Here's the deal:
If you really want to buy a foreclosure, and have the guts and the money, vision and heart, you can.
Plan to look and look and look to find the stuff that is good. Most of it is pretty horrifying, or overpriced. Or both.
And have a very strong credit score and a good mortgage broker.
Oh, and you need a good real estate agent. One willing to bring you through stinky and perhaps dangerous places. And then maybe get paid 2.5% of $9,000 for all of this work. Remember --we're paid on commission and 2.5% is a pretty typical payout to a buyer's agent. On $9,000, that's $225... and that's before my boss takes her cut. At those commissions, it's a hard thing for a realtor to do. We spend hours working on purchase agreements, hours searching for property, and worst of all, every hour we spend working on a deal that will pay $225 is every hour we are NOT working on bigger and better things.
Wednesday, November 26, 2008
But I really want to buy a house for pennies on the dollar!
Okay, fine. Let's find you a house for pennies on the dollar.
They are out there, they certainly are -- but again -- it's not what you think.
I once spent a couple hours talking a client OUT of buying a foreclosure for a rehab "project."
There are many, many homes out there that have been foreclosed and are available for low prices. Here are the current low prices in my nearby neighborhoods:
On the West Side:
403 Curtice Street E, $14,000
In Merriam Park:
1145 Selby Avenue, $43,900
In West 7th:
301 Goodrich, $28,500
In Midway:
1478 Sherburne, $29,900
In the area the MLS calls Crocus Hill:
332 Fisk #3S, $49,900
In Highland:
1774 Norfolk, $69,900
In Dayton's Bluff:
738 Bradley, $7,000
In Frogtown:
512 Edmund, $9,900
On the East Side:
1330 7th St E, $11,000
And you are probably thinking: Wow! I could put one of those babies on my credit card!
You sure could. And then you are looking at thousands and thousands of repair costs to make the home livable. Several of the above homes are slated to be torn down, they are just too far gone.
Just start thinking of the cost to rehab a house...
Roof: $5-$10k
All new wiring: $5-$15k
New pumbing: $10k
Exterior rot/siding repair: $5k
Regrading: $500 with a lot of shoveling
Plaster/drywall repair: $1k-$10k
Flooring:$5k
Paint: $1k-$15k
Kitchens: $10k-$30k
Baths: $5k-$25k
Low end:$48k
High end:$125k
And believe me, any house listed for under $50k is likely to need $125 worth of work.
I have seen many foreclosed houses. I will say the cheapest one I have ever personally seen was about $30,000. At that price, the houses are pretty bad. I can't imagine what they are like at less than that. I have seen more expensive homes than the ones above with extensive mold, with foundations that were collapsing so badly it was a little scary, with environmental hazards, with no plumbing or heating, with no plaster, drywall, or flooring, with smells so horrifying I remember them to this day.
These houses are NOT for the average person to buy and rehab. These homes will take hundreds of hours of repairs, and many of them are too far gone to be repaired. Many of them are not even worth $125,000 when they are remodeled, because of the nearby properties, even if they had the perfect HGTV makeover. Even if Ty from Extreme Home Makeover ripped the top off and added new Kenmore appliances.
Let's pull some highlights from some of the comments on these homes:
- This property is going to be demolished and after the demo this listing will be transferred to a vacant lot listing.
- Category 3 on VBR list. Fire damage throughout. Location near highways and shopping.
- Boarded property. Needs lots of plaster, paint and carpet needed. Needs doors in and out. Property is SOLD As Is. Buyer is responsible for any work orders or repairs for a boarded property.
So what's a category 3? It means the CITY IS PLANNING TO TEAR THE PLACE DOWN. Sometimes investors can post a bond to the city to save the home from demolition, but the costs to rehab a house with "fire damage throughout" usually is prohibitive.
With properties the City of St Paul has declared Category 2 or 3, those homes MUST be brought up to CURRENT code. Since these buildings are older, that may mean MASSIVE retrofitting and repairs.
And where is all of that money coming from -- to make these repairs? Some buyers of Category 2 or 3 property must have cash out of pocket to give to the city as a bond to prove intent to repair the property. There is very little financing out there in the mortgage world to do these kinds of projects.
So -- if you plan to buy one of these houses, go ahead. But I hope you have $100,000 in the bank that you plan to spend on the rehab.
They are out there, they certainly are -- but again -- it's not what you think.
I once spent a couple hours talking a client OUT of buying a foreclosure for a rehab "project."
There are many, many homes out there that have been foreclosed and are available for low prices. Here are the current low prices in my nearby neighborhoods:
On the West Side:
403 Curtice Street E, $14,000
In Merriam Park:
1145 Selby Avenue, $43,900
In West 7th:
301 Goodrich, $28,500
In Midway:
1478 Sherburne, $29,900
In the area the MLS calls Crocus Hill:
332 Fisk #3S, $49,900
In Highland:
1774 Norfolk, $69,900
In Dayton's Bluff:
738 Bradley, $7,000
In Frogtown:
512 Edmund, $9,900
On the East Side:
1330 7th St E, $11,000
And you are probably thinking: Wow! I could put one of those babies on my credit card!
You sure could. And then you are looking at thousands and thousands of repair costs to make the home livable. Several of the above homes are slated to be torn down, they are just too far gone.
Just start thinking of the cost to rehab a house...
Roof: $5-$10k
All new wiring: $5-$15k
New pumbing: $10k
Exterior rot/siding repair: $5k
Regrading: $500 with a lot of shoveling
Plaster/drywall repair: $1k-$10k
Flooring:$5k
Paint: $1k-$15k
Kitchens: $10k-$30k
Baths: $5k-$25k
Low end:$48k
High end:$125k
And believe me, any house listed for under $50k is likely to need $125 worth of work.
I have seen many foreclosed houses. I will say the cheapest one I have ever personally seen was about $30,000. At that price, the houses are pretty bad. I can't imagine what they are like at less than that. I have seen more expensive homes than the ones above with extensive mold, with foundations that were collapsing so badly it was a little scary, with environmental hazards, with no plumbing or heating, with no plaster, drywall, or flooring, with smells so horrifying I remember them to this day.
These houses are NOT for the average person to buy and rehab. These homes will take hundreds of hours of repairs, and many of them are too far gone to be repaired. Many of them are not even worth $125,000 when they are remodeled, because of the nearby properties, even if they had the perfect HGTV makeover. Even if Ty from Extreme Home Makeover ripped the top off and added new Kenmore appliances.
