Marketing video for our most recent client

 

If you think your home should be marketed like this…please give me a call at 561.602.1258

or email me at email link

Thanks..Steve Jackson

Bad Credit? Had a short sale or foreclosure? I can help you buy a house!

This week I had a meeting to discuss the details of the launch of a new type of lease-option program for my clients.  This is very exciting news for the thousands of people looking to do a lease option the ability to lease option a very wide range of homes.
Our program is unique as it allows people who would not qualify for traditional home financing due to a short sale, foreclosure, or credit issues to select the home they would like to buy at some point, have our investor purchase it, and have a long-term lease with the option to purchase WITHOUT having to make the typical large, non-refundable option payment.
Since the market crash I have had dozens and dozens of people asking me to help them find a seller that would do a ‘lease-option’ or hoping to find someone to owner finance. This has always been (until now) a very difficult goal to accomplish as the minute number of sellers that would consider a lease option for their home are looking for a significant non-refundable deposit to be included. 
These clients, and thousands more like them, are not able to buy at the present time for any number of reasons, but need the security of a long-term housing solution and typically are very specific about the school district they need to be in. They don’t want to pursue a standard rental and the uncertainty that comes along with it…the owner can decide to not renew the lease, sell the house, or even let it go into foreclosure forcing the tenant to move every year and uprooting their family over and over.
What makes my new program so unique is that, once approved, the buyer/tenant gets the ability to go and shop for the homes they want to eventually buy (within their approved budget) and once a home is identified, our investor with my assistance, purchases the home as a cash sale for the buyer/tenant.
After the normal inspections, the sale can close quickly as there is no financing involved. Sellers who may have been unable or reluctant to do a lease option themselves get the benefit of a quick, cash sale.  The buyer has the flexibility to move in with much less than the typical lease option would require too.  A security deposit, and first and last month’s rent is typical.  Much less than would be typical for an owner financed purchase.
Right now in Palm Beach county there are under a dozen homes that have offered non traditional financing, or lease option programs (and they require a big, non-refundable deposit).  But now I have a way to satisfy sellers looking for a hassle free sale, and to help buyers that are looking for a lease option program.
The basic criteria we look for with the buyer is steady income, no serious criminal history,  and a minimum household income of $50,000. With regards to homes that qualify we allow homes priced up to $500k and homes that are in good school districts.
If you think that this program may work for you, give me a call right away at 561.602.1258 to set up your initial meeting.  Regardless of credit issues, a prior short sale, bankruptcy, or even a foreclosure this could be a new way to get your family’s next home. I am very excited to have this great option to give families the housing stability they need in the school districts they want with the prospect of buying their home in the near future!
Call me today to see if you can pick out your new lease-option home!
Steve Jackson
561.602.1258

No Money Down?

What are the maximum concessions (Seller-paid costs) a buyer can receive from the seller, realtors, and other parties in a real estate transaction?

This is a great question we deal with all the time. There are so many buyers who need help with their cash for closing. Each program has different guidelines, so I will review the guidelines for the three more popular programs:

1. Conventional: When a buyer is financing a primary residence or second home the conventional guidelines base the allowable concession on the buyer’s down payment. Buyers who put less than 10% down can receive up to 3% of the sales price in the concessions. With 10% - 24.99% down the concession can go up to 6% and with 25% down or more, can up to 9% of the sales price.

1. FHA: This is a little bit more liberal. They allow 6% in contributions with FHA’s minimum down payment of 3.5%.

1. VA Loans: They are even more liberal because they will let interested parties pay for all of the Veterans closing costs plus another 4% for other costs related to the transaction. VA allows 100% financing, so they can move in with literally no cash out of their pocket. 

 

IF YOU WOULD LIKE TO TALK TO US ABOUT GETTING IN TO A HOME WITH LITTLE OR NONE OF YOUR OWN MONEY…GIVE ME A CALL.

Steve Jackson

561.602.1258

EMAI L

NAR Buyer/Seller traffic report analysis

 

Back in early to mid 2011 the market value of homes here bottomed out. Then several big hedge funds started scooping up everything under $300k…with ‘all cash’ offers. Home prices/values had been on quite a tear since…until recently.

What happens from here is difficult to predict. With the elections having just tilted back towards the Republicans we should quickly see if this translates into a more robust economy/jobs/business environment.

The current market may look like a ‘standoff’ between sellers and buyers.

But is not about standoffs, it’s about negative feedback loops and positive feedback loops:

Positive feedback loop: buy because prices are increasing, don’t put your house on sale because next year you can get 15 percent more. All of a sudden you have low inventory and rising prices, further feeding the loop.

Negative feedback loop: prices are stalling, let’s wait to see where they are in a year. Let’s sell that house now before prices fall further.

Let’s not forget, there is a lot of investor housing bought in the last 36 months that may quickly make it back on the market once the price gains stall out.

I’ll keep an eye on this…you keep an eye on this blog.

Thanks for reading…Steve Jackson…561.602.1258

A dirty little real estate secret

 

The “Dirty Little Secret” Agents Don’t Want You to Know

…that can cost you tens of thousands of dollars (and waste a lot of your time)!

Did you know…..most agents list homes at a price where the property WILL NOT SELL?! In fact almost 70% of homes listed today are initially listed overpriced, meaning that they require one or more price reductions before they sell. For some reason, most agents don’t want to admit that little-known secret…that agents typically price homes where they will not sell!

