Sellers....To List or Not to List...The before or after the Holidays Question

Should I list my home or is it better to wait until after the Holidays? 

The big answer to the question that so many sellers ask themselves as Christmas, Hannakuh, and the New Year nears is not necessarily what you think.

Most real estate professionals always advise sellers to list their homes during the holiday season rather than waiting, citing more serious buyers and less competition among properties, according to a recent survey from Realtor.com.


The property search site's Holiday Home Selling Survey gathered responses from 429 real estate professionals surveyed online between Oct. 26, 2011, and Nov. 8, 2011. The "holiday season" was defined as Nov. 23, 2011, to Jan. 2, 2012.

Among respondents, 60 percent said they would always advise a seller to list a home during the holiday season and agreed that "it's a good time to sell," while 30 percent said they would sometimes advise it if the seller were motivated. Only 1 percent said they would never advise it because "selling during the holiday season is always a bad idea."

The vast majority of respondents, 79 percent, said more serious buyers were one of the biggest benefits of listing during the holidays, while 61 percent said less competition among homes was a plus. Only 17 percent said cold weather making homes look cozy was an advantage.

Indeed, 39 percent of respondents cited winter weather as one of the biggest challenges to putting a home on the market during the holidays. An equal share said buyer vacation and celebration schedules were problem.

But the biggest challenge, noted by 63 percent of respondents, was keeping a home "open house ready," meaning clean and staged, during this time of year.

Selling a home during the holidays requires employing different strategies from selling a home during other times of the year, according to the survey.

More than eight out of 10 respondents said online listing photos were particularly crucial for homes listed during the holiday season. The main reasons cited were that buyers attend fewer open houses because of busy schedules or winter weather, while sellers also host fewer open houses during this time.

The majority of respondents, 74 percent, said pricing a home to sell was even more important during the holiday season, and 40 percent said staging a home was more important at this time of year. Nearly a third said being flexible with contract terms such as move-in dates and when closing costs were paid was more essential during the holidays.

The way a home is staged during this time of year is also significant, according to the survey. Almost all respondents said they advised sellers to put up some seasonal decorations, though there were differing opinions on the types of decorations.

A 37 percent plurality said homeowners should put up some nonreligious holiday decorations to make a home feel inviting, while 28 percent said sellers should put up all of their holiday decorations, including religious ones, to make their home feel festive, the survey said.

A similar share, 27 percent, said sellers should put up seasonal decor that is not suggestive of specific holidays, while 8 percent of respondents advised sellers to stage their home without any decorations at all.

Eighty percent of respondents said they encourage sellers to light their fireplace when staging a home during the holiday season, while 62 percent said they suggested sellers update outdoor lighting because the buyer is more likely to see the home at night due to shorter days.

Other popular staging advice for sellers included using winter-scented home fragrances before an open house, making the home feel more cozy through reading nooks and blankets on couches and beds, setting the table to showcase holiday entertaining, and playing seasonal music that is not specific to a particular holiday, the survey said.

Hope this information you find useful and please feel free to share with others that may benefit from this advice.  I appreciate as always your time in reading my blog and I hope that you have a wonderful Holiday Season! Merry Christmas & Happy New Year :-)

Can't Refinance? Can't Get a Loan? Here's why 2 Million had the same problem in the past year...

Today is some useful information for those of you that are considering applying for a loan, have recently applied for a loan or would just like to know how the process works.

Half of refinance applications are abandoned or rejected, as are 30 percent of purchase mortgage applications, according to the Mortgage Bankers Association. All told, the Federal Financial Institutions Examination Council (FFIEC) says that well over 2 million mortgage applications were rejected last year.


Want to avoid falling into that number? It's tough -- especially in light of the fact that mortgage lenders have become increasingly restrictive in terms of their lending guidelines since the housing market crash.

Here, as a cautionary tale and primer on what to expect, are the top six reasons mortgage lenders reject applications.

1. Income issues. Most failed applications falling into this category have income too low for the mortgage amount they are seeking; often, a spouse's credit issues can create this problem, too, as the income the spouse plans to actually chip in toward the mortgage cannot be considered by a lender.

But increasingly, the recent vagaries of the job market are also causing this issue, as people who have changed their line of work or have changed from salaried employee to freelancer over the last couple of years can also have their home loan applications rejected based on income.

2. Muddled money matters. If the mortgage for which you're applying plus your monthly payments on credit card, car and student loan debts will comprise more than 45 percent of your total income, you could have problems qualifying for a home loan. You might also run into problems if you rely too heavily on bonuses, overtime, cash wages or rental income -- all of these can be difficult or impossible to get a mortgage bank to consider, and if they do, they might not take all of it into account.

3. Credit issues. Today, the mortgage-qualifying FICO score cutoff falls somewhere between 620 and 660, depending on which lender and which loan type you seek. More than one-third of Americans, by some numbers, have credit scores too low to qualify for a home loan. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible.

4. Property didn't appraise. Since the whole industry had its hand (among other things) smacked for allowing home values to skyrocket in a very short time, appraisal guidelines have tightened up -- some would say, even more than overall mortgage guidelines. So, it is increasingly common to have the property appraise for a price lower than the sale price negotiated between the buyer and seller.

This is especially common in the refinance realm, as well over a quarter of U.S. homes are now upside-down, meaning the mortgage balance owed is greater than the value of the home. (If you're trying to refinance an upside-down mortgage, consider the FHA Short Refi program -- contact your lender or get referrals to any mortgage broker who makes FHA details to apply.)

5. Condition problems. With all the distressed properties on the market, and with most nondistressed sellers barely breaking even, more home-sale transactions than ever are falling apart due to condition problems with the property. Many lenders will not extend financing on homes where the appraiser points out problems like cracked or broken windows, missing kitchen appliances, electrical problems, or wood rot.

And in the world of condos and other units that belong to a homeowners association, if more than 25 percent of units are rented (rather than owner-occupied) or more than 15 percent are delinquent on their HOA dues, new applications for refinance or purchase mortgages on units in the development are likely to be rejected.

6. Technical difficulties with application. The days when lenders just took your word for it are long, long gone. Applications with incomplete or unverifiable information are doomed.

If any of these mortgage loan application glitches arise in your homebuying or refinancing process, it's critical that you connect with your mortgage professional, be it your banker or mortgage broker, to determine what course of action to take.

In some cases, it might be as simple as buying a stove you find at Craigslist and installing it before escrow closes; but with income issues your mortgage pro will need to help you determine whether it makes sense to pay some bills down, get a co-signer, or even wait six months so your income documentation will qualify.

Protect yourself or your Buyer in "AS-IS" purchases!

