Real Estate Information

Submitted by:  Suzanne Bauer - Broker , Realtor,  Buyer's Agent for The Team For YOUr Dreams

Receiving an inspection report that states " Possible Structural Issues " - would and does cause most of us to panic or want  to throw in the flag - so to speak.  At this point - one needs to call in a qualified Structural Engineer.  Just this last month I had a home that came back with just such an inspection report.  We  called a qualified Structural Engineer.  Home Inspectors are wonderful ; but , a qualified Structural Engineer can tell you what that crack in the wall really means. We - as a Team - believe in rallying  together all resources and professionals to get you -as our client - the answers you need to make an informed decision on the purchase of your Dream Home.  The end to my story is a good one - the crack turned out not to be a structural issue and having a qualified Structural Engineer inspect the home made all the difference to both my buyer and the sellers. 

Submitted by: Suzanne Bauer 

I love my career and I have found that being flexible to my career's ups and downs is a definite pre-requisite for the job.  Just last week I had a wonderful young couple I was working with  who were concerned that bringing along their young adorable child might be an issue.  I have discovered over time that bringing children along for home showings and to accompany their parents' makes my job more enjoyable and somewhat easier.  We can stop for frequent breaks .  We ( as brokers ) often just keep going -showing home after home without thinking that maybe our clients are not accustomed to the daily pace we keep.  Having children in the mix affords the ability for myself and my clients to step back and really take our time.  Granted - we may view fewer properties ; but , the quality of those showings is higher.  On a few occasions - it has been the child ( children ) who fall in love with the home and discuss this fact  with their parents.  Younger children ( babies) allow my clients and I to laugh and share stories about our own childhood.  All in all children - my client's children that are brought along on a home tour -remind me of why I love my career.  I - as a Broker - am not just helping my clients find a home but a DREAM home - where they can store all their memories and dreams .  So please - if you wish - bring your children with you on home tours. My eldest daughter at the age of four decided this was the perfect home for us as a family and we have lived in our current home for 10 years. She was right.

Submitted by Tim Burrell:  There are a number of homeowners who have gotten into financial trouble by taking out Adjustable Rate Mortgages, frequently called ARMs, where the amount of the monthly payment has just changed dramatically.  These loans start with low rates, called Teaser Rates, that last for a limited amount of time.  Then, they adjust to be closer to the market rate.  The new rate is determined by an Index, frequently the cost of funds for the lender, plus a margin, which is the lender's profit. 

Once the period for the Teaser Rate is up, the monthly payments can jump dramatically.  Some homeowners are having trouble making the payments at the new rate.  This problem has been helped by the recent action by the Federal Reserve Board, as their lowering of a key interest rate has decreased the lender's cost of funds, which decreases the index rate on the ARM mortgage, and decrease the monthly payment.  If the homeowner cannot make the new mortgage payments, it frequently starts a financial "death spiral"  that leads to the foreclosure of the home.  This program is a great way to avoid foreclosure.

FHA has implemented the FHASecure Initiative to rescue homeowners in trouble from the jump in their monthly payments.  Basically, if you are having trouble making the payments now, but you were current on your payments before your mortgage payment jumped, the Initiative allows you to refinance with FHA, even if you have late payments on your mortgage.  In other words, if you were financially responsible before the mortgage payment jumped, but got into trouble after it jumped, you can refinance. 

Why is this amazing?  Because a late payment on a mortgage is the "kiss of death" for refinancing.   The refinance lenders look at late mortgage payments as a clear sign that the borrower is in trouble, and a prime candidate for foreclosure, so they do not want to be the one with the loan on the house when it goes into foreclosure.  In order to get top quality loans, any late payments on a mortgage have to be more than a year old i.e. you have to be on time for a year after you have been late.  Since many sub-prime loans are no longer available, many borrowers have to qualify for the top quality loans, or get no loan.  So, getting out of a bad ARM into a conventional 30 year fixed rate mortgage is an amazing opportunity for a borrower who has been late on recent payments.

To get detailed information direct from FHA, go to this website http://tinyurl.com/2p9s2c .  Notice the short URL, that you never get from a governmental agency.   I shrunk it. 

