Year-End Pick-Up in Activity

The Limits of Statistics
in Valuing Homes

It's only Wednesday, and I've already fielded three calls this week from appraisers wanting "scoop" on recent, closed sales that I've handled.

A year-end pick-up in deals?

Well, that, too.

However, in each case the appraiser was working on a refinancing application.

To approve the new loan, the lender needed to establish current market value, which in turn means performing an appraisal and identifying/analyzing the Comp's -- just like they would for a sale.

The fact that appraisers need to talk to actual, live Realtors -- who can fill them in on floor plans, updates (or not), and other home features not otherwise captured in statistics -- should give anyone relying on Trulia, Zillow, etc. for home values pause.

P.S.: Time permitting, I'm happy to talk to appraisers. Often times, something I know can be the difference between a deal (or refinancing) happening -- or not.

In an environment where banks are looking for any excuse to shoot down a deal, as a plugged-in, on-the-ground expert, I'm ideally positioned to serve as a counter-balance.

Of course, a healthier, more active market benefits everyone.

Price - Terms = Price

The Factor in Selling a Home Today

If you have a choice between price and terms . . pick terms.

--famous real estate line

Once upon a time, when mortgage rates were in the stratosphere, "terms" -- specifically, financing terms, if the Seller was providing it -- were everything in real estate deals.

Fast forward to today's environment of free money (for banks) and very, very cheap money (for home Buyers with decent credit).

Once a listed home is well-staged, photographed, and otherwise well-marketed . . . the only factor that's left is price (that insight per City Lakes Office Manager Josh Kaplan).

"Hurry! These Rates Won't Last!"

Lack of Buyer Urgency

I was taking advantage of a welcome -- and too brief -- lull in my schedule the other day to cull the accumulated detritus on my desk (and on my office floor, and chairs, and . . .), and saw the following postcard: 'Hurry! These Rates Won't Last!"

The date?

October, 2009.

And therein lies the problem.

Broken Record

Home Buyers -- and presumably, mortgage borrowers -- have seen low rates for so long now that that's all they know.

All the postcards, phone calls, email's, etc. screaming that they'd "better act now" or risk losing out are simply falling on deaf ears (and blind eyes, in the case of emails).

Which leaves Buyers whose sense of urgency comes from within -- specifically, newly married, a new baby, an expiring lease, a job transfer, etc.

Call that "organic" housing demand, which is driving the housing market at the moment (along with "organic supply": downsizing, relocation, divorce, health issues, etc.).

Which, come to think of it, isn't so bad . . .

"Would Your Client Consider a CD?"

Low Rates . . If You Qualify

Last year, I heard that question from would-be Buyers maybe 3 times.

This year, I've logged that question three times . . . just this week!

And that, with mortgage rates plumbing all-time lows: just above 4.5% to those with impeccable credit.

Which, of course, is the catch.

Few Sellers Biting (So Far)

Buyers float seller financing, like a contract for deed, precisely because they can't qualify for a mortgage.

Their credit scores may be too low (or non-existent); they may have filed for bankruptcy recently; or they may not have any money for a downpayment.

Unfortunately, all those yellow flags are problems for home sellers, too -- especially the one about limited funds for a down payment.

That's because the risk to the Seller who accepts a Contract for Deed is that the Buyer doesn't perform, and the Seller gets back a property that's much the worse for wear.

On top of that, most Sellers are selling because they need the cash, in one lump sum -- not in monthly payments stretched out over years.

Thanksgiving Special: TV's, Clothes . . . Mortgages

4.75% -- Again

While everyone is eating Turkey and looking for flat panel TV's on sale, interest rates have quietly re-touched their all-time lows: 4.75% (or even lower) for a 30-year, fixed rate mortgage.

That's what supply-and-demand says should happen when soft demand meets ample supply (at least something in the economic realm is functioning normally).

If you missed your chance to re-finance earlier this year . . . take advantage now!

Unlike earlier this year, there's no frenzy, which means a lot less hassle and delay.

P.S.: Of course, the other monetary phenomenon at the moment is bizarrely low short-term rates: effectively 0% for 3-month T-bill's, and less than 1% for 2-year bills.