Selling Your Own Home In A Tough Real Estate Market - Five Tips
If you are in a tough real estate market and are looking to sell your home quickly, you might want to consider doing a For Sale By Owner. My wife and I recently bought a new house and after trying unsuccessfully to sell our existing house through a real estate agent for several months decided to try For Sale by Owner. We found a buyer within four days and closed on the house three weeks later. However, through our experience we discovered a few things. Here are a few tips if you are considering a FSBO in a less than ideal real estate market. 1. Consider paying to have your home placed in the MLS. There are several companies out there that will do this for a few hundred dollars. With sales down, real estate agents are desperate to earn a commission. By putting the house in the MLS you are agreeing that if an agent brings a buyer to you that you will pay the agent their part of the commission (you still save the listing agents commission). If you can sell the house on your own with no agent then you won’t have to pay an agent. However, in a tough market you want as many possible eyes on your property as possible. 2. Get the word out to as many places as possible about your house. One of the best places to do this is on the internet. There are dozens of free websites that will allow you to post your house for free. Consider starting with craigslist since it has so much traffic and then spread out to the other sites on the net. It will probably take you an entire evening to get the house posted on all the sites and you will want to keep a spreadsheet with your usernames and passwords so that you can go back later and remove the listing once the house sells. 3. Design a professional looking flyer and put out for sale by owner signs and a flyer box. If you aren’t the artistic type and don’t know that much about designing things like flyers consider a site like vflyer which will give you templates for designing a flyer. Take some good pictures of the house with your digital camera and put them on the flyer. If you use Vflyer or a program like it you can probably use the same template to post the house to craigslist and ebay (if you decide to pay for a listing). 4. Be creative. When we put our house on the market we ordered an eight foot full color printed banner to put on our fence. Our house backed to a major street and we were able to get some major exposure from the banner. I have heard of people offering free vacations, big screen tvs, cash bonus’ to the listing agent and even a free car. I have also heard of people giving away a cool prize at their open house. These things can help get your house noticed which is the first step to getting it sold. 5. Make sure that your price is competitive. Consider using the money that you are saving on real estate commissions to cut the price of your house so that it is more competitive. In tough markets it is going to be very important that your house isn’t priced too high or people will find another option. In our area there were a ton of houses on the market and most of the houses that were selling were 5% or more undervalued. If that is what it takes you might need to swallow hard and cut the price of your house. Of course all of these things are just suggestions. Still, when things get tough and you need to sell your house these could be an option for you. They worked for us.Jeff McRitchie is the director of marketing for MyBinding.com and lives in Hillsboro, Oregon. He writes extensively on topics related to Binding Machines, Binding Supplies, Report Covers, Binders, Index Tabs, Laminators, Laminating Pouches, Roll Film, Shredders, and Paper Handling Equipment.
