Utah Market Watch

$6,000 Government Housing Grant Approved

2009-03-17T08:14:00.003-06:00

Utah is leading the way in economic recovery by choosing to ACT now and make smart decisions on our future and what drives our economy. Amazingly enough if you go downtown right now you will find more building construction going on then in most of the country given the current economic state. Construction drives this great state and Utah would like to get housing construction back on track. One way to do this is to clear out builders standing inventory and Utah has just approved a new grant to help do so.

With Governor Jon Huntsman’s encouragement our state legislature has passed a state sponsored housing stimulus program this week. This down payment assistance program, administered by the Utah Housing Corporation (UHC), will be available to qualified buyers of newly constructed homes. A total of $10 million has been appropriated by the state legislature. This appropriation will provide $6,000 grants for 1,666 Utah home buyers.

Just as the state acted quickly home buyers must also act quickly to claim their grant. Once the money for this program runs out.... It's gone.

To apply for a grant, an application must be submitted by the homebuyer’s lender. A grant can only be locked in when the loan is fully underwritten. The funds are wired in by UHC at time of closing and can be used to pay closing costs, buy-down rates, or as the down payment towards the purchase of any newly constructed home.

You do NOT need to be a first time home buyer to apply for this grant, however if you are a first time home buyer you can use this grant and still qualify for the $8,000 first time home buyer tax credit.

As long as the buyer meets income requirements of $75k for an individual and $150k for couples filing jointly a Home Run grant can be used on the purchase of any newly constructed home.

Key Program Facts

• The $6,000 Home Run grants can be used with the $8,000 federal tax credit
• Funds are immediately available at closing
• Home Run grants are only available for newly constructed homes
• Must be occupied as principal residence within 30 days after closing
• Co-signer can sign on loan but not on Title
• Income limits are the same as the Federal First Time Home buyer Tax Credit
• Deal must be fully underwritten in order to apply for grant
• Mortgage lender must request the funds for the buyer by submitting the following:
o Appraisal
o Certificate of Occupancy
o “Clear to Close” Form
o Grant Request Certification
• Conventional, FHA, UHC, USDA, VA and other loan types are eligible as long as it is a 30-year fixed rate loan
• $6,000 grant may need to be claimed as taxable income (a definitive ruling from IRS is pending)

My team is currently leading the way on this new grant and working with lenders in the know to make this grant a reality for as many as possible. Rates are low, new construction home prices are down, and down payment assistance is back for a limited time!

If you are in the market for a newly constructed home purchase I would love the opportunity to help you take advantage of this new program.

Please visit our new site www.ListedInUtah.com where you can view eligable properties by clicking on the "Home Run" button. If you have any specific questions please call me any time

-Dave 801-330-3963

Winning industry innovation

2009-03-06T07:58:00.009-07:00

Has officially teamed up with:

Listed In Utah.com has recently been completely redesigned to give the buyer the complete online buying experience without all of the fluff. This is a completely listing centric website designed around properties NOT agents. You can search all homes listed on Utah's MLS system updated in real time.

Listed In Utah.com brings you the best local search around allowing several advanced searching techniques such as:

Search filtering right down to the finest detail, find the home you really want!
Search by price changes, catch a new hot deal the moment it is changed.
Search by BANK OWNED properties specifically
Search APPROVED SHORT SALES
Save your searches and allow for price change e-mails
All this and more in an easy to use search platform that will allow you to search directly from the home page. No more searching through mounds of mindless information just to find the search button!

We have now added the powerful RealEstate.Com brand to further support our growth. RealEstate.com will dramatically increase traffic to our listings by allowing your home to be posted on the LARGEST national Real Estate stage in the nation.

The Process:

When a prospective buyer visits RealEstate.Com, your home will show up as a featured home and seperated from the rest since you have listed your home with a RealEstate.com agent.
When the buyer shows interest in your property and requests more information the will be contacted within 30 seconds!!! While they still have your listing up on their computer screen.

With our award winning call center there is NOBODY in the industry that can provide this kind of customer service and response.

The key to selling your home is MAXIMUM exposure. Many companies can say they give you maximum exposure but do they really? It's not about getting you ON all the websites it's about where you land on those sites. Don't get lost in the crowd.

New Housing bill H.R. 3221 Passes...

2008-07-28T09:42:00.004-06:00

H.R. 3221 passed

The long awaited housing bill passed and is awaiting a signature from President Bush who is expected to sign the bill Tuesday July 29, 2008. Below I will break down each part of the bill and explain what this actually means. There are a lot of items addressed in the bill and it is important to understand how this will help and hinder in each case.

GSE Reform:

GSE is "Government Sponsored Enterprise" (or entity), otherwise known as Fannie Mae and Freddie Mac. GSE reform will include a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median price, capped at $625,000. The effective date for reforms is immediate upon enactment, except loan limits which go into effect December 31, 2008 after the expiration of the economic stimulus limits.

This permanently increases the conforming loan limit. This will allow more people to get into homes without entering the "Jumbo" category and paying a higher interest rate.

FHA Reform:

FHA reform will include permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price capped at $625,500. FHA reform also includes streamline processing for condos. The effective date for the reform is immediate upon enactment, and the loan limits go into effect at the expiration of the economic stimulus.

This is a big win for all as FHA is quickly becoming the financing type of choice, and this will increase the loan limits for this type of financing.

Home buyer Tax Credit:

As I have recently blogged about, a $7500 tax credit that would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years. For more information on this topic please see my blog titled "Home Buying Tax Advantages".

This is an incredible incentive for first time home buyers when used properly and can be a great financial tool.

FHA Foreclosure Rescue:

A refinance program for home buyers with problematic sub prime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. There are some important time limits on this and it is a rather lengthy topic I will be blogging about separate this week.

This will help stop the stream of foreclosures and keep people from walking away from their sub prime mortgages.

Seller-Funded Downpayment Assistance Programs:

This portion codifies existing FHA proposal to prohibit the use of down payment assistance programs funded by those who have a financial interest in the sale. This prohibition does not go into effect until October 1, 2008. If you are looking to buy a home and need the seller to pay your 3% down payment, I would recommend you do so now!

Seller funded down payment works like this; FHA says that your down payment of 3% can come from a non-profit organization. For years the work around has been non-profit organizations set up to assist in this process. The seller would agree to contribute 3% to a non-profit such as Nehemiah and in turn the non-profit would pay your down payment minus a fee for the service. According to the bill a non-profit can still pay your down payment however it can no longer be funded by anyone with a financial interest in the property i.e. the seller.

This means buyers are going to have to have some skin in the game. The seller can still pay your closing costs in many cases but the buyer will be responsible for bringing in the 3% for their down payment.

Believe it or not this is actually a good thing for our market. Studies have shown that the less money someone brings in on a home the more likely they are to default.
VA Loan Limits:

This is a temporary increase of VA loan limits to be the same as the economic stimulus limits through December 31, 2008. If you are going to get a VA loan and you want to be able to go up to a higher loan amount you have until the rest of the year to do so.

GSE Stabilization:

This allows the treasury department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.

The last few weeks the stability of both Freddie Mac and Fannie Mae have driven the markets down. This information confirms the continued stability and support for these organizations.

Mortgage Revenue Bond Authority:

Authorizes $10 billion in mortgage revenue bonds for refinancing sub prime mortgages.
National Affordable Housing Trust Fund:

Develops a trust fund funded by a percentage of profits from the GSEs. In it's first years the fund would cover the costs of any defaulted loans in FHA foreclosure program. In out years the trust fund would be used for developments of affordable housing.

CDBG Funding:

Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.

LIHTC:

Modernizes the low income housing tax credit program to make it more efficient.

Loan Originator Requirements:

Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC - insured banks. The purpose is to prevent fraud and require minimum licencing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state.

In Conclusion:

This is simply an outline of the bill and I will be tackling each item individually through out the week to further explain the effect this bill will have on an item by item basis. This was a much needed bill for the nations real estate market and will help to get things back on track.

If you are thinking of buying a home this year and would like to know how this bill will affect you please contact me as soon as possible to discuss your situation.

Correction: 1101 homes sold in June

2008-07-21T07:45:00.004-06:00

Last minute numbers came trickling in:

The county recorders office was caught off guard in June and wasn't prepared to record 1101 sales. It took a little longer for everyone to get all the information in and recorded but now near the end of July we have a final number of 1101 homes sold in Salt Lake County in the month of June.

Pulling numbers:

I went back to re pull numbers because of a disturbing article I found in the Real Estate section of CNN money. This article was speculating on the expected drop in median home price in 75 of the 100 largest cities. Obviously I looked down the list to find Salt Lake City as we have been tracking the growth of the sales price. To my surprise I saw Salt Lake City expected to lose 9.8% of it's value on median home price. A 9.8% drop in the median home price in one year is completely unheard of in Salt Lake City and I can't find a year where that has happened. One article prior on the same web site shows a first quarter median home sales price INCREASE of 3.5% listing the median home sales price in Salt Lake City at $225,700. The article that shows the decline between now and may of 2009 shows our median home price at $229,000, published may 8th 2008, which would mean by a little over 1 month into the second quarter we were showing another 1.5% increase. Bringing the total increase in 4 months to 5% by their own reporting. How can someone report a 5% increase in the first part of 2008 to a 9.8% drop by May of 2009, in my opinion based solely on speculation and mere guessing, with a straight face?
Anyone that has done any serious tracking of Salt Lake City's home market can see that there has not been a single month since 1995 that our home sales price has dropped by more than 2 or 3% and furthermore will not find a year with an average home sales price drop.

The reason I investigate these articles is because I track the numbers very close for Salt Lake County and report and source them right here in this blog. When I see this kind of malicious speculation by a well known source it is easy to pick out the manipulation of the article. $229,000 is a healthy median home price for Salt Lake City. The average home sales price in Salt Lake County for June of 2008 was $278,042 as reported by the Wasatch Front Regional Multiple Listing Service. This is higher than reported in 159 of the last 162 months.

This is not an attempt to slander anyone:

I am not trying to put down the credibility of any organization. I am simply calling for a large scale public awareness to common media manipulation. The thought pattern that "if it's on the internet it must be true", has become a reality. The kind of reporting that I have seen over the last 12 months has been malicious and dangerous and this is simply a call to action for all of us to question the corporations that have better ratings when the news is bad. If you would like a copy of the statistics from the Wasatch Front Multiple Listing Service please e-mail me.

Home Sales Up In June

2008-07-11T06:08:00.003-06:00

Utah is no longer considered part of the West?

CNN reported today that ALL of the West experienced a drop in home sales. Once again our actual numbers reported by the Wasatch Front Regional Multiple Listing Service paint a very different picture. I think it is safe to say the number of homes sold in June are in and have been reported at 1,074 homes sold in Salt Lake County. This is up from May's 1,064, and Aprils 997. The average list price and reported sold price are both up as well. The average list price for June was $286,887 up from May's $281,180 and April's $278,355. The sold price is up to $279,401 up from May's $274,294 and April's $271,198.

Are you ready for the big number?

Home sales are up 69.13% since the beginning of 2008. The average sales price is up 4.2% in Salt Lake County since January of 2008. We have come a long way this year and are hitting some very positive numbers.
Do you remember the last housing crisis?

If we are in a housing crisis this year with the total number of homes sold for June at 1,074 then by that very definition you must clearly remember the housing crisis of 1996, 1997, 1998, 1999, 2000, 2001, and 2002 right? Well don't feel bad I don't remember those housing crisis years either and we are above or close to June numbers for all of those years.

Homes sold in June Historically:

1996 - 933
1997 - 886
1998 - 1027
1999 - 1146
2000 - 1173
2002 - 1158
2008 - 1074

If those years were not considered "Housing Crisis" years than it must be said that in the best of those years 99 home sales separate a "good year" from a "crisis year". What can be said for 1996 and 1997? We had sold 208 fewer homes in June of 97 and 141 fewer in June of 1996. How did we ever manage to pull out of that one?

Ignore the negativity and do what makes sense to you:

We have not had a crisis year in Utah. In fact historically we have not had a crisis year. We have sold a few less homes this year than last year. Our property values continue to increase and we have better and safer loan choices available to us now. We are not a dramatic state in increase or in decline so don't expect dramatic headlines from me. If it makes sense for you to sell your home or a buy a new one, if you need to down size or your family is growing, you can feel safe that you are in a great place to do so.

Salt Lake County Home Prices Rising

2008-07-01T15:16:00.005-06:00

Can it be true?

I hear so many people talking about home prices dropping by incredible numbers each and every month and many times I have found myself questioning where this data comes from. The truth is that home prices in Salt Lake County are increasing, and have been since November of 2007. When a home is bought or sold through the MLS, and most are, that data is recorded. The MLS tracks the total number of homes sold, the total volume, the average list price, the average sold price, the list to sale ratio, as well as days on the market per county. This information is the most accurate and up to date data available. I am constantly blogging this information to the public to help raise awareness about what is really going on, so here is another attempt to try and bring clarity to an otherwise confusing housing market.

The Numbers Through June:

As you can see from the chart above, since the begining of the year both the listed price and the price homes are selling for has continued to climb. The rate of appreciation is lower but homes are still appreciating. When I hear that home prices are falling by as much as 10% I am forced to go to the numbers and see for myself. Home prices are up around 2% from January to June of 2008. Another number that sticks out to me is the DOM field or "Days On Market". The average time it takes to sell a home in Salt Lake County currently is 60 days. Sixty days on the market is not very long especially when I am hearing comments like "Homes are not selling", or "Homes are just sitting". The truth of the matter is that Utah has a strong economy and a very strong housing market and prices are continuing to increase at a healthy rate. All of the numbers for June are not in yet but it is looking like we will break 1100 homes sold in June. This is exactly what I had expected as pointed out in my previous blog post.

How the numbers are reported:

The media typically will report over a time frame which fits their story. For instance if home sales are up from last month but they are down from this time last year they will use a year over year scenario. If we are up from last year but down from last month you will reiceve a month to month blurb about the housing market. Up to this point the news that I have seen has been comparing 2007 - 2008 simply because the last half of 2007 was down and into the first half of 2008. There is an interesting scenario about to happen and I am curious to see the outcome. As we have reached the half way point in 2008 and the market is really stabalizing and improving at a healthy rate, the media will no longer be able to make a year over year comparison to promote bad news. July of 2007 showed the first significant drop in home sales and average home sales price. If the media is consistant and makes their year over year comparison for July they will have to report a huge increase in number of homes sold and will no longer, by their definition, be able to report a troubled market. In July for the first time in a year you will either have: A) Good news from the main stream media about the housing market, or the more likely scenario B) No news at all because good news typically does not sell. Homes, on the other hand, do sell!

It's STILL a great time to buy and you CAN still get a loan. If you would like the actual statistics for any other county in the state of utah feel free to send me an e-mail and I will send you the data so you can compare the numbers for yourself.

Salt Lake County Breaks 1000 Homes Sold In May

2008-06-13T08:50:00.009-06:00

What is a normal Market?

You have seen the headlines, "Home sales drop dramatically", "Home sales decline 50%", etc, etc. If you are a regular visitor to this blog, then you already know I like to challenge headlines with "actual" numbers. Often we forget to look at where these numbers are coming from. We had a housing boom, although it was slightly more modest in the great state of Utah, we were affected by artificially inflated home sales. Many would consider the housing boom to have begun early in 2004 and to have tapered off here by the 2nd half of 2007. Taking a look at housing numbers during the boom will give us a clear understanding of what inflated housing sales numbers look like. Lets take the best months and compare straight across. The following numbers reflect homes sold in Salt Lake County.

As you can see here our sales really peaked in 2005 and 2006 with a high of 1953 sales in June of 2005. Since the June numbers are not in for 2008 yet lets look at May across the board. If you were to take May of 2007 and compare it to May of 2008, you could make a really strong case and a very misleading headline that home sales in May were down 65% from last year to this year. However the numbers on this chart are inflated quiet a bit due to the housing boom.

2000-2003 compared to 2008

Comparing 2000-2003 to 2008 will give a better comparison of a normal Real Estate market for Salt Lake County outside of a housing bubble setting.

If we take the same comparison as above you can see that we are getting very close to our 2000, 2001, and 2002 numbers. 2003 inched higher on the verge of the housing boom. While there is no doubt that 2008 has been the worst year on record in the last 8 years, is it really as bad as it looks when compared to more accurate data? In fact if you only take March to April data over the last 8 years we are mirroring 2002 and 2003, some of our healthiest years on record, where Aprils housing numbers increased over March.

The 8 Year Look:

Comparing year over year on the eve of a housing boom and right in the middle of a mortgage crisis can give very entertaining numbers. Remember bad news and wacky news sales. Over the last 2 years I have yet to see one news story that has made these gigantic comparisons with an explanation of what is normal and healthy. It is impossible to determine what a normal market is on such a small scale, specifically year over year. So lets see how we are doing since the start of the century:

Looking at this graph you can clearly see the housing boom. I urge you to print this off, take out a pen, and draw a line from May of 2000 to May of 2008 to get a more accurate feel of where our market currently is. I am sure you will see that our market is making a strong push back to a healthy, "Normal", market.

June is already looking good:

The numbers for June are not in yet but the mortgage and real estate professionals I have spoken with are busy right now working with buyers and new borrowers. My prediction is that June will stun us all pushing numbers well beyond 1100 homes sold in June. May's numbers have already told me that the decline is over and the numbers are beginning to level off. I believe June will only further make make this case. We live in a conservative state, our housing boom was conservative, and our decline in home sales was small compared to the rest of the nation. We have made it through the "housing crisis". Pat yourselves on the back and get ready for another 8 great years of steady economic growth in the state of Utah.