Q: What can a buyer do if the seller includes an as-is clause in the contract and "issues" are discovered from the inspection? Will the buyer lose his deposit if he walks away from the deal after the inspection uncovers, let's say, termites or electrical problems? It would seem to me that a buyer would insist that the as-is clause be removed. --V. Wohner

A: In most states, the phrase "as is" has been defined, over time (and lots of lawsuits) as also indicating that the buyer is taking the property in "as-disclosed" condition. These same states tend to have disclosure standards that require sellers to tell buyers, even as-is buyers, about any "material" issues with the property: things that the seller knows about that would have some influence on the decision-making process of a reasonable buyer.

In other states, though "as is" does not connote any disclosure requirement on the part of the seller. I recall reading an Arkansas case where the seller had known the property's lot flooded every year for many years, didn't disclose it to the as-is buyer, and the court sided with the seller. In these areas, "as is" might well be interpreted as "caveat emptor" (Latin for "buyer beware").

However, in the vast majority of cases, buyers can -- and should -- insert an inspection contingency into an as-is contract. In fact, the inspection is the vehicle for knowing what exactly is going on with the condition of the property. The inspection, follow-up, or specialty inspections and repair bids or estimates are really the only way for a smart buyer to know whether they should move forward with an as-is deal.

Under an as-is contract with an inspection contingency or an inspection period, the buyer will have a certain period of time to obtain his inspections and decide whether he wants to move forward with the transaction, back out of the transaction and recoup his deposit, or back out of the transaction.

If after inspections, the buyer decides to exercise the inspection contingency and back out of the transaction within the time frame provided in the contract, their deposit money is safe and must be returned by the seller.

If, on the other hand, the buyer receives troubling information during the inspection but would still like to move forward with the transaction as is, he can do that.

Some buyers do this, especially when they feel like they are getting a great deal, even with the repair costs, when they can afford the repairs or anticipated them in advance, and/or when the seller is already making nothing on the property, so a price reduction would turn the transaction into a short sale (which might or might not be allowed by the seller's bank).

Other buyers who learn of termite or other work that needs to be done choose several tactics. Some request that the seller complete some or all of the repairs, and insist that if the seller refuses, they (the buyers) will cancel the transaction and request their deposit back. Other buyers request a price reduction, on the same condition of canceling the transaction if the seller cannot or will not do so.

I see it as highly unethical to make a "fake" as-is offer, knowing full well that you plan to come back and ask for repairs or a price cut later in the transaction.

But if you get inspections and are surprised at how much work is needed, or at what it will cost, there is no legal or ethical bar from either backing out of the transaction entirely or making an effort to renegotiate the terms of the contract, so long as you do so within the contingency or objection period time frame provided in the contract.

In most states that allow for contingencies and objections, the buyer is legally able to back out of the contract after the contingency or objection period expires, but will forfeit his deposit or other liquidated damages provided in the contract if he does so.

Consult with your local broker or agent, or a local real estate attorney, to determine what avenues are available in your state and under your contract.

Dead Grass? Tips on How to Properly Water a Lawn

If you live in the Midwest then like me, you've probably recently attempted to off-set the staggering 90-100 Degree Heat Wave we've had to keep your grass alive by watering it.  I thought it was appropriate to find some useful tips to share so that you can maintain a green lawn, or close to it despite mother nature as of recent :)

How to Water Your Lawn Efficiently

The Environmental Protection Agency reports that nationally, lawn care and landscaping accounts for more than 30 percent of water use in the United States.

That is an amazing amount, especially if you consider how much time and energy it takes to treat water to make it suitable for drinking, only to use it on the grass. The worst part of it is that much of this water goes to waste due to inefficient watering techniques.

Knowing how to water you lawn efficiently can make for greener, healthier grass, and big water savings during the year. This article will cover some basic techniques to get the most out of your water when you irrigate your lawn.

When to water your lawn

Water your lawn only when it needs it. The first three to four inches of soil below the turfgrass should be dry before you water. Use an electronic soil tester to test the soil moisture, or use a trowel or a screwdriver to open the soil and feel it with your finger. Another way to test when you lawn needs water is to step on the grass. If you can easily flatten the grass with your foot, you should water it. If the grass regains its form quickly after you step on it, wait to water.

It’s always a good idea to water in the cool of the early morning or the evening to reduce the levels of evaporation. Watering in the morning is best as the water may sit overnight and cause problems with root rot or fungal diseases. Never water on a windy day.

How and how much to water your lawn

Water less frequently and more deeply. If you water deeply, your roots will begin to grow down further into the soil. This means that your grass will perform better during hot and drought-like periods.

One inch of water is a good rule of thumb for your lawn. However, this will really depend on where you live, the quality of your soil, etc. Soil types can make a big difference on how efficiently your lawn uses water. See this site from the Better Lawn and Turf Institute for a guide to how soil types affect watering rates.

Adding organic compost to your garden soil is one of the best ways to improve the efficiency of your lawn’s water use. You should water a little more during the hottest times of the year, and less during the fall. If your area is getting an inch of rain a week, there is no reason to water more. You should save you water until you need it.

Measuring how much you’re watering:

Go out and test to see how much water you’re using each time you water. Remember that your goal should be an inch of water about every week. Place a series of shallow containers throughout your lawn. Turn the sprinklers on and water your grass. When you’re finished, measure the water in the dishes. Adjust the time until the water is about an inch deep.

When you do this test, also observe your grass. If you see pools occurring quickly, this means that your soil may need some adjustment. Adding compost will do the trick.

In the meantime, you can turn off the water once the pools start to form and let the water soak in before you continue to water. If you have a sloping lawn, you’ll want to probably reduce the rate of your sprinkler system so that the water has more time to soak in.

If you have an automatic sprinkler system, this test will also help give you a time setting for your sprinkler system. This technique will also help you determine if your sprinkler system is working well. If you note large discrepancies in the level of water in the containers, you may need to adjust you sprinkler system.

Adjusting your sprinkler system:

Check your sprinkler system to make sure that it’s watering your grass and not your sidewalk, driveway, etc. Check all the sprinkler heads. Some may be clogged or pointing in the wrong direction. Replace and adjust any sprinkler heads that aren’t working properly. You can talk to a professional lawn and garden service if you need help with this. Also check for leaks, broken pipes, etc. If you have a timer for your sprinkler system, set it based on the 1 inch watering system.

How to water new lawns:

For newly laid sod, give the entire area a good, long drink right after you set up your lawn. You should continue with frequent soakings (every 2 days) for about 2 and a half weeks so that the roots establish. After this period, use the one inch rule for watering your sod.

When you seed a new lawn, it’s important to water it properly. You’ll initially want to water more frequently, but without saturating your lawn. You should keep the first few inches of soil moist during the establishment period. It will probably take a little over a month for the roots to begin to establish. At which point you can use the 1 inch of water rule.

Aerating your grass for efficient water use:

Soil aeration is another way to get your grass to use water more efficiently. Aerating your grass involves punching holes in your lawn with specialized aerating equipment.

