Month: September 2011

By Jim Droz

Processing delays are taking a toll on first-time home buyer interest in short sales, which now account for more than one of every six house sales, according to an Inside Mortgage Finance tracking survey.

First-time home buyer purchases of short sales dropped to 39.7 percent of short sale transactions in August. That represented a three-month slide and was the lowest level for first-time home buyers ever recorded by the survey.

The first-time home buyer share of short sales hit a peak of 54.1 percent of all short sale transactions in November 2009, just before the originally-scheduled expiration of the federal homebuyer tax credit.
Short sales are just one type of distressed property, with damaged REO and move-in ready REO also being significant components of today’s housing market. In August, short sales accounted for 17.1 percent of the home purchase market, with damaged REO and move-in ready REO accounting for 13.2 percent and 15.6 percent, respectively.

Real estate agents responding to the August survey indicated that home buyers frustrated with short sale delays are resorting to placing offers on multiple properties, with the intention on closing on only one. This practice can bog down the short sale approval process with many mortgage lenders.

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By Jim Droz

Existing-home sales increased in August, providing some good news for the struggling housing market. Monthly gains were seen in all regions, according to the National Association of Realtors.

Total existing-home sales, which are completed transactions that include single-family, townhouses, condominiums and co-ops, rose 7.7 percent to a seasonally adjusted annual rate of 5.03 million in August from a revised 4.67 million in July, and are 18.6 percent higher than the 4.24 million unit level in August 2010.

Investors accounted for 22 percent of purchase activity in August, up from 18 percent in July and 21 percent in August 2010. First-time buyers purchased 32 percent of homes in August, unchanged from July; they were 31 percent in August 2010.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.27 percent in August, down from 4.55 percent in July; the rate was 4.43 percent in August 2010. Freddie Mac reported last week that the 30-year fixed rate fell to a record low 4.09 percent.

Regionally, existing-home sales in the Northeast increased 2.7 percent to an annual pace of 770,000 in August and are 10.0 percent above a year ago. The median price in the Northeast was $244,100, which is 5.1 percent below August 2010.

Existing-home sales in the Midwest rose 3.8 percent in August to a level of 1.09 million and are 26.7 percent above August 2010. The median price in the Midwest was $141,700, down 3.5 percent from a year ago.

In the South, existing-home sales increased 5.4 percent to an annual pace of 1.94 million in August and are 16.9 percent higher than a year ago. The median price in the South was $151,000, which is 0.8 percent below August 2010.

Existing-home sales in the West jumped 18.3 percent to an annual pace of 1.23 million in August and are 20.6 percent higher than August 2010. The median price in the West was $189,400, down 13.0 percent from a year ago.

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By Jaime Westman

With a background in NASCAR, Bryan Dunaway is used to working fast. So when he left the auto racing circuit to try his hand at real estate, Dunaway wasn’t sure what to expect because of the economic slowdown and lull in the housing market.

“It was a little slow at first, being the end of 2010, but, to be honest, I really believe it was HouseHunt that kept us afloat the first couple of months,” said Dunaway, who works with his wife, Sharon, in the Charlotte area of North Carolina. “It was tough because we didn’t really have any prospects, we were new at it, we didn’t know how to go and find clients, and there weren’t that many to be found because the buyer pool was small. But people that are looking at houses are on the Internet, and the HouseHunt site seems to attract quite a few of them, so it was good to have that as we started out.”

Dunaway hasn’t taken his foot off the gas since, and he has found success by bringing some of the work-related tools he picked up at NASCAR to the real estate industry.

“Teamwork, always showing up and always being there no matter what are things I learned along the way,” said Dunaway, 50, who was a mechanic and pit crew member for Matt Kenseth, Dale Jarrett and other drivers. “I have a philosophy of listening to people, finding out their needs and tailoring my dealings with them to fit those needs.”

Dunaway, who hopes to complete 20 closings by the end of the year, contacts potential clients immediately to give them information about the market and how he operates.

“I let them know that I’m always there for them, so that when they’re ready to buy, I’m the guy to call,” he said. “And it seems to be working.”

Dunaway’s work hours also have no boundaries, which is another thing he learned from NASCAR.

“Being used to those demands, working on a holiday or working on a weekend or working late at night is a cinch,” he said about his new job. “You never know when a lead or potential sale is going to happen.”

Recent examples of Dunaway going the extra mile have led to sales. One occurred over the Labor Day weekend when a cash buyer who was retiring to Highland Creek, N.C., called two agents and signed on to three Internet sites looking for leads. Dunaway e-mailed her Saturday around midnight and called her Sunday at 9 a.m. While having lunch on Labor Day, another agent called but was rebuffed because Dunaway was so prompt.

Two other closings also happened because of Dunaway’s diligence and people skills. Despite logistical challenges, he stayed in touch with a female client who was working in Afghanistan as a civilian contractor and ended up selling her a house in the Charlotte area. He befriended the client and was invited to her wedding, and while at the reception he got a call from a HouseHunt connection who was requesting to see a house. When he told her that he was at a wedding of a current HouseHunt client and that he’d e-mail her as soon as he got home, she was impressed. They talked the next morning, and a few days later an offer was made.

Dunaway’s love for cars and his commitment to service were formed at an early age when he visited his dad’s service station in the days when pumping gas, washing windshields and checking the oil and tire pressure were part of the routine.

“I saw firsthand that if you do something every single time, the customer will come back,” he said. “I always try to form friendships along the way, and helping people look at houses is perfect for that. This whole thing is just now feeling like it’s starting to roll. Being honest, reliable and using basic courtesy goes a long way with people.”

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By Jaime Westman

Karen Taussig is an upbeat real estate agent in a reportedly down market. In fact, business is so good in her HouseHunt territory of Oxnard, Camarillo and the Channel Islands in Southern California’s Ventura County that she’s thinking about expanding.

“I feel like I’m working the system well enough to bring on another agent and be able to funnel her some of the leads because I just have too many,” said Taussig, whose home office is in Oxnard. “Even the really successful listing agents out here are amazed at how many buyers I’ve had.”

Taussig has been an agent for about five years and with HouseHunt for four. After taking time to get her MBA, this is the first year she has spent totally focused on her business. And it’s paying off.

“For me, this is the best year ever,” said Taussig, who uses HouseHunt’s variety of Internet tools to contact and stay in touch with clients. “I’ve learned how to work the database and the follow-up system, and I have too many clients! You don’t hear a lot of people saying that these days.”

Mixing business with pleasure also seems to be working for Taussig, who is planning a party Nov. 3 for people she has placed in houses.

“I look at them as pen pals more than as potential clients,” Taussig said about her HouseHunt leads. “I enjoy talking to the people and meeting them. And I’m really glad that you put that follow-up system into place because I’m not really sure what I’d do without it.”

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By Jim Droz

Foreclosure filings rose in August, as more homebuyers fell behind on their mortgage payments. Filings were up 7 percent compared to July, but were still 33 percent lower than a year ago, marking the 11th consecutive month of year-over-year declines.

According to a report by Realty Trac, 228,098 homes in the U.S. received some kind of foreclosure filing in August. Default notices, which typically initiate the foreclosure process, surged more than 33 percent from July. Foreclosure auctions and bank repossessions, which come later in the process, both fell slightly.

The good news is that bank repossessions have been falling. Lenders repossessed 64,813 homes in August, a six-month low and a 37 percent decline after bank repossessions hit a peak in September last year. Also, foreclosure auctions were scheduled for 84,405 homes, the lowest number in more than three years.

Nevada, California and Arizona housing markets continued to be the hardest hit by foreclosures. Nevada has had the nation’s highest foreclosure rate for more than four years, and even though bank repossessions and auctions both fell in August, the state saw default notices increase 31 percent. California came in second, with one in every 226 homes in foreclosure, and Arizona, with one in every 248 homes, was third.

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Just when you thought it was safe to jump back into the mortgage pool, new regulations that officially roll out on Oct. 1 will need to be taken into account before prospective homebuyers take the plunge.