You may be saying, “OK…so they priced it too high initially…no big deal…we can always come down.” But here is the shocking truth…..

Overpriced listings end up selling for less because they sit on the market too long and can become stigmatized. After weeks and weeks on the market the “WWWTH Syndrome” kicks in with buyers….”What’s Wrong With That House.”

Here are the actual statistics! Of these overpriced listings that actually end of up selling (not including the ones that don’t sell at all), they average selling for only 87% of their original asking price and take over 120 days on average to sell! Homes that are priced right from the beginning, sell for over 97% of list price with an average of only 45 days on the market to sell!*

The TRUTH is that the “Price-It-High, Come-Down-Later Strategy” actually costs you precious equity…2%, 3%, 5%, or even more!!! When your home is initially listed too high, you lose the opportunity to get the premium value for your house…because of this simple, statistical fact: the longer a house spends on the market, they lower the offers it generates. This happens for two primary reasons:

1. The “WWWTH Syndrome” (see above) causes buyers to offer less for your property…if they’re willing to make an offer at all.

2. After price reductions, buyers and agents perceive an increased motivation from the sellers so they make lower offers thinking you are now desperate to get an offer. It doesn’t matter if it’s true or not…their perception costs you.

"...Beware of agents who set the list price on homes at unrealistically high levels simply to get listings. They will tell you what YOU WANT to hear…because they are AFRAID if they tell you the truth up front…they might not get the listing. DO YOU WANT THE TRUTH?" Real estate trainers even have a name for this tactic…it is called “Buying a Listing”!

I will always tell you the truth. And the THE TRUTH IS…I don’t want your listing. I want to help you get WHAT YOU WANT…which is to get your property SOLD, within your timeframe, for the BEST PRICE AND TERMS. If that is what you want…LET’S TALK.

Call me today at: 561.602.1258

Thanks again for reading…Steve & Jackie Jackson

ReMax 360 Video Channel

Build your multi-generation compound

Are you tired of the rules and restrictions of a homeowners association?

Do you have a boat, motor home, work trucks, etc. that you’d like to store at your home?

Would you like to have a big workshop next to your house?

Do your elderly parents need your help and watchful eye now?

Are the just-graduated kids moving back home?

We may have a great solution for you…we just signed an agreement to market a 1.4 acre piece of property a short distance from Winston Trails, Journeys End, Smith Farm, Lake Charleston and Lakeview Estates.

It is a heavily wooded, private parcel ready to be cleared and transformed. It is surrounded by other large parcels providing extra privacy.

We even can recommend a great, local, custom builder/engineer to help you with your plans and construction.

You can buy this property from us today for only $130,000! (Cash Only)

Call me today before we release this opportunity to the general public.

Steve Jackson: 561.602.1258

The propaganda confliction continues…

 

First…the ACTUAL facts related to the current state of housing…

• JPMorgan to lay off a total of 17,000 mortgage bankers by the end of 2014

• Prices were up 11.7% in the first nine months of 2013, but fell 0.3% in the fourth quarter. And, the latest housing news has been bad.January existing-home sales fell to an 18-month low. And home construction in January recorded the biggest month-over-month drop in seven years.
• “Our early data shows national quarterly price gains are falling at a rapid pace and suggest overall prices could dip into negative territory soon if current conditions continue,”

NEXT: Here is a sample of recent ‘upbeat’ housing related headlines:

• March comes in like a lion and goes out like a lamb. As March comes in this year, the housing sector continues to roar ahead with good news, while other sectors are struggling.
• NAR says the housing market will continue to experience a growth in home sales, provided the job market continues to improve.

As a seller or buyer, it’s difficult to know what to believe. Are prices rising? Is inventory low? Should you sell now or wait? Should you buy now or wait?

Here, in Palm Beach County, it looks like the market peaked in August, 2013 after a bottom in early 2011. An additional signal is the inventory levels have risen about 25% from the beginning of September 2013. Where is our local market headed this year? I think I know what the indicators are and where they are pointing.

My business has been built upon giving highly personalized advice based upon my client specific needs and goals. No one answer is right for all sellers or all buyers. And you can’t rely on the media to give you all of the ‘unbiased’ data and analysis required for you to make an educated decision.

If you are thinking about making a move, selling or buying, we should see what is the best thing for you to do, now. My direct line is 561.602.1258

Thanks for reading….Steve Jackson

What’s in store for 2014?

Sorry to start out 2014 with a bad-news post…but writing about all sides of the real estate market is how I roll!

On December 31, 2013, the Federal Housing Administration (FHA) reduced the loan limits for its single-family insurance program in 652 counties, while increasing them in 89 counties. The changes result from the expiration of provisions of the Economic Stimulus Act of 2008.

In Palm Beach County, the FHA loan limit for 2013 was $423,750…which meant that a buyer could obtain an FHA insured loan for $423,750. Typically, buyers choose the FHA loan route for 2 reasons: 1) they have little to no down payment, or, 2) their credit score would not enable them to obtain convention financing.

With an FHA loan, a buyer could purchase a home with as little as 3.5% down. On the aforementioned 2013 limit, that would have been a home sales price of about $439,000.

