Is the Drop in Home Prices Your Chance to Get in?

Good news for people that are looking to purchase a new house; home appraisals show that prices declined at a record pace around the nation in the final three months of 2008, according to an industry report released Tuesday. This is based, in part, on residential appraisals done by professionals in the field. In fact, many real estate appraisers in Valley Village, CA as well as real estate appraisers in North Hollywood, CA know this first hand. While this is bad news for our economy, it may be the one bright spot for people that have waited many years to get into the housing market. Even better is the fact that if these people can get a loan with the new plan for TARP funds, the economy will start to perk up. But, before your pour your hard-earned money into that new house, make sure you employ the services of a reputable real estate appraiser, because with thorough real estate appraisals, you can make sure you are buying a house for the fair market value.


I say this is good news because residential appraisals had been showing over-inflated prices for so long that potential home buyers were left out in the cold. If you look at what many home appraisals were going for over the past five years or so, you would wonder how anybody could afford to buy. Then again, we all know by now that most of those home owners couldn’t really afford those homes at all, and got into them through unfair lending practices and sheer greed. In fact, many of the real estate appraisers in Valley Village, CA as well as real estate appraisers in North Hollywood, CA were shocked to see comparables of surrounding homes go up and up while the condition of many of them were seriously lacking. That’s why having a professional real estate appraiser is so important, because they can tell you exactly what the range of prices are in any given market through real estate appraisals.


Now depending on how you look at it, the fact that real estate appraisals show that the decline in home prices does not seem to be slowing down it’s either a good thing or a bad thing. It’s a bad thing if you are trying to sell, because residential appraisals reflect the decline; however, it’s a good thing if you are looking to buy because you now may finally be able to afford a home of your own. One of the reasons for the falling home prices is that rising foreclosure activity is putting pressure on prices, as lenders are increasingly pursuing a ‘take what we can get’ selling strategy. Again, this is good news for people looking at home appraisals and seeing the real price of the homes they are trying to purchase.


Many experts predict that prices are going to continue to fall; they have to reflect economic reality. But that doesn’t mean you should hedge your bet and wait for the bottom. Sadly, many real estate appraisers in Valley Village along with some real estate appraisers in North Hollywood have seen many of their clients miss out because of this and lose their dream house to the next guy. Hiring a real estate appraiser to help you determine the fair price for a house is a first step. If you find that the house you want appraises for a price within your budget, you should grab it as fast as you can.  



Increase the Value of Your Home Without Breaking the Bank

Real estate is still one of the best investments you can make. Whether you want to get a fixer upper you can turn around and sell for a profit, which believe it or not is still possible even in this housing market, or a home you can move yourself and your family into and plant roots. Either way you go, it’s always a good idea to spruce up your little corner of the world; it will help increase the value of your home and make you feel like you are living in a little piece of heaven. One more plus is the fact that mortgage lenders hire real estate appraisers to research the value of your home, and the better it looks, the more money you can get for it.



The good news is that you don’t even have to put in a lot of money to add value to your home and do well in this housing market. Even the smallest improvements can add a significant amount of cash to your pocketbook. In the world of real estate, the three key words you should know are location, location, location. To that end, before you even hit that mortgage lender up for your loan, decide the most advantage area to purchase a home in. That’s even more important in today’s housing market, because certain areas are starting to show signs of a rebound, so if you can get in now, you can make out big.


Another thing you want to keep in mind, storage is king when people are looking to buy. Even if you plan on staying in the home you purchase, adding more storage will make your life more manageable and add value to the real estate appraiser’s report when you get ready to sell. One great and affordable idea you can implement to add more storage is hanging wall units. Places like Target and Wal-Mart sell great looking wall units for prices even people on a tight budget can afford.


Another easy way to improve the value of your real estate is to bring those old

cabinets into the 21st century by repainting them and replacing those old rusty handles with bright shiny new ones. Again, these are easy things to do, they are cheap things to do and you would be amazed by how much more attention your house will get in a competitive housing market. While mortgage lenders won’t necessarily tell you about these things, real estate agents will. But doing these things before you even get to the stage of hiring a real estate agent or real estate appraiser will put you ahead of the game.


