that prediction for the Valley, arguing that, for the past few months, newly issued notices of foreclosure have decreased significantly in the area, bringing the number of "active" notices - those yet to be resolved by foreclosure, short sale or loan modification - from 40,000 in January down to 27,000 in April.

Predicting an uptick
Because foreclosure homes generally sell at a discount and there are likely to be fewer of them in the coming months, Ruff is predicting a slight uptick in the area's median home-resale price.

One reason the Valley might be pulling away from other metro areas in terms of price stability is the ease with which lenders can foreclose on homes in Arizona, Ruff said.

In many other states, banks cannot foreclose without going to court, he said, where it's possible for borrowers and their attorneys to drag out the process much longer.

'A faster track'
"We think Arizona is on a faster track to recover than some of the other states," Ruff said.

Jay Butler, an Arizona State University housing-market analyst, was less optimistic, saying it's still a toss-up whether home prices in the Phoenix area will go up or down from here.

One expected change that could seriously affect Valley home values is the slashing of maximum mortgage-loan limits backed by Fannie Mae, Freddie Mac and the Federal Housing Administration, Butler said.

The conforming loan limit for Fannie and Freddie loans in the Phoenix area is $417,000, and the FHA loan limit is about $350,000.

Serious challenges
Butler, director of real-estate studies at ASU's W.P. Carey School of Business, said that Fannie and Freddie officials are talking about lowering the limit to $200,000 for conventional loans and that the FHA is considering a reduction to $150,000 for the loans it guarantees.

Butler also pointed out that Arizona still faces serious employment challenges and that population growth has slowed to a trickle.

"The only thing going on right now is investors buying homes for as little as they can get them for," he said. "There's nothing really out there to propel the market forward."

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