Mar 16, 2012 by MichaelS.Dunn.

Beginning in 2007,  and more like 2008 in the Roaring Fork Valley, foreclosures rocked the real estate world. Like an out-of-control freight train, they began decimating the market, peaking in 2009. Myths and rumors began propagating like mushrooms as consumers struggled to understand the new reality. Although many misconceptions have come and gone, we still encounter five myths on a regular basis.

1. There is going to be a flood of new foreclosures to the market.

This rumor has appeared every year since 2008 and has been routinely debunked. However, recent announcements that the Feds reached a settlement over the robo-signing scandal have reignited speculation. The idea is simple: Since the cork is now out of the foreclosure bottle, we’ll soon see another flood of REOs inundating the marketplace.

My personal opinion: don’t hold your breath.

Banks have learned that if they control inventory, they can affect local prices. By releasing homes in measured amounts, they realize higher prices than if they released a glut of homes. In addition, they’ve learned that if they can mitigate their losses by agreeing to a short sale, everyone wins.

2. You can go directly to a bank to buy a foreclosure.

Every few weeks I’m asked how to buy foreclosures direct from a bank. Someone knows a friend being foreclosed on and they want to step in and grab the house before it hits the market. Don’t we all? In reality, banks have a simple system – they first offer properties on the courthouse steps. The rest they assign to asset mangers who then hire local real estate agents to put them on the market along with all the other homes. Want an REO? Pay cash at the courthouse steps or get in line witheveryone else when they hit the local MLS (Multiple Listing Service).

3. You can get a killer deal by submitting lowball offers on foreclosures.

You would think this myth would be dead by now. Unfortunately, like Elvis sightings, it just won’t go away. Here’s the truth: Banks want REOs sold in 30 days or less, so they typically appear on the market priced slightly under comparable properties. If the property doesn’t sell quickly, the bank will lower the price after about 30 days. Lowball offers are ignored and are, quite frankly, a waste of everyone’s time and effort. You might get a deal by offering a lower price on a foreclosure that’s been sitting on the market for more than 90 days, but remember that there are good reasons it’s gone unsold for so long. And even if you have cash, your lowball offer won’t be accepted —seriously.

4. You can’t use foreclosures when doing an appraisal.

Or short sales, for that matter. That is no longer true. In fact, in many neighborhoods, that’s all that’s there. Therefore, foreclosed or distressed sales represent the actual value of homes in the area and HAVE to be used to appraise other properties. Don’t like it? Get over it. Times have changed and the ways neighborhoods are valued have changed as well.

5. Foreclosures are only affecting the bottom end of the market.

This used to be true. However, while foreclosure rates on the lower end of the market have actually decreased, they’re actually increasing on the upper end. According to Daren Blomquist, vice president of RealtyTrac, the market share of foreclosed homes under $1 million is shrinking, but those among properties valued over $1 million are rising – up 115% since 2007. And foreclosures on properties valued upwards of $2 million have increased by 273%. While some well-known jet-setters have melted down and lost everything, others are choosing to strategically default. They see it like liquidating a poorly performing portfolio – they have enough resources to cut their losses and move on. Historically, banks have been reticent to foreclose high-end homes and absorb a large loss, but defaulters are now forcing their hands and mansion foreclosure rates are moving on up.

Myths control behavior, and this has never been truer than in the housing market. Savvy agents will work hard to educate their clients, debunk myths, explain market trends, educate with solid facts – and actually close transactions

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Feb 17, 2012 by MichaelS.Dunn.

From Scott Condon of The Aspen Times:

BASALT — Plummeting property values in the Roaring Fork Valley portion of Eagle County were finally reflected in tax bills that arrived last month.

Property values generally fell about 35 percent in the part of Eagle County that includes El Jebel, part of Basalt and portions of Missouri Heights when the assessor performed a mandatory revaluation in 2011. The drop will be reflected for the first time in the bills for 2011 taxes due in 2012.