Look around at the home you are thinking about purchasing and search for any latches bolts and hinges that may need a bit of work. If you are a purchaser looking for your dream home, you can ask the seller to fix these before you move in. In today’s housing market you can get sellers to do a lot work for you that they may not have been willing to do when real estate was booming. If you are a seller, these little touches will give you the edge over others trying to sell right now.


Here’s another often overlooked fix that can make a world of difference, change the filters in your air-conditioner. This will help avoid musty smells during your walkthrough and avoid any hostility with your buyer when they find out their air-conditioner is spewing out dust. While you’re at it, try hanging a large mirror in the living room, as it will help create a feeling of space in the room. Another simple way to add space is by applying window boxes and hanging baskets around the house. I can’t say this enough, the housing market is very competitive for sellers right now, so all those extra added touches will add value, help the mortgage lender find quality buyers, add value to your real estate appraiser and make your home more attractive than the others trying to sell in your neighborhood.


If you can, try adding rooms to your house. It may sound like a huge undertaking, but if you already have a patio or attic, it’s simple and cheap to turn those into separate rooms. Why not turn that attic into a game room, or extra bedroom. Create a cozy breakfast nook in your patio. Again, these can be as small or big a renovation as your budget allows, and will bring you extra cash in the end.


It’s a difficult time in the housing industry right now, but as you can see, there are ways of improving your chances of getting out ahead. Real estate is now and will always be a good investment, especially to your personal future. This cycle will eventually turn back around, so if you apply what you’ve learned here now, you will be ahead of the game when the right time to sell comes around.


If you or anybody you know is thinking about buying a house, selling a house, refinancing a house or simply want to find out the current value of your house, please visit us at Mahler & Associates for all your appraisal needs.



How to Spot a Rise in the Housing Market

Ok, so the news doesn’t look so good for the housing market right now what with IndyMac being seized by the government and mortgage lenders Freddie Mac and Fannie Mae’s stock plummeting. But take heart, because real estate always seems to rebound, and in fact, there are areas of the nation that are beginning to see a brighter future.


First you have to keep in mind that just because the housing market in one area is bad, that doesn’t mean it is bad all over. That’s because real estate is a local game. In fact median prices for existing single-family homes in a third of the country’s metro areas are actually higher than they were a year ago, according to the National Association of Realtors. Of course you’ll have to do your research, especially when looking for reputable mortgage lenders and real estate appraisers. Be very careful though, because one of the shady practices of some mortgage lenders is coercing real estate appraisers to turn in a report that shows a higher value for a home than the market in those areas really reflects.


You also want to keep in mind that even when the housing market was beginning its bubble, different areas of the nation were booming sooner than others. For example; real estate in Las Vegas and San Diego were two of the first markets to shoot up. That being said, different cities in the country will start rebounding faster than others as well. The point I’m trying to make is this, don’t lose hope just because the housing market in your area still stinks. Again, it may be even more important than ever to find an honest mortgage lender even before you begin looking for your home. Try asking around; word of mouth is the best referral source you’ll find.


With prices of homes starting to fall, you may be thinking this is a good time to get into the housing market. But before you do, ask yourself a few key questions, in order to gage whether or not real estate is rebounding in your area.


First of all, is there a reduction in the supply of homes combined with a spike in sales in your area? If so, this is a good sign that your location is on the way back up the real estate ladder. Try and research the amount of mortgage loan applications mortgage lenders in your area are getting. Again, if it is a lot, or if the number is rising, that’s a good sign. You may want to enlist the aid of an experienced real estate agent for that one, because often times, it can be difficult information to get unless you work in the housing market industry.


Even though falling home prices are a good thing for buyers, knowing when the fall begins to slow down is even better. For information on the sale prices of homes in the housing market in your area you can find quarterly price data for about 150 major metro areas at the Web site of the National Association of Realtors. For monthly figures, ask your agent or local real estate association. Some agents will even provide stats for homes in particular price ranges and zip codes. Another good option is to hire a real estate appraiser. They do research on the sale of real estate in your area, and can tell you what the going rate is. Keep in mind that you’ll want to track these numbers for at least three months in order to feel confident that the housing market is really shifting.