Let's pull some highlights from some of the comments on these homes:
- This property is going to be demolished and after the demo this listing will be transferred to a vacant lot listing.
- Category 3 on VBR list. Fire damage throughout. Location near highways and shopping.
- Boarded property. Needs lots of plaster, paint and carpet needed. Needs doors in and out. Property is SOLD As Is. Buyer is responsible for any work orders or repairs for a boarded property.
So what's a category 3? It means the CITY IS PLANNING TO TEAR THE PLACE DOWN. Sometimes investors can post a bond to the city to save the home from demolition, but the costs to rehab a house with "fire damage throughout" usually is prohibitive.
With properties the City of St Paul has declared Category 2 or 3, those homes MUST be brought up to CURRENT code. Since these buildings are older, that may mean MASSIVE retrofitting and repairs.
And where is all of that money coming from -- to make these repairs? Some buyers of Category 2 or 3 property must have cash out of pocket to give to the city as a bond to prove intent to repair the property. There is very little financing out there in the mortgage world to do these kinds of projects.
So -- if you plan to buy one of these houses, go ahead. But I hope you have $100,000 in the bank that you plan to spend on the rehab.
Can I really buy a home for pennies on the dollar? The Infomercial Promises
Well, not really pennies on the dollar. And it's not what you think it is.
I know some of you have seen these articles or infomercials telling people that they can buy foreclosures at the sherrif sale. That is true, but Minnesota has very different rules than other states, making it impractical. The current market also makes this undesirable.
Here's what the infomercials tell you to do:
1. Read the legal notices in the paper and choose a property from the foreclosure notices that you are interested in. And all of the addresses are in legal description, so be up on your legal descriptions. (Such as: Anna E Ramsey's Addition, Lot 10 Block 3. That's in the Lexington Hamline neighborhood.)
2. Then, go to the courthouse and pay the price at the sheriff sale.
Sounds so easy! But here are some problems:
- You need to pay cash. Pretty much then and there.
- It is very unlikely you have seen the interior of the property, as the owners still live there
- The price you will pay is some amount ABOVE the mortgage amount. Many people going into foreclosure today owe more than the house is worth. So you are paying WAY MORE than the house is worth.
- And the big kicker, if the previous items aren't enough: in Minnesota, after the sheriff sale, the owners have 6 more months to live in the property. That's right -- if you buy that property at the sheriff sale, you have just bought a property with tenants that will be living there for free for 6 months. And you cannot control what they will or will not do to the property.
So, good luck with that.
I know some of you have seen these articles or infomercials telling people that they can buy foreclosures at the sherrif sale. That is true, but Minnesota has very different rules than other states, making it impractical. The current market also makes this undesirable.
Here's what the infomercials tell you to do:
1. Read the legal notices in the paper and choose a property from the foreclosure notices that you are interested in. And all of the addresses are in legal description, so be up on your legal descriptions. (Such as: Anna E Ramsey's Addition, Lot 10 Block 3. That's in the Lexington Hamline neighborhood.)
2. Then, go to the courthouse and pay the price at the sheriff sale.
Sounds so easy! But here are some problems:
- You need to pay cash. Pretty much then and there.
- It is very unlikely you have seen the interior of the property, as the owners still live there
- The price you will pay is some amount ABOVE the mortgage amount. Many people going into foreclosure today owe more than the house is worth. So you are paying WAY MORE than the house is worth.
- And the big kicker, if the previous items aren't enough: in Minnesota, after the sheriff sale, the owners have 6 more months to live in the property. That's right -- if you buy that property at the sheriff sale, you have just bought a property with tenants that will be living there for free for 6 months. And you cannot control what they will or will not do to the property.
So, good luck with that.
Friday, August 22, 2008
Newsflash: Caron NOT to be Obama's VP Pick
At this late hour, I can now announce that I will NOT be Barak Obama's VP pick.
While friends, family and neighbors have speculated that I was speaking with Obama's campaign during my extensive and furtive cell phone conversations, it was simply clients, loan officers, other realtors and the occasional robo-caller.
My Sunday "open house schedule" has also been suspect, with family assuming I was spending time at Obama's Raymond Avenue Minnesota HQ. I was actually in St Paul and nearby suburbs, holding open houses.
With my extensive experience with the local real estate market, the foreclosure crisis, my credentials as a board member of the Lexington Hamline Community Council and prestigous Bachelor of Fine Arts, I was a must-call for the campaign.
However, I have decided the campaign trail would simply take too deep of a toll on The Annoying Cow Dog and The Brown Dog.
While friends, family and neighbors have speculated that I was speaking with Obama's campaign during my extensive and furtive cell phone conversations, it was simply clients, loan officers, other realtors and the occasional robo-caller.
My Sunday "open house schedule" has also been suspect, with family assuming I was spending time at Obama's Raymond Avenue Minnesota HQ. I was actually in St Paul and nearby suburbs, holding open houses.
With my extensive experience with the local real estate market, the foreclosure crisis, my credentials as a board member of the Lexington Hamline Community Council and prestigous Bachelor of Fine Arts, I was a must-call for the campaign.
However, I have decided the campaign trail would simply take too deep of a toll on The Annoying Cow Dog and The Brown Dog.
I have referred the campaign to other Famous LexHam/St Paul Bloggers. We'll see how they respond to Mr. Obama's inquiries.
Petit Flower
LexHam Rand
The Pirate
The Dork
Little Latin Lupe Lu
Blacktop Desciple
On the Other Side of the Shell Game
My last post talked about the death of the last $0 down program.
However, the bill passed by Congress also had some interesting angles for first time homebuyers.
One of them is a tax credit. If a first time homebuyer buys a house between now and next summer, you will get a $7,500 tax credit on your next tax bill.
You don't get a check when you close your house -- you get a giant refund check when you file your taxes.
What's the catch? Oh yeah, there is a pretty big catch.
This tax credit must be REPAID. Yep, the IRS giveth and the IRS taketh away.
What it means is that each subsequent year you file your taxes you will pay back (interest free, mind you) a few hundred dollars to the IRS for that $7,500 tax credit.
No, you cannot use the tax credit for your house downpayment, but you will get a fat check come next year. You can buy whatever you want with it.
I would buy cartons and cartons of Camel Lights and 50 pounds of prime rib.
