Tuesday, February 27, 2007

Existing-home sales rise 3% in January

By Rex Nutting, MarketWatch
Last Update: 10:13 AM ET Feb 27, 2007

WASHINGTON (MarketWatch) -- Sales of existing U.S. homes rose 3% to a seasonally adjusted annual rate of 6.46 million in January, the highest in seven months, the National Association of Realtors reported Tuesday.

It was the largest percentage gain in two years. Sales were down 4.3% year-on-year. Economists surveyed by MarketWatch were expecting sales to rise to about 6.30 million. See Economic Calendar.

Resales of single-family homes rose 3.5% to 5.69 million annualized, while condo resales fell 0.1% to 767,000 annualized.

The results were "surprisingly strong," said David Lereah, chief economist for the real estate trade group. Lereah said he couldn't be confident that the bottom had been reached, because unusually warm weather earlier helped to boost sales in January.

Inventories of unsold homes on the market rose 2.9% to 3.55 million, a 6.6-month supply.

The median sales price fell 3.1% year-over-year to $210,600. "The price correction is working," Lereah said. Prices fell the most in the West, which had been the hottest region for price appreciation. Median prices are down 4.6% in the West, which could reflect slower sales in relatively high-priced California and faster sales in cheaper areas such as Utah, Idaho and New Mexico.

In a separate report, Standard & Poor's said national home prices rose 0.4% year-on-year, according to the Case-Shiller index, which compares sales of the same homes over time. See full story.

Revisions to historic data show the pace of sales in December was slightly higher than previously reported at 6.27 million vs. 6.22 million. The supply of homes on the market was revised down to 3.45 million from 3.51 million.

Regionally, sales rose 5.6% in the West, 4.8% in the Midwest, 2% in the South and were unchanged in the Northeast.

In other reports, the Commerce Department said orders for durable goods plunged 7.8% in January. See full story.

The consumer confidence index rose to a five-year high of 112.5 in February from 110.3 in January, the Conference Board reported. See full story.

Rex Nutting is Washington bureau chief of MarketWatch.

Tuesday, February 20, 2007

Warm U.S. weather to prevail in March - Potential good news for the real estate markets.

The following article from WSI Corp. (WSI Corporation is the world's leading provider of weather-driven business solutions with top clients including CNN, FOX, NBC, American Airlines, Delta, and FedEX. WSI's innovative products, services and software satisfy the professional weather needs of the most demanding media, aviation, energy trading and utility customers in the world) forecasts warmer than usual temperatures for March for most of the nation.

This is potentially important news for the midwest as it could lead to a resurgence of Buyer activity in the local markets as the cold weather spell that we have experienced since mid-January fades away. As we saw a high-degree of activity in the first two weeks of January when temperatures were warmer than usual, I predict we will see a step-increase in buyer showings and offers as we move into next week and then into March. Along with the warmer temperatures, mortgage rates are continuing to weaken, with 30 year fixed rates falling below 6% for the first time in several months.

As I believe buyer activity will accelerate, it is imporant for sellers to recognize that it may be in their best interests to prepare and list their properties sooner than they may have been planning. Typically many sellers wait until late March or even April to put their properties on the market. If a potential seller waits another 30 to 45 days, I am afraid they will miss the potential wave of buyer showings that I expect to occur over the next several weeks.

If you are either buying or selling, please contact us so we can assist you in your efforts. We have marketing programs for sellers that can potentially save them thousands versus a traditional real estate transaction based on a 6% commission structure.

As well, we offer a buyer credit program wherein buyers who agree to work with us on an exclusive basis can receive a credit at closing of up to 20% of our commission, for properties listed in the Multiple Listing Service, that are offering a 3% co-op, and that are not listings of Help-U-Sell North High Realty.

We stand ready to serve and positioned to save our clients thousands.

Vito Boscaino
Help-U-Sell North High Realty
office: 614.447.3050

"Warm U.S. weather to prevail in March: WSI
Mon Feb 19, 2007 9:33pm ET

NEW YORK (Reuters) - Temperatures will be above normal in most parts of the United States through March, spelling a mild end to the winter heating season, private forecaster WSI Corp. said on Monday.

After deep cold in late January and into February that spiked demand for heating oil and natural gas, March temperatures will average above normal in all regions of the country except part of the South, WSI said.

"The warmer March outlook should help to keep gas inventories at or above the five-year average," WSI said in a press release.

April will average warmer than normal in the Northeast and the Northwest, but cooler than normal in the middle of the country, WSI said in the release.

Winter weather can have significant impact on world oil prices by altering demand for heating fuels. A recent spell of frigid temperatures in the United States that began in late January pushed crude prices back near $60 a barrel.

