D.S.News.com reports that Capital Economics experts predict that the housing crisis will end this year.  The primary reason is that banks are loosening credit standards. You no longer have to be Donald Trump to buy a basic home!

Five years ago buyers could qualify for a loan when their FICO credit score was in the mid to low 500s. (Fair Isacc Corporation developed a formula to apply to an individuals credit history which predicts the likelihood of a that borrower being 90 days late on their mortgage payment. The scores range from 300 to 850) The factors considered are: 1) payment history, 2) credit history length, 3) Recent searches of their credit record, 4) Other factors, such as types of credit used, recent improvements or declines, court or tax liens…)  It now takes a FICO score of 700 to qualify for a mortgage loan.

During the housing spike, one could obtain a loan for 100% of the purchase price.  In the past year, few borrowers could get a loan for more than 75% of that purchase price.  Lenders have recently loosened that requirement and most are back to a loan of 80% of the purchase price if other factors pass muster.

Lenders are also now lending amounts of up to 3.5 times a borrower’s annual income, up from 3.2 times in recent years.

The days of 100% financing and “liars loans” are long gone.  Borrowers still have to meet stringent standards to qualify for financing.  The good news is that lenders are loosening up on most of those standards a little bit at a time.

The lenders are being very cautious, however, they have new loans to stay in business, so the market is slowly righting itself.

Select this link for the full DS News story:

http://www.linkedin.com/news?actionBar=&articleID=5567733516482908167&ids=dj8QdP4Ud3gQdzsRe34OejoRdiMRcPkVdjgUdzgUczkRdPsUdzkRb3sOdj8RdjAPcz0UcPcVdPASdjkIczsQejcRcj4Oej8TdPwQdPoRdiMTdz4Uc3AOe3gScjkPcPsTdzkR&aag=true&freq=weekly&trk=eml-tod2-b-ttl-0&ut=1jY48NKE9SMB41

If you have questions about obtaining a loan, feel free to call or text (916) 337-0658 or e-mail Mike@BuyYourVilla.com .

This is one in a series of brief videos designed to provide buyers and sellers information about the sale and purchase of real estate.  The data provided helps people better understand the market place and the process of buying or selling.  The tips are offered so that you can leverage your position in that purchase process.  Knowledge is power, or at least a tool with which to increase your chances of success.

If you are thinking of buying or selling in our area, we will be happy to assist.  Just call (916) 337-0658, text or e-mail us at Mike@BuyYourVilla.com.

This is the latest monthly report of a four-year study of bank owned home sales in El Dorado Hills, CA.  This report covers December 2011.

There were six bank owned homes sold in El Dorado Hills in December, down one from the previous month.  A low inventory is the primary reason.

The average days-on-market increased from 29 in November to 79 in December.  One of the homes had been on the market for over 100 days.  Some old inventory was cleared out.  None of the homes that sold had been on the market for two weeks or less, which is very unusual.

The six bank owned homes that sold represent only 8% of ALL homes sold in El Dorado Hills this month.  This is a much smaller segment than normal, despite the increase in inventory.

The available inventory of bank owned homes in El Dorado Hills spiked at a 2.4-month supply in December, the second highest inventory level in 2011…  The available inventory for ALL homes available dropped from a 2.9-month supply the previous month to a 2.2-month supply in December, the lowest inventory level in 2011.  Pundits advise that a 6-month supply is a neutral market, so we are still looking at a strong seller’s market for ALL homes in El Dorado Hills. 

The average cost-per-square-foot for Bank Owned homes was $ 150 in December, up considerably from $ 126 in the previous month, and the highest in the past fifteen months. The average cost-per-square-foot for ALL homes sold in El Dorado Hills in December remained $ 153 for the second month in a row.   

The overall sales price for bank owned homes was 94.9% of the final asking price and 87% of the original asking price.  Only one of the buyers paid the full asking price in December.  The banks did not do a very good job of estimating the market value of their “toxic Assets” that sold in December.

Bank owned homebuyers paid 98% of the cost-per-square-foot for their REO home when compared with the cost-per-square-foot for ALL homes sold in December.  That is only $ 3 pre-square-foot savings.  When applied to a 2500 square foot home that represents a savings of $ 7,500, much less than usual. 

If you have any questions about purchasing any home in El Dorado Hills, an El Dorado Hills Bank Owned Home, or a Bank Owned Home anywhere in the area, feel free to give us a call (916) 337-0658.

The data follows:

This is the latest monthly report of a four-year study of bank owned (REO) home sales in Folsom, CA.  This report covers December 2011.

There were 16 REO homes sold in Folsom this month, up from 12 the previous month.

