Tiered Real Estate Blog – Reality in Realty

The first bailout has been voted down by the House of Representatives and now we are faced with what to do next. In all of the discussions, I found an interesting article from the Los Angeles Times that offers two points and at least one possible avenue of proceeding.

Something is likely to happen and it is likely to happen soon because no one wants to face the political fallout of doing nothing while the economy collapses (or playing fiddle while Rome burns). Regardless of how we got here, we are here and something has to happen (and if it is really to be the most effective and helpful, politics and greed will have to be cast aside).

We welcome all of your thoughts on the current financial crisis. Feel free to leave comments or e-mail directly to Webmaster@TieredRealEstate.com

I was reading an interesting article written by an agent in Minnesota. This article really was written for real estate agents and discusses how real estate offices stand in the way of buyers and sellers communicating with agents. Also it discusses how agents work out of their home and car anyway.

For the consumer, there is a very important line that is mentioned: “Having … offices costs money, and those costs get passed onto agents and consumers.” Yes, that means that part of that commission that the consumer pays (and the split that gets taken from the agents) is to cover the cost of an obsolete office. The amazing thing is that although offices generally slow down communications and highly inflate the rates that companies charge, a very popular question that I get is “Where is your office?” The truth is that we all have home based offices, but in the 21st century the need for the storefront, brick and mortar building is gone. The internet and cell phones have replaced the need to congregate in one place. Over 85% of buyers research on the internet. That is where the focus should be.

Don’t misunderstand the opinion given here. The real estate company and its agents and brokers should be part of the community. We routinely get involved in local activities whenever we can. What happens to the person that isn’t a part of the community? Then they have no roots or loyalty. They could easily get up and move away. They could get up and be gone. Without ties to the community, without demonstration of care for all of those around, then maybe that person or company isn’t the one that you want to deal with.

Ultimately, if you are a person who thinks that a brick and mortar storefront is required to sell your home, then I suggest re-evaluating your position because the times, they are a changin’.

MLS is an acronym for “Multiple Listing Service.” It is a database where the area real estate agents enter their listings for sale to share with all of the other agents. The MLS in the Chicago area is the largest in the country with over 50,000 agents and brokers and covers an area from Wisconsin to Indiana and past Ottawa and Dwight. Any agent who goes into the MLS can see any home for sale by any agent in that entire area. It is this network that allows most homes to be sold (over 50%). In addition, the MLS provides information to Realtor.com so that your home can appear there as well.

If you want your home in the MLS or are looking for a home, don’t hesitate to contact the experts at Tiered Real Estate!

the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun has commented on the Fannie Mae/Freddie Mac takeover. You can read his comments here:

http://blog.thehill.com/2008/09/09/federal-govt-had-no-choice-in-fannie-freddie-situation/

He has some good comments and wraps it up by mentioning four areas that the ‘restructuring’ needs to address (or at least consider).

Your thoughts?

There are still many people facing short sales. If you are one of them, then this generic list of commonly required items may be helpful:

• Hardship letter – A letter to the lender/mortgage company explaining why you need to sell for less than you owe
• Bank Statements – Copies of all recent bank statements
• Pay Stubs – Copies of all pay stubs for at least the last two months
• Tax returns – Copies of your tax returns for the last two years
• 3rd Party Authorization letter – A letter to the mortgage company where you give the lender permission to discuss your loan with your real estate agent. Be sure to give your agent’s name, company and contact info on the letter

You will need to provide your agent:

• Mortgage/Loan number
• Any contacts (names/phone numbers) that have already been given to you
• Any payoff letters that you may have received
• The date/information concerning a sheriff sale
• You may need to provide the last four digits of your social security number (which the lender will use to verify your account. Do not give anyone else these numbers and do not give more than the last four digits!)

Your agent will have to provide to your lender/mortgage company:

• Copy of your listing agreement
• Copy of the purchase contract
• Copy of a pre-approval letter for the buyer
• An Estimated Settlement statement (also called a HUD-1)

Please note that all of these documents will have to be submitted to all lenders/mortgage holders and that all documents need to be signed. For specific details, be certain to call your lender right away.

If you are facing a potential of foreclosure, do not wait to receive sheriff sale information. Let your real estate agent know immediately and do your best to sell your house. It is much better to have a short sale on your credit than a foreclosure!

Effective this morning (Sunday, September 7th, 2008) we now live in a Socialist country. Our government owns over 50% of all the homes in the United States. This is a result of the government’s takeover of Fannie Mae & Freddie Mac who backed over $5 TRILLION in mortgages (more than 50% of the total in the US). This US takeover is only supposed to last until the end of 2009, if the two giants can get their acts together and the housing industry can rebound. As American citizens, it is crucial that we make certain that the givernment relinquishes their hold on the housing market in a year and a half. Otherwise, we don’t live in the same America of our forefathers.

I hope that we (i.e. the industry, the government) learn from this mistake and prevent the bubble bursting that we have watched for the last couple of years and next time work on an ounce of prevention and hopefully pass on the pound of cure.

Have a blessed week!

I came across an article about housing prices and the possibility that the decline could be worse than the great depression. There are two things that strike me about this brief article.

First, it hints that we may be near the bottom as far as the decline in home prices is concerned. While it does say that we could drift down some more, it gives us an indication that the crash, and the most difficult decline, is over. It does dispel the myth that prices will jump right back up. The rate of increase in housing prices in a normal market is slow and steady. As we proceed through the cycles we have adjustments (most not as severe as this one) but historically, real estate is a slow and steady march upward. When we hit the bottom, it will take several years for prices to start going up and they will not recover all of their losses for many years.

Second, even though prices may have plunged on a level equivalent to the great depression and our debt ratio is so extremely high (which is a concern for the overall economy), we still haven’t had a repeat of the changes in the landscape of the American public like we did in the 20′s & 30′s. We don’t see the Joad family. We don’t see millions of people crossing the country looking like the Beverly Hillbillies searching for that elusive job. Yes, we see millions losing or giving up their homes, but the impact has been different. These people have shifted from owning to renting. They have shifted from spending lavishly to being forced (largely by not having access to enormous amounts of credit) to spend conservatively. They have shifted from one income to two and not raised their nose at that minimum wage job that the business owner had trouble filling a couple of years ago.

Yes, the housing correction has been extremely painful, but more and more indicators are that the worst is over and while the glory days will not return in the near future, we do know that they will return. They always do.