29
July
2008
Los Angeles home prices have taken a record dive. Basically, LA home owners just lost one fourth of their home’s value. If you have an 80% mortgage one year ago, you are upside down. Wow. It just keeps getting worse.
More from CNN….
May home prices dropped a record 15.8% from a year ago, according to the S&P/Case-Shiller Home Price Index of 20 cities. It was the 22nd consecutive month of decline recorded by the index. Prices fell 0.9% from April to May.
Each of the 20 metro areas covered by the index posted annual declines; nine posted record lows and 10 cities recorded double-digit drops.
The Case-Shiller 10-city Index posted a year over year decline of 16.9%, and a 1% month over month dip. Both the 10-City Composite Index and the 20-City Composite Index are reporting record annual declines.
“Since August 2006, there has not been one month where we have seen overall price increases, as measured by the two Composites,” said David Blitzer, Chairman of the Index Committee at Standard & Poor’s.
Losing streak
Case-Shiller has been tracking the 20-city index for 19 years, while the 10-city index is 21 years old. The current streak of price declines has been unprecedented in both its length and depth. The last extended decline began in in April 1990, when the 10-city index sank for 10 consecutive months. But that total loss was just 6.5%.
Since the 10-city index peaked in July 2006, it has plunged 19.8%. The 20-city is down 18.4% from the peak.
The 20-city index’s Sun Belt cities, which recorded the biggest price gains during the boom, have led the charge down. Las Vegas prices have plummeted 28.4% during the past 12 months; Miami prices fell 28.3%; and Phoenix homes lost 26.5% of their value.
Midwest metro areas, which have endured tough economic times for years, are also feeling the pain. Detroit prices are off 17.4% for the 12 months, and Cleveland is down 8%.
Northeast cities like Boston, down 6.2% for the 12 months, and New York, off 7.9%, have been less volatile than the Sun Belt.
The smallest year-over-year declines were recorded by Charlotte, N.C. (down 0.2%), Dallas (down 3.1%), and Denver (down 4.8%).
The soaring numbers of foreclosures are helping to push down prices. Banks tend to slash prices when selling repossessed homes, since they lose money every month a house sits vacant. They must pay property taxes, maintenance expenses and utility costs while getting nothing back in return.
Those sales, in turn, tend to bring down prices in the rest of a given neighborhood, creating a vicious cycle.
Foreclosures accounted for a large - and growing - share of all existing homes sold in some markets. In California, for example, 40% of the existing homes sold during the three months ended June 30 were foreclosures, according to DataQuick, a real estate information provider. That’s up from just 5.4% during the same period in 2007.
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7
February
2008
The Home Sales Network has launched at www.HomeSalesNetwork.com
HSN is a collaborative writing project to compile the world’s best free knowledge resource about buying and selling a home. I am the senior editor. Please take a look. You will find lots of valuable content, how-to’s and videos there. You can also upload articles, edit them, rate them or join in the conversation about your home buying and selling experiences.
Thank you,
Scott
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18
October
2007
The time has come. You have signed all the documents required by your escrow officer. The escrow has been funded by your lender. You have deposited your our down payment into escrow. Today is closing day! Today you will own the home or real estate. It’s also the day that you and the seller will pay closing costs which are all the charges to close this transaction.
As a Buyer, what closing costs do I pay?
The seller pays for the real estate commissions. You pay for appraisal fees for your loan, loan fees, usually one half of the escrow charges, advance payments for property taxes, homeowner’s insurance, title insurance premiums for your lender and a few other charges like document fees and postage.
How much will I be paying for all this?
The amount you pay for to close varies with the purchase price. If you are taking out a new loan, an estimate of your costs will be in the settlement estimate provided to you (required under the Real Estate Settlement Procedures Act). This disclosure provides you with a good faith estimate and an itemized list of charges to close your transaction and take title.
Must I pay for closing costs all at once?
They must be paid at closing in the escrow in full since the escrow agent has to pay those parties at that time.
Can I use a personal check for the down payment or closing costs?
Typically buyer’s either wire the funds or use a cashier’s check. Using a personal check may delay the closing because your escrow officer will have to wait for it to clear. .
Am I required to have title insurance to buy a home?
All lenders will require it. If you pay cash for a property, you usually can get the seller to pay for it. You are not required by law to have title insurance but it sure it a good idea.
How much is title insurance?
There is a lot of confusion about this. Typically the seller pays for his/her portion of the policy and you pay for your lender’s title insurance. The seller’s portion is usually larger. Your escrow officer will provide you with an estimate but you can ask for quotes from several title insurance companies. Often the seller will try to dictate which company is used since he/she is paying for most of it.
Why does the lender need title insurance?
Because the lender needs to know the title is clean. Most lenders sell the loan and the buyer of the loan will never see the property so the insurance helps them know they have a valid and enforceable lien. Without a current title policy the original lender will not have a marketable loan.
What does my title dollar pay for?
Title insurance companies attempt to eliminate the risk of future title claims or conflicts by research during an intensive period of risk identification.
These companies spend a significant percentage of their operating revenue collecting, storing, maintaining and analyzing and disseminating official public records that may affect title to real property. This work is very labor-intensive and methodical. Their “title plant” is a specialized library of records that can go back in time hundreds of years. Also keep in mind that every day this information changes with each new recording, lien, lawsuit etc. These recorded documents affect real property and must be organized for rapid and accurate retrieval so a title can be updated in a short period of time.
Title experts must be able to identify the rights others may have in your property. This includes but is not limited to: recorded liens, disputes, lis pendes, legal actions, rights of ways or easements, or many other potential encumbrances of title. It have recently been involved in a transaction were there were 48 “Schebule B” items, which means there were 48 problems standing in the way of getting clear title so the transaction woud close. What a nightmare that was… But we got it done!
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28
June
2007
If you are a seller, be prepared to answer these strategically.
If you are a buyer, these questions will put you in control of the process immediately.
1. Why are you selling?
2. How flexible is the price?
3. What did you pay for this house?
4. What have you done to this house in the last five years and do you have all the receipts? (including home owner insurance claims)
5. What problems have you had with this house?
Why are you selling?
It’s a buyer’s market. Buyers are more aggressive when it comes to maneuvering into position to gain an advantage in the negotiation process. Buyers always want to know why you are selling. If the buyer is coached by a good agent, these questions will be asked. Buyers are looking for the seller’s motivation. Is this a financially distressed situation? A divorce? Is the seller being transferred and is dealing with a timeline? Is there a problem with the house or neighborhood and the seller wants to get out? Is this a short sale?
If I am buying, or represent that buyer, I will probe to get answers to all the above. If I represent the seller, I coach them to handle these questions. I wrap the probe. If you are selling and I am representing the buyer and we are touring the home; this is how I may address these questions: “This seems like a really nice house, why did you decide to sell it?” Sellers will often reveal motivation when it is put to them this way.
How flexible is the price?
Again, the smart agent will wrap the question: “Great floor plan. Love the neighborhood, any flexibility in the price?” Listing agents often stumble when I ask them this as well. Regardless of what they say, I follow with: “Have you had any offers? Lots of inventory right now.” If you are my seller, I will coach you to have these questions slide right off and smile at the same time.
What did you pay for this house?
What a seller paid is public record, but this is still a very awkward question to field if you are a seller. It often puts a seller on their heels. When I show property to buyers, I am armed with this information as well as their mortgage data so I know it already.
Buyers should be a bit careful asking sellers this because it may tend to isolate them.
What have you done to this house in the last five years and do you have all the receipts? (Including home owner insurance claims)