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Why the Real Estate Crisis Had to Happen
We cannot understand the present unless we understand the past The first question to be asked is when did the real estate crisis become inevitable? The correct answer is in the time period between 1980 and 1982 It has been forgotten today but the last real estate crisis in this country were the twin real estate crises of the 1980s In the early 1980s the first crisis was brought on by double-digit mortgage interest rates Then in the late 1980s there was the savings and loan crisis, which in those days provided most of the nation’s mortgage capital In response to these twin crises congress passed two laws that made today’s real estate crisis inevitable . .After these acts were passed it was only a question of time until the stars aligned correctly for the volcano to erupt .In 1980, congress passed the DIDMCA Act Prior to this time, it was illegal to charge less credit worthy customers a higher rate of interest on their mortgage Then in 1982, congress passed the AMPT Act, which allowed adjustable rate mortgages or ARMs for the first time Prior to this act adjustable rate mortgages had been illegal . .If you go back to 1896 when reliable housing records first began to be kept you will find that from 1896 to 1996 housing prices tracked the rate of inflation Then suddenly from 1996 to 2006 housing prices doubled The problem of course in that the income of the American people did not come anywhere near to doubling in that time period .When you stop to think about it, you will realize that it is impossible for the price of housing to exceed the rise in the income of the American people for any sustained period of time Unless there is an enabler, a speculator’s tool that allows this to happen What was the speculator’s tool or device that enabled this process to occur? What was the enabler? . .In the whole of American history there has only been one prior real estate bubble that resembles the real estate boom and bust that we are now witnessing It was the great Florida land boom of the 1920s Real estate has always been expensive What has always held real estate prices in check was that people just did not have enough money to bull prices up for very long The money is just not there The device that enabled the Florida land boom to occur was the “binder ” This is a real estate term that has gone out of use today In the manner in which it was then used it was essentially an option payment on the down payment if you can conceive of such a thing . .What it boiled down to is that people thought they were speculating on real estate but in reality they were speculating on real estate options . .The stock market has long been the ultimate proving ground for speculative tools Those of us who are stock market speculators are very familiar with stock options The only thing that the reader has to know about options is that they are speculating tools that possess tremendous leverage In other words, you can make a killing on a chump change investment . .Both the binder of the 1920s and the ARM are in reality real estate options All options expire worthless if they are not exercised prior to their expiration date Most ARMs were written to expire in two or three years, the fixed interest rate period At that moment the option had to be exercised or rolled over because the option would become worthless People were deluded into believing that they were buying real estate When in reality they were speculating in real estate options As we have seen, the tools for the bubble were in place by 1982 the only thing lacking now was the mania The boom years from 1991 to 2007 provided the mania Real estate prices rose relentlessly It was a boom that seemed like it would never end You couldn’t lose in real estate because no matter how much you over paid because rising prices bailed out everyone . .Today in the aftermath of the boom, we are already discounting the impact on the human psych that manias and bubbles produce To put it bluntly by the end of the boom almost no one could believe that real estate prices could fall This nearly universal belief gradually eroded prudent behavior The more risks you took the more you were rewarded There was no down side . .In the early 90s the use of sub prime mortgages and ARMs were limited-since almost all sub prime mortgages were also ARMs they will be considered as a unit- but as the boom progressed their importance grew and grew .Mortgage brokers just could not stay away from sub prime mortgages They were three to five times more profitable than standard mortgages Once they had sold one they didn’t want to sell anything else The caution that lenders had originally shown toward the new mortgage products was relentlessly ground away as the endless boom continued Caution wasn’t being rewarded, it was being punished There was a Gresham’s Law in effect- Gresham was an economist-in which bad or reckless behavior which was constantly being rewarded by lush profits drove out good or cautious behavior because the profits were inferior In the final years of the boom, conservative firms could not even keep their mortgage brokers from bolting to subprime lenders . .Then around the year 2000 Minsky’s Law kicked in Hyman Minsky was a Noble Prize winning economist . .Minsky’s Law .Over periods of prolonged prosperity the economy evolves from financial relationships that engender a stable financial system to financial relationships that produce economic instability The longer the trend persists the more violent the correction when the trend reverses . .As the boom rolled on the most important factor was that almost everyone was a winner This was true in spite of the fact that subprime mortgages were constantly defaulting at the higher rates that had been predicted Not only was the higher default rate not a problem but everyone was making out like a bandit with subprime mortgages This included the subprime borrower As soon as he fell behind his friendly subprime mortgage broker would be there to write him a new subprime mortgage In fact he often got to take out new money when he refinanced the mortgage It was not unusual to have subprime borrowers take out new mortgages every two or three years during the boom . .If there wasn’t enough equity to suit the lenders, real estate speculators would be pounding at his door offering to take the property off his hands as soon as the notice of default had been published Often at a profit over his purchase price . .The banks were the greatest winners of all They were making a killing It is obscene how much money a bank can make during the foreclosure process as long as someone buys the foreclosed property Not only do they receive all the back payments but the brutal penalty fees as well .
