Another Lender Story

Here I go again. In yet another transaction that our company is involved in the Lender is dragging his feet. Our company brought an offer on a bank owned property that is listed with another company. There were competing offers and our offer eventually won the sale. Unfortunately the lender that owns the property did not sign off on the offer, thereby converting it to a bona fide sale. So what happens next? Another agent with another buyer comes along and submits an offer. Once again we have to compete, once again we win. Once again the lender is not signing off. They are telling their agent, "Oh, it's okay, everything is fine". Their agent is telling us that he is telling all subsequent offerees that the property is in contract, which technically it is not. Meanwhile no one can sign off on this agreement. Meanwhile this bank owned property is still on the market. Meanwhile our buyer is still not in firm contract or any contract for that matter. Is this the sort of behavior that got them in trouble in the first place? YIKES!!!!!!!

Do the Lenders Really Want to Get the Short Sales & Foreclosures Off Their Books

Yes, there are glimmers on the horizon of an improving economy and housing market. Yes, I have written countless times regarding what a good time it is to buy. Yes, I have even reprinted other people's missives on the subject, so you know I believe it is a good time to buy. And finally yes, prices are still attractive, interest rates are still good and the inventory of homes to buy is still larger than normal.

So what's my beef?

Short sales and foreclosures, that's my beef. Specifically how uncooperative the lenders in these positions are. As I write, our company has a listing that is in short sale status (the lender is willing to take less than is owed on the property) with multiple offers on it. As the Broker in Charge, I had to step in and take over the negotiations because the listing agent also brought one of the offers. So my first course of action is to submit all three offers to the lender. Done. Knowing full well that these things take longer than normal I waited a few days to contact the lender. When I contacted them to check the status and see how they were going to proceed --

a. choose one offer and reject the others,
b. negotiate all the offers or
c. reject all the offers

I was told that I should have selected the best one and rejected the others. To which I explained that this wasn't possible, that I had to present all offers and although technically they aren't the seller (yet) the transaction is subject to third party approval. The person on the other end sighed heavily and told me that my offers although they had been submitted five days earlier were waiting for document review from the underwriter, not document review of offers but of the home owner's file. In other words they wouldn't even look at any of them until they amassed reams of paper from the seller.

Five days after that, I have checked back twice and the only thing I can tell you is that the seller's file is complete and the offers have gone to the underwriter. They can't / won't tell me which offer has been chosen, they don't know who the underwriter will choose. They can't / won't let me talk to the underwriter. They tell me that a decision should be made in about 30 days. I tell them that the home is due to be foreclosed on prior to that. They say call a week before to get them to avert the foreclosure.

Next, I ask them to please take pity on me and my buyers. I try to explain that without even knowing if their offers have been selected or not that they will grow nervous and weary and that we stand the chance of losing any or all of the buyers and clearly that isn't good for either of us. I told them that most buyers won't wait 30 days to know if they are even going to be negotiated with, that they will start looking around at other stuff. The response, "well, if one or all of them walk just notify us".

I ask them to take pity on my seller. I explain the state of anxiety a seller must be in when they are on the brink of something as serious as short sale and if that doesn't work, foreclosure. I tell them I will do whatever I can to help expeditite the process. I am essentially told, "sorry about your luck, we will be done, when we are done".

I am STUNNED....... Every day for months and months the whole country has been reading about the economic and housing crisis. We have read about how no one is doing anything, that consumer confidence is at a historic low, that lenders are awash in foreclosures and short sales, that families are losing their homes, people are losing their jobs etc. The news has been dismal at best and here in our situation, we have ready willing and able buyers and we can't even get a response.

This I know for sure, it is paramount that we get the inventory reduced. Prices have no hope of returning to normal until there are fewer homes. That is a simple law of supply and demand. We have no hope of a serious reduction in inventory with such a lack of cooperation from the lenders. This particular lender's representatives were down right disdainful in speaking with me. If I am frustrated, I can't imagine how the buyers must feel.

Is there an answer? Yes, get the lenders to cooperate with ready, willing and able buyers. How do we do that? I'm not sure, it will take someone much smarter than me to figure that one out.

6 Reasons to Buy a Home

Even though I didn't write the post below, it is good information none the less.

6 Reasons Why It's Still a Good Time to Buy

The housing market is looking healthier. Here are six reasons why now is the time to jump into the market.

1. Uncle Sam is willing to help. First-time buyers (defined as anyone who hasn’t owned a home in the last three years) are entitled to a maximum $8,000 tax credit; interest rates are at record lows; and the Federal Reserve is doing its best to make mortgage loans available.

2. People have to live somewhere. About 800,000 new households are formed each year in this country, ensuring that the housing market will tighten, even if the economy doesn’t soar.

3. Borrowers leverage their investment. If you put $10,000 into the stock market and it earns 10 percent, you’ve earned $1,000. If you put $10,000 down on a home and its values increases 10 percent, you’ve made $10,000.

4. When prices come back up, you’ll have instant equity. In parts of the country where foreclosures have driven down prices, better times will mean the price of the home you buy will rise rapidly.

5. Mortgage costs stay the same. If you get a fixed-rate mortgage, the monthly payment stays the same – while everything else, including rent, goes upward.

6. You own it. There is something comforting in the notion that your home is your own. You can paint it any color you want, let the dog run in the back yard and hang a swing for the kids in the front.

Source: The Wall Street Journal, June Fletcher (03/27/2009)

We're on YouTube

We're on YouTube. In today's world everyone wants to see things immediately and I get that, I'm that way too. With that said, our listings are appearing on YouTube. To take a look at what we've got, just click on the link below.

http://www.youtube.com/view_play_list?p=F957FE6ACC0F2000

Posting videos is just one more thing that we do for our clients.

Quick Fact About '08

Once again, Island Realty was the clear leader east of Cowan Creek both in sales volume of $32,000,000 and number of units closed at 37. Our nearest competitor had volume of $19,000,000 closing 19 units. Given the challenging economic times I am very proud of these numbers and clearly we are keeping our market share.

Have we seen the bottom of the market? Who knows, certainly not me and no one will know until it has passed. This is just a guess, I suspect the real esate market graph will look somewhat like a V. In other words, if (and I hope it doesn't) it continues to slide downward, when it hits bottom, I believe that with all the pent up demand, it is going to blast back.

Think about it, the front end of the baby boom is starting to retire, they are beginning to inherit, their kids are off their payroll and they have their 401 k money etc. So many people have been sitting on the sidelines that when this thing turns, I suspect they will all be jumping in at once. The simple laws of supply and demand tell me that all that pent up demand will drive prices up. So what's the takeaway here? It's a buyers market, so buy. Buy now while you can buy low, before the prices start rising, before the inventory decreases, before interest rates begin to creep. Speaking of which, I just closed on a great piece of property, so my money is indeed where my mouth is.

Real Estate on the Sea Islands in The New Year

Welcome to 2009. Where to start, where to start? In about 10 days we will have a new president. My hope is that the new administration can help pull the country out of the challenging real estate market, get the economy under control and most importantly get things in Iraq and Afghanistan under control as well. Somehow they all seem interconnected to me and helping one of those things will ultimately help the other two.

From my point of view, our year is off to a good start. While we are only 13 days into the New Year, Island Realty has already put 7 properties under contract for a total value of $2,765,900 all due to close within the next 45 days. Additionally Island Realty boasts 48 % of all the active listings on Fripp and 36% of all the active listings on Harbor. Further I/R claims 50% of the new contracts on Fripp and 100% of the new contracts on Harbor.

Dataw remains a challenge to us but we are committed to penetrating that market in '09. With a combination of newsletters, e-blasts, community participation and plain old fashioned hard work, by this time next year our Dataw statistics will be just as impressive as our Fripp and Harbor statistics. Stay tuned.

Feds Cut Rates

The Federal Reserve's cut in Key interest rates makes 30 year fixed mortgage rates the lowest since the 1960's, sparking a surge in homeowners looking to cash in and refinance. Some lenders are now offering rates as low as 4.5 %. Last March, I refinanced my own home at 5.5% and was thrilled with that rate. Does it make sense to seek out a refi? It could depending on what your current rate is, how long you plan to be in your home etc. One rule of thumb that I hear a lot is that if the difference in your current rate and the new rate is at least 1.5% you should consider it. You need to determine how much the refinance is going to cost you in real costs and how long it will take to realize any savings. In other words, if it cost you $1500 to refinance and you are going to save $100 per month, it will be 15 months before you realize any true savings.

Another good reason to refinance is if you are in an adjustable rate mortgage (arm) that is getting ready to reset, already has or in general has simply become too expensive. Lenders are stricter with credit, requiring higher credit scores and borrowers equity position of at least 20%.

All of this leads one to believe there is a strong possibility of a big refinance boom. If you're trying to sell and haven't been able to this could really help you out. With lower interest rates there are more able borrowers out there to buy your home. The other possibility is that if you have enough equity in your home, you can pull some out to make improvements. In any event, the loosening of the credit hopefully will help stimulate the housing market followed by the rest of the economy.