Sellers also are advised to take note of the new mortgage regulations, which could lead to tighter credit availability as lenders start gearing up for lower loan caps.

In a recent attempt to boost the housing market, Congress increased the maximum loan amount that government-sponsored enterprises Fannie Mae and Freddie Mac could guarantee, to a high of $729,750 in some markets. That made it easier for borrowers in pricier markets to get loans. But as the government begins to gradually reduce its footprint in the housing market, limits on government-backed loans are scheduled to reset to prior levels — a high of $625,500 in some markets — which could lead to higher mortgage rates and more downward pressure on home prices.

Prospective borrowers could face higher mortgage interest rates for loans that exceed the new caps — also called jumbo loans — which would increase the overall cost of owning a home. House hunters might also be drawn to less-expensive properties as a result of the change, which could exacerbate a weakness in the middle-priced segment of the market.

Sellers, too, are likely to feel the impact, meaning that they could find it in their best interest to push down the price of their home to accommodate buyers seeking mortgages under the new limits.

Experts are advising consumers to evaluate their needs and to do their research now in order to get a closing guarantee that won’t float if too much time is taken and the rate isn’t locked in.

Buying a home is much cheaper these days than it has been in the past few years, but the cost of closing on a mortgage has increased in many states.

Nationwide, the average origination and title fees on a $200,000 purchase mortgage totaled $4,070, according to Bankrate. That’s an 8.8 percent jump from 2010, when the average closing costs totaled $3,741.

For the second year in a row, the states with the highest closing costs are New York, where costs average $6,183; Texas, at $4,944; and Utah, with $4,906. Next was California, where average closing costs in San Francisco totaled $4,832. New York and Texas have dominated the top spots for five years.

The cheapest places to get a mortgage are Arkansas, North Carolina and Indiana. In each of these states, the average closing costs are close to $3,400.

Most of the jump in closing costs is tied to fees charged by lenders. On average, lenders charged about $1,614 in origination fees this year, up 10.3 percent from a year ago. Origination fees include lender charges for services such as underwriting and processing.

Fees imposed by third parties, including title, appraisal, postage/courier and survey charges, averaged $2,456, up 7.9 percent from 2010.

Buying a home is much cheaper these days than it has been in the past few years, but the cost of closing on a mortgage has increased in many states.

Nationwide, the average origination and title fees on a $200,000 purchase mortgage totaled $4,070, according to Bankrate. That’s an 8.8 percent jump from 2010, when the average closing costs totaled $3,741.

For the second year in a row, the states with the highest closing costs are New York, where costs average $6,183; Texas, at $4,944; and Utah, with $4,906. Next was California, where average closing costs in San Francisco totaled $4,832. New York and Texas have dominated the top spots for five years.

The cheapest places to get a mortgage are Arkansas, North Carolina and Indiana. In each of these states, the average closing costs are close to $3,400.

Most of the jump in closing costs is tied to fees charged by lenders. On average, lenders charged about $1,614 in origination fees this year, up 10.3 percent from a year ago. Origination fees include lender charges for services such as underwriting and processing.

Fees imposed by third parties, including title, appraisal, postage/courier and survey charges, averaged $2,456, up 7.9 percent from 2010.

By Jim Droz

Many home sales in the Northeast have been put on hold following the aftereffects of Hurricane Irene, which sparked flooding and caused damage in about 11 states.

One lender based in Connecticut estimated that anywhere between 15 percent to 50 percent of his company’s pending mortgage applications will need re-inspection.

Buyers with pending home purchases and home owners with refinancing applications in FEMA-designated disaster areas could be impacted by the re-inspections. If severe damage is found, financial institutions might not provide loans to buyers on the property.

Andrew Wilson, a spokesman for Fannie Mae, said that it’s too early to tell how many purchase and refinancing applications will be impacted by Hurricane Irene. However, he said that home owners with Fannie Mae loans whose homes had flooding or other damage from the storm might qualify for a loan forbearance.

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