Home sellers and real estate agents have a new worst enemy: inaccurate home value appraisals.

Even as prices begin to stabilize and buyers re-enter the market, the appraisals many banks rely on to approve financing are causing some deals to fall apart at the last minute or forcing sellers to agree to lower prices.

Lawrence Yun, chief economist for the National Association of Realtors, said the appraisal problem is serious.

“Lenders are using appraisers who might not be familiar with a neighborhood or who compare traditional homes with distressed and discounted sales,” he said. “In the past month, stories of appraisal problems have been snowballing from across the country, with many contracts falling through at the last moment.”

Washington real estate agent Jeffrey Tanck agreed. Tanck, with the Czuba Group at McEnearney Associates, said bad appraisals have affected two of his deals in the past three months.

“In one case, a $364,000 condo came in $80,000 less than asking,” Tanck said. “That buyer was using an out-of-town lender who had no concept of this market. Another appraisal on a $317,000 coop came in $27,000 under, forcing the buyer and seller to meet halfway.”

The potential problem inaccurate valuations pose to sales can be seen in numbers that measure pending sales of existing homes. Those represent contracts that are signed but sales that haven’t closed, and are usually considered a more forward-looking gauge of housing sales.

Earlier this month, the NAR reported that pending home sales in April rose for the third-straight month, advancing 6.7 percent from March, with pending sales up more than 3 percent from a year ago. By contrast, closed sales of existing homes in May rose 2.4 percent and remained nearly 4 percent below year-ago levels.

The NAR’s Yun said he sees a danger of a delayed housing market recovery and a further rise in foreclosures “if appraisal problems are not quickly corrected.”

Tanck said part of the problem is too much work and too few appraisers, who he said are in demand right now.

“People are buying, and lenders and appraisers are both busy,” Tanck said. “But lenders should make sure they’re using appraisers with the correct market knowledge.”

Still, many indicators continue to point to stabilization in housing. The nationwide May increase in existing home sales was the first month-to-month increase since September 2005.

A separate report Tuesday from the Federal Housing Finance Agency showed declines in prices moderating, with the average U.S. home price down 0.1 percent in April from March. (All contents of this site © American City Business Journals Inc. All rights reserved.)

Click Here to Read What to Do if you Get a Low Appraisal

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In what could be a “Here we go, again” scenario, Barney Frank (D) and Anthony Weiner (D) have ask Fannie Mae and Freddie Mac to back off on  tightening loan standards for condominum’s.

In March, Fannie and Freddie announced that they would no longer underwrite mortgages on condo’s located in buildings where less than 70 percent of the units were Sold.   Their previous policy required that 51 percent of the units be Sold, before loans were guaranteed.

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U.S. home prices fall another 6.9 percent in April, from levels seen one year ago.   The catalyst seems to be record foreclosures, rising rates and the highest level of unemployment in the past 26 years.

More troubling news…home buyers and people looking to refinance have retreated to the sidelines, as mortgage rates creep back up to nearly 6 percent for a 30 year fixed rate loan.

Although the Federal Reserve is working to keep rates low, concerns about rapidly growing government debt, inflation, and the likelihood of a further decline in real estate values continue to push rates higher.

Tax incentives and other efforts to stimulate housing sales have not been able to keep up with the number of people losing their homes.   In May, filings surpassed 300,000 for the third straight month.  Foreclosure filings are predicted to reach 1.8 million in the first half of 2009, alone. 

To read about predictions for Real Estate Prices Going Forward, CLICK HERE.

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Charles McMillan, President of the National Association of Realtors, held a conference in Ft. Worth, TX and told attendee’s that “The dream of homeownership is alive and well in the US.”

Highlights include:

• Homes are selling under two conditions.  People are buying, if the home is priced right and financing is affordable.
• Good news, if your home is in a first-time buyer’s price range.  The $8000 tax incentive is working.  Nearly half of all home sold have been to first-time buyers.
• Cheap prices drive sales.  In CA, NV, FL and AZ where prices are down over 50 percent, existing home sales are dramatically increasing.  Bidding wars are not uncommon.

