I really am amazed at the complete lack of reason at FHA, Fannie Mae and Freddie Mac. Last year they made condo financing impossible and tightened all their guidelines making it more difficult to obtain financing. Keep in mind the government was giving hundreds of billions of dollars to banks to improve their liquidity so they could make loans. The Fed also slashed their interest rate to zero, and began pumping hundreds of billions more dollars into the economy to prime the lending pump. Also, Congress passed the first time home buyer tax credit, then extended it, then extended and expanded it again. So, Congress and The Fed are pumping hundreds of billions of dollars into a system clogged by the very entities that are supposed to be facilitating lending.
Last year FHA was successful in outlawing the practice that allowed sellers to contribute money for the buyer's downpayment, they raised the amount of money buyers have to put down and the implemented the use of credit scores as a lending criteria. Now FHA wants to require people with credit scores below 580 to put 10% down instead of the 3.5% down required right now. They also want to reduce the amount of closing cost assistance to 3% of the purchase price from the current allowable 6%. I don't think these are necessarily bad ideas. I do believe the timing is wrong, and I believe they are contradictory to the other programs in place to stimulate demand for real estate. FHA has long been a program designed to help first time home buyers, and increasing the cash requirement makes purchasing more difficult for first timers. Don't make loans to people that are too risky, but if you don't take some risks you won't make any loans.
Orlando Real Estate, David Welch Real Estate Optimist, As Seen On HGTV's House Hunters
I was fortunate enough this week to have two closings with the new HUD-1 settlement statement. The new form adds a section where the buyer's good faith estimate (GFE) from their lender is compared with the fees actually charged at the closing. There are three types of fees on the GFE and HUD-1 that are compared on this extra page. The first type of fee cannot have any variance between the GFE and the final HUD-1. When you meet with a lender, they know what their fees are, so obviously their estimate of these fees should be exact. The second set of fees are those that can change by up to 10%. That sounds like a lot of fluctuation, but an example is the days of interest the buyer pays at closing which is based on the day of the month. When estimating this number the lender may expect to close on the 30th, but the closing could get moved up (most get delayed, not moved up) to the 29th adding a day of interest. The final category of fees are those that can vary by any amount. The reason they can vary by any amount is that the buyer can shop for these services, and the lender has no control at all. A great example of this is homeowner's insurance. The buyer's lender can only estimate insurance, and insurance quotes can vary widely. One of my customers who closed this week had quotes that ranged from around $1,200 per year to $1,800.
Of course, as you can tell from the title of this post it is a government regulated, mandated change. Therefore, there are some things that you have to laugh at. The new improved HUD-1 is being called the three page HUD (the old HUD was two pages), but the two I closed this week were five pages long including one blank page in the middle? One of my customers brought his actual GFE with him to closing, and several of the estimates on his did not match what the lender reported on the third page. In the end they were immaterial, and his actual costs were lower. It begs the question of how this is being enforced. I suppose the buyer could stop the closing, and they should if they are getting ripped off. I just wonder how many will when they have a moving van and are anxious to get into their home.
The way that the fees roll up from the details on the side is rather difficult to see, which added a degree of confusion. Also, here in Florida the seller pays for the title insurance. The new HUD-1 requires it to show on the buyer's side of the ledger with a credit back from the seller on the front page. This added more confusion as the buyer questions why they are paying for it, and the seller questions why they are giving the buyer another credit. Both felt like it was a bit of a shell game. The other issue I have with the disclosure section (page three) of the form is that it shows the terms of the buyer's loan. What is wrong with that you might ask. Well those terms are disclosed already in their note - which is private. Now they are on the HUD-1 for everybody to see. I don't know that it is the seller's business, or anyone else for that matter. Here in Florida the note is not recorded, just the mortgage. I just find this a bit of an invasion of the buyer's privacy. The best part is HUD has a 48 page guide that you can download from their website on the shopping for settlement services and the new three page (five page) HUD-1.
Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV's House Hunters
If you go to google and search "Orlando Real Estate", Zillow comes up in the middle of page three. I am sure the folks at Trulia love to hear this, since they are and have been number one on that same search forever. My own webpage pops up at number 10 - that is page one - or number 11 most days. I pay about $400 a year for my website with Alamode. I can add all the content I want including advertising as many listings as I may have for no additional cost. I also make use of a Point 2 website for $9.95 a month for additional exposure. Between those two sites, my listings are syndicated across more than 40 other websites. The single most important of all these real estate sites of course is Realtor.com. There is a reason why all these sites offer free advertising. They are trying to amass content. Content is king on the internet, and if I am providing it, you should not be charging me $9.95.
It is true that virtually all of these sites have "premium" advertising packages. They like to call them partnerships, but they are really just offering to place you ahead of the crowd. I am a Remax agent, because Remax is already above the crowd. All the large brokers have inhouse tools to promote their agents and the properties they represent. I don't need the premium sites. Just so Trulia does not get any ideas, outside the real estate community nobody seems to know who you are. A lot more people have heard of Zillow, but generally question their valuation model. Please don't think I am bashing any of these tools. I am just quetioning Zillow's choice during difficult times to start charging. I have plenty of other free options available. For me, it is not worth $9.95.
I find myself helping a lot of buyers looking at foreclosures these days. They are often the best deals at least from the perspective of purchase price. They can take a toll on you emotionally though if you are not prepared for multiple offers, long bank delays, even longer bank addendums and short time frames. Let's start by looking at the multiple offer situation. The first thing you should know is that everybody is looking for the best deal. Everybody wants the home with the fewest problems for the lowest price. In Orlando we have been closing over 2,000 sales on over 3,000 new contracts each month with over 8,000 pending sales back logged. Every single one of these deals invloves a buyer looking for the best deal. Remember this when you find a nice house at a great price, and you find out there are multiple offers on it. It happens frequently in our marketplace. A foreclosure in Baldwin Park recently sold for $60,000 over the asking price. When I showed the house the first day on the market there was a line to see the house. Under pricing is a popular strategy on with these homes, so look at comparable sales before making an offer.
Because these homes are frequently garnering multiple offers, yours may not be selected. Be prepared to write multiple offers of your own, and keep an eye on homes that you don't get. They frequently come back on the market when buyers are unable to meet the banks deadlines. You may get a second chance. Do not expect a quick answer from the bank on your offer, although some are very timely most take days to get back to you. When your offer is selected, you have to wait a little longer for the bank's addendum. Typically, you will have one day to rewrite your contract, and signoff on the bank's addendum. Fannie Mae and Freddie Mac have 15 page addendums. These addendums will freak you out if you are not prepared for them. Basically, they disclose that this property could have all kinds of scary problems like mold and lead based paint, and you should have inspections for everything imaginable. The contract of course is "as-is", so do not expect the bank to repair anything or to be held liable for anything. They will also expect you to have these inspections and make your determination as quickly as possible even if that means having inpsections on the weekend. Then they expect you to close on time or face stiff penalties for delays. They on the other hand will get around to it when they are ready. Expect delays for HOA estoppels.
In the end, you will be getting a good price. The banks just expect you to abide by their terms. Have your proof of funds or pre-approval letter ready, and your check for the escrow deposit. Best of luck, and let me know if I can help you.
This information provided by and posted with permission of Jay Buerck from YouServed.com.
Veterans and military homebuyers in Florida turned to VA loans in huge numbers in 2009. The credit crunch and overall housing decline made these government-guaranteed loans even more appealing. And 2010 is shaping up to be another big year.Since 1944, more than 18 million veterans have become homeowners through the VA Loan Guaranty Program. In essence, the Department of Veterans Affairs guarantees about a quarter of a borrower’s mortgage. That guarantee gives VA-approved lenders a degree of protection and, in turn, spurs lending to a group of people who spend their lives serving others.VA loans come with a host of big-time benefits for qualified borrowers. The program’s top benefit is that military buyers can purchase a home worth up to $417,000 without putting down a single dollar. Other major benefits of VA loans include:-No private monthly mortgage insurance-No penalties for loan pre-payment-Higher debt-to-income ratio allowed than for most conventional loans-Sellers can pay up to 6 percent of closing costs and concessions Most veterans and active duty military find VA loans easier to obtain than conventional loans, which typically require at least a 15 percent down payment. In fact, more than 75 percent of VA borrowers couldn’t have qualified for a standard loan. Today, in Florida, the VA guarantees about 11,000 home loans worth a combined $2.2 billion. As the credit and housing markets continue to sag, VA loans will only become more appealing to military buyers in search of a way to stretch their dollar. To be eligible for a VA loan, borrowers must first be:-Military members who’ve served 181 days on active duty or three months during war time may be eligible.-People who have spent at least a half-dozen years in the National Guard or Reserves-Spouses of those killed in the line of dutyVeterans who already have a home loan can also benefit by refinancing through the VA. The agency’s refinancing programs allow qualified borrower to refinance up to 100 percent of the value of their home.
