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92% Say Home is Good Investment

August 21st, 2009 5:50 AM

92% Say Home is Good Investment

Reported by Sheyna Steiner, Bankrate.com

The financial publishing web site Bankrate.com recently commissioned Princeton Survey Research Associates International to gauge the attitudes of Americans about finances and family life and discovered several surprises.

"American families are stricken by fear about finances, but not enough to change their savings behavior,"reports Bankrate.

The markets have shaken people's faith in certain bedrock financial principles, but the American dream of homeownership remains alive and well.

Among the survey findings: About nine out of 10 (92 percent) survey respondents believe that a home is a good investment for the future. Four out of 10 Americans (39 percent) don't believe the stock market offers the best chance for long-term returns, but 49 percent do have faith in the market.

Preferring homes as investments as contrasted to the stock market seems off base, given each of their respective historical returns. A study to be published this fall in the Journal of Portfolio Management found that in the last three decades, the average annual return on residential real estate was 5.92 percent versus 12.33 percent for the stock market, as measured by the Standard & Poor's 500.

"Over time, the stock market is more liquid with a higher rate of return, but in the short term much more volatile," says Jack Clark Francis, professor of finance and economics at Baruch College and a co-author of the study called Contrasting Real Estate with Comparable Investments, 1978-2008.

"In the past 10 years, many investors have been burned by the stock market twice and have been scared out of equities as a result," he says.

Yet why do so many Americans believe that homes are good investments, despite the hits taken lately by the real estate market?

"Most people are not selling their homes, so they don't see the possible illiquidity that is in the market or any of the negatives that are on that side," says Jeffrey D'Italia, senior financial professional at Firstrust Financial Resources. Also, people track their investments more closely than they follow the value of their home.

"Houses are homes first and investments a distant second," offered Bankrate's Senior Financial Analyst Greg McBride.

"Even then, housing is a long-term investment and not a get-rich-quick scheme. What makes homeownership attractive is that over time it can rebate some of the costs, unlike renting," stated McBride.

Survey interviews were conducted from July 16 to July 19, 2009, under the direction of Princeton Survey Research Associates International.

Link: Financial Attitudes

Posted by Customer Service on August 21st, 2009 5:50 AMPost a Comment (0)

How not to sell your house

August 17th, 2009 8:48 AM

How not to sell your house
Common mistakes sellers make

Reported By Mary Umberger, Chicago Tribune

If you're trying to sell a client's home, you've probably counseled them about all of the basic preparations needed for getting their home ready for market. Keep it clean. Eliminate clutter. Use neutral colors.

That's all true. But there are things that sellers do - or refuse to do - that can jinx a sale. Chicago Tribune reporter, Mary Umberger queried local agents about their uncooperative clients and got an earful of horror stories. Here's a short list of proven items that are sure to kill your sale.

Refuse to get real about the price

"If you don't have a motivated seller in this market, you're not going to have a deal," said Honore Frumentino, a Prudential Preferred Properties agent. "The days of testing the market are gone, and the price has to be on the money. Sellers have to be at the bottom 30 percent of pricing [for comparable homes] and in the top 30 percent on the house's condition."

Be fatally insulted by lowball offers

"I tell all sellers that 100 percent of buyers are coming in with lowball offers these days," said Lino Darchun, an agent at Coldwell Banker. He said it's usually a mistake not to respond to an offer that seems overly low. Sellers have to counteroffer," he said. "I've seen (low ball) offers come up to an acceptable level.' "

Insist on being present at showings (and chiming in with comments)

Baird & Warner agent Fran Bailey said she had a client who felt uncomfortable with the seller being present during a showing. Bailey politely asked the seller if he'd step outside. "He said no, and announced that he was the narrator and would lead a tour," Bailey said. "My client shook her head and got back into the car and left."

Clients will often "throw out things like, 'That basement hasn't flooded in 40 years,' and the buyer hasn't even been to the basement yet," Darchun said. "And all of a sudden the buyer is thinking, 'I'll bet the basement floods.' "

Ignoring the curb appeal

Frumentino said some homeowners are oblivious to overgrown bushes or cracked sidewalks. "Some people go in through the garage and never walk up to their own front door," she said. "I tell sellers, 'Let's walk up this path, because that's how buyers are going to see you.' "

In multiple offers, automatically choose the highest one

"Believe it or not, we still get multiple offers, and it's sometimes a mistake to accept the top dollar, but not the most-qualified buyer," Darchun said. "I've seen a dozen deals fall apart where the seller took the top dollar but the buyer only had 5 percent down or had to sell their own home or any number of different things that they weren't putting into the offer."

Let your dog have the run of the house during showings

"Once, I rang the doorbell for a showing and this horrendous barking started up," Bailey said. "I looked in the window and the dog was clearly not in his crate. Needless to say, that house did not get shown. Maybe they thought the dog was friendly, but my clients and I were intimidated and we left."

More Seller Missteps: How to not sell your house

Posted by Customer Service on August 17th, 2009 8:48 AMPost a Comment (0)

FHA Market Share Tops

August 17th, 2009 8:20 AM

FHA Market Share Tops
35 Percent, New Record

By the Mortgage Bankers Association

WASHINGTON, D.C. - The government-insured (FHA and VA loans) share of mortgage applications was 35.9 percent in June 2009, the highest level since November 1990, according to the Mortgage Bankers Association.

Based on data from MBA's Weekly Mortgage Applications Survey, the government-insured share jumped from 25.7 percent a month earlier and 27.0 percent in June 2008. Since the MBA survey's inception in January 1990, the lowest recorded share was 5.8 percent in August 2005.

The government-insured share of purchase applications in June was 38.6 percent, up from 27.8 percent one year ago. The government-insured share of purchase applications has averaged 36.6 percent to date in 2009, compared to an average of 21.8 percent during the same period in 2008. The low point was in August 2005 when it was 6.8 percent.

Low down payment requirements are popular

"A primary reason government-insured loans have retained a high share of the purchase market is that these loans typically require lower down payments than conventional loans," said Orawin Velz, MBA's Associate Vice President of Economic Forecasting. "In addition, lending standards tend to be tighter for conventional loans, especially for loans that require private mortgage insurance."

"While the government-insured share of purchase applications has remained elevated, the government-insured share of refinance applications has been volatile. Refinances hit a record high share of 38.4 percent in October 2008. As mortgage rates fell sharply between mid-November through early May, refinance activity surged for conventional loans.

"This surge in conventional refinance applications dominated the market, causing the share of FHA refinance applications to fall below 20 percent for most of this year.

"Recent increases in mortgage rates have caused conventional refinance activity to drop much more sharply than government-insured refinance activity due to a combination of credit and LTV requirements. As a result, the government-insured share of refinance applications climbed to 33.6 percent in June," Velz said.

Link: FHA Market Share

Posted by Customer Service on August 17th, 2009 8:20 AMPost a Comment (0)