The average days-on-market increased from 49 the previous month to 67 in December. Two of the homes had been on the market for over 200 days and two others had been on the market for over 100 days.  Obviously, some of the old inventory was cleared out. However, 38% of the homes that sold were on the market for two weeks or less, proving once again that well priced homes in good condition sell quickly.

The 16 REO homes that sold represent 23% of all homes sold in Folsom this month.  The very low bank owned home inventory is one reason for this statistic.

The available inventory of bank owned homes in Folsom dropped to a 7-month supply, the lowest inventory level of bank owned homes in the past 15 months.  The inventory for bank owned homes in Folsom peaked at a 2.8-month supply in January and has steadily declined since. The available inventory for ALL homes available decreased to a 1.6-month supply, down from a 2-month supply the previous month.  Pundits tell us that a 6-month supply is neutral market, so Folsom remains a strong seller’s market for both bank owned homes and all other homes on the market.

The average cost-per-square-foot for bank owned homes was $ 141 in December, unchanged from November. The average cost-per-square-foot for ALL homes sold in Folsom in December was $ 157, up one dollar from the previous month.  It has been moving within a narrow range for the past year.   

The overall sales price for REO homes was 96.50% of the final asking price and 89.38% of the original asking price.  Both of these numbers are lower than usual.  The 89.38% number is a reflection of the banks ability to judge the true market value of their “toxic assets.” They did not do well on those homes sold in December.  In addition, only 32% of the buyers paid the asking price, or more, for their bank owned homes in December.  That too is lower than usual.

Based on the cost-per-square-foot statistic, bank owned homebuyers paid 10% less for their home than did buyers of non-bank owned homes in December. When we apply that to a 2500 square foot home, it represents a savings of $ 40,000: a considerable savings.    

If you have any questions about purchasing a home in Folsom, a Folsom REO, or an REO anywhere in the area, feel free to give us a call (916) 337-0658.

The Data Follows:

This is the latest monthly report of a four-year study of bank owned home sales in El Dorado Hills, CA.  This report covers November 2011.

There were seven bank owned homes sold in El Dorado Hills in November, down from 10 the previous month.  A low inventory is the primary reason.

The average days-on-market decreased from 56 in October to 29 in November.  None of the homes had been on the market for over 100 days.  Twenty-nine percent of the homes that sold were on the market for two weeks or less.

The seven bank owned homes that sold represent only 16% of ALL homes sold in El Dorado Hills this month.  This is a much smaller segment than normal, largely due to the low available inventory.

The available inventory of bank owned homes in El Dorado Hills decreased from a 1.7-month supply the previous month to a 1.5-month supply in November.  That inventory level has not been over a 2-month supply since March of this year.  The available inventory for ALL homes available dropped from a 4.2-month supply the previous month to a 2.9-month supply in November.  Pundits advise that a 6-month supply is a neutral market, so we are still looking at a seller’s market for ALL homes in El Dorado Hills. 

The average cost-per-square-foot for Bank Owned homes was $ 126 in November, down one dollar from the previous month. The average cost-per-square-foot for ALL homes sold in El Dorado Hills in November increased to $ 153, up from $ 146 the previous month. 

The overall sales price for bank owned homes was 101% of the final asking price and 97.1% of the original asking price.  Yet 86% of the buyers paid the full asking price or more for their bank owned homes in November.  Apparently, these homes were well priced and buyers decided to take advantage of those prices along with excellent mortgage interest rates.

Bank owned homebuyers paid 83% of the cost-per-square-foot for their REO home when compared with the cost-per-square-foot for ALL homes sold in November.  That is a $ 23 pre-square-foot savings.  When applied to a 2500 square foot home that represents a savings of $ 57,500, a considerable sum. 

If you have any questions about purchasing any home in El Dorado Hills, an El Dorado Hills Bank Owned Home, or a Bank Owned Home anywhere in the area, feel free to give us a call (916) 337-0658.

The data follows:

This is the latest monthly report of a four-year study of bank owned (REO) home sales in Folsom, CA.  This report covers November 2011.

There were 12 REO homes sold in Folsom this month, one less than sold the previous month.

The average days-on-market increased from 45 the previous month to 49 in November. Only one of the homes had been on the market for more than 100 days. However, 17% of the homes that sold were on the market for two weeks or less, a smaller segment than normal.

The 12 REO homes that sold represent only 14% of all homes sold in Folsom this month, here too a smaller segment than normal.  The very low bank owned home inventory is a primary reason for this statistic.

