November 28th, 2008 Categories: Investment, Real Estate
The last post concentrated on the process of going through a short sale, and today we will explore more details about why a homeowner should want a short sale versus a foreclosure, and to also eliminate some misconceptions about what this means for a buyers credit standing.
How a short sale starts
In Oklahoma the use of sub-prime financing was little used. Certainly there was 100% financing, and less than prudent use of 2nd mortgage equity lines of credit. There will always be people who want everything now, and the ease of obtaining cars, furniture, and credit cards can add to the problem. Many people just don’t budget or plan for a rainy day. Other standard reasons can include divorce, loss of job, or medical problems that can cause someone to get behind on a mortgage. In Oklahoma, once three payments are missed, the lender has to step into legal action and file against the owner. It is not unusual for the owner to want to give up, or not understand what their alternatives are. In the moment, many of them feel that the world is falling in on them not realizing that the future can change for the better. Asking for a short sale can get them on the road to recovery.
What is the next step?
The first move is to find a Realtor who knows how to work the system. Our team members who specialize in short sales have been able to get the lender to pull the home from the sheriff’s sale list. This can give us the time to complete the first part of the process which is to find a buyer quickly. One of our advantages is that we have a list of over 600 individuals who have bought investment property from us in the last four years plus over 2000 more in our database. many have put themselves on a waiting list for short sale purchases. It is normal for us to have a buyer in a matter of days. Lenders are more willing to listen to you when they know that you can complete a contract as soon as they are contacted. For the lender, the whole reason for going with a short sale is the time value of money. if they can take a loss up front, and it that can be completed quickly it is off their books, and the up fron loss is not as great as going through the full foreclosure process. They also see the current statistics about refinancing these toxic loans with over 50% of recent workouts not working almost from the day they are done. In this our team is unique in that not only do we have experts who can negotiate with the loss mitigator, we have others who work with investors on a daily basis.
The Advantage to the owner
When the time comes for a short sale to be asked for, the owner is already behind on payments which are reflected in their credit report, and nothing can be done to change that. With a short sale the damage can be minimized. At this time the IRS cannot charge taxes on the deficiency, but the lender can. In better days lenders would just write off the loss but not anymore. Deficiency notices are being sent out after foreclosure and that can force people into bankruptcy which deals a more serious blow to credit ratings. Doing a short sale gives the owner the ability to eliminate the deficiency judgement. One misconception that is very important to note is that a short sale is not a foreclosure, but it does not erase the process for the participant. It will be noted as a write off by the lender but that is not as much of a serious hit to the owner than just letting it go. Plus, at some time people will repair their credit and have the ability to buy another home, and participating in a short sale that aids the lender will show responsibility in dealing with this problem versus just letting it go. So for those who may be in this position, avoiding a deficiency judgment, and having a faster track to repairing your credit are strong reasons for you to making this happen.
Conclusion
If you are a person or family in this economic plight, the sooner you contact us the easier it will be for us to prevent the foreclosure. If you are a potential buyer, getting on our short sale list will give you the ability to buy one before it hits the market. Either buyer or seller can contact us by emailing me at joe@joepryor.com.
| Discussion: No Comments »
November 27th, 2008 Categories: Economics, Personal
Bounty of Blessings
This Thanksgiving I have lots to be grateful about, but I thought I would hit the highlights. Hopefully this will get you in the mood to create your own list. There is plenty we can be negative about, not just in these perilous times, but always. I don’t highlight family and friends becasue we should be gratful every day for that blessing. Today to use the Monty Python song, “Always look on the bright side of life”!
The Election
As a 60 year old man I would have never thought that this country would elect a black man as President. First, it shows you that for all our problems, there is a deep goodness and an openness to change in Americans. It can also show grace as exhibited by John McCain’s concession speech that was deeply moving and his best speech of the election.
The iPhone
Before I came to Houston for cancer treatment I wanted to give myself a present, and the iPhone is wonderful. The down loadable apps give me traffic problems, the restaurants and more around me, the ability to hear a song and to find out who it is, and the complete works of Shakespeare all for free. The Google earth free app is worth the purchase of the phone. The computer just got smaller.
Gas Prices
I know that as an Oklahoman in an energy state i should want high gas prices, but can you imagine the misery of a financial meltdown and $4 gas? This is the biggest tax cut incentive plan that the American people can have. Just filling up for $30 and not $50+ is a psychological boost.
