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Wednesday, June 8 2009
“Real Estate for Real People”
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Short Sales, a wining way out?
When it comes to housing, there is not another area of the country harder hit than Phoenix so chances are you have heard of a short sale. While you might recognize the term, few people outside the real estate sector actually have an understanding of what a short sale is and is not. Quite simply, a short sale is a real estate transaction where a homeowner sells a home for less than what is owed to the lender(s). The lender(s) in turn agree to release the seller from the terms of the original mortgage. What a short sale is not is short in how long they take to complete.
With a short sale, sellers avoid having to go through the emotional upheaval of a foreclosure while preventing the devastating impact it can cause to their credit. Many times when an individual short sells a house, he/she can often purchase another home within 12 to 24 months due to the minimal damage to their credit. In a foreclosure, it may be as long as 5-7 years before a mortgage with competitive rates can be obtained. Regardless of how one feels about this subject it is clear that if we want to dig out of this real estate market we can all agree we need more buyers. Another benefit to the seller is that there is no out of pocket expense for closing costs including commissions.
Clearly, the biggest advantage to homebuyers is the prospect of moving into a property at below market value. Moreover, buyers normally find that short sale properties have the added benefit of being in much better condition than 90% of REO’s on the market. We have all heard about the foreclosed properties that have been damaged by the sellers, many with no kitchen, damaged pool equipment, missing A/C units, and worse. In contrast, most sellers trying to sell their home as a short sale have a vested interest in maintaining the property. As such, they leave their property in much better condition. Because the property is in good repair it sells for more, which obviously helps property values for everyone.
Of course, mortgage lenders also benefit. The average loss for a lender on a short sale is 19% versus over 40% in a foreclosure reaching as high as 60% for properties in Phoenix. Additionally, with a short sale, lenders don’t have to worry about getting involved in a long foreclosure process, which can cost tens of thousands of dollars in attorney fees, insurance, property taxes, utilities and other holding costs. Multiply this cost by the hundreds of thousands of foreclosures happening every week and it is easy to see why the banks are still neck deep in red ink. Beyond the exorbitant cost lenders face with a foreclosure, the dominate reason banks do not want any more homes back is the havoc it creates on their balance sheet, which can cause insolvency. Just ask Indy Mac!
The biggest benefit may be the one that rarely is mentioned in the media and that is the benefit short sales can have for our communities. Instead of a vacant house with weeds knee high, missing appliances and a mosquito-infested pool, we have a new homeowner eager to improve the property and help our community and local economy thrive again. Furthermore, our neighbors who were once drowning in a mortgage they no longer could afford are able to find a rental property and go from struggling non-spenders, to thriving customers for our local businesses.
For the record, the majority of people who lose a home to foreclosure or who turn to a short sale as a means to relieve their financial nightmare have been devastated by an unforeseen hardship. This is usually an event out of there control like job loss, health issues, death of a spouse, or a job transfer, that has placed them in a position they couldn’t imagine. If you haven’t been impacted by this economic downturn be thankful, but also find compassion for your neighbor who has not been as fortunate.
Sincerely,
Robert Holt and Phil Mills of The [HOLT] Group, RE/MAX Sonoran Hills
We will be holding free informational seminars every Tuesday at 6:30 pm to help reach out to neighbors in need. Please call 623.748.9583 for more information & to reserve a seat as seating is limited.
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Wednesday, July 7 2009
“Real Estate for Real People”
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The truth shall set you free
Most people will agree that the lack of truthful information is just as bad as getting wrong information. If you watch the news programs on TV or read a few lines in the business section of local papers around the country one might think we are moving out from the depths of the current economic downturn and everything is about to be all rosy again. Of course, if you are one of the millions of Americans that are unemployed then the outlook is not so nice. Current figures reflect unemployment at 9.5% and underemployed at 16.5% and many will argue that these numbers are being misreported and are much higher.
What should we think about all the happy talk out of Washington on how the economy is recovering strongly, and how good times are on there way? Well keep in mind that these are the same people who told us the credit crisis was contained to the subprime sector. They are same talking heads who had no idea we were even in a crisis until it was nearly too late. Meanwhile in the first quarter of this year the delinquency rate on 45 million US mortgages climbed to a record 9.12 percent. In every category of mortgages, including prime fixed-rate loans (the “safest” in the business) late payments increased significantly. Credit losses and delinquencies are rising to new records in every sector including home equity lines, credit cards, auto loans, and corporate loans. It is abundantly obvious that those in charge were dead wrong about the size and scope of the credit market as well as the impact it will continue have on the economy! I guess this is why the same folks that said “it’s all turning around” are now floating the idea of another stimulus.
“Honesty is the first chapter in the book of wisdom.” – Thomas Jefferson (1743-1826)
To be optimistic and to choose to see the glass as half full is a wonderful way to live life. However, when optimism is used as a means of control, which is exactly what the mass media and many in government are attempting to perpetrate on the American people, then it is disgraceful. Our leaders apparently think that we are all better off simply placing our head in the sand, believing what we are told and letting the good Sheppard lead us to the promise land even if that means the Sheppard runs the sheep right off a cliff.
What we have been witnessing over the last several months is a massive effort by our elected officials to make everything seem just fine when in reality we are still deep in the woods. While there is no question that the American people will ultimately rise out of this financial tsunami it is clear we have a long way to go before we are in calm seas.
Before anyone can make wise decisions, he/she must be armed with the truth. Many people were told in 05, 06 that real estate would never go down. In 2007, the National Association of Realtors even predicted we were at the bottom of the market and that it was a great time to buy. Worse yet, few knew the house of cards the mortgage industry was built upon and how easily it would crumble. (Nearly 80% of US mortgages issued in recent years to subprime borrowers were adjustable-rate mortgages – many of which have not yet reset). Because of the flood of misinformation, many people today find themselves buried their home. The financial and psychological impact of which is devastating not only to the individual/family, but also to the community. Meanwhile, we have witnessed the collapse of companies such as Merrill Lynch, Lehman Brothers, and Bear Stearns not to mention GM and Chrysler all of whom made it through the great depression. Where were our policy makers when this debacle was transpiring?
As for our local real estate market, with prices at or below 2001 values, clearly many buyers feel that it is a great time to buy. Since May of 09, we have witnessed a buying frenzy for properties at the price point of 250k and lower. As footnote, the current level of buying (equal to 05 levels) is once again proof that capitalism works. This resurgence in home buying is very encouraging and suggests that we have found the bottom. However, as anyone who purchased or refinanced a home in the last 6 years will tell you - we have a long way to go. Therefore, while we should appreciate the newfound exuberance in the market, we must also remain mindful of the deeper realities of our current economic environment and use those facts as the foundation for our decisions.
Today’s economic climate requires all of us to dig deeper into the reality of the situation while diligently shifting through the propaganda bestowed from those in the Ivory Tower. As history has repeatedly shown, people not governments rise above tough times. Being resilient and innovative is what being an American is all about and when we make it through this crisis, it will be because enough people woke up to the realization that they were lions not sheep.
Sincerely,
Robert Holt and Phil Mills of The [HOLT] Group, RE/MAX Sonoran Hills
We will be holding free foreclosure prevention seminars every Tuesday at 6:30 pm to help reach out to neighbors in need. Please call 623.748.9583 for more information & to reserve a seat.
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Wednesday, July15, 2009
“Real Estate for Real People”
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Short Sales, a wining way out?
Still waiting for your life preserver… Well you are not alone. Unfortunately, anyone who purchased or refinanced a home in the last five years is now severally underwater. Many of you have watched your property’s value decrease by as much as 60%. These devastating numbers coupled with the onslaught of job lose has forced homeowners to the brink of financial collapse.
