Tuesday, October 29, 2013

Seven things that kill your home sale

Your home can be immaculate, in a great neighborhood and priced right. But when a prospective buyer walks in, they can be persuaded to turn and walk out. Obviously, they're motivated; otherwise they wouldn't have wasted the trip.

If your home has any of following six problems, you may see the buyers turn on their heels and head in the direction of the next property. Two of them, you can't do much about. The others can be fixed, but the cost ranges from not much to quite a bit.

Seven deal-breakers for homebuyers

The backyard isn’t family-friendly

The back yard is something that potential home buyers give great consideration to when buying a home. They imagine cookouts, landscaping, gardens, kids playing and tire swings. If it doesn't match up to their expectations, it's a deal breaker... and there's not much you can do about it.


You can try to cover it up but it's going to be found in the inspection if you have it. Fixes range from a new piece of drywall behind the bathroom sink to calling out a remediation crew. Don't hide it, especially if you've spent the money to have it removed.

Foundation problems

A crack in the foundation can cause a myriad of other mostly cosmetic, but costly, repairs, from repairing drywall to doorframes. Many buyers walk away from foundation problems. Most lenders require foundation problems to be repaired before closing. And even a fixed foundation can be a deal-breaker because potential homeowners are worried about the damage that it has caused.

Personal belongings

Your sense of style and taste may not appeal to the potential buyer. Ask your REALTOR® about staging your home for sale. He or she will have some suggestions about what should be put in storage until you complete the move. For higher end homes, you may want to consider hiring a staging consultant.

The house is dirty or smelly

Pets, mildew, smoke... these are all turn-offs to potential buyers. Permanent smells and stains, if they aren't a deal-breaker, may mean you'll have to drop the price on your home because the new owner will have to pay to have it cleaned or do it themselves... which can be a big undertaking.

Pest infestation

This is especially true of termites. The damage they can cause is not always immediately apparent. A certified termite inspector knows what to look for and how to eradicate them.


You can have the perfect house, the right number of bedrooms, a great kitchen, plenty of storage space, a clean inspection and a perfect back yard, but if the location is horrible, your house is going to sit for a while.

Tuesday, October 22, 2013

What is eminent domain, and should I be worried?

One of the things that property owners must be concerned with is eminent domain, which is defined as "the right of a government or its agent to expropriate private property for public use, with payment of compensation."

City, county, state and federal governments can claim eminent domain for any number of reasons. For example, if your property is impeding a road expansion, it may make the claim in order to make the land available for public use.

If you receive notification that a government entity is considering an eminent domain designation on your property, there are two things you should know:

1. They have to pay you fair market value for it.

2. Their offer will be on the low end of fair market value.

Eminent domain power can and has been abused. There can exist a conflict of interest when a developer lobbies a city government for a redevelopment project, only because it plans to construct new buildings for office, retail or housing in order to line their pockets.

The first thing you need to do when faced with eminent domain is hire an attorney who specializes in the area.

  1. Agency with the interest in your property will hire an appraiser to inspect and appraise your property.

  2. Agency makes an offer, usually a low one.

  3. If you don't accept their offer, and are unable to negotiate a fair deal, they will schedule a public hearing. The agency has to prove their case that acquiring the property is necessary for the public good.

  4. They will file a complaint against you in Superior Court, and you will be served a summons which requires a response.

  5. They will deposit "probable compensation" and file a motion for prejudgment possession with the Court. At this time, you may object once again. If their motion is approved, they may take possession of your property within 30 days.

  6. At this time, your attorney will obtain appraisal reports from appraisers and other experts to establish your property's fair market value. These reports are filed with the Court and presented to the agency who filed for eminent domain.

  7. Mediation - the two parties come to an agreement, if one can be reached.

  8. If you can't come to a compromise, they are forced to make a final offer.

  9. If you still do not accept the offer, a trial will be held to determine fair market value of your property and hear any other issues.

Your rights as a property owner vary by your home state. You need to be informed of those rights and the process. For instance, depending on your home state, you may be able to recover attorney fees from the agency who filed the case. Do your homework. Most importantly, hire a successful attorney who specializes in eminent domain cases.

Tuesday, October 15, 2013

Lenders using new criteria to determine credit risk in mortgage loans

A low credit score doesn't necessarily result in an automatic turn down for a mortgage loan.

