This was a great little blog spot that I happened upon on this snowy morning here in Virginia Beach.  My kids are out of school and my Husband was able to take the day off to be with them.  With coffee in hand, I dive-in to catch-up on all my "reads."  This one I really liked and thought you might too.  Enjoy!

The Top 5 Mistakes Made in the Home Buying Process - and it's Not Always the Buyers Making the Mistake

This post was inspired by Bob Stewart and summarized by William Johnson 

We all have made mistakes in the way we first go about fulfilling the desire for owning a own home. (Notice, I didn't say the Dream of Home Ownership - taking care of what you purchased is not exactly my definition of a dream). I have read so many lists on this subject and thought I would formulate my own lists that is a bit more reality based.

1. The first mistake, in my view, is confusing price with value. Price is a term we mostly understand. It is what the item costs. Sometimes the price is even negotiable. Value is a whole other issue that needs to be explored. The right home in the right location, at the right price - one that can be readily maintained and even improved, is probably a good value.  A first time home-ownership question immediately comes to mind; should I buy a home that is large enough to account for a future family or buy something more modest that suits my needs in the shorter term? Obviously, this question should be answered on an individual and case-by-case basis. There cannot be a stock answer to this question as the answer will be different for every Buyer. Value is better defined as getting the right property that satisfies the right needs at the right time. Trying to find your buyer the right floor plan in the right neighborhood in the right condition is a good start. 

2. Too much time is spent looking for real estate before the professional REALTOR® is selected. A Realtor will help the Buyer through the home purchasing journey, exposing the right property that suits their needs. A listing of a home on the computer can be out of context to the neighborhood that it is in, causing it to just be a house on a random street. I think it is far more useful to engage a professional Realtor from day one when the decision is made to buy a home. A good REALTOR will save a Buyer so much time and will assist the Buyer understanding the nuances of the housing market.  They will guide the Buyer to the best choices that fulfill the needs and wants that a Buyer has listed as a priority, including price versus value.

3. First time and even second time Buyers often use the word "fixer-upper" when  they really mean "we can do the re-painting and maybe even complete some other minor upgrades." If a Buyer says they would like to buy a fixer-upper their Realtor needs to ask what defines a "fixer-upper" to them.  The Realtor should not assume that the Buyer can handle or afford renovations, regardless of how simple the task, at hand, appears. How easy it is to complete repairs or upgrades depends on the abilities of the person who is actually going to undertake the task.  Many times the difficulty and expenses associated with these types of projects can be underestimated, leaving that buyer at risk. A great Realtor will communicate thoroughly to help their clients understand exactly what it is they are getting in to. 

4.  If a real estate professional is not willing to spend the time teaching a new buyer the ins and outs of buying and the true cost of home-ownership is not creating a long term client. It is necessary to spend as much time as a Buyer needs to counsel them in the ever-changing-ways of the real estate market.  It is our job as Realtors to navigate them through the process that is unfolding before them.   

5. The amount of home that a Buyer can qualify for is not often what the Buyer can actually afford. Lenders make loans and we have seen the consequences of Buyers being facilitated to purchase homes they were able to buy but could not easily afford to own or maintain. Taking Buyers to the threshold of their maximum purchasing price that they  qualified for can lead to some serious consequences down the road.  Keep in mind, that it is not always connected to missing or making late payments. It often revolves around the true cost of home-ownership and maintenance. A home not properly and constantly maintained & improved is a home losing value while the costs associated for paying for it, keep rising.  Fortunately, due to lending restrictions and folks being more realistic of life's possible outcomes, home-ownership in the future can be for a life-time not just a period of time.

Keeping it Simple

Buying and Selling Your House: A Great Resolution

I came across this article and thought it had merit enough to post.  As we all know, selling, moving & buying a home creates both an exciting and stressful time in everyone’s life.  Sometimes employing the “it’s a business transaction” mentality can help prevent trauma and help the seller see the forest through the trees in order to get to the end result, which is selling their home.  I hope this tip is helpful! 


By Geoff Williams, FrontDoor.com | Published: 12/21/2010

“I will make this a business transaction and not an emotional decision.

That's a little easier said than done, of course, and to some extent when you buy a home, it should be emotional. If you tour a house, register absolutely no feelings and think "whatever" while agreeing to buy it... well, maybe you should seek some counseling.

But beyond the emotions, this is a financial transaction, and if you can keep that in mind, you'll likely come through this in better shape, argues Horton. "Owners who consider that their home may be just one of many properties competing in a free and open market are better equipped to make the decisions necessary to get their homes sold," he says. "While it is a home to the sellers, it's typically just another house to potential buyers until they move in and make it their home."

So if you happen to overhear a potential buyer whisper to their Realtor or spouse, "This house is a joke," or you're close to getting a buyer when they suddenly veer off course and make an offer on a different home, or you make what you think is an awesome offer and it's rejected, try not to let it get to you. When it comes to home buying, everything may feel personal, but at the same time, nothing's personal.”

Happy Holidays!

Thanks again to all the wonderful folks @ ANIMOTO as they have once again helped me finish my year a bit greener!

Happy Holidays from our home to yours...

Fisher Family 2010 Holiday Greeting Card  -  click here

More Housing Myth Busters!

I follow Tara regularly & in this article I think that she was able to highlight some important trends that are affecting real estate here in Hampton Roads.  I don’t necessarily agree that banks are holding on to foreclosures in order to have some type of positive impact on the shadow market because foreclosures are happening left & right in this area. What I am finding is that the foreclosed/REO homes that are being put on the market are not substantially discounted & they are in need of a lot of work. Many buyers in the Hampton Roads area are looking for move-in ready homes that have been updated, upgraded & are in tip-top shape.  Buyers just don’t have the extra money sitting around, nor can they borrow it like in the past, to upgrade counter tops, buy new appliances, put in a pool, etc.  

On another note, this market is seeing a surge in home sales & second home sales because, for the first time in over ten years, the actual cost of buying a home & the actual cost of owning a home are both at an all time low.  Interest rates are low, allowing for greater purchasing power, and home prices have come down enabling more qualified folks to buy a new home, up-grade from their current residence, invest in a vacation home, or purchase rentals.  In another ten years are you going to be saying “Boy, am I sure glad we bought this house when we did” or are you going to say, “Why in the world didn’t we buy a home when the perfect opportunity was right in front of us?”  

Take a look at this graph…

Graph: Robert Shiller from his Irrational Exuberance website

It is interesting to note that the dramatic price declines that we are currently seeing is the first time that home prices have fallen for an extended period of time without a corresponding period of rising interest rates.

You can clearly see the “housing bubble” running up from 1998 to 2006, caused by too many factors to address here.  You can also see the “crash” between 2006 and 2009.  Assuming prices have bottomed out in 2010, I think it is interesting to note that if you draw a straight line between the start of the bubble (1998) and the apparent (and hopefully) end of the crash (2010), home values are about where they would be if we would have had moderate/normal appreciation during that time period.  If you were fortunate to purchase prior to the bubble, whatever loss you think you have is perceived; you actually gained.

Well, on to Tara’s story….5 More Foreclosure Myths by Tara Nicole-Nelson 

“Four years into the housing crisis, myths about foreclosure still litter the minds of even the smartest of real estate consumers. When it comes to matters as high stakes as your home, confusion can cost you thousands - or even your home. Whether you’re a buyer looking at foreclosures, a homeowner struggling to keep your home or a seller concerned making sure your home can compete with the foreclosed homes on your block, these foreclosure myths are prime for the busting, with no further ado.

Myth #1:  Foreclosure happens fast. With unemployment and underemployment still affecting nearly 1 in every 4 Americans, no one is immune from fears that a pink slip might quickly turn into a foreclosure notice.  According to NeighborWorks America, nearly 60 percent of families seeking foreclosure counseling cited a lost job or cut wages as the reason they were facing foreclosure. 

While the Obama Administration's Home Affordable Programs haven't been nearly as effective as predicted in actually preventing foreclosures, they have had the effect of extending the foreclosure process for many families.   Even though the legal process of foreclosure can happen in as few as 6 months in most states, it is currently taking much longer for the average foreclosure to get to completion.  Recently, JP Morgan Chase revealed that their average borrower who loses a home to foreclosure has not made any payments in 14 months nationwide; 22 months in Florida and 26 months in New York.

To be sure, some see this as good; others view it as unnecessarily dragging out the overall market's recovery. Many insiders will point out that these delays in foreclosure may be calculated to save the banks the costs of owning and maintaining foreclosed homes, not to help homeowners.  In any event, the fact that foreclosure does not happen nearly as fast, in many cases, as expected does give families who are temporarily down on their luck some extra time to try to get back on their feet and save their homes.

Myth #2:  Buyers can’t get clear title or title insurance on foreclosed homes.  When the foreclosure robo-signing scandal first hit, there was widespread concern that buyers would not be able to get clear title on foreclosed homes, because the former foreclosed owners might be able to come get their homes back when the improprieties in the bank's foreclosure documentation processes came fully to light.  At the same time, several of the country's largest title insurance companies publicly balked at issuing policies on bank-owned homes until the issue was resolved.  At this point, the banks claim they have revamped their processes, and all banks have stated that they have found not a single borrower whose home was repossessed without them having missed the requisite number of mortgage payments.  Nevertheless, a number of governmental investigations are still in progress.