McMillan is optimistic about the housing market, in spite of his real estate experience.  McMillan began his career in Fort Worth, TX in 1983, one year after the Texas market crash in 1982.  Ironically, the prices of home in Texas are still below their pre-crash levels, 27 years later.

Thank you for visiting Why 6 Percent.  If you want to market your home to 10 million home buyers each month, without paying 6 percent of your sales price to do so, call us today at 1-800-381-9496.

We found two homeowner’s who don’t need to worry that they over built or spent too much to live in their neighborhood.

Tiny buyer’s only.  The buyer of this home doesn’t have to worry about being the biggest home in the neighborhood, but they may need to worry about stretching out without kicking the wall or breaking a window. 

If you’re looking for an example of a home that is under built for the neighborhood, take a look at this.   The property must be in a great location because the neighbors are spending a lot more to live here than this guy.

Thanks for having some fun with Why 6 Percent.   If we can assist you with an MLS and Realtor.com listing for your property, please call us at 1-800-381-9496.   Our marketing package reaches 10 million home buyers each month.

To see more pictures and read about the features of this home, CLICK HERE.

Thank you for visiting Why 6 Percent.  We can list your home on the MLS and Realtor.com for $399….Why Pay 6 Percent???    Buyers, check out some great deals on real estate at InfoTube.net.

Johnny Isakson, a Republican Senator for Georgia has a solution for jump starting the housing market.  Tax credits for everyone.  And, double down.

As the housing recovery continues to falter in the face of rising interest rates, fuel prices, unemployment and continuing foreclosures.  A Republican Senator has introduced legislation that expands the $8000 tax credit program for first time buyers.

• The proposal increases the tax credit for purchasing a home to $15,000.  Nearly double the current $8000 credit.
• The proposed bill would allow everyone who buys real estate to qualify for the credit.  It waives the requirement that disqualifies buyer’s who have owned property in the last 3 years.
• Income Requirements are out the window, too.  Even Donald Trump, and other millionaires, would qualify for the $15,000 incentive.
• Landlords and Investors are Welcome.  Multi-family units qualify for the tax credit, as long as the owner lives in one of the units.
• Deadline for Purchasing is Extended.  The plan would extend the generous benefit for up to one year, after the bill passes.  Buyer’s could extend closings well into 2010, if the bill passes.
• Taxpayers can Collect Early.  The bill allows taxpayers to earn the credit now, by amending their 2009 tax return for purchases made in 2010.  Also, no waiting until you file your in 2010 return in April of 2011 to collect the $15,000.

The bill has a lot of respected, powerful, co-signers on board, including Senators Lamar Alexander (R-TN); Jim Bunning (R-KY); Saxby Chambliss (R-GA); Chris Dodd (D-CT); John Ensign (R-NV); Joe Lieberman (ID-CT); Lisa Murkowski (R-AK); James Risch (R-ID); David Vitter (R-LA).   Also, giving two thumbs up to the plan is the National Association of Realtors (although, not a surprise).

In light of the stalled US economy, what do we have to lose?  The costs of carrying distressed property are staggering, both financially and emotionally.  Millions of vacant neglected homes are a blight on otherwise good neighborhoods.  Distressed properties continue to drag down home values across the board.   Getting rid of excess inventory improves cash flow for lenders, gets bad assets off the books and encourages more lending.

If providing a tax credit to any buyer willing to jump into this uncertain market environment will help the American taxpayer, then why not?  We have certainly spent much more money witjout the prospect for doing this much good!

Thank you for visiting Why 6 Percent.  We have a marketing program which exposes your real estate to over 10 million homebuyers each month.  Best of all, the cost is only $399.  You can’t sell your home by waiting on a drive by.  Call us today at 1-800-381-9496 to learn how we can help you  succeed, like we have helped thousands of other seller’s.

Britney Spears new song is ”Opps I Reduced it Again”.  Britney bought her Beverly Hills Mansion in January 2007 for $7.1 million big ones.  She listed it for sale in September of 2008 for $7.9 million, hoping to do little more than break even after shelling out $426,000 to the 6 percent listing firm.   On June 2, 2009, Ms Spears dropped her asking price $1.4 million to $6.5 million.  Ouch, hit me baby one more time indeed.