Source: www.rsstnx.com

Real Estate Statistics Not Always What They Seem
Read enough about the Phoenix (or elsewhere) real estate market, and someone will start spouting statistics And while market stats are important to understand, one must exercise extreme caution in interpreting them, or listening to others interpretations . .Let’s take a look at “Days on Market” (DOM), or “inventory”, or “months supply” Whatever you prefer to call it, it is an oft-cited indicator of overall market conditions And generally speaking, it’s not a bad indicator The supply of homes available for sale is a key component in understanding the overall real estate market conditions . .It is important to understand a few things though: . . * Our current market really consists of three major categories of inventory: 1) Bank/lender owned homes (also known as REOs); 2) pre-foreclosure/ short sale properties; and 3) “normal” properties (homes that are owner/investor owned and not in a pre-foreclosure status) . . * Real estate is local And the Phoenix metro area is a BIG place Any time statistics or price indexes are quoted for the entire Phoenix area, you have to understand that conditions across the Valley can vary dramatically Even within a suburb, conditions can vary from subdivision to subdivision Within a single large Master Planned Community, conditions can vary from neighborhood to neighborhood . .The supply of homes is a perfect example The general consensus in the real estate industry is that a six-month supply of homes is considered a “balanced market” Less than a six month supply means we are in a seller’s market and more than a six-month supply is an indicator that we are in a buyer’s market . .At this moment in time, if you look at all the available inventory of homes across the Phoenix metro area, there is a 5 2 month supply of homes . .If you’re a seller, you may be thinking, “Hallelujah! Phoenix is a seller’s market!” and if you’re a buyer you may be thinking, “Crap I should have bought a home a couple of months ago when it was a buyer’s market and I would have had more negotiating power ” . .Let’s look at the categories of inventory that make up this number . .If you extract the data for just lender owned properties, you’ll see a much different picture . .Currently in the Phoenix metro area, there is only a 1 1 month supply of foreclosed homes That indicates a very strong sellers market for foreclosed homes A close examination of the data shows that foreclosure inventory is down, sales are up and pending sales (those homes under contract but not yet closed) are also up . .OK, so now you need to understand why these numbers are what they are And sometimes the numbers alone won’t tell the whole story Nothing in the numbers tell you that some large lenders and the Government Sponsored Entities Fannie Mae and Freddie Mac imposed moratoriums on foreclosures that are in the process of being lifted Nothing in the numbers tell you that there is still a lot of short sale/pre-foreclosure inventory - much of which slips into the lender owned category when it doesn’t sell on the open market . .There are almost 12,000 homes listed in a short sale position And it would take 15 2 months to sell all the existing short sale properties - if there were no more properties placed on the market . .The simple fact is, no home lasts for 15 months in a short sale position The lender will foreclose long before that time period expires . .And what if you are a “normal” seller? Just the guy who owns their home and wants/needs to sell it You aren’t in trouble with the payments, and you’ve got enough equity to sell at current values and repay your loan (and hopefully pocket a little cash at close) . .There is a 11 9 month supply of “normal” homes You my normal seller are still looking at a strong buyer’s market Yes, sales and pending sales are trending up, but they are nowhere close to what they were last year and the year before On average, you can expect it to take almost a year to sell your home And guess what? You also get to compete with that foreclosed home across the street The seller there is a bank that has probably already taken it in the shorts, they have no emotional investment in the home, and they’ve priced it very aggressively to get it off their books . .The Bottom Line . .Not all statistics are as they appear, nor does any one stat tell the entire story Consolidating all types of listings across an area the size of Phoenix metro into one number is usually very misleading Look closely at all real estate stats, keeping in mind that the variations across market segments and location can swing wildly (and change quickly) You should try to understand what the real estate market is like in your location, for your type of home in your situation Just keep in mind that it is very easy to generalize and misinterpret real estate market stats, particularly the data that aggregate large areas of completely different property types .
Source: www.rsstnx.com