But starting now, the maximum loan amount for an FHA buyer is only $345,000! A $94,000 reduction…almost 20%! This new loan limit will translate into a new maximum purchase price of about $358,000.

Lets look at what effect these new limits would have had if we overlay the 2014 limits on to 2103 loans.

In 2013, there were 2301 FHA home sales (about 5% of the total sales) reported in MLS statistics. Of those 2301, 127 of them fell above the 2014 limits. This doesn’t necessarily mean that those 127 sales would not have happened in 2014 limits were in place, but in my 15+ years of experience I have found that the great majority of FHA buyers do not have much money for the down payment and that is why they pay the higher fees and higher interest rates associated with FHA as FHA is about the only game in town for this type of buyer.

So lets assume that 20% of those FHA buyers could have financed the loan another way…that leaves 100 sales between $357,000 and $439,000 that would not have been possible (or will not be possible this year). No matter how you interpret it, losing 5% of your prospective buyer pool is not good for home sellers in 2014.

Another interesting and potentially impactful statistic: in 2013 there were 767 all cash sales in the $357k-$439k range. This equates to 43% being cash sales. The all cash sale market is expected to contract again this year as investors/hedge funds continue to scale back on purchases as prices have risen 25% or more since the bottom in mid 2011.

All-in-all, I foresee a tightening of the real estate market going forward this year. I am of the opinion that sales prices will be flat-to-negative. But on the flip side…for the (non FHA) buyer, buying sooner rather than waiting will be advice I will be comfortable giving seeing as how interest rates are expected to continue climbing (with the next ‘taper’ on the horizon) and as underwriting rules are going to be getting tougher.

If you’d like to discuss your options as a seller or buyer in this market give me a call at 561.602.1258

Thanks for reading, Steve Jackson

And come to visit us in our new office (We are now a REMAX franchise). we’re located on the SW corner of Hypoluxo and Jog in the Charleston Square Plaza. 6582 Hypoluxo Rd., Lake Worth 33467

Janet Yellen, The Nation’s New Chief Slumlord

Below is a blog post from Charles Hugh Smith’s blog: OfTwoMinds.com

I couldn’t comment or paraphrase anything in his post that would be an improvement or would add any clarity…so the verbatim post is below. You should add his blog to your daily reading list.

Janet Yellen's role as the nation's slumlord is masked by her apparent distance from the Fed's money spigot and the resulting institutional ownership of the nation's rental housing stock.

Please welcome the nation's new chief slumlord, Janet Yellen. The previous top slumlord, Ben Bernanke, has retired from the position of Chief Slumlord (i.e. chair of the Federal Reserve) to the accolades of those who benefited from his extraordinary transfer of wealth from the many to the few.
Why is the chairperson of the Fed the nation's top slumlord? Allow me to explain.We only need to understand two facts to understand the Fed's role as Slumlord.
1. Rental housing has long been a decentralized, locally owned industry. Over 90% of rental properties under 50 units have historically been owned by individuals or couples: the nation's landlords have historically been Mom and Pop, middle-class folks who saved capital and used those savings to buy a single-family home or small apartment building (duplex, triplex, four-plex) as an investment that they own and manage.
Very few amass a huge portfolio of properties, as few have the income or assets (i.e. the collateral) to leverage the purchase of dozens of rental properties.
Buildings up to four units qualify for conventional mortgages; small rental properties are not considered commercial properties like strip malls or large apartment complexes.
This diverse, local ownership provided a wide spectrum of residential rentals. The wider the variety of rentals and owners, the greater the diversity of prices, locales and requirements. This is the essence of free enterprise: sellers (landlords) and buyers (renters) agree to price and conditions in a dynamic, open and adaptive marketplace.
2. No Mom and Pop real estate investor can compete with financial institutions who can borrow unlimited sums of money from the Federal Reserve at near-zero rates of interest.

Let's start by asking what happens to the price of real estate when mortgages fall from 8% interest to 4%: prices basically double, because buyers can "afford" to pay more at low rates of interest.
When conventional mortgage rates are 8%, a rental that costs $200,000 requires a 30% down payment in cash (because the buyers are not owner-occupants) or $60,000. The simple interest on a $140,000 mortgage is about $11,200 annually. (Let's use simple annual interest for simplicity's sake.)
At 4%, the price can double to $400,000, with a 30% down of $120,000 and a mortgage of $280,000, and the mortgage accrues the same $11,200 in annual interest.
Declining interest rates push real estate prices higher.

At first glance, this doubling in price doesn't seem to affect the cost of ownership. But that is deceptive; consider how many households can scrape up $120,000 in cash compared to the number who can scrape up $60,000. The higher the price, the bigger the down payment required. The higher the down payment, the fewer the number of households who can accumulate that much cash.
To households that live paycheck-to-paycheck, both sums are out of reach. But a significant number of middle class households could accumulate $60,000: such a sum could come from a family house that was sold and divided amongst the offspring, for example, or a Solo 401K that allows the retirement fund to own real estate, or from saving $5,000 a year for 12 years.
The Federal Reserve's Zero Interest Rate Policy (ZIRP) was designed to push real estate prices higher. The Fed's public justification was "the wealth effect": the idea was that as the family home increased in value, homeowners would begin to borrow and spend more money due to their increased home equity.
The second Fed goal was to increase home sales by lowering mortgage rates, theoretically enabling more marginal buyers to buy a home. But since prices rise as mortgage rates drop, this goal is mooted unless marginal buyers are also given a free ride on down payments and qualifying income, i.e. offered near-zero down payments and no-document mortgage qualification processes.
But zero interest rates and unlimited liquidity don't just push real estate prices higher--they give institutions with access to the Fed's nearly-free money an unbeatable advantage over Mom and Pop real estate investors.