As of August 1, 2009, over 45,000 homeowners throughout the valley had a notice of default on their property and are now facing the prospect foreclosure in the coming months. Additionally, Deutsche Bank released a report on 8/5/09 that predicts more than half of all US homeowners and up to 90% in Phoenix will be underwater by 2011. Despite all the happy talk from Washington it is clear that we are far from out of this mess.
So where’s your bailout? On the surface, a loan mod sounds like a great idea and for a few, it can be beneficial. However, the vast majority of homeowners who try a loan modification have been unsuccessful. The Treasury Department recently released the Home Affordable Modification Program Report. It found that B of A (the bank with the largest number of eligible borrowers) has only begun trial modifications for 4% of those eligible while other major banks reported success rates as low as 2%, and some actually reported a 0% modification rate. Despite all that bailout money put forth by the taxpayers, the banks are seemingly unwilling to help anyone stay in their home.
So if loan mods don’t work what do you do? Well – when you are in a hole you, the first thing you do is stop digging and the second is to remember that no one saves you, but you. You also need to get the facts, the truth, and the solution.
For over two and half years we, at The Holt Group have been helping homeowners avoid the devastating effects of foreclosure while eliminating the mountain of mortgage debt many are under. With years of experience, a thorough understanding of thee Short Sale process and a proven record of accomplishment we can help you too.
Sincerely,
Robert Holt and Phil Mills of The [HOLT] Group, RE/MAX Sonoran Hills
We will be holding free informational seminars every Tuesday at 6:30 pm to help reach out to neighbors in need. Please call 623.748.9583 for more information & to reserve a seat as seating is limited.
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Wednesday, 08.07 2009
“Real Estate for Real People”
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Affordable for who?
It was fitting that President Obama chose the Phoenix Valley to announce his help for homeowner’s plan back in February. The program allowed individuals to refinance their current mortgage to up to 105% of its current value, then it was raised to 125% of the homes’ current value. While this has helped many families around the country, it offers little relief to our local community that is on average 50% underwater.
The second part of ‘The Making Homes Affordable’ plan was pressuring the lenders to make loan modifications. This sounded like a great way to stabilize values and finally do something for “we the people” in this era of bailouts and unprecedented debt. As many local neighbors have found out, if it sounds too good to be true, it probably is. On August 4th, the Treasury Department announced its first monthly “report card” on the Home Affordable Modification Program, it was far from making the grade.
The report showed that of the 2.7 million eligible borrowers (you must be 60 days past due to be eligible) 235,000 loans we modified in some way. Bank of America has the largest number of eligible borrowers but was only able to modify 4% of their loans. Wells Fargo modified 6%, Wachovia trailed at 2%. Overall, the banks modified about 9% of eligible borrowers.
Having spoken with many of our neighbors about their personal experiences, these numbers were not much of a surprise. I’ve meet more than a few people who have been told they must miss two payments to be eligible, only to then be told they don’t qualify because of their lowered credit score. It is this kind of frustration that continues to plague our market with foreclosures, and short sales.
The banks, under pressure from Washington, have started making some headway in the streamlining of short sales. Not all of them are on board yet, but a few key players are really trying to speed up the process. They have expanded departments in an effort to keep up with an ever increasing demand. Some major institutions have stopped asking the seller for detailed personal information, such as tax returns, income verification, and proof of hardship. They are trying to remove some of the barriers that scare away distressed homeowners, because a short sale is better for the lenders’ bottom line.
Despite the lack of initial success from the government and banks, it is important to remember you do have options. If you, a friend, or neighbor is struggling with payments or unable to complete a loan modification, a short sale is a much better alternative than a foreclosure. Short sales have minimal impact on your credit, where as a foreclosure crushes your credit and stays on public record forever. Short sales can also stop your trustee auction even if it is just weeks or days away. In this tough economy, waiting for help will get you nowhere, you have to be proactive and take the first step. If you have any questions about the local real estate market or the short sale process, please feel free to contact the [HOLT] group or visit www.TheHoltGroupAZ.com.
Robert Holt 623.748.9583 & Phil Mills 480.643.0558 the [HOLT] group RE/MAX Sonoran Hills
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Wednesday, 08.19 2009
“Real Estate for Real People”
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A new government program that might actually Help
Recently, the government announced a new program under the Making Home Affordable Plan. In light of the fact that very few of the millions of distressed homeowners are getting the help they need via loan mods, and many of those that have received help still can’t afford their homes, the government is now creating a program that would encourage banks to accept a Short Sale rather than foreclosing.
Details of the new program are still coming out, but essentially the government will offer banks cash incentives for accepting short sales instead of foreclosing. They will also lay out a streamlined process to help short sales close faster. Right now, it can take at least 2 months to close a short sale with 4-6 months not being uncommon.
So why would the banks prefer a short sale to foreclosure?The simple answer isforeclosures are killing the bottom line of the banks. These are the same banks that have received billions of taxpayer dollars in order to stay afloat. Because REO’s (Real Estate Owned) are considered non-performing assets for banks, the act of foreclosing on a property is actually very detrimental in terms of the bank’s reserve requirements. It is this very reason that so many institutions have been taken over by the FDIC in the last two years. The latest mammoth bank to fall victim was Taylor Bean & Whitaker (the third largest underwriter of FHA loans in the country), which was shut down on 8/04/09. Additionally, foreclosed homes lose value fast as they decline in condition after the foreclosure because no one is maintaining them. Unfortunately, previous owners or vandals also gut many of these properties, which further deteriorate the value. This, of course, is not good for neighbors or communities.
At the end of the day, it is all about the bottom line. Banks do not approve shorts sales because they care about the distressed homeowner. They only approve the short sale out of their own self-preservation. For a long time, it seemed as if the banks did not really believe the homeowner would let the home go into foreclosure. They are no longer under that delusion as evidenced by the over 45,000 homeowners with a notice of sale in the Greater Phoenix area. Most of these will ultimately result in foreclosure since less than a third of them are listed for sale and given that statistically, no visible intervention takes place in seven out of 10 foreclosures.
I don’t support many of the new programs that have come out to combat the crisis, but I do support this one. Although foreclosures result in a lower home price for the buyer, there are many pitfalls in purchasing a foreclosure as the buyer has very fewer protections and potentially more costs. In a traditional sale, the seller discloses everything they know about the property, including defects. They also usually make repairs to the property. In a foreclosure, the bank discloses virtually nothing and require the buyer to sign away any future opportunity to pursue a judgment against the bank for major defects. The buyer is responsible for all inspections and the bank will rarely agree to repair anything. In a short sale, the owner offers the same disclosures as a traditional sale. Although most aren’t required to make repairs, some sellers will be willing to. Most of all, the home is generally occupied during the process, so you don’t have to worry about vandals or thieves stripping out wires, plumbing, or fixtures. This process also keeps the seller thoroughly vested in the process resulting in a property that is in far better condition than an REO and consequently renders a higher sale price. This not only helps the bank recoup more of its money while keeping them solvent, it also helps the next-door neighbor since the property retains more value than an REO.
Despite all the happy talk out of Washington, there will be many more foreclosed homes that will hit the market, so it doesn’t make sense to add more to the collection when banks stand to lose less money by agreeing to short sales. Maybe we all can benefit from this plan since there is no chance of a serious recovery as long as we have unprecedented foreclosures.
For more information on Short Sales or the current real estate market, please contact Robert Holt @ 623.748.9583 or Phil Mills @ 480.643.0558 or visit www.TheHoltgroupAZ.com.
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Wednesday, 09.2 2009
“Real Estate for Real People”
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Phoenix is on sale
Despite the rough economy and grim reality of more short sales and foreclosures, there is one bright spot, buyers. With prices beaten down, home sales are reaching levels not seen since 2005. Well priced properties sell in days and often have multiple offers. We often find ourselves asking where the buyers are coming from...
Many people have been sitting on the fence, some are 1st time buyers, rushing to receive the tax credit before it expires in November. Programs like the neighborhood stabilization act are giving 22% free down payment assistance to qualified borrowers via state and federal grant money. Many investors are jumping back in as rents easily exceed mortgage payments. For the first time in a few years, we are seeing an increasing number of out of state buyers as well as an increase in foreign buyers.
While the declining dollar keeps many of us up at night, it is proving to be perhaps an unintended stimulus for the Phoenix real estate market. The fact that home values are off close to 60% from 2005 and the dollar has dropped approximately 8-18% against major foreign currencies has caused an increasing number of foreigners to take notice. We recently worked with a Canadian buyer who felt the combination of the declining dollar and reduced price of a distressed property gave him an 80% discount from the 2006 sales price. Eighty percent off…That’s a hard sale to pass up, especially on a house.
The big question is will this buyer activity continue? We know short sales and foreclosures will likely remain steady over the next few years, but predicting if demand will keep up is a tough one. It involves many factors from the overall economy, Arizona’s sunbelt appeal to new residents, and interest rates to name a few. New demand will be created as former homeowners who previously short sold their homes see their credit rebound and jump back into the market. We are just starting to see people who performed a short sale last year being able to qualify for a new mortgage.
Hopefully the recent flurry of sales activity will continue as we work through the excessive inventory. While our communities continue to deal with the housing meltdown, at least others are taking notice that Phoenix is having a fire sale on housing.
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Wednesday, 9.09 2009
“Real Estate for Real People”
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Foreclosure Nation
A couple of weeks back, the AZ Republic ran a front-page article essentially declaring that Phoenix real estate had hit the bottom. There were quotes from local experts about current trends indicating that the worse is behind us. However, throughout what was probably the most ambiguous article I have ever read, there were a couple of small yet very important words that kept popping up. The words BUT & IF were riddled throughout the article leaving a bad taste in my mouth like sand in a beer. You can still drink, but the enjoyment is gone.
The Schizophrenic article would, in one sentence, tell how the numbers look good and then state how we are now headed into a period of uncertainty as Foreclosure numbers shoot through the roof. One often-quoted expert exclaimed that while the economy is fraught with problems, the fundamentals are strong. Didn’t someone lose an election for saying that? He went on to say that while buying has been good the last few months, get prepared for a slow down, but if you are a homeowner “don’t worry.” It was also pointed out that all the analysts believe that there will be another “dip” in housing prices. Is that why we should not worry? By all accounts, the biggest IF’s regarding stabilization factored on unemployment. Ironically, the front-page headline the following day was “State jobless rate 9.2% and rising.” Maybe they should have run that article first.
Well, at least for some Americans there is “good” news coming out of D.C. Goldman Sachs, JP Morgan Chase, and B of A are all happy campers with their billions in profits. Meanwhile, the rest of us lose our jobs and watch our country sink into bankruptcy. No one ever mentions that, besides the TARP money, Goldman Sachs received $12 Billion from AIG to cover hedge fund losses. Where did AIG get the dough to cover its insurance policies? Why, funny you should ask, that also came from taxpayers…The same taxpayers that had to prop up all of these jokers because they were too big to fail. In retrospect, all I see is an endless cycle of taxpayer funds creating “wealth” for these clowns while the rest of us starve. That’s capitalism, right?
What does all this have to do with real estate? Plenty, as it turns out. Chase and B of A are, of course, banks, now, in fact, the biggest banks in the country. That means they also control a majority of the mortgages and how the rising default rate is to be handled. In case you hadn’t heard, default rates are up and rising. The overall mortgage delinquency rate jumped to 9.24% in the second quarter of this year from 6.41% in the same period of 2008. That's the highest delinquency rate ever recorded. Could that number have anything to do with the also rising unemployment rate now over 10% in 30 states?
With no job or prospect of a job, when underemployed or working only part-time or sporadically, homeowners can’t cover their mortgage payments. Add to that, the factor of plunging prices. It’s estimated by Deutsche Bank that by 2011 50% of homeowners nationwide and up to 90% in PHX will be underwater.
Of course, the smart ones are short selling their homes. It’s hard to give up the old homestead and all the work and money put into it. However, if a homeowner has financial distress and the property underwater mark hits 30% loss of equity, it really makes more sense to try a short sale since it will be years before the equity returns, given the numbers involved.
What about the refi program? For some, that might be an option. It’s no help if you’ve lost your job. You won’t qualify. If you still have a job and can afford the payments, this is an option. Though, notice–you still owe the money your home is no longer worth. You do probably have a better rate and more manageable payments, but the debt is still there.
What about the loan mod program discussed in previous editorials? Well, there we are back to the big banks, Chase, B of A, and all the rest. These banks do most of the loans in the country, so borrowers have to apply to these banks to get loan mods. Obama’s Homeowners’ Stabilization program can only be described as, shall we say, less than effective. The total number of actual modifications stands at 9% and most of those (75%) end up in foreclosure within 6 months since the modification did no good and in many cases increased the monthly payment. Not much of a start, so far…
Then, there’s B of A which says it’s done 45,000 loan mods since April. That’s for the ENTIRE COUNTRY. So, B of A is basically DOING NOTHING to help at this time of NATIONAL CRISIS. Nationwide, in the first quarter 1.8 million homeowners fell more than 60 days behind on their loans, 15% more than the prior quarter [Q4 08]. To repeat: this is a NATIONAL CRISIS.
What is going to happen next? Is B of A going to change its corporate culture and start helping homeowners? Yeah right! Just try to do a loan mod or a short sale with B of A / Countrywide. They take forever - 4 months is the minimum; there is no maximum time. The paperwork demanded is just stunning and the incompetence level is higher. So, those foreclosures, kept off the market by useless cycling of paperwork in rejected refi’s and loan mods, will come onto the market, especially here in AZ. The only thing clear about their process is that they have ZERO interest in the common good and obviously feel no obligation to the taxpayers that gave them $100 billion dollars to stay afloat.
Last year foreclosures hit an all time high. Before this year is out, there is no doubt that we will beat that record. The real problems of the economy have not been solved by the Fed's easy money policy, by the big bank rescues or by the stimulus programs ...
The real issues — too much bad debt, over leverage, a sick banking sector, and an over-stretched consumer — are still with us. If history is any guide, a huge deleveraging process will weigh as a major negative on the economy for many years to come. That's why the prediction of a stabilizing real estate sector seems to be based much more on hope than on reality. Reality tells us there are more job losses to come coupled with a hell of a lot more foreclosures. When these two things stop then stabilization will occur, but not before.
So when I hear an expert talk about how the fundamentals are strong, I have to reflect back to the last time I heard that in 05,06,07, and wonder what fundamentals they are looking at.
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Wednesday, 09.23 2009
“Real Estate for Real People”
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Housing Recovery on Shaky Ground?
Fresh data from the housing sector suggest that perhaps we are long last headed for a real estate upturn. However, before we get too excited, we might want to take a deeper look at what is on the horizon. While I hate to rain on anyone’s parade, the numbers relating to the pending foreclosures are darn right frightening. In fact, it is so concerning that even the Pollyanna talking heads are taking notice.
The latest statistics suggest that we are just at the tip of the foreclosure iceberg. For example, there are over $189 billion (that’s right, BILLION) option adjustable rate mortgages (negative am loans) outstanding with over 87% of them scheduled to reset in the next 3 years. You remember these loans, they were the ones advertised by the likes of Countrywide, IndyMac and so many other lenders in 2007. These were loan products promising a $300K mortgage for $600 a month. If you thought that sounded too good to be true, well you were right. The only way the borrower could get that low of a payment was by choosing the minimum payment option, which did not cover the amount of interest due, resulting in the principal going up. Borrowers using this product were underwater before the market ever turned south. Sadly, over 94% of the borrowers utilized the minimum monthly payment option. So what do you think they will do with their underwater home when the loan resets? That’s right, they’re outta there quicker than… well you know what. Oh by the way, 75% of all these loans were made in just 4 states: CA, FL, NV and you guessed it, ARIZONA.
The above numbers do not take into account the 2.8 million interest only loans worth over $908 BILLION that are now starting to reset with over $575 BILLION adjusting by mid 2011. It will be interesting to see how many of these homeowners will hang on to their home when they have a much higher loan payment on a home that is 30-50% underwater. My guess is not many will hang in there…
While we have all heard about the rising number of SUBPRIME loans defaulting, (over 40%), the scariest number might be the rapidly increasing number of PRIME mortgages that are now in default (1 out of 10). These are the borrowers who had good credit, documented income, and who put money down on the property. Many of these homeowners are now facing true hardship due to unemployment, health issues, divorce, and a host of other distressing issues. However, for the first time in US history, there’s a new segment of homeowners who are walking away even though they can afford the mortgage. The term given to this sort of foreclosure is “Strategic Default.” Studies show that when homeowners find themselves 10-15% underwater, many look at defaulting as a business decision. In fact, current data suggests that nearly 1 in 5 individuals will strategically default if their house is worth 50% less than their mortgage balance. The scary thing is that could include most people in Phoenix.
If we combine the probability of these future foreclosures with the 9.5 million homeowners across the country that are currently in default, the path to recovery appears to be riddled with danger. The mounting foreclosures will act unfavorably on future housing supply as well as home values. A steady flow of new foreclosed properties promises to add to existing home inventories, which will in turn exert additional downward pressure on home values.
With rising unemployment, rising home inventories, and falling home values, it is possible that home sales could retreat rather than advance sometime during the next two years. If that happens, do not be surprised if we witness a double dip in the current housing cycle, which would be disconcerting to say the least.
Add to this the fact that over the last 12 months, the default rate of newly funded FHA loans, which now account for more than 30% of all loans, has reached 14% leading many to speculate that the FHA will need their own bailout. I guess they can line up right behind the FDIC, which has also been in the news lately as another government entity that is about to go bankrupt.
While most in Washington continue to simply shake their pom-poms and wish upon a star, at least the Treasury Dept announced plans to roll out a new program designed to streamline and simplify the short sale process. Maybe some in government are starting to wake up to the nightmare the rest of us have been living. Maybe if we are all loud enough, some of the clowns that think they own the country might actually start effectively finding solutions for those that voted them into their positions as civil servants. Maybe if a few more of us start screaming at the banks that have taken billions of taxpayer dollars like (B of A), they will start helping homeowners stay in their homes. By the way, B of A - enough already of the hypocritical commercials about how you now have your clients’ best interest at heart – yeah right!
In conclusion, the current housing recovery remains on shaky ground and is susceptible to retreat. Since the destiny of the housing recovery is greatly reliant upon the economic recovery, I would not count on turning this battle ship around quickly. As long as the economy continues to discard jobs and consumers continue to deleverage their own balance sheets while keeping their wallets shut, the recovery will be tenuous at best.
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Wednesday, 10.7 2009
“Real Estate for Real People”
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Bizarro World meets Reality
When I was a kid I loved reading comic books, my all time favorite was Superman. My favorite editions involved the villain Bizarro, from Bizarro World, a place where everything was the opposite of what it should be. There was an alter ego for Superman, who was evil; bad was good; day was night; right was wrong; up was down; etc. When I look around our country I can’t help but feel like I’m…we’re all, living in Bizarro World.
I recently received an email that read, “The new health care plan will be written by a committee whose head says he doesn't understand it, passed by a Congress that hasn't read it and whose members will be exempt from it, signed by a president who smokes, funded by a treasury chief who did not pay his taxes, overseen by a surgeon general who is obese and financed by a country that is broke. What could possibly go wrong?” I’m not trying to make a political statement, whether you’re left , right, or center, you can’t help but feel things are not right. I go back to my starting point; we are living in Bizarro World,
Maybe it’s just me, but not much of what is happening in this country/world makes any sense lately. Case in point, President Obama, who can give a great speech, but who has not ended a war much less slowed the rising unemployment rate or created any peace I know of has just won the Nobel Peace Prize. The world has witnessed great individuals who fought in wars, ended wars, torn down walls, and raised this country out of serious economic turbulence who were never even nominated. Again, I'm not trying to be political, maybe someday President Obama will accomplished great things, but in Bizarro World, you get the award first. I don’t know about you, but when I hear about a safe school Czar who failed to report the statutory rape of a 15-year-old boy or the chairmen of the committee that writes the tax code who doesn't pay his taxes or the chairmen of the committee that writes bank regulations who gets sweetheart mortgages I become just a little angry (to put it mildly)! I mean you just can't make this stuff up.
Think about it, our world is turning upside down. We have been told our entire life that real estate can never go down, but now it feels like it will never go up. Banks tell homeowners they cannot adjust their $400K loan down to $300K, but then they accept a trustee sale for $160K. The banks have received Billions and Billions of United States citizen’s taxpayer dollars, but as we process short sales we spend hours on hold in India??? Perhaps the banks of America could set up a giant call center in Michigan where unemployment will likely breach 20%. Why does a normal real estate transaction take 30-45 days and a “short” sale take 4-6 months? Bizarro World!
Nothing seems to make sense anymore. The banks tell you, “You’re not eligible for a loan modification until you stop making payments,” and then they say, “You don’t qualify because you have late payments.” This housing debacle was created by risky loans and no down payments, however, new stimulus programs allow borrowers 22% of free down payment money from government grants. FHA loans only require a 3.5% down payment and that can be a gift. We are told to be responsible and live within our means while the government printing presses run 24/7.
I guess common sense is out the window. The stimulus package was supposed to fix everything, yet unemployment continues to rise. Now there is talk of another stimulus even though the first one hasn’t been spent. And, could someone tell me how, if every elected politician opposes deficit spending… How in the world do we have deficit spending??? Bizarro World is the answer. I only hope it goes down like the comic book and Superman wins.
Robert Holt & Phil Mills, RE/MAX Sonoran Hills. Please call 623-748-9583 or visit www.TheHoltGroupAZ.com & tell us your thoughts…
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Wednesday, 10.28 2009
“Real Estate for Real People”
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Living High on the Hog…
The current U.S. economy now, more closely resembles the parting of the Red Sea than a land where the average Joe has a shot of getting ahead. The misers on Wall Street are raking in massive amounts of money, while millions of Americans lose jobs and homes. As unemployment and foreclosures continue to spiral out of control, the Dow Jones reaches 10,000, which simply illuminates the fact that the efforts to save Wall Street have far surpassed the support for the people of this great country.
As wreckage from the mortgage bubble continues to increase and as wage cuts & layoffs become more widespread today than in any era since the Great Depression, bankers benefit from taxpayer bailouts to reap blockbuster profits and scandalous bonuses.
So how can the same companies that “we the people” are “bailing out” now report billions in profit while the rest of us suffer? Well, we know the profits are not being generated through lending since access to much needed capital is still not available to the average small business. No, it looks like the new formula for the Big Banks is a toxic combination of selling off assets, laying off employees and rolling the dice. As it turns out, the banks are not lending all of the cheap money because they are using it to make bigger and bigger bets on financial instruments that are no less risky than a game of craps in Vegas.
The Wall Street casino is thriving, fresh with taxpayer dollars, while the rest of us are fending for ourselves in a financial nightmare created by the same clowns now living high on the hog. As an example, JP Morgan Chase (TARP fund recipient) just reported $3.6 billion in 3rd quarter profits and Goldman Sachs (TARP fund recipient) reluctantly announced recently that they would be paying out $23 billion in bonuses. How do I get that job?
I have never had a problem with any company making money, even a lot of money as long as it does not come at the expense of someone else. The problem here is that we just bailed these same companies out for excessive gambling debts and now they are back at the blackjack tables letting it ride again. So much for oversight, Mr. Frank.
In other words, the banks are gambling with taxpayer money. I guess it is easy to make big bets when you know you cannot lose – even when you lose. There is no risk for the B of A’s and Goldman Sach’s of the world when all they have to do is turn to their friends in Congress or at 1600 Pennsylvania Ave. to be bailed out. It is no wonder people across this country are angry. I hear it everyday from ordinary hard working Americans that are losing their home due to no fault of their own and getting zero help from their lender or their congressperson. The worst part of all of this is that the lenders that are doing nothing to help the little guy are the ones still holding the bailout money and the elected officials continue to do nothing, but appease the hogs.
Personally, I do not think anyone would have a problem fending for themselves if the playing field was even, BUT, it is not and that’s the problem. Clearly, this “Bailout” has not done what it was designed to do which was to help the people. The Stock market might be going up as big corporations score short-term profits from cost cutting (namely from mass layoffs), but your neighbor who is losing his/her house is sure not benefiting.
Ironically, the same banks that are now reporting billions in profits (many still holding taxpayer bailout money) are doing nothing to help struggling homeowners. Meanwhile all we get out of Washington is tough talk and weak action. We hear awe-inspiring speeches, but get policies with no teeth. We watch Senate hearings where politicians act like the school bully, but do nothing. Until our elected officials find some backbone and demand more positive action from the banks, (at least the ones the taxpayers are propping up) then the foreclosure epidemic will continue to wreck havoc on everyone.
Obviously, what the government and the banks are doing is not working since despite a multi-trillion-dollar bank bailout, foreclosures are surging to all-time highs. In fact, the latest numbers show there were more foreclosures in the 3rd quarter than ever before. Sadly, we all had better hold on to our hats because according to many of the predictions (10 million in 2010, 11 in 2010 and 12 million foreclosures projected by the end of 2012) things are just getting warmed up.
Through the years I have learned that not much in life is certain, however, I have never been more certain that if the banks and the government do not make radical changes in the way they are dealing with this crisis, then there is much more misery ahead for all of us.
I once heard that an economy should be a measure of social well-being. If that is true then our current society is in pretty bad shape. Maybe it is time for our government to stop bailing out the Big Banks and start helping those it was designed to help – the citizens of the country. After all, the 17.5 Trillion (recently reported as the real number the banks have received in loans and guarantees) would have been more than enough to pay off every mortgage and all student loans in the US. I think that sort of stimulus package might have worked?
Robert Holt & Phil Mills, RE/MAX Sonoran Hills. Please call 623-748-9583 or visit www.TheHoltGroupAZ.com & tell us your thoughts…
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Wednesday, 11.04 2009
“Real Estate for Real People”
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Lessons learned…
We became real estate agents because we love interacting with people and have always had affection for the American dream. Owning a home… and then a bigger home. We always loved the excitement of finding the perfect home for a family or an investment with a great return. Real estate was always a happy business. Sellers left the closing table with a check and moved on; buyers enjoyed the happiness of finding a new place to create their future.
What a difference a few years can make. A failing economy and deflating real estate bubble has changed not only the market, but also all of our lives. It is hard to remember a few years ago when the cocktail chatter was about who had the biggest TV, and who owned the most homes. Hummers lined the driveways of our communities. Today bank owned homes and short sales line our streets. Unemployment is climbing and underemployment is even higher.
While times are tough at least we are learning from them. It is easy to blame others, politicians, and predatory lenders for how we landed here. The truth of the matter is everyone had a hand in it. People bought into it. Everyone from HDTV to the Today show told us how to live and, in general, we bought it hook line and sinker. For many, it was all about being better than your neighbor.
A stark comparison to today, many of our neighbors once so eager to impress are gone. They have lost their American dream to foreclosure or a short sale. Keeping up with the Jones’s at today’s cocktail party means short selling your house. While interest only and no money down loans were the norm, the people who played by the rules are often hurt the most. It is a sad irony that 20% down and a fixed rate mortgage resulted in the loss of a life’s savings.
We hope the lessons of the past will refocus our future. Savings rates are up, people are focusing on the things that are truly important, our family, friends and community. After years in the business and perhaps the craziest market cycle ever seen, our motivations and priorities as real estate agents have changed as well.
While we all work for a paycheck, our job duties have changed. We have become more of a counselor than a real estate agent. We used to negotiate the best deal and now we negotiate with a bank. It has become much more rewarding. We don’t just sell homes, we help people. Sellers no longer leave the table with a check… but with relief. This slow down won’t last forever but hopefully we will never forget the lessons we have learned.
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Wednesday, 11.11 2009
“Real Estate for Real People”
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Surprise! Surprise! More taxpayer money going down the toilet
As many of you now know, the brain trust we have in congress and in the White House, have extended the First Time Home Buyer Tax Credit and expanded it to include all those that have owned a home for 5 years or more. I know as I Realtor I should be jumping with joy, but I am actually hopping mad, as this is just one more in a long line of missteps made by our elected officials. This stimulus measure is the one that I thought Congress would have had the good sense to back away. However, that would mean that someone in Washington would have to have a spine. It is painfully clear that prior to entering office as an elected official one must have his/her spine removed and for men there is another set of parts removed as well. If you don’t believe me just watch these clowns at work. Amazing and Sad!
So, I know you are asking yourself why would I not be more supportive of what on the surface looks to be a good tactic to spur more home buying? Well, like most everything this congress does to fix the mortgage/housing/economic crises, this extension/expansion will only make things worse in the end and it does nothing to address the real issues.
First of all, I will acknowledge that the first time homeowner incentive has stimulated some added buying. However, from my vantage point much of that buying will only lead to the next wave of foreclosures. As outlined in a previous piece, FHA, which only requires a 3.5% down payment and allows the seller to pay for closing costs resulting in little money from the borrower. (Sound familiar - 100% loans). Anyway, many if not most, of these loans go to first time homebuyers, many that have less than stellar credit. Four years ago, there were hardly any FHA loans being written, today FHA accounts for 30% of all loans. However, over 14% of these written in the last 12 months are already in default. Why? Well because many of these well-meaning buyers should not be buying a home because they do not have the means to do so. Many of these people are only buying to get the tax credit. This is not to say that they planned to bail on the home, but it does point to their motivation.
Second, cost for this stimulus is not 8k per home sold, but closer to 42k per home. Again, the government does not pay this amount – you and I do! Furthermore, as a believer in capitalism it is apparent that the when prices get to certain levels, people buy. My belief is that most of the transactions over the last year would have happened without the stimulus, due largely to low prices and low mortgage rates.
Third, since there was so much made about the ending of the First Time Buyer program resulting in a push to get homes closed, I wonder how much bang is left. Like the cash for clunkers, the months ahead may be void of buying regardless of the extension.
Fourth, I am no mathematician, but how does the expansion of this program to those that have owned a home for 5 years or more help reduce inventory? Since the $6,500 credit has to go towards a primary home, most people will have to sell the one they are in to “move up.” My math leaves us at zero inventory reduction. The only thing I see this encouraging is a new round of buy and bail. If you bought or re-fied anytime between 2001 and now, you are under water – it is just a mater of by how much. Five years ago was 2004-2005 and if you managed to keep that home, you are so far under water that $6,500 will do nothing to bring you above the water line. To add salt to the wound, keep in mind that the estimated cost of this new expansion is 17 billion. I guess billion is the new million, but wow what a difference.
Fifth, and the most important aspect of all of this, is that this extension/expansion does nothing for the folks that are in the most trouble (those that bought or re-fied within the last 5 years). Exactly who do the clowns in Washington think they are fooling? (I covered that in a minute) Are these new buyers going to step up to pay what these homeowners owe on their homes? I don’t think the $8k much less the $6500 is even 10% of the deficiency most people have in their homes.
As I write this, the unemployment number of 10.2, (real number 17.2) was just released (worst in 26 years) and five more banks were taken over by the FDIC bringing the total to 120 for the year. Meanwhile, we have politicians patting themselves on the back, the National Association of REALTORS® touting how wonderful it is for the market that the “handouts” have been extended and the talking heads, who have no clue, exclaim that this might really help. Ha, Ha! This helps no one that it should. It does nothing for the family in the 2400 sq ft home in Anthem that paid 400k in 2005, but is now worth 185k. The same family that was told by everyone – “real estate never goes down” and/or “don’t worry you’ll refi it or sell it no problem.” The fact is it helps no one, not even the buyers getting money to buy the dirt-cheap homes because in the end, when the party is over, we all will pay. We tend to forget that there is no government paying for these outlandish bailouts and handouts, it is “we the people.” --Robert Holt & Phil Mills w/ RE/MAX Sonoran Hills. Please visit www.TheHoltGroupAZ.com or call 623-748-9583 to tell us your thoughts…
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Wednesday, 11.18 2009
“Real Estate for Real People”
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Who’s to blame?
Being heavily involved in real estate, we speak to hundreds of homeowners on a weekly basis about how best to protect themselves from the devastating affects of this market. During these conversations one of the most often asked questions is “how did this happen”. Perhaps one of the most memorable of these questions came from one of our clients with a heavy Chinese accent who dramatically asked “How’d America get so !@#$ up. This was never supposed to happen here.”
Well, the question is a good one and like all questions, the answers are much easier in retrospect when our vision is 20/20. Despite the fact that we are still in the middle of this debacle we can now more clearly dissect what happened to put us at the brink of collapse. By looking back at the cause, we stand a better chance of learning from the mistakes with the hope that we do not repeat them. For those that read this editorial weekly you already know we do not hold much faith that those in power in both Washington and Wall Street will make the necessary changes. However, “we the people” can learn from the blunders of the past and change our actions accordingly.
As for placing blame, there is plenty to go around and the list is long. There are a few groups that obviously cannot be held responsible, but that list is short. At the top of the list are of course those that did not buy or refi in the last 6-7 years or those that did so responsibly such as the homeowner who put 20% down and provided all necessary loan docs. These people did things the right way and bought their home with confidence that the system would not fail. Sadly, the system has failed and those that played by the rules are now the most penalized.
Now that we have determined who is not to blame lets shift to who is responsible. Those named in the first group all share equal blame for the role they played in the making of the housing boom and eventual bust that lead to the near collapse of our financial system. The groups of people in the first category while motivated by greed had (in my opinion) no idea the role they were playing in the largest Ponzi scheme ever devised. Simply put, most of these people were misguided and only trying to chase down the American dream. Unfortunately for everyone they made the mistake of believing the information they were being told. Of course, being misguided does not make the actions any less dangerous, but it does suggest that the intent was not calculated. These people were culpable, but more out of ignorance than malice.
So who are these misguided souls? Well, it is anyone who bought a home or influenced someone to buy a home based on the theory that homes prices never go down, or because it is a sure thing that homeowners be able will sell it and make a fortune or refi it to a better rate. Now that covers a lot of people including real estate professionals, mortgage brokers and the “expert” on CNBC. This also includes the homeowner who bought into the hype and bought too much house(s). RULE 1 - Never Believe the Hype.
While every one of these people played a role, none of them had any idea of the devastating effects of their collective actions. Of course, there were vicious people who could careless who got hurt as long they made a buck, but I believe most of the individuals in this first group were simply misguided and naive. Heck the experts believed the experts, just ask the people who ran Lehman, Merrill, Countrywide and the rest now bankrupt companies.
The second group of individuals who are much more culpable and whom I have no empathy is the elected officials who are suppose to write laws that protect people from the bad guys. This group dropped the ball! They not only aloud it to happen they encouraged it. However, how can we ever expect there to be oversight and regulation with any teeth when we have elected officials who take millions of dollars from bank lobbyist. To make matters worse we have a Fed that holds interest rates below momentary guidelines creating bubbles at every turn. Can anyone deny that the greed that is so pervasive on Wall Street is any less so in Washington?
So, all of the above players played a major role in the drama that is unfolding, but the real star / villain was the banks themselves. Yes the same banks that are continuing to get bailed out while doing next to nothing to help those that are buried in the (Barney) rubble. That’s right the Mega banks – the too big to fail banks are where the greatest degree of blame must fall.
These mega banks through lending practices that were nothing short of criminal created a house of cards that fell and fell hard. Banks lent money to anyone with a pulse and did so because they knew that they would immediately sell the loan and wash their hands of the stink of a decaying loan. The people in charge knew the loan products at both the subprime and prime markets were insane and would eventually end badly. I for one feel that the people in charge of the same banks that we are now bailing out should be tired for treason since what they allowed to happen has damaged this country for many years to come – maybe forever.
To add to the problem rating agencies (such as Moody’s and S&P) grossly underestimated the amount of risk associated with mortgage-backed securities. Because these rating agencies rated these highly volatile investments vehicle as AAA (safest grade) Wall Street bought them non-stop creating a fever for more loans. It was the ultimate Pyramid scheme and sadly thanks to our government’s commitment to bail out the “too big to fail guys” all the rest of us become too small to save.
Without question, this is a complex problem and impossible to cover in a short editorial. However, I am convinced it was the massive greed of the banks combined with the lack of oversight from Washington that caused what might yet turn out to be the destruction of the American Dream.
As a last thought, since it is clear that Washington will not take the corrective action necessary to dismantle these too big to fail companies maybe we should do it for them (and for ourselves). We could start by pulling all our money out of the B of A, Wells Fargo, Chase and Citi’s of the world and put it into credit unions and local banks. The same banks that played by the rules and who did not get nor need a dime of bailout money. After all, they are the little guys and us little guys should stick together.
In the end, it is clear the culprit and the cause of the undoing was GREED. Greed at all levels. Sure, we all should have known better, but the little guy wanted to desperately to believe the fairy-tale – we all wanted the American Dream to be alive and well. Maybe one of these days we will recognize that the true enemy, which of course is greed cannot be regulated by anyone other than ourselves. Perhaps that is the true lesson of this experience.
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Wednesday, 12.02.2009
“Real Estate for Real People”
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A time of gratitude
In these tough economic times, it’s easy to be distracted from the things we truly cherish. Between the stress of work, school, activities, and bills, it is a wonder how we hold it all together some days. We all too often overlook the most important pieces and people of our lives. However, with the start of the holidays, we are granted the opportunity to take a step back and reflect on what and who is truly important.
This is especially true of Thanksgiving. I have always loved this holiday and with each passing year, I treasure it more and more. I have come to look at Thanksgiving as the therapy I need that allows me to be mindful of all the blessings and beauty I am surrounded by, but often miss. What a wonderful thing for a holiday that focuses our attention on the people, events, and things we tend to take for granted.
Life can be very trying. When your child is sick, your body wracked with pain, you lose your job, or you have no idea where you and your family will go when you lose your home, it's hard to find something for which you can be thankful. However, while it is vital to be thankful for our blessings at all times, there is no more important time than when times are challenging.
Over the course of the last 12 months, we have had the great privilege to help many of our neighbors through some very challenging events. We have had the honor to meet some amazing members of the community and witness first hand families facing enormous challenges. These same people have inspired us with their courage and drive to take back their lives. Today, it’s no longer just a listing appointment, it is a counseling session. It is no longer just selling someone’s home, it is saving someone’s financial future.
There is no question that many families are faced with making tough choices while experiencing true pain caused by economic hardship. We recently listed a short sale for a family of five where the mother expressed her deep desire simply to be able to once again send her daughter to piano lesions and let her oldest travel to softball tournaments. It may sound trivial to some, but the small things are what make our lives big. As so elegantly stated in an old proverb, “Who does not thank for a little will not thank for much.”