Mortgage lenders are looking for borrowers who are good risks, even though they may have little or no credit history. Lenders are now looking at additional criteria, some that they may not have considered a few years ago, in order to find new home buyers who are good risks, even though their credit score may not show it.

Those most likely to gain from this new way of looking at financial history include young adults and new immigrants. They are more likely to be approved without being subjected to extremely high interest rates because their scores are not high.

This "non-traditional" data that lenders are now looking at when considering home loan applications includes:

Information in public records, including property records and professional licenses. A license indicates that a person is a better risk because they have a steady income and commitment in the community.

Rental payment is another category that reporting agencies have begun to consider. Late payments could be an indicator of future behavior.

Utility payments and cell phone bill payment history can also be an indicator of whether a person with little or no payment history takes paying their bills seriously.

The takeaway for many is that even though you may have little credit history, or may have a score that falls somewhere between bad and good, you may be able to secure a loan from a mortgage lender. The first thing you need to do is talk to a lender to see what you qualify for and what a loan will cost. A mortgage lender will also be able to tell you how to improve your scores so that you can get a better rate.

Tuesday, October 8, 2013

What the government shutdown means for home buyers and sellers

With Congress unable to come to an agreement, we've got a situation known as a partial government shutdown. The last time this happened was in 1995 when there was a shutdown that lasted for 21 days.

Many agencies, such as NASA, have furloughed non-essential personnel. Still others are operating at full capacity, including the military and TSA. There are many, including Housing and Urban Development, which are operating with skeleton crews.

Early reports stated that the Federal Housing Administration would stop processing loan applications. This is not the case. The first contingency plan issued by HUD mistakenly stated that FHA would be unable to endorse any single-family loans and that staff would be furloughed.

The announcement sent a panic through the real estate market. After noticing the error, HUD issued a statement saying that its Office of Single Family Housing will continue to endorse new loans even in the event of a lapse in appropriations.

The FHA is funded through multiyear appropriations. There will be some reductions in staff and furloughs, but it will be able to operate. Because the department will be short-staffed, there could be some delays, but the paperwork will be processed. Multi-family operations, however, are funded on a year-by-year basis. During a shutdown, condo projects would be put on hold because the FHA will not be able to underwrite them.

It is unknown at this time how much of a delay we can expect in single-family loan applications or what the long-term impact of a lengthy shutdown will be. In its statement, HUD said that it does not expect the impact on the housing market to be significant, provided the government shutdown is brief.

Tuesday, October 1, 2013

How unemployment affects mortgage rates

When Federal Reserve Chairman Ben Bernanke announced last week that the Fed would not curtail its bond buying program, the mortgage industry breathed a sigh of relief. Rates dropped slightly after the announcement.

Interest rates had been rising steadily since May, when Bernanke said the Fed was considering trimming the stimulus program, which pumps $85 billion into the American economy every month.

According to Zillow.com, after declining to a low of 3.21% in December 2012, the national average for a 30-year fixed-rate mortgage was recently 4.44%, more than a point higher less than a year later.

What the Fed said

Although pundits and politicians paint these numbers as rosy, the Fed's announcement as a barometer of the nation's economy isn't quite as positive. Here are the highlights:

  1. The Fed will maintain its plan to keep short-term rates at record lows at least until unemployment reaches 6.5 percent.

  2. It doesn't project the unemployment rate to reach that level until the end of 2014 or beyond.

  3. The Fed predicts that inflation will start to rise next year, to somewhere between 1.4% and 2%. Currently it's about 0.8%.

The Fed's announcement assured the mortgage industry that the stimulus would continue for at least a year. But the announcement said, in a nutshell, that the economy is still not improving as quickly as it would like.

Why the Fed's announcement matters

As it stands now, this is a manipulated market, according to a piece on Bankrate.com. (link to http://www.bankrate.com/finance/mortgages/mortgage-analysis.aspx) One analyst was quoted as saying that rates are probably headed to 5 - 6%, once the Fed cuts back on its stimulus efforts and lets the market decide where mortgage rates should be.

What it means for home buyers

The announcement has a definite effect on the environment if you're looking to buy, sell or refinance your home.

Loans are still cheap... for the time being. We're not likely to see the rates go as low as they were late last year, but for the foreseeable future, rates are likely to drop a bit. If the economy continues to improve as anticipated, rates will keep inching up.