Imagine being able to borrow $400,000 at 1% with zero collateral. You can now buy the rental property for cash, and pay only $4,000 in simple annual interest. And you didn't have to put up a dollar of actual collateral to buy the property.
Consider the huge advantages you now have over the competing Mom and Pop bidders. Sellers typically prefer cash offers, so your cash offer (of Fed money) is more attractive than Mom and Pop's loan-based bid.
If the price jumps to $500,000, Mom and Pop are blown out of the water: they don't have the additional $30,000 cash required as collateral.
Thanks to the Fed, you don't need any collateral. You can borrow $500,000 as easily as $400,000, and the increase in annual interest is trivial: a mere $1,000.
Now consider the operating costs: you have a $7,000 annual advantage because you have access to the Fed's nearly-free money. Mom and Pop have to pay $11,200 in simple annual interest, while you pay only $4,000. A property that is break-even to Mom and Pop reaps you a $7,000 annual profit, just because you can borrow money from the Fed for next to nothing.
Now multiply the $400,000 and the $7,000 by 1,000. Now you can buy $400,000,000 of rental properties and skim $7,000,000 in annual profits, just from the advantage of having access to the Fed's quantitative easing (QE) nearly-free money.
Any advantages you can accrue from economies of scale from owning tens of thousands of rental properties are also yours to keep, courtesy of the Fed.
Now you understand why Janet Yellen is the nation's new top slumlord. Her policies of unlimited liquidity, QE and zero interest rates directly enable financial Elites to beat out Mom and Pop rental housing investors and buy tens of thousands of rental properties at will.
Access to free money and near-zero interest rates gives institutional buyers a built-in advantage over Mom and Pop rental property owners: no collateral and free profits from super-low rates available to those closest to the Fed's QE money spigot.
Institutional ownership turns the rental housing stock into a Fed-enabled financial monoculture. Individual Mom and Pop owners may not require a credit check, or they might not raise the rents very often; the odds that you will be treated as a human being are higher because the scale of the operation is small and local.
To Fed-enabled Institutional landlords, you are an income stream to be skimmed.You will be processed and managed remotely, and variations are not allowed, as they mess up the profit machine.
Fed-enabled Institutional landlords may or may not hire competent, responsive managerial firms to manage their thousands of properties: from the point of view of Fed-enabled Institutional landlords, the lower the costs, the larger the profits. One way to lower costs is to not respond to tenant complaints or requests for service. Another is to hire the lowest-cost (and likely understaffed) management firm.
Janet Yellen's role as the nation's slumlord is masked by her apparent distance from the Fed's money spigot and the resulting institutional ownership of the nation's rental housing stock. But guess what, Chairperson Yellen: we're not fooled. Your phony facade of "progressivism" doesn't mask your real role as the nation's top slumlord.

Happy Holidays to all of my loyal blog readers!

It’s a Wonderful Life

This isn’t real estate related…but I thought it may come in handy to my loyal blog readers.

I ran across a blog that has a listing for ALL of the holiday TV shows…date/time/channel!

The list starts with shows as of tomorrow (11/20) and runs through Christmas day. It’s an awesome list…click on the image below and go print your list so you don’t miss seeing (or DVR’ing) any of your holiday favorites.

 

Thanks for reading…and be on the lookout for a big announcement coming in the next few weeks!

Steve Jackson

561.602.1258

The canary in the coal mine?

Back in the early days of the mid 2000’s real estate bust…Las Vegas was the first to show signs of cracking. Now, is Vegas trying to tip us off again?

Read the excerpts from todays WSJ story below and see what you think. Personally, for the past 60 days I have been telling my clients that I feel (and see) a softening in demand and growth in listing inventory. Although we still seem to be short on properly priced inventory in certain price ranges, I can feel the tide shifting.

Also, I am of the opinion that rents will be softening up soon as there are hundreds of new rental units coming close to completion. And new construction ‘for sale’ homes are coming our of the ground everywhere…just like in 2005. Close to me, Osprey Oaks had the timing about right, but I think that DR Horton is going to be late to the party with their 2 developments on Hypoluxo and the one on Haverhill north of Lantana. Then there is Capistara just around the corner on Military (Lennar I think?) and also on Lawrence just south of Hypoluxo. I think we’ll be seeing LOTS of builder incentives in 2014 in an effort to maintain the listed pricing…just like the builders tried to do in 05/06/07.

Las Vegas: The share of homes that sold in cash last month stood at 47.2%, down from 54.8% in August and one year ago, and down from a high of 59.5% in February, according to the Greater Las Vegas Association of Realtors. Many cash buyers tend to be investors.

Home sales were down 1.2% from a year earlier, even though there were more homes for buyers to choose from. The number of single-family homes listed for sale, at 14,659, stood 12.6% below last year’s levels, but the inventory of “non-contingent” listings—homes that don’t have any offers and aren’t under contract—was 60.5% above year-earlier levels. The median sales price in September fell for the first time in 19 months.

