The current options for delinquent homeowners to prevent a foreclosure are not working very well for the majority of borrowers, but lenders are increasingly finding themselves in hot water when trying to prove they have the right to foreclose in states where they must go before a judge. It does make me wonder how many Nevada foreclosures could have been prevented by simply making banks make their case in court.

All things considered, it looks like the housing market is barely treading water at the moment. For a better look at what’s happening here in Vegas, please don’t forget to come back here on Friday.

Some experts say we may have a bottom (again, nationwide) this fall, but there won’t be a real recovery in housing until 2013, when demand is expected to finally catch up with supply. One thing to be careful of in this report: the expert in question says Zillow knows of 7,300,000 homes that are either delinquent or in foreclosure that aren’t on the market, and says that if these homes were counted there would be 45% more available homes. My experience leads me to believe that most “shadow inventory” estimates are over-stated.

An FHA “Reform” bill has passed the House of Representatives. If the Senate also passes it and it gets a Presidential signature, it will raise the premium on FHA mortgage insurance. If you are considering an FHA loan, please discuss this with your mortgage professional to see how it might effect you.

The average size of new homes is shrinking, down to 2438 square feet. There is also a trend towards single story homes. I’ve already noticed a sharp price per square foot premium on single story homes here in the Las Vegas Valley, and I expect the trend to remain in place as Baby Boomers get older and start to require homes that can be made disability friendly.

Finally, check out my ActiveRain (and ShortWoman) article on Senator Harry Reid’s proposal to extend the closing deadline on the home buyer’s tax credit. Don’t think this means you can still get in on the action — you had to have a signed contract by April 30! — but if your loan is slow to close or that short sale approval is taking too long, there is hope from Harry.

See you back here for Friday Figures!

MANAGING THE STRESSES OF BUYING AND SELLING A HOME

By Stanley Popovich

Many people deal with the anxieties of buying or selling a home.  This process can be confusing to many people. As a result, here is a list of ways that a person can use to manage the anxiety of purchasing or selling a home.

The first step is to determine your goals in purchasing or selling a home. Determine what you want to accomplish.  It will save you a lot of time and money in the long run if you know what you are looking for.  Sit down and think about the overall goal of what you are looking for and convey this to your real estate agent. Some people like to write down their goals on a piece of paper so they have something to go back to when they get stressed.

Educate yourself on the steps of purchasing or buying a home. Go to your local bookstore and find some books that will explain the process of buying or selling a home. There are many books available that can inform you of the process and will help reduce the anxiety of the situation. Most importantly, you will be able to make smarter choices that will save you time and money.

Find a reputable real estate agent that can help you accomplish your goals. Ask some of your friends on who they recommend and get in touch with them. Referrals from people you know are a great way in finding a good real estate agent.

Get your finances organized. Make sure you have an idea on what you can afford and also make sure that your credit is good. The financial aspect of buying or selling a home does not have to be scary if you have a sound business plan and a realistic budget. Some people may buy a home that they can’t afford and this can cause problems down the road. Determine what you can afford and develop a budget where you will be able to keep up with your bills.

In addition to using the services of a good real estate agent, try to get a friend who is more experienced to help you. Chances are good that you know someone who has purchased or sold a home. You could ask them for their assistance and ask them questions on what to do and what not do. Having a friend who can assist you along the way can really help reduce the anxiety of the process.

Read the fine print on everything before signing and do not assume anything. Ask questions if you are uncertain on some aspects of buying or selling a home. A good real estate agent will not mind if you ask questions, however you should do your part and try to educate yourself on the entire process.

There will be times when everything happens all at once. When this happens, a person should take a deep breath and try to find something to do for a few minutes to get their mind off of the current situation. A person could take a walk, listen to some music, read the newspaper or do an activity that will give them a fresh perspective on things. Once you calm down, you will better able to make the right decisions.

Purchasing or selling a home does not have to be a bigger deal than it has to if you take the proper steps.  There is help out there if you get stuck or confused. The most important thing is to do your homework.  Determine your goals, educate yourself on the steps to reach your goals, ask questions, and take it one step at a time. If you follow this advice you will be better able to reduce the stresses of purchasing or selling a home.

BIOGRAPHY:

Stan Popovich is the author of “A Layman’s Guide to Managing Fear Using Psychology, Christianity and Non Resistant Methods” – an easy to read book that presents a general overview of techniques that are effective in managing persistent fears and anxieties. For additional information go to: http://www.managingfear.com/

But today I want to defend some really bad pictures in a listing by a local Realtor. These were so bad, they were featured on a website that does nothing but bad and amusing real estate listing pictures. Commenters asked why on earth the listing agent actually put these pictures in the listing. One even emailed the agent to ask why she would do such a thing! Here’s the post, feel free to go see for yourself.

How and why can I defend those pictures? Because the listing agent did the right thing by posting them.

When you look at the pictures in the listing, you know this is not a turnkey condo. You know it’s going to take a lot of work before you can move in or rent it out. Before you and the buyer’s agent even drive over there you know that there’s either a broken window or a hole in the wall, you know it needs new carpet and pad, you know it needs to be scrubbed top to bottom, you know the kitchen is in need of updates, you know that to put it politely the bathroom is “in rough shape.” You will arrive with no delusions that FHA financing is possible, and in my experience it will be difficult to get any financing. You know it will take thousands of dollars and several weeks of diligent work after closing before it is habitable. What you see is truly what you get.

In short, she has saved everyone a lot of time by ensuring that only dedicated investors or truly handy individuals will even bother to look. If there were an “Honesty in Listings” award in our local MLS, I would nominate this one.

Some years back, I started defining “Investing” as “spending money with the reasonable expectation of receiving more money back.” Real estate is something that people have invested in for centuries. Sometimes it has been a spectacular investment, and at times it has been a poor investment, but most of the time real estate has been a good investment.

There are 3 basic ways people can make money investing in real estate:

1. Buy property with the intent of selling it at a higher price at a later date, such as buying acreage near the edge of town in anticipation of future development
2. Buy property and improve the property to increase its value, such as painting, fixing problems, adