Major media is reporting such nonsense. They are 'spinning' data to incorrect conclusions to fake the American people into thinking our economy isnt 2 seconds from great disaster.
Some firgures are up!Â Hmmmlet's qualify that. Investoirs have been buying REO and SHORTS to keep as rentals becasue rents are now so high that the price ranges now yield pretty good ROI--or Return On Investment.Â Hey, anything is better than CD rates, etc. right?
So lets say 5 years ago we were moving 100,000 homes in a certain metro area but last year it dropped to 10 units. This year we are up to 20 units. WOWEEEEE We doubled production! Business is up 100% right? Thats the spin thats out there. Hogwash. We have millions of units to still go into foreclosure. It aint over by a long shot, folks.
A series called 'Addicted to money' by a man named McWilliams.Â Go to my site http://www.wix.com/marvinvonrenchler/realty
Â and click on WHY THE MARKET CRASHED to the right of the ugly guys picture.Â There are three parts on youtube so look for all three. Ive linked to the first one.Â I watched this series the other night and you should all be outraged!Â The great scam continues and no one is accouintable. Our taxes are floating the banking system so they can continue to fatten and take their time accepting offers and selling off inventory wihtout taking losses.Â Â The stock market was a horrific scam. A lie.Â Millions lost their pensions. Now millions have lost equity! What are we all going to do as we near retirement age? Heads should roll. We need to do something.
A recent article in 'The Economist' Magazine talks about the bubble being fully burst, and that we have reached the end of falling values. Here is my response tom the author. What do YOU think?
Completely DISAGREE with you. We have at least 20% more drop in equity in many parts of this country. I do Broker Price Opinions for lenders/servicers who are foreclosing or considering actions against home owners. We know the projections of anticipated foreclosures and short sales. We know how many millions of loans , mostly adjustable, that will most likely go into default. How many people have been battling foreclosure in the court systems but will be LOSING because the government doesnt want the lenders to fail.
We know how hard it is to qualify now for a new mortgage regardless of how low rates are. What you must understand is this simple rule:Â Price is determined by the income of Joe and Jane Average in any given area. Our economy is putrid. Unemployment is high. We no longer have the FALSE economy created by the falsely values electronics industry and scam stock market. The Clinton days seemed properous but it we were living a lie.
So---who are Joe and Jane? They are the BASE of all wage earners. They represent the highest number of potential buyers. If Joe and Jane can afford $125,000 mortgage and average about 10% down,Â you can bet that values wont be $25,000! We are still seeing $500,000 (5 years ago) houses , now down to $200,000 in some places, but STILL cant be purchased by Joe and Jane. I know a man with a home previously valued at $495,000 that is worth $119,000 today and still is on the market. Short sales and REO continue to erode values as the banks take less in auction or from buyer straight offers.
So my friend---the bubble may be over mid POP but its still got air in it. That gas will be expelling for several more years, Mark my words here and return to them in 2014.
Hi folks. I see many blogs about the proper valuation of property. Exactly what is your home worth?
Basically, the value of anything is what willing buyers will pay for it under normal circumstances. The value is set by the market and buying history unless its a rapidly expanding/growing market ala late 90s early 2000s when people were bidding over real appraised value just to get in on the great American hope of owning then selling for profit.<BR><BR>There are other blogs here about using COMPS (Comparable , or 'like-kind' properties that have recently sold) to determine value. The problem is that used to work well when things were 'normal'. We have not seen normal in years and is becoming worse.
Estimates are from 35% to 50% of new sales are people buying SHORT SALES and REOs. SHORTS are sellers who owe more than the home is worth and have worked something out with the bank to take less. REO, or Real Estate Owned, is a bank owned property. These properties have been DECLINING in value and make it hard to give current value to normal sellers.Â Though its best to use normal sales for comps when valuing an un distressed house for sale, its not always practical.Â If the subjects area is surrounded by shorts and reos or the comps that most closely match it are shorts/reos, one must use them. Some lenders will not allow their use anyway!Â Some will allow using some but not all, and want an explanation of thee areas situation and forces driving prices.
It used to be easy to find comps. You had so many sales going on that one could easily find three SOLDS and three LISTEDS within a 1/2 mile of the subject. These comps were cookie cutter in many areas.Â I Calif I used to do business near a bay area city that had scores of subdivisions...each consisting of hundreds of similar floorplans by the same builders. Easy to appraise.Â Here in Portland, we have a big mix of architecture, ages, etc. Even in the best of times it was harder to do the older areas of town.Â We have some areas that literally have $195,000, 60 year old 2 bedrooms across the street from $2,000,000, 7,000 square feet monsters.