The available inventory of bank owned homes in Folsom rose to a 1.2-month supply.  The inventory for bank owned homes in Folsom has not exceeded a two-month supply since February of this year. The available inventory for ALL homes available decreased to a 2.1-month supply, down from a 2.4-month supply the previous month.  Pundits tell us that a 6-month supply is neutral market, so Folsom remains a strong seller’s market for both bank owned homes and all other homes on the market.

The average cost-per-square-foot for bank owned homes was $ 141 in November, down from $ 153 the previous month. The average cost-per-square-foot for ALL homes sold in Folsom in November was $ 156 for the second month in a row. It was $157 in September and $155 in August. 

The overall sales price for REO homes was 99.21% of the final asking price and 95.30% of the original asking price.  In addition, a full 59% of the buyers paid the asking price, or more, for their bank owned homes in November.

REO buyers paid 91% (or fifteen dollars per square foot) of the cost-per-square-foot for their bank owned home when compared with the cost-per-square-foot for ALL homes sold in November. When applied to a 2500 square foot home, that represents a savings of $ 37,500: a considerable savings.    

If you have any questions about purchasing a home in Folsom, a Folsom REO, or an REO anywhere in the area, feel free to give us a call (916) 337-0658.

The data follows:

If you have had the patience to read through the previous posts in this thread, many of which go into great detail about loans, you now have an idea of what to expect and the long term impact the decisions you are about to make will have on your future. There is an old saying, “forewarned is forearmed.”

REO Property Update

It may be a good time to discuss some aspects of the current market for our local area.  Bank Owned properties (REOs) are a significant segment of that market.  At least 25 percent of the homes sold in the past year have been REOs.  They are properties that have gone through foreclosure.  The bank now owns them and puts them on the market for resale.  The banks are not  in the real estate business by design and they would like to clear these “toxic assets” off their books.

However, the banks are just like any other seller.  They want to get as much as they can for each property.  Observing the activity, the asset managers seem to be as vulnerable to poor decision making as are individuals who sell their own homes.  REOs often come on the market over priced.  When they sit on the market without receiving offers, the asset managers then reduce the prices and the properties do eventually sell.

Over 25% of the REO properties in pending sale status (properties for which a purchase price has been agreed upon by the buyer and seller and are waiting for the buyer to complete their inspections and wait for lenders to process and fund loans) were on the market for FOURTEEN days or less.  So, well priced homes in good condition sell quickly.

Historical data shows that REO properties consistently sell for a lower price per square foot than do all properties that sell, usually by five to ten percent.  That fact coupled with buyer perception that REOs are the best deal on the market creates an interesting dynamic.  Buyers frequently find themselves in multiple offer situations (an undesirable position for a buyer) when placing offers on REO properties.  Buyers find that if they really want a property the have to submit an offer OVER the asking price.  The banks want to create a bidding atmosphere, increasing the selling price considerably.

The perception that a buyer could pick up an REO property for fifty to sixty percent of the asking price was always a pipe dream.  In today’s market the myth has evaporated completely.  My four year long study of REO sales in El Dorado Hills and Folsom, CA clearly shows that it is difficult to get any bank to lower their price more than 5% of the asking price.  It does happen in rare instances but it is more common for an REO to sell at, or over the asking price.

If one views the data with perspective, a five percent reduction in asking price still represents a significant savings.  The key is not to let emotion take control and pay above market price for any REO property. 

Also remember that REOs are sold AS/IS.  The buyer usually has to pay for their own inspections and repairs.  The only thing the bank usually guarantees is a clear title to the property—an important issue.

Of course, each property is unique.  Each has to be studied individually. Once you find a property that you like, you should ask your Realtor to do extensive research.  When you decide to make an offer you should know about as much about the property as possible.  Understand what the market value of the property is and do not offer more than that market value.

There are a lot of excellent buys out there.  You just have to expend the effort to find them and decide on the one which meets you needs and wants.

To review the latest Bank Owned Home Sales Data for El Dorado Hills, Ca select this link:

                         http://www.ByuYourVilla.com/blog/page/4/

Of course, I would be pleased to help you find that ONE.  Just give me a call. (916) 337-0658

 Stay tuned for part 7.

Freddie Mac, one of the two huge government sponsored enterprises that buys mortgages on the secondary market from lenders, has announced a “Winter Sale” on a number of their bank owned homes.

These homes, offered through their “Homesteps” program, include some attractive benefits for homebuyers.  In order to be eligible for this program the buyer has to occupy the home as their principal residence.