In Las Vegas, buyers earlier this year found themselves regularly losing out to investors amid tight supplies of homes for sale. Now, “the market is softening tremendously,” said Bryan Lebo, a local real-estate agent. “Buyers are becoming a lot pickier. They’re more patient.”

In some neighborhoods, he says, homes are now selling for 10% less than they were just a few months earlier, and builders are beginning to offer generous incentives, such as home upgrades to buyers and commissions to real-estate agents, in order to stay competitive.

Thanks for reading…Steve Jackson

561.602.1258

Show Me The Money!!

IMPORTANT NEWS FOR ANY HOMEOWNER WHO OWES MORE ON THEIR MORTGAGE THAN THEIR HOME IS WORTH!!

PLEASE FORWARD THIS POST TO YOUR FRIENDS AND FAMILY…

TALLAHASSEE—During a press conference on Friday, September 20, Florida Housing Finance Corporation (Florida Housing) announced that next week, Florida homeowners who have remained current on their mortgages may apply for federal assistance from the Florida Hardest-Hit Fund Principal Reduction (HHF-PR) Program. The online application, www.PrincipalReductionFLHHF.org, will open at 9:00 a.m. (Eastern) on Wednesday, September 25, and will be available in all 67 counties. ON A FIRST COME-FIRST SERVED BASIS

“This morning, Florida Housing’s Board of Directors approved $350 million in federal Hardest-Hit funds allocated to our state to be used specifically for a principal reduction program,” said Steve Auger, executive director of Florida Housing. “While our state’s housing market continues to recover, many Florida homeowners have remained current on their mortgage payments in spite of their homes being substantially underwater. For those who qualify, this new program can help to reduce their principal balance, which can result in a lower monthly payment and put more money in their pockets.”

Initially, only 25,000 completed and submitted applications will be accepted for eligibility determination, via the website only. When that number has been reached, the ability to start a new application will be disabled so that staff can begin processing the completed applications. However, if additional funding is available for the program after this initial launch, Florida Housing will notify the public prior to re-opening the application process.

The Florida HHF-PR program is designed to provide up to $50,000 to eligible homeowners who owe at least 125% more on their home than its current market value—commonly known as having a home that is “underwater.” Funds will be applied to reduce the principal balance of the first mortgage to reduce the loan-to-value (LTV) of the first mortgage to no less than 100%. The mortgage can then be recast (re-amortized) or refinanced to produce a lower monthly mortgage payment.

The minimum qualifications a homeowner must meet to be considered for participation in the Florida HHF-PR program are as follows:

· Must be a Florida resident and a legal US resident/legal alien, and occupy the property as the primary residence;

· Must be current on the monthly mortgage payment—first mortgage payment cannot have been 60 or more days late within the past 24 months;

· The first mortgage must have originated prior to January 1, 2010;

· The unpaid principal balance for the first mortgage cannot exceed $350,000;

· The loan-to-value for the first mortgage must be greater than 125%—in other words, home must be more than 125% “underwater”; and

· The total household income, including all persons age 18 years and older who live in the home, must be less than 140% of the area median income.

Principal reduction program funds will be in the form of a 0% percent, deferred-payment loan that will be subordinate to current mortgages on the home. The loan can be forgiven over a five-year period, at a rate of 20% each year. For conventional mortgages, once HHF-PR funds are applied to the principal, the mortgage will be recast (the terms of the loans will remain the same, but the loan will be re-amortized).

If the borrower has a FHA, VA or USDA-RD mortgage, the mortgage will need to be refinanced within 120 days after closing on HHF principal reduction funds in order to receive the pro rata forgiveness.

If a refinance is not completed within the specified time, the principal reduction loan will be 100% forgiven after a full five years of the borrower remaining in the home.

Homeowners in every Florida county may apply for the Florida HHF-PR program by using the official website: www.PrincipalReductionFLHHF.org. The site contains all the information users will need to begin the application process, including a program fact sheet and answers to frequently asked questions. Additionally, the Florida HHF Toll-free Information Line [1-(877)-863-5244] will be open on Saturday, September 21, and Sunday, September 22, from 9:00 a.m. – 5:00 p.m. to answer any questions callers may have about the program.

Application for the Florida HHF-PR program is FREE-OF-CHARGE, and applicants will not be asked to pay for any eligibility determination services in conjunction with applying for the program.

To My Blog Readers: If you apply for this program please follow up with me and let me know what happens/how it goes. Thanks

Steve Jackson…561.602.1258

 

Lets keep this housing party going!

There was a time when those who defaulted on their debt, especially mortgages, had to wait 3-5 years before they became eligible for any form of new credit, let alone a brand new mortgage. That, however, was in the Old Normal. In the New one things are different: so different, that for anyone who filed a bankruptcy on or before July 2012, we have good news for you - the FHA (subject to an explanation and several almost painless conditions) will be happy to provide you with a brand new mortgage.

From the recent FHA Mortgagee Letter 2013-26:

FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.

As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.

To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that:

• certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control;
• the borrower has demonstrated full recovery from the event; and,
• the borrower has completed housing counseling.