The fact is buyers of bank-owned properties in nearly every jurisdiction are protected from later title attacks by foreclosed homeowners by the bona fide purchaser rule, under which courts would prefer to simply award cash damages to be paid by the culpable, bank to a wrongfully foreclosed-on homeowner, rather than reversing the sale or ownership to the new, innocent buyer.  Additionally, the title insurers have now changed their tune and restarted issuing insurance policies on bank-owned homes which protect buyers' interests, after working with the banks for them to take responsibility in the event a former homeowner prevails in a wrongful foreclosure suit. 

While there are still many intricacies of title to be resolved for foreclosure buyers who purchase homes at trustee sales and auctions, or for cash buyers who often went without title insurance in the past, on the average, Trulia-listed, bank-owned property purchased with an average mortgage and title insurance, the chances a buyer's title will later be successfully challenged by the foreclosed homeowner on the basis of robo-signing?  Exceedingly slim.

Myth #3:  Buyers should wait for the shadow inventory to be released.  Many a buyer, discouraged with the homes they see on the form in their price range, has decided to sit still and wait for the banks to release for sale what is called their "shadow inventory" - rumored to be anywhere from 4 to nearly 6 million homes that have already been foreclosed, but not listed for sale, or will be foreclosed in the near future. The fact is, to the extent that the banks have acknowledged the existence of a pool of homes they own but are not selling, they have expressed that their reasoning for holding the homes off the market is to avoid flooding the market and driving home values down any further.  For that reason, buyers should not expect to see a massive influx of these shadow homes onto the market anytime soon - if ever. 

The banks' current modus operandi is that as they sell a home, the replace it with another home in that market - if they sell 50 homes in a town that month, they'll put another 50 on the next.  So, don't hold your breath waiting for a fabulous new flood of homes.  Instead, set up a home-search alert to notify you when homes that fit your search criteria come on the market, and be ready to call your agent and go visit any and every one that looks like it might be a good fit.

Myth #4:  If you’re looking for a deal, you’re looking for a foreclosure.  Despite what they may say, no buyer’s heart's fondest desire is to buy a foreclosure.  But almost every buyer dreams of buying a great home - and getting a great deal on it.  Many people think that to get a great value on their home on today's market, it means they must buy a foreclosure.  As a result, the value and other advantages of buying an individually-owned home on today's market are frequently overlooked.  Individual sellers with homes on the market right now are generally quite motivated, and understand that their homes are competing with discounted short sales and foreclosed homes. 

Further, individual owners are often much more negotiable on a wide range of contract terms than a bank which owns a foreclosed home.  You can work with non-bank owners on things like repairs, closing dates, choice of escrow provider, closing costs and even included personal property much more flexibly than you can when the bank is on the other side of the bargaining table.  On top of that, many individually-owned homes are in pristine, move-in condition; that is much rarer with foreclosures.  So, don't underestimate the value of the deal you might be able to get on a non-foreclosed home.  Just get clear on what you can afford and look at all the homes that are available in that price range, without discriminating against non-foreclosures.

Myth #5: Having a foreclosure on your credit history means it'll take years and years before you can buy again.  One of the most frequently asked questions by homeowners who are facing or have just lost a home through foreclosure is how long it will take before they'll be able to buy again.  Until recently, the standard wisdom was that 5 years, minimum, would have to have elapsed between the foreclosure and the new home purchase.  Now, though, borrowers can obtain an FHA loan with the low, 3.5 minimum down payment requirement as soon as 3 years following a foreclosure.  To do so, though, all your other ducks must be in a row. 

Post-foreclosure buyers need a credit score of 620-640 to qualify for an FHA loan; higher for a non-FHA loan - given that the foreclosure itself usually dings anywhere from 100-150 points off the credit score (not necessarily counting a full year or more of pre-foreclosure missed payments), former homeowners who want to buy again need to ensure they have no other late payments or credit dings after they lose their home.  You must have clean credit with no derogatory marks like late credit card payments following the foreclosure,  and you may also be required to document 12 to 24 months straight of on-time rent payments after the foreclosure. 

Further, the bank may impose a lower debt-to-income ratio on post-foreclosure borrowers than on borrowers who have not had a foreclosure, in an effort to keep your mortgage payments low, keep you from overextending yourself and boost the chances you'll be a successful homeowner over the long-term this time around.  The bank will also need to see 2 years of continuous employment history in the same field, and documentation that you meet other loan qualification requirements.”