Sarasota Real Estate Market News

Fannie, Freddie to make short sales faster

PHILADELPHIA – May 3, 2012 – Government-backed housing giants Fannie Mae and Freddie Mac are adopting new guidelines to streamline the process for short sales, which most real estate observers expect will outpace foreclosures in the coming year.

The guidelines, required by the Federal Housing Finance Agency and effective June 15, would require servicers of mortgages backed by Freddie and Fannie to review and respond to requests for short sales within 30 calendar days of receipt of a buyer’s offer.

A short sale is a transaction in which a lender agrees to accept less than the amount owed on the mortgage. It is a “strategic default,” designed to get a borrower out of financial trouble without having to go through the drawn-out legal tangle of the foreclosure process.

A short sale does affect the seller’s credit score, reducing it as much as a foreclosure would, according to Fair Isaac Corp., which developed the system.

On average, according to recent data from foreclosure search engine RealtyTrac, short sales are taking 306 days from start to finish, compared with 113 days in 2006 as the housing market started to unravel.

Area real estate agents who handle such transactions have acknowledged that they do take a long time to complete, and that delays often result in loss of the sale.

But lenders are becoming more accommodating, though they have issues with short sales because unscrupulous investors and others have abused them, perhaps to the tune of $375 million in annual losses nationwide.

In January, there were more than 35,000 short sales nationwide, on pace for more than 105,000 pre-foreclosure sales for the first quarter. That would be the highest quarterly total since the first three months of 2009.

This is not the first time the government has acted to accelerate the short-sale process. In late 2009, the Treasury Department proposed financial incentives and simplified the procedures for completing them. That included a $1,000 payment to servicers and a maximum of $1,000 to go to investors who signed off on payments to subordinate lienholders, the Treasury said. Borrowers were to receive $1,500 in relocation expenses.

The rules, which took effect in April 2010, were supposed to reduce the short-sale process to 10 days, but didn’t.

The pending Fannie Mae/Freddie Mac guidelines will mandate weekly status updates to the borrower if the short sale remains under review after 30 calendar days.

Servicers also will be required to make and then inform borrowers of final decisions within 60 calendar days of receipt of an offer.

By the end of the year, Fannie and Freddie will announce other “enhancements” to the short-sale process, including borrower-eligibility evaluation, simplified documents, and payments to subordinate lienholders.

Housing Finance Agency acting director Edward J. DeMarco said the changes were being considered as “additional tools to prevent foreclosure, keep homes occupied, and help maintain stable communities.”

Copyright © 2012 The Philadelphia Inquirer. Distributed by MCT Information Services.

May 19, 2012 Posted by | News related to Short Sales and Foreclosures | Leave a comment

Bidding wars catch buyers off guard

SEATTLE – May 1, 2012 – Homebuyers are unexpectedly finding more competition this spring in landing their dream home. Bidding wars are increasingly being reported in markets across the country, from California to Florida, The Wall Street Journal reports.

“It’s a little surprising because we thought bidding wars were done with,” Andy Aley, a home shopper in Seattle said. Aley says he was outbid on a home earlier this year, even though he offered to pay $23,000 above the listing price and also waive inspections and other closing conditions.

Homebuyers are frustrated and caught off-guard about the bidding wars re-emerging, real estate professionals report.

“We’re writing a record number of offers, but we’re not seeing a record number of closings and that’s because it’s so competitive,” Glenn Kelman, chief executive of Redfin Corp., told The Wall Street Journal.

Why are things getting so competitive? Many housing markets are seeing a drastic decrease in the number of homes listed for sale, leaving homebuyers with fewer options and more bidding on the same house. Housing analysts say the shortage in supply is from sellers unwilling to take much less for their home than what they originally paid for it and pulling homes off the market. Also, a surge in investors who snatch up homes in bulk in all-cash deals has made the market competitive.

“The bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump,” The Wall Street Journal reports.

National Association of Realtors® latest pending sales report seems to confirm the trend. Pending sales in March reached their highest level in nearly two years and are up 12.8 percent from one year earlier.

Source: “Stunned Home Buyers Find the Bidding Wars Are Back,” The Wall Street Journal (April 27, 2012)

May 19, 2012 Posted by | News related to Buyers, News related to Sellers, News related to the Market | Leave a comment

Is Fla.’s shadow inventory a rebound threat?

ORLANDO, Fla. – May 1, 2012 – The term “shadow inventory” hangs over the real estate market, suggesting a thinly veiled catastrophe seen through the mist, just as the passengers of the Titanic watched an iceberg draw closer. However, a white paper written by Florida Realtors Chief Economist Dr. John Tuccillo finds the fear of a shadow inventory overrated.

“The fear … is that the inventory of delinquent and foreclosed loans (will be released onto) an already weakened market,” says Tuccillo. “(But) the reality, even in Florida where distressed properties make up a significant portion of the market, appears to be different.”

Tuccillo says lenders have no reason to flood the real estate market with more homes if doing so would drive prices down and impact the lender’s profit. While some observers worry that lenders were holding back on purpose, Tuccillo says that’s not so – that the large number of distressed properties on hold was “largely the result of confusion over the rules of the game, and thus missteps by the lenders.”

In conducting an analysis, Florida Realtors Research looked at data from MLSs around the state and data provided by CoreLogic, a statistical analysis company.

“We looked at the recent history of distressed property listings and transactions relative to normal market data, as well as estimates for the shadow inventory, and came to some conclusions about the likely course (for the) future,” says Tuccillo.

Conclusions

• Florida remains one of the nation’s hardest hit states for distressed property sales.

• Distressed property sales and listings have declined since late 2010, except for single-family-home short sales.

• Average prices for distressed and normal property sales have been stabilizing.

• In general, Realtors and lenders have learned how to cope with distressed properties in a way that stabilizes the market.

• Florida’s highest percentage of distressed property (compared to total listings) occurs in the I-4 corridor and Southeast Florida; the lowest percentages occur in Northwest Florida.

• Currently, Florida’s shadow inventory was 550,000 units at the end of 2011, a decline of about 9 percent from its peak in the first quarter of 2010.

• Currently, the flow of new seriously delinquent (90 days or more) loans moving into the shadow inventory is offset by the roughly equal flow of distressed sales (short sales and REOs).

• The number of foreclosures and REOs was significantly lower in February of 2012 than one year earlier, suggesting slower shadow inventory growth.

Tuccillo predicts that distressed properties will be a significant feature of the Florida real estate market over the next ten years, but it will be considered just one property type a buyer can consider – one that has its own unique sales techniques and documentation.

© 2012 Florida Realtors®

May 19, 2012 Posted by | News related to Short Sales and Foreclosures, News related to the Market | Leave a comment

Boost home’s value with curb appeal

NEW YORK – April 30, 2012 – First impressions matter, especially when it comes to selling a home.

A home’s curb appeal – how its exterior looks to a buyer from the street – can either provide an inviting enticement for a prospective buyer or produce a negative impression.

Several websites offer a host of information for improving the curb appeal value of a residential property. Here are a few with good insights:

• Bankrate.com: Covers eight tricks to improve the curb appeal of a home.

• Good Housekeeping: Lists five ways to boost curb appeal.

• HandyAmerican.com: Serves up extensive list of home improvements to maximize a home’s curb appeal.

• Home Gain: Offers spending considerations and guidelines for remodeling a home.

• Kiplinger.com: Spotlights curb appeal beautification options for free, $100 and $500.

Copyright © 2012 McClatchy-Tribune News Service, Chuck Myers. Distributed by MCT Information Services.

May 19, 2012 Posted by | News related to Sellers | Leave a comment

Three housing trends emerging this spring

WASHINGTON – April 30, 2012 – What can homebuyers expect to face this selling season? An improving housing market has made it a different picture in many areas compared to recent years, housing experts say. Bankrate.com notes the following trends:

1. Fierce competition.

Housing affordability is at a record high due to falling home values and mortgage rates near record lows. More buyers are jumping off the sidelines. At the same time, investors are snapping up bargain prices, often in all-cash deals, and competing with traditional homebuyers.  Add in a sinking inventory of homes for sale, and the competition is getting fiercer.

“Rents are going up, and as long as there are properties at the level where investors can get positive cash flow, they will continue to invest,” says Jed Smith, managing director of quantitative research for the National Association of Realtors®. Smith adds that first-time homebuyers, in particular, may find increased competition from investors in trying to snag some of the best deals on the market.

2. More renters show desire to become homeowners.

Recent surveys show that buying a home now is more affordable than renting. As such, more renters are finding homeownership more enticing.

The signs are already starting to show: About 59.5 percent of tenants recently surveyed by Kingsley Associates say they intend to renew their leases this year, which is the lowest rate since early 2009.

3. Mortgages may be a little pricier.
Fannie Mae, Freddie Mac and the Federal Housing Administration recently raised their loan fees, which means homebuyers can expect to pay a little more for their mortgage this spring.

“Those who don’t have credit scores in the high 600s to low 700s may be forced to go the FHA route,” says Ed Conarchy, a mortgage planner at Cherry Creek Mortgage in Gurnee, Ill. “And they will be stuck with the higher fees.”

Buyers with smaller downpayments can expect to pay more for FHA mortgage insurance premiums, which have risen to 1.75 percent of the loan total. Bankrate.com cites an example illustrating the higher fees: A borrower who takes out a $200,000 FHA loan will likely have to pay about $3,500 for mortgage insurance upfront. Prior to the increase taking effect, borrowers would pay about $2,000 for that same loan amount.

Borrowers with higher mortgages can expect higher fees too. The FHA announced that in June it would increase its annual insurance for mortgages more than $625,500. “A borrower who lives in a high-cost area and takes out the maximum $729,750 (which is the FHA limit for high-cost areas) will pay $912 each month in mortgage insurance alone,” Bankrate.com reports.

Source: “5 Mortgage and Housing Trends in Spring 2012,” Bankrate.com (April 21, 2012)

May 19, 2012 Posted by | News related to Buyers, News related to Sellers, News related to the Market | Leave a comment

Florida’s ‘hardest-hit’ homeowners are eligible for more aid

TALLAHASSEE, Fla. – April 30, 2012 – Florida’s struggling borrowers will get more money and more time to get back on their feet with new rules announced Friday for a $1 billion program aimed at keeping people in their homes and out of foreclosure.

The changes to the Hardest Hit Fund, which also eliminate eligibility roadblocks, validate complaints that the original plan was too optimistic in its timeline for unemployed and underemployed homeowners to turn their lives around.

Instead of six months of mortgage assistance, homeowners can now get up to a year, while the allowance to bring a loan current was increased from a cap of $6,000 to $18,000.

To minimize credit damage and reduce late fees, the money to bring a loan current will be awarded when the homeowner is approved for the program. Under the current process, the money is given at the end.

The Florida Housing Finance Corp., which oversees the program, approved the changes during a Friday meeting, but they still need federal authorization. That is expected in May.

“These changes are really good news and beneficial to a lot of Hardest Hit applicants,” said David Westcott, the corporation’s director of homeownership programs.

They also come just two weeks after a federal report criticized the program nationwide for ramping up too slowly and helping too few homeowners.

Announced in February 2010, the program has allocated $7.6 billion to 17 states and the District of Columbia to help homeowners while they look for a better job, or any job at all.

But as of the end of December, just 30,640 homeowners nationwide have benefited and just 3 percent of available money has been spent, according to the inspector general of the Troubled Asset Relief Program.

In Florida, nearly $90 million has been set aside as of April 1 to assist 4,955 homeowners statewide. About 350 Palm Beach County homeowners have received Hardest Hit money.

Cecka Green, communications director for the Florida Housing Finance Corp., said Friday’s changes were not in response to the federal report and had been in discussion for a while.