(And no, I don't smoke. I just think the idea of buying cigarettes is funny.)
However, the bill passed by Congress also had some interesting angles for first time homebuyers.
One of them is a tax credit. If a first time homebuyer buys a house between now and next summer, you will get a $7,500 tax credit on your next tax bill.
You don't get a check when you close your house -- you get a giant refund check when you file your taxes.
What's the catch? Oh yeah, there is a pretty big catch.
This tax credit must be REPAID. Yep, the IRS giveth and the IRS taketh away.
What it means is that each subsequent year you file your taxes you will pay back (interest free, mind you) a few hundred dollars to the IRS for that $7,500 tax credit.
No, you cannot use the tax credit for your house downpayment, but you will get a fat check come next year. You can buy whatever you want with it.
I would buy cartons and cartons of Camel Lights and 50 pounds of prime rib.
(And no, I don't smoke. I just think the idea of buying cigarettes is funny.)
It's Now or Never, People
The party is officially over. A few weeks ago Congress and the Senate passed a big housing bill to help the flailing housing market. Some of what they did helped, some of it could hurt.
The biggest news: last $0 down "program" in the mortgage world is kaput as of October.
It was a funny deal -- called a Downpayment Assistance Program, it allowed a home seller to give a "gift" to a nonprofit who would turn around and give a buyer that money to use as a downpayment on the house purchase. My lawyer client called it legalized money laundering, but it is (was) legal. And now it is almost gone.
Sooo.... if there is anyone out there that wants to buy a house -- they can use this program now (and I mean, like, today, time is ticking) or they can save up 3.5% for a downpayment next month.
The difference is more than dramatic, to be frank.
Think of it in these terms:
You are a renter. You want to buy a house. You make, say, $50,000 a year. Or you're a couple and make $80,000 or so a year.
You can buy a house NOW for $0 down (well, you do need a few hundred dollars for the inspection and whatnot)
OR
Next month, you will be required to put down 3.5% of the purchase price. On a $200,000 house, that would be $7,000.
All I know is when you are 25 years old and buying your first house, it is not an easy thing to scrape up $7,000.
But you protest:
I already own a house! Why would I care?
Because housing is a trickle down (trickle up?) kind of situation.
People sell $200,000 houses to buy $350,000 houses.
People sell $350,000 houses to buy $500,000 houses.
So if there are no buyers for a $200,000 house, that seller can't turn into a buyer for the next bracket up.
It's really tough out there and it just got tougher.
And -- if you are renting and want to buy something relatively soon and don't have $10,000 sitting in your bank account -- call me today. For reals, today. The house needs to be found, the offers need to be written and at the mortgage office by Friday August 29.
The biggest news: last $0 down "program" in the mortgage world is kaput as of October.
It was a funny deal -- called a Downpayment Assistance Program, it allowed a home seller to give a "gift" to a nonprofit who would turn around and give a buyer that money to use as a downpayment on the house purchase. My lawyer client called it legalized money laundering, but it is (was) legal. And now it is almost gone.
Sooo.... if there is anyone out there that wants to buy a house -- they can use this program now (and I mean, like, today, time is ticking) or they can save up 3.5% for a downpayment next month.
The difference is more than dramatic, to be frank.
Think of it in these terms:
You are a renter. You want to buy a house. You make, say, $50,000 a year. Or you're a couple and make $80,000 or so a year.
You can buy a house NOW for $0 down (well, you do need a few hundred dollars for the inspection and whatnot)
OR
Next month, you will be required to put down 3.5% of the purchase price. On a $200,000 house, that would be $7,000.
All I know is when you are 25 years old and buying your first house, it is not an easy thing to scrape up $7,000.
But you protest:
I already own a house! Why would I care?
Because housing is a trickle down (trickle up?) kind of situation.
People sell $200,000 houses to buy $350,000 houses.
People sell $350,000 houses to buy $500,000 houses.
So if there are no buyers for a $200,000 house, that seller can't turn into a buyer for the next bracket up.
It's really tough out there and it just got tougher.
And -- if you are renting and want to buy something relatively soon and don't have $10,000 sitting in your bank account -- call me today. For reals, today. The house needs to be found, the offers need to be written and at the mortgage office by Friday August 29.
Wednesday, July 9, 2008
Everybody's Buying a Foreclosure
I think I have had only 2 deals this year that did not involve some kind of foreclosure/short sale/distressed property.
My buyers are pretty good at recognizing a bargain and are willing to go through the agony of it all to end up with a good house.
Last night I was lying in bed thinking about how fewer "normal people" are listing their homes and more and more the selection for buyers is mostly bank-owned property.
I dug through a report put out by the Minneapolis Area Association of Realtors called Foreclosures and Short Sales in the Twin Cities Housing Market. A quote illustrating my point is here:
The market share picture is similar for home sales, with foreclosures and short sales comprising a larger portion of overall sales than they have before. In Q1 2008, 27.6 percent of total residential closed sales were mediated by a financial institution, up substantially from the first quarter of the two years prior. And the number of traditional closed sales fell from 8,896 in Q1 2006 to 4,790 in Q1 2008, while the number of bank mediated sales increased from 324 to 1,828 for the same time period comparison.
So we are talking almost ONE THIRD of all sales in Q1 2008 were foreclosures. That's not ending anytime soon, either.
Read the full report here:
http://www.mplsrealtor.com/downloads/market/Reports_Analysis/Foreclosures-and-Short-Sales-in-the-Twin-Cities-Housing-Market.
I'm seeing lots of bank-owned and soon-to-be bank-owned in Lakeville and Apple Valley, where I have some buyers. This is going to hit the suburbs, and it will be tough, very tough.
And when one third of all listings are foreclosures -- just by mathmatical odds -- a third of all of my sales should be foreclosures. We are all dealing with this, not just the "inner city," or the late-night infomercial watchers. It's here.
My buyers are pretty good at recognizing a bargain and are willing to go through the agony of it all to end up with a good house.
Last night I was lying in bed thinking about how fewer "normal people" are listing their homes and more and more the selection for buyers is mostly bank-owned property.
