Real Estate Information

Recently one of our clients ran into a dilemma while buying a HUD owned property that needed $10,000 worth of repairs. He was hesitant to do what's called a FHA203k rehab loan and pay an extra $65 per month. "What if I lose my job and have to take a lower paying job?" Plus his theory was he would pay an extra $800 per year, or $23,400 over the life of the loan for repairs. That is all certainly one way to look at it.

Or, you could look at it this way.. The likelihood of one staying in a house for the life of the loan is less than one thousandth of one percent or one out of every 100,000 people. So odds are he would never end up paying the $23,400. But for about the price of a cup of coffee per  day he could be in this house soon with instant equity and start taking advantage of the tax savings that is likely to be more than $65 per month. He could find another house that is in top shape, but for the same amount of money he would get far less house, and likely with no equity for a few years. This is the risk/reward factor that comes along with buying distressed (bank owned) property. Typically you are going to have to spend some money out of pocket on these properties, but typically you still come out like a bandit in the end with equity in the property.

If you're facing this dilemma, have you looked at what your out of pocket investment and the instant equity equates to  a year from now? 5 Year? 10 years? Verses a house with no equity for a few years?

Here's an example: Distressed property sales price $155,000 verses same house in top shape for $180,000. Add $10,000 worth of repairs. Distressed property price is now $165,000. All things considered, down payment and closing costs would be somewhat similar, you would have $15,000 equity in the property immediately!  Let's say out of pocket expenses were similar for both homes $8000. You are $8000 dollars out of pocket with NO EQUITY in the house in top shape, verses $8000 out of pocket with $15,000 in equity in the distressed property! Even at a modest appreciation it would take you a few years to make it to the "break even" point with the house in top shape. Whereas the appreciation in the Distressed property continues to climb every year!

Here's the bottom line, the only thing certain in life is death and taxes. You should never overextend yourself no matter what. There is always that chance you could lose your job and not even be able to find another job. Should you just rent and pay someone else's mortgage? If you lose your job, certainly you could "find somewhere to live". But wait, you could do that if you owned as well!

Mitch Muller is a Certified Distressed Property Expert^®  and a Certified Residential Specialist® with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. 

Unemployment Falls to 9 Percent!

Charlotte NC Real Estate - What does this have to do with real estate? Everything! A lot of people are going back to work which means they will start spending money again which has a trickledown effect on the economy creating even more jobs in which those people spend even more money! According to a government survey, the unemployment rate dropped last month to 9 percent and that more than a half million people have found work. Wow!

Other reports say the economy is picking up with new jobs, and many people are starting new businesses. Retail sales are going up and factories are cranking out new goods! So what does all this mean to real estate? It means more people will be in the market to buy homes and when you start chipping into supply and demand 101, that's a good sign of things to come!

Mitch Muller is a Certified Distressed Property Expert^®  and a Certified Residential Specialist® with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. 

Charlotte, NC Real Estate - WOW! If you read the headlines of our local newspaper recently, then you saw this on the front page. The newspaper says they got their information from an analysis of government property data. I'm guessing this would be the tax records and court filings? And to say "the public has no idea how bad the real estate market is'? As my grandma would say, "hogwash!" Oh well, not knocking the paper, after all their job is to sell newspapers and bad news sells papers! The facts are, yes the real estate market has been hit hard by this economy. But it's not doomsday like they want you to believe. I have no idea where they got their data, but I get my data from our Charlotte Regional Realtors Association's Multiple Listing Service of which I am a member. Our MLS data says there were 22,394 single family homes (including townhomes and condominiums) that sold in our market area in 2010. Break that down and that's an average of 1866 homes per month or 62 homes sold per day! That doesn't seem like doomsday to me! Now, I'm not going to sit here and sugar coat the fact the real estate market has taken a huge hit. But facts are, homes are still selling! Is it a great time to sell a home? It depends. If you are just selling a home, the answer is no. If you are selling and buying another, the answer is yes, it's a great time! Ok, so your house is worth less than it was a few years ago. But the same thing applies to the house you are buying! With a really good Realtor, you can fetch as much as possible in this market for your home, and in turn "steal" one of these foreclosures, and come out smelling like a rose! What a concept!

Mitch Muller is a Certified Distressed Property Expert^®  and a Certified Residential Specialist® with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. 

Charlotte NC Real Estate - If you've watched the news recently you've probably seen "Charlotte area home prices still declining". Does that mean your homes value is going down? No. Numbers can be turned, twisted and interpreted more than a dozen ways to Sunday as my mom would put it! And these reports can come from all different sources, Case-Shiller, Trulia, Zillow, NAR, etc, so who and what do you believe? 

The answer is, a good experienced Realtor with hard facts from their multiple listing service, specific to your area! Once you expand from that area, be it your street, then your neighborhood, your zip code, then your map area, city, etc, the numbers become less accurate. I've seen home values differ from one side of the street to another!