There isn’t a direct correlation in property value decreases and tax bill decreases, Eagle County Assessor Mark Chapin said. That’s because some governmental entities have voter permission to adjust their tax rates. Roughly half of the special taxing district in Eagle County have that flexibility, Chapin said. Therefore, tax-bill decreases vary in different parts of the county.

The drop in property valuations also dropped by varying degrees in different neighborhoods. Homes along Homestead Drive and Sopris Drive in Basalt “ballooned” in value during the real estate boom prior to the recession in late 2008, Chapin noted, so their decrease was larger. Areas that he called “blue-collar neighborhoods” didn’t increase as much, so they had more modest declines.

Using the assessor’s website, The Aspen Times checked the changes in tax bills for a handful of midvalley properties and found they fell anywhere from 18.5 to 52 percent.

The owners of a house on Sopris Drive saw their tax bill fall $5,823.36, or 52 percent, from 2011 to 2012. Their property value dropped $1.37 million in 2011, or 60 percent.

The owners of a home in the River Oaks subdivision of Basalt will pay $901 less in property taxes this year, a decrease of 21 percent.

One couple in Sopris Village saw their property value drop 43 percent in 2011, and their tax bill fell 33 percent.

Blue Lake homeowner Garret Brandt said his property tax bill was 21 percent lower in 2012.

“I’m not overly disappointed in that,” he said. His property value had dropped 33 percent, so he felt the correlation was reasonable.

Brandt said the tax relief comes at a good time given the state of the economy.

“I think most people are going to say, ‘Hey, I need all the money I can get right now,’” he said.

But midvalley and downvalley residents also demonstrated last fall that “not everyone is out for themselves,” Brandt said. Voters approved a property tax increase for the Roaring Fork Re-1 school district in November. Proponents said the property tax increase was necessary to partially offset the loss of revenues the district would experience from falling property values.

Missouri Heights homeowner Andy Stone saw his property tax bill fall 18.5 percent.

“I didn’t have a real expectation of what was going to happen,” he said, noting that the process to determine property taxes is “sufficiently complex and a little opaque.”

The lower tax bill was welcomed by Stone, a former editor at The Aspen Times, but was also a cause for concern.

“I am always glad when any of my bills go down,” Stone said. “I do have some concerns for services we all depend on from government.”

The drastic drop in property values means fewer revenues for the taxing districts. Stone said he is concerned about the ability of some of the districts to provide adequate services considering the amount of revenues they lost.

The revenue losses may continue to mount for districts that receive property taxes. The state of Colorado requires new valuations every two years. The new values will be released in May 2013. They will be based on sales made the 18 months prior to June 30, 2012. Chapin said property values in Eagle County continue to drop. He said he anticipates a general decrease of about 20 percent in values, which means another drop of an unknown amount in property tax revenues.

scondon@aspentimes.com

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May 09, 2011 by MichaelS.Dunn.

This is just a quick note for anyone that is considering a short sale:

Recently in my business, I have noticed a dramatic shift in the attitudes and effectiveness of banks/mortgage lenders when presented with an offer for a short sale on a home. 18 month ago, when i really started doing these, it was nearly impossible to get anyone at the banks to even talk to me. Then, when I was able to speak to someone, they frequently did not know and did not care what it was that i was proposing. I would talk to their supervisors and be begrudgingly talked at, which primarily amounted to a list of demands that were to be met, with absolutely no regard for ethics, etiquette or even common business sense.

I’m happy to report that times have changed.

Now, not only do the major home lenders have entire departments set up just for handling short sales, but they actually seem happy to talk us and show a sense of understanding when faced with the choice between accepting a short sale and risking the extra time money and exposure on taking the home through the foreclosure process and putting it back on the market  for sale.

Here’s a few examples:

1. A short sale with two loans, one with Chase and the other with GMAC was approved in a friendly, ethical manner in two weeks from the time that the offer was received.The loss that was taken by the Chase was around $75,000 and GMAC ate about $50,000.

Sellers: Lost everything that they had put into the house(about $52,000) but were able to walk away without any further obligation, responsibility or financial liability AND were given $3,000 as an incentive for completing the short sale and not just walking away from the home.