I dug through a report put out by the Minneapolis Area Association of Realtors called Foreclosures and Short Sales in the Twin Cities Housing Market. A quote illustrating my point is here:
The market share picture is similar for home sales, with foreclosures and short sales comprising a larger portion of overall sales than they have before. In Q1 2008, 27.6 percent of total residential closed sales were mediated by a financial institution, up substantially from the first quarter of the two years prior. And the number of traditional closed sales fell from 8,896 in Q1 2006 to 4,790 in Q1 2008, while the number of bank mediated sales increased from 324 to 1,828 for the same time period comparison.
So we are talking almost ONE THIRD of all sales in Q1 2008 were foreclosures. That's not ending anytime soon, either.
Read the full report here:
http://www.mplsrealtor.com/downloads/market/Reports_Analysis/Foreclosures-and-Short-Sales-in-the-Twin-Cities-Housing-Market.
I'm seeing lots of bank-owned and soon-to-be bank-owned in Lakeville and Apple Valley, where I have some buyers. This is going to hit the suburbs, and it will be tough, very tough.
And when one third of all listings are foreclosures -- just by mathmatical odds -- a third of all of my sales should be foreclosures. We are all dealing with this, not just the "inner city," or the late-night infomercial watchers. It's here.
Land Ho!
I've been talking with my friend John from Shelter Architecture about how now is a good time to build your dream home in the city.
Here's why -- it's really hard to find a lot in the city. However, the glut of cheap foreclosures could allow someone to tear down an existing house to build a new house. With houses selling for as little as $7,000 in the metro, it's a good time to jump on this. And yes, there are foreclosures in all neighborhoods -- from Bald Eagle Lake and North Oaks to Kenwood and Crocus Hill.
Financing is tight right now, but I think this is a nice opportunity time for a lot of people.
It's also a good time to take a shell of a house and turn it into something new.
Here's why -- it's really hard to find a lot in the city. However, the glut of cheap foreclosures could allow someone to tear down an existing house to build a new house. With houses selling for as little as $7,000 in the metro, it's a good time to jump on this. And yes, there are foreclosures in all neighborhoods -- from Bald Eagle Lake and North Oaks to Kenwood and Crocus Hill.
Financing is tight right now, but I think this is a nice opportunity time for a lot of people.
It's also a good time to take a shell of a house and turn it into something new.
Incredibly Lucky
Serendipity seems to strike every once in a while in real estate.
I was in the office making my open houses flyers and the front desk paged me. There was a walk-in customer that wanted to talk to an agent.
I was rushing to get to my opens and I did not have much time to talk. I went away with some doubts -- first time homebuyers, small budget, grand ideas. Not sure this was going anywhere, but I agreed to meet him next week.
I was really busy and scrambled to put together a couple houses to show them. I thought at least I could talk to them more and find out if buying was a possibility for them, or just a dream.
I showed them two houses in their price range - both foreclosures on the West Side. One was a grandpa house that needed a lot of work. The other was a beautiful house that had been overlooked for a long time because it was a foreclosure. It had just been reduced in price, and the buyers loved it. It was in great shape and just needed appliances.
It's unusual to find a beautiful house in a great neighborhood for dirt cheap, and my buyers knew it. They acted quickly, and found out that night that they were approved for $5,000 less than the list price.
We wrote the offer for $5,000 less than the list price -- exactly what the buyer was approved for. The next day I was sick with the flu, and the bank counters with a few thousand over the level the buyers can spend. I was demoralized and I told the list agent we would work with the lender to get my buyers approved to go to the new level, which might be hard. While I slept off the flu, I got an email that the list agent had simply re-submitted our offer and we got it!
I was thrilled. It's so rewarding when you have a buyer with a small budget and you can find them a beautiful house in a good neighborhood. We are all thrilled, I'm excited to see this one close.
I was in the office making my open houses flyers and the front desk paged me. There was a walk-in customer that wanted to talk to an agent.
I was rushing to get to my opens and I did not have much time to talk. I went away with some doubts -- first time homebuyers, small budget, grand ideas. Not sure this was going anywhere, but I agreed to meet him next week.
I was really busy and scrambled to put together a couple houses to show them. I thought at least I could talk to them more and find out if buying was a possibility for them, or just a dream.
I showed them two houses in their price range - both foreclosures on the West Side. One was a grandpa house that needed a lot of work. The other was a beautiful house that had been overlooked for a long time because it was a foreclosure. It had just been reduced in price, and the buyers loved it. It was in great shape and just needed appliances.
It's unusual to find a beautiful house in a great neighborhood for dirt cheap, and my buyers knew it. They acted quickly, and found out that night that they were approved for $5,000 less than the list price.
We wrote the offer for $5,000 less than the list price -- exactly what the buyer was approved for. The next day I was sick with the flu, and the bank counters with a few thousand over the level the buyers can spend. I was demoralized and I told the list agent we would work with the lender to get my buyers approved to go to the new level, which might be hard. While I slept off the flu, I got an email that the list agent had simply re-submitted our offer and we got it!
I was thrilled. It's so rewarding when you have a buyer with a small budget and you can find them a beautiful house in a good neighborhood. We are all thrilled, I'm excited to see this one close.
Forcing It
This year I have had several closings (all related to distressed properties, go figure) that were pretty brutal. A closing usually takes about an hour and I have had several now that have taken 3 or more hours. Yesterday was a whopper -- I was at the closing office for almost 5 hours.
The property was incredible, in the historic district, and cheap cheap cheap. About 30% less than the previous owner paid a few years ago. It was a real once-in-a-lifetime for the buyer.
My buyer was incredible -- smart and motivated and charming to boot.
The deal was less than incredible. A short sale, with Countrywide, while they were going through a merger with Bank of America. The seller lives in Europe and was hard to reach, and maybe did not want to be reached.
Luckily, the list agent was a gem. She worked really hard on this but she almost gave up on the deal because Countrywide was not approving any short sales during the BOA merger and was giving them the runaround.
About 5 months after we wrote our offer, Countrywide decided to take it. It was a huge effort by the list agent to get Countrywide to accept a big loss. It was a definite relief, but it was not the end of our hurdles.
It was FHA financing, and there is nothing FHA loves more than to require a house to be painted before it is sold, or not allow it to be sold at all. And yes, this big old Victorian needed paint, and fast. The buyer got to work and had it painted in less than 3 days. I was shocked and stunned, and knew this closing had a chance to happen.
Yesterday at the closing table we were missing a few elements, but the buyer began signing anyway. As he signed the last few papers, we still did not have an email or phone call back from Countrywide with final approval on our numbers.