Also consider this fact, three different type homes sell for $150,000, $200,000 and $250,000. The average sales price is $200,000. Three more similar homes come on the market at the same prices, but this time the one for $250,000 hasn't sold yet. Does that mean all these home values have gone down? No. It means the average sales price for the two that recently sold is $175,000 is all!

Mitch Muller is a Certified Distressed Property Expert^®  with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. 

Charlotte NC Real Estate - This is a question or comment I get a lot.. “I need to sell my house but I know I owe more than it’s worth, so it will have to be a short sale” To be clear, just because you have to sell and owe more than your home is worth, does not mean this is a short sale. A short sale is when the bank agrees to take less than what they are owed.

I recently sold a home for a client who had very little assets, but had near perfect credit. I’m not trying to put in a plug for myself here, but the house had been empty and she had been trying to sell it for a year. She thought she was going to have to do a short sale. I asked if she had considered borrowing the money for the shortage? I was surprised no one had thought of this. Long story short, we were able to adjust the price and get it sold quickly, she borrowed $18,000 dollars to bring to closing for the shortage and was ecstatic to have gotten rid of the house! She was tickled to death to now have only a $200 dollar a month payment verses $2000 dollars a month payment on a vacant house. And, kept her near prefect credit rating!

Long and short of the story, there are lots of other options available if you are upside down on your home!

Mitch Muller is a Certified Distressed Property Expert^®  with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. 

Charlotte NC Real Estate - I now caution my clients against waiting for home prices to drop. For one reason, have we seen the bottom? Don’t know for sure, but here’s what I see, we are definitely bouncing along that bottom. Consider this though, with a lower price, a higher rate can actually cost you more money.

This past week we are seeing slightly higher rates because we are starting to see inflation and concerns over a double-dip recession have subsided. Now I’m no economic expert but I do know mortgages are bonds, so when bond traders see inflation on the horizon, they raise the rate of return they require so that their profit is not eaten away by inflation.

So in short we could potentially see rates headed up which will start offsetting some of these great deals on homes that are available out there on the market today?

This week 30 yr. fixed rates ranged between 4.125 &  4.375% depending on program, credit and points.  What will they be next week, next month, six months from now? Who really knows. I just call it as I see it!

Charlotte NC Real Estate - Here’s a question I get all the time from home sellers, “What’s the advantage as a seller to do a short sale verses foreclosure? My credit will still be ruined.”

There are numerous reasons. If you are behind on your payments, most of the damage to your credit has already been done should you decide to go the short sale route. It gets worse if you go into foreclosure. For example, there is a flag for foreclosure on your credit report and this is huge. There is no such thing for a short sale. A foreclosure is a public filing and a deficiency judgment, and can follow you forever. It asks that question on mortgage credit applications (if you’ve ever filed bankruptcy or been foreclosed on). It can affect your getting a job, it can cause your insurance to skyrocket, you can’t get a Fannie Mae, Freddie Mac, FHA, or VA loan for five years. With a short sale you can in as little as two. There are lots of things other than just trying to salvage your credit. I always ask people when they are in this situation, “Do you want to keep your home, if so have you exhausted all efforts to get a loan modification?” 

Mitch Muller is a Certified Distressed Property Expert^®  with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. 

Charlotte NC Real Estate - If you follow the news, reports are out that home sales were down in October over the same time last year, but average home prices are up. Many interpret this as home values are up. Not so.

Home sales are down for several reasons. One is the first time homebuyers tax credit expired earlier this year that many first time homebuyers took advantage of. Another is because of the recent foreclosure robo signing debacle.

I personally have several first time homebuyers looking in the low 100’s price range. The homes that work for them and they can afford are mostly foreclosures and short sales. Guess what? This inventory has all but vanished.

This in part is because a lot of the inventory has been bought up, even since the tax credit expired. A lot in part because of the continued historic low interest rates. But a big part of this inventory has been taken off the market and put on hold. In addition to this, very few foreclosures have been listed since as well.

Another piece of the puzzle is the short sales. Many sellers are not listing their homes as short sales right now, thinking they have plenty of time, some thinking something magical will happen and they will not be foreclosed on.

So suddenly many buyers out there are finding no homes that will work in their price range anymore, hence less sales. As far as the average price going up? That’s simple math! Less homes selling in the lower price range simple makes the average sales price go up! And this has nothing to do with values.

Something I try to stay conscience of is, when you are in a certain industry, it’s very easy to take “industry terms” for granted whereas your client or the consumer may not understand. In real estate, take “short sales” for example. I get asked this question all the time, 

What exactly is a short sale?

A short sale is when a seller has a mortgage on their house (say for example $150,000) and they sell the house for less than what is owed on it (say for example $125,000). Barring other expenses, they are “short” $25,000 dollars. The bank agrees to accept the $125,000 as a payoff so the seller can sell his house despite the shortage, hence “short sale”.

This is a pretty simple explanation albeit the process is not that simple and there are of course ramifications.

Watch for upcoming articles about these ramifications and advantages of a short sale verses foreclosure, deed in leiu of foreclosure, etc.

Make it a great day!

Mitch Muller is a Certified Distressed Property Expert^®  with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners.