Sellers Writing A Check When/If It Sells
The Landmark reports from Illinois. “Despite hopes that the local real estate market would begin to recover three years after it began to crash, the bottom still hasn’t been reached, according to the latest sales figures for Riverside, Brookfield and North Riverside. Through Aug. 31, the median home sale price in Riverside plummeted to $307,000 - down 20.5 percent since Dec. 31, 2010, according to Midwest Real Estate Data LLC. By Aug. 31, the median sale price in Riverside for a single-family, detached home has fallen 39 percent from its high of $503,500 at the end of 2007.”
“‘From my perspective, there were sales a month ago and it’s dead in the water, and it shouldn’t be,’ said Karen Skiba, a Brookfield resident who is a real estate broker. ‘There are no showings. There was a big push a month ago and, now, nothing. And I don’t think it’s going to pick up.’”
The Register Mail in Illinois. “The number of homes sold in Illinois dropped by 34 percent, when comparing 2007 to 2010. The average home price also dropped sharply, by 19 percent. Mike Cratty, president of the West Central Illinois Association of Realtors, said banks will have to tighten some of their lending practices, beginning today, because of requirements set by the federal government. ‘What they’re doing is probably the way it was 20 or 30 years ago,’ he said. ‘There for a while, when things were really booming, banks and the government loosened up on their lending practices.’”
“According to Cratty, one of the results in Illinois is the state ranking as having — on a percentage basis — the ninth highest rate of foreclosures in the country. His opinion is that potential borrowers who can afford the payments should be OK. ‘I think in the (recent) past, yeah, it was a great thing to lend (people) money, but they were strapped. Unfortunately, the American public was spending more than they were making,’ Cratty said.”
The Des Moines Register in Iowa. “Here are excerpts of an online Register discussion with Holly Olson, director of the Neighborhood Finance Corp., and Kurt Schade, president of the Iowa Association of Realtors. Q My house has been on the market over a year and the main feedback from prospective buyers is that the kitchen is dated, needs granite countertops, hardwood floors, new cabinets, etc. And a new back and side deck. I am getting mixed feedback regarding the wisdom of making an investment in this overhaul. Some say it will be money lost and the house is priced to reflect the need for updates, and others say it won’t compete with newer homes without these amenities if I don’t. With the way it is priced now, I’ll already be writing a check when/if it sells.”
“Schade: I do agree that sellers need to understand the new mentality of buyers. For buyers, if everything is not perfect, let’s keep looking until we find that one that is. Therefore, deferred maintenance is just not acceptable in this market. We are seeing so many sellers in a position of writing checks. Unfortunately as there were a few years of zero-down mortgages and then some correction of property values, a lot of sellers just cannot sell. It is a business decision. I just sold my home and made about $80,000 less than had I sold it five years ago. We decided it was best to take the loss now instead of making another three to five years of payments not knowing if or when it will get better.”
“Q: I see some new construction. What, if anything, are the lenders offering to decrease the glut of ‘used’ homes on the market? Olson: I am not sure the lenders see the ‘glut of used homes on the market’ as their issue, unless they have a foreclosed home they are trying to sell. This is a seller issue and they have to realize what their competition is.”
“Q: In my area there are several abandoned homes. What can I do to limit their effect on my home’s value? Schade: That’s a loaded question. If the properties are not being maintained, I suggest you call the city to enforce such.”
The Grand Rapids Press in Michigan. “Economist Ted Jones has an idea to help the economy. ‘Allow every homeowner that is current on their loan to refinance at today’s interest rates,’ said Jones, the chief economist with Texas-based Stewart Title Guaranty Company at the Michigan Association of Realtors Convention & Expo. ‘I don’t care if they’re under water,’ he said. ‘Make Fannie Mae or Freddie Mac buy them all since they or a bank is already on the hook for them.’”
“Lowering interest rates on an existing loan is not a simple matter and would have huge, negative implications in the future lending market, said Mitch Stapley, chief fixed income officer for Fifth Third Bancorp, reached by phone after the speech. ‘If you say unilaterally I’m taking that 7 percent rate and lowering it to 4 percent, you would basically abrogate contract law,’ said Stapley. ‘The government would have to be the provider of basically 100 percent because there is no way private capital would ever be directed again to provide a mortgage out there. The devil is so far in the details on this one.’”
The Plain Dealer in Ohio. “Once just another step in the sale process, appraisals are attracting ire from real estate agents, builders, homeowners, buyers and sellers. The National Association of Realtors says appraisals that don’t meet the contract price are delaying and derailing deals. ‘When an appraisal comes in low, it puts doubt in the mind of the buyer as to the true value of that property,’ said Richard Kassouf, the broker-owner of New Hope Realty in Brunswick. ‘And it gives them a crisis that they have to deal with, where they have to come up with more money for the down payment to allow that transaction to be completed. Or they have to negotiate the price down.’”
“Representatives of the appraisal industry hotly rebut the claims about low appraisals hurting the housing market. Jonathan Hall, an Ohio appraiser based in St. Marys, says members of the national Realtor association’s appraisal committee plan to complain about the group’s finger-pointing during a gathering in November. Hall is the committee’s vice chairman.”
“‘Appraisers were blamed for the run-up of the market when prices were high, and now they’re being blamed because prices are low,’ said Ken Chitester, a spokesman for the Appraisal Institute. ‘Both can’t be true. Appraisers are doing the same thorough research and thoughtful analysis that they’ve always conducted. So, in short, don’t shoot the messenger.’”
The Pioneer Press in Minnesota. “Mike Kinning looks out the window at the industrial park in Hastings and points out building after building that once held thriving businesses but now sit vacant. There was a packaging company over there. A building supply company there. An architectural business is long gone.”
“The housing market crash affected sales at home building suppliers like Intek. In 2007, the company had two plants in Hastings after closing a plant in Eau Claire. Even with one less plant, Intek was operating the two with 30 percent to 40 percent unused capacity. ‘We started to see we had too many eggs in one basket,’ Kinning said. Still, ‘Nobody predicted that it would fall to the depths it would, but we reacted and we reacted quickly.’”
“The following year, the company consolidated the two Hastings plants into one. Some production lines were closed and others were transferred to the remaining plant. The idled plant was sold. At the same time, the company was searching for new markets outside of home building.”
“Clarence Chapman, the lead extruder, recalled the old days of overtime and a lot of spending money. ‘We were busy. We had all kinds of overtime. I was actually getting burned out on overtime.’ At the time, people were buying homes or property. ‘We were living the high life back then,’ he said. ‘The money was there, so people purchased cars, they purchased homes and they purchased vacation property.’”