© Reuters 2007. All Rights Reserved. "

Wednesday, February 07, 2007

Title Insurance for the Buyer

The title is what gives you ownership of a property. As the buyer you want a clear or clean title — one that doesn’t have liens for unpaid taxes against it or claims of ownership by dear Aunt Millie or a surprise easement through the backyard to reach power lines or a cell phone tower.

As for your lender, he wants to know that the loan is going to a legitimate transaction — the seller really does own the property and therefore can sell it to you.

The Title Search

In other words, nobody wants an unpleasant surprise after the settlement. So a couple of things happen. First, a title search is conducted. Public records are examined manually or by computer or both. It depends on how pertinent records are kept in your area. The searcher looks at deeds, will, and trusts, tracing the history of the property back many, many years. Among the important questions are whether all past mortgages and liens have been paid.

Does anyone hold an easement? Are there any pending legal actions? But what if the title search misses something and it comes back to bite after you’ve moved in? This could happen. Buyers have even been known to lose their houses because of clouded ownership — some past problem that wasn’t discovered.

Title Insurance

The way to avoid losing everything is to buy title insurance, which is available from title insurance companies, title agents, or, in some states, attorneys.

Title insurance is a one-time, up-front investment with rates based on the purchase price of your home and the type of policy you buy. Some are more comprehensive than others. The policy protects you by making the insurance company liable for most claims against your ownership. If a critical document was overlooked during the title search and you actually lose the house, you’ll likely receive damages — but only if you bought an owner’s title policy at closing. You can see why experts advise you to do this.

Make sure you understand the policy you’re buying — what it covers and what’s excluded. The owner’s policy should cover your full sales price. If you want a policy that covers the value of your home as it increases, ask about adding an inflation rider. Your lender wants a policy, too. He or she won’t even loan you money unless you buy a separate lender’s title insurance policy to cover the bank’s interest in your property. The lender’s policy should be for the amount of the mortgage.

Shopping for Title Insurance

The only time you can purchase insurance is at closing. Whether buyer, seller, or both pay for the coverage varies according to local custom. In some areas the seller buys the owner’s policy and the buyer pays for the lender’s policy. Both policies take effect on closing day. A congressional subcommittee hearing on title insurance in early 2006 looked into why consumers were paying so much for title insurance. They found the industry rife with joint ventures between title insurance companies, real estate brokers, and lenders and heard that these deals are a factor contributing to rates higher than they should be. The Federal Citizen Information Center Web site offers advice on title coverage and cost savings from the Department of Housing and Urban Development.

Buyer's Tip: You need a clear title on closing day and two title insurance policies — one to cover the owner, the other the lender.

How to Take Title

Many home buyers, especially first-time buyers, are at the closing ceremony signing the mysterious documents when the closing agent asks how they want to take title to the property — sole owner, joint tenancy, tenants-in-common ... Oops! Another new subject that sounds like a foreign language. Will this never be over? Don’t let your eyes glaze over. This really is important. There are tax and estate considerations to ponder prior to deciding. And you also need to ask whether you need to protect your home from, say, a lawsuit against your business or a malpractice suit against a partner or spouse. Here are three of numerous ways to take title:

Sole owner - An unmarried person buying a house alone has the easiest task. Title is taken as a sole owner in the individual’s name.

Joint tenancy - When a married or unmarried couple buy a house together, things get more complicated. If they choose to take title with joint tenancy, each has the right of survivorship. If the spouse or partner dies, full ownership goes to the survivor. There are tax advantages for the survivor as well, regardless of marital status.

Tenants-in-common - When two or more individuals buy a home together as tenants-in-common, they are partners who may own unequal shares and who can sell their shares of ownership independently. Buyer's Tip: Decide before you attend the closing how you wish to take title to the property. Consult an accountant, real estate attorney, or estate planner to learn the advantages and disadvantages of each type of ownership.

Recording the Deed

When you have title to your property, you own it. But the deed is the written document used to transfer the title from seller to buyer. It is only when the deed is recorded at the appropriate county office that your ownership is official. Here’s what happens. On the day of closing, buyer and seller sign numerous documents and the closing agent disburses the money.

Then, depending on the time of day and practices in your area, someone from the title company takes the deed and other documents that must be recorded to the county office. This is usually done first thing in the morning or at the end of the business day. A recording fee is paid. The county recorder assigns each document a number and records the time of entry to the minute. A copy is made for the county file. Your real estate transaction is now part of the public record.

The Keys, Please

Your sales and purchase contract spells out when you can take possession of your new home. But ask your real estate or closing agent whether you’ll get the keys to the house at your closing ceremony or after the deed is recorded. If you live where all parties gather with a closing attorney to sign documents, you might leave the meeting with keys. But if your seller is signing paperwork after you, it might be later in the day or even the next day before you get the keys, garage door opener, and security alarm codes.

Home Pricing Strategies

Just as a football coach has a bunch of different plays to choose from and use throughout a game, you have a variety of strategies in how you can determine the price of your home. No one strategy can stand alone, but used together they can narrow the best possible price for your home.

Review Comparables

After sizing up the landscape, comparables play the biggest role in setting the price. Considered part art, part science, “comps” are regarded as the single-best tool in determining a home's value. There are some tricks determining which comps are the best; see the article on Picking the Best Comps for help. You can view comps on your property or anyone else’s on Zillow.com, simply by entering an address, though Zillow and other valuation sites are really just a first step, and data from any of these sites should always be triangulated with data from the MLS or other real estate listing sites.

Look at Unsold Homes

Homes on the market that haven’t sold yet are also a consideration, although not a strong one, since it’s unproven whether the house will bring the money it’s asking. But, look at the active competition. Find a home most similar to yours and find out how many days it has been on the market . If the house has been sitting for a while (more than 30 days), you will see the market is not convinced that is the correct price for that home. Once you see the “Sold” sign, find out how much above or below the list price it sold for. This will give you a good idea of how the market is behaving and how aggressive you can be in setting a price.

Use Square Foot Pricing

Some neighborhoods are a mixed bag of architecture, style, and size, which means if you can’t find another home similar to yours, you can use square foot pricing. How? Take 3–5 homes as similar to yours as possible, add up the square footage, and divide by the number of homes. This will give you an average per square foot for your comps. Then, add up the sold price of each home, divide by the number of homes to get the average. Lastly, divide the average sold price by the average square foot to get the average price per square foot. Once you have the average price per square foot, multiply it by your home’s square footage. This is just another tool to help you price your home.

Step 1: Find the average sq. ft. of comps
Home 1 – 1,950 square feet
Home 2 – 2,400 square feet
Home 3 – 1,800 square feet
Home 4 – 2,050 square feet
Total – 8,200 square feet 8,200 / 4 = 2,050 sq. ft. 2,050 is the average sq. ft. of your comps

Step 2: Find the average price of comps
Home 1 – $310,000
Home 2 – $410,000
Home 3 – $299,000 Home 4 – $325,000
Total – $1,344,000 $1,344,000 / 4 = $336,000 $336,000 is the average price of your comps

Step 3: Divide the average price by the average sq. ft.: $336,000 / 2,050 = $164/per sq. ft. $164 is the average price per sq. ft. of your comps

Step 4: Set the price of your home: Take $164 and multiply it by your square footage to get a price. For example, if you have a 1,975-square-foot home, multiply it by $164 (e.g., 1,975 sq. ft. x $164 = $323,900). Bingo! Your home’s price: $323,900!

Get a Comparative Market Analysis (CMA)

If you’ve used the three strategies above, but still need reassurance, go to a real estate agent — or, two or three — and ask them for a CMA. Whether you use the agent to sell your house or not, they will be more than willing to provide a CMA in hopes of getting your listing. It shouldn’t cost you any money to get one.

Get an Appraisal

If you really need extra assurance, hire a professional appraiser. An appraiser will cost approximately $250–$400, depending on your home size and uniqueness of the property. They will come to your home and itemize the number of rooms and amenities (e.g., swimming pool, fireplace, etc.) and will pull comps from other nearby homes that sold recently. Once they have completed their review of your home, the comps, and the market, they will furnish you with an appraisal. This will be an estimation of your property’s fair market value.

Tuesday, February 06, 2007

Preparing to sell your home

Springtime is usually the time when most homeowners who are moving or relocating, place put their house on the market. Getting your house in good condition before you sell can demonstrate pride of ownership and could possibly get you a higher sales price for your home. A home that is visually appealing and in good condition will attract more potential buyers particularly those driving down the street. You should view your property through an outsider's eyes.

Are the lawn and shrubs well maintained?

Are there cracks in the foundation or walkways?

Are the gutters, chimney and walls in good condition?

Are garbage and debris stored out of sight?

Strong curb appeal will lure potential buyers inside, where you have to live up to their expectations. There are a lot of easy improvements you can make to your home's interior without incurring major expenses. A major cleaning is mandatory. Your windows, floors and bathroom tiles should sparkle. Shampoo dirty carpets and clean tubs and showers. Give the interior or exterior a fresh coat of paint.

Next, get all of your mechanical systems serviced by qualified contractors. Service your air conditioning system, clean your furnace, repair plumbing leaks, and correct any electrical switches or outlets that are not working.

Most people buy homes because they have outgrown their existing house or apartment and need more space. You can create more space, even in smaller houses, by eliminating excess furniture and removing unnecessary clutter from the garage, basement, attic and closets.

Before you put your house on the market, arranging for a professional home inspection can provide expert help in the pre-sale process. While buyers will often want their own inspection, you will be far ahead of the game to have an impartial expert check your house beforehand.

Inspectors can provide lists of needed repairs and, most importantly, give you an early warning of any potentially major problems that are likely to creep up when a buyer's inspector gets involved.

Remember, cosmetic changes do not have to be expensive. In fact, costly home improvements do not necessarily offer a good return on your investment when you sell. It is attention to the basics - anything that says "this home has been carefully maintained" - that will help you get the price you want.

Monday, February 05, 2007

Paying Mortgage Points a Smart Investment

Returns are 'astonishing,' so why don't more borrowers take advantage?
Monday, February 05, 2007By Jack GuttentagInman News

"I read recently about a study that says that most people would not profit by paying points on a mortgage. Do you agree with that?"

No. The much-cited study by Yan Chang, senior economist at Freddie Mac, and Abdullah Yavas, research director of the Institute for Real Estate Studies at Penn State's Smeal College of

Business, claims that most borrowers don't hold their mortgages long enough to make paying points a good investment. The study based its conclusion on the life of fixed-rate mortgages (FRMs) that were originated and terminated during the period from 1996-2003. But almost two-thirds of the loans in their sample were still in existence at the end of the period, and they are bound to have a longer life than those that were paid off. Further, the study did not cover adjustable-rate mortgages (ARMs), which in today's market provide the most attractive opportunities for paying points.

Even if the study was right, what "most people" would profit from is beside the point. What matters is whether you would profit from it.

Well, then, how do I know whether or not it makes sense for me to pay points?
Points are an investment on which the return consists of lower mortgage payments in the future, and a lower loan balance if the loan is paid off before term, which almost all are. The investment makes sense for borrowers who have the money and find the return high enough to be attractive.

The standard view is that the borrower's time horizon must be quite long to make points worthwhile -- I have made this statement myself many times. However, when I recently calculated rates of return for different types of mortgages, I found that the standard view holds only for FRMs. On ARMs, the returns are high over periods equal to the initial rate period.

For example, while the return over seven years was only 8 percent on a 30-year FRM, on a 7-year ARM it was 22 percent. On a 3-year ARM, the return over three years was 17.5 percent. I found this so astonishing that 10 days later I looked again to be sure I hadn't made a mistake.

Sure enough, I hadn't.

Do most borrowers pass up this opportunity?

They do. In the sample selected by Chang and Yavas, less than 15 percent paid points.

Borrowers are predisposed against an increase in their cash outlays at closing for a benefit that will accrue in the future. Nobody tells them what the rate of return on investment might be. Often, they aren't even offered the option.

Mortgage brokers and loan officers don't encourage borrowers to pay points. Points make it more difficult for loan officers working for lenders to earn an "overage" -- a price above the lender's stated price, which the loan officer usually shares with the lender.

Similarly, if borrowers pay points for a lower rate, mortgage brokers are forced to disclose their own fees upfront where borrowers can see and possibly question them. The broker can't avoid disclosure when his fee must be added to the points. It is much better to steer the borrower to a loan with a rate high enough that the lender will pay points to get it, referred to as a "yield spread premium," or YSP. Then the broker can pay himself out of the YSP, which existing rules permit to be disclosed in ways that usually mean nothing to the borrower.

How can borrowers be sure that the option to pay points will be made available to them?
One of the advantages of shopping for a mortgage online is that the alternative rate/point combinations appear on the screen. The rates of return shown above were calculated from data shown by one such lender, Amerisave, an Upfront Mortgage Lender. Upfront Mortgage Brokers will also provide the required data. Since their fee is set upfront, they have no financial interest in which rate/point combination the borrower selects.

How do I find the rate of return?

You need two price quotes for the loan type you want. One is the rate/point combination with points closest to zero. The other is the combination for the lowest rate available. Using calculator 11c or 11d on my Web site, enter the two rate/point combinations and the period you expect to be in your house. Presto, you have the rate of return.

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

For a local central ohio perspective please contact:

Vito Boscaino

Owner / Realtor / MBA

Help-U-Sell North High Realty

4485 North High Street

Columbus, Ohio 43214

Our office:http://northhighrealty.helpusell.com or call 614.447.3050If you have any other questions please click on this link to contact me:Contact Me Link