Throw the spiraling economy and this mix of properties into the mix and appraising is a daunting task.
This is where ADJUSTMENTS come in. If a real estate agent doesnt know how appraisers use ADJUSTMENTS to determine final value, they may be very far off.Â Adjustments can be very murky. For example, your subject is 1,500 square feet and your comps are 800, 1,600 and 2,000 square feet.Â How do you adjust? First you have to determine what the per foot dollar cost is. That will vary, as a house has an initial per foot cost because of static items such as kitchen and baths and their equipment. The actual costÂ difference per foot between a 1,500 sq ft and a 1,700 sq ftÂ will be less. If it took $115 per foot to build the initial plan, adding another 200, depending on what part of the house, could even be as low as $35 a foot. See where this is heading? Then you have LENDER requirements. Some dont want adjustments if the difference is less than 100 sq ft.
Bedroom count. Ideally, you should have enough very similar properties to be able to compute the average difference people paid for the same house with an extra bedroom. This just doesnt work any more!Â So you try to value a 1,500 ft 3 BR home but the only comps that are even halfway close to the age, sq ft, style, distance are one 3BR and two 4 BR. And, those are the ONLY solds within 2 miles for the last 11 months!Â Now you have the bedroom difference and you must compute
the DEPRECIATION FACTOR. Over the last 11 months, what happened to the overall market? Was it up or down? If it depreciated 8$ during that time, one must take 8% off the value of those three solds. What if one of them sold 7 months ago? You take the depreciation, it by the months and take that off.
Now assume we have a 7 bedroom home that was a farmhouse in the middle of 2 square miles of farmland that was turned into high density subdivision property. Its surrounded by 3 and 4 bedroom newer homes. Wow. Or, you have a 6 BR in the middle of 3 andÂ 4s because it was specially built or had an add on. Sometimes people convert extra space into living space or convert their garage. Converted garages are their own problem. There are other issues but Im not writing a book here.
Bottom line?Â If new financing is required, the lender will want an appraisal. The appraisal will go by USPAP, or Uniform Standards of Professional Appraisal Practice.Â If the property hasnt been correctly priced, problems can occur. You can imagine what all could happen including re-negotiation, a dead deal if the home doesnt price out, etc. The seller may have made an offer on another property contingent upon theirs selling. The buyer may only have a few days to buy and move to a new job, etc.
Your real estate professional should understand appraisal guidelines. Think about the subjects above when studying a CMA, or Competitive Market Analysis from a real estate agent.
For you real estate agents, you can join for FREE sites that have courses for all this. The sites are designed for BPO agents.
Some other agents here have given great information about the different government and private programs/companies to use for saving you property from foreclosure. If they fit, use them of course, but I want you all to know that a lot of it is just posing by our great government of, by and for the people, and you shouldnt plan on any of them working. Be prepared for alternatives. I'll touch on some below.
As a BPO agent Ive dealt with over 2,000 people who tried for loan modifications and only spoke to less than 10 who had any degree of success. The lenders want to foreclose. Our government makes sure they dont take losses.Â Lenders never had the infrastructure to deal with REO but now they do in spades, and actually are pulling back and saving money by outsourcing loss mitigation, etc to new third party companies. For example, IBM has a huge new division supplying people who try to do loan workouts with delinquent borrowers. The lenders pay them to do it instead of worrying about employees, training, etc.Â I predict we real estate folk will see almost all REOs listed through a few majors and maybe even a portal similar to eBay, taking listing opportunity from most smaller offices. Im off track now---to et back to options to save the home, Obamas plans have been a failure. Yes, some were helped. MANY more were not. Ive seen loans modified and the payments were increased!
The lenders made it so difficult to try for a loan mod, that months would go by with fees and back due mounting. Then as far as over a year from starting the mod, they would turn the homeowner down and demand huge amounts to cure the default. Of course many legal fees were added. Most people could do nothing but a short sale IF they were lucky and the lenders went for it, or just lose it at sale or give it back to the bank without a fight. Its been a major scam and should be exposed to the public.
Though Obamas plan/s (Like he actually created them--) sound good, they have not help a large percentage of people in trouble. The newest ones will not either. They help those who need help the least.Â That subject would take an hour so just trust me about it.
TIP: If in default or in full foreclosure process, contact your TITLE COMPANY and ask if your loan/s were handled by MERS. Everyone knows what MERS is, I wont elaborate here. Look it up in a search engine.Â If MERS was involved, you may be able to stop foreclosure proceedings. Speak to a good real estate lawyer. If your loan is still with its original lender, chances of being a MERS loan are less but ask anyway. Through use of legal actions Ive seen people stay in their homes for close to 2 years after they should have lost the property. Im not a lawyer and this isnt legal advice---its what Ive seen.