We let the buyer go and I got on the phone. I called the number we had. I called other Countrywide numbers I found online. I could not reach the "only person" that would be allowed to approve this sale. We had to have it wrapped up in 48 hours or the entire deal would be lost. It was high stakes and I was not going to let it fall apart.
Finally I checked Countrywide's SEC filings and called the number that connected me to the office where the executives are. I was connected through to one of the VP's admins and she was more than happy to stop coloring spreadsheets and pulled a few strings for me. After more than two and a half hours on the phone, Countrywide approved the sale.
I think it took six days off my life, this closing. It's kind of a miracle it happened at all -- the list agent filled me in on some details that I did not know before that make it clear this is a real miracle.
I had champagne on the buyer's new deck last night with his friends and family. It was very rewarding to have this one done. As I was going to sleep that night, all of my adrenaline came rushing through and my heart was just palpitating. I had spent so long keeping a cool head that it all fell on me right then. I don't think anyone other than other realtors know what we go through to keep it together sometimes.
The property was incredible, in the historic district, and cheap cheap cheap. About 30% less than the previous owner paid a few years ago. It was a real once-in-a-lifetime for the buyer.
My buyer was incredible -- smart and motivated and charming to boot.
The deal was less than incredible. A short sale, with Countrywide, while they were going through a merger with Bank of America. The seller lives in Europe and was hard to reach, and maybe did not want to be reached.
Luckily, the list agent was a gem. She worked really hard on this but she almost gave up on the deal because Countrywide was not approving any short sales during the BOA merger and was giving them the runaround.
About 5 months after we wrote our offer, Countrywide decided to take it. It was a huge effort by the list agent to get Countrywide to accept a big loss. It was a definite relief, but it was not the end of our hurdles.
It was FHA financing, and there is nothing FHA loves more than to require a house to be painted before it is sold, or not allow it to be sold at all. And yes, this big old Victorian needed paint, and fast. The buyer got to work and had it painted in less than 3 days. I was shocked and stunned, and knew this closing had a chance to happen.
Yesterday at the closing table we were missing a few elements, but the buyer began signing anyway. As he signed the last few papers, we still did not have an email or phone call back from Countrywide with final approval on our numbers.
We let the buyer go and I got on the phone. I called the number we had. I called other Countrywide numbers I found online. I could not reach the "only person" that would be allowed to approve this sale. We had to have it wrapped up in 48 hours or the entire deal would be lost. It was high stakes and I was not going to let it fall apart.
Finally I checked Countrywide's SEC filings and called the number that connected me to the office where the executives are. I was connected through to one of the VP's admins and she was more than happy to stop coloring spreadsheets and pulled a few strings for me. After more than two and a half hours on the phone, Countrywide approved the sale.
I think it took six days off my life, this closing. It's kind of a miracle it happened at all -- the list agent filled me in on some details that I did not know before that make it clear this is a real miracle.
I had champagne on the buyer's new deck last night with his friends and family. It was very rewarding to have this one done. As I was going to sleep that night, all of my adrenaline came rushing through and my heart was just palpitating. I had spent so long keeping a cool head that it all fell on me right then. I don't think anyone other than other realtors know what we go through to keep it together sometimes.
Wednesday, March 5, 2008
Who Wants to be on HDTV?
Dude, seriously!
Last year one of my clients worked for HDTV. They are now casting a new season of "Sleep On It" -- concept is homebuyers sleep overnight in the home they are thinking of purchasing as a kind of test drive.
I got an email from the producer, and she was wondering if I have any buyers or sellers that would be interested in participating. They want "high-energy" people (no duds, please).
I'm not very sure how this is going to work out, but it does sound fun, and why the heck not???
Anyhow, let your friends know I have the HGTV hookup and drop me a line asap if you are interested.
amycaron@edinarealty.com
Last year one of my clients worked for HDTV. They are now casting a new season of "Sleep On It" -- concept is homebuyers sleep overnight in the home they are thinking of purchasing as a kind of test drive.
I got an email from the producer, and she was wondering if I have any buyers or sellers that would be interested in participating. They want "high-energy" people (no duds, please).
I'm not very sure how this is going to work out, but it does sound fun, and why the heck not???
Anyhow, let your friends know I have the HGTV hookup and drop me a line asap if you are interested.
amycaron@edinarealty.com
Vacation Realty
So I was in Montana over the weekend. Not a vacation, but a grandma's funeral.
On our non-funeral day, we went to Red Lodge, a cutesy ski town not far from Yellowstone. There were 4 or 5 brokerages in the little downtown, all featuring the listed properties on color copies in the front windows.
It's funny -- vacation property always seems so much like home, and so much not like home.
Cute 1 bedroom bungalow in a good location? $179,900! Just like the swanky neighborhoods here!
Overdone, new construction, too many finished square feet for anyone other than a family of ten -- $799,900! Just like here!
616 acres of open land -- $189,900!
Hold the freaking phone! Over 600 acres??? Here, good open land goes for much, much, much more. A quick search of the MLS for parcels in excess of 600 acres brings me listings well above a million dollars. The climate in Montana is very arid, and I would imagine the 616 acres is only good for grazing land.
But I do have this fantasy of buying up a lot of vacant land. They aren't making any more of it, you know.
On our non-funeral day, we went to Red Lodge, a cutesy ski town not far from Yellowstone. There were 4 or 5 brokerages in the little downtown, all featuring the listed properties on color copies in the front windows.
It's funny -- vacation property always seems so much like home, and so much not like home.
Cute 1 bedroom bungalow in a good location? $179,900! Just like the swanky neighborhoods here!
Overdone, new construction, too many finished square feet for anyone other than a family of ten -- $799,900! Just like here!
616 acres of open land -- $189,900!
Hold the freaking phone! Over 600 acres??? Here, good open land goes for much, much, much more. A quick search of the MLS for parcels in excess of 600 acres brings me listings well above a million dollars. The climate in Montana is very arid, and I would imagine the 616 acres is only good for grazing land.
But I do have this fantasy of buying up a lot of vacant land. They aren't making any more of it, you know.
Get While the Gettin' is Good
I've had some conversations with some mortgage guys lately (yeah, somehow they are all guys) and lending rules are tightening up.