There is something extremely powerful about being thankful for what we have, no matter how small. The act of being grateful allows us to recognize the opportunity that lies at the center of all challenges and difficulties. The true gift of gratitude is the dawning of the realization that we control our own lives, not some bank, or overzealous government. The most amazing gift we receive from those we help is the satisfaction of watching someone with little hope turn into someone who is empowered to take back their life. There is nothing more powerful than to witness an individual shift from being hopeless to being full of hope once he or she sees the opportunity within the darkness.
During this time of reflection, we at the [HOLT] group, would like to extend our sincere thanks to all of you who have written or called stating that our words written in these pages have been helpful. Moreover, to all of you that have placed your trust in us to help you through the process of Short Selling your home and thusly closing this chapter of your life, we are so very grateful. When we started out in real estate, it was because we saw an opportunity to make money in a business. However, now, instead of calculating how many transactions we had last month, we count how many people we helped. The current economic downturn has placed us in a position that allows us to make a positive difference in the lives of our clients and community, and for that, we are very appreciative and our gratitude goes far beyond earning a paycheck.
Never in our lifetime could we have imagined home values dropping 50-60% or unemployment devastating so many. No doubt, these are challenging times, but now more than any other time in recent memory, is the time to be thankful and as a result be empowered. Now is the time to remember you don’t need money, houses or cars to change someone’s life. Words and actions will do just fine. Spend more time talking, playing, and laughing with the people in your life who really matter. All the while, remember that although we can’t change how we ended up here, we change our future and for that gift we should all be grateful.
Robert Holt & Phil Mills, the [ HOLT] group, RE/MAX Sonoran Hills. Visit www.TheHoltGroupAZ.com or call 623-748-9583 to tell us your thoughts…
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Wednesday, 12.9.2009
“Real Estate for Real People”
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It is all a matter of perspective…
In last week’s article, our intention was to express our gratitude to all of the many readers who have voiced their appreciation for the words we have written in these pages that touched them in one way or another. The most common response has been “thank you for telling the truth.” From the many that find themselves in the unfavorable predicament of financial hardship while being desperately underwater in their home, the response has been “thank you for understanding and showing another path besides foreclosure.”
Again, this week, the response from readers was incredible and again we thank you. However, we did receive a passionate response from one gentleman who feels differently. The synopsis of his letter was that the homeowner, who is going into foreclosure, was at fault because he/she bought more home than he/she could afford and because of that, he/she deserves to lose the house. He went on to attack me personally (although I have never met this person) stating that I, through our advertising and articles are making the problem worse. Of course, I feel quite the opposite. However, since I know he is probably not the only one that feels this way, I thought I would put my response in this week’s edition.
Dear Mark,
Thanks for sharing your thoughts and I agree with some of what you have to say, namely that there is plenty of blame to go around and yes we are in a “gigantic mess for years to come.” However, you are mistaken about many things. First of all, you are obviously unaware that there are now 45,000 homes in Phoenix that have a recorded notice of sale, most of which will be foreclosed upon in the next 90 days. Additionally, there are 10’s of thousands more homeowners who are in default around the valley and millions around the country – this is an epidemic. Moreover, it is reported that there are over 40,000 homes throughout PHX that are “shadow inventory.” These are homes that have already been foreclosed, but are not YET listed on the MLS.
No neighborhood has been spared, as there are vacant bank owned (or soon to be) homes from Queen Creek to Buckeye and from Laveen to Anthem, and every neighborhood regardless of price point in-between. Apparently, NO ONE needs any encouragement from us to let his or her home go back to the bank. To the contrary, what everyone needs is more education regarding options rather than just walking away.
We do not push people into doing short sales. We encourage them to do anything other than just walk away. While loan mods have been proven to help very few (less than 10%), we encourage homeowners to pursue every option possible, and if a loan mod is the right choice for them, we help them achieve the desired result. For the record, we do not charge for that help, in fact, all of our help costs our clients nothing.
Since 7 out of 10 foreclosures happen without any intervention, we are dedicated to informing valley residents what options other than foreclosure exist. If you or any of us ever expect to come out from this nightmare of an economy, much less the depressed real estate market, than the foreclosure crisis must be solved first.
What you (and others like you) fail to recognize is that most people that go into foreclosure have serious financial hardship. Most are victims of the worst economic times any of us have ever seen. A lot of these homeowners are in their 60’s and 70’s and have gone through their life savings in an attempt to hold onto their home only to end up broke. Many put very large sums of money down and some were victims of mortgage fraud. Of course, there have been investors who have just cut and run, but that is not who we assist. We help your neighbor who just lost thier job or the person down the street that found out he/she has cancer or the family who is transferred to another state for work or a thousands other genuine scenarios. We help good people who are in a very bad situation.
Furthermore, if you do not see how a short sale benefits you, then keep in mind that when a homeowner walks away (often times with everything including the kitchen sink), he/she leaves behind an abandoned property with knee high weeds and a mosquito infested pool that will only sell at a deep discount. A short sale keeps the homeowner vested in the property and it sells for more. This keeps your property value higher, which helps you and the community! Additionally, with a buyer who is financially stable as your neighbor, he/she can update the home and that helps you, the neighborhood, and local businesses that employ your neighbors. Furthermore, it saves the bank from another major hit: a crumbling balance sheet, which again helps you since it costs the taxpayer money every time a bank goes under or is bailed out. Considering there are still 3-4 being taken over every weekend by the FDIC, be prepared to continue footing the bill by way of higher taxes.
As for placing blame, one should hold responsible our government who is only bailing out the “Too Big Too Fail” meanwhile the rest of us have to fend for ourselves. Blame the banks (who are now receiving BILLIONS of taxpayer dollars) that created this house of cards through recklessly providing bad mortgages to anyone with a pulse. Meanwhile, these villains do NOTHING to help struggling homeowners. In the end, you can blame whomever you want, but blaming and complaining will not change a thing. Maybe it would be more productive to transform all the anger and help your neighbor down the street that is about to lose his/her house. Maybe he/she is not as lucky as you are, but remember luck always changes. I hope for your sake you never lose your job, your spouse, your health, or your child, but others around you have lost those things and because of that, they lose their home because they can’t sell it unless it’s through a Short Sale. We simply try to help those good people who legitimately need the help and along the way, that helps you.
For the record, I sleep very well at night because while I do make good money doing what I do, my motivation is to help others and because of that, I and other responsible Realtors, help you whether you realize it or not. Perhaps a bit extra compassion would achieve more!
Sincerely & Respectfully,
Robert Holt & Phil Mills,
the [HOLT] group, RE/MAX Sonoran Hills.
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Wednesday, 12.16.2009
“Real Estate for Real People”
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What you need to know when hiring a Short Sale Agent
Let’s face it, times are tough for homeowners in Metro Phoenix. Phoenix is the hardest hit metropolitan area in the country. The average home price has dropped over 50% from just a few years ago. Unsure about future values and faced with an unsettling loss of equity, many homeowners are feeling trapped.
If you are a homeowner, chances are, you have heard the term short sale. Short sales are becoming increasingly common because they offer a win/win for seller, lender, and buyer. In fact, all banks prefer a short sale to a foreclosure and when handled correctly,they have a high degree of probability of being approved. That’s why walking away from your home should NEVER be the choice.
Unfortunately, the landscape of real estate is littered with individuals, agents, and companies that are taking advantage of the vulnerable situation many in our community find themselves. There are now many agents who claim to be short sale experts, however, many are simply not qualified to effectively help those that are in distress. Now of course not all of the inexperienced agents are attempting to deceive the client. In fact, some, if not most, have had at least a class or two on the subject. Nonetheless, taking a class for four hours hardly qualifies someone as an expert. Many of the so-called experts simply do not have the experience, tools, and skill set necessary to help those that need the help the most. (Sounds similar to our government).
In addition to the nouveau experts, we are also seeing many so-called Professional Negotiating Companies pop up over the last 12 months. These companies are designed to negotiate with the bank on behalf of the seller and the agent. While I am sure that there are some legitimate companies, many are not. Most of whom running these companies this time last year thought a short sale was when the Outlet Mall ran a 6 hour, 50% off sidewalk sale. Beyond not bringing anything to the table by way of true negotiating skills, the biggest problem with these companies is that the client becomes a number, and sadly, numbers are much easier to forget than people are.
If you find yourself in the potentially devastating position of being desperately underwater in your home while facing financial distress, understand that you do have some viable options. If a Short Sale proves to be the best option, the following list should help you make a knowledgeable decision when hiring your next agent:
What you need to know…
Do not use any company that charges upfront fees, or that require you to pay any money directly to them at any time during the transaction. The bank pays the real estate commissions as well as all other costs associated with the sale of the property, all of which is paid at Close of Escrow.
Make sure the agent handles the short sale directly and has CLOSED at least 20 short sale transactions. Each short sale is different and you need to make sure the person handling yours has experience in dealing with the banks.
If an agent does not have experience in short sales and negotiating the contracts, they probably do not have the contacts within the banks and do not know the language needed in the contracts to protect you. Not having this information can cost you months during the process, or even worse, foreclosure.
You should be very wary of anyone that uses a third party “specialist” or another person to negotiate your short sale. There are numerous horror stories about these situations going poorly or leading to foreclosure. In most instances, you will never meet the person negotiating on your behalf. They will know nothing more about you and your hardship other than what is on the paperwork you present, and you are only another file to them. You need someone who has your best interest at hand. We have closed numerous Short Sale transactions than most other agents, much less an outside firm that would have given up and consequently gone into foreclosure. Sometimes the intangible factor that gets the job accomplished is caring. When you are a number, there is not much caring involved.
In addition, very often do these outside companies charge additional fees to negotiate the short sale. If the bank does not agree to the fees, the short sale might not be approved, or the agents will have to agree to lower their commissions… If the agents don’t agree, it will not be approved and you may face foreclosure. Choose an agent that does not charge additional fees.
Be careful of any agents that have an “investor” that will submit an offer AND handle the negotiations of the short sale. If the investor is negotiating the sale, they are negotiating in their best interest, not yours. These investors are trying to buy the property at a large discount in order to turn around and sell the property at a profit.
One of the problems that arises is the lenders complete an appraisal on the property and know what the market value of the property is. In most cases, they will not approve the “low ball” offers that are submitted. If they are not approved, the investor moves on and you may not have enough time to obtain another offer, which can lead to foreclosure. It is a numbers game for the investors, not about helping people…
Robert Holt & Phil Mills w/ RE/MAX Sonoran Hills. For more information, please visit www.TheHoltGroupAZ.com or call 623-748-9583 to tell us your thoughts…
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Wednesday, 12.23. 2009
“Real Estate for Real People”
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PRESS RELEASE
The [HOLT] Group donates $20,000 worth of clothes to “Adopt a Neighborhood”
On Thursday, December 17, Christmas came a few days early for Pastor Gus Korkotselos of Fire & Water when Robert and Christina Holt along with Phil and Emily Mills of The [HOLT] Group donated over twenty thousand dollars worth of clothing to the AZ-TV “Adopt a Neighborhood” campaign. International Church
When presented with this surprise donation on the popular AZ-TV Pat McMahon show, Pastor Gus was brought to tears. “I am absolutely blown away by this amazing gift.” “There are so many people that will be impacted in such a positive way,” he would go on to state.
Pastor Gus, alongside Dream Center Phoenixare the lead sponsors of AZ-TV “Adopt a Neighborhood for the Holidays.” This highly successful program has raised thousands in donations that go directly to some of the most economically distressed neighborhoods in Phoenix. , Set Free Ministries, Phoenix Teen Challenge, and Nation’s Food Basket,
“We had the opportunity to see Pastor Gus several weeks back on The Chat Room on AZ-TZ co-hosted by Lisa Schneider-Cipriano & Angela Scott and were so thoroughly impressed with the magnitude of change being brought forth by his out reach program we knew we had to help,” said Robert Holt.
“In our daily dealings in the world of real estate, we see the overwhelming negative effects this economy is having on families throughout the valley, but no where is it more devastating than in the inner-city,” Phil Mills added. “We are very pleased to help such a deserving group of individuals.”
Robert Holt and Phil Mills were featured guests on the Pat McMahon show where they were speaking on the topic of real estate short sales and how they can be the way out for many distressed valley homeowners. After their segment, Pastor Gus was brought in for the surprise donation. “I had no clue why I was there with a couple of real estate guys, but as it turns out it is was the hand of God at work,” exclaimed Pastor Gus.
For more information on the “Adopt a Neighborhood” program visit www.AZTV.com or www.TheHoltGroupAZ.com or call 623.748.9583. Robert Holt & Phil Mills are with The [HOLT] Group, RE/MAX Sonoran Hills.
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Wednesday, 12.23. 2009
“Real Estate for Real People”
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Giving is Receiving
The holiday season is in full swing and in just a couple of days, 2009 will fade into the history books. No question this will be a year that many of us will want to forget. For those paying attention, you know there have been plenty of events that have occurred over the last 12 months that are scary to say the least. During this time, we have attempted to bring you a heavy dose of the truth with the hope that by understanding the realties we all face, we can each make more empowered decisions.
Sadly, many of the topics we covered were unpleasant and disturbing. Whether it was about the next wave of foreclosures, the insanity that continues in Washington, or the villains on Wall Street, there was (is) plenty of negative subjects to discuss. Unfortunately, we as a society have been down this road many times. One only needs to revisit the history books to see the repeating patterns, which have plagued the planet for thousands of years. A very wise man over 2000 years ago was quoted to say, "The budget should be balanced; the treasury should be refilled; public debt should be reduced; and the arrogance of public officials should be controlled." -Cicero. 106-43 B.C.
The more things change, the more they stay the same, is a worn out cliché and for good reason since we, individually and collectively, tend to routinely repeat many of our past errors. However, this week I was reminded that while we all have room for improvement we are also capable of tremendous good.
We, at The [HOLT] Group, were honored to participate in the “Adopt a Neighborhood” program sponsored by AZ-TV. One of the main forces behind this powerful community out reach program is Pastor Gus of Fire and Water International Church in downtown Phoenix. I have had the privilege to meet many powerful, self-made individuals in my life, but none is more inspiring than Pastor Gus. After meeting Pastor Gus, I was reminded of the movie Pay it Forward (great movie and one I highly recommend). The storyline of the movie is that we all have the power to make a positive difference in the quality of another person’s life, which will in turn positively affect another life and so on and so forth. Pastor Gus is a man who embodies that sort of change and because of his actions, the lives of many have changed for the better.
What I observed this week as I witnessed the change that has occurred because of the vision and dedication of one man was truly inspiring. I was reminded of the power that lies with all of us which is harnessed when we passionately work for the common good of others. When our focus is clear and our actions are inspired we can achieve amazing things. The accomplishments of a man, like Pastor Gus, serves as a reminder that we each have the power to change our lives and one of the best ways to do that is by helping others. It is abundantly clear that when we help others, we help ourselves.
So as we move through the rest of the holiday season and into next year, it might serve us well to emulate those like Pastor Gus who are giving all of themselves so that others that have nothing might have something. Yes, we are in the midst of some very challenging times. Yes, the economy is a mess and the real estate market will get worse before it gets better. But, we each have the power to get through this and very often the best way to help ourselves is to help another. As another very wise man said over two thousands years ago “Do unto others as you would have them do unto you.”
Robert Holt & Phil Mills are with The [HOLT] Group, RE/MAX Sonoran Hills. For more info, please visit www.TheHoltGroupAZ.com or call 623-748-9583 & tell us your thoughts…
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