Hey Who Do You Know?

Most of you know I love to give out referrals to my friends.  I really stick to my mantra “do business with those you know and trust” when choosing whom to do business with. When I don’t know someone providing a service I need who I know and trust, I ask you, my friends and clients.

But even with a referral, you need to do your homework. In terms of a mortgage, you have always had the Better Business Bureau and local regulators (like state banking departments) that you could contact. Over the past few years, the internet has become a easy way of finding information about company or a loan officer. Two other places I recommend you visit online (one for the company and one for loan officers) are:

https://entp.hud.gov/sfnw/public

This is the website for HUD’s Neighborhood Watch. Neighborhood Watch is where HUD publishes a lender’s loan performance on FHA loans and how it compares to the national and local averages.

A compare ratio of 100% means “average” performance. Numbers greater than 100% are below average. And a ratio under 100% is above average. Understand that the Neighborhood Watch numbers measure the quality performance of FHA loans only. Further, be aware that HUD recently stated that lenders with compare ratios over 200% were subject to suspension from being able to participate in the FHA Program, and lenders between 150-199% were going to be scrutinized very closely and subject to audit. Be wary of “riskier” lenders.

When you go to the website, click on the “Early Warnings” tab and either research an individual lender or look for a list of lenders in an area, and then just follow the instructions. Remember, many lenders nationally have similar names, so make sure you have the right lender.

www.nmlsconsumeraccess.org

Here you can search for loan officer and company licensing status. Loan officers are individually licensed now and that includes Washington State. Those who have taken the required courses, passed the required tests and been approved by their respective state licensing authority have all that information verified on this website, along with their employment history.

Loan officers who work for federally chartered institutions (like banks) have not yet been required to take the classes and pass exams and are listed on the site with their license number and their employment history. I think this will change but for now, that’s the case.

Make sure you are dealing with a loan officer who is licensed! Ask questions if they have a lot of job changes.

Like in real estate, there has been a cleansing in the mortgage industry over the past few years, but there are always lousy people in any service area. I beleive nothing beats a word of mouth referral from someone you know.  And while not the end-all, these websites may help you avoid poor performers when choosing who you ultimately do business with.

 

Top 10 Cities: Green Living, Health, Air Quality and Other Stuff!

Top 10 Overall:

• San Francisco
• Washington, D.C.
• Seattle
• Boston
• New York City
• Minneapolis
• Denver
• Portland, Ore
• Los Angeles
• Chicago

These cities earned the highest combined scores. In order to earn a spot on this list, cities had to rank highly on positive lists (such as “best public transit”) and rank low or not at all on negative lists (such as “worst allergies”).

Top 10 Most Frequent List Appearances

• New York
• San Francisco
• Washington, D.C.
• Seattle
• Boston
• Minneapolis
• Denve
• Los Angeles
• Chicago
• Miami

These cities showed up most frequently on the lists featured in Scientific American’s top 10 cities lists for the past four days (green living, health, air quality, technology). New York City, the overall winner, appeared on more than 60 percent of all the collected lists, whereas the cities that tied for second earned spots on almost half the lists; the third-place cities showed up in the rankings about 30 percent of the time.

Not all of the lists on which these overall scores are based were created using conventional statistical or scientific methods, therefore their validity should be suspect. We have presented this information mainly for discussion. Scientific American gathered the lists from several online sources. To earn a place on the “overall performance” list, cities had to appear on multiple lists, and earned points based on their rankings. Each city’s points were added up to arrive at the overall score. A high rank on a positive list such as “best public transit” earned a city points whereas a spot on a negative list such as “worst allergies” detracted points. Each city’s points added up to its overall score.

What do you think?  I can speak for a couple of these cities.  How about you?  I’d love your comments.

More Time Than Money? Measuring Your Motivation To Sell

Welcome to the Price VS Time dilemma that faces all homeowners. Pick a price, any price for your home. Now wait. Eventually, someday, someone will probably be willing to pay you that price. The question is – Do you have the time or the desire to wait for that to happen or would you rather sell your home now for a reduced amount of money?

The Price VS Time dilemma is the challenge of determining which is more important to you as a homeowner – selling quickly or selling for top dollar. Of course, it’s easy to bang the kitchen table with both fists and say I want both, but that’s unrealistic. In the real world every homeowner falls into one of two categories: the necessary seller or the optional seller. Let’s define these two vastly different types of sellers:

The Necessary Seller: Necessary sellers are homeowners who must sell their home and it’s not something they can avoid or put off. Perhaps they have a job transfer or job loss, a pending divorce, health condition, or a financial crisis that is causing them to sell. Regardless of the reason, they need to sell, and the faster the better.