For the most part, it is making it much more difficult for first time homebuyers to make deals without a big downpayment. The zero down programs are drying up, and the entire Twin Cities area has been tagged a "decling market." (At least the declining market tag no longer just applies to my own ghetto address). The declining market designation means, to the buyer, that they will automatically need to put 5% down to get a conventional loan. (5% of $200k=$10,000!!)
There are still first time homebuyer programs that allow zero down, but they do have income restrictions. The limits are pretty high, but many of my first time homebuyer clients last year did not qualify.
I spoke to Todd Ingebretsen on the phone today. He works for Advisors Mortgage and is definitely very dedicated to knowing all of the little details of as many mortgage programs as possible. Since he is so dedicated to knowing the little details, the poor guy is on overload. Every day he gets piles of emails from the lenders outlining the changes in the mortgage programs.
All I can tell you all is that if you don't have a house now, and want one in the next couple years, do it now.
For the most part, it is making it much more difficult for first time homebuyers to make deals without a big downpayment. The zero down programs are drying up, and the entire Twin Cities area has been tagged a "decling market." (At least the declining market tag no longer just applies to my own ghetto address). The declining market designation means, to the buyer, that they will automatically need to put 5% down to get a conventional loan. (5% of $200k=$10,000!!)
There are still first time homebuyer programs that allow zero down, but they do have income restrictions. The limits are pretty high, but many of my first time homebuyer clients last year did not qualify.
I spoke to Todd Ingebretsen on the phone today. He works for Advisors Mortgage and is definitely very dedicated to knowing all of the little details of as many mortgage programs as possible. Since he is so dedicated to knowing the little details, the poor guy is on overload. Every day he gets piles of emails from the lenders outlining the changes in the mortgage programs.
All I can tell you all is that if you don't have a house now, and want one in the next couple years, do it now.
Wednesday, February 13, 2008
Blinkers
You know how they put blinkers on horses so they aren't distracted by the carnage going on around them?
I think that's how lots of realtors are feeling, like we wish we had blinkers on.
I need a little attitude adjustment. Need to light the real estate candle, tidy up my desk, and focus on the good stuff that's going on. And, there is a lot of good stuff. Maybe it's just January that's getting to me.
I think that's how lots of realtors are feeling, like we wish we had blinkers on.
I need a little attitude adjustment. Need to light the real estate candle, tidy up my desk, and focus on the good stuff that's going on. And, there is a lot of good stuff. Maybe it's just January that's getting to me.
Monday, February 4, 2008
So I'm hoping to make $169,000 this year
I was talking to my mom on the phone and she was talking about how they paid off the mortgage a while ago. She told me that when they had us 3 kids, my dad had one week where they had only $6 left, because they paid the mortgage that week.
I was like -- WHAT??? --- YOU COULD PAY THE MORTGAGE ON ONE PERSON'S SALARY???
And what's more, my dad was paid weekly so it was just ONE WEEK'S SALARY.
God in heaven! My attorney husband's salary takes two weeks of work to pay one week of mortgage -- and we have a cheap house.
So I pulled together some stats:
Current Nerstrand Stats
(Where my parents live)
A house down the street for them sold for $120,000 recently. Some sold for more, some less, we'll use $120 as our average.
Mortgage on $120,000, with 5% down, FHA 5.5% interest:
$642 each month
$78 taxes
$720 total
To pull in a salary to pay that mortgage payment in one week's salary, you would need to make $57,200 per year.
The factory my dad was working in when they bought the house is still around. My sister works there now too, and she is not making ANYWHERE near $57,200. I think salaries there are in the high $20k-$30s for the average workers.
So now let's do St. Paul.
I pulled the average house price for my area, Merriam Park. Average house price is $329,530.
Mortgage on $329,530, 5% down, FHA 5.5%
$1777 payment
$338 tax
$2115 total
To make $2115 after-tax each week, you would need to make $3250 pre-tax, for a pre-tax income of, yes, $169,000.
I don't know anyone that makes $169,000 in a factory when they are 28.
I was like -- WHAT??? --- YOU COULD PAY THE MORTGAGE ON ONE PERSON'S SALARY???
And what's more, my dad was paid weekly so it was just ONE WEEK'S SALARY.
God in heaven! My attorney husband's salary takes two weeks of work to pay one week of mortgage -- and we have a cheap house.
So I pulled together some stats:
Current Nerstrand Stats
(Where my parents live)
A house down the street for them sold for $120,000 recently. Some sold for more, some less, we'll use $120 as our average.
Mortgage on $120,000, with 5% down, FHA 5.5% interest:
$642 each month
$78 taxes
$720 total
To pull in a salary to pay that mortgage payment in one week's salary, you would need to make $57,200 per year.
The factory my dad was working in when they bought the house is still around. My sister works there now too, and she is not making ANYWHERE near $57,200. I think salaries there are in the high $20k-$30s for the average workers.
So now let's do St. Paul.
I pulled the average house price for my area, Merriam Park. Average house price is $329,530.
Mortgage on $329,530, 5% down, FHA 5.5%
$1777 payment
$338 tax
$2115 total
To make $2115 after-tax each week, you would need to make $3250 pre-tax, for a pre-tax income of, yes, $169,000.
I don't know anyone that makes $169,000 in a factory when they are 28.
Signs of recovery
Last week we had the big Edina Expo -- a big conference at the Xcel Center for all of the Edina agents.
We had an economist there talk about the state of the market and the possibility for recovery. He believes we will see better conditions for home sellers and stabilizing prices near to the end of this year.
He also shared the elements that he says will tell us that the market is turning and the bottom is past:
1. The number of new listings is less than previous months and less than the same month last year. This will signal two things: Sellers have realized now is NOT a good time and the foreclosure new listings are decreasing.
2. Days on market is decreasing. This means houses are selling more quickly and there is more demand.
3. The listing price and the sold price are closer to each other. This will signal that buyer have less bargaining power.
We have seen none of these things yet. I am thinking of running these stats in just my neighborhood. I do know we had fewer listings in my neighborhood in 2007 than 2006. I'll keep you updated as to the results.
We had an economist there talk about the state of the market and the possibility for recovery. He believes we will see better conditions for home sellers and stabilizing prices near to the end of this year.
He also shared the elements that he says will tell us that the market is turning and the bottom is past:
1. The number of new listings is less than previous months and less than the same month last year. This will signal two things: Sellers have realized now is NOT a good time and the foreclosure new listings are decreasing.
2. Days on market is decreasing. This means houses are selling more quickly and there is more demand.
3. The listing price and the sold price are closer to each other. This will signal that buyer have less bargaining power.