Sheila Blair of the FDIC
President-Elect Obama should return her. Her workout package of IndyMac was genius, and her recommendations on how to handle the housing crisis was genius. Finally it looks like the Bush Administration got the message and the Treasury is dealing with toxic mortgage assets, and money will flow again.
Oklahoma!
Not the musical but the state. Finally Oklahoma and my city of Oklahoma City is the place to be. With a diversified economy, energy and agriculture, a robust housing market that is still going up, and Indian Tribe corporations that are making brilliant investments outside of casinos, the state although affected does have a distance from the economic plight of the country.
Political Satire
Tina Fey, Colbert, and The Daily Show gave me reason to smile. National elections have a meanness to them, and sometimes it’s hard to separate truth from fiction, but the purpose of satire is to put meaning in perspective, lets us laugh at ourselves, and often speaks truth we need to hear.
MD Anderson Cancer Center
As I write this in my apartment a mile from the center, my thoughts, prayers, and tears are with the Doctors, Nurses, and staff of this miracle in a building. I came to MD Anderson with what I thought was a death sentence, but through these caring people and great medical technology, I am leaving cancer free. The fact that I can breathe, smile, and live gives me the ability to give to others. The first thing I will do when i get home is open a chapter of a head and neck cancer group so that I can give comfort to others who are diagnosed. This Thanksgiving please remember those who come hear every day. Some will not live but many more go home like me. Please also consider giving to Stand Up to Cancer. It is one thing to treat cancer, but it equally important to work on prevention and ways to help the body heal itself instead of chemo and radiation. I wish you Happy Holidays. Please share with me what you are grateful for.
| Discussion: No Comments »
November 26th, 2008 Categories: Oklahoma City Real Estate, Real Estate
Yesterday, the TARP program finally did what it should have down 6 weeks ago, and that is to buy up or guarantee toxic assets so that credit is freer. Real estate may be at the base of the problem, but car loans, credit card debt, and student loans have also put the financial sector is a perilous position. The stock market reacted in a positive way, treasury bonds and bills had lots of buyers, so interest rates are going down. In fact I saw a mortgage company offering an FHA 30 year fixed loan at Read the rest of this entry »
| Discussion: No Comments »
November 25th, 2008 Categories: Personal
After being diagnosed with cancer in August after a surgery in Oklahoma City, I just finished 30 radiation treatments after another surgery at MD Anderson In Houston. What I mean by the title of this blog is that this hospital is more than the best cancer doctors and equipment in the world. When I come to free valet parking every day for radiation, the valets call me by name. When I check into treatment or my radiation consult, the secretary calls me by name. This the way that this hospital makes you a person and not a number. I do have a number that I use every time I come back including my six weeks check up, but I will be a cancer free person, and not a statistic. I will miss Patrice and Dolores my radiation techs, but I will not miss the process. I have learned some great lessons from this, some that are obvious, and some that are spiritual, and I would like to share them with you starting with the obvious.
Check you health insurance for proper coverage
I spent a time in my early forties where I thought I was invulnerable and if i didn’t have health insurance I could invest that money instead. yes I was an idiot. When you see teenagers on up with cancer you know not to gamble with your life. I asked the radiologist what it would cost for radiation alone with no health insurance and he only went so far as to mention the $85,000 deposit. When I needed nausea pills, and the retail price for the prescription was marked at $2800 I was so glad for my prescription add on. My 3.5 month stay in Houston cost me $8000 of my money just on housing. You can get a rider for housing on a policy. If you have cancer you want to go to where the best are working and you have the best chance of cure, and for that it might pay you to add this on, especially when you see the 1 in 3 Americans who will get some form of cancer.
Real Estate Lessons
As a Realtor I have been focused like a laser beam on success. it is not that I haven’t taken care of people, it is just the amount of stress I was willing to absorb to be successful. Trust me, after this experience and with the knowledge of the effect on health because of stress, no amount of money will make it worth going back to the stress I had. But speaking of taking care of clients, this place is amazing. The level of coordination and communication between all department is fantastic. The radiologist knows what acupuncture treatments I have had. The primary care doctor knows what the PET scan says, and the Dentist knows I am going to Yoga. This is the way everybody should be treated if they pay a full commission. They don’t just deserve excellent care, they are owed extrordinary care. I know that real estate doesn’t involve the possibility of death, but you want a full commission then give people what they deserve.
Know what is important
I am tempted to quote the Dalai Lama, but I will refrain. First, your family and friends are all wonderful. They are not perfect, my mother did not do everything right, and some friends have forgotten my birthday, but no one is perfect including me and you. I had a friend I got mad at years ago because she did offend me for real. I decided to cut her out of my life years ago. After no contact for those years, before I left for Houston I got a call from her to tell me she heard of my cancer, and gave me an amazing pep talk which included a complement about my fighting spirit. I learned a valuable lesson. A good friend goes to the a friend that has offended them and talks about it. Years later we are friends again, but I have missed out on years of friendship, and when things go horribly wrong like with a cancer diagnosis you can’t have too many friends. I have been amazed by the goodness of people since my diagnosis. Sometimes our lives can become so busy that we forget what is right in front of us, a caring family, friends with hearts of gold, an a universe that doesn’t feel so empty anymore. The picture above is me ringing the bell which you do after your last treatment. Sometimes it takes a serious jolt to your system to know what is really important and it isn’t money or recognition. The answer is as clear as the ringing of that bell today.
| Discussion: No Comments »
November 24th, 2008 Categories: Economics, Real Estate
Even my choice for President Barrack Obama doesn’t understand real estate like the common man. Washington has done so much to talk about derivatives and the liquidity of banks, and have geared its solutions to Wall Street, probably the Big 3 automakers, but main street has been ignored. I am not saying that we shouldn’t bail out the financial system, although the purpose of the banks lending money has not happened, so not blank check should be given Detroit or anyone else in the future. But at the heart of the problem is toxic mortgages that have increasingly been foreclosed on and housing prices have continued to slide down a slippery slope bringing more misery to Read the rest of this entry »
| Discussion: No Comments »
November 20th, 2008 Categories: Economics, Real Estate
It sounds a little crazy to say you are bullish on real estate anywhere in the United States. The stock market is continuing to go down, the American auto industry is on the brink, and the foreclosure rate is still continuing to rise. America is in for a hard fight to get out of this recession, but improvements could be coming next year. Obama looks like he is bringing in the best and the brightest, Detroit will get their money but with reforming strings attached, and public works spending will help employment. Oklahoma is not following the downward trend of much of the country, and I would like to show some sunshine peaking through the dark clouds. Here are my reasons to be bullish.
Gas Prices
Gas in Oklahoma has gone down in Oklahoma from $4 a gallon to $1.70. It is estimated that in short order nationally this will result in A $225 Billion dollar savings. this is the equivalent to a massive tax cut. With more money in peoples pockets there is more money to spend. Some of it will go into savings but that is good to. If financial institutions get your business, they have that money to loan. This is bigger that the stimulus package that Bush initiated.
Interest Rates
Rates dropped today on the ten year note to 3.01%. One week ago it rose to 3.93%. Let’s use a $160K home mortgage and see the effects of lower rates. If we take this loan and lower the fixed rate to 5.75% from 6.5%, we lower our payment around $77 per month. Using the cost per thousand of a 30 year mortgage of $6 then that is the equivalent of approximately $12,800. That means that I just got a discount of $12,800, or because of the lower interest rates, I now have $12,800 in buying power. We all go by the monthly PITI payment, so that is the economic value of lower rates.
Inventory and Foreclosures
Oklahoma City still shows a sellers market below $200K overall. Edmond, Oklahoma, the most affluent suburb shows 6 months of inventory on the market from $150K to 200K, and 3 months inventory below $150K. This is a condition for prices rising. A discount in an over inventoried market doesn’t help you becasue that with foreclosures will put tremendous pressure downward on pricing. You want a market that is rising to protect your largest investment. On foreclosures, Oklahoma City has only 6% of all listed homes as foreclosed property on the market. In areas of Arizona, Florida, California, and Nevada, it has run as high as 65%. In those markets the scary thought is that you don’t know what the bottom is. Chances are in may be 2010 or 2011 before the bad inventory works itself out of the system.