The Optional Seller: Optional sellers are homeowners who have made the choice to sell. They aren’t forced to move, they simply would like to make a housing change. Perhaps they want to upgrade to a newer home, a larger property, or just as likely, maybe they are selling to travel or move closer to friends and family. The bottom line is it will be inconvenient if they don’t sell, but the world won’t end.

So which kind of seller are you – a necessary seller or an optional seller? The answer to this question is key to determining how you resolve the Price VS Time dilemma, but be careful as it’s not as easy it might sound. For instance there are tens of thousands of necessary sellers across the nation who desperately need to sell their homes quickly, yet they act as if they are optional sellers.
These sellers list their homes for inflated prices and then are shocked, frustrated, or even angry that their homes fail to sell within their pre-set timeframe. Another wrinkle facing both optional and necessary sellers today is the issue of rapidly declining prices in many areas of the country. While in a typical real estate market an optional seller might hold out for top dollar, this strategy can easily backfire in today’s market as their home may be worth significantly less the longer they hold out for a higher price. In addition while many optional sellers may not be forced to sell, they may want to sell quickly because of other motivating factors. If this is the case they will need to adjust their pricing strategy accordingly.

If you are having a challenge determining just where you fall on the motivation scale ask yourself this follow up question. If I listed my home for 90 days and it did not sell, what would be my next step – adjust the price or give it a little more time? If your answer is to adjust the price, this would seem to indicate that selling quickly is more important for you. On the other hand if you feel more inclined to give it a little more time, top dollar is more than likely your primary motivator.

To unravel the Price VS Time mystery further sit down with me or Dave and give us an honest assessment of the reasons why you are selling. By reviewing what homes similar to yours have sold for in recent months and the time frame it took those sellers to sell, we can help you to set a pricing strategy that meets all of your needs.

The Murky Waters of Short Selling a Home

With residential real estate prices still depressed, sellers and buyers continue to find themselves navigating the murky waters of a short sale.

A short sale is a sale of property for less than the amount of the debt against it, and where the mortgage lender must agree to release its lien for less than what it is owed.

So why would a lender agree to such a sale? Because this is as good as it’s going to get. If the lender forecloses, it will incur additional costs and delays, and might have to evict its borrower.

In the end, the lender will receive less than what the short sale would produce. Thus, from the lender’s point of view, it’s better to have more money now than less money later.

For sellers, it’s important to understand that a lender’s agreement to release its lien for less than what it is owed does not mean the lender has agreed to forgive the remaining portion of the debt.

To the contrary, the lender may require that the seller sign a new note or an agreement modifying the repayment terms of the original note.

Or, the lender could file a lawsuit against the seller seeking a judgment for the unpaid balance of the original note. With a judgment in hand, the lender is then in a position to garnishee wages and bank accounts; have the sheriff sell the debtor’s possessions; and take other collection action.

If the lender does agree to forgive the balance of the debt — and this sometimes happens — the seller has another worry. Will the amount of debt being forgiven be treated as taxable income by the IRS?

In keeping with the tradition of the Internal Revenue Code, the rules here are technical and seem to change from time to time, so a property owner considering a short sale needs to check with a tax professional to determine the latest position the IRS has taken on this issue.

Because short sales are fraught with legal baggage of this nature, the Real Estate Division of the Washington State Department of Licensing and the Department of Financial Institutions have issued two bulletins about short sales. The DOL Short Sale Advisory is for home sellers but really should be for both sellers AND their Realtors/real estate brokers. DFI’s companion advisory is titled “Short Sale Guidance for Licensees” and contains many Q&As for both loan modification and short sale negotiation services.

Remember, Time is Not Your Friend when it comes to Short Selling your property. Call me today for solid answers to this very complex issue.

Should I stay or should I go?

I met with a couple the other night and they were facing some tough choices

Question: Should We Walk Away From Our Home?

They bought a home at the height of the market and now it is worth less than they paid for it. Not only has their value dropped, but they owe more to the mortgage company than the home is presently worth.