Through time and continued use, the soil beneath your lawn becomes compacted and this affects water drainage, air circulation, and how efficiently your grass makes use of nutrients. The overuse of chemical fertilizers also can create soil compaction. Thus, aerating your soil is one of the best ways to get your lawn to make the best use of water and nutrients.

You should aerate your lawn to about 3-4 inches deep. A lawn coring aerating tool is a great tool for small lawns. For larger lawns, you may want to go ahead and rent a larger lawn aerating machine. When you aerate your lawn, try passing 2-3 times over the same area so that you properly cover your lawn with enough holes. If you use a machine aerator, make sure you leave the soil plugs on the grass. They should decompose quickly and will return nutrients to the soil.

Other water saving tips for your lawn:

To further increase your water savings, you should mow your grass correctly and use “grasscycling,” which means leaving the grass clippings on your lawn. The grass clippings act as natural mulch, retaining moisture and returning nutrients to the soil. This will improve soil texture and water retention. Reel mowers are a great way to grasscycle. Also, make sure to read this guide to grass cutting heights for more information.

Removing weeds can also help your grass use water more efficiently, as weeds compete with your grass for water. Invest in a good quality weeder to effectively remove weeds from your lawn.

Also, look for drought resistant and water-wise grasses. This website from Texas Aggie Horticulture is a good place to look for grasses that will use less water than standard turf grasses.

To further your water savings, you can use water absorbing polymers (water crystals) in your lawn to help you save water. These water absorbing gel products, such as Solid Water polymer gels, can help reduce the amount you water your landscaping by up to 50 percent.

Water absorbing polymer gels work by absorbing high quantities of water, in addition to beneficial nutrients, and then slowly releasing the water through osmosis. When mixed into the soil, the gel polymers come in direct contact with the roots of your grass. This translates to extremely efficient use of water in your landscaping. Gel polymers are safe for your family and pets and will not cause problems with root rot or soil borne diseases.

Foreclosure Activity falls to 42 Month Low in May!

Is the market finally on its way towards brighter days?  Can we really expect that with foreclosure numbers dwindling that our home inventory levels would finally subside and come down to normal levels within the next year? 

Anything is possible right? haha....Well I being the optimistic person that I am would love to see the foreclosure activity continue to fall, not just a month at a time but month after month.  This would then prove to me and to many others that we are in fact on our way to a recovery.  Yes, I said it....There is hope for a recovery folks but it starts with inventory levels as compared with the number of buyers and as long as we see the number of homes that hit the market decline from banks and short sales then we are on the right track. 

Foreclosure activity falls to 42-month low in May

Default notices drop to lowest monthly total since December 2006

By Inman News

Inman News™

Foreclosure-related filings on U.S. properties fell 33 percent year-over-year in May, hitting a 42-month low, according to a report from foreclosure data site RealtyTrac.

One in every 605 housing units, or 214,927 properties, received a foreclosure-related filing such as a default notice, scheduled auction, or bank repossession. That's a 2 percent drop from April and a 33 percent drop from a year ago.

"Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask," said James J. Saccacio, RealtyTrac's CEO, in a statement.

"First, activity spiked in May for various stages of the foreclosure process in some states, a pattern that has occurred in several states over the past few months. This pattern provides evidence that lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory.

"Second, while the inventory of properties in the foreclosure process has declined steadily over the past six months -- thanks in large part to 16 consecutive months of year-over-year declines in new default notices -- the inventory of unsold bank-owned REOs increased in April and May even as new REO activity slowed in both of those months. That points to continued weak demand from buyers, making it tough for lenders to unload their REO inventory. Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month."

Default notices declined to a 53-month low in May, falling to 58,797, the lowest monthly total since December 2006. Default notices fell 7 percent month-to-month and 39 percent year-over-year.

After eight straight months of decreases, the number of foreclosure auctions scheduled rose slightly, to 89,251, up 3 percent from April but down 33 percent from a year ago.

Bank repossessions fell 4 percent month-to-month and 29 percent year-over-year in May, with lenders taking 66,879 homes into their real-estate owned (REO) inventories.

"Since the so-called robo-signing controversy came to light in October 2010, REO activity has followed a roller coaster pattern, with five monthly decreases and three monthly increases," the report said.

States with a judicial foreclosure process saw activity decrease 45 percent year-over-year in May, while states with a nonjudicial foreclosure process saw activity fall 25 percent year-over-year. Scheduled auctions rose in both judicial and nonjudicial foreclosure states on a monthly basis, 6 percent and 2 percent, respectively. REO activity rose 1 percent month-to-month in judicial foreclosure states and fell 6 percent in nonjudicial foreclosure states.

Five states accounted for 51 percent of all foreclosure activity last month. California had the highest volume of properties receiving a filing (51,906), followed by Florida (19,192), Michigan (14,614), Arizona (13,122), and Nevada (11,039).

Nevada had the highest foreclosure rate among states for the 53rd straight month in May, with one in 103 housing units receiving a foreclosure-related filing that month. Overall foreclosure activity in the state fell 23.1 percent year-over-year, with bank repossessions falling 21 percent from an all-time monthly high in April. Default notices rose 8 percent and scheduled auctions fell 1 percent on a monthly basis.

For the sixth straight month, Arizona held the second-highest foreclosure rate in the nation with one in 210 housing units receiving a filing. Overall foreclosure activity in Arizona fell 18.5 percent year-over-year. Scheduled auctions rose 4 percent month-to-month and bank repossessions fell 8 percent month-to-month but were essentially flat year-over-year.

Scheduled auctions also rose month-to-month in California, 16 percent, though default notices fell 16 percent and REOs fell 25 percent. Though overall foreclosure activity fell 27.9 percent, the Golden State had the third-highest foreclosure rate in the nation, with one in 259 units receiving a foreclosure filing.

Daily Motivation - I THINK I CAN

I THINK I CAN

If you think you are beaten you are;

If you think you dare not, you don't;

If you want to win but think you can't;

Its almost a cinch you won't.

If you think you'll lose you're lost;

For out of the world we find

Success begins with a fellow's will;

It's all in a state of mind.

Life's battles don't always go

To the stronger faster man,

But sooner or later the man who wins

Is the man who thinks he can.

Make a Home Investment in 2011

Location, location, location. In the latter half of 2011 that adage should come back into vogue. But first, more declines. C'mon, you're thinking, you've been hearing for months that prices have been more or less stable nationwide. True, but the still-soft job market, the foreclosure crisis, and the absence of incentives such as the homebuyers tax credit will push down the median home price another 5% or so next year, according to Moody's and Fiserv, before it stabilizes by late 2011 or early 2012.

Individual markets, though, will start diverging from the downtrend by summer. About one-quarter of the nation's 384 metro areas should see higher prices by year-end, and half will see drops of less than 3%.

Certainly, conditions will favor anyone in the market to buy a new home -- or homeowners looking to refinance. Today's record low mortgage rates, averaging 4.2% for a 30-year fixed term, are expected to remain low at least through the first half of the year.