Buyers: Total transaction time was about 7 weeks. Got into the home of their dreams with the lowest priced home in the neighborhood!

2. Another Chase short sale, this one with an investor owner and two loans. (which are usually the toughest short sales to get approved.) After one buyer who bailed out after waiting for 1 month for approval we got a another offer. This one was approved after two weeks and there were also incentives offered to the Seller for completing the short sale. Chase apparently is randomly selecting particular short sale borrowers to receive seller incentives for leaving the home in good condition and maintaining the utilities, etc until closing. This approval was absolutely hassle free and actually required quite a bit less paperwork and documentation than most. Way to go Chase!

Seller: Got out without any further liability. Received $20,000.

Buyer: Once again got the home of their dreams and paid less than anyone else in the neighborhood.

3. A number of large lenders have gotten on board with equator which, love it or hate it, is a very organized and efficient software for processing the short sales and all of the documents that go with it. This is just another sign that lenders are wanting to streamline their systems to make the short sale process work.

Seller: More likely to have a successful sale, less time spent dumping $ into a bottomless pit.

Buyer: Less time spent wondering if the purchase will actually happen, less stress, better deals.

The point of all of these examples is just to let you know that many of the horror stories that you may have heard in the past (yes, some of them were probably from me) are likely to be just that: stories from the past. Lenders are starting to make some sense in their attitudes about short sales and will at least consider a short sale as an alternative.

What this means for you if you are considering buying a short sale is less uncertainty, time and hassel as you are trying to purchase what is likely to be a very good deal.

What this means for you if you need to sell and owe more than the home is worth is that there are options and talking to a realtor and/or your lender is a great way to explore whether a short sale is the best option for you. You are not alone and the process is much less dysfunctional than it was 18 months ago. Lenders do not want to take your home, they just want to minimize their loss. A short sale may be the best way to do that and free you from having a burden you cannot bear for years into the future.

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Feb 17, 2011 by MichaelS.Dunn.

Data provided by: NAR 

Metropolitan Area Existing-Home Prices and State Existing-Home Sales 

The Quarterly Reports

NAR releases statistics on state-by-state existing-home sales and metropolitan area median home prices each quarter. The state existing-home sales report includes single-family houses, condos and co-ops. The price report reflects sales prices of existing single-family homes by metropolitan statistical area (MSA). Beginning on February 15, 2005, this quarterly report includes a breakdown of condo and co-op prices by metro market. MSAs are as defined by the U.S. Office of Management and Budget and include the specified city or cities and surrounding suburban areas.

Metropolitan Area Prices

• Current Report: Single-Family 4th Quarter 2010 (PDF: 27K)
• Also available in spreadsheet (MS Excel: 53K)

• Current Report: Condo 4th Quarter 2010 (PDF: 13K)
• Also available in spreadsheet (MS Excel: 53K)

• See the latest news release >
• Read about 2005 Revisions using latest MSA Definitions from the U.S. Census Bureau.

State Existing-Home Sales

• Current Release: 4th Quarter 2010 (PDF: 10K)
• Also available in spreadsheet  (MS Excel: 20K)

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Dec 23, 2010 by MichaelS.Dunn.

Just when I was thinking that maybe, just maybe, I could start trusting the big lenders…they snuck up behind me and bit me in the ass.

I thought that the major real estate lenders out there, when they so graciously agreed to follow the HAFA program guidelines were doing the right thing. Despite the fact that their participation was a contingent of the massive amounts of TARP funds that they received from You, Me and every other tax payer; it still seemed like a step in the right direction.

For those who do not know what the HAFA program is, which is likely to be everyone that is not as much of a geek about it as I am, it stands for the Home Affordable Foreclosure Alternatives. It is a Government sponsored program to assist home owners who have a legitimate financial hardship and are facing a possible foreclosure. It is essentially a series of guidelines that lenders are supposed to follow to streamline the short sale process and protect the borrowers from liability after the sale.