We have seen none of these things yet. I am thinking of running these stats in just my neighborhood. I do know we had fewer listings in my neighborhood in 2007 than 2006. I'll keep you updated as to the results.
What is "subprime" anyway?
The news media sure does love talking about the "subprime mortgage mess."
But it seems some of the talking heads don't really know what they are talking about.
There are a few things going on in the mortgage mess. Here's part of the story:
1. Subprime. Subprime borrowers are people that had credit scores and/or debt to income ratios that were less than would qualify them for mortgage programs and rates that people with average to good credit would get. Most of the subprime borrowers got into morgages with tough terms, some had adjustable rates, and some of the borrowers were given more mortgage than they could actually afford. Some of these borrowers did not have enough money to pay the first payment.
2. Adjustable rates. Many homeowners, some of them subprime and some of them good credit borrowers, took advantage of the very low teaser rates that the Adjustable Rate Mortgages offered. These mortgages all have different rules on how and when the rates adjust up, but the monthly payment difference from the first cheap payment to the subsequent adjusted payments are usually pretty steep. Lots of borrowers assumed that property values would continue to increase, and they would be able to refinance out of the now-adjusted loan. However, some ARM borrowers bought at the height of the market, and the house is not worth what they paid for it, making it impossible to refinance.
Both of these scenarios have lead to the foreclosure mess. It is not just subprime borrowers getting foreclosed, but lots of people. Of course, those people that are most economically vunerable are the most affected. I am seeing foreclosures in virtually every neighborhood, in the city, in the suburbs, in the gated communities.
But it seems some of the talking heads don't really know what they are talking about.
There are a few things going on in the mortgage mess. Here's part of the story:
1. Subprime. Subprime borrowers are people that had credit scores and/or debt to income ratios that were less than would qualify them for mortgage programs and rates that people with average to good credit would get. Most of the subprime borrowers got into morgages with tough terms, some had adjustable rates, and some of the borrowers were given more mortgage than they could actually afford. Some of these borrowers did not have enough money to pay the first payment.
2. Adjustable rates. Many homeowners, some of them subprime and some of them good credit borrowers, took advantage of the very low teaser rates that the Adjustable Rate Mortgages offered. These mortgages all have different rules on how and when the rates adjust up, but the monthly payment difference from the first cheap payment to the subsequent adjusted payments are usually pretty steep. Lots of borrowers assumed that property values would continue to increase, and they would be able to refinance out of the now-adjusted loan. However, some ARM borrowers bought at the height of the market, and the house is not worth what they paid for it, making it impossible to refinance.
Both of these scenarios have lead to the foreclosure mess. It is not just subprime borrowers getting foreclosed, but lots of people. Of course, those people that are most economically vunerable are the most affected. I am seeing foreclosures in virtually every neighborhood, in the city, in the suburbs, in the gated communities.
Thursday, January 24, 2008
Waiting for the Bank
The thing about the current market is there are a lot of short sales (homeowners trying to save themselves from foreclosure by selling the house) and bank-owned properties.
Dealing with the banks can be a time-consuming process. Banks are only open business hours and don't keep Realtor hours. The short sale responses can take a month or more, and the bank-owned properties can be really quick or really slow. And all of the bank departments are really really busy now, and I think some of them are even hiring temps to deal with all of the foreclosure work.
Right now I have a handful of purchase agreements from buyers out there that all need signatures from the bank. I'm just waiting! I am not good at waiting, but there is NOTHING I can do.
It's tough for buyers to purchase this property. They usually have some kind of condition problem (somewhere between needs new carpet to needs new everything) and they are usually sold as-is. And then to have to wait for answers to the offers is excruciating.
Keep your fingers crossed that these offers come through for me, will ya?
Dealing with the banks can be a time-consuming process. Banks are only open business hours and don't keep Realtor hours. The short sale responses can take a month or more, and the bank-owned properties can be really quick or really slow. And all of the bank departments are really really busy now, and I think some of them are even hiring temps to deal with all of the foreclosure work.
Right now I have a handful of purchase agreements from buyers out there that all need signatures from the bank. I'm just waiting! I am not good at waiting, but there is NOTHING I can do.
It's tough for buyers to purchase this property. They usually have some kind of condition problem (somewhere between needs new carpet to needs new everything) and they are usually sold as-is. And then to have to wait for answers to the offers is excruciating.
Keep your fingers crossed that these offers come through for me, will ya?
The Road to Hell: A New Kitchen
Long story short I bought some display model cabinets.
They fit my kitchen perfectly, and the style is so perfect for my house.
I'm going to have a new kitchen sometime this summer.
But, at my house, the motto has always been Champagne Living on a Beer Budget.
We're going to be doing the kitchen in phases. Not terribly long drawn out phases, but there might be a point when the current stove we have is in it's current place and there is an open spot for the new stove that is not yet installed.
And I think there might be some plumbing and wiring sticking out of the walls for a while.
It's all great news but I know it's going to be some trouble.
I guess the good news is the first of the contractors came by today. I wanted to find out if I needed to sister in some of the notched joists (don't ask if you don't know), or at worst, needed to replace some of the original 1900's supports. The answer is that my supports all look good! I think he was staring at my bra when he said that, though.
Anyhow, I'm getting a little kooky running through color scenarios in my head. For a while I could not get past dark khaki/forest green but now I am on to french gold to match the toile in the dining room.
They fit my kitchen perfectly, and the style is so perfect for my house.
I'm going to have a new kitchen sometime this summer.
But, at my house, the motto has always been Champagne Living on a Beer Budget.
We're going to be doing the kitchen in phases. Not terribly long drawn out phases, but there might be a point when the current stove we have is in it's current place and there is an open spot for the new stove that is not yet installed.
And I think there might be some plumbing and wiring sticking out of the walls for a while.
It's all great news but I know it's going to be some trouble.
I guess the good news is the first of the contractors came by today. I wanted to find out if I needed to sister in some of the notched joists (don't ask if you don't know), or at worst, needed to replace some of the original 1900's supports. The answer is that my supports all look good! I think he was staring at my bra when he said that, though.
Anyhow, I'm getting a little kooky running through color scenarios in my head. For a while I could not get past dark khaki/forest green but now I am on to french gold to match the toile in the dining room.