Oklahoma Economics
The larger Oklahoma cities like Oklahoma City is sitting on 3.7% unemployment which is dramatically below the national average. Federal government statistics show that Oklahoma is leading the country in the rise of the average and median price, and the economy is stable and not dependent on manufacturing like the Rust Belt and Midwest. Plus, having strong industries in energy and agriculture creates strength. Although prices are down on energy most Oklahomans are grateful. Can you imagine the current U.S. economy with high gas prices. The prices will rise again, but hopefully when we have recovered, and Oklahoma will benefit greatly. The push for 25% biofuels by 2025 will create 160,000 jobs and billions of dollars in revenue. Oklahoma is growing and if you look to a long term purchase you want the economic prospects to be bright. The time to buy is now. To get set up on an auto-email notification of property listings in real time, go to www.homesearchbyemail.com, fill in the information with your guidelines, and we will get you started.
| Discussion: No Comments »
November 19th, 2008 Categories: Real Estate
Preparation
Whether you are in the city, state, or out of state, the buying process can start as early as six months ahead of contract. The first thing you can do is sign up for an auto-email notification of homes that fit your profile. That profile can be adjusted as you go along, but in that process you can get familiar with what our market gives you to buy. It also can give you questions to ask us. If you want to know about the schools that take care of an area, distance to work, or other amenities, it lets us give you the answers you need so that the process will be easier by the time you are ready to physically look at your choices. To sign up go to www.homesearchbyemail.com and put in your parameters and we will start sending you listings in real time.
Representation
Oklahoma has statute law for real estate representation. previous to this was the law of agency based on the results of national court decisions on representation, making it common law. Oklahoma moved to stronger standards that are specific about how Realtors behave and act. The most used choice is Single Party Brokerage. This is like the old buyers agency with the addition of stronger wording about our responsibility to obey your wishes unless they are unlawful acts like discrimination or purposeful misrepresentation. Where it works well is when you qualify for a $225K home but you only want a $160K home. If we constantly show you $225K homes we are acting without ethics. Our job is to get you the house you want. Transactional brokerage is where you don’t want or need advice, you just need someone to write a contract. Very few people would need this, so it shouldn’t happen much. On single party brokerage you would sign an exclusive contract with a Realtor to represent you. The only exception is when I would be writing an offer from another realtor in my agentcy. In that case the company policy is for the sellers Realtor to move to transactional brokerage.
Making the Decision
Once you at the time to make a decision it normally would be within 60 days of occupancy unless you are wanting a new custom home which could take 4 months to a year to build depending on complexity. You should have chosen a mortgage company which we can help you with because in Oklahoma you need to be qualified by a company no longer than five days from contract acceptance. The normal process is to hone the acceptable houses to around 3 and revisit them a second time to look in great detail. I would show you comparable sales in the neighborhood and area to insure that pricing is right, and we would look at a sellers property disclosure to see if pre-exisiting conditions might effect resale. Structural issues would be the most problematic. We may want one final look before contract offer.
Contract Time
When the offer is written it is done with contingencies. Contingencies include an acceptable appraisal of value by an independent appraiser, and inspections for the house including electrical, mechanical, plumbing, structure, and pests like termites. You may want to specify environmental inspections at the time of contract. The offer should be biased in your favor but my advice is to never insult the seller by offering a very low offer. If we have done our homework and the house could be worth the $200K they are asking, a $100K offer doesn’t start the negotiation in good faith. By law I am required to write that, but it normally stops communication. Hopefully we will get the price where you move in with equity beyond your down payment.
Inspections and Appraisal
The mortgage company will get an appraiser from a pool so that there is no collusion, and the appraisal has to be for at least the purchase price or the contract is void and subject to renegotiation. You will choose a home and pest inspector from a list because a Realtor who tells you to use only one is quality of possible collusion. You want the inspectors to give you fair estimates of repairs and they should be within the limits you set in the contract. If they are greater again you can at your request renegotiate the contract for the added repairs. The repairs should be done by licensed contractors if required. A homeowner doing the repairs is unacceptable. You want warranties from the licensed repair people.
Closing and Possession
Closing and possession are often negotiated separately. Be mindful that Oklahoma is a table funding state. That means that when papers are signed, you bring the certified funds for your down payment and closing cost, and the mortgage company funds, then at that moment you own the house. Hopefully you have reasonable sellers and you are too. The seller doesn’t want to move out before closing in case you back out, and that has happened. Often the seller is buying another house locally and can’t move until they close on their property which is contingent on you closing. It is not an exact science, but it should be decided before you are at the closing table. There is lots more to this process, but that is the detail you and my team will go over during the process. Remember, if you want to get started go to www.homesearchbyemail.com and we will start you up.
| Discussion: No Comments »
November 16th, 2008 Categories: Economics, Going Green
25×25
T. Boone Pickens is the only proposal for lessening our dependence on foreign oil with an alternative energy plan. 400 groups have endorsed the vision of 25×25. This is an non-fossil fuel renewable energy program that would supply 25% of our energy by 2925, hence the name. The Pickens Plan depends on a dramatic increase in wind power and a complete rebuilding on the energy grid, then the natural gas that fires electrical plants would be used for domestic vehicles which would also require an expensive retooling of gas stations where none exist for natural gas. It also has an advantage in that we have headed in that direction with ethanol production. The plan does call for changes that would not put so much pressure on items like corn production that has had detrimental effects on food prices. If you want more detail go to this link to download the fuel plan or a summary of the program. The following hits the highlights.
