Archive January 2010

If you have a mortgage commonly referred to as “Alt-A”, you may have a problem in the near future. Many of these loans had features which will cause financial hardship for the homeowner. They are generally adjustable loans which were designed to reduce the monthly payment of the borrower under the assumption that prices would continue to rise. As we all know that was simply not true and because of these and other questionable loans the demand for residential property was artificially stimulated and the “bubble” was created.

If you have one of these loans you will probably have a very large increase in your monthly payment in the next 18 months! In many cases it will be overwhelming and you may be facing financial disaster. Do not wait until you have a panic situation! Your best first step is to contact a Realtor who has been trained to handle this kind of problem. Look for Realtors with the (CDPE) Certified Distressed Property Expert designation. There are over 14,000 of them and we have over 40 trained CDPE's in our REMAX Select Properties, Inc. offices!

The story of 2009 is very clear. We began 2009 in utter chaos, sales prices were rapidly declining and home prices were falling sharply as well. It was a very unsettling time for everyone in the residential Real Estate business, the worst market I have seen in my career of over 25 years! As the year progressed we slowly saw improvement but the level of difficulty completing a sale increased almost daily. If it were not for FHA loans during this period we would have probably seen the market collapse. As 2009 progressed we saw the market change dramatically. The number of bank sales declined, the short sales increased substantially and gradually sellers began returning to the market in larger numbers. During most of the year we have had a backlog of buyers. We have had investors looking for “great” deals, first time home buyers taking advantage of the tax credits and a lot more. In a normal market the supply of buyers would have caused rapidly rising prices, but not in this one! What they did cause is a tremendous amount of frustration! The buyers did not understand why they had to make so many offers simply to buy a home. Most good properties were attracting multiple offers and the price was escalating. Then came the appraisal! There were so few “normal” sales that many times appraisers were forced to use distressed properties, the rules guiding the appraisals were tightened and the lottery system of distributing them simply did not work. I would like an easy fix to solve the problems but I am beginning to believe we should let the market “fix” itself. It seems that most of the adjustments have just made the problems worse!

As we close out the year we are still experiencing the same problems, however at least prices no longer seem to be falling and the market appears to have stabilized; our biggest challenge will be to change the appraisal rules to allow for an upward adjustment of distressed sale comparables. We may not see any real increase in values in the future unless this happens. Maybe Santa will leave us a present under our trees this Christmas making all of our problems go away.