Mercury News – Home buyers no longer can assume that it’s easy to buy a cheap house in a good location.  Make no mistake: There are still more sellers than buyers.  But the decline in listings and the quality of the options are slowing the search for those on the hunt.

Read the full story

Each year, about 15 million American households move, with the majority changing households between Memorial Day and Labor Day.  Unfortunately, this same time period also is peak season for moving company scams.

• To avoid falling victim to common scams, experts in the moving industry recommend consumers do the following:
  • Go with a company that has a well-known and recognized name
  • Get a referral from friends, family, neighbors, and colleagues
  • Ask for an in-home estimate, to ensure accuracy of the estimate
  • Don’t always go with the lowest price
  • Do not pay up-front fees
  • Conduct research on the government website protectyourmove.gov to find out if a mover is licensed for interstate moves by the Federal Motor Carrier Safety Association.
  • Get all details of the transaction in writing
  • Request a copy of “Your Rights and Responsibilities When You Move,” a brochure created by the Federal Highway Administration that outlines consumers’ rights.  Federal law requires movers to give this to customers prior to an interstate move.

Wall Street Journal - Affordable home prices and historically low interest rates have created an ideal situation for many qualified first-time home buyers to purchase a house.  Despite this opportunity, some buyers may be overconfident and make mistakes during the home-buying process.

 MAKING SENSE OF THE STORY FOR CONSUMERS

• Some first-time buyers are unaware of the vast amount of paperwork and negotiations that go into purchasing a home.  As a result, buyers may think they can save money by forgoing the use of a REALTOR®.  However, managing the nuances of offers, inspections, financing, and other pivotal steps when buying a home often causes confusion and anxiety for buyers.  Working with a REALTOR®–who is obligated to put the buyer’s best interests first–will help to alleviate buyer concerns during this process.
• Online mortgage calculators can help buyers estimate the amount of house they can afford, but calculators should not be the sole source for mortgage-approval information.  Buyers are advised to meet with a mortgage broker or banker prior to beginning the home search to help determine the loan amount for which they are most likely to be approved.
• Although there is a large selection of homes available for sale, home buyers should not assume they can make low offers or unreasonable demands.  Even in hard-hit housing markets, homes in desirable neighborhoods are receiving multiple offers.

A new study found that borrowers who receive loan modifications that reduce loan balances, and not simply interest rates, are less likely to redefault on the loan, according to the Federal Reserve Bank of New York.

Principal reductions are more successful at avoiding redefaults because they reduce negative equity and provide the borrowers with greater incentive to remain current on the loan, according to the study.  The study also found that borrowers who owe 15 percent or more than their homes’ value have a 51 percent higher risk of redefaulting in any given month.

While this message is more for Realtors, we have all seen first-hand the positive impact the first-time homebuyer tax credit is having on the real estate market recovery. As the expiration date for this successful program looms, we ALL need to make sure that Congress hears from us about the positive impact this program has had and ask them to extend it, and expand it, so that we can continue to see our markets fully recover.

Please watch this video of your fellow REALTORS, along with President Charles McMillan explaining how the credit is helping and urging both you and Congress to take action NOW.

Send a letter to the following decision maker(s):
Your Congressperson
Your Senators

Below is the sample letter:

Subject: Homebuyer Tax Credit: Extend and Expand

Dear [decision maker name automatically inserted here],

As a Realtor and a constituent, I can assure you that the $8,000 first-time homebuyer tax credit has definitely been a success.  Homebuyer interest and housing sales increased almost as soon as the ink was dry on the tax credit legislation.  Today’s lower prices and interest rates appeal to consumers, but it’s been the tax credit that has attracted people to open houses and to homeownership.  

That progress could grind to a halt sooner than you think.  Congress must act NOW to extend the credit through 2010.  Otherwise, uncertainty will return and the market might again be frozen — possibly as soon as October.

A homebuyer is eligible for the tax credit only if the home is “purchased” before December 1, 2009.  That means that buyers have to find a house, complete a contract, satisfy any contingencies, secure financing and go to closing by November 30.  Accomplishing those tasks by November 30 will become more difficult with every passing day.  In today’s market, it generally takes between 45 and 60 days to go from contract to closing.

The market has improved, but it has not yet fully corrected itself.  The credit needs to be extended for an additional period of time and expanded in order to build upon the progress that’s been made. Uncertainty about the future of the credit will dampen consumer demand.  The best way to assure continued housing activity is to extend and expand the credit and to do that NOW.   

We can’t wait until late in the year to see what happens.  Consumers will drop out soon if they can’t predict what’s in their future.  Please act NOW to extend and expand the credit through 2010.

Sincerely,

Your Name

Recently I found this article on BankRate.com about the 10 biggest home-buying mistakes. I thought it would be a good article for the blog. They are:

1. Not doing your homework
2. Trying to make a shrewd investment
3. Choosing a poor location
4. Overlooking an inferior floor plan for an attractive exterior
5. Overlooking how the house will function for your family
6. Not having the home properly inspected in a resale
7. Not checking out the builder’s reputation on a new home
8. Not getting what you want because you’re impatient
9. Waiting for a better market and interest rates
10. Not buying at all

The entire article may be found here. Also read our related blog article on Renting Versus Buying.

- Christine Serventi

While this may not be the best time to sell, there are benefits to buying a home when the market is cooling. Please take the time to read this July 25, 2006 article from MarketWatch. It gives a positive look at one side of this transaction.

- Mick Orton