The agenda item corporation board members approved does note that just 12 percent of homeowners receiving the monthly mortgage stipends had found jobs with incomes high enough to make their loan payments affordable at the end of the six months and qualify to have their arrearages paid.

Previously, homeowners’ monthly expenses had to be below 31 percent of their gross income to get the money to bring the loan current.

That requirement was eliminated with Friday’s vote because the money will come on the front end now, Green said.

It means Deborah Stockhammer of Jupiter River Estates may qualify to have her $9,800 unpaid balance funded. Although working, Stockhammer, 59, was denied the money previously because her salary was too low.

Also, because the plan changes are retroactive, Stockhammer, whose six months expired in March, may get another six months in monthly mortgage help.

“If they give it to the people who really need it and deserve it, it will be helpful,” she said. “We’re all not just sitting home doing nothing wanting a handout.”

Another eligibility roadblock removed was a requirement that homeowners be fewer than 180 days behind on their mortgage. With the changes, a homeowner can’t be in foreclosure, but there is a limit on how long a loan can be delinquent.

Foreclosure defense attorney Mike Wasylik said the new plan is a “bigger Band-Aid, but still a Band-Aid.” He believes using the money to write down loan balances would be a better use.

“Why not make it permanent help by taking the $1 billion and putting it toward principal reduction?” he said. “This is an economic policy that’s not solving the real problem.”

Copyright © 2012 The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services.

May 19, 2012 Posted by | News related to Short Sales and Foreclosures | Leave a comment

March pending home sales rise, market recovering

WASHINGTON (April 26, 2012) – Pending home sales increased in March and are well above a year ago, another signal the housing market is recovering, according to the National Association of Realtors® (NAR).

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 4.1 percent to 101.4 in March from an upwardly revised 97.4 in February, and it’s 12.8 percent above March 2011 when it was 89.9. The data reflects contracts but not closings.

The index is now at the highest level since April 2010 when it reached 111.3.

“First quarter sales closings were the highest first quarter sales in five years,” says Lawrence Yun, NAR chief economist. “The latest contract signing activity suggests the second quarter will be equally good. The housing market has clearly turned the corner. Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses.”

The PHSI in the Northeast slipped 0.8 percent to 78.2 in March but is 21.1 percent above March 2011. In the Midwest, the index declined 0.9 percent to 93.3 but is 16.9 percent higher than a year ago.

Pending home sales in the South rose 5.9 percent to an index of 114.1 in March and are 10.6 percent above March 2011. In the West, the index increased 8.7 percent in March to 108.0 and is 9.0 percent above a year ago.

© 2012 Florida Realtors®

May 19, 2012 Posted by | News related to the Market | Leave a comment

Investors becoming the new landlords

FORT MYERS, Fla. – April 25, 2012 – Gene Richards is a lifelong Vermonter, but on a recent weekday afternoon he found himself back on Florida’s west coast, scouting foreclosures to add to the collection of rental properties he has amassed in the wake of the housing crisis.

“I just started buying them and I haven’t stopped. I have 15 right now, and I’d buy another 15,” said Richards, 51, who runs a mortgage company and also owns rental properties back home in Burlington, Vt. “This to me is a no-brainer of an investment.”

With home prices at historic lows and rental rates on the rise, Richards and a growing number of investors with cash to spare are seeking lucrative returns by gobbling up foreclosures in distressed markets across the country and turning them into rentals.

“The investors are seeing bargain opportunities,” said Lawrence Yun, chief economist for the National Association of Realtors. “The numbers are just very attractive, given the alternatives.”

The real estate data firm CoreLogic estimated in a report this month that the burgeoning foreclosures-to-rental business could become a $100 billion industry this year as bigger investors get involved in hard-hit markets from Florida to California to Arizona to the Midwest.

Yun cited a recent NAR survey that shows sales of investment homes soared nearly 65 percent in 2011 over the previous year. By contrast, the number of purchases by owners who intended to occupy the homes fell more than 15 percent.

Those numbers reflect the fact that investors often have the ability to purchase in bulk and with cash, bypassing the need to rely on credit approval from banks. But the survey also suggests that the combination of bargain prices and a steady stream of rental income seems more attractive to many investors than having their money languish in banking accounts or bonds.

Of course, the speculators who furiously acquired properties and flipped them in search of quick profits played a key role in fueling the housing bubble that wrecked the U.S. economy. But for the moment, Yun believes, the current investor boom in turning foreclosures into rentals could actually help to heal the ailing housing market.

“In the current market situation, I would say the investors are very helpful. …We don’t want to see foreclosed properties linger. The investors are clearing this inventory out of the system,” Yun said. “Investors during the bubble years were not helpful; they were just adding fuel to the fire. But now they’re playing a stabilizing role.”

In the past, the investors willing to buy bank-owned, single-family homes and turn them into rentals predominately were individuals or mom-and-pop outfits with only a handful of properties. They’re still in the mix, but larger players have entered the business, and even larger ones – including hedge funds and private equity firms – have said they plan to invest hundreds of millions of dollars in such properties.

California-based Waypoint Homes has amassed about 1,300 rental houses in California since the business began in 2008 and has begun expanding into Phoenix.

“We’re not looking at this as a short-term opportunity in a distressed market,” said Waypoint co-founder Colin Wiel, noting that some large hedge funds and private equity funds are looking to spend hundreds of millions of dollars going into the single-family rental business. “There’s so much big capital that’s so eager to get into this space. It’s the emergence of an enormous industry.”

In the Washington area, investor Dan Magder recently left his job with the private equity firm Lone Star Funds to start the District-based Rock Creek Capital Group and focus on the single-family rental business. He has partnered with Greenlet Investments of Texas, which owns hundreds of homes throughout the South, and he expects to spend as much as $200 million in coming years buying foreclosures, renovating them and renting them out.

“There are a tremendous amount of these homes that are going to be sitting there. At the same time, you have many people who were in these homes who are looking for a place to live,” Magder said, adding that between rising rents and low vacancy rates, “the financial proposition starts to look good.”

Banks and lenders currently own 634,282 distressed properties across the country, a 16-month supply at the current sales pace, according to RealtyTrac. An additional 717,874 properties are in the foreclosure process but have not yet been repossessed.

In February, the federal agency that oversees government-backed mortgage giants Fannie Mae and Freddie Mac announced its intention to hold bulk sales of about 2,500 foreclosed homes in some of the nation’s hardest-hit areas, such as Las Vegas, Chicago, Atlanta and parts of Florida. The program could expand if successful.

The following month, Bank of America announced that it will test a pilot program to allow as many as 1,000 struggling homeowners to hand over the deed but stay in their homes and rent from the firm. The bank said it will work with property management companies to maintain the homes and eventually sell them to investors.

Some housing advocates say the idea of hedge funds and other large investors becoming large-scale landlords raises red flags. Will they abide by fair-housing laws? Will they actually maintain the homes or just slap on a coat of paint and ignore tenants until it’s time to sell?

“It’s a whole different thing than an apartment building, where all of your tenants are in one place. The fact that you have properties that may be scattered across a metropolitan area has its own set of challenges,” said Deborah Goldberg, special projects director for the National Fair Housing Alliance. “We’ve never been in this kind of situation before where you have so many vacant properties in so many places.”

The Federal Reserve recently issued a policy statement about bank-owned rental properties in which it urged banks to hire only reputable vendors and to comply with all landlord-tenant laws and property maintenance provisions.

Investors such as Wiel and Magder say they are aware of the potential problems and are using updated technology and infrastructure to make sure their properties are well maintained and their tenants treated fairly.

“The onus is on us to be effective stewards of these assets,” Magder said. “We’re dealing with real people and their lives, and you have to be sensitive to that. It’s actually the right business proposition, but it’s definitely the right thing to do.”

It’s a business proposition that isn’t likely to lose steam anytime soon. From institutional investors to small-time buyers, turning foreclosures into rentals seems to be one boom that has emerged from the housing bust.

