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.
Wednesday, July 9, 2008
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.
Subscribe to:
Posts (Atom)