The basic provisions look like this:

HAFA Provisions

• Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
• Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
• Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
• Uses standard processes, documents, and time-frames/deadlines.
• Provides the following financial incentives:
  • $3,000 for borrower relocation assistance;
  • $1,500 for servicers to cover administrative and processing costs;
  • Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.
• Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

Sounds great right? I mean for anyone out there that has truly struggled to keep their home, lost a job, or otherwise suffered from a depressed economy (Which was substantially caused by these very same lenders) this provides them an opportunity to get out from under a burden that they can no longer afford without having to worry about having a foreclosure or a possible deficiency judgement haunting them for the next 7 years.

Well that was the way it was supposed to work. But just like the vast majority of people who tried, sometimes over and over again, to have their loans modified through the HAMP program we have learned that this program isn’t quite that easy to get into.

The problem has to do with that last provision in the list above, and one other piece of fine print in the HAFA guidelines that they don’t like to advertise much which says that if a lender is already considering a traditional short sale (one without any of the HAFA protections or guidelines) on a particular property, then that property no longer qualifies for HAFA!

To clarify, this means that if the lender has already received an offer for a short sale for their approval, then that property no longer qualifies for HAFA. This leads us to the sneaky part.

I have found that most of the major lenders will not even talk about a short sale UNTILthey have received an offer! In fact that is their policy. So here’s how the typical hardship situation goes for most HAMP and HAFA qualified home owners:

1. They realize that they cannot afford their mortgage payments

2. They call the lender to try to do a loan modification

3. They spend 6 - 12 months banging their head against a wall while submitting hundreds of pages of documents and financial information to their lender.

4. They get denied for the modification based on investor guidelines that I don’t even understand, despite the fact that they meet every single one of the qualifications set up by the HAMP program.

5. Because they have spent 6-12 months trying to negotiate better terms with their lender, they are now facing foreclosure.

6. They talk to a good realtor, put the home on the market and get an offer.

7. The home owner or their realtor submit the offer to the lender for approval and following the recommendations of the HAFA program, they call the lender to discuss how to get involved with the HAFA program.

8. They are told that this short sale does not qualify for HAFA.

Why? Well that’s the complicated part, but when you get down to it, it’s just like everything else these mega corporations do…it’s all because of the money.

If our home owner happens to have a second loan on their house, the maximum amount payable under the HAFA guidelines to that second lien holder is $6000. That makes things much easier for getting the short sales done, but if the second lien holder happens to be the same as the primary lender, do you really think that they want to take only $6000 to pay off a loan that could be $50,000 or more?

Because of the loop holes mentioned above, lenders have figured out a way to get around HAFA. Their policies are to not discuss short sales until they have an offer, and then once they do have an offer, you are no longer qualified for HAFA and the second lien holder is free to go after you for any deficiency that is not paid in full, or they ask for a promissory note so that you still have a loan that you cannot afford to pay, even though you no longer have a house to go with it.

The way to solve this is to put it in writing - BEFORE submitting an offer for short sale. Write up a letter to the lender stating that you wish to participate in the HAFA program. Once the lender has confirmed that they received that letter, you can go forward with submitting the offer for approval. This still doesn’t guarantee that you will qualify for HAFA, but at least it forces the lenders to consider you for it, and they will then have to have a legitimate reason if they do deny your participation in HAFA. (You can still try to do the a traditional short sale.)

Too bad that what appeared to be the banks stepping in the right direction now looks more like a thief tip-toeing around your back door.

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Aug 26, 2010 by MichaelS.Dunn.

The following is my response to an e-mail I recieved from a nice couple in Illinois. Their current home had lost about 50% of it’s value and they needed to move because of an expanding family and proximity to their work. Because they owe about $80,000 more than their house is currently worth, they needed advice on what their options were. Here was my reply that I thought might be helpful to others in a similar situation.