Our coach, Andy Hnat also coaches a local high school Team, Raleigh Junior Rowing.  The Team has been active for several years and has spawned several budding rowers in search of college scholarships.  The Team continues to recruit new members and participates in both the spring  and fall racing seasons.  Andy is an experienced rower and was a member of the NC State Rowing Team.

This is the first time Andy has taken on a "Masters" Team.  A "Master" crew Team consists of rowers aged 27+ who are eligible to compete in all divisions offered at local, state and national regatta's.   Crew teams can participate in singles, doubles, four (quad) or eight person boats. The quad and the eight boats also have a coxswain who steers and calls commands.

Whether you have rowed in the past or have never touched an oar, now is your opportunity to learn something new, get a great workout, and become a part of a great Team sport.  Take the gym out to the lake and join us today!  For more information, contact Andy Hnat at ahnat@nc.rr.com.

Posted by Tim Burrell - Foreclosures are all over the national news.  Even President Bush is proposing legislation to help buyers with exotic financing avoid foreclosure.  NBC17 just did a story on how Foreclosures can hurt the values in our neighborhoods.   Consumer stories are all over the media about companies springing up to help homeowners in trouble, some of which just get the homeowner in more trouble.  What about Raleigh and the Triangle?

The number of foreclosures in Raleigh and the Triangle is down.  That is right, way down.  Because we are one of the best seller's markets in the United States, if a homeowner is realistic they can sell their home before they lose it to foreclosure.  Also, banks and other financial institutions do not want to foreclose on more properties, as it hurts their profitability.  If a property owner faces financial problems promptly and contacts a Realtor, a good Realtor can help persuade the lender to give the owner enough time to sell the property and pay off the lender.  So, homes are getting sold, not foreclosed.   This is good for the seller, who frequently gets some money instead of nothing in a foreclosure.  This is good for the lender, as foreclosed properties tie up not only the funds in the loan, but additional funds for reserves and government requirements, that can be used more productively by the lender.  It is also good for the Realtors who represent homeowners, and bad for the Realtors who sell REO properties acquired by lenders after foreclosures.

The news media needs to sell their stories, and bad news sells.  They indicate that foreclosures will hurt the value of a neighborhood.  Theoretically, it will not, as appraisers and those of us who do Broker Price Opinions (BPOs) for lenders do not use the sale prices of foreclosed homes when we analyze the value of other homes in the neighborhood.  However, if there are enough empty, foreclosed homes in a neighborhood it will make the area look worse, and affect the amount that a buyer will offer for a home.  Once again, since foreclosures are down in the Triangle area, this potential problem is decreasing.

One of the problems that causes Foreclosures is homeowners not facing reality.   It is hard to admit that a problem is serious.  So, some wait until it is extremely late to deal with the problem before they do anything about it.  As long as the foreclosure sale has not occurred, there is still time to try.  Even up to 10 days after the sale the owner can still close a sale and pay off the bank under North Carolina foreclosure laws.  I just sold a home in foreclosure by getting "the tenant from Hell" out of the property, clean it and repair it, then get it on the market less than one week before the foreclosure sale.  We received a contract before the foreclosure sale date, then persuading World Savings to allow the sale to close by postponing the foreclosure sale.  The owner did not get top dollar by getting so close to the deadline, but he did receive enough at closing to help him with his next house.  The buyer got a good deal on a good house in a nice section of Cary.  Also, the lender is fully paid.   So, one way we can all help with the problems in the mortgage industry is to face the problem early, get the house on the market, adn get it sold.  In a good market, it works well.

posted by: Melanie

STRIKE FOR SURVIVAL

So what is Strike for Survival? Simply put, they have created a unique community “fun-raiser”—a night of bowling focused more on socializing than scores—with all proceeds directed to the American Cancer Society and their efforts to find a cure for cancer.

There are many ways to get involved—sponsor, bowl - (bowling is only $25.00 per bowler and includes Pizza, drinks, shoe rental, raffle ticket, goody bag and entertainment), volunteer. Whichever way you choose, you are guaranteed to be part of a fun event for a great cause. Find details of each event by clicking on the city links.