Richards, the investor from Vermont, says he has no plans to cease his regular trips to Florida. Unlike the cavalcade of speculators who flocked to the state during the boom years to make a quick buck, he said he intends to be a responsible landlord and watch his investment grow over time.

“It isn’t about the flip for me,” he said of the foreclosures he has purchased. “I really like fixing them up. I feel like I’ve helped stimulate the economy down here. I don’t want to be the one who continues to hurt it.”

Copyright © 2012 washingtonpost.com, Brady Dennis

May 19, 2012 Posted by | News related to Investors, News related to the Market | Leave a comment

Low-ball offers don’t work anymore

WASHINGTON – April 23, 2012 – When the number of home sellers grossly outpaces the number of buyers, no offer can be ignored, even if it’s 25 percent or more off the asking price. But in today’s rebounding market, those low-ball offers don’t often work. Many times, the potential buyer finds that they don’t get a counter-offer. And, in many cases, another more realistic buyer gets the home.

A low-ball offer – generally 25 or more off the asking price – allows buyers to see if they can land a great deal, even if they’re willing to pay more. In a survey last year conducted by the National Association of Realtors® (NAR), one in 10 respondents cited low-ball offers as a concern. According to real estate columnist Kenneth Harney, a NAR survey conducted in March and not yet released found that almost no one complained about low offers.

When the number of listings outpaced the number of buyers, many potential homeowners submitted a shockingly low offer on the theory that they had nothing to lose. If the seller balked, most would still counter with something below their asking price. Today, however, offers close to the asking price – or even beating it – will probably come in fairly quickly from someone else if a home is priced correctly in the first place.

Even buyers who still want to low-ball an offer on a home many times switch tactics after they lose a property or two to a more aggressive buyer.

Florida Realtor Marnie Matarese works with J Wood Realty in Sarasota. She told Harney that fewer buyers want to low-ball an offer in her area, but they still come in – mainly from out-of-state or out-of-the-country people who have read about the state’s foreclosures and short sales. That news, however, is old – it has not kept up with reality in many areas.

Matarese says some people still insist on making a low-ball offer, but that she doesn’t mind. “You can’t blame a buyer for trying to get a good deal,” she says.

In some cases, a seller isn’t offended by a low-ball offer, but their counter-offer shaves only a little bit off their original asking price. An Olympia, Wash., real estate agent had a $150,000 offer for a $250,000 listing, according to Harney. But after the dust settled and the seller shook off his irritation, he and the buyer agreed to $230,000.

Harney closed his column with this advice: “Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012’s environment – at least in rebounding markets – it could be counterproductive if you truly want to buy.”

Source: Ken Harney. Distributed by Washington Post Writers Group.

May 19, 2012 Posted by | News related to Buyers, News related to the Market | Leave a comment

Buyers: It’s time to commit

WASHINGTON – April 20, 2012 – It’s an old investment adage that remains true: “Buy low, sell high.”

National Association of Realtors® (NAR) President Moe Veissi, who served as Florida Realtors president in 2002, explains why conditions have never been better to buy a home in an online radio interview.

The Real Estate Today interview can also be forwarded through Facebook and Twitter to friends, family and clients.

Veissi, broker-owner of Veissi & Associates Inc. in Miami, says today’s real estate market has “less folks looking, less inventory and more contracts working. … We’re just now seeing appreciation in real estate prices in some areas of the country. … This is a wonderful time to take advantage of interest rates that are lower than they’ve ever been.”

Veissi quotes investor Warren Buffet’s outlook on the current real estate market: “Warren Buffet appeared on CNBC about two weeks ago, and the young lady that was interviewing him asked where you should invest your money. Warren said, ‘If I had the capabilities, I’d buy 200,000 homes across this county … I think that housing in America today will outstrip the investment capabilities of the Wall Street blue chips over the longer term.”

To hear the five-minute radio interview and forward to friends and clients, visit the Real Estate Today website at: http://retradio.com/?p=4916.

© 2012 Florida Realtors®

May 19, 2012 Posted by | News related to Buyers, News related to the Market | Leave a comment