So, my first question would be…what’s the rental market like near you? If you think you can rent out your current house to cover the payments and other expenses (taxes, insurance, hoa dues, etc.) that could save you some financial pain, although it would mean becoming a landlord which can be a hassle of you don’t have the right tenants. If you were able to get a signed lease, the bank may include that as additional income to get you qualified for a loan to buy the new house. (Check with your lender to verify this…they all have their own way of doing things.) This method would prevent any credit score damage and foreclosure issues and still get you into your new place. In addition, You may be able to hold on to the house until the market improves and sell it then. Do some number crunching and look in the paper for rental rates in your area for a similar house. If there is any way that you can afford to do this, I think it is the best option.

If you decide you do not want to go the landlord route, or if you can’t get a new loan without selling the old house, then a short sale is definitely better than a foreclosure, although it will still hurt your credit a bit. A foreclosure is nasty, and makes it nearly impossible to get a mortgage for 5-7 years, as well as doing a number on your credit score. Then if the lender can’t sell the house for as much as the amount that was owed, they could come after you for the difference! I would definitely avoid this choice if at all possible.

A short sale on the other hand, although it does affect your credit score, does not have all of the negative repercussions that a foreclosure would. (Many experts are not sure how much short sales will affect scores, because they are just now becoming popular due to the economic situation we are all facing now. I’ve seen estimates from as little as 50 points to up to 200 points. Either way, your score can be brought up again relatively quickly if you stay on top of all of your other payments.) Most lenders will report the short sale as “settled for less than the amount owed” in your credit report. The big question is how will lenders look at this in the future. My guess is that because there are so many short sales now, if mortgage companies want to do much business in the future, they are going to have to be pretty lenient when it comes to folks that have a short sale in their report.

The FHA or Federal Housing Authority, who is a governmental agency that insures many of the loans made to people buying their primary residence (No investment properties or vacation homes), requires a waiting period of two years after a short sale to get approved for one of their loans. Most of the major lenders have guidelines that are close to this. (Wells Fargo says 3 years for example.) That being said, if you need to move now, it might be a good idea to get the new loan and complete the purchase of the new house before the short sale shows up on your credit report. The problem here is that you can get stuck with two mortgage payments for the time it takes to get the old house sold unless you do things in the right order.  

So this is where a good realtor and mortgage person come in. Things have to happen in a very particular order for this to work out. This is what I would recommend:

1.      Talk to a Realtor who has the SFR designation and one that you trust to handle this. (I can help you find someone qualified in your area if you would like.) Get your old house listed for sale at a price that the realtor thinks will get it sold in 30 to 60 days. Also have the realtor start the short sale process by sending in any financial info, the listing agreement and short sale application to your lender.

2.      Apply for a new loan and let the lender know that you will be selling your current house.

3.      Start looking for a new house

4.      Get an offer on your house AND get the bank to approve the short sale. Make SURE that you have something in writing from the lender that states that they will not pursue a deficiency judgment. Meaning that they will not come after you for the difference between the sale price and the amount owed. This is the most important part of the short sale. Sometimes they will ask you to sign a promissory note to pay off the difference. Remember that these are negotiations and that the lender is simply trying to minimize their loss.

5.      Put in an offer that works for you but make sure that the offer is CONTIGENT ON THE SUCCESSFUL CLOSING OF YOUR CURRENT RESIDENCE. Some sellers will not like this but many are taking whatever they can get in this market. Schedule the closing on the new house to be within a week of the closing on your old house. This way the short sale will not be on your credit report until after the new loan is already closed. Even better if you can have both closing on the same day.

6.      Confused yet? 

As far as getting approved for a short sale, banks are typically looking at these things:

1.      Is the house your primary residence? They have programs and incentives such as HAFA that makes it easier to get approved when it IS your primary residence.

2.      Do you have a legitimate financial hardship? In your case, if your income has not gone down, your argument is that you HAVE to move for your job and that you cannot afford two mortgage payments and can’t get the old house rented for enough to cover the payments. If they think that you can afford your current house and that relocation isn’t absolutely necessary, they will probably not approve the  short sale.