Our pastor's message on Sunday was about access. As a Christian our faith is based upon the belief that Jesus purpose in coming to earth was to reconcile our relationship with God the Father giving us direct access to Him. I got that message, but I also learned something else on Sunday. I think it is important to dream big. The personal story that David Loveless was speaking about was a list of accomplishments that he wanted to achieve. One of the items on that list was something that he had no access to on his own. He wanted to land in a plane on a nuclear aircraft carrier. If you ask me that is a pretty big dream. In a some ways this may have been the biggest "dream" that was on his list, because there is seemingly noway to get that kind of access short of graduating from Top Gun school. Five years ago, he was actually invited to facilitate a meeting on an aircraft carrier in the middle of the Pacific ocean by the Admiral of the Pacific fleet.
I thought about that dream which was not intended to satisfy some bigger purpose, although it probably did. (I don't imagine they host unimportant people in unimportant meetings on nuclear aircraft carriers.) I believe that David just thought this would be something really cool to do. Yesterday was our national holiday celebrating the life and contributions of Dr. M.L. King, and I cannot imagine anyone not thinking of his "I have a dream" speech as being pivotal in American history. Call me introspective, but I guess the message Sunday and the MLK holiday yesterday got me thinking about big dreams. They can be scary, because they are big and they should be audacious and seemingly unachievable. I think a big dream should be something that changes at least your life, the lives of the people around you and maybe the world. As 2010 kicks off the next decade, dream big.
Orlando Real Estate, David Welch Real Estate Optimist, As Seen On HGTV"s House Hunters
Last year started with a lot of activity. If I recall, I wrote 14 offers in January. The only problem with that is that I only got two of those deals to contract. Virtually all the activity centered around investors looking to pick up inexpensive condos. I think last year there was more uncertainty, even among the investors. They were jumping into the market, but many were writing offers below the bank's asking prices. As investors lost deal after deal in multiple offer situations they began to come in with stronger offers and greater success in contracting for these properties. For some people the learning curve was longer than others. My observation is that investors are pricing in about an eight percent return on their investment.
Today, there is still a lot of activity. The big difference is that the investors I am working with are jumping on new listings faster, and making their best offer up front on the good deals that are out there. I think part of that change is experience, and part is a greater confidence in the values and returns on properties they have already purchased. The other big change in my activity is that I am working with a lot more first and second home buyers than investors now. This year's activity is turning into a lot more executed contracts and should lead to closed sales. I will take six contracts over 14 offers any day. Two more offers look like they may be accepted, that brings the count to eight and it is only January 14th. Happy birthday Mom! Two are closed, inspections are done on two and three more are expected to close this month. If any body doubts that 2010 is going to be better, I don't want to hear it. My 2010 is going to be great.
Fred Thompson www.OrlRent.com heads up our property management division here at Remax 200 Realty. In our business meeting this morning Fred spoke about a rash of hijacked Craigs List ads. In the fake advertisements, the rents are too good to be true (first red flag), and require the prospective tenant to send money to them (second red flag), in West Africa (third red flag) and also e-mail their personal information (fourth red flag) before they can even get a key to see the place. Your best protection as a tenant is to deal with a reputable property management company. If you do decide to rent directly from an owner you may want to run a public records check to make sure the property you are about to lease is not going into foreclosure.
Are short sales getting any better? Mary Shanklin writes about the new guidelines in the Orlando Sentinel today. My observations suggest that not much has changed with short sales amid the optimism that they are getting better. I have been tracking the percentage of short sales closed of the total number of pending short sales for several months. What I have observed is that the success rate is running between 8% to 10% per month. In Orlando that translates into between 400 and 550 short sale closings each month. Unfortunately, there are about 5,500 pending short sales and another 5,000+ active short sale listings.
I do see this situation getting better after the first quarter for a few reasons. First, The Fed will stop purchasing mortgage backed securities around the end of the quarter. This open market activity has done two things: kept the mortgage markets liquid (lower interest rates); kept the heat off the banks with bad loans. With this in mind, watch for significant upward pressure on interest rates by the second quarter. I also expect that the banks will have a lot more incentive to settle short sales and modify loans. The new guidelines become required for TARP recipients in April just in time to give the floundering short sale departments some type of structure and incentive to get deals approved. I also believe that we will begin seeing more improvement in employment and overall confidence in the economy. This will begin to stem the flow of distressed properties coming to the market. Also, banks should start to get serious about loan modifications which should slow the number of distressed properties for sale.
I am not expecting economic miracles, just steady improvement for 2010.
Well, that might be a bit of an exaggeration. Fannie has announced that it will make an effort to help the sagging condo market in Florida. This program is only in Florida, and so far has only been directed at South Florida. Specifically, the Miami area is where all the focus seems to be right now. For more complete details read Mary Shanklin's article in the Orlando Sentinel. It was nearly a year ago that Fannie, Freddie and FHA essentially created the condo mess here in Florida by making financing virtually impossible. In an already difficult market, the tight restrictions on financing caused condo prices to plummet. Literally, overnight I saw condo values drop by tens of thousands of dollars and sales contracts fell apart en masse.
The assistance that Fannie is offering now is a special approval process that will be handled by special teams going around the state reviewing existing condominiums. They have dedicated six people to this project (read with a sarcastic tone). With the special approval, condos will be able to qualify for Fannie Mae financing. Because of changes last year many condominiums do not qualify for Fannie Mae financing, making it more difficult to obtain a mortgage. There is virtually no financing available for purchasing condos in Florida as an investment. Even purchasing a condo as a second home can require a higher down payment, higher interest rate and shorter term. Many times only 15 year financing is available and frequently ARM (adjustable rate mortgages) are the only options for condos financed as a second home according to Jeffrey Sachs with FBC Mortgage.
To see if your condo is Fannie approved check their website eFannieMae.com. Go to Frequently Searched Pages and click on Condo, Co-op, PUD Eligibility. The special approval area will be updated as complexes are reviewed and added. I am sure with six quasi-government employees on the job, the whole state will be reviewed in no time (sarcasm again). I apologize in advance for the sarcastic tone. After all, I am the Real Estate Optimist.
Active and pending listings dropped to 15,707 and 8,110 respectively while closed sales continued a seven month streak of better than 2,000 closed sales. So far 2,228 sales were posted for December 2009 with a median sales price of $124,000. That sales price marks nine months of relatively stable prices and an uptick from November. Distressed properties continue make up a sizable percentage with 47.4% of the active listings. Of that 5,830 are short sales and 1,620 are bank owned properties. The number of REO's has nearly doubled since the summer. Distressed properties make up an even larger percentage of pending sales as REO's and short sales continue to be slow to close. Nearly 85% of the pending contracts are distressed sales with 5,436 or 67.0% of the total coming from short sales and 1,448 or 17.9% made up of bank owned properties.
Closed sales finished strong, and are also dominated by distressed properties. More than two thirds of closed sales in December were either short sales or REO listings. Of the 2,228 closed sales 719 or 32.3% were "normal" sales, 520 or 23.3% were short sales and 989 or 44.4% were bank owned. Short sales were a little stronger in December possibly due to quarterly bank financials. The 520 sales represented 9.6% of the total number of short sales with pending contracts. Typically, I have only been seeing about 8% of the pending short sales closing in any given month. The disparity in prices continued among the three types of sales. In December the median sales price for REO's was $81,000, short sales were a bit higher than they have been with $133,800 and "normal" sales came in at $179,900. Despite the rise in REO listings, new contracts continue to be very strong last month with just over 3,000. With nearly four months of sales tied up in pending contracts and the extended tax credit, I expect the stong sales numbers to continue through Winter and into the Spring selling season. Although the recent unseasonably cold weather might put a bit of a damper on things for a couple of weeks.
It is a bit chilly down here in the Sunshine State this week with lows getting down around freezing in Orlando. Somehow, I don't think most of the rest of the country feels bad for us as the snow piles up out West and up North. The sky is clear and blue, and the breeze is light with plenty of sunshine. Normally, this time of year is met with lows in the 50's and highs around 72 degrees. If our "balmy" weather is not enough to get you interested in a move, and our miles and miles of sandy beaches on the Atlantic and Gulf coast aren't enough incentive. Check out Kiplinger's ranking of best value Universities. http://www.kiplinger.com/magazine/archives/best-values-in-public-colleges-200910.html
Five Florida universities ranked in the top 100 in the nation for best value. The University of Florida came in at number 2. The New College of Florida #12, Florida State University #17, University of Central Florida #36 and University of South Florida #60. What can I say, I think Florida is a terrific place to live. If a move is in your future, you can reach me at 407-924-7670 (voice or text). You can always contact me through my website www.DavidWelch.com. Realtors, I love your referrals. Just let me know how I can help you.