RALEIGH GLENWOOD | RALEIGH CAPITAL | CARY

Submitted by Tim Burrell - The Triangle area has two minor league baseball teams, the Carolina Mudcats and the Durham Bulls.  The Durham Bulls got a great deal of publicity from the 1988 Movie,  Bull Durham with Kevin Costner and Susan Sarandon.  So, I went to see the more country Team, in a more country setting, the Carolina Mudcats, and affiliate of the Florida Marlins.

Five County Stadium is well east of Raleigh, in Zebulon.  As the name implies, it is near the junction of five different counties, most of them full of people enjoying country living.  For example, when the Public Address system played Lynyrd Skynyrd's "Sweet Home Alabama", everyone around us sang along.  The stadium is easy to get to, as the new Interstate 540 and the Highway 64 Bypass take you there in minutes.   The game honored the 100 birthday of the City of Zebulon, so three past Mayors threw out ceremonial first pitches, and they served free birthday cake after the fourth inning.

I grew up in Los Angeles watching the Dodgers at Dodger Stadium.  The Mudcats are much more fun.  The stadium is much more intimate, so that nearly all the seats are good.  Get some Nachos with Chili and Cheese and you can sit at picnic tables on the first level near home plate and watch while you eat.  Of course, no one hogs the seats, as that would not be Southern, and they leave when their snack is through.  Cute Kids cary trays of lemonade, orangade and cotton candy through the stands yelling out their products to the audience.

The Mudcats have their mascot, Muddy, a catfish, and his side kick Little Muddy.  Muddy arrived on a four wheeler, racing in from the outfield, to shoot T-shirts into the stands.  In between innings, Muddy presided over a gunny sack race and a contest to toss bean bags over your head to be caught by your partner in a skillet.  Then, he raced a brother and sister Team (who looked to be about 5 and 7 years old) around the bases, and luckily enough Muddy lost to the children so they could get their prize.   The stands were full of families with children of all ages.  Most of the people in the rows around us knew each other.  There were a few groups with three generations of family, down to the three year old who danced to all the music and said "Muddy Funny" after one of the mascot's performances. 

The junior high school girls behind us had a thing for Mudcat player number 7, aptly named Chase.  When Chase trapped an opposing player off base in a run down, they screamed their lungs out, until Chase dropped the ball after the tag, so they made excuses for his error.  The level of play is not the Dodgers, which makes it more exciting.  In the big leagues, if they can touch it, they catch it.  Not at Five County Stadium, so the suspense lasts until the play is finished.  That is what I loved about Little League, you were not sure if they would catch it until it landed in their glove and even then you had to wait a few seconds to see if it would stay there.

I do not think I will go back to the big leagues.  The Mudcats are much more fun.  I even got an official hat, in the right size for my large head, so I can be properly dressed when I return.  If you want to see more about the Team, click here .  By the way, the Mudcats beat the Tennessee Smokies by a score of 6 to 5, with two big comeback innings.   The crowd loved it.

One of the joys of living in the Triangle and selling its Real Estate is that you are in a sophisticated group of cities, with every high tech job and gadget readily available.  But, you are only minutes from the country and a different style of living.

Submitted by Tim Burrell - Wall Street's Dow Jones Averages lost 387 points yesterday, primarily due to worries about mortgage backed securities.  What is happening?

A French Bank suspended a fund that was made up of mortgage backed securities, because it could not figure out what the value of the fund was.  The fund had a significant amount of sub prime mortgages in it, and they were worried about the increase in default of the sub prime mortgages.  This lack of confidence quickly spread, and the financial communities became worried about investing in funds that are made up of sub prime mortgages.  For example, the value of the stock of Countrywide Financial fell 8.2% in Friday morning trading.

What does all this mean?  Many lenders need to sell the loans they make in order to get cash to make new loans.  One place they sell them is to funds that purchase large quantities of loans, then sell investments in the fund, primarily to insurance companies and those firms that have to provide for the payments on pensions.  When investors do not want to buy into these funds, it is harder to sell the mortgages, and the lenders have a hard time raising cash, particularly small lenders.

