I was talking this week with a fellow Realtor.

About the dearth of new REO orders.

In the face of hundreds of empty houses.

“What is going on in your business?” I asked . . .

He is seeing the same thing that I am.

The REO pipeline has been shut down.

It started 3 or 4 weeks ago.

Someone “of a higher paygrade” decided to slow down the marketing of new foreclosed homes.  The news is grim – at least in the headlines.  Then you read the reassuring copy – “nothing to worry about”, “move on . . . nothing to see here”.  Let’s say I agree.  There is no wave of new REO coming.    Then the tactic of the lenders to hold off inventory now is a premeditated attempt to firm up prices and values for today’s buyers and to protect their asset values.

The houses that are foreclosed and not available?

Oh – they are still there.  They are just sitting empty.  Waiting.  Marinating.

Does this make sense?  Does this make money?  Does this “help” the housing market?  Does this increase prices?

Like “Rosebud” in Citizen Kane . . . NO MAN KNOWS.

I do get phone calls.

“I have a couple of questions about . . . ”

And I try my best to answer them.

I also have a couple of questions about Perrysburg Real Estate:

1. What is the future of home values in Perrysburg?  Will we ever see an “automatic 3%” increase every year like we did for many years?

2. What is the impact on the continued meltdown in Toledo home values going to do to our prices/values in Perrysburg residential real estate?

3. How much/many new taxes and property tax levies can the citizens of Perrysburg keep passing and paying until the stigma of “too many taxes” hits the top of mind thinking of buyers and they discriminate AGAINST Perrysburg listings/houses?  Will the City ever STOP spending more each year?

4. Who is going to rent/lease in Levis Commons?

5. What is the “BEST” subdivision in Perrysburg?  The one that people, irrespective of price point, love the most?

6. What can Perrysburg do to better leverage one of the greatest downtown districts in Ohio?  More car shows?  More parades?  Getting more people to a bigger/better Thursday Farmers’ Market?

7. How many homeowners are “underwater” in Perrysburg today?  Right now?  And how does that realization change their spending?  Change their planning?  Change their involvement with the community?  Change their desire to stay/work here?

I do not have the answers . . . . not on these.  I’m just asking . . .

This:  the news that mortgage interest rates for residential borrowers are at an “all time low”.

Details:  WSJ.

4.58% for a 30.

4.04% for a 15 year term.

As the members of the National Association of REALTORS say . . . “NOW IS THE BEST TIME TO BUY A HOME”!!!

But take the letter “w” out of that sentence and no – it might NOT be the best time to buy.

Not if you don’t have a down payment saved.

Not if your consumer debt is out of control.

Not if your car is over-leveraged and your school loans are hitting.

Not if your job is in danger.

It might NOT be a good time to buy.

The bank rate on borrowed money should be one of the last considerations about timing and pulling the trigger on a home purchase.

I listed 2 foreclosed homes today.

I am certain that each of these homes had a prior owner that was absolutely certain it was a great idea to buy.

And I am certain that each of these former owners – I have talked to both of them – wish they would have made another choice.

Don’t let the “buy, buy, buy” PR machine push you into buying.

Buy if it is the right, correct, and wise decision.

Don’t buy because rates are low today.

One more thought . . . why do you suppose this trend will stop?  If it continues then NOW is actually NOT the best time to buy a house.

And as this picture shows – we have some very good balloon pilots.

Because hot air balloons go where the wind takes them – no engines.

One of my team members, Deborah Patton, was on board – and she told me they are going to aim for the stadium.

I have flown many times in the balloon – we have a fleet of three of them in Ohio – and the most memorable ride was the ONE TIME I took my dear, sainted mother in law Darlene up.

We had a crash landing.

I hope she has forgiven me now . . . after 10 years.

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.

“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.

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.

My friend Alex Charfin of the Certified Distress Property Institute (imho the leading source for underwater homeowners in dealing with the bank . . .) has just produced a slick new jargon-cutting video.

Enjoy!

Me?

Unlike many Realtors who are “foreclosure experts” because they have been foreclosed themselves, I did go and get the training from the CDPI and have earned the right from Alex to actually train others in the short sale process.