Avoiding Forclosure and What to do if it's close

2008-06-05T08:22:00.005-06:00

The Number of Foreclosures have doubled!

Many of you have heard the statistic that the amount of foreclosures have doubled. This is correct we have gone from 1% of all home owners with a mortgage losing their home to foreclosure up to 2%. The good news here is that 98% of all home owners with a mortgage are not losing their homes. 7% of all U.S. mortgages are sub prime mortgages and those mortgages make up 42% of the foreclosures. Almost half. If you take away the sub prime mortgages then foreclosures would be up just over 1%. The bottom line here is that if you have a sub prime mortgage with an arm that is set to reset to a higher interest rate, if you bought more home than you can afford, or if some life altering event has occurred you face a legitimate danger of foreclosure.

Before the Foreclosure:

If you begin to have trouble making your payments the first thing that will arrive in your mailbox will be a a letter from your loan servicing company reminding you that your payment is past due and usually indicating the actions they can and will take to remedy the situation. Ideally if you think you are going to get to a point where you will miss a mortgage payment or your payment is going to adjust above what you can afford, you should look to get help before going 30 days behind on your mortgage. 30 days late is the magic number that will appear on your credit report. A mortgage late can seriously hinder your chances of refinancing out of this bad loan. You still have several options at this point and will want to speak with someone who has your interests in mind and will work with you to find the best possible solution. Please see the next section as it is very important that you recognize and avoid the "Save you from foreclosure" scams.

Once you Receive a Notice of Default:

If it's too late for you and you have fallen several payments behind you will receive a notice of default from the loan servicing company. Sadly this information is public knowledge readily available at most title companies. Your credit will be scarred and you will be in serious jeopardy of losing your home. On top of this many people will begin to contact you about "saving you from foreclosure" and you may even begin to notice the foreclosure help signs on the side of the road or even vehicles. If you are in this boat you NEED to be aware that you have options and steer clear of the foreclosure help scams. Some companies will offer to buy your home and rent it back to you letting the rent go toward the principal and preserving your equity. Others will offer a counseling service and offer a fee. Many will have you sign a "new loan" form and most will require you sign over the title. These programs are bad and clearly designed to prey on your bad situation. The BEST thing to do is to speak with someone you can trust to point you in the right direction.

The Options:

Speaking with someone who understands all the options available in pre-and post foreclosure is the single most important thing you can do to get back on track. In many cases a government secured refinance program called FHASecure can help you refinance to a low fixed rate saving you from getting into the mess in the first place. In other cases aggressively pricing your home and selling it is the best plan of action. If you have fallen severely behind but foreclosure has not started yet one option that may fit your needs is working with a Realtor® on a "Short Sale". This is a process where you and your Realtor® work directly with the bank to allow a sale price of your home that is less than what you actually owe. In any of these cases I would recommend working with someone with experience in the area as it is not a cut and dry solution and what may be the best option for 1 is not the best interest of another.
How To Determine YOUR Best Option:

Determining the right long term solution for you requires an in depth look at your overall situation and your long term goals. If you fear you might not be able to make your payments soon, if you are in an arm that is going to reset, if you have a pre-payment penalty, if you are behind on your payments, or if foreclosure has started, contact me right away and I can get you in contact with the right person for your situation. No I do not charge a consultation fee and no I do not want you to sign over the title. I am a Realtor® and a homeowner just like you and I know how confusing it can be to tell the difference between a helping hand and a shady dealer in times of desperation. It's not too late you DO have options. You may call me directly @ (801) 330-3963 send an e-mail to Dave@ListedInUtah.com or simply use the Messenger box on the sidebar of this page to contact me anonymously.

Home buying tax advantages

2008-05-16T08:08:00.005-06:00

The house introduces HR 5720

House bill 5720, or the "housing assistance tax act" in it's simplest form is a tax credit for first time home buyers. This tax credit will allow you to take a $7,500 tax credit in the year of the purchase. This is not a tax deduction but a tax credit. This means you will actually get $7,500 back on your taxes or a credit toward what you owe.

The Qualifications

To qualify for HR 5720 you must meet the following criteria;

Purchase any single family residence including condos that will be used as your personal residence
If you are single your adjusted gross income must be $70,000 or less and if you are married filing jointly your income must be $140,000 or less.
Must have NOT owned a residence in the last 3 years
Purchase must be made between April 8, 2008 and April 1, 2009

The Catch

First and foremost this bill has only passed the house and has not passed the senate yet so I would advise against "Counting on it". If this bill passes the senate there will be a "Recapture Rate". A Recapture rate means that a % of this money will have to be paid back over time. The Recapture rate for this bill is 6% per year for 15 years and if the home is sold before 15 years then the remainder of the credit is recaptured. The recapture payback period begins 2 years after the credit is taken. $7,500 x 6% = $450 per year at 15 years = $6750. $6750 is the amount you must pay back over a 15 year period of the $7,500. Think of it as a negative interest loan. You have taken out a loan for $7,500 at 0% interest and you only have to pay back 90% of the loan. Just taking the tax credit and using it to pay itself back you make 10% but there are ways to make this tax credit work for you.

Investing

Since you have 2 years before the recapture begins why not invest the money for 2 years in a high yield money market account? If $450 a year to pay back is not a big issue to you why not keep the money in the money market account until you sell your home? Put the money back into your home or consolidate some high interest credit cards. The possibilities of how to make this tax credit work for you are virtually limitless but each situation is different.

Tax deductions

While real estate tax deductions are not anything new it is frightening how many home owners don't know about them, understand them, or take advantage of them. When you purchase a house you can deduct mortgage interest, mortgage insurance, and a portion of you property tax from you income tax. This is a huge year over year savings for most people.

How to Lower Your Monthly Payment

Here is a strategy many savvy home owners use to lower their monthly payments. First work with a Realtor® who understands the tax advantages to buying Real Estate and is current on any new tax changes. Second work with an accountant who is familiar with Real Estate Tax deductions. For references please contact me. Here is an example of how to use the tax savings toward your monthly payments giving you more breathing / fun / saving / investing / whatever room every month.

Lets say you purchase a new home for $225,000 and your household income is $70,000 per year. For this example you have obtained and FHA loan at 6% interest and the property taxes are roughly $1000 / year.

Your total monthly payment with your Principal, Interest, Taxes, Insurance, And Mortgage insurance would be roughly $1563.57 per month. Given the information above your tax savings based on real estate deductions would be an estimated $3,400. Take this number and divide it by 12 and you will have a monthly tax savings of $283.37 against what you would normally pay in taxes just because you own a home. Next take your monthly payment and use the money you save by owning a home toward your payment. $1563.57 - $283.37 = $1280.20 per month is now your "Actual Monthly Payment". You have just effectively reduced your monthly payment by 18%.

Beating the dead horse

Real Estate is the foundation for wealth building in this country but remember there is a right way and a wrong way for everything. Be smart with your money and get the help of a knowledgeable Realtor® to make the most of your home buying dream. Take advantage of the tools put in place to help you succeed and join the millions of home owners nationwide who are NOT in danger of losing their homes.

Gathering the Data

2008-05-09T08:04:00.003-06:00

"The Housing Crisis Is Over"

The wall street Journal stated in an editorial on Tuesday that April will likely mark the bottom of the housing slump. The housing boom made housing unfordable for many and took many buyers out of the market place. Couple that with a mortgage crisis and you get our current situation. Wall Street Journal states that the home prices are back inline while incomes have continued to grow and the reform of FHA financing has again made purchasing a home a little easier.

Even Better News for Utah

Of course in Utah we typically don't realize the housing crisis is 3 years old as we were not shaken nearly as bad as many parts of the nation. In fact I have earlier stated that CNN has reported that Salt Lake City is one of 6 major metro areas that has already begun a rebound and Forbes magazine has called our state #6 of 10 on the list of "Most Recession Proof Cities". There is also some other really exciting data straight from the MLS that indicates a healthy Utah housing market. For the first time since 2004, the number of homes sold has increased from March to April. This simply does not happen, even in a great market. There has always been a slight decline in April before jumping back up in May. This year there were 34 more homes sold in Salt Lake County in the month of April then in the month of March. The average sales price had a slight but healthy increase from $267,216 in March to $271,077 in April.

Rewarding First time Home Buyers:

The house is voting on a tax credit for first time home buyers as we speak. Most already know that mortgage interest, property tax, and at least for this year mortgage insurance is tax deductible. When used properly you can use the difference in your tax liability to decrease your monthly mortgage payment. The only flaw in this method is that you don't realize any of the tax benefits in the first year of buying your home. The House is trying to change that by allowing a one time tax credit of $7,500 to be taken in full on the tax return for the first year of the purchase. There are some conditions and this has not been approved yet, but this is some incredible news and really gives the first time home buyer some incentive to purchase a home aside from the tax deductions, equity growth, and all of the other wonderful not financial aspects of home ownership.

The Market Correction:

The market correction has been a great thing for us in Utah. Price increases have slowed, interest rates are incredible, loan programs have been reformed, and many that were practicing shady methods of doing business have disappeared. We are going to begin to see some healthy growth as more major companies begin to land here in Utah and our unemployment continues to stay below the national average. Home sales will increase as rental rates increase and our housing supply diminishes. This is a great time to live in Utah!

As always feel free to use the IM icon on the side of the screen to message me with any questions you may have about Real Estate.

Where Is Our Market Headed?

2008-04-23T14:57:00.007-06:00

All Real Estate Is Local:

Many people our shouting doomsday and claiming the greatest economy in the world is going to fold over night. When it comes to Real Estate remember, while there are many places in the nation waiting to hit bottom before they can begin to rebound, Utah has been named as 1 of 6 states that have already began our Real Estate Rebound.

Numbers Don't Lie:

Utah has lead the nation in home price appreciation for 5 consecutive quarters. Homes prices, with the exception of some isolated zip codes, are not deflating in Utah. The rate of appreciation has slowed and that is actually a very good thing and part of the reason we are not suffering as bad as a large portion of the nation. Homes in Utah appreciated an average of 9.27% in the fourth quarter of 2007 compared to the fourth quarter of 2006. The national average for home price appreciation in the same quarter was 0.84%. Net migration (People coming into the sate VS people leaving the state), and job growth continue to be strong points for the beehive state.

Salt Lake County This Year So Far:

Home sales in Salt Lake County from January to March this year are up 46.36% and home prices are already reflecting nearly a 1.5% increase. Our market rebound has not only begun it has shifted into high gear.

The Bad News Is:

If you have been waiting for the bottom to fall out to purchase a home, you have missed your opportunity, take this as a warning not to miss another one. The time to buy is still very ripe. Home prices are increasing moderately as demand is gaining ground on supply. Interest rates, while inching up, remain very low. With the reform of FHA financing obtaining a loan with even less than favorable credit may be easier than you think. If you are going to buy a home this year don't wait any longer. You will not have more choices, better rates, or lower home prices this year than you will right now!

Real Time Q & A

2008-04-21T08:01:00.002-06:00

In a changing market you need answers now:

If you are trying to make a decision to buy or sell your home sometimes you just need information right away. Good News! I have embedded an MSN instant messenger application directly into my blog. Now you can get real time questions and answers as well as discuss any topics real estate related.

Ready or not this world is about instant communication:

Text messaging, e-mail, and instant messaging are great because you can't always use your phone but need to stay connected. If you are at work for instance you may not have the time for a lengthy phone call to get information. The problem with instant communication is that you have needed to know the other party's information in order to contact them. Now you don't. By visiting this blog you can openly communicate directly with me any time the messenger icon is green from the messenger app on the right side of the blog.

You Do Not Need Messenger:

The great part about this is that you don't actually need to download anything to speak directly to me. All you do is click the button that says "Begin conversation". From there you have 2 options.

If you have a live messenger ID:

You may log in and speak directly with me. This will allow me to see who you are and give me access to your profile if you have made it public. If you wish to remain anonymous then you can simply go to the next method.

If you do not have messenger or wish to remain anonymous:

Click "Begin a conversation"
Type a name in the box
Enter the letters that appear on the screen as a verification
Begin communicating directly with me

Use and abuse it:

I love talking real estate. I urge you to send me a message when you have a question, need an MLS #, want to see pictures of a home you have found online, have suggestions, etc etc etc. I look forward to hearing from you.

Existing Home Sales Rise In February

2008-04-02T08:06:00.004-06:00

Slow and Steady Momentum:

Existing home sales rose by 2.9% in February. This gain is encouraging but a "notable" gain is not expected until the 2nd half of 2008. While the national "median" home price is down from last year, nearly half of the metro areas in the U.S. show median price increases. This is a clear sign of market stabilization.

Interest Rates and Mortgage Programs fueling the increase:

Many buyers are taking advantage of new FHA programs including increased loan limits for both FHA and conventional loans. 30 Year Fixed Rates were down do 5.92% in February from 6.29% last year. The rates did increase from 5.76% in January of 08 to 5.92% in Febrary which is yet another sign of slow and steady market stabilization.

The fence is tipping over:

It has been a great time to buy a home with relatively lower appreciation rates and interest rates at or near all time lows. For whatever reason people sat on the fence to see what would happen with the market while many others took advantages of this buyers market. Signs of the market shifting are beginning to show and if you have been on the fence about buying a home let me assure you that NOW is the best time to buy. With Utah leading the nation in job production we will remain ahead of the nation in housing stabilization. Many people realize that Real Estate is local and we do not face the same problem the majority of the nation did. Once word gets out to the people who do not yet understand this concept, inventory levels in Utah will be consumed. Right now you have more homes to chose from then you will the rest of the year coupled with sellers willing to negotiate and low interest rates. Conditions are right but will not remain this way.

Real Estate Mistakes For Buyers and Sellers

2008-03-31T08:23:00.006-06:00

10 Mistakes Sellers Make

1. Limiting Showings
Once you have made the commitment to sell your own it is time to mentally move out of the home. It is important to keep your home ready to show at a moments notice even if you are not there. Most buyers will make only 1 attempt to view your home and if it is unavailable they will move on to the next. Having a Realtor® install a Risco Secure Lock Box on your home is a great way to make sure agents can always show your home.

2. Overpricing

This has been a common topic amongst my blogs. A quick review: Overpricing your home leads to less showings, less showings lead to less offers, less offers lead to more time on the market, more time on the market leads to lowered price, a long time on the market with continued lowered price leads to a vicious cycle. In conclusion have a Realtor® price your home correctly the first time.

3. Failing to Stage

Buyers want more than just a great deal these days. It is important to create 1 wow factor in your home. This does not necessarily mean moving out of your home and having a stager come in and make a life sized doll house. Select one room preferably a living room or dining room and create that wow factor. Give potential buyers something to talk about after they see your home.
4. Offering Repair Credits

If at all possible fix the problems in your home before you put it up for sell. Offering repair credits in your advertising creates the impression that your home is a fixer upper.
5. Listing with Discount Brokers

You get what you pay for and now is not the best time to leave the sell of your home to random chance. You need more than a sign in the yard to sell your home. Aggressive marketing, lots of exposure, and a knowledgeable agent are the bare minimums in selling your home in today's market conditions.

6. Discounting Buyers Agents

Offering a reduced commission across the Multiple Listing Service to a buyers agent will often give the impression that you are not motivated to sell your home and that negotiation will not be possible. This information will not be wasted upon the potential buyer as the agent will be sure to let them know.
7. Rejecting Offers

Ridiculous offers will come in on your property. This happens to everyone, it is simply just the way some people view the home buying negotiation process. Do not get angry, this is not an attack on you or your home. Keep your cool and prepare a reasonable counter offer. If the buyer was not interested in your home at all they would not have written an offer and more than likely they know their price is ridiculous and simply want you to counter their offer.

8. Sticking around for Showings

Find some place to go for an hour. If it's nice weather go for a walk around the block and if you have pets, take them as well. Buyers feel uncomfortable viewing homes when the homeowner is home. This can be inconvenient but it will help you sell your home faster. Small sacrifices now will help you to avoid huge price cuts later.

9. Selecting Your Agent On Non Business Factors

Do you have a brother that has a full time job but dabbles in Real Estate on the side? This is often a poor choice of agent to market your home and could potentially lead to relationship breakdown. If you feel this person is offended simply explain to them that you like to keep your financial affairs personal.

10. Not Using A Realtor® To Market Your Home

A Realtor® can save you time, money, and keep you out of court. A large percentage of home buyers use a Realtor® to help them find a home and only a Realtor® can have your home listed on the MLS.

10 Mistakes Buyers Make

1. Not getting Pre-Approved

With changing loan programs and interest rates it is important to get pre-approved. This is the best way to find out exactly what you can afford. I have found that most people typically think their credit is either "good" or "bad" and that is about as far as they go. New FHA programs, for the most part, are not driven by your Fico score. It is important to speak with a loan officer and get pre-approved not just pre-qualified, to discuss your goals and find out what loan program will work best for you.

2. Having Unclear Goals

You will not find a perfect home but you can get a lot closer if you know what is important to you. Make a list of features you would like in a home and rank them in order of importance. How long do you plan to stay in the home? The length of time you plan to live in the home will make a dramatic difference on the loan program and even the home that is right for you.

