HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

HOLD ON TO YOUR HATS - FHA IS TIGHTENING UP

We just returned from the annual week-long convention of the Leading real estate Companies of the World. There were over 780 Real Estate companies represented at the conference (23 from outside the U.S.). As always, the meeting featured a lot of fascinating seminars and trade show booths and we enjoyed having the opportunity to meet and greet Realtors from all over the country and the world. We were also very pleased to hear from many of the attendees that they are receiving and enjoying our eNewsletter. We’ll try to keep it interesting for you.

This year, most Realtors at the Leading RE conference were asking, “How long will it be before we see sales going up?”. In many parts of the country, the market is extremely soft. In Detroit, for example, the Realtor’s commission sometimes turns out to be higher than the actual selling price of the property. Fortunately for us, Colorado Springs is a real “Magnet Market”, and we received a lot of inquiries and interest in our local market from other conference attendees. However, although we have not suffered the steep declines that many of our fellow Realtors have seen, we still have a long way to go.

For us, the highlight of the conference this year was the presentation by Dave Stevens, the newly-appointed head of the Federal Housing Administration. Prior to his appointment, Dave had been with Long and Foster Realtors, the largest real estate company in the world. (They have over 10,000 Realtors working with them, primarily along the East coast.) So, Dave knows and understands the problems that the industry now faces.

In his capacity as head of the FHA, he meets regularly with Congressmen, Senators, Cabinet Members and the members of the Press and they all ask the same question, “Who created the present mess?”. Dave’s regular response is, “My neighbor. ….The one who bought the house he couldn’t afford”.

Some of the pertinent facts about the market that Dave brought out in his presentation were:

90% of all residential loans originated in the first quarter of 2009 were sold to either Freddy Mac or Fannie Mae

  • 80% of insured loans in 2009 were to first-time Buyers (So it looks like the tax credits to these Buyers did work)
  • FHA did a “terrible job” of monitoring lenders. Within the past 6 months, FHA has suspended the licenses of 359 lenders …That’s more than all of the suspensions since the year 2000.
  • The cost of FHA insurance to Borrowers has been increased by 35%. This represents an increase in closing costs and monthly charges. The increase was to make up for the costs of foreclosures and short sales and to bring FHA’s charges into proper balance as a federal agency.
  • When Seller concessions of up-to 6% were allowed, over 50% of the loans became delinquent. For that reason, FHA reduced the maximum allowable concessions to 3%.
  • As of January 1, 2010, every loan officer must be licensed.

In conclusion, Dave Stevens said he sees himself as a “Professional Temporary” employee of the FHA. He emphasized his Faith and Trust in the real estate industry and pointed out that a market as large as the Real Estate market moves very slowly, but it is turning around.

THE WALL STREET JOURNAL SAYS, “IT’S TIME TO BUY YOUR NEW HOME”

In the Saturday, March 13, 2010 issue of the Wall Street Journal, two separate articles emphasized the need for speed in making your decision about buying your new home.  The first article emphasized that mortgage interest rates will soon rise. Predictions about the size of the increase vary, depending upon which expert your read, but all of the experts say a rate increase is coming. What will the increase mean to a typical Buyer. Well, for example, if a couple has a combined pretax income of $100,000 a year and debt obligations (excluding mortgage) of $500 a month, they would qualify for a $590,000 house, at the present interest rate of 5%. However, if rates go up to 6% (as some experts predict, that same couple would only qualify for a $540,000 mortgage.

In a separate article, the Journal writer explains that, in order to qualify for the soon-to-end Buyers-federal-tax-credit, you must be under contract by April 30 and must close by June 30. As we have mentioned before, it does not look like this tax credit will be renewed.

The WSJ writer also points out that appraisals are now a challenge for prospective Buyers. With home prices still falling in some areas of the country, you might find that the property appraises below the purchase price. That means the Buyer must come up with more down-payment, or, the Seller must lower the purchase price to keep the deal alive.

To get the best advertised rates, you must have a credit score of at-least 720, out of a possible 850. According to Fannie Mae, the big mortgage buyer, every 20 point drop in your credit score below 720 results in a steeper origination fee.

All of these factors point to the fact that these costs and rates are rising and, when inflation hits, will rise even more quickly.

There are many more factors that will affect the cost of your home purchase, but the two conclusions that are obvious are: 1. The home you look at today will cost you more tomorrow and, you will need some expert advice about all of these factors, so, give us a call right now.   

IN LAS VEGAS, I WAS DEFINITELY A ‘LICENSED’ REALTOR

As a means of publicizing and promoting our local community, and as a conversation starter at the Leading RE conference in Las Vegas, I decided to break the ice with the attendees by wearing my Colorado auto license on my chest, in addition to the traditional name tag. My Colorado license plate reads, RELOC8 and it really helped to start-up conversations with a lot of people. It seems that everyone is interested in Colorado and the Realtors were also intrigued by the idea of advertising their services on their license plates. If fact, the license plate even got us a couple of leads. We got inquiries from two employees of the Wynne Hotel, the host hotel for the conference, who wanted to talk with us about relocating to our area and a from a Realtor from Italy who loves skiing and is thinking about moving over here. Hey, this “Thinking Outside of the Box” stuff really works !!.    

LET’S MAKE A DEAL !

One other pleasant surprise for us at the Leading RE conference was the high level of interest from other Realtors in the “Certified Negotiation Expert” program that we recently completed. They were fascinated in the details about how negotiating skills can be learned and used to benefit both the Buyer and the Seller in a typical transaction. It goes without saying that, in every transaction, the Buyer and Seller both have the same goal, namely, the completion of the sale. However, that sale cannot be consummated until both parties are satisfied about such details as completion dates, down payment, terms, seller-provided furnishings, etc. Unfortunately, failure to resolve conflicts about such details often causes the deal to fall apart. That’s where negotiating skills on the part of the Realtor are so important. Identifying the goals of both parties, explaining options, suggesting solutions should all be part of the Realtor’s duties. That’s why we are so pleased to have recently completed the CNE certification process. It enables us to help both Buyer and Seller achieve their respective goals.        

And, please remember, I would be honored to serve as your Broker and negotiate on your behalf for all of your residential real estate needs. I want to help you, my reader, make the most prudent and accurate Real Estate business decision.

Also if you know of anyone who desires to buy or sell local real estate, or, who is moving in or out of the Pikes Peak region, remember that, with over 37 years of providing relocation and Real Estate services to clients throughout the country, I am uniquely qualified to assist them with the relocation process, including buying and/or selling their homes on both ends of their move. Please allow me to implement my negotiating skills on your behalf.

Just click on the icon at the top of this email to listen to my latest podcast. ….

And, if you would like to learn more about our Job Loss Protection Program, or, about our CyberHomes Complete Market Analysis of a property, please contact us. 

JOKE OF THE WEEK

In honor of St. Patrick’s Day, we offer the following classic:

An Irishman walks into a bar and orders three glasses of Guiness, drinking them one at a time. Noticing this odd ritual, the bartender explains that beer goes flat when poured and informs the man his beer would be much fresher if he ordered one glass at a time.

The Irishman explains he began this custom with his two brothers, who have moved to America and Australia, respectively. This is their way of remembering all the time they spent drinking together.

The man becomes a regular at the pub, well-known for always ordering three beers at once. One day he walks in and orders only two beers. Assuming the worst, a hush falls among other patrons.

When the Irishman returns to the bar to order his second round, the bartender quietly offers his condolences. The man looks confused for a moment, and then explains, "No, my brothers are both just fine, but I have given up beer for Lent."