Even if the economy picks up steam in the latter half of 2011, rates are unlikely to climb higher than 5%, says Amy Crews Cutts, deputy chief economist at Freddie Mac.

On top of that, assuming that banks can solve their issues with poorly documented foreclosures, home seizures will revert back to record highs, creating competition for sellers and keeping a lid on home values.

The combination of low prices, cheap mortgages, and a slowly improving job market should gradually entice buyers back to the market, setting the stage for prices to stabilize.

Demand, though, won't be strong enough for values to rise substantially, largely because the weak labor market is depressing new household formation as family and friends opt to live together, and recent graduates return to their childhood bedrooms, says Patrick Newport of IHS Global Insight.
Only about 350,000 households are forming a year, vs. 1.3 million typically. "All you hear about is foreclosures and the supply problem," says Michael Castleman Sr., CEO of housing research firm Metrostudy. "But the bigger problem is demand."

Wildcards: Foreclosures. If the investigations into robo-signed seizure documents and other issues turn up more problems for banks, foreclosures could be halted indefinitely. That would prop up prices in the short run but weigh them down over the long run.

Jobs. Housing demand could rise if the labor market picks up faster than expected. In that case, prices would firm up earlier in the year.

What to Watch: Signs of an improving market: three straight months of rising sales and a decreasing inventory of homes (a six-month supply is considered healthy; today it's 11 months). A local agent or realtor's association can supply you with that data.

Action Plan: Buyers. Don't try to time the market perfectly. Even if prices fall a bit more in your area, mortgage rates could rise later in the year, offsetting the drop. Initially bid about 10% below what comparable homes have sold for over the past three months; go even lower if the area is rife with foreclosures.

By contrast, if well-priced houses in your desired area are receiving multiple offers -- your agent will know -- bid close to list price. But don't engage in a bidding war, plenty more homes will be coming onto the market.

Until your house keys are in hand, don't change your financial profile don't buy a car, take a new job, or pay a loan late. Increasingly lenders are re-pulling credit reports and reconfirming jobs just before closing,

Action Plan: Sellers. Hang on a few more years until the market recovers. Can't hold off? Then try to unload fast.

Prices will be falling in most areas for the next several months and, depending on your location, the foreclosure slowdown in place may temporarily reduce your competition, advises Ellen Klein, a realtor in Rockaway, N.J.

Wherever you are, pricing your home right is key. Buyers typically put an upper limit on their search in increments of $25,000 or $50,000. If your house is priced at $365,000, shoppers who cut their search at $350,000 may never see your home.

Best idea: Slightly underprice your house. More often than not you'll attract numerous buyers who bid up the price, and you'll end up getting fair value in much less time.

Action Plan: Investors. Assuming foreclosures have slowed where you are, hold off until a few months after they ramp up again. Until then, inventory will be limited, and that will set a floor under prices. When you're ready to make your move, paying in cash will better the odds of a winning bid, says Foreman.

Action Plan: Owners. One word: refinance -- even if you just did it a few years ago, urges Keith Gumbinger of HSH.com, a mortgage information publisher.

If you can shave at least one point off your rate and plan to stay in your home for at least four years, a refi makes sense. On a two-year-old $300,000 loan at 6.5%, refinancing will save you $465 a month and $120,000 in interest.

Or go with a 15-year loan, which averages 3.7%. Your payment will jump $225, but you'll own your home 13 years earlier and save $253,000 in interest.

Underwater or have little equity? You may be able to refinance through a federal program known as HARP (for details go to makinghomeaffordable.gov). Have funds to spare? A cash-in refi, in which you put in enough to reach 10% or 20% equity, will let you nab those record low rates.

Flaws in Obama's Mortgage Reform Plan?

Attached is a great article to help you understand better the administrations mortage reform plan and potential flaws in it.

Scaling back housing finance: Fallout feared

Flaws in Obama's mortgage reform plan
By Jack GuttentagInman News™
March 07, 2011
Editor's note: This is Part 1 of a multipart series.

The document the administration recently sent to Congress outlining its game plan for housing finance has both scale-down and ramp-up thrusts. The scale-down thrust, comprising most of the report, involves shrinking the federal government's involvement in the market.
The ramp-up thrust would create a new federal program designed to support the private market. This article is about the scale-down.

Backdrop
The point of departure for this proposal is a post-crisis housing finance system in which only about 10 percent of all new home loans are strictly private. The remaining 90 percent are either acquired by Fannie Mae or Freddie Mac, or insured by the Federal Housing Administration (FHA).

Further, qualification requirements set by the strictly private market are far more restrictive than they were before the crisis, which is the reason their market share is now so low. Before the crisis, risk-based pricing was widely practiced, making loans available over a wide range of risks.

Today, only a sliver of risk-based pricing remains. For the most part, risk-based pricing has been replaced by risk cutoffs. At many lenders, borrowers with a credit score of 800 have to put 20 percent down, and borrowers who put 40 percent down still need a 700 score to qualify. Some lenders will go to 10 percent at 680, but limit the loan size.

Fannie Mae and Freddie Mac have tightened their requirements, but by much less than the strictly private sector. The agencies today will accept a credit score of 620 at 20 percent down, and 680 at 5 percent down. However, risk-based pricing is extensive and many borrowers with mediocre credit, small down payments or both, choose to opt out.

The average down payment on new loans is about 35 percent, and the average FICO is about 765. The agencies have also tightened their documentation and appraisal requirements significantly.
FHA has the most liberal requirements, which are little changed from what they were before the crisis. FHA accepts 3 percent down with a credit score of 580, though many lenders require higher scores so that they won't be tarred with originating too many loans that default. FHA has also increased its insurance premiums.

What scale-down means
The crux of the Obama administration's scale-down plan is a gradual phaseout of Fannie Mae and Freddie Mac, combined with a reduction in the scope of FHA operations. The ultimate goal seems to be a system in which the strictly private market would account for about 85 percent of the traffic, and FHA would have about 15 percent.

The report suggests a number of ways of accomplishing this, including reductions in the maximum qualifying loan size at all three agencies, and increases in insurance charges. The first reduces the number of borrowers who qualify, while the second forces price increases by the agencies that would make the strictly private market more price-competitive.

Implications and consequences
The volume of risky loans, already down sharply from the post-crisis tightening of qualification requirements, will shrink further as the scale-down proceeds. Because a large proportion of risky mortgages are generated by disadvantaged groups, this approach constitutes a reversal of what had been public policy for at least four decades, which was to encourage homeownership among such groups.

Sometime this year, the regulatory agencies will promulgate new rules implementing provisions of the Dodd-Frank bill that require them to define "qualified residential mortgage" (QRM).
These are low-risk loans that exempt originators from having to assume 5 percent of the risk of loss. The split in the market following implementation of this rule will further disadvantage weaker borrowers, since non-QRM loans will carry a higher price if they are available at all.