3. Skipping the Inspection

Home inspectors are relatively inexpensive and could save you thousands of dollars in the long run. You should have an opportunity to inspect the property or have it professionally inspected before you buy the home. After the inspection is complete you may even be able to negotiate the home down. Even on a newer home I would recommend an inspection. Here in Utah if you are buying a home in the early spring, how do you know the hose has not been connected to the home all winter? If you move in and the basement floods this will typically not be covered by the seller or an after market home warranty.

4. Not Shopping Mortgages

It is important to shop both interest, rates, fees, and even loan officers. There is no such thing as no cost loan. A lower interest rate will be accompanied by higher fees and a no fee loan will usually come with a slightly higher interest rate. Speak with your mortgage professional about your goals. If you are staying in the home long term it would make more sense to come in with more money up front and pay less for the home over the price of the loan. A loan officer can not give you an accurate quote on a pre-qualification alone. This means getting pre-approved. You will have a window of time to shop for a mortgage where you credit score will not be negatively affected by being pulled repeatedly by lending institutions. This is your opportunity to get pre-approved by more than one lender. Look at the fee's and the interest rate from all competing brokers, but most importantly which broker understands and can meet your needs?

5. Waiting For A Better Market and Interest Rate

In the words of billionaire investor, Warren Buffett, "The rear view mirror is always clearer than the windshield." It is nearly impossible to predict market conditions, however it is possible to come out ahead in both up and down markets. Buying a home should be a long term investment. No matter what the market is doing you can always benefit from home ownership, comfort, security, tax deductions, building equity, and appreciation. Even in a "down" market the average value of a home nearly doubles on a 10 year time line.

6. Not Buying At All

The only reason that I know of for not buying a home is that you simply can't afford it. If you can afford a home and you currently rent chances are you are paying more for rent than you could be paying to be in a home. Everyone pays a mortgage. Will you pay your own? Or your landlords?

7. Forgetting About Closing Costs

There are costs to getting a home loan and "closing" on the home. If you are getting a loan you will have fees such as appraisal, credit report, loan origination, etc. Also the title company has a few fees. First there is a fee for the escrow officer to be there and conduct the closing. The county charges a fee to record the home in your name and you must by title insurance to protect the investor giving the loan from any outstanding liens. These fees are not high and many can be negotiated, however it is better to go into this knowing that there is money required besides the down payment.

8. Not Going Back to The Neighborhood

Many home buyers will look at homes on the weekends and chose a home for purchase in broad daylight. Let me first say that picking a home when you can actually see it is the best way. I would recommend going back to the neighborhood at different times. What happens at night? Or during the week? Does the wind howl after dark? Is it a busy street during the week? You will live in your home 24 hours a day and 7 days a week. It is best to visit the home at different times and different days to avoid surprises.

9. Not Considering Resale

It's easy when you are buying your home to forget to think about what it might be like to sell the home. When looking at homes put yourself into the perspective of the seller. When you buy think about the day that you will sell.

10. Not Using A Realtor®

A Realtor® can save you time and help keep you out of long drawn out legal disputes. In the majority of cases your Realtor
® will be paid by the seller and not out of your pocket. Your Realtor® views dozens of homes a day and knows what to look for. Your agent should be on the cutting edge of changes in the market and real estate laws. Your agent can help you set your goals and set up a plan that will work best for you as well as running the neighborhood comparable sales and active listings to make sure you are not paying too much for the home. Finding you a home is only the beginning of the job for a Realtor®. Don't leave the advantage to the seller.

What are you waiting for?

2008-03-28T08:11:00.002-06:00

The timing is perfect:

If you have been on the fence about buying a home and you are waiting for a "sign" that everything is going to be alright, this is your sign! Forbes magazine has recently named Salt Lake City #1 on the top 10 list for "best cites for bargain house-hunters". If that is not enough for you, at the same time that the Forbes magazine came out, Time magazine has published an article stating "Ignore the headlines". Time magazine says now is the time and Forbes says "This is the place".

Why buy in Utah?

Utah is a great place to live. Our recreation and mountainous valley's are out of this world, however this is not the reason Forbes has decided we are the best bargain in the market. Forbes goes on to say that in order to get a great bargain you need a "buyers" market where there is "healthy job growth and more houses available than people to buy them. This is not due to foreclosures and economic downturn, but to overbuilding that should balance out in time." Utah is adding jobs faster than anywhere in the country and our net migration is expected to rise quickly this year. The abundance of homes will be consumed and this market will be ripe for the sellers. The economic boom that is going on right now in Salt Lake city is drawing residents from all over the country. It is said that 1,000 jobs will be created when manufacturing giant, Procter & Gamble open their new paper productions plant in Utah.

Why buy now?

According to Time magazine, if you plan to buy a home and stay put for at least five years and have been waiting for the perfect entry point, "It's time to get serious before an inevitable rise in interest rates wipes out your advantage". Anything that can be gained by waiting to see if home prices will come down will be offset by rising financing costs. The chances are if you are looking to buy a home here in Utah the prices are not falling so you are basically waiting around for higher interest rates. It is still a buyers market here in that we do have more inventory available than we are used to here, but not by much and with smart buyers entering the market from around the country the gap is closing. Time goes on to quote an example of buying now verses waiting to for prices to fall while rates go up:

If you are looking to buy a home and the current list price for the home is $218,900. In this example you put down 20$ and get a 30-year fixed-rate mortgage at today's rate of 5.5%. Your monthly principal and interest payment on this home come to $994.31. If you wait a year and for some reason that home does drop by 10% to $197,010, but the fed is now trying to stem inflation by raising the interest rate by just 1% to 6.5%, your monthly payment would be $994.94. The point is you are paying the same amount you have saved nothing and if you are currently renting its actually costing you more to stay where you are by not taking advantage of the tax savings.

About what I have said:

In the previous blog I told you not to listen to the media and to listen to a Realtor®. In these two cases I have sighted above I have done the research and agree 100% with the articles. So there you have it no matter what you want to believe you have your local Realtor®, Time magazine, and Forbes magazine agreeing on one simple thing: If you are going to buy this year NOW is perfect time.

-Dave Jungst
(801) 330-3963

What the "experts" are missing

2008-03-26T20:52:00.002-06:00

The temperature is nice:

What if I told you that the temperature of the United States was 70 degrees today so dress appropriately. You do live in the United States correct? This has been the problem with the housing guru's featured on national and even local media programs, they keep giving us the forecast and the condition of the United States. All real estate is local, even within the local market real estate is local. There are areas where prices are going down right now in Salt Lake County as well as areas where prices are strong and expected to keep rising by as much as 10%.

Zoom in:

Taking the average and median home price for the state of Utah can give us a vague idea as to what is happening in our state but unless you look closely at the data it isn't really saying much.
We had some builder irresponsibility here in Utah and many builders begin flooding the market with high end homes. One of the primary factors in Utah is afford ability. We are known here for our quality of living and our sense of community not necessarily for our top wages. When the mortgage industry began to mature and learn from it's mistakes in lending, it put these high priced homes further out of reach. We are sitting on an abundance of inventory in the high end being about $500,000 and above for most areas. If those homes are not selling it really begins to affect our averages and makes it appear as if prices are dropping when in fact in most zip codes they are not. Home prices are still gradually rising under $400,000 in the majority of the state right now.

What are current market conditions?

If you really want to know the current market conditions you need to turn to a Realtor® instead of a news anchor for information. You should find out what the market is doing in YOUR price range where YOU are shopping or in YOUR neighborhood where YOU are selling. This is really the only way to truly look at the current real estate market conditions.

The "NEW" importance of pricing your home correctly

2008-03-21T07:47:00.008-06:00

Pricing your home correctly:

Pricing your home correctly up front has long been the difference between selling your home quickly for top dollar rather than dropping your price continually while your home sits on the market longer and longer. Correct pricing is the single most important factor in selling your home, there is no amount of home staging that will make up for an over or even under priced listing.

Pricing your listing too high:

The idea of pricing your home too high comes from two different schools of thought. The first and most common reason for this is the "I'll just price my home high to start so that I have room to come down if someone makes an offer". The major problem with that statement is that the offer will not come because the home will not be viewed. A recent study has found that buyers will most commonly search for homes in $25,000 increments, so buyer A will be searching for homes from $150,000 to $175,000 while buyer B will be searching for homes from $175,000 - $200,000. If your home is worth $190,000 and you price it at $205,000 in order to give yourself some room for negotiation, you have just priced yourself out of buyer A and buyer B's search criteria. Also if a buyer does go up in price to see what is available this buyer has seen everything from $150,000 - $200,000 and simply thinks you are way over priced. A buyer will not usually make the connection that you have priced your home at $205,000 so that he will offer $190,000. The buyer will have no interest in going to see your home. An over priced listing will sit on the market longer and the buyer and the agent can clearly see the "DOM" or "days on market" field. The longer the home sits on the market the longer it will sit on the market. Once your price does not bring anyone to see your home for long enough you will lower the price. The home will sit on the market longer. You will lower your price again and this vicious cycle will repeat itself. A home that sits on the market for a long time is usually viewed in the buyers eyes as a "defect" property. They will wonder what is wrong with the home. If you begin to lower your price every two weeks to get it in line with your competition, a savvy buyer will wait and see how low you will go. The second school of thought is personal justification or emotional attachment to the home. The "My home is worth more than the Jones' because (insert any of the reasons why you purchased your home here)". Keep in mind that the reason you picked your home over the other homes in the neighborhood may be the very same reason someone else will pick a different home over yours. Did you pay $20,000 more for your home than your neighbors home because of this reason? If not it would be hard to expect the next buyer to come along to do the same.

Pricing a listing too low:

The only reason that I am aware of for pricing a perfectly good home too low is a need to get out. Usually a financial issue. While it makes sense to buy a home for a great deal pricing your home too low brings up one question time and time again in a buyers mind, "What is wrong with the home". Every buyer is looking for a great deal but there have been numerous occasions where I have taken a buyer to a home that was priced extremely low for the value and they have asked "What is wrong with this home?". Even if the agent does his homework and digs deep and finds the reason to be something as simple as a job related relocation where time is a factor, the idea that something is wrong with the home has already entered the mind of the buyer. If you have an urgent need to get out of your home fast, pricing your home correctly within your comparable sales and competion will actually help your home to sell faster than pricing it way below market value.

Why is it more important to price your home correctly now?

In the section about pricing your home too high, I briefly spoke about the "Days On Market" field that will show up on a listing. This field will allow a buyer to know how long the property has been listed for.

In the figure above you can see this home had been listed for 3 days at the time this listing was pulled. A high number in the DOM field can cause the home to be devalued or even not come up on a search if the buyer is searching for homes that have come available in the last 30 days. When I am showing homes to potential buyers the number one question I am asked is "How long has this home been on the market". This is also a basis for what a buyer will offer, the longer your home has been on the market the lower the offer a buyer will make.

This kind of thinking was often offset by agents taking listings and then pulling them off the market after 30 days and then putting them back on to reset the days on market field. The problem with this, other than it's obviously intended to deceive, is that those of us who track market statistics were not getting accurate information as to the average time a home in a given area would sit on the market before it was sold. The Wasatch Front Regional Multiple Listing Service, in an attempt to give more accurate market data, recently decided to adopt a system already in place in many other markets. The "DOM" field has now been replaced with "CDOM", or "cumulative days on market". If a listing is pulled off of the market for any reason when it is put back on the market the clock will leave off where it was. It is no longer possible to reset the days on market field. If you price your home to high with the thought that you can reprice it and start fresh, you will be disappointed in the results. There is no second chance on pricing anymore.

What if I list it with a different company?

"CDOM" does not discriminate from company to company. If you list your home with "Discount Dollar Realty" and you get the bare bones sign in your yard and listed on the MLS service hoping to save a few dollars, then later decide that based on your less than favorable results you would like to re-list your home with a full service heavy marketing firm, your days on market will not be reset.

The good the bad and the ugly:

The good news is that this will bring more accurate neighborhood statistics and give home owners a much needed realistic view of market conditions in their area. We will now be able to accurately track the average days our homes are taking to sell. Buyers will no longer be deceived by the days on market field.

The bad news is that it may take a little while for buyers to adapt to a realistic "days on market" time frame, but if Realtors® will simply take the time to educate their buyers to the new system I believe this should not have much impact at all.

The ugly. The ugly can be avoided by simply selecting a Realtor® who is willing to do more than just put a sign in your yard to sell your home and is willing to do the research necessary to price your home accurately from the beginning of the listing. Please do not be one of the many home owners that will make bad choices leading to a 270 CDOM. This will affect all of us.

Please feel free to contact me with any and all of your questions, concerns, or comments.

Questionable sales practice: Buying a Listing

2008-02-01T08:37:00.000-07:00

Sellers beware:

A sales practice known as "buying a listing" has become increasingly more popular in current market conditions. This practice is dangerous to the seller and in the best interest of the agent. Although there are more agents behaving responsibly and ethically, it is the few that dabble in questionable practices that give us all a bad name. The intent of this post is in no way shape or form to point any fingers at agents or the industry at all. This is simply an educational post to help sellers understand this process and choose the right Realtor®.

Here is how it works:

As sellers we all get a perceived value in our mind that is justified by our own emotional attachments to the property or swayed by "made for entertainment" shows like Flip This House. So when you finally decide to sell your home you will typically meet with one or more agents. The chances are agents will come prepared with a CMA or Competitive Market Analysis. This is actually good practice and you are on the right track, be assured that if your agent shows up with a crystal ball or nothing at all it's time to be nervous. What you may be surprised to find is one or more of the Realtors® have come up with a price that is less than you expected. The agent may have comps right in your neighborhood that sold a month ago but the natural response from you as a seller is to remain convinced that your home is worth more. Here is where the questionable part comes in. After being disappointed with one or more Realtors® opinion of the sales price of your home another agent comes a long with old and outdated comps or an area stretched to fit their needs to artificially inflate the price of your home. He shows you colorful graphs and gives you his explanation as to why your home is worth more than your neighbors. His estimate of your homes value is more compatible with your own idea of the homes value. He has just "bought the listing" using your emotions and the natural pattern of most sellers as currency. Doesn't this agent seem great? He is willing to price this home on your terms and bring the price down at a later time if needed.

The Problem:

In the case of actually "buying a listing" the agents intent is to simply secure the listing and then in a predetermined period of time when your home is not sold, the agent will come to you and ask you to lower your price. More than likely you will be lowering your price close to the correct comps previously suggested by the first agent. The agent you have given your listing to in this scenario is most likely doubtful of the price he has quoted for you homes value but that doesn't matter because you have just signed a 3 or 4 month listing with him. In some cases someone may recommend starting with a higher price because "you will get a lower offer anyway". If this is your strategy you have just started a dangerous cycle. Buyers shop based on what they can afford. If your home is worth $250,000 and you have priced it at $260,000 to give yourself some "wiggle" room on a lower priced offer, there is a good chance that you have just shut out a large portion of buyers. A buyer will search or tell their agent to search for homes from $220,000 - $250,000 based on what they can afford monthly. Now your home that you are going to sell for $250,000 anyway doesn't come up on their search and has less of a chance of receiving any offer at all. Most buyers use Realtors® to help them search for homes. A Realtor® can spot an overpriced listing very easily and will generally let his buyers know. That property will then become a negative in that buyers mind. If you are the highest priced home in any given neighborhood there is a good chance your home will be the last to sell and more than likely for less than your competition. You must remember that affordability is typically the most important factor for many home buyers.

It's time to lower the price:

After some time goes by and only a handful of showings while for sale signs in your neighborhood are replaced with moving trucks, you will more than likely decide to lower your price. If you start out with a high sales price and drop it later your home is "old news". A fresh listing will go stale after only a few weeks. The best chance for you to sell you home is in the first few weeks by driving as much traffic to your home as possible. If your home has been on the market for too long and the price continues to fall, buyers typically think there is something wrong with the home.

It's a human thing:

Of course you want the most you can get out of your home. When you choose to list your home at a price based on emotion and what you want to hear, you are setting yourself up for a long listing process. It is normal for a home listed under these circumstances to sit on the market for a longer period of time and eventually sell at a much lower than desired price. This is bad for the market, the seller, and the reputation of Realtors® as a whole.

Why they do it?:

They are self serving. I think I could end this chapter right there and move on but this process must be exposed for the good of our Real Estate Market. An agent that uses this practice is often desperate for listings and desperate for sales and does whatever it takes to get the listing even if it is lying to the seller. The agent hopes that someone will come along and pay more for the home than it is worth or that you will eventually lower the price. Either way the listing is secured and they are counting on a paycheck. Another reason an agent will take an overpriced listing is to pick up new buyers. If a buyer calls off of the sign and does not have a real estate agent, that agent can then show them other properties.

Most agents do not use this practice:

While most agents and especially members of the National Association of Realtors® follow a strict code of ethics and act in a professional manner, there are some bad seeds just like any industry. You have heard horror stories about doctors, lawyers, real estate agents, loan officers, car salesmen, etc... etc.., but we all still use them in fact most of us are in a field that has gotten some bad press caused by the few. Anything you do in life can lead you to someone who is not looking out for your best interest, this is the sad fact where the few give a bad name to the many.

Don't be the one to tell the horror story:

A little education is the difference between a frustrated seller and praising your Realtor®. First of all don't get caught up in the hype.

Look at the facts and prepare yourself that your idea of the value of your home may not be in line with a buyers.

When an agent presents a CMA to you they should have comps ready and available to show you. If the agent only brought a spread sheet ask them to come back with comps supporting their figure.

If the agent has brought comps look closely at your comps and have your agent explain them to you.

There are 2 very important items to look at first and foremost on a comp.

Sold Date: The sold date appears close to the top of the comp take into account how recent the sale was. A comp sold more than 6 months ago will not even be considered by an appraiser in most cases and should be discarded. The more recent the sale the more relevant the price.

Also look at concessions paid. This is money paid by the seller on behalf of the buyer, either for down payment assistance or helping with closing costs. Keep in mind that this money will also be disregarded by an appraiser.

The more throughly an agent can explain a comparable sale the more comfortable you can feel. Have them explain all of the contributing factors and how they will affect the price of your home.

Another good idea is to not only look at the recent sales in your neighborhood, but also take into account the "Active" listings and the "under contracts". Go deep into the actives and don't just look at their current price. Have your agent pull a history on the active listings to see their pricing trend.

Trust your instincts:

You have a far better chance of ending up with a great agent than a poor agent. Good Realtors® outnumber the bad seeds 50:1, and the Utah Division of Real Estate works diligently to pursue and punish agents violating rules and regulations. Agents participating in questionable practices usually do not end up with referral business and without referral business they quickly fade away. In a tougher real estate market a good portion of these agents have already been flushed out of the system. Do you homework on your agent and make sure they have done theirs on your property.

The seller and the agent as a team:

Accurately pricing your home for maximum exposure at the beginning of the listings should be the goal of both the agent and the seller. Selling a home for "what you have to get out of it" isn't the right way to do it unless what you have to get falls into the pricing structure. A home sitting on the market for an extended period of time does not help anybody! There is a system that works to get you the most for your home and sell your home in a favorable amount of time.

First agents must do their homework:

What are the recent solds?
What are the recent actives and under contracts?
What is the pricing trend of both actives and solds?
Are there any economic or geographical factors that will drastically change the sales price?
The more data gathered the better

Second the seller must let go:

A buyer might not care that you personally did the custom woodwork in the home. If the woodwork is great it will sell itself.
De clutter, depersonalize, and properly stage your home. Your agent WILL help you with this.
Keep the home clean and ready to show. This may possibly be the hardest part for sellers so used to "living" in their home. Don't worry if the plan is followed your home will sell fast and this will only be a short time.

Third market the home properly:

Advertise to buyers agents. It is foolish to cut out the largest portion of the home buying market by not advertising on the MLS. Its like trying to sell your car with only a for sale sign while parked in your garage.
Your agent WILL have a detailed marketing plan for you home. Make sure it makes sense for your home. If you are in an adult community of 55 and older it wouldn't make sense for the marketing campaign to be internet only.
Remember you get what you pay for. Marketing your home with a discount service boasting that they "post your home on the MLS for a flat fee" should be a giant red flag to you. These companies survive only by volume and taking any and every listing they can get. They do not care about the interest of the seller and may not be around to help you out at settlement.

Summary: How to chose the right Realtor®

Make sure they have done their homework
Make sure they have a great, not good, and innovative marketing strategy combined with traditional proven marketing techniques.
Make sure they are not afraid to "hurt your feelings" by telling you the truth instead of what you want to hear.
Make sure they have a detailed follow up and feedback program for interested parties
Ask them if you can fire them if they do not do as they have represented.

Realtors® who meet the criteria listed above, are not the kind of agents that exploit you or abuse questionable selling practices. Any Realtor® that is willing to do the few items listed above is the reason that the National Association of Realtors® is celebrating their 100th anniversary this year. We are Realtors® we are here to help you.

Everyone pays a mortgage. Either it's your own or your landlords.

2008-01-30T08:08:00.000-07:00

There has never been a better time to be a landlord

With rental rates expected to rise 12% on average statewide in Utah and an occupancy rate of 96.2%, demand is high and supply is low. In Salt Lake City rents were raised an average of 10.4% from 2006-2007 and continue to increase at a rate of 1% a month. The Provo - Orem area saw the largest increase in our state at an average increase of 13.4% last year. With the collapse of the sub-prime mortgage market this trend of high rent - high occupancy is expected to continue for a substantial period of time. Renters who refuse to pay the high rents are simply being replaced by renters who will. Landlords mortgages are being paid off faster and the tax advantages are phenomenal.

Advantages to being a landlord

When done properly and diligently being a landlord can have some serious advantages. Listed below are just a few of the advantages to being a landlord that can become multiplied 10 fold in a market like this.

The ability to set up a constant income stream
Have your mortgage paid while your home appreciates
Freedom of time and work
Tax advantage
A strong leveraging position

Income Stream:

You will receive your income month after month like clock work as long as someone is renting your properties. Furthermore, many investors start out with only one or two properties, and then quickly improve their portfolio. Eventually, they have several properties that are all working for them simultaneously. In short, they will have an income stream set up based on each property.

Freedom of time and work:

Being a landlord is not like working in an office, you do not have a lot of work except some administrative work each month when it comes to collecting money. Even though you will be responsible for up keep on the rental units, but you can always hire others to complete the maintenance work for you. This will never add up to a full-time job.

Tax advantage:

Tax advantages include the ability to write off mortgage interest and taxes. Maintenance fees such as home repairs and even yard expenses. Probably the most favorable tax advantage of all is the ability to depreciate the property while the value goes up. See a tax adviser for more information on local tax laws.

Oh it's good to be a landlord these days but what about renters? Are there advantages to being a renter right now?

Yes! Renters have the most to gain in current conditions. With home prices softening and interest rates low many buyers will shuffle to get back into the market. Unlike current home owners that have a home to sell before they can buy, renters have a much shorter time frame in which they can be in a home and can buy a home without the purchase being subject to the sell of their residence. This is great for renters and puts them in a stronger negotiating position.

Should I rent or should I buy? The cost Question.

This is becoming less and less of a question. Rental prices are raising and mortgage rates are dropping closing the gap between monthly rent and monthly mortgage. Also there is the often overlooked tax advantage factor. Did you know that you can deduct your mortgage interest and even your private mortgage insurance from you income taxes?

There is a big difference between cost and price. Below is a case study I have put together to determine the cost of owning a home vs the cost of renting.

Case study: Tom has a $200,000 home mortgage with a 6% interest rate and a term of 30 years. Tom's payment with principal and interest is $1,199 per month. Because interest is paid heavily up front on a fully amortized loan, Tom will pay approximately $11,926 the first year in mortgage interest. If Tom earns $50,000 per year he can now deduct $11,926 from his income on his taxes. Instead of paying taxes on $50,000 tom will now pay taxes on $38,074. Using a taxable income calculator based on the federal tax bracket for 2007 filing single here are the numbers: At $50,000 taxable income, Tom's federal income tax liability is $8,924. At $38,074 taxable income, Tom's federal tax liability is only $3,942. That is a difference of $4,982. It saved Tom $4,982 on his taxes to own a home. To figure the cost you simply divide that number by 12 and subtract it from your monthly payment. In this case Tom's cost by realizing the tax savings would be $718 / month. Carefully consider the difference of the kind of apartment you can get for $718 a month Vs a $200,000 home. Tom now owns a home that is appreciating each month. Tom also has no neighbors above or below him. Also keep in mind that your income tax is not necessarily the same as Tom's and I would recommend seeing a tax adviser to get the exact number of your savings.

Help your local landlord:

If you are currently renting rest assured that your landlord loves you. He knows that he will be able to raise rents on an average of 1% a month. He knows his home will be occupied and you just keep on paying his mortgage while he realizes the appreciation of the home and the tax advantages.

Like the title suggests; Everyone pays a mortgage either your own or your landlords. Contact me today to find out how much money you could be saving a month by owning instead of renting. I can compile a customized report for you that will compare mortgage rates, your rent, appreciation, tax savings, anticipated time at residence, and other economic factors to determine if it is indeed the right move for you. It's time to get the facts.

Up is the new Down

2008-01-29T07:41:00.000-07:00

Put down your umbrella and rejoice

While many people have been all to busy trying to "weather the storm", you may have not noticed that a little rain is good for your crops! The average sales price of homes has risen in 14 key areas in Utah, including an impressive 42.45% in the Park City area.

Where are the falling prices we have been hearing about?

Washington county - Down 8.75%
Juab County - Down 14.55%
Iron County - Down 16.65% HOWEVER the average condo sales price in Iron county is UP an astonishing 35.68%

If your county is not listed above you can be assured that the average sales price for you has gone up:

Brigham / Tremonton Area - UP 10.87% ($171,928)
Cache / Rich - UP 8.65% ($196,417)
Carbon / Emery - UP 16.07% ($117,879)
Davis County (Homes) - UP 0.04% ($247,768)
Davis County (Condos) - UP 7.48% ($164,722)
Grand County (Homes) - UP 17.48% ($269,200)
Grand County (Condos) - UP 2.42% ($283.172)
Morgan County - UP 0.57% ($331,690)
Park City Area (Homes) - UP 42.45% ($1,224,007)
Park City Area (Condos) - UP 50.86% ($841,473)
San Juan County - UP 41.12% ($172,437)
Salt Lake County (Homes) - UP 0.10% ($286,550)
Salt Lake County (Condos) - UP 0.23% ($191,606)
Tooele County - UP 13% ($203,954)
Utah County (Homes) - UP 1.14% ($278,260)
Utah County (Condos) - UP 2.13% ($172,975)
Wasatch County - UP 91.15% ($670,039)
Weber County (Homes) - UP 11.61% ($191,078)
Weber County (Condos) - UP 29.37% ($139,668)

As a state are average sales price is up 8.62% with an average sales price of $282,511

What is healthy appreciation?

Since 1968, home prices generally have risen between 1 and 2 percentage points faster than the overall rate of inflation. A healthy statewide appreciation should be between 7-10% so at 8.62% we are growing at a rate that is both equitable and combative toward a "bubble market".

If you have any questions on the current value of your home please feel free to send me an e-mail to receive a detailed comprehensive market analysis of your home that with unmatched detail and accuracy.

Attention: Teachers, Firefighters, Law Enforcement, and EMT's

2008-01-28T08:29:00.002-07:00

Did you know that you are eligible to buy a home for a 50% discount?

When I found out about this program my jaw dropped. I had no idea that this program was available and now I feel it is my personal responsibility to provide this helpful information to those who help us so much. The U.S. department of housing and urban development has a program that allows homes to be sold at a 50% discount. This means a buyer could purchase a home listed for $100,000 for $50,000.

So what's the catch?

Like everything that sounds too good to be true this has a catch. You must be a teacher, law enforcement officer, firefighter, or emergency medical technician to qualify.

HUD introduces Good Neighbor Next Door:

This program allows eligible buyers to receive a discount if they purchase a single-family HUD home in a designated revitalization area and live in it as their primary residence for 3 years. After that they can sell the home and keep the profits. To qualify you DO NOT need to be a first time home buyer, although you must not have owned any residential property for one year prior to making an offer on a Good Neighbor Home.

Other terms and conditions:

As part of the three-year occupancy agreement, buyers must sign a mortgage note for the discount amount. Once the three years is up, HUD releases the "second" mortgage obligation if buyers fail to meet the three-year agreement, HUD requires a prorated repayment of the mortgage amount - 1/36 of the discount - for each month short of the commitment. So in other words you have to abide by the guidelines.

So here is what you HAVE to do:

Buy a home at 50% of the listed value (sounds terrible)
Live in the home for 3 years while it appreciates at an average rate of 10.8 per year. (Painful I know)
Continue to live in a home where you have at least 50% Loan To Value ratio or sell the home and realize a favorable profit. (I know this will be hard for some)

There is just one more thing:

In order to purchase a home like this you MUST have a HUD registered Real Estate agent or broker. Lucky for you, you have stumbled upon my blog. So if you or anyone you know is interested please send me an e-mail at: Imagine.re@gmail.com and I can get you an updated list of available homes each Friday.

About the price:

The price is set. This is a luxury most people buying a home do not have. The price you see is the price you will get the home for. We simply prepare a HUD bid on the home. Unlike other HUD bids you do not need to try to "out bid" someone else. Everyone bids the same amount and if more than one person bids on the same property the bid winner is selected at random. So what are you waiting for? Help me make our neighborhoods a better place to live.

Current Market Conditions

2008-01-27T11:29:00.001-07:00

There are several factors to watch in order to determine the direction of the Utah housing market.

The growth of the community, the unemployment rate and current job demand, mortgages, home sales, and home price trends are the best economic indicators of the direction of Utah's housing market.

To better understand the 2008 housing market and beyond for the state of Utah I will focus on the five categories listed above in depth.

1. Population

Population Growth:

Utah population growth from 2006 - 2007: 3.2%
Estimated population growth 2007-2008: 3.1%

So how do we stack up nationally?

U.S. Population Growth from 2006-2007: 0.9%
Estimated U.S. population growth 2007- 2008: 0.9%

Net Migration:

Utah 2007 Net Migration Forecast: 44,252
Utah 2008 Net Migration Forecast: 41,200

2. Jobs

Job Growth:

Utah employment growth October 2006-2007: 4.3%
Utah employment increase October 2006-2007: 52,500
Utah unemployment rate October 2007: 2.8%

And Nationally?

U.S. employment growth October 2006-2007: 1.2%
U.S. unemployment rate October 2007: 4.7%

3. Mortgages

Mortgage Rates:

Projected 2007 Annual 30-Year fixed Rate: 6.4%
Projected 2008 Annual 30-Year Fixed Rate: 6.5%
Projected 2007 Annual 1-Year ARM: 5.6%
Projected 2008 Annual 1-Year ARM: 5.1%

Foreclosures:

Utah Delinquency rate 3rd quarter 2007: 3.92%
U.S. Delinquency rate 3rd quarter 2007: 5.59%

4. Sales

Home Sales:

Utah homes sold 3rd quarter 2007: 9,515
2007 3rd quarter sales down from 2006: 24.62%

5. Prices

Average Home Price:

Utah average sales price 3rd quarter 2007: $288,307
2007 3rd quarter sales price up from 2006: $12.91%

5-Year Appreciation:

Five-Year Utah appreciation rate: 54.36%
Five-Year U.S. appreciation rate: 46.92%

So what does it mean for the future 2008 and beyond in Utah?

Now that we have accurately gathered all of the data from the Utah Department of workforce services, National Association of Realtors®, Mortgage Bankers Association, Global Insight, Utah Population Estimates Committee, Utah Association Of Realtors®, and the Office of Federal Housing Enterprise Oversight, it is important to zoom in a little further.

Utah is excepted to grow in population 3.01% faster than the U.S. average. Our job growth is expected to increase 3.1% more than the U.S. average. In Utah we have 1.67% fewer mortgage delinquencies than the U.S. average cutting down on foreclosures and keeping home prices accurate. The average home price in Utah is up from 2006 by almost 13% and if you read the previous blog you would know that Utah has been the highest appreciating state in the U.S. for 4 consecutive quarters, and the 5 year appreciation rate of your home in Utah is an amazing 7.44% higher than the U.S. average.

As far as home sales go, they are down from 2006, which fell in line with some record breaking home sales years in Utah. In order to understand the statistic of home sales being down here is an analogy that is completely appropriate for the situation. Let's say that the temperature in Utah was 120 degrees Fahrenheit every single day for 12 consecutive months. The next year the temperature dropped to 115 degrees for the first few months and eventually tapered off to 100 degrees Fahrenheit by October. Would you say that the temperature outside was cold? In this analogy the home sales are represented by the temperature. Homes were selling in Utah at record breaking unheard of numbers during the housing boom and when many parts of the nation fell flat on their face Utah tapered off to a normal comfortable level, important for future housing economic stability in our great state.

So from where I sit....

All signs point toward a stable and strong growth in the housing market in Utah. Owning a home is the key to creating wealth in the United States and we are lucky enough to be in a place where the housing market it is strong and equity continues to grow in our homes.

The Media VS Reality In Utah

2008-01-24T15:36:00.000-07:00

Take a moment to ask yourself which of these headlines captures your attention:

A) Housing market dragging down U.S. economy, recession inevitable.

or

B) Utah housing market still growing strong with highest home price appreciation for 4 consecutive quarters!

Now take a brief moment to ask yourself which headline is most commonly in the news?

The truth is the news is based on ratings. The truth doesn't always sell, so often the media will embellish with one extreme or the other in order to create excitement and capture a larger viewing audience. The media is a terrible source for economic raw data and information. Lets face it data is boring. There are some facts that we must get through in order to further understand the current housing market.

FACTS: (Exciting or not these are solid truths)

The United States began a housing boom in 2001 that reached its peak in 2005.
Housing nationwide plateaued and began to deflate in 2006
August of 2006 began the sub prime mortgage crisis
Buyers who had poor credit or no down payment were suddenly forced out of the marketplace
Doomsday hits national television!

Does that pretty much sum up what you have seen on the local news and MSNBC?

Here are a few things that you may have missed about our local community.

Utah grows to number 1 in home price appreciation in the nation and holds it's title for 4 consecutive quarters.
Job creation in Utah kicks into high gear with 47,900 jobs created in April of 2006
Utah's unemployment rate hits 3.2% in December 2007. National average is 5%.
Fed slashes rates by an unprecedented 3/4% on January 22, 2008
More rate cuts expected January 30, 2008

So what does that mean?

It means a strong and improving housing market now and in the future. On average home prices nearly double in a 10 year time span. So make it a point from here on out to find out what is going on in your local community from a community expert rather than a reporter hired to make you believe that the end of the United States Economic life as we know it is over. Or for quick reference, do yourself a favor and subscribe to my blog.