3.      Will the house go to foreclosure if they do not approve the short sale? For this they look at your financial information and your work situation to try to determine whether or not they think you could afford to keep making the payments.

4.      Will the short sale cost the lender less than a foreclosure would? This one is really out of your hands, but typically the answer is yes because of the long, expensive process of doing a foreclosure. 

Another good option if you can’t get a loan to purchase a home is to consider renting for a short time. You could get into a house that suits your needs, in a location that you want, and still have the option of leasing or doing a short sale on your current home.

Hope this is helpful and doesn’t confuse you more! Feel free to call me with other questions or if you want me to recomend a qualified realtor in your area.

-Mike

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Aug 16, 2010 by MichaelS.Dunn.

Home owners are more active in their communities, benefit from improved education opportunities, and report higher levels of self-esteem and happiness when compared to renters, according to leading research. A new report from the NATIONAL ASSOCIATION OF REALTORS®, Social Benefits of Homeownership and Stable Housing, explores the impact of stable housing and the positive social outcomes resulting from homeownership.

“Homeownership is in investment in your future – home is where we make memories, build our lives and feel comfortable and secure,” said Vicki Cox Golder. “Owning a home has long-standing government support in this country because homeownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy.”

NAR’s study identifies research from government, industry, and academia that identified the relationship between homeownership and stable communities. Home owners move far less frequently than renters, and therefore are embedded into the same neighborhood and community for a longer amount of time. This allows for social cohesion, ultimately resulting in social benefits and stronger communities.

“REALTORS® care as much about keeping families in their homes as they do about helping them find the home of their dreams,” said Golder. “Social benefits do not arise solely from ownership, but also from greater housing stability and social ties associated with less frequent moves among home owners.”

Several research studies cited in the NAR report have found that homeownership has a significant impact on educational achievement. For instance, the decision by teenage students to stay in school is higher for those raised by parents who are homeowners compared to those whose parents are renters. Access to economic and educational opportunities are also more prevalent in neighborhoods with high rates of homeownership. Furthermore, studies have shown that changing schools frequently due to moving impacts negatively a child’s educational outcome.

Civic participation is another social benefit resulting from homeownership and stable housing. Home owners are proven to be more politically active and are more likely to vote in local elections compared to renters. In addition, homeowners have a higher membership in voluntary organizations.

Studies have shown that home owners are more likely to believe that they can do things as well as anyone else, and they self-report higher ratings on their physical health. “The research shows that home owners report higher self-esteem and happiness than renters, resulting in better overall health, both physically and psychologically,” said Golder.

When it comes to property, home owners have more invested both financially and emotionally. Property crimes affect home owners directly, but nonviolent property crimes can impact the property values of the entire neighborhood. Therefore, home owners are more motivated to deter crime by forming and implementing voluntary crime-prevention programs. In addition, it is easier for home owners to recognize perpetrators in stable neighborhoods because of extensive social ties. Unstable neighborhoods often display social disorganization which can lead to higher levels of crime.

Along with protecting their home and neighborhood from crime, home owners spend more time and money maintaining their home than renters. Neighbors also influence other home owners to improve their property, resulting in a better overall quality of the community.

“Homeownership certainly contributes to positive social outcomes, but those outcomes are truly a result of stable housing communities,” said Golder. “With strong social ties and a cohesive community, home owners can enjoy not only the long-term financial benefit of owning a home, but also a more satisfying life – which is what’s really at the heart of the American Dream.”

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Aug 16, 2010 by MichaelS.Dunn.

by Phoebe Chongchua 

While kitchens are still high on the interest list for buyers and homeowners, the National Association of Home Builders (NAHB) is reporting that remodeler survey respondents say that a bathroom remodel was one of their most common projects during the first six months of 2010–as much as 61 percent of their remodels were done on bathrooms.

“In previous years, kitchen remodeling was reported as the most common activity by more than 70 percent of remodeler respondents,” according to the NAHB news release.

NAHB reported that its Remodeling Market Index sunk to 40.7 from 47.9 in the first quarter. The survey also showed a decline in larger remodeling projects “such as room additions, whole house remodeling, bathroom additions, and second story additions. But NAHB is forecasting encouraging news. “While remodelers are continuing to struggle, we expect the rest of 2010 to be a period of stabilization for remodeling, with the first stages of recovery emerging by the end of the year, followed by a robust recovery beginning early next year,” said NAHB Chief Economist David Crowe.

However, these market conditions are making now the right time to take on remodeling projects that can not only increase comfort and functionality but also add value to your home.

No matter which room you’re going to remodel, doing your homework and knowing exactly what you want will save you not only money but also potential headaches. Things like checking references and visiting some of the recently remodeled projects are a great way to determine if the company you plant to hire will be suitable for your needs. Neglecting to do this could mean that you bring in the wrong company and, worst case scenario, a simple job turns into months of work and extra expenses.

Here are a few things to consider when remodeling. Some experts say, if you’re planning to stay in the home for five years, remodel it how you like. In other words, put in the countertops that make you happy–even if they’re not the most popular. Use the color paint that expresses your inner feelings. However, I always say, remember there’s a balance. If you remodel and create something that is so unusual, you may run the risk of it not appealing to the masses and therefore you will have to find the few that are searching for that particular look. That doesn’t mean you shouldn’t design and decorate based on your likes, it’s just a matter of considering how the remodel will impact you when it comes time to sell the home and then choosing the best option for you for both short and long term.

1. Write it down. Just like your goals in life are more likely to come to fruition when first penciled out on paper, your ideas for your remodeling project also need to be clearly spelled out. When you do this you are able to clearly see which projects you want to tackle first, how much money you can afford/want to spend on the remodeling projects, and if your goals conflict with your ultimate objectives. You will find clarity by writing down what you hope to accomplish. This step alone can turn the project into a success from the start.

2. Slow down. Don’t rush into a project. If you just purchased a home, some experts recommend living in it a year before you start to knock out walls. Your taste and needs might change. Get to know your surroundings and then thoughtfully consult with design-build companies to help ensure the project’s success. Visit other people’s homes and see how they increased storage and used space-saving techniques in their design. I am frequently visiting remodeled homes and am amazed at the creative ideas that add functionality for the homeowner and aesthetic beauty.

3. Let there be light. Light and bright is a commonly used term when listing a home. It’s popular because it’s appealing to buyers. If you’re in the design phase of your remodel, especially for a bathroom–but other areas too, be sure to make sure that you will end up with enough light. The folks over at HouseLogic.com concur. Making lighting a priority. “When it comes to adding creature comforts, your first thoughts might be multiple shower heads and radiant-heat floors. But few items make a bathroom more satisfying than lighting designed for everyday grooming,” writes author and residential builder, John Rhia.

4. Keep it clean. One of my pet peeves is yucky bathroom air. Poor ventilation creates enormous problems in the future. Homes that were designed without bathroom windows that open can quickly develop mold, mildew, and stale air if there isn’t a very good ventilation system installed. High-quality bathroom fans help. These are often not thought of because they’re not obvious “fun toys” like heated floors, but bathroom ventilation systems that exhaust to the outside are vital. Consult with your remodeling expert for the best choice for your room.

Before beginning any remodel, talk to lots of experts, get all your ideas out on paper, and prioritize wants and needs. Taking the time and steps to create a plan with your hired experts will ensure your needs and desires are met in a timely fashion.

Published: August 6, 2010

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Jul 21, 2010 by MichaelS.Dunn.

Knowing how to read your good-faith estimate can help you save money on your home loan.

When you’re shopping for a mortgage loan, it’s sometimes hard to understand the jargon lenders use in the good-faith estimate explaining the costs and fees you’ll pay when taking out a mortgage.When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you’ll pay, as well as other loan terms. Here are five tips for using the new three-page form to your advantage.

When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you’ll pay, as well as other loan terms. Here are five tips for using the new three-page form to your advantage.