Softening the blow
The report recognizes the need to go slow and cautiously, but offers no concrete ideas on how to soften the blow. Here are two.

1. The administration ought to set up a task force to determine whether the existing regulatory structure, including the bank examination process, is unduly constraining the strictly private market. If government wants lenders to expand into the space vacated by Fannie, Freddie and FHA, government ought to make sure that it has not itself constructed roadblocks to such expansion.
2. FHA should extend its tentative steps toward risk-based pricing to a comprehensive system in which the insurance premium on every loan reflects the risk of loss to FHA of that loan. This will help keep FHA financially sound, reduce concerns if FHA is pressed to expand into some of the space vacated by Fannie and Freddie, and neutralize political pressures to liberalize terms unduly.

Thanks to Guy Cecala of Inside Mortgage Finance.

Next week: The ramp-up proposal.

Well, please feel free to share your thoughts and insight on the above. Also, please share this and any articles of mine that you feel may benefit friends or family! Thank you and have a wonderful day! Ben

Lots to Love about Investing in Storage Units

I've been a huge fan of and hopefully one day investor into storage facilities for many years now. I've always felt the allure of the business as one of the most recession proof and sounds investments that could be made.

Think about it....The population continues to increase, land does not, and people love to buy things! Many now more than ever are also down-sizing or may have lost their homes and are in need of storage space for their belongings. When the market is booming, the need is also very real as each city finds a storage facility a necessity for its growing population.

Maybe your a fan of the new hit series TV Show Storage Wars...http://www.aetv.com/storage-wars/. As the rave about storage units grows for the avid buyer of units that are repossessed or for the investor looking for a sound place to put their money, the business is hot.

Here are some big companies that have put their money in a big way into this business as of recent. Recent news reports show that a number of companies have been buying up self storage facilities as fast as they can. An Austin firm has pledged to spend close to a $150 million in the next year.

Another spent $53.9 million in the last quarter for a total of just under $90 million on the year. Another announced that it spent $126 million in self storage facility acquisitions for 2010. However, those numbers pale in comparison to what another company has recently announced they plan to do.

Axxcess Capital Ventures LLC and former Universal Self Storage Acquisitions president Troy Downing have teamed up with plans to spend $1 billion to acquire as many self storage units as they can in 2011. That’s right-- $1 billion.

“We believe this is an excellent time in the real estate cycle to acquire self-storage properties...a return to positive growth fueled by a slowly improving economy and Americans shifting to smaller, more affordable housing and needing more rentable storage space for their possessions...Entrepreneurs launching small businesses and online marketers needing to warehouse inventory are added demand factors,” Downey says.

I'm sold....I think that for years to come the rental price per square foot and combination of market trends and growth opportunities makes this one of the best investment opportunties there is.

What Buyers can learn from the Stock Market

Real estate and stocks aren't often compared to one another unless your speaking of a REIT (real estate investment trust) or a stock in a company that focuses on real estate. Most of the time however they are mutually exclusive of one another.

While my career is in Real Estate I've dabbled in more than my share of stocks and share a passion for investing in companies and trends in the stock market. I've made far more mistakes trying to be the next Warren Buffet than I'd care to share however but have learned often more during these set-backs than I have during times when I've been right.

The one thing that I've learned that I can relate to the real estate market for today's buyers is that you shouldn't try to "TIME THE MARKET PERFECTLY".

Timing the market perfectly is a gamble that is never mastered. Even if prices fall a bit more in your area, mortgage interest may rise later in the year offsetting the drop. If your in the market for a new home, now is the time to get off the side-lines and make what could amount to be one of the better investments of your life. If your thinking about investing in real estate and want to purchase a rental property, also a great time to do so.

Of course when making a bid, have some research done to determine what comparable homes have been selling for over the past three to 6 months. Then make a bid 10% below that average number and in some cases more if the area is extremely distressed with foreclosures.

In contrast however, if your area has a home thats been listed at a very strong price and your comps suggest that it is, multiple offers are not uncommon even in this market. Your agent can contact the listing agent to find out about additional offers and if this is the predicament you are in, keep your offer as competitive as you feel you can. This however does not mean to let emotion get the best of you during a bidding war as many homes will be available if this bid doesn't work out for you.

If you are hoping to buy a home soon, another rule of thumb is to keep any and all other big ticket purchases on hold until you have successfully found and closed on a home. Do not purchase a new car, take a new job, or pay any loans late. This could all adversely affect your approval when it comes to the ability to get a loan.

Hope these suggestions and thoughts on the market are useful to you! As you take the next steps towards your new home be sure to find a full time realtor that knows the business, can be counted on to look out for your best interests, and is reliable.

Please forward this and any of my past blogs to anyone that you feel may find this useful information and thanks again for taking the time to read my blog! Ben

Moving? Tips for a Successful Stress Free Move

Tips for a Successful Move

Packing your belongings and moving is often fraught with high emotions and involves a to-do list a mile long. So, it’s tempting to give only passing attention to hiring a mover and the related incidental costs.

That could be a mistake—for your wallet and your peace of mind. Moving can be quite expensive. A typical full-service interstate move costs about $4,300, while the same in-state move might cost about $2,500, according to the American Moving & Storage Association. And while the moving industry has many fine companies, it is notorious for fraud and dirty tactics by so-called rogue movers.

Here are 12 tips to make your move simple and avoid the hassle.

Choose a type of move: You have three basic choices: do-it-yourself, full service and a relatively new hybrid of the two. Going it alone is the cheapest alternative, costing the rental price of a truck, gasoline, packing materials and, perhaps, pizza and beer for friends you rope into helping. With full-service moves, moving within a state is charged by the hour, while moving across state lines is charged by weight and mileage.

With a hybrid move, a mover will drop off a large container at your home for you to pack. The mover will then load the container onto a truck, drive the belongings to your new location and drop off the container for you to unload. Because you’re doing the manual labor of packing and unpacking, it’s far less costly than a full-service move.

Hire a quality mover: If you hire help, get at least three price quotes and do your homework before selecting a mover. Seek recommendations by talking with family and friends, even your Facebook circle. Investigate a company’s reputation with the Better Business Bureau (http://www.bbb.org/), Yelp.com and possibly the paid-membership site Angie’s List (angieslist.com). Check a company’s complaint history at the federal government site, ProtectYourMove.gov.

“People think a good reputation equals expensive, but that’s not true,” said Laura McHolm, co-founder of NorthStar Moving in Los Angeles. “You don’t get a good reputation by overcharging people.”

Look for two things when hiring a moving company: A full-service mover should visit your home in person, not give a quote over the phone or online, and should provide a written estimate, experts say.