They both have good jobs and are not behind in our mortgage payments. But some family members are saying they should walk away. That it’s not a big deal, and they could start over. Is it really that easy? Should they walk away from their home?

Answer: You need a place to live. There are plenty of good reasons to own a home. For another, you made a promise to repay a loan, and most people feel an ethical, if not legal, obligation to follow through on their word. It’s a matter of personal integrity.

And yet another reason is markets move in cycles. You can’t time the real estate market. Eventually, what goes down comes back up. Historically, real estate values appreciate over time.

You have better alternatives to Buy and Bail.

Internet Sites for Walking Away From Your Home

For some people, walking away is the only solution because they can no longer afford to make an increased mortgage payment due to an adjustable-rate mortgage loan. So, they look online for a solution.

There are no honest solutions online from these walkaway profiteers. These are companies that prey on troubled borrowers’ misfortune and perpetrate the myth that walking away and going into foreclosure is a logical, foregone alternative.

You don’t need the help of an online company to help you do what you can do for yourself. Don’t line the pockets of opportunists. There are plenty of nonprofit organizations that can help you negotiate with your lender or offer up other viable options, and they don’t charge you:

You don’t need the help of an online company to help you do what you can do for yourself. Don’t line the pockets of opportunists. There are plenty of nonprofit organizations that can help you negotiate with your lender or offer up other viable options, and they don’t charge you:

• National Credit Foundation for Credit Counseling
• Hope Now
• HUD Approved Counseling Agencies

You can also find local nonprofit agencies that will give you free advice regarding foreclosure. Call your local council member’s office to get this information.

Foreclosure Scammers – If you fall behind on your payments, suddenly, plenty of foreclosure scams will find you. These companies will strip title from you faster than you can say, “What’s a quitclaim deed?” Don’t do business with them. Call a trusted friend or a real estate lawyer before agreeing to accept “help” from a company who wants to steal your home by making promises it can’t fulfill.

Stopping Foreclosure – If you’ve reached the point where a Notice of Default has been filed and you are headed into foreclosure, there are ways to stop foreclosure. Again, deal with reputable companies that don’t have a dog in race. Ask yourself, if the company stands to profit from helping me, how much help is it likely to offer?

Bottom Line on Foreclosures – Foreclosures will ruin your credit. That derogatory credit will stay on your credit report for 10 years. Short sales affect credit in an identical manner. Doing a short sale won’t save your credit report.

You may qualify to buy another home in two to three years, but the interest rate offered to you will be higher. If you are facing a situation like this and have questions, don’t hesitate to call me. We have been helping people in this area for many years and we can help you too.

Plan now for your housing concerns after retirement and beyond

Do you remember when 50 was waaaay old? I sure do. Now it seems rather youthful eh! Anyway, one of the major decisions facing us “older folks” is where to live in our later years.

Anyone over 60 (not me – yet) who has grown children should be developing a plan for where to live when they’re 75, 85 and even older. Like solid retirement-investment programs, your housing plan can be sidetracked by all sorts of things like recessions and personal issues. The downturn in the Seattle housing market and nationwide of the last few years doesn’t help, either.

When it comes to housing decisions, it’s been shown that people, who thought about the issue and planned accordingly, fared better when it came to housing decisions. In a 2009 study, Boston College’s Center for Retirement Research analyzed information about moves made between 1992 and 2004 by people who were 51 to 61.

The study looked at all moves made during the period and reviewed the reasons people gave for relocating. Those who tended to be in control of their own move were classified as planners. They tended to move to get a better location or home because of retirement or financial reasons.

People who said they had been forced to move because of family or health issues — the death of a spouse, a divorce, poor health — were classified as reactors.

Having a financial cushion is, of course, a big help in providing some control over the timing of their move and the ability to carry out their plan even when things go less than perfect. It should come as no surprise that setting aside money to complete a move should be part of your plan. But so should doing some homework:

• Where do you want to live?
• What’s the housing market like there?
• How will the cost of homeownership change in your new home?
• Can you afford these outlays in retirement?
• What’s the minimum amount you need to get from selling your current home?
• What’s the likelihood of receiving this amount, and are there home-improvement projects you need to undertake to increase the net proceeds from selling your home?

In the study, planners tended to have choices and fared better even if confronted with the kinds of problems that forced reactors to move. Reactors didn’t have the same range of choices.

“Those moving for retirement reasons are more educated, better off financially, more likely to be married and less likely to be in poor/fair health,” researchers said. “Those moving for health or family reasons have the lowest educational-attainment level, the highest incidence of poor/fair health and the lowest level of income and wealth, as measured by Social Security, housing and nonhousing wealth.”

Reactors lost an average of $26,000 in home equity when they moved. That’s explained, in part, by the fact that a third of them did not buy another home and either rented or moved in with relatives.

Planners, by contrast, gained an average of $33,000 in home equity when they moved, and only 18% of them did not buy another home. They had more choice and control and wound up improving their financial situation.

Older people who felt forced to move tended to include those who were recently widowed or divorced and those diagnosed with a new health condition, researchers said. “Surprisingly, the other shocks — being hospitalized or reporting worsened health, entering into a nursing home and losing a job — do not significantly impact the probability of moving in these households with at least one shock. Thus, again, it seems that family structure is a very important factor in these households’ decisions to move.”

During the period studied, about 30% of older people moved out of their homes, and major factors cited were family considerations, financial matters, wanting a better location or type of house and retirement.

Health was not cited as a major cause of moves, but researchers speculated that this might be because even the oldest people included in the study were only 73 when it ended.

Among people who moved, about 60% stayed within 20 miles of their former home, 20% moved up to 200 miles away and a comparable number moved farther away. A mass exodus to sunnier locales was not a major driver of relocation decisions. Aging in place continued to be the overwhelming first choice.

Many of our clients are facing some of the issues I mention here. Many have parents or others they really care about. If you or someone you think could use our assistance, please introduce them to us. We’d love to help.

The 10 Most-Searched Real Estate Markets Online Might Surprise You

Daily Real Estate News | Monday, December 19, 2011

Seattle didn’t make the Top-10 List! Chicago continued to hold onto the No. 1 spot for most searched for real estate market at Realtor.com in November. What other markets did potential home buyers have their eyes on last month? Realtor.com releases its top search ranking from November based on 146 metro areas.

The following are the 10 top-searched metro areas from November at Realtor.com.

1. Chicago

Median list price: $192,900

2. Detroit, Mich.

Median list price: $84,900

3. Los Angeles-Long Beach, Calif.

Median list price: $329,000

4. Phoenix-Mesa, Ariz.

Median list price: $164,700

5. Atlanta

Median list price: $156,900

6. Philadelphia, Pa.-N.J.

Median list price: $229,900

7. Tampa-St. Petersburg-Clearwater, Fla.

Median list price: $144,200

8. Las Vegas

Median list price: $122,000

9. Dallas

Median list price: $194,900

10. Riverside-San Bernardino, Calif.

Median list price: $199,000

Source: Realtor.com

How will you deal with the demographic tsunami that may be on its way to Seattle?

How will you deal with the demographic tsunami that may be on its way to Seattle and beyond?

The first boomers have already turned 65, and every day for the next couple of decades another 10,000 people will do the same, according to data from the Pew Research Center. By 2030, 18 percent of America will be 65 or older, taking the Early Bird dinner special and slowly siphoning off their savings.

The front end of the baby boomer generation is starting to take money out, and that could become a big headwind for the stock market.

For six decades the boomers have driven everything in society, and that’s only going to continue. They can no longer afford to buy stocks for the long run and wait out any bust. They’re focusing less on capital appreciation and more on income, and we’re seeing that trend take hold already. Read more. .

Seattle On Top Ten list – Best Run Cities

Seattle On Top Ten list – Best Run Cities

The financial press’ favorite pastime, compiling lists, has produced yet another Top Ten product, 24/7 Wallstreet’s Best and Worst Run Cities.

Seattle makes the list at number seven on the list of Best Run Cities. Do you agree?

In compiling those lists, 24/7 Wall Street considered violent crime rates, poverty, the citizenry’s education achievement and the city’s credit rating.

The rating cities Seattle’s poverty rate (14th lowest), its high educational achievement (7th), its Aaa credit rating and its 43rd ranking on violent crime.

The city’s achievement was particularly noteworthy because all of the other cities on the Best Run list were much smaller with several such as Plano, Tex. (10th), Scottsdale, Ariz. (8th) and Irvine, Calif (2nd) being well-to-do suburbs without the typical urban crime and  poverty issue that come with being a larger central city like Seattle.

Tops on the list was Virginia Beach, Va.  On the Worst Run list, Miami was number one followed by Detroit and Newark, N.J.