Archive for the ‘Real Estate’ Category

The Expected Housing Recovery Faces a Brick Wall

January 31, 2013 Comments off

Re-emergent house flippers are set to flop.

By Elliott Wave International

In 2005, a mania for residential real estate reached such a fever pitch that a series of cable television shows became entirely devoted to house “flipping.”

Flipping involves buying a worse-for-wear house, making the minimum repairs necessary, then turning right around and selling it – ideally for a fast and handsome profit.

Two years before the housing bust became painfully obvious to U.S. homeowners, EWI’s publications warned subscribers that the housing market had reached extremes and was about to bust.

There’s no mistaking it now: Extreme psychology … has taken up residence in real estate. …

A significant percentage of the population does not know that a return to earth is implicit in [real estate’s] pole-vault to record heights.

The Elliott Wave Financial Forecast, July 2005

That issue published around the time the S&P Supercomposite Homebuilding Index peaked.

The index bottomed in late 2008. Since then, the index moved sideways into late 2011 and in 2012 staged a modest rebound. Take a look at this chart from the November Financial Forecast (wave labels removed):

The outburst of over-the-top enthusiasm for home buying turned out to be a great sell signal. The Homebuilding Index lost more than 85% over the next 40 months. The rise from its November 2008 low appears to be a … countertrend rally. … Near-term excitement has definitely risen.

Financial Forecast, November 2012

As you might expect, the rebound is accompanied by a rise in expectations for a real estate recovery.

The head of the world’s largest asset management firm sees more than just higher home prices ahead; he sees a return to 2005 levels.

As the inventory of unsold U.S. homes drops to a more manageable level, the U.S. housing industry is inching closer to a complete rebound, [said] BlackRock CEO.

CNBC, Oct. 4

By looking at the chart, you can see how much farther prices have to climb before achieving a “complete rebound.”

What’s more, home flippers have returned.

Property Flippers Are Back as Housing’s Middle Men

Yahoo Finance, Oct. 15

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This article was syndicated by Elliott Wave International and was originally published under the headline The Expected Housing Recovery Faces a Brick Wall. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.


Why and How to Pursue a Short Sale

July 22, 2011 Comments off

short sale

Homeowners who are struggling financially to pay the monthly mortgage might be facing foreclosure. Lenders who wish to avoid the expense of going through the foreclosure process may agree to a short sale of the property. The homeowner can sell the property to another party if the lender agrees to accept less than what is currently owed on the loan. While the real estate short sale process may appear complicated, many lenders are working to make the process easier. Banks are more inclined to accept a real estate short sale because the homeowner does most of the work.

The Short Sale Process
If you are interested in pursuing a real estate short sale, outlined below are the steps required to complete the process:

• Upside Down on Mortgage—The ideal candidate for a short sale is a borrower who owes more on the loan that what the home is worth. Lenders will not agree to a short sale if there is enough equity in the home to at least break even on the loan.

• Hardship Letter—The hardship letter should contain facts about the borrower’s financial difficulties. This could be due to divorce, reduced income, unemployment, a medical emergency, death in the family, bankruptcy or the need to relocate for business or personal reasons.

• Documentation Package—Borrowers should prepare a detailed set of documents containing financial data that supports the need for a short sale. This package of documents must be submitted to the lender. Each bank has specific guidelines about what documents are required. Typically these include tax returns, payroll stubs, a complete financial statement and an authorization letter that lets your agent speak to the bank. If you fail to follow the bank’s instructions, this could result in a delay or lead to a rejection of your short sale request.

• Submitting the Documents—Before you submit the documents to the bank, ask your real estate agent for a list of comparable sales in the area. The bank will want to receive an amount that is close to the current market value. The comparative market analysis should include comparable homes sold within the past six months.

• Negotiating With the Lender—Once the bank receives the entire package, a negotiator will be assigned to the case. Prior to the lender approving the short sale, the borrower may need to provide additional information about their situation and what has led up to the financial hardship.

• Closing Requirements—If the bank approves the short sale, closing the deal needs to happen within a short amount of time. Most banks require escrow to be completed within 30 days. Sometimes the house falls out of escrow because the buyer gets impatient. If this happens, the good news is that you already know what the lender is willing to accept in a short sale. Getting a new buyer approved may not be as lengthy if your circumstances haven’t changed and the market conditions remained the same.

Some real estate short sales happen within six to eight weeks, while other may take up to five months. Generally, the agent usually has some idea of when an approval will come from the bank once the package has been sent for final review. The primary benefit of a short sale is that the borrower is free from the majority of the loan and avoids the detrimental effects a foreclosure would have on his credit rating. A financial arrangement can be made to pay off the remaining balance if the lender is not willing to forgive this portion of the balance.

Don’t Let Property Taxes Break the Bank

July 19, 2011 Comments off

property  taxes

With a struggling economy, you may be on the hunt for money saving tips that can free up some of your monthly budget for other expenses. While you may be slashing grocery costs, cutting coupons and seeking alternatives to high fuel costs, your property taxes may represent another way of lowering costs for your household. Taking advantage of some simple tips that can result in lower property taxes is a great way you can achieve savings and slash your family’s budget.

When seeking lower property taxes, one of the first steps you may want to take in your quest to cut costs is to gain more information about your current property tax costs. City hall is one resource which can reveal your current property tax rate, seeking out any mistakes that may have been made. Even the smallest error on your property tax rate card may provoke higher fees and payments on your part, making careful checks a good way to insure proper rates.

In addition to checking for discrepancies, insuring that assessors have given an accurate depiction of the worth of your property can unveil lower property taxes. Excessive landscaping may be one characteristic of your property that may drive the value up, sparking higher taxes. Calculated by multiplying the assessed value of your home by the tax rate in your area, property taxes can often be related to the area and community where you reside, rather than the actual status and value of your home as a whole.

According to the National Taxpayer’s Union, as many as 60 percent of homeowners are paying property taxes on a home which has been over assessed. One of the best methods for insuring your home has been fairly assessed is by comparing the homes in your community to the assessed value of your own property. If discrepancies between the assessed value of your home and those within your community arise, hiring an independent property assessor is another option, in order to reveal a more accurate account of your home’s worth. While you may not be able to challenge the property taxes of your home based on an incorrect property assessment, you may be able to file an appeal if you truly think the value has been over exaggerated.

As a property tax assessor walks through your home in order to discover its worth, walking through the home with them may help you uncover the various faults in the property that could help them assess the property at a smaller value in contrast to an assessment that results from a lone walk through. The beautiful updates you may have made in your home and on your property can often overshadow some of the more serious issues, resulting in a higher assessment than the true worth of your real estate.

Looking for small ways to save your money can be simple by looking at payments, fees and bills you already find yourself paying and reducing them by gaining information about authentic costs. While it may seem complicated or overwhelming, insuring that you are paying the correct costs for property taxes can be as simple as taking a closer look at what you currently pay and looking at the fine details accompanying.