Why Doesn't Someone Just Buy Up All of the $50,000 Houses on the East Side?
One of my colleagues asked me this earlier this week.
I told him it's because there are $50,000 houses on the West Side, and in Midway, and all over town.
I've just seen so many bottom-dollar houses lately. Good stuff, even, good condition. Just foreclosed, and needs to get sold. For me to see a house that is shockingly cheap I think it has to be under $50,000.
I told him it's because there are $50,000 houses on the West Side, and in Midway, and all over town.
I've just seen so many bottom-dollar houses lately. Good stuff, even, good condition. Just foreclosed, and needs to get sold. For me to see a house that is shockingly cheap I think it has to be under $50,000.
Speaking of Suing
Really, there is this dumb myth that "You can sue anyone for anything."
No. You can't. You just can't.
I can't sue Craig Finn because he won't come to my parties. Nor can I sue the asses that broke my dad's car windows, or the jackass that had that loud party.
Sometimes you can try to sue someone without a good reason and you will fail, if a lawyer will even bother to take the case. Lots of lawyers can't or won't take them.
So please stop thinking that. Or saying that. Because it's just not true.
No. You can't. You just can't.
I can't sue Craig Finn because he won't come to my parties. Nor can I sue the asses that broke my dad's car windows, or the jackass that had that loud party.
Sometimes you can try to sue someone without a good reason and you will fail, if a lawyer will even bother to take the case. Lots of lawyers can't or won't take them.
So please stop thinking that. Or saying that. Because it's just not true.
Seriously Addicted to Marshmallows
Really, I've never loved marshmallows until this winter.
Now, I can't get enough. I told my husband I was going to get a drink when we were watching Lost last week. Came back with a mug full of hot chocolate with marshmallows, hold the hot chocolate.
I'm really trying to not eat the whole bag. We know where this is going.
The Declining Market is VERY Localized
So about a month back I applied for a HELOC (home equity line of credit).
When they ran my address through "the system" my ghetto address came back tagged as declining market and the bank wasn't too excited to give me tons of cash. It turned out okay in the end, but this declining market stuff is B.S.
So I had a buyer looking at a house one mile over and 3 blocks south of me... basically my old neighborhood. This owner is selling the house for $100k less than he bought it for in 2002. When talking to the mortgage guys about it, they checked it for declining market status: Nope! it's fine! No declining market there!
Seriously, this is such B.S.
When they ran my address through "the system" my ghetto address came back tagged as declining market and the bank wasn't too excited to give me tons of cash. It turned out okay in the end, but this declining market stuff is B.S.
So I had a buyer looking at a house one mile over and 3 blocks south of me... basically my old neighborhood. This owner is selling the house for $100k less than he bought it for in 2002. When talking to the mortgage guys about it, they checked it for declining market status: Nope! it's fine! No declining market there!
Seriously, this is such B.S.
Thursday, January 10, 2008
Let the Suing Begin
As you all know the foreclosure thing has really gotten out of hand. Foreclosures have even *gasp* hit the suburbs. Being good Americans and having a government that holds a loose grasp on business, when things get out of hand, we sue.
So the city of Baltimore has begun to sue Wells Fargo over "reverse redlining" -- a fancy way to say Wells Fargo is alleged to have given loans with the harshest terms to those in the poorest (read: blackest) neighborhoods. The city of Baltimore (as well as cities across the nation) must now deal with the fallout of having lots and lots of vacant homes to deal with. The city must inspect, maintain, and protect these homes. Sometimes they are set on fire, and there's no one to cut the lawn.
The cost to the other homeowners on the block is terrible. Lowered home prices on your block mean lower home prices for your own house -- as well as dealing with vacant houses that are never maintained and are a break in and fire risk.
Additionally, Fannie Mae and Freddie Mac (quasi-governmental agencies that buy mortgages from Wells Fargo, Countrywide, US Bank, etc.) has announced new guidelines for lending. They are saying that if you are in a declining value area you may not be able to get a 100% loan as you have in the past. The funny thing is that no one can figure out what these declining areas are. Will the correspond with the poorest neighborhoods in town? Will they also correspond with the most ethnic neighborhoods in town? Will this lead to a Baltimore-style lawsuit?
Realtors are pretty up in arms over this. We are taught to be unendingly fair in our treatment of neighborhoods, and this announcement rubbed us all the wrong way. It will be interesting to see where it leads.
So the city of Baltimore has begun to sue Wells Fargo over "reverse redlining" -- a fancy way to say Wells Fargo is alleged to have given loans with the harshest terms to those in the poorest (read: blackest) neighborhoods. The city of Baltimore (as well as cities across the nation) must now deal with the fallout of having lots and lots of vacant homes to deal with. The city must inspect, maintain, and protect these homes. Sometimes they are set on fire, and there's no one to cut the lawn.
The cost to the other homeowners on the block is terrible. Lowered home prices on your block mean lower home prices for your own house -- as well as dealing with vacant houses that are never maintained and are a break in and fire risk.
Additionally, Fannie Mae and Freddie Mac (quasi-governmental agencies that buy mortgages from Wells Fargo, Countrywide, US Bank, etc.) has announced new guidelines for lending. They are saying that if you are in a declining value area you may not be able to get a 100% loan as you have in the past. The funny thing is that no one can figure out what these declining areas are. Will the correspond with the poorest neighborhoods in town? Will they also correspond with the most ethnic neighborhoods in town? Will this lead to a Baltimore-style lawsuit?
Realtors are pretty up in arms over this. We are taught to be unendingly fair in our treatment of neighborhoods, and this announcement rubbed us all the wrong way. It will be interesting to see where it leads.
Hooray for Klondike Kate!
In a surprise move, my friend Audra tried out for AND WON the title of Klondike Kate!!
I am ridiculously thrilled for her. I can't wait to get my picture taken with her in her Kate getup.
Curiously, this is not the first Kate I have know. The very talented Kari Schaff is a past Kate and friend of a friend. Funny, I've never known any of the queens or princesses, though. I guess I am just more of a Klondike Kate kind of gal.
Photo from the Strib:
I am ridiculously thrilled for her. I can't wait to get my picture taken with her in her Kate getup.
Curiously, this is not the first Kate I have know. The very talented Kari Schaff is a past Kate and friend of a friend. Funny, I've never known any of the queens or princesses, though. I guess I am just more of a Klondike Kate kind of gal.
Photo from the Strib:
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