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Blog By Scott Harrison Bay Area Realtor of 20+ years

Will you miss this market when it sling shots up again?

It is going to be easy to miss the signs that the market is turning around unless your Realtor is telling you the % of the short sales market and tracking them in each city your interested in. Some markets will not be so sensitive while others will shoot ahead in a big way. Since the number of short sales is held in the Realtor MLS confidential section which is not available to the public sites like Realtor.com, Zillo.com, Prurealty.com or any other public sites are allowed to display this info.

The markets which are not going to be so difficult to spot will be the markets with a low number of short sales and markets which has a high number of bank owned properties. The markets which have a high number of Short Sales will be the ones that surprise most when they sling shot into the over asking sellers market. To understand why consider that these short sales are taking 45-95 days for the banks to respond too. During that time the home shows active on the market and may have 3-7 offers awaiting a response from the bank. As the market heats up the bank owned and standard owner sales will almost all go pending leaving a large number of buyers awaiting the short sale bank decision on their offer. Most agents and buyers will see a large number of active homes so they will think there will be plenty of time to pick up on a deal because the inventory is so high. Lets assume this happens and 125 short sales are active and in 60 days 125 buyers get their offer accepted with a 30 day close (that is 90 days before people tracking sold prices will see it) and then the buyers who's offer did not get accepted go out looking again which would be about 625 buyers flooding out looking for homes in a small market of 100 active homes it will make a big impact. When you consider the number of buyers on the side lines waiting for the market to turn before the make offers jumping in it would sling shot things up in a big way.

Of course the accuracy of this prediction is only known after buyers market is gone.

Written 5/5/2008 By Scott Harrison Prudential Ca. Realty

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Credit scores will be very important to future pricing on conventional loans.

Below are the increases FHLMC (Federal Home Loan Mortgage Company) will charge starting 6/1/08.

Credit score of 720 + best rates no adjustment.

680-720--.50 unless under 60% or less

660-680-- 1.25 from 70% up and .50 between 60 & 70%

640-660--1.75 from 70% up and .50 between 60&70%

620-640--2.50 from 70% up and .75 between 60-70%

620 and below--2.75 from 70% up and .75 between 60&70%

I would imagine that Fannie Mae will do this also. These costs just reflect the delinquencies the agencies are seeing in their portfolios at the moment. This is true risk based pricing.

1) Our loan agents can help improve your score and thus make pricing more affordable.

2) Consider FHA/VA/Cal Vet loans - no pricing adjustments as long as the middle score is over 620

from Tom Wardrope Vice President Cherry Creek Mortgage Company

Claudia Kim Loan officer 925-474-1115 3/12/2008

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Why are we in this market, what is causing it and how long will this last ?

I have studied the home sale averages from today to 2005 and found that values is some cities are around the same as 3 years ago. This drop in prices has created a hardship for many and an opportunity for those looking to buy.

Some big factor contributing to this slow down is often buyers bought using a loan program allowing them to place 3% or less as a down payment to buy a home and used an adjustable rate mortgage (ARM) that was fixed for 3-5 years with the loan agent saying to the borrower “you can always refinance” when it starts to adjust. If their homes value has gone up and then dropped they often don’t have the equity in their home that would allow them to refinance since many of these loan programs have new rules or been eliminated.

Another contributing practice allowed borrowers to use stated income on loan applications which often led borrowers to sign papers with inflated income numbers. Today many of these home owners are trapped preventing them from getting out of these loans because they did not qualify when they bought or don’t have the equity needed to refinance. This will contribute to the market decline or cause it to persist longer.

Home owners trapped often use a short sales to get out of their situation. Short sales are often price below market by agents desperate to make a living and sellers who don’t care how much it sells for. A short sale is an alternative for those seller who owe more that what the property is worth and has stopped making mortgage payments. The seller can not make any money from selling the home and the lien holder (bank) has the say so if the sale can take place once an offer is made on the property.

The mortgage reforms that congress passed recently is going to extend the effect of this market by prevent those who used stated income loans from reusing that type of program to refinance trapping many in their ARM loans and preventing home buyers with less than 5% down from buying until they have saved up the down payment.

By Scott Harrison Realtor December 2008

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"Why a dropping market is a good time to buy a home."

By Scott Harrison

If you already own a home and are looking to trade into a dream home now is the best time.

Moving your equity from a lower priced home to a higher is the best direction today. Since the higher priced home often looses more value in a recession than a lower priced home, you will come out ahead (see the example below). You also come out ahead because property taxes on the bigger home are going to be lower. If your next dream home is going to have a great location, be just the right size, floor plan and have the features you want, today is by far a better time because you have lots of selection and you won't be rushed into buying a home that is not really your dream home.

Don't own? Timing the real estate market can be more tricky than the stock market because of the size of the investment and other factors. Eight months from now will you still have the same amount of cash for the down payment? Or will that new car be in your drive way? Can you still qualify with the higher debit of the new car payment? Will the interest rates be reasonable or will high rates be the reason the timing is not right later? Will lenders continue to tighten up lending standards? Is an other child in the cards will the loss of the second income keep you back. In 8 months could some thing be looking uncertain at work and you will have paid 8 months more rent without any tax shelter or tax benefits. Just why are your waiting?

There are a lot of things that could come up and with too many buyers do come up. Over the long run "buying and holding real estate is much better than holding to buy real estate" You do not have to be a home owner selling to see the benefits of owning just look at any 30 year chart comparing real estate and any other investment.

Lets compare buying a more expensive home in 3 different market situations.

Sold value Difference Buy bigger

Flat market $100,000 $100,000 $200,000

Rising market +10% $110,000 $110,000 $220,000

Falling market. - 10% $90,000 $90,000 $180,000

Would you would want to sell when the Difference was smallest? If you feel you can’t afford it today what makes you feel you will be able too afford it when the market is up and more expensive? There are other factors to look at and I will be happy to discuss them with you. Call for your free consultation today Scott Harrison 510-388-4536

It is a good time to buy and you can start you search on line at this link or just call Scott Harrison 510-388-4536 to take your next step into your dream home.

Find out when out next first time buyer seminar will be.

Information about buying a Townhome or a Modular Home

What are the tax brakes if I am selling a Home?

Where can I find information on first time home buyer programs?

Are Bank Forclosures or short sales a good deal?

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Want to check out Scott's biography? Some office awards

Find out about Scott G Harrison his accomplishments. Alist of real estate sold can be viewed below as well as client referrals.