Dan Marino.  Great guy.  Great quarterback.  But, the Florida hero is forced to come up with a new game plan if he plans to score the sale of his Weston, FL estate.   Dan and his wife listed their estate for $15.9 million in 2006.  In June 2009, the Marino house is still sitting on the market with thousands of others.   In June, Dan went back to the playbook and slashed the price down $2.4 million, bringing the asking price to only $13.5 million.  Always cool under pressure, Dan turned up the heat on all other competiting properties by throwing in $1.5 million in custom furnishings and a personally autographed football into the deal.  

Alex Rodriguez is under a lot of stress these days.  A-Rod, sexy baseball player and past boyfriend of Madonna, recently struck out in the real estate market.  A-Rod bought his Coral Gables, FL mansion in December of 2004 for a cool $12 million.   He listed it for sale in October of 2008 for $14,876,000 and slashed the price in June 2009 to $11 million…down $3,876,000.    A painful forced error for A-Rod.  Maybe cuddling up with his new cutie, Kate Hudson, will get him through the pain.  

Thank you for visiting Why 6 Percent.  Our program places your property in front of 9 million home shoppers each month.  For Only $399, showcase your home in front of the hot, white spotlight for 6 months or more.

Few buyer’s, low appraisals and tight fisted lenders are encouraging some seller’s to consider “rent-to-own” options in order to sell their property.  

Lease with the option to purchase agreements are effective tools for selling a home.  They are ideally suited for “would be” buyers who have financing issues or don’t have a down payment saved.  But, before you jump in, educate yourself about the pro’s, con’s and the proper way to draft the agreement.

How Does Lease with an Option to Purchase Work? 

• Generally the buyer pays an up-front fee, usually  from $1000 to 5 percent of the sales price.  If the buyer completes the purchase, the upfront fee is credited to them at closing.  If they do not purchase the home, the seller keeps the fee.

• Generally, the buyer agree’s to pay extra rent each month.  The normal rent is used by the seller to pay the mortgage, maintainence costs, etc.  The extra rent is credited to the buyer and lowers the purchase price at closing.

The Pro’s of Lease Options

• Because the typical contract term is typically from one year to 36 months, it gives the buyer ample time to establish job history, correct credit problems or save for the down payment needed to obtain financing for the home.

• During the option period, the buyer can lock in today’s reduced price, yet, continue to look at other neighborhood’s, area’s and properties without fully committing.

• The seller receives cash upfront, the normal rent for the property and extra rent that they can use to offset the costs of ownership.  The seller does not have to refund any money, if the buyer doesn’t exercise the purchase option.

• The homeowner will likely get a tenant that cares more about the property condition than an average renter.  Because the buyer has committed their own money and plans to own the home at a future date, it is likely that they will care more about maintenance, upkeep and paying the rent on time.

The Con’s of Lease Options

• Buyer and Seller need a well written agreement, drafted by a knowledgeable attorney.

• The Buyer can lose their investment.  If they can’t obtain financing by the end of the rental period, they forfeit the cash paid into the deal.  If the buyer falls behind on the monthly payments, they lose the extra rent and money paid upfront.

• The Seller may get the home back, if house prices fall below the agreed upon sales price.   The seller can opt to renegotiate the price, but net profits may be lower than if the property was sold now, versus at a future date.

• Some renter’s have been burned by seller’s who hide the fact they are going through a foreclosure proceeding on the property.   After a period of paying inflated “rent” and upfront fee’s, the seller may lose the home to the lender, in which case the tenant will be evicted and lose all the money paid into the deal.

• Some Seller’s are Foreclosure Scammers.  Some seller’s take the upfront money and run, never to be seen or heard from again.

• If home prices increase, the seller would lose money, if the agreed upon purchase price is lower than the market price.  In the case of home price inflation, the seller may benefit from renting the property now and forgetting the option to purchase in the future.

Thank you for visiting Why 6 Percent.  We have helped thousands of sellers market their property and keep more of their money.  Ask us about our low cost MLS and Realtor.com marketing package for sellers.   We can help you reach thousands of buyers every month for $399.

Recent reports find that nearly one in every four current home sellers (not seller’s of bank owned property) have dropped asking prices an average of 10.6 percent from their original listing price.

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