1. Know which fees can increase and by how much

In the past, lenders provided an estimate of the costs involved in getting your home loan, and if those costs rose by the time you closed on your home, tough luck. The good-faith estimate shows some fees the lender can’t change, like the loan origination fee that you pay to get a certain interest rate (commonly called points) and transfer costs.The form also lists the charges that can increase by up to 10%, like some title company fees and local government recording fees. The lender must cover any increase over that amount.Finally, the good-faith estimate lists the fees that can change without any limit, such as daily interest charges.

2. Look for answers to basic loan questions

In the summary section, lenders explain your loan’s terms in simple language. Can your interest rate rise? If so, a lender must spell out how much the rate can jump and what your new payment would be if it does. Can the amount you owe the lender increase, even if you make your payments on time? If it can, a lender must show you the potential increase.

3. Evaluate the “tradeoffs” on a loan

In the new “tradeoff table,” you can ask lenders to provide details on the tradeoffs you can make in choosing among home loans. If you’d like the same loan with lower settlement charges, how will the interest rate change? If you’d like a lower interest rate, how much will your settlement charges increase?

4. Compare apples to apples with the shopping chart

Included on the good-faith estimate is space for you to list all the terms and fees for four different loans, so you can make side-by-side comparisons.

5. Know what’s missing from the good-faith estimate

The new form lacks some key information, such as how much you’ll reimburse the sellers for property taxes they’ve already paid on the home. It also doesn’t tell you the amount of money you’ll have to bring to the closing table. Some lenders have created supplemental forms providing that information. If yours hasn’t, ask for it.

More on the new good-faith estimate form:

http://www.houselogic.com/articles/homebuyer-tax-credit-what-you-need-know/

 Other web resources

The new U.S. Housing and Urban Development good-faith estimate http://www.hud.gov/content/releases/goodfaithestimate.pdf 

More on shopping for a loan http://www.hud.gov/offices/hsg/ramh/res/Settlement-Booklet-January-6-REVISED.pdf

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Jun 16, 2010 by MichaelS.Dunn.

This is my response to a question asking about programs for short sales and whether short sales were possible for investment property:

That program is called HAFA and is part of HAMP. That is: Home Affordable Foreclosure Alternatives act which is part of the Home Affordable Modification Program which was instituted with the agreement banks made to receive Tarp funds from the recovery program! Whew!

http://www.roaringforkproperty.com/foreclosure.html

Anyway, the program works really well for:

1. People who are upside down on their primary residence.

2. People who have had a legitimate financial hardship that has caused them to not be able to keep up with their payments.

Investment properties are tough to get approved, but you could always call the lender or apply for a Short Sale Approval. You can get this approval before you even list your property for sale. The lender will base their decision on two main things:

1. Whether they are convinced that you cannot afford to keep the property and whether it is imminent that it will lead to a foreclosure if they do not except a short sale and:

2. Whether that short sale or the foreclosure would be more costly to them.

It is really just a matter of whether the lender is convinced that they will have to foreclose and which alternative costs them the least.

A good article : http://www.businessweek.com/the_thread/hotproperty/archives/2007/03/the_new_exit_strategy_a_short_sale.html

My advice would be that if you can afford to keep up with the payments for another year or so then hold on to the properties. I think rental rates will start to come up within the next year, and home values will start to climb, very slowly, again in summer 2012. (Just a guess based on national inventory levels.) One other option if you just want to get out from under the place is a deed in lieu. Again the bank needs to be convinced that this is a property facing imminent foreclosure, and then there are times that they may just take a quit claim deed in return for a release from the debt.

If you are going to proceed with either course of action, make sure to let me know. I have specialized training in handling these and there are a lot of pitfalls to be avoided. Specifically, you want to make sure the bank not only releases the lien and the deed of trust(or mortgage) but also gives you a signed waiver of the deficiency so that they cannot go back after you for a judgment on the loss. The other fallout is the fact that the IRS will treat the portion of the debt that is forgiven as ordinary income unless it was on your primary residence. That can add up to a large tax bill for money you never even saw.

-Mike

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