Housing counseling is an important resource for both first-time home buyers and repeat home owners. Housing counseling enables borrowers to better understand their loan options and obligations, and assists borrowers in the creation and assessment of their household budget, accessing reliable information and resources, avoiding scams, and being better prepared for future financial shocks, among other benefits to the borrower.

Well, we did say almost painless: it is only logical that after filing bankruptcy one should go to housing counseling. Surely that will 'learn' one to buy that 18 bedroom McMansion that the evil banker, gun against head, forced down one's throat.

Either way, once done with the grueling "counseling" sessions, and providing evidence one didn't blow it all in Vegas, the FHA makes one eligible for a new mortgage even with a prior recent bankruptcy, and not just any but Chapter 7 as well as 13, as follows:

D. Economic Event-Related Chapter 7 Bankruptcy

The lender must verify and document that:

• a minimum of twelve (12) months have elapsed since the date of discharge of the bankruptcy; and
• the bankruptcy was the result of the Economic Event.

E. Economic Event-Related Chapter 13 Bankruptcy

The lender must verify and document that:

• the Chapter 13 Bankruptcy was discharged prior to loan application and all required bankruptcy payments were made on-time, or a minimum of twelve (12) months of the pay-out period under the bankruptcy has elapsed and all required bankruptcy payments were made on time; and
• the bankruptcy was the result of the Economic Event.

But what if, gasp, the existing bankruptcy has not yet been discharged? Don't worry: the FHA's got you covered even then:

If the Chapter 13 Bankruptcy was not discharged prior to loan application, the lender must also verify and document that the borrower has received written permission from the Bankruptcy Court to enter into the subject mortgage transaction.

And so on. There are other conditions (the full FHA Mortgagee Letter can be found here) but if the only gate for a bankruptcy as a restraining factor is for 12 months to have gone by, one can imagine just how "strict" the other conditions have to be.

So…party on!

Thanks for reading…as always.

Steve Jackson

561.602.1258

Does it pay to sell?

Is the “smart money” starting to bail on real estate?

Here are 2 recent headlines relating to the hedge fund investing strategy that has gained popularity in the past few years:

 

• Is private equity and Wall Street planning their exit from the rental business- Lower yields, IPOs, and packaging deals to sell: The whispers about private equity exiting the rental market are now out in the open.  A few reports are highlighting that some private equity investors are testing the waters for an exit via IPOs.

• Housing Bubble II: Euphoria And Other Shenanigans: Private-equity funds have poured tens of billions into gobbling up vacant single-family homes in specific markets. And now some of them are planning IPOs as a way of dumping this stuff into funds that unsuspecting worker bees hold in their 401(k)s. It’s called an exit, and they have to do it before it blows up in their faces.

Personally, I just last week saw another agents deal that Blackstone (a very large hedge fund) tried to renegotiate at the last minute…then bailed out on. They had a 3 week to closing date contract on a single family home in Deerfield at $333k and on the final day of their 10 day due diligence period they asked the seller to reduce the price to $300k. Even though the seller had already contracted to purchase another home and packed most of their belongings they counter offered Blackstone at $325k..and Blackstone walked. Was this their normal M.O or are they getting a bit skittish about the rapidly rising home prices in South Florida? Time will tell I guess.

In the past few years institutional investors rushed to buy homes with the philosophy of buy cheap, renovate, and rent. But they might be in for a surprise. According to real estate research firm Trulia Inc., since 2005, there have been almost four million single-family homes added to the rental market. That supply has met the demand created during the crisis in the housing market. (Source: Trulia Inc., April 4, 2013.). Also those numbers do not include the huge rush into the building of multi-family/apartment rentals. With just a simple 15 minute drive around our area you can see hundreds and hundreds of new rental units being built…Cheap corporate money+lots of bad credit/unstable job families=A generation of renters. But the returns projected by these entities, are, in my opinion, much too high.

As a result, the rental rates that institutional investors were banking on (they were working off projections of up to 5% annual rental rate increases) are actually compressing. Recent reports have shown that rental rates are down 1.2% on average in Dade/Broward/Palm Beach counties year over year.

Interest rates have recently spiked to over 4%, which is still historically low, but every tic higher changes the yield for a leveraged investor and reduces the amount any that any buyers who needs a mortgage can qualify for.

Be careful out there.

 

Thanks for reading…Steve Jackson, 561.602.1258

For Memorial Day…The Pledge of Allegiance

Thank You to all of the veterans who have served, sacrificed and protected our freedom…

Don’t “sell your listing” when trying to sell your home

All recent indicators point to it being a strong sellers market…super low inventory, historically low interest rates, lot’s of cash on the sidelines too. It is the strongest sellers market I have seen since 2005.

But…be careful when pricing your home for sale lest you may miss this selling opportunity. It is always tempting to hire the agent that tells you the highest price. Unscrupulous agents are well aware of this typical seller tendency and often try to take advantage of it as follows:

Case in point: Earlier this year I met with a prospective seller to interview for the job of assisting them with the sale of their home. All went well EXCEPT for the portion of our meeting where we discussed the most likely selling price range. These sellers were of the opinion that their home would sell for about 20% more than my assessment. Shortly thereafter, their home showed up on the market with another well-known local franchise agent/team at the price they told me they thought it was worth. Now, not to be an “I told you so”…but after 3 price reductions and 5 months on the market, their home sold $8,000 below where I recommended it be priced initially. Buyers quickly become very astute in determining a homes value…there is sooo much information readily available that you’re not going to fool anyone into overpaying. And if you do,  then you have to convince the buyers appraiser of the higher value too!