Declutter: No matter what type of move you’re making, taking less stuff is cheaper and less hassle. Set up a staging area, perhaps in a garage, with various piles, such as throw out, recycle, donate and sell.For many items, use the rule of thumb, ‘If you haven’t used it in a year, you probably don’t need it.’Be flexible: Like airline fares, moving rates depend on when you book.

The busiest time for movers, and thus the most expensive time for consumers, is summer weekends near the 15th and 30th of the month.If you have time flexibility, ask what rates would be for different days or seasons. If you have extreme flexibility, ask about moving standby: waiting until the mover has extra space and needs to fill a truck.

Save on boxes: Buying new boxes from a moving company is the most expensive choice. To save some money on packing materials, ask if you can buy used boxes from your moving company.Cheaper yet is finding free boxes, ideally from somebody who just moved.

Ask your real estate agent to connect you with other clients who recently moved or look on Craigslist.org. Specialty boxes, such as wardrobe boxes, might be cheaper to purchase at a do-it-yourself moving store, such as U-Haul, than from your mover.

Save on packing materials: If you’re packing your belongings yourself, fill suitcases, laundry baskets and plastic containers with unbreakable items. Use pillows, scarves and towels to wrap fragile belongings.Mail books: If you have a large collection of books, pack them yourself and ship them at the postal media mail rate as it might be cheaper than paying a mover—a 70-pound box would cost less than $30.

Consider consolidation: For long-distance moves, ask about consolidating your stuff on a truck with other people’s as most homeowners can’t fill a full-size moving van. You might have to be flexible on delivery dates and times, but consolidation can be cheaper.

Insure it: Check your homeowner’s or renter’s insurance policy to determine whether it provides coverage for your belongings while in transit. If not, you’ll probably want more than the basic free valuation coverage a full-service mover provides.

The standard valuation is 60 cents per pound per item. That means breaking a 10-pound, $1,000 stereo system would net you $6. You’ll want full replacement-value insurance, which reimburses you what it will cost to replace broken items. But don’t necessarily buy that insurance from the moving company. Moving insurance is likely cheaper from a third party, but be aware that you probably cannot get insurance on boxes you packed yourself.

Be prepared: Plot out where furniture and boxes will go before moving day arrives. The less time movers spend rearranging, the less expensive it will be.In urban areas, reserve a space or two in front of your new home for the moving truck by parking your own vehicle there ahead of time. If the movers have to park too far away to unload, you could incur a “long carry” surcharge.

Stake your claim: If you’re moving for a job, negotiate the best relocation package you can. Unreimbursed expenses might be tax-deductible

The Art of Shoveling Snow!

Who loves snow? Who loves shoveling it? Probably much fewer enjoy the shoveling aspect of the winter guest to our drive-ways and side-walks J Today I’m going to share some thoughts on an article that caught my attention to help save as many backs, and hard-aching bodies as possible, ready?

With the recent snowstorms that have—and still are—pummeling the U.S., many residents will be doing more snow shoveling than ever before. That news leaves some people thinking about all the pain that will come once they’re finally back indoors. However, shoveling snow can actually be good exercise if done safely and correctly.

"Shoveling snow for about fifteen minutes at a time counts as moderate physical activity, similar to a brisk walk," said Terry Carolan, PT, NCS, ATP, clinical manager at Kessler Institute for Rehabilitation. "Adults are generally advised to do about 20-30 minutes of moderate exercise at least three to four days a week and shoveling can help provide that—especially during the winter months when both outdoor temperatures and personal motivation tend to drop."

However, snow shoveling, like most types of exercise, does present some physical risks.Kessler, a leader in the field of physical medicine and rehabilitation, offers these guidelines:

• Drink plenty of water to avoid dehydration.

• Avoid caffeine or nicotine, as they can cause extra stress on the heart, especially among individuals with a history of or are at high risk for a heart attack.

• Dress in layers and be sure to wear a hat, gloves, and sturdy, non-skid footwear.

• Do some basic warm-up exercises before shoveling, such as walking for a few minutes or marching in place. Stretch the muscles in your arms and legs. Warm muscles will work more efficiently and are less likely to become injured.

• Try to shovel fresh snow rather than partially melted and packed snow and lift small amounts at a time using your legs, not your back. Scoop snow in a forward motion and step in the direction as you throw the snow and avoid twisting and tossing the snow over your shoulder or to the side. If possible, try pushing the snow forward rather than lifting.

• Make sure you have a good snow shovel. Many newer models offer ergonomic features to facilitate lifting and throwing.

• Pace yourself. Take frequent rest breaks and avoid over-exertion.

• Most importantly, if you experience any pain in the chest or arm, shortness of breath or profuse sweating, stop shoveling immediately and seek appropriate medical attention.

There you go folks, the shoveling snow how to guide to help you navigate through this sometimes brutal winter and make it out healthy and strong once Spring comes around!

If you feel anyone else you know may benefit from my blog, please forward this article or previous to those friends or family members. I usually stick to articles that are more closely related to my business of Real Estate but will at times throw an article appropriate for the times or season. Have a wonderful day and thanks for reading my blog!

P.S. - Don't forget, if you or anyone you know is in the market to buy or sell a home contact me today, you'll receive the best in service, dedication and my expertise to make it a success! Ben

9 Tips for Staging Your Home to Sell

9 Staging Tips to Sell Your Home Quickly

Surveys show that staging pays off and often helps to sell a home fast. But you don't have to spend thousands to make a big impact. Put the home center stage with these tips!

1. First Impressions Count

Roll out the red carpet for potential home buyers by sprucing up your entryways, especially the one on a lockbox. Welcome mats, planters filled with seasonal flowers, and clutter-free foyers and hallways set the stage.

2. Sell the Space, Not Your Stuff

Remember that the goal of a successful showing is to make a prospect feel at home – like it's theirs, not yours. Put away your extensive personal collections. Less is more: open up your space so prospects can actually see what they're buying.

3. Paint and Elbow Grease Work Wonders

Fresh paint and a thorough cleaning will give you the greatest “bang for your buck.” Remember that neutral walls are your best bet when staging a home for sale.

4. Go with the Flow

Arrange furniture for easy traffic flow. Consider placing a major piece of furniture at an angle, such as a couch or desk. Angles add interest and can create a more open feel.

5. See the Light

Move lamps to dark corners and arrange window treatments so that natural light floods your rooms. Brighter is better, and your rooms will look larger.

6. Go Green

Live plants can add decorative flair, without spending a bundle. Plants and cut flowers have a way of warming up a room.

7. Don't Forget the Outdoors

If you have a porch, deck or patio, clean the furniture and replace worn cushions. Give your deck a fresh finish with a new stain and seal.

8. Make the Kitchen Sparkle

Declutter the countertops by removing toasters, food processors, and other non-decorative items. If you have a breakfast table or counter, put out a couple of table settings complete with place mats, napkins, and dinnerware.

9. Warm Up an Empty Home

If your home is vacant, consider renting furniture for key rooms, but don't go overboard. Ask your real estate professional for advice, based on your home's unique features and selling points.