Remember you need INCOME for a loan mod or a chapter 13. Stopping a foreclosure process may give you time to get a better job (or a job if you are unemployed) or maybe have the spuse also work, etc.
If you can stop a normal foreclosure, the lender may give up fighting you over MERS or other issues and file for a JUDICIAL foreclosure. Thats a court and judge instead of an auction.That is very costly to a lender. Perhaps you can negotiate with the lender at that time for time to move, no reporting of deficiency to the IRS, etc.
BANKRUPTCY is something to consider and you may need to no matter what happens with your house. If taking taking a loss at sale, the lenders may try to legally force you to make up the difference. Its called deficiency.
If you are no longer responsible for certain mortgages, the IRS may be able to come back and call it 'relief of debt' as though you earned enough money to pay off that debt, and TAX YOU for the difference!
If you file a chapter 13 to save your home, your original house payment will need to be made plus all the back due will be divided into a 36 to 60 month payback plan and added. So, your payments will go up but you may be losing huge debts from consumer debts and junior mortgages. If your house value has dropped to just your first mortgae amount or less, the junior loans may be cleaned off. Again, Im not a lawyers and this advice is from what Ive seen happen with customers. Point is, dont let this all go to the last minute. Dont be afraid to see a lawyer or do a bankruptcy.Â Also consider if its worth it to fight at all, especially if your value is below your mortgage/ amount. Is there some special reason to keep it anyway? Do you have a unique reason why it will appreciate when most real estate is still depreciating and probably will for another few years? Rents are increasing as more and more owners are forced out of their homes, causing a greater rental demand. By now your credit is probably bad and landlords dont like that. Be prepared to tell your story---perhaps you are in a good position to pay rent now, and even you old mortgage payments but its too late to bring all the back due current or you dont have a spare $30,000 laying around even if not too late. Remember that you are alive and thats what matters. This is not just a bump in the road---its a mountain in the road but you will survive andÂ be relieved to just end the process and move on.
Its been hard for me to take pictures of empty homes and see the childrensÂ growth charts marked in doorways, crayon pictures scattered around, etc. A family with all their hopes, dreams, good times and bad times lived in each one.Â
If you do lose your home, change your spending habits. Get down to basics. Save money. Be creative about making money. Heck---night time pizza delivery can be pretty good tip money! Certain paper routes will pay $1,200 or so a month for a few hours in the early morning. Get part time jobs for the weekends or other days you dont work your regular job. I know thats easy for me to say to you but Ive been there too folks. Real estate hasnt been a bottomless piggy bank for each and every oneÂ of my last 32 years in it.
Kiplinger Magazine says Portland will experience a 3.4% rise in jobs, making it a Top Comeback City. OH BROTHER! Im not a negative person but I am a realist. One cant stick their head in the sand and whistle happy tunes! You have to face whats really going on and plan accordingly.Â Â
Billionaire investor Warren Buffett thinks that the nation's employment picture will improve significantly once residential housing construction rebounds
Of course Buffet does.Come on---once housing rebounds, which will be YEARS, everything will improve. A 6th grader can make that forcast! The big question is when? Do you realize how many millions of houses the banks now own and are going to be owning over the next 2 years as the paths (MERS, etc.) are cleared by the courts? We wont be seeing any major construction for a LONG time. Mark my words. Portlands unemployment rate is more than 10%. The 3.4 projection is to be up from current? That still leaves us in poor shape. The Fed is in a total mess. We need to kick the current politicians to the curb and take this country back. The Fed is pulling back on many programs to the states. Ill believe the 4.4 million when we see it, and then again when its actually used for what the original intention is. We all know how this state squanders billions. The hiway fiasco, The DMV computer fiasco. On and on. The parking meter fiasco. THE LIGHT RAIL ABOMINATION! How can we citizens allow that? millions upon millions to create rail transportation that only has a few riders just so the city can say its progressive? What palm greasing is going on here? How about the new bridge they are planning? Did you read about the projected costs and over runs? Oh mercy. Oregons citizens could have much lower taxes over all and we would have a better school system. No one would have lost their homes. We have wasted and lost more money in the last ten years than the entire budget of some small countries.
Is this negative? It is what it is. Face it. Work with it. Investment properties will be a good buy as more people pile into the state and more owners lose their homes and need to rent.
To conclude, hardly will an uptick of 3.4% make Portland a TOP COME BACK CITY!! Kiplingers report is worth the paper upon which its typed.