Finally ask yourself this question; is the real estate in the housing market you’re looking in really more affordable? Unless a significant percentage of households in a market can afford to buy homes there, sales won’t rise. It’s as simple as that. So check your region’s affordability level. But don’t price yourself out of the housing market by waiting too long, because experts say that by the time foreclosures peak and start falling, the market will have already bottomed out and turned around. In other words, buyers will have missed the sweet spot.


If you are looking into buying a house right now, do your research, hire a thorough and honest real estate appraiser and real estate agent and ensure you are dealing with a reputable mortgage lender. If you are careful about your purchase and you time it right, you may just get yourself into your dream home.


If you are looking to buy a home, sell a home, refinance a home or find out what your current home is worth, please contact us at Mahler & Associates for all your appraisal needs.



The Fed’s New Housing Bill Released…Too Late for IndyMac Bank

It has been reported that approximately 200 people were waiting in line at Pasadena based IndyMac bank this morning to withdraw any and all money they could. For all the people who had more than the insured $100,000 at IndyMac, the FDIC has said they will cover up to half of the rest. That comes to a lot of money, so we’ll have to wait and see if they follow through with that promise. Meanwhile, The Federal Reserve unanimously approved new mortgage lending rules Monday in a crackdown on shady practices – particularly those involving subprime loans made to borrowers with weak credit.


This is the bill I wrote about last week. Both consumers and mortgage lenders were displeased with the original bill, which has since been tweaked in order to make as many people happy as possible. To that end, the agency made several substantial revisions to the proposed regulations it unveiled in December. Many of the changes acknowledged consumer advocates’ concerns that the rules still contained too many loopholes that would allow shady mortgage lending practices to continue. But the Fed also made some concessions to industry executives, who feared increasing oversight would lead to less lending.


The new rules will apply to all mortgage lenders, not just those supervised and examined by the Fed. The new rules will go into effect Oct. 1, 2009, but that doesn’t mean the investigation is over. The people who brought us this bill have announced that they will continue to scrutinize all mortgage lending companies, in order to ensure they are following the new rules and aren’t getting around them and further complicating the mess we have in the housing market.


So here are the rules as they stand right now. The new rules governing “higher-priced,” or subprime, loans will:

Prohibit creditors from extending credit without regard to a consumer’s ability to repay the loan from income and assets other than the home’s value. The mortgage lender will comply by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan. Mortgage lenders will also have to verify income and assets that can determine whether or not the borrower is fiscally able to pay their mortgage.


Furthermore, the new bill will ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years. Mortgage lenders and creditors will also have to establish escrow account for property taxes and homeowner’s insurance. This rule will be phased in during 2010.


One of the changes The Fed made was to the definition of higher-priced loans with regards to mortgages rates that are at least 1.5 percentage points above the average mortgage rate, which is published by Freddie Mac; who by the way is also under the government’s radar for shady mortgage lending practices. No here’s a big one I have personally been affected by; Creditors and mortgage brokers cannot coerce a real estate appraiser to misstate a home’s value. I have lost thousands of dollars over the past five years do to this practice. For those real estate appraisers unwilling to fudge the numbers, this comes as a happy occasion.


Mortgage lending companies are now to be upfront and completely honest about late fees and hidden fees. It seems they were glossing over this information, which is one of the reasons so many people in the housing market find themselves in foreclosure now. They were led to believe their mortgage would be one fee, only to find out it was more do to those hidden fees. In order to further ensure people getting into the housing market know what they are in for, The Feds have included a rule that in any advertisement a company must include additional information about rates, monthly payments and loan features. The rule also bans seven deceptive practices, such as saying a rate is fixed when it can change. Sadly, that kind of stuff should have already been the standard operating practice. I find it disgusting that the government has to put these rules into writing and make them law.


Most advocates for the housing market and real estate consumer are generally pleased with the bill, and feel their months and months of keeping up with the progress of it has paid off. More than 4,500 comments were filed since the agency announced its plan in late December, and after reviewing the final rules, advocates said they felt the changes did provide additional protections for the consumers. In particular, it’s important that the Fed eliminated the requirement that borrowers prove lenders engaged in a “pattern or practice” of originating unaffordable loans since that’s very hard to do, said Brenda Muniz, legislative director of Acorn, a housing advocacy group.


As for whether this new bill will help the slumping housing market and bring real estate back to stability, that remains to be seen. There are also people who feel this bill is too little too late. But what about you; do you think this new bill will curtail shady mortgage lending practices. Leave us a comment and tell us how you feel.




Where is the Housing Market Headed?

With all the trouble in the housing market right now, you may think it’s the worst time to invest in real estate. For some of you that may be true; after all, you can’t buy any home if you are taking a bath in the stock market or on the verge of losing your job. But for others, the housing market slump may be just the thing you’ve been waiting for. With more and more homes going into foreclosure everyday and sellers getting so desperate to get out of the house they can no longer afford, there are many deals in real estate popping up all over the nation.


The next question you have to ask yourself is whether or not now is the right time to buy, or should you wait a little bit longer and see if the prices in the housing market will go down even further. That’s a much trickier proposition; and with the government seizure of IndyMac Bank, people are much more nervous to seek out a mortgage loan. After all, who knows what mortgage lender is the next to bite the dust. Let me just say this, real estate, especially here in California, is always a good investment. That being said, you have to feel fairly certain you can keep up with all your bills, not just your mortgage payment, before you decide to take the plunge.


I’ve discussed this topic several times in my blog, but I feel it is of the utmost importance to warn anybody who thinks they can make a bundle by purchasing real estate that is in foreclosure that you will have to look at that purchase as a long-term investment. The housing market will turn around, it always does. However, it can be upwards of five years before it becomes a seller’s market again. You also have to take into consideration the condition the economy is currently in. The government has stated that they see inflation leveling off later this year, but we can’t be sure of that, and with gas prices rising and people losing their jobs, you may want to wait a while before you go seeking out that mortgage loan.


Now if you think you can afford to get into the housing market right now, the first thing you want to do is make sure you seek out reputable professionals. You want to read everything in your mortgage contract thoroughly to make sure there are no hidden fees, you want to hire yourself a good real estate agent who has the experience to steer you in the best area to purchase your new home and you want to get the home appraised by a licensed real estate appraiser. The real estate appraiser will research the area you are thinking of buying in and make sure you are paying the fair market value for that home.


Also keep in mind that the government is working on several bills that will keep a tighter reign on mortgage lenders like Fannie Mae and Freddie Mac, so you might want to wait until those go into effect as well. Take this knowledge with you as you go in search of your next piece of real estate, and remember that the housing market goes in cycles. As long as you don’t expect to turn right around and sell it for a profit, now may be the right time for you to purchase your next home.




The New Housing Market Bill Finally Passes the Senate.

Sing hallelujah, the Senate has finally passed a comprehensive housing and foreclosure prevention bill. And this is none too soon folks, because in case you haven’t heard the government seized Indymac bank about an hour ago! This seizure is the largest of its kind in U.S. history, and we don’t know as of yet exactly how it will effect homeowners whose loans are held by them. Rest assured though that as soon as I find out, you will find out. But now about the Senate bill that will hopefully help out the sagging housing market.


So to start out with this bill will create a new program to help prevent home foreclosures, to the tune of $300 billion, which aint too shabby. It will also keep a closer eye and provide more oversight to two of the nation’s largest mortgage companies, Fannie Mae and Freddie Mac, which they hope will prevent the shady lending practices that got us into this mess in the first place. You know what I’m talking about, mortgage lenders getting people into homes they know couldn’t really afford them, by not fully disclosing the details of the loan, mortgage lenders putting pressure on real estate appraisers to bring in values higher than the market was reflecting and real estate agents who weren’t spending the time explaining all the ins and outs of the home purchase to their clients.


The bill still has to go back to the House, which is expected to make some minor and major tweaks, so we’ll still have to wait and see if everything in will end up being as helpful as they say it will, but I’ll tell you what, this is at least a step in the right direction. However, that likely back-and-forth makes it uncertain when lawmakers will be able to send final legislation to President Bush for his consideration. So again, one step forward, two steps back. One of the reasons it has taken this long to get this far is that the House was hoping the housing market would correct itself, unfortunately, things got so bad so fast it was hard to keep up.

The housing marketbill attempts to address this crises by providing more relief for borrowers facing foreclosure, as we know, you can’t get government help right now unless you are already behind on your mortgage payments to your mortgage lender. The bill also hopes to increase access to mortgages in higher-cost areas and modernize the loan guidelines for the Federal Housing Administration (FHA). Ok, that all sounds good, but what does that really break down to for people already in or wishing to get into the real estate market?


First off, under this new bill, FHA could insure upwards of $300 billion in new 30-year fixed rate mortgages for the higher risk home buyers, but that is contingent on the mortgage lender agreeing to write down their loan balance to 90% of the current appraised value of the home. In order to do this you, the mortgage lender or the real estate agent must hire a real estate appraiser to research the fair market value in that particular area. But the mortgage lenders would also have to pay the upfront fees to the FHA equal to 3% of the home’s appraised value. You may be thinking that no mortgage lender would be willing to take such a cut, but ask Indymac if they would have liked the chance to take advantage of this deal. Remember, home owners, home buyers and home sellers aren’t the only ones hurting in this housing market.


Another aspect to this bill is that it would permanently cap the size of mortgages guaranteed by Fannie and Freddy to $625,000, and the limit at all three agencies to nearly $730,000. These higher loan limits for higher-risk borrowers would make it much easier for them to get a loan, a loan in which the mortgage payments would remain stable. So if a higher-risk borrower is able to pay their mortgage at the time they purchase their home, they should always be able to pay it, barring any unforeseen circumstances that is.


FHA rules would be updates as well, for example; the bill would increase down payment requirements from 3% to 3.5% and would eliminate the program that allowed sellers to provide down payment assistance, which actually takes away some assistance to the buyer, but I guess they feel the rest of the bill should supplement the help that is needed enough. There is actually more to the new bill, but until the President actually signs it, nothing is set in stone.


Whether you think this is good news or not depends on who you are, what part of the housing market is affecting you and if you believe the government has your best interests in mind. I for one continue to take a wait and see attitude, but that’s just my opinion. One thing I do know for sure, is that the real estate industry and the public at large need some type of break, so I hope this is just what the doctor ordered.




Is Buying That House Right Now Right For You?

So you’re ready to dive head first into the housing market by purchasing your own home. I believe that is a smart move right now, as the prices of homes are finally coming back down to a reasonable level. However, before you hire that real estate agent to find you the perfect house, and before you enlist the aid of a real estate appraiser to research the fair market value in the area you are looking to buy in, and even before you go in search of a reputable mortgage lender who will help you finance your purchase, you should take a few things into consideration.


While it’s true that owning your own piece of real estate means you will no longer have to hand over your monthly rent check to the guy living in the apartment for free next to you, and that you can remodel the inside and redo the outside anyway you see fit-within reason of course, owning your own home comes with a lot of responsibility and it is still a bit of a risk. Once your real estate agent has taken their cut of your closing costs, along with the mortgage lender, and once you have paid the real estate appraiser who gave you a thoroughly researched report about the value of that home, you are left to handle the rest alone.


But, I’m not trying to talk you out of getting into the housing market, because, I believe, that inevitably you can end up making money on real estate that you own. The trick is in knowing when to buy and when to sell. Right now we are headed into a buyer’s market, which means that people buying homes are getting better deals now than they have for several years. But people trying to sell could end up taking a loss. This is very similar to how the stock market works…sell high, buy low. What you have to consider if you are thinking about buying real estate right now is that you will have to be willing to hold on to it for a while if you want to sell it for a profit.


That being said, if you simply want to move yourself and or your family into your own piece of real estate and plan on planting roots, than buying right now may be perfect for you. One word of advice though; with the housing market being in such a free fall right now, you would be doing yourself, and your pocketbook, a huge favor by enlisting the help of some real estate professionals who can do a lot of the research for you. As I said, a real estate appraiser helps ensure you are paying the fair market value for the neighborhoods you are looking at, and a real estate agent can save you a lot of time and hassle by scoping out the best deals in the areas you are interested in living in.


Now, if all that sounds good to you, you are on to the next step. You must consider whether it will cost you more to own than rent. Here’s a good rule of thumb I read in an article at, “if you pay 35 percent less in rent than you would for owning – including the monthly mortgage, property taxes, and any homeowner’s fees – then it’s smarter to continue renting.” So if after reading this post you still want to head out into the wild blue yonder of the housing market, find yourself a good real estate agent, real estate appraiser and mortgage lender, and buy yourself that house you’ve always dreamed of; or at least the one you can afford before you get the one you’ve always dreamed of.