What is your home really worth?

In a way, that's a trick question. What your home is worth to you, considering the new paint and the children's park across the street, could be very different from what the home is worth to a couple who doesn’t like your taste in color schemes and whose kids are grown. So before you put a price tag on your home, read this:

CMA (comparative/competitive market analysis) : an objective point of view

Your home's "fair market value" is the price a buyer agrees to pay and you agree to accept. All homes ultimately sell at this price.

Instead of using subjective measures, the housing market uses a "Comparative Market Analysis" or CMA. It's the most important factor in determining what your home's fair market value is. A CMA compares your home to comparable homes, or "comps," in your neighborhood that are presently on the market, currently under contract and that have sold recently. Adjustments are made to account for differences in location, size, condition, upgrades, etc...

For $300 or so you can also pay for a professional appraisal of your home to get a state certified appraisers opinion of your home's fair market value.

When Your Realtor Suggests a High Selling Price, Beware!

Meeting With Realtors

· You’ve decided to sell your home and have a fairly good idea of what you think it is worth. Being a sensible home seller, you schedule appointments with a few local agents who’ve been mailing you cards. Each Realtor comes prepared with a "Competitive Market Analysis" and they each recommend a price.

· One of the Realtors has come up with a price that is lower than you expected and although they back up their recommendations with recent sales and current market data, you remain convinced your house is worth more.

· When you interview the next agent, they are much more in line with your own hoped-for value, or maybe even higher. Suddenly, you are a happy and excited home seller, already counting the money.

A Dangerous Sales Practice Called "Buying a Listing"

· If you’re like many people who don’t buy or sell a lot of homes, you pick Realtor number two. This is an agent who seems willing to listen to your input and work with you. This is an agent that cares about putting the most money in your pocket. This is an agent that really sees the value in your home.

· The truth is that you may have just met an agent engaging in a questionable and all too common sales practice called "buying a listing."  He "bought" the listing by suggesting you might be able to get a higher sales price than the other agent recommended. Most likely, he is quite doubtful that your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price to where he knows it should be. (Or it could be that the agent is NOT being underhanded but that they are just new/inexperienced or plainly not very good).

Why do some agents "buy" listings this way? There are 3 reasons:

· The first one being that the agent realizes that you have to sell and they will eventually get you to reduce your asking price to where it should have been initially, even though it may be $10,000, $20,000, $50,000 or even $100,000 less then they told you they could get you on the day you signed up!

· The second one is so that they can do a neighborhood mailing and in that way get another listing “priced correctly” that they believe they have a chance of selling.

· The third reason is that they hope to get a buyer to call off of your sign or ad and that buyer will purchase some other (properly priced) house and the agent eventually gets a paycheck that way.

A seller who choose an agent based on which estimate is highest is the ultimate loser.

Selecting an agent by essentially “auctioning” your listing is a sure way to waste your time and miss out on a real buyer for your home.

Conclusion: Choose your agent based on honesty, reputation, ethics, experience, competence and marketing, and don't chase after those tossing around pie-in-the-sky numbers.

As always, thanks for reading,

Steve Jackson: 561.602.1258

Interesting Perspective

A guy whose videos I get a few times a week recently did a short video with an interesting perspective on the current market conditions.

Thanks for reading…Steve Jackson

561.602.1258

Making Moving Easier for Children

From a great parenting blog, Little Hearts/Gentle Parenting, that I read whenever I can, comes this post on kids and moving

Transitions are hard on everyone, and when the whole family is affected such as in a big move to a new home, parents often get so caught up in the logistics of the move and their own stresses that helping their children cope with the move can get lost in the chaos. Here are a few things you can do to ease the transition for your little people without adding more stress to yourself:

1. With small children, it can be tempting to build up the move beforehand to make it seem like an exciting adventure, but over excitement can be just as stressful and overwhelming to small children (and big ones!) as anxiety can be. Instead, try to keep things as low-key as possible. Wait until it’s close to time to actually start packing before discussing the move with your little one, and then use simple, age-appropriate language to tell them that you are all moving together (emphasize together so there’s no misunderstanding!) to a new house.
2. Show them pictures of the new house, the new yard, their new room, the kitchen, bathroom, living room, etc. Ask them where they’d like to put their bed and draw it on the picture with a marker. Do the same with their toy box, toothbrush, high chair, sandbox, and anything they ask about to reassure them that their things are coming along on the move and to begin to familiarize them with their new space. Give them a marker and another set of pictures of the new house to draw on so they can begin to make it their own.
3. Put boxes in their room a few days before the move and let them begin to pack their own things in their own time. You can go back and repack the boxes when they’re asleep or playing elsewhere if needed. Giving them some control over the move will help tremendously with their feelings of being taken away from their familiar home.
4. Keep a few familiar toys out for the actual move to help your little one see that their things are coming with them. If possible, let them help with loading the boxes from their room onto the truck, too. Knowing that their toys and clothes and bed are coming with them on the move is very comforting.
5. Pack a travel bag with new toys and activities and healthy, familiar snacks for moving day. The novelty of the new toys will help them to travel more happily, and the familiar snacks will keep their tummies settled and hunger at bay making for a calmer trip for all.
6. At the new house, unpack your little one’s things first if at all possible so that they can see for themselves that they made the trip and can begin settling in right away. Take the time to play with them, too. It’s amazing how a few minutes of playing together can settle a small child when they’re stressed!
7. Don’t be surprised if your little one is clingy and whiney for a few days after the move. After unpacking their things, don’t try to rush to unpack everything else all at once. Give your child all of the time and attention they need to help ease the transition for them.
8. Nighttime can be the hardest for children in a new home, so be prepared for lots of cuddling and possibly a night visitor in your bed for a while. Being there for your little one at night is as important as being there for them in the day!
9. Involve them in unpacking and putting away everything from kitchen utensils to books to linens to clothes. Children are very tactile, and actually touching all of the places and putting familiar things from their old home away in the new home can help them to begin to feel at home themselves.
10. Stick to familiar routines such as bedtime, naptime, etc. But don’t be rigid about schedules. Your little one has been through a huge change and needs extra attention and understanding from their source of comfort and security…you!
11. Introduce new things like playgroups, pediatricians, babysitters, churches, etc. slowly, spread out over as long a period of time as possible. The move itself is overwhelming enough in its newness without adding in a ton of other unfamiliar things right away.
12. Find some things near your new home that are familiar to your little one from your previous home such as a chain grocery store, toy store, restaurant, etc. Seeing and visiting familiar places is vastly reassuring for small children because they can see for themselves that you can still buy them food and other necessities even though you’ve moved.

Giving your child the reassurance that some things will remain the same even when so many things have changed helps to stabilize and assure them that their needs will still be met and life will still go on in many of the same patterns and routines they are used to. Remaining calm and available for your little one, even in the midst of your own stresses over the move, is key. But take care of yourself, too. Change is hard on everyone, so cut yourself some slack and don’t try to do everything at once. Remember, slow and steady wins the race!

 

Thanks for reading…Steve Jackson…561.602.1258

Lantana investor special

I am sure that all of you investors know how difficult it is to find (and successfully get under contract) decent single family properties in the ‘under $150,000’ market.

I now have access to a package of 10 single family homes in east Lantana…fully leased…NO HOA…owner stated rental income of $106,200/yr..

They are not, and will not be listed on the MLS and are sold as 1 complete package.

The price is $1,050,000

Call me quickly at 561.602.1258 or email me at Investors@thejacksonteam.com (please include your proof of funds with your email).

Steve Jackson

How Santa refuels his sleigh

Z.I.R.P. and mortgage rates

Below is an excerpt from a recent article by Barry Habib of MBS Highway

Quite possibly you have heard of the Federal Reserves ZIRP or Zero Interest Rate Policy…below is a good explanation of how it works and the tangential effect on mortgage rates.

Imagine that you are a Money Manager, managing a $100 Million Dollar portfolio. You can borrow at very low rates that are close to the Fed Funds Rate. Call it a 0 .5% cost to borrow. You can buy mortgage bonds that pay 3% . It looks like a nice profit spread of 2 .5% . But the real magic happens when you use leverage. You can buy those bonds with only 10% cash . So you can take your $100 Million and buy $1 Billion worth of bonds, by borrowing the other $900 Million at a cost of only 0 .5% . The 2 .5% profit on the $1Billion is equal to a whopping 25% on your $100 Million dollar portfolio...making you a great money manager, and a heck of a lot of fees. This is called "The Carry Trade". But one sure way to lose money on this trade is to have your borrowing cost rise. So, as the data begins to approach the Fed's targets, managers will be less willing to buy mortgage bonds and begin to unwind their holdings. This selling of mortgage bonds will cause mortgage rates to rise, and perhaps at a surprising pace. We will need to be on guard about this in the months ahead.

The above is important to buyers and sellers alike…for buyers, it is quite obvious how interest rates have an effect on the purchase of a home. an increase in rates from 4% to 5% has the following effect on a $250,000 loan.

Principal and interest payment of $250,000 at 4% is $1,194/mon

Principal and interest payment on $250,000 at 5% is $1,342/mon…that is a 12% increase in payment and can have a significant effect on the size of the loan you can qualify for.

If the rates go to 6% you would be at almost $1,500/mon

So, if you are a buyer, you have try to predict the future of interest rates and home prices (we’re here to help you with that!). Should you buy now at the lowest rates in history, or gamble that home prices will fall if interest rates rise? Can you chart out the ‘rates vs. price’ so you are aware of the optimum rate/price relationship?

And, as a seller, are you up for the gamble? Are you on the side of the “we’ve hit bottom” and it’s all up from here crowd or, after reading the above, do you think that now may be an opportune time to “get while the getting is good”?

 

We are not your typical real estate agents. We’ll help you decipher all of the ‘noise’ relating to the housing market and what decision is in YOUR best interests. You won’t get ‘objection handling techniques’, you won’t get ‘memorized dialogs’…in short, you won’t get a salesman that tries to influence and steer you in one direction or another. You’ll get honest advice tailored to your specific needs, goals and situation.

Call me directly at 561.602.1258 if you’d like to discuss anything real estate related.

And, as always, thanks for reading