These are some great starters to get your home prepared for your open house or its introduction to the market. Remember, this market is extremely competitive for sellers and by utlizing the advice you'll find here and other areas you can only help improve your chances for a quick and successful home sale!

Thanks again for reading my blog and be sure to forward this to any friends or family that may benefit. Also, if you are looking to purchase or sell a home, please feel free to contact me direct as I welcome the opportunity to work for you!

2011 Is a Great Year to Buy a Home!

Happy New Year!

2010 is no more and as the New Year is upon us, great expectations, hopes, and optimism is at an all time high for the year 2011. For many, we have anxiously jumped into the year with goals and desires to improve our own lives.

Many new years resolutions involve the desire to quite smoking, excersise more, spend more time with family, vacation more and on and on. How many will be working towards these new goals in 30 days, 60 days and how many will throw in the towel? My hope for all is that each day is met as an opportunity to improve one's life and that these goals are met and succeeded.

Personally I have many personal and business related goals for 2011. Business related goals include helping many achieve the dream of owning their own home. Possibly you already own a home but want to move from your townhome or condo to a single family?

Question is, what can we expect from 2011 and is this a good year to purchase a home?

While I don't hold that magic crystal ball its safe to point out that there are many reasons why you shouldn't wait to purchase your next home or your first home. Lets start with the basics.

Prices

Home prices remain at 2000-2002 limits and in some cases even lower. What does this mean to you? Well simple, if the average person purchased a home in those years the appreciation for that home has gone up and then gone down dramatically in recent years back to this level. For you as a buyer, you are seeing some amazing opportunities to purchase homes that may not see prices this low ever again.

We've seen the average price of a home fall 30-50% from their highs in 2006 and this represents a huge opportunity!

Interest Rates

Interest rates have slowly crept up on the past month and may continue to rise. They are however, still historically very low and should be taken advantage of before they rise much more. If you think that rates may fall again to under 4% and gamble wrong will you regret that? Or, will you see that even though rates have moved up as of late, they are and remain very low and coupled with home prices create a great opportunity? I encourage the latter.

Supply & Demand

Everyday we are confronted with supply and demand and it affects our life in all areas. When we go to the gas station, grocery store or make travel plans, the prices we see are due to this force of supply and demand.

In real estate this remains true as well and in the scenario where the supply is far greater than the demand we call this a Buyers Market. This simply implies that the buyers have an advantage as they are at a premium. Many sellers will take much less for their home and banks are willing to take great losses on mortgages that were foreclosed on due to this. As a buyer, there are so many homes that are available that may fall in to an average buyers price range that it also may cause a lack of motivation to move quickly on homes of interest. I see on a weekly basis however that even in this market, some homes when priced right have multiple offers and can't be over-looked or expected to sit on the market for long.

We may never see a better combination of home prices and interest rates and I hope for all those that have thought about home ownership to consider contacting a professional lender today to discuss this. Once you have spoken with a lender/banker and have determined if you are approved to purchase a home and for what price, then contact a realtor for additional assistance.

For additional information or if you would personally like to discuss your own options, please feel free to contact me direct. I'm available for free one on one consultations and to assist you in any manner as it relates to your real estate goals.

Thanks as always for reading my blog and feel free to use our website at http://www.advantageil.com/ for your home shopping :)

10 Real Estate Predictions for the New Year

10 Real Estate Predictions for the New Year

RISMEDIA, December 22, 2010—

The start of a new year is often a time of reflection, as well as a time of anticipation for the future. It’s no different for real estate professionals, many of whom have weathered the recession and are now optimistic about 2011.

From the return of new construction to the creation of healthier homes, the following are 10 residential real estate trends they see for the coming year:

1.) Building is back: After three years of little to no new development, John Wozniak of Wheaton, Illinois-based J. Lawrence Homes said the builder is excited about 2011. “After a couple of very challenging years, the market for new-construction housing is showing signs of life. Slowly but surely, homes are selling and new properties are breaking ground, such as the two communities we opened this year in Lynwood and North Aurora,” he said. “We’ve had encouraging sales and I believe they point to an uptick for 2011.”

2.) Apartments continue to thrive: If there has been one bright spot over the past few years in the real estate industry, it has been the rental market. “People have realized the many benefits of renting, from having more flexibility with your housing commitments to a higher level of finishes and amenities. And, this demand will continue to outpace supply,” said Steve Fifield, president of Fifield Cos. “Appraisal Research reports that Chicago’s Class A downtown apartments are at a nearly 95 percent occupancy rate, and those numbers will continue to stay very strong for 2011.”

3.) Opting for established: The mega-communities in the exurbs are a thing of the past, said Brian Brunhofer of Meritus Homes. Instead, 2011 will see builders move toward smaller neighborhoods or pockets of homes in established communities. “Close-knit communities with respected homeowner associations, mature landscaping and neighbors waiting to greet you – that attractive quality of life is going to appeal to buyers much more in 2011.” Seconding the movement toward established communities is Jeff Benach of Lexington Homes. “Buyers are looking for a safer investment for their home purchase,” he said. “We won’t see them roll the dice like in the past on a fast-growing town in a far-out suburb. They want a proven area with access to retail development and employment corridors. They don’t want to wait for the surrounding area to be built. They want everything already in place,” he said.

4.) Make it modern: Chalk it up to “Mad Men” or simply a pendulum swing in taste, but either way transitional and warm-modern design will be prevalent in 2011, said Brian Goldberg, a partner in LG Development Group. “Our clients are looking for a cleaner approach to the style of their homes – more mid-century and less traditional with a warm and tailored aesthetic,” he said.Ray Hartshorne, principal of Hartshorne Plunkard Architecture, agrees. “From the single-family side, our clients are gravitating toward modern design instead of strictly traditional, that is simple, clean line exteriors and open floor plans that are comfortable for the family and versatile for entertaining,” he said. “In the multi-family sector, now more than ever, we are seeing an interest in contemporary-themed and luxurious interior design for lobbies and common areas.”

5.) Buying for the long term: The Census shows the average person moves about 11 times, but Jim Chittaro, president of Smykal Homes, predicts that number will slowly decrease. “Thankfully, the idea of a home as a short-term moneymaker is essentially gone, so when people do buy, they’ll do it with the intention of staying put for closer to 10 years rather than two to three,” he said This means people will be studying floor plans more closely, to ensure the home will grow with them, Chittaro continued. “Buyers want to be sure the home will suit their needs not only now, but down the road, whether they plan to expand their family or prepare for kids to leave the nest,” he said. “Floor plans that can adapt to lifestyle changes with flexible features like second family rooms should do well in 2011.”Brunhofer agrees that more buyers will be looking for a home for the long haul. “It’s not just floor plans that buyers are going over with a fine-tooth comb,” Brunhofer said. “Our buyers are very careful about school districts. They want to know they can send all of their children to a school with a proven track record and not have to relocate a few years down the road to ensure a good education.” The shift to long-term buyers will also put long-term builders in the spotlight. “People are hesitant to buy a home from a builder or secure a mortgage from a lender they don't perceive to be well-established,” said Benach. “Buyers want to know their builder is committed to them and the community, and that it’s not about making a quick buck or boosting a shareholder’s financial interest. That personal connection is really important.”