HGTV's House Hunters
Lisa and Doug's Orlando Real Estate Search
Episode 3812 - Program Guide http://www.hgtv.com/hgtv/program_guide
Watch a short video of the episode
Lisa and Doug found David Welch, a Realtor with Remax 200 Realty through an internet search for Orlando real estate. Specifically, they were looking for their first home here in The City Beautiful. Lisa and Doug both wanted something near downtown Orlando to help with Doug's commute, but close to roads that would keep Lisa's drive convenient too. They settled on the area from downtown Orlando north to Maitland. They have two dogs, Eddie and Okra, so a yard or parks nearby was extremely important to them. Three or four bedrooms with two full bathrooms and an updated kitchen were also on the list of things that Lisa and Doug wanted in a home. They were looking for a home that met all these needs for less than $300,000.
Here are the three homes David found for Lisa and Doug.
House #1 House #2 House #3
House #1 - We started our tour in Maitland, since it was the farthest out from downtown and the closest to their current home in Winter Park. Built in 1984 on a large yard, this house is a four bedroom, two and a half bath traditional style house with around 2,200 square feet priced at $299,900. Doug and Lisa's new home!
House #2 - The second house we looked at is located in Baldwin Park, Orlando's newest community in the downtown area. Located across the street from a park and pond, this three bedroom, two bathroom house was built in 2005 has over 1,500 square feet and is priced at $291,900. Still available - lower price!
House #3 - We completed our tour with this downtown Orlando house near Thornton Park. This house, built in 1925, sits on a deep lot on a brick street just blocks from downtown lakes and parks. This four bedroom, two bathroom house has over 2,000 square feet and is priced at $299,000. Still available - lower price!
Let me introduce you to the cast and crew of for this Orlando episode of HGTV's House Hunters.
Lisa and Doug are the House Hunters, and the stars of the show. Some people think the houses are the stars, but I think people watch to see which house Lisa and Doug will choose.
That is David Welch (me) on the right. If you are looking for a home in Orlando, check out www.DavidWelch.com. Since working with Lisa and Doug, I am the Realtor to the stars.
The other stars of this television phenomenon are the crew. They kept us in line and put this whole show together. They really made being part of this production interesting and an enjoyable experience.
Where would we be without the PieTown producer Josh and the camera crew Chris and Kerry from Buckshot Productions.
Josh (Led Zeppelin shirt) flew out from Hollywood to put this show together, keep the "talent" in line and keep things on schedule. Chris (above center) made sure to get our best side. His brother Kerry (above right) fought through, planes, trains, automobiles and lawn mowers to record all our great dialogue as we toured the houses.
The world is ending in two years, right? The ancient Mayans said so, some old Chinese book of numbers runs out in 2012 and Hollywood is pumping out disaster movies that concur. If things are so bad, why do I have three closings lined up for this first month of the new decade? Why did a family just travel down from New York to look at purchasing two second homes? Why have three first time home buyers contacted me in the last week that are ready to buy? I think people are getting tired of the negative point of view. If Yogi Berra was an economist he would probably tell you that 90% of economics is half mental. With that in mind, I believe people are starting to look for good news about the economy. This will lead to improving consumer confidence and increased demand. Supply is a number, but demand is a state of mind.
By the way, I give Washington little to no credit for this collective turnaround in the psyche of the public. Quite frankly, the Bible even says that bad times only last for so long.
The bad times (recession) was pretty bad this time around, but things are getting better. Just look around, retail sales are showing improvement and employment numbers are on a 17 week upward trend. Of course, there are still plenty of people complaining, and there are plenty of people still feeling the negative effects of the downturn. I did not wake up 20 pounds lighter this morning or a million dollars richer. Improvement is a process whether it involves working on personal goals or turning around the local, national or world economies. It is easy to be a pessimist just like it is easy to be to be lazy. Being an optimist is hard work, but the result is worth the effort. Make a resolution to be optimistic this year.
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