• The program lasts through January 31, 2012
• Escrow must close on or before March 15, 2012
• Freddie Mac will pay up to 3% of the final sales price toward the buyer’s closing costs
• Homes purchased through this program are covered by a two-year limited home warranty covering heating, air-conditioning, electrical, appliances, plumbing and other major systems
• The home protection component will also offer a discount of up to 30% on the purchase of appliances

For a complete list of eligibility requirements go to  http://www.HomeSteps.com/smartbuy

That site also has a link to all homes available through this program.

For a list of homes available through this program select this link:http://www.homesteps.com./featuresearch.html

If you have any questions about this program or would like to visit any of the eligible homes, feel free to give us a call at (916) 337-0658.

FHA STILL CHARGING BORROWERS INTEREST ON PAID OFF MORTGAGES!

During the housing boom in the early years of this century lenders applied innovative solutions when developing loan products. These solutions were designed to eliminate some of the loopholes that borrowers exploited that prevented those lenders from getting a maximum return on their investor’s dollar.  

One such innovation is the prepayment penalty.  There is a considerable cost involved for a lender to complete the approval process and fund a loan.  A borrower must make their monthly payments for well over a year before the lender recovers those costs.  If the borrower paid off the loan before those costs were recovered the lender, and their investor, lost money.  Unhappy investors to do not reinvest with the same lender, so the lenders developed a prepayment penalty. 

If a borrower paid off the loan balance before a specified period, they would owe thousands of dollars in additional penalty fees.  In order to make those loans more attractive to borrowers those loans came with a lower interest rate.  Many borrowers did not understand what the prepayment penalty was all about or accepted the loan package thinking that they would never pay the loan of early anyway.

However, if the borrower tried to refinance or sell their home before the specified period lapsed, they quickly learned the meaning of the term “prepayment penalty.” 

Now that the government is involved in trying to clean up the problems in the housing market, prepayment penalties are one of their targets.  They are directing changes in loan disclosures and other documents in an effort to make borrowers aware of the pitfalls involved in accepting a loan with a prepayment penalty. 

We applaud their efforts but question how effective they will be.

The irony about prepayment penalties is that the FHA has a rule in place that, in a narrowly defined set of circumstances, equates to a prepayment penalty.  The fact is that if a borrower pays off an FHA loan, they must pay interest for the full month.  Therefore, if a borrower pays off a loan in the 15^th of the month, the FHA is still charging interest for the period from the 16^th to the end of the month!  This situation exists, in spite of all of the government intervention in the mortgage loan process over the past year or more.

At this writing, the only way to beat the system is to pay off your loan on the last day of the month.

Ken Harney of Inman News has written a comprehensive article on this subject.  Select this link to review his article.

http://lowes.inman.com/newsletter/2011/11/10/news/161420

BANK OWNED (REO) HOME SALES DATA FOR EL DORADO HILLS, CA – OCTOBER 2011

This is the latest monthly report of a four-year study of bank owned home sales in El Dorado Hills, CA.  This report covers October 2011.

There were 10 REO homes sold in El Dorado Hills in October, a 33% decline from the previous month.  A low inventory is the primary reason.

The average days-on-market increased from 35 in September to 56 in October.  Two of the homes had been on the market for over 100 days. Only 20% of the homes that sold were on the market for two weeks or less, a smaller than normal segment.

The 10 Bank Owned homes that sold represent 24% of ALL homes sold in El Dorado Hills this month.

The available inventory of bank owned homes in El Dorado Hills increased from a 1.5-month supply the previous month to a 1.9-month supply in October.  That inventory level has not been over a 2-month supply since February of this year.  The available inventory for ALL homes available increased from a 3.7-month supply the previous month to a 4.5-month supply in October.  Pundits advise that a 6-month supply is a neutral market, so we are still looking at a seller’s market for ALL homes in El Dorado Hills. 

The average cost-per-square-foot for Bank Owned homes was $ 125 in October, down from $ 137 the previous month. The average cost-per-square-foot for ALL homes sold in El Dorado Hills in October dropped to $ 147, down from $ 151 the previous month. 

The overall sales price for REO homes was 98.8% of the final asking price and 93.1% of the original asking price.  Yet 50% of the buyers paid the full asking price or more for their REO homes in October.  Apparently, these homes were well priced and buyers decided to take advantage of those prices along with excellent mortgage interest rates.

REO buyers paid 85% of the cost-per-square-foot for their REO home when compared with the cost-per-square-foot for ALL homes sold in October.  That is a $ 22 pre-square-foot savings.  When applied to a 2500 square foot home that represents a savings of      $ 55,000, a considerable sum. 

If you have any questions about purchasing any home in El Dorado Hills, an El Dorado Hills Bank Owned Home, or a Bank Owned Home anywhere in the area, feel free to give us a call (916) 337-0658.

The data follows: