Perrysburg Blog

Who is busted up.

Mad.

Disappointed.

Why?

That the Federal Government cannot get the simple 30 or 60 or 90 day EXTENSION of the $8000 buyer incentive tax credit into law.

Everyone wants to extend it.

But no one can get it done.

And because of snarled paperwork, overworked appraisers, fully booked title companies, overwhelmed mortgage underwriters, there are 300,000+ deals hanging that are already written and accepted but that are not going to make it to closing by midnight tomorrow, 6/30.

They are all important to the buyer and seller who have inked the contract.

So, the buyer’s will often move on.   Or keep renting.  Or try again later.

My advice to a seller client?

You ought to look long and hard at paying the buyer $8000 to close in July.

You do not know what the future will hold.

You do not know what the market will be.

$8000 might seem like a great bargain this time next year.

Get your sale closed and move on.

That was my advice.

Macro?

Big.

A simple chart of “big numbers” that covers the whole US economy.

Perrysburg area homes would be included . . . as a tiny little subset of these big, macro numbers.

While these are national numbers . . . they are not good.

By some measures almost 1 out of every 4 new loans is headed for a future default.

This is simply unsustainable.   On many levels.   We will run out of solvent buyers.  We will run out of solvent banks.  And the capacity of the enormous American economy to absorb so much expense and bad debt will run out at some future, unknown point.

Don’t ask me for a prescription for today’s market to get better.

You won’t like it.

But I would remind you about my grandfather, Gilmer Moden, bought his first house in Albert Lea Minnesota.   When he bought his first house, he worked and saved and worked and saved and then put 25% down before the local bank, whose manager and bank president knew him, loaned him the difference.

The idea that in a declining market people can and should be buying homes with nothing down is a fallacy.  It will not work.  Someone is not helping people own homes, but rather helping them take huge bets on the velocity and direction of the housing market with other people’s money.

Could be!

This chart shows that there is a move toward a more balanced supply of houses:

In the cold, cold months of Winter the 43551 had about 10 to 13 months of inventory on the market and moving off the market.

That was too much obviously.

Now?

May MSI (Months Supply of Inventory) was 4.7 months.  It was 6.5 last month.

It always drops in the Spring and Summer (mine is a seasonal business – like picking strawberries).

But the current numbers are indicative of strong demand from buyers, the continuing popularity of Perrysburg real estate, realistic sellers, and sellers moving houses off of the market.

How about prices?

Behold the numbers:

Ignore the bank numbers – and median prices for closed Perrysburg homes are right – almost exactly – where they were last year in May.

In fact, they have declined from this past Winter, which speaks of sample size issues.  The trend is steady – perhaps we have reached the end of the pricing cliff in Perrysburg?

“Unexpectedly”

People are always surprised.

Chagrined.

Shocked!

To discover that paying buyers to buy backfires.

We really didn’t pay the buyers.   WE PAID THE SELLERS.

We inflated values by $8000.   With money we don’t have.  That the Germans and Chinese have kindly loaned us.  That our kids and grandchildren will pay back.

And, “unexpectedly”, sales of existing homes declined.

CNBC has details here.

“Sales of previously owned homes fell unexpectedly in May as delays in processing mortgage applications hampered the closing of contracts benefiting from a popular homebuyer tax credit, an industry group said on Tuesday.

AP

The National Association of Realtors said sales fell 2.2 percent month over month to an annual rate of 5.66 million units from an upwardly revised 5.79 million-unit pace in April.

Analysts polled by Reuters expected May sales to rise 5.5 percent to a 6.12 million-unit pace from the previously reported 5.77 million units in April. Sales were up 19.2 percent compared to May last year.

Sales were expected to rise as transactions for existing homes are measured at contract closing.

Although the tax credit for home buyers expired in April, qualified home owners have until June 30 to close contracts.

“There hasn’t been much of a rebound in housing. We are growing from the extremely low levels of last year. On average, we are looking for a moderate advancing trend,” said Stephen Stanley, chief Economist at Pierpont Securities in Stamford, Connecticut.”

Shocking!

But not unexpected.

A contrarian view here:

“Things are looking worse on the housing front, with a severe drop-off in existing home sales following the expiration of the home-buyer tax credit. It’s hard to overstate how stupid this policy was. The government marketed it as a measure to boost residential real-estate prices by providing new home-buyers with a tax credit in the neighborhood of $8,000. Did you see the ubiquitous ads featuring the couple that gets an envelope full of cash from Uncle Sam? The idea was to convince potential home-buyers that they were the ones who would benefit from the subsidy, when in fact the opposite was true. The tax credit was a subsidy for sellers, not buyers, allowing them to increase their asking price (or avoid decreasing it) by $8,000.

The government’s “gift” to new home-buyers? A house immediately worth $8,000 less than they paid for it, and falling fast thanks to the sharp drop-off in demand that accompanied the expiration of the tax credit. Gee, thanks, Uncle Sam! I’m not sure the “predatory lenders” Obama likes to talk about ever did anything that sketchy.”

“It can’t happen here!”

“This is an unsinkable ship!”

“The Maginot Line will protect France!”

Umm.  Might want to check your assumptions.

Sellers in Perrysburg need to check theirs too.  RIGHT NOW.

I wrote on this before and told you

If your assumption is “The Lender Will NEVER Come After Me!!”  you may be embarking on a financial voyage of Titanic consequences.

I just put a house on the market today – $120k area in Toledo.

The owner thought he would be smart and TOTALLY REMOVE his updated kitchen.

The home is going on market for . . . $44,900.

And there is a good chance that the banks that are forced into those situations are going to challenge your assumptions.

Read all about this ACCELERATING trend in the Washington Post ….. HERE.

What Palacios did not see coming was the letter from his lender demanding that he pay the shortfall: $148,064.02. “I really thought I was through with this house,” said Palacios, who fell behind on payments when the economy soured and his cleaning business stumbled.

Some consequences:

-Short selling?  Make sure you do it right.  Hire an expert.

-Foreclosed?  Don’t have a trash out the house party.   Keep the “asset” (that’s what it is to the bank) in good condition.  They are going to run a tab on your decisions.

-Facing foreclosure?  There are plenty of options and decisions you have.  Make smart ones.

The 2010 Federal Tax Credit, which has to have a property not only under contract but closed before the end of June is done.

It’s too late.

For you and for me . . . if you or I don’t have a house already under contract.

But . . . if you already have an accepted offer and you are trying to get your deal closed before the deadline is crossed on June 30, Operation Chaos is in effect.

As I have spent much of the day talking to lenders and service providers I can tell you that they are under HUGE stress right now.

Nationwide there are hundreds of thousands of deals hanging that MUST close by 6/30.

They are stressed, pressed, being threatened and or cajoled.

And they are running out of time.

There are new RESPA rules.  New rules for appraisers.  New HUDS.  And now this artificial deadline is the cream on top of the frosting on the cupcake of stressed out buyers.

Ouch!

Therefore, it is good news that if your deal is already in the hopper the Feds are giving you more time.

Details here.

More time.  It will help.

So will some massage therapy sessions.   Some vacations for the loan guys.   And some more hours in the day.

I have, for many years, provided MLS feeds for my customers and clients.

In the “old days” on-line we were allowed to give consumers the picture of the house and the price but NOT the physical address.

Then the National Association of Realtors got serious about data sharing rules – and promulgated them into something called “IDX”.

Many real estate companies got “IDX compliant” websites with the full data feed from the MLS.   Consumers had to register but it was all there.

Then agents got their own “IDX sites”.   Then national and regional “aggregators” jumped into the pond.

Today, my own local Board of Realtors really can’t say with any accuracy how many data sharing websites are out there with MLS data for Northwest Ohio.

So – the data is out there.  (BTW, you can see a chronological listing of new listings in Perrysburg over to the left of this post  .  .  . constantly updated.)

There is a plethora of sites.

What can an enterprising entrepreneur do?

How about provide the BEST data site?

With the most bells and whistles?

With mapping?  Alerts?  Big photos?

That might work.

It’s called www.GoToledoHomes.com

It is the absolute best, fastest, most feature rich MLS site that any consumer can use.

Some agents have even told me they like it better than our own MLS.

You have to get your own registration to try it – name and email and phone number.

But it will rock your world if you are looking for a house in Perrysburg sometime in the next 12 months.

They need the work.

They are hungry.

They can be there 24/7 for you . . .

There are so many reasons to hire the financially destitute Realtor.  It’s just that none of them accrue to your benefit.

And, seriously, there is just a little bit of downside risk.

From my observations this week, talking to dissatisfied former clients of broke Realtors, and Realtors who are unable to sell real estate today:

A. The Financially Challenged Realtor is not going to be there.  They are not going to return your call.  Or have staff and support to do so.   You are going to be on your own.

B.  The Financially Challenged Realtor is not going to invest much money in marketing your house.  They don’t have any money to invest.  And if they did they need it for themselves and their survival.

C.  The Financially Challenged Realtor is going to be distracted.   Seriously distracted.  With a new job.  With court problems.   With other career issues.   Think that won’t hurt the sale and marketing of your listing?  Sure.

D.  The Financially Challenged Realtor is not going to have the best and most up to date technology and software.   No office to take an interested potential buyer to.   No color printer to make brochures for you with.  No scanner to digitize paperwork with.   No wide angle lens for the camera that makes your home more attractive on line.  No . . . you get the picture.

E. The Financially Challenged Realtor is not going to do the right thing when they should.  They may be desperate.  And the blood of desperation in the pool with your equity is not a good mixture.

F.  The Financially Challenged Realtor is not going to have the judgment needed to effectively protect you from scams and scammers.  They will instead try to sell you on uplines, travel deals, pills and potions, and magic software that will help you pay off your mortgage early (for an investment of $3000 up front for the magic program).

Help yourself . . . if you feel sorry for a broken real estate agent, give them a donation.  Don’t donate your home’s value.

Buyers like a process.

Their process may be different from mine.

This buyers process in buying a home may be different from that buyer.

But they all like a process.

And one thing that absolutely NO buyer likes is to hear “give us your highest and best offer.”

That means that the house in question is wanted.

By other buyers.

Sometimes lots of other buyers.

Sometimes only one other buyer.

I have 2 or 3 of these “highest and best” offer negotiations going on today.

Here are a few buyer responses and results:

A. One possible response from a buyer is “I want to see the other offers!”

- No.  You can’t.  If I tell you or your agent that there is another offer – there is.  Anything else is fraud and we don’t do that.  We say it is true and it is.

B. Another possible response from a buyer is “I don’t want to bid on that house anymore – pull my offer!”

- Will do.  You can.  But then you won’t be purchasing that house.   And you may facilitate the other buyer getting it at a price much lower than you would have paid.    I try to explain to my buyers that if a multiple offer situation is occurring on a bank owned property that bank does not care about WHO or WHAT they just want to close the sale.  You can pull out but you won’t hurt their feelings or teach them anything.

C. You can do your research.  And bid accordingly.  Then you get the house or investment you want at the price you can afford.   One of the best and sneakiest tactics is real simple – offer, in writing, to bid $1000 HIGHER than any other competing written offer.   Sometimes, again in a bank owned situation, they won’t let you do this.  But other owners will, and it gets you back in control, with an effective “veto” over the final price if you write the counter offer properly.

No one likes unwanted competition.

It disrupts the buying process.

But for the BEST HOUSE at a GREAT PRICE you must be prepared for a “Highest and Best” offer scenario.

It can be done.

You need comparable sales from before 1/1/2010 if you want to deal and wheel on your 2009 tax bill.

State of the art comparables include a real appraisal, “non distressed” recent sales, and neighborhood comps.

If the seller is a bank . . . that makes it distressed.  So, use short sales comps.

You have until March 31 every year to go the “formal appeal” route.

You can an “informal appeal”.   I have found Auditor Sibbersen’s office to be VERY helpful.

In the pre-Great Real Estate Collapse days people used to do all kinds of crazy things to get the auditor/inspector to devalue their home. Like these.

You don’t need to do anything like that anymore!

Just get some good recent comparable sales of houses like yours . . . take some photos, and do a nice letter with explanatory remarks.

You might want to drive down to BG and give it directly to the Auditor’s staff.

This is the “informal appeal” process and there is no deadline for it.

With nice people helping at the County . . . declining values all throughout Perrysburg  . . . and a streamlined, deadline free appeal process, it may really pay off to challenge the Auditors tax valuation on your real property.