This is why American Home Mortgage filed for Bankruptcy protection and laid off all its employees, after they could not raise cash for new loans.  Their stock lost 97% of its value.  Two leveraged hedge funds from Bear Stearns "went bust" and a third has run up big losses.  In order to give banks enough liquidity, the Federal Reserve has been pumping billions of dollars into the banking system.

While this is a disaster for small lenders, the larger banks are able to just keep more of the loans they make as they do not need to sell as high a percentage of the loans.  Some buyers have had the miserable experience of having a loan approved with a small lender who could not fund the loan when it was time to close the sale.

How does this change the market?  The investors want security, so they are focusing on buying only loans that are backed by the guarantees of Freddie Mac and Fannie Mae, quasi-governmental agencies that insure certain mortgages.  Since the limit for these loans is $417,000, it is harder to sell Jumbo Loans that are over this limit.  As a result, the interest rates on Jumbo Loans have changed dramatically, with the market still being in a state of flux.  What makes no sense is that the default rate on Jumbo Loans is at near record lows, according to the Wall Street Journal.  So, the Jumbo Loans are not a risky investment, as there are few defaults, but they are being penalized because you cannot get Freddie or Fannie to guarantee them.

How did this happen?  There is a huge demand for investment grade debt, as the pension funds have to make payments to a world that is getting older and living longer after retirement.   The pension funds used to invest in Bonds from corporations.  In 1992, over 70% of debt earned a rating of investment grade, and the pension funds could just invest in those debts.  But, the quantity of investment grade debt has decreased, so that Standard and Poor's found  that 49% of new debt issues in 2006 was below investment grade, commonly called Junk Bonds.  So, the pension funds had to find other investments.  Wall Street packaged mortgage back securities featuring sub prime loans and other debt that were put into the fund in layers, called tranches.  The logic was that by bundling together large numbers of investment, there is little risk of a major loss if any one loan defaults.  The first layer was comprised of the riskiest loans, and the last layer were the most secure.  Since the last layers were supposed to default only after the first layers, these last layers were considered investment grade.  The pension funds bought the idea, as they had to put all their money to work.

What will happen next?  I predict that the large banks will get stronger, and swallow those small ones that do not go out of business.  I hope the loan limits for Freddie and Fannie guarantees are raised, so there is more liquidity in the lending market if more loans qualify for their guarantees.  Some Senators looking for re-election coverage will hold a hearing to further hurt the mortgage market, as the threat of restrictions on sub prime loans was a major impetus to this problem.  It was going to be a little problem for sub prime borrowers as interest rates rose and property values did not continue to soar.  It became a big problem when these borrowers could not find new loans to re-finance out of their bad ones.  So, they defaulted, and the defaults have caused this loss of confidence, leading to an increase in difficulty in getting financing.  Next time you see Senators grandstanding with threats of regulations in an industry they do not understand, run for cover.

Submitted by Tim Burrell:  One of the latest phenomena in Real Estate is staging.  Staging a listing can involve hiring a professional to take out your furniture, put in furniture to match the house, arranging highlight props to accent the imagination, and generally redecorate to be as appealing as possible to the buyer.

Intellectually, I find it objectionable.  You are not buying the furniture and the props.  So, having the seller spend money on things that are not for sale to the buyer is not rational.  The Realtor should be talented enough to help a buyer imaging the potential of a house, and the buyer should  be able to mentally arrange their own furniture in the house.

On the other hand, the quality of Realtors rarely gets to the height that they can instill an image in the buyer's mind.  Also, over 90% of buyers have no ability to visualize potential.  So, emotionally I find staging appealing, as you can create the image for the buyer and let them visualize the house in an appealing manner.

If you would like to see an example of excellent staging, get to know Laura Kistemaker by clicking here.  Her firm, Staged Right!, is an excellent example of professional staging talent, and good business practices.  They do what they promise, shows up on time, do excellent work in an expeditious manner, work with your suggestions, and give you more than you expected.  To see a checklist of do's and don'ts, as well as before and after examples, click here .

So, intellectually, I do not like the fact that I have to do the buyer's and buyer's Realtor's work for them.  But, emotion is what sells properties.  So, emotionally, I can see the value of staging a property to get the image to the buyer of what the home can be.