6.) Upping the ante on amenities: In 2011, developers will continue to create new and exciting amenities to differentiate their properties and keep them relevant in the marketplace, said Tony Rossi, president of RMK Management Corp. “Renters are looking for something special, like an outdoor grilling area or special events like dance lessons,” he said.But it’s not just enhanced outdoor spaces in apartments that will matter in 2011. Benach thinks condo and townhome buyers will also place a higher importance on outdoor space in the coming year, especially those who live in an urban setting. “People may realize they don’t need to live with as much square footage inside their home, so to compensate they’ll want a place to call their own outside their home,” said Benach.

7.) High-tech takes over: Running your home entertainment system, appliances and lighting from a centralized control panel is old news. Going forward, we’ll see more homeowners want a smart phone app that can control their residence remotely, noted Goldberg. “Each year, the demand increases for home technology that makes homeowners’ lives easier,” he said. “We’ll get to a point, and some of our clients are almost there, where homeowners can leave work and by activating an app on their phone have all of their home electronics queued up when they walk in the door – the oven is preheated, lights come on and a TV show turns on when motion sensors recognize they’ve walked into the room. It may sound like a movie, but some of this technology we can build into homes now.”

8.) Smaller homes stay the course: The average size of a new home decreased for the first time in decades from 2008 to 2009, and that trend will continue into 2011, said Benach. “This trend is fueled by first-time buyers with smaller budgets, requiring smaller homes,” he said. “New buyers will have to be more conservative with their mortgages and will need to pay a higher percentage for a down payment, which means they’ll need a home with a smaller price,” he said. “People won’t be buying more than they need. So to meet their needs, we’ll see builders continue to trim the size of their homes and look for new ways to make square footage work harder.”

9.) Green and gorgeous: As the green movement continues to grow, high-end builders and developers have found ways to make homes both green and gorgeous. “The old mind set was that a green home couldn’t also be stylish and sophisticated. It was as if the two concepts were mutually exclusive,” said Hartshorne. “But new products and forward-thinking design have proved that today’s homeowners can have both. Also, building a green home doesn’t have to break the bank. We are constantly being introduced to attractive, sustainable building materials that are more cost effective than in the past.”

10.) Healthy homes: When you consider a study by the National Institutes of Health that found the number of people with allergies is as much as five times higher than 30 years ago, the trend toward building homes with a healthier environment will also gain ground in 2011, said Goldberg. “Indoor air quality, low VOC paints and adhesives, and all-around healthier materials are becoming more and more of a concern for people building homes – especially for those with children,” he said. Rick Croce, from Wheaton-based Smykal Renovations, said this trend applies to existing homes, too. “Due to the economy, many people have decided to stay put in their existing home, which means they’ll be investing in changes to make it look better and live healthier,” he said. “We expect to be pricing out more jobs that include installing HVAC systems with better filtration, using low-VOC materials and even replacing old doors and windows to safeguard against exterior pollutants.”

Positive News for Chicago Area

Fewer Homes Underwater! For those of you not privy to our real estate terms, this means that fewer home owners now owe more, than the home that they own is worth.

For the Third Quarter of 2010, the number and percent of homeowners in the Chicago area who owe more on their mortgages than their homes are worth fell. This was the third straight decline, according to a report from CoreLogic. However, the report may be due to homes going into foreclosure rather than price gains but we see this as positive news regardless.

The the third quarter 22.3 percent of home in the Chicago area or 324,741 homes were underwater which was down from 22.7 percent.

What does this mean for the big picture? It may not signal any real breaking news that will catapult the real estate market or build much optimism to help us rebound from 2000 prices but we'll take it! Simply put, any news like this is better than the alternative and we need to keep our heads up and realize that despite tough times, the sky is not falling and things will improve.

I read in a book written from Dale Carnegie last night this quote from Marcus Aurelius...."The happiness of your life, depends upon the quality of your thoughts."

I love this quote and it can be summarized that if you think happy thoughts, you are more inclined to be happy. If you think negative thoughts or fearful thoughts, you most likely are living your life patterning those thoughts.

Keep this in mind as you look towards a great 2011 and success and happiness for the year ahead!

Thinking of Being a Landlord or Investor? Understanding Cap Rate is a Must!

Hello and thanks for reading my blog! If you are not a regular follower of this blog, please subscribe to it today. You'll be glad you did as I routinely share many useful tips for your home, tips on investing, and updates on the real estate market locally and nationally.

Today, I am going to discuss with you how to calculate capitalization rate and why this is a must when investing in real estate.

In order to invest in real estate in income producing properties you must have a method in determining the value of the property you're considering buying and by utilizing the tool of calculating cap rate you can quickly weed out homes that may or may not be a good investment.

So what is cap rate?

Definition: Capitalization rate defines the percentage number used to determine the current value of a property based on estimated future operating income. In other words, taking the net operating income from an apartment complex and dividing it by the capitalization rate would yield the approximate current value of the complex.

The capitalization rate would be determined based on an appraisal and/or the cap rates of similar properties that have sold recently. By taking another apartment project that sold recently, determining it's net operating income (NOI), you would divide the income by the sold price to get the cap rate.

When I review homes, I personally with some exceptions look for properties that have cap rates of 10% or better. For me, this guarantees that once I put money down and purchase the home, that I am immediately cash flowing. Many investors will be happy with less, for me its a number that I try to stick to and have found success.

The Cap Rate is computed by taking the rental net operating income (NOI) and dividing it by the property's fair market value (FMV). The higher the Capitalization Rate is the better.

Cap Rate - Practical Use #1
You can use the Cap Rate to value your property. Let's say that your property generates $10,000 of annual net operating income. Your real estate agent tells you that the Capitalization Rate in your area is approximately 4%. That would mean that the approximate fair market value of your property is $250,000 ($10,000 / .04).

Cap Rate - Practical Use #2
Let's assume that you are looking at investing in two properties. The first property has a projected NOI of $20,000 and an asking price of $500,000. The second property has a NOI of only $10,000 but an asking price of $110,000. Which one would the Cap Rate suggest is a better investment? That's right, the second property since the Cap Rate is 9% ($10,000 / $110,000) versus 4% ($20,000 / $500,000).

Hopefully the above has helped you both understand the benefit of understanding what cap rate is and how to determine what it is for your own properties or others that you are considering investing into.

Want additional information or assistance in finding a great home? Contact me direct for a free consultation where we will work on a personal plan for your own success!