Understanding Credit

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Understanding Credit

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Price VS Cost

Are you a weak Agent?

Are you a weak agent?

Referenced from Steve Harney Blog

When interviewing agents to sell their home, most homesellers really only care about the answer to two questions:

1. Who is going to sell it for the most money?

2. Who is going to charge me the least?

The result of these narrow criteria is painful to the seller.  Most people list their home at a price that is not realistic with a weak agent.  Weak agents let the homeowner set the price (largely as a strategy to get the listing and work on lowering the price over time).  In a declining market, sellers are chasing a ball that is rolling downhill.  Weak agents can’t negotiate for themselves (they actually cut their own family’s income when they negotiate below market commissions).  How tough do we believe they will be for the homeseller, if they’re already not negotiating well for their own families? 

In today’s market, where a vast majority of homes on the market will NOT sell this month, we need to change the criteria of how we choose an agent to list our home.  Gone are the days of picking an agent we “like”.  No longer can we judge agents based on price (of the home or of the commission).  Strong agents should know the following:

1. What is your average list price to sales price ratio? This question will eliminate the agent who is just trying to get a listing with the hope of getting you to lower the price later.

2. What percentage of your listings expire without selling? Whether you list the home for 30 days or a year, the expiration rate of your agent is a good indicator of their effectiveness.

3. What is your average days on market? How quickly your home sells is important to you (sometimes more important than the actual price).

4. What percentage of your listings do you actually sell yourself? Many agents don’t like this question because they want to list homes, not sell them.  But, in this market, I would want to list my home with the agent who is most likely to bring me a buyer.  Let me warn you that most agents can’t answer those four questions.  The average agent doesn’t “know their numbers”, and you can’t afford to be an average agent today.  The superior agent not only knows their numbers; they know the numbers for their office, their competition and the entire MLS. 

       

        Do you know the answers to the following questions?

1. Where do they feel the buyer is most likely to come from?

2. Does the agent have a marketing plan that targets the most likely buyers?

3. Do they have a database of active buyers?

More than sales price, commission rate and likeability, clients need to search for EFFECTIVENESS.  How Effective are you?

Have you changed your batteries?

Oversupply of Bonds

Dates to Remember

Dates to Remember:


February 1. 2010

HUD TAKES ACTION TO SPEED RESALE OF FORECLOSURES
With certain exceptions, FHA currently prohibits insuring a mortgage on a
home owned by the seller for less than 90 days. This temporary waiver will give FHA
borrowers access to a broader array of recently foreclosed properties.

April 5, 2010
INCREASE IN UPFRONT PREMIUMS FOR FHA MORTGAGE INSURANCE
FHA loans with a case number assigned on or after April 5, 2010, will have a
2.25% upfront mortgage insurance premium. This is a .5% increase. Case numbers are
generally assigned when there is a contract with a property address, and a closing date
AND the borrower has committed to go forward with the loan.
Annual premiums (remitted on a monthly basis) will not change at this time.
Please go to http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-02ml.pdf. for more information.

Other changes include:
New borrowers will now be required to have a minimum FICO score of 580 to qualify
for FHA’s 3.5% down payment program. Borrowers with less than a 580 FICO score
will be required to put at least 10% down.
Seller concessions will be reduced from 6% to 3%. HUD has not yet released an effective
date for this change. (This will be a big one)

April 5, 2010
SHORT SELL PROCESS BECOMES EASIER
As of now, these seem to be the key points:
• Mortgage servicers have 10 days to accept or deny a short sale request. After a sale
is completed, the borrower could be completely released from debt.
• Borrowers are eligible to receive a $1,500 moving allowance, if they sell their home
through a short sale.
• Mortgage servicers will receive $1,000 for each completed short sale.
• Investors who hold first mortgages can get as much as $1,000 for allowing second
lienholders to release their liens.
• Second lienholders can get only as much as $3,000 in proceeds from short sale to
release their liens.
• The property must be the homeowner’s principal residence.
• The homeowner is delinquent on the mortgage or default looks likely.
• The loan was made before Jan. 1 this year and is less than $729,750
The borrowers’ total monthly mortgage payment exceeds 31 percent of their before-
tax income.

Mark P. Moyes
Associate Lending Manager
“Mark of Excellence”

Interest Rates Go UP, UP, and Away

Interest Rates UP, UP and Away!!

Reference from Steve Harney Blog

NEWS UPDATE: In 4 weeks rates have increased from 4.71 to 5.14

The government has been keeping interest rates down for over a year. The programs that they used to accomplish this will be coming to an end on March 30, 2010. Rates are expected to rise quickly and dramatically after that.

Here is what the experts are predicting:

HSH & Associates’ 2010 Outlook: (http://www.hsh.com/2010-Outlook.html?wmt)

Broadly, we expect interest rates to be lowest in the early part of the year, as support programs remain fully in force, with 30-year fixed-rate mortgages hanging around the 5% mark during the first quarter. After that we’ll start a transitional period, and for planning purposes, borrowers should expect figures one-half to even a full percentage point higher than this. ..With continued economic healing expected, pressure will build for the Fed to list rates and/or begin to remove supports, and, absent any resumption of these programs, rates will nudge closer to 6% than 5% for the final two quarters of 2010.

CNBC.com article 12/22/09 (http://m.cnbc.com/us_news/34513588)

“If you told me by the end of 2010 a 30-year rate was at 6 percent that sounds about right” says Mark Zandi, chief economist at Moody’s. “I don’t think there’s any question rates are headed up.”

“The ending of the Fed program will definitely affect rates,” says Mark Goldman, professor of real estate at San Diego State University. “So far, the Fed has not expressed interest in keeping the program going. That could raise rates by some 150-200 basis points.” (which equates to 6 ½ to 7% rates).

Washington Post article 12/26/09 (http://www.washingtonpost.com/wp-dyn/content/article/2009/12/25/AR2009122501652.html)

After hitting an all-time low in early December, the average rate on a 30-year, fixed-rate mortgage rose to 5.05 percent this week and could climb to 6 percent by the end of 2010, if not sooner, according to giant mortgage financier Freddie Mac.

The experts are saying rates will be somewhere between 6-8% by the end of 2010. This is why, even though prices are still receding, a person should consider buying now instead of waiting and trying to time the bottom of the housing market.