Economic Strategy
25×25 should increase farm income by $180 billion annually including 37 billion in 2025 alone. It will generate $700 billion in new economic activity annually which ironically is the size of the recent bailout package. It would create 4 to 5 million new jobs and reduce oil consumption by 2.5 million barrels per day. That is 10% of our projected consumption in 2025.
Policy Recommendations
Energy efficiency should be America’s highest priority energy resource and the energy option of choice. We should increase renewable energy production to 65 to 85 billion gallons per year of bio-fuel production by providing $808 million in new funding to expand R&D, new incentives for farmers, ranchers, and forestry landowners to use agricultural and forestry residues and grow dedicated energy crops for cellulosic biofuel production and a new generation of refineries. 800 billion kilowatt-hours of renewable electricity and boosting renewable heating and cooling with 3.7 billion incentives. Deliver transmission from rural areas to urban areas by an expanded network of pipelines, ports, shipping facilities, new transmsission lines, and expanded availability of E85 fuel pumps for 85% ethanol.
Expand Renewable Energy Markets
The plan would insure that 50% of registered vehicles in 2012 are flex-fueled. Increase consumer purchases of renewable electricity by increasing federal government purchases to 25% by 2025 and a new national Renewable Energy Credit trading market. The plan would also improve soil and water quality and wildlife habitat by establishing a new Residue Management Assistance Program and increasing funding for existing Farm Bill and other conservation programs by $3.2 Billion. Finally it would enable more farmers, ranchers, and forest landowners to adopt renewable energy and energy efficiency projects by increasing funding for the Energy title of the Farm Bill by $1 billion.
Summary
Renewable energy represents only 6% of the energy consumed in America, and with an estimate of a 24% increase in energy use projected by 2025, all forms of alternatives need to be explored. If Congress joins with President Obama in his goal of not only energy independence, but also increased infrastructure spending, we need to do more than just roads and bridge building and repair. The 25×25 plan plus the upgrade of our energy delivery system will not only enhance our security by freeing our foreign policy from our oil addiction, it also creates 21st century jobs and technology that can improve our way of life, and give us something new to export. By also adopting policy that reduces green house gas emission, we can improve our economy while we are responsible stewards of our environment.
| Discussion: No Comments »
November 15th, 2008 Categories: Economics, Investment
I feel fortunate to live in Oklahoma at this perilous time. Oklahoma leads the nation in the rise of the average and median price of homes increasing. Oklahoma City home listings are only at 6% foreclosure or short sale where other areas of the country are over 50%. Unemployment has dropped to 3.5% which means it is at a level of full employment since 3.5% is the number of the hard core unemployed. The state has positive cash flow on virtually everything property you but at 20% down, so you can expect I am naturally biased toward positive cash flow versus flip. Let me give you an example. In the 1990’s I flipped 20 properties at an average of $12,000 profit which was at a time Oklahoma was still suffering. However, the average price was $50,000 fixed up. It’s hard to argue with $240,000 profit, but Read the rest of this entry »
| Discussion: No Comments »
November 13th, 2008 Categories: Going Green, Real Estate
I am in my 20th year of real estate in Oklahoma. It is an industry
that in the 21st century has grown beyond anyone’s imagination. NAR, the National Association of Realtors grew from one million Realtors in 2000 to 1.4 million in 2007. Most prognosticators were predicting a shrinkage. Along with that the mortgage industry, inspectors, builders, and other related fields grew as well. Now the industry is retrenching to a smaller group. The old saying only the strong survive is absolutely true for 2009. For this reason I want to make a few recommendations for the industry. Hopefully Realtors will read this and put their own two cents in because this is a discussion that needs to happen. For those Realtors who took Ninja selling, remember the mantra “The biggest problems as Realtors is that we think Read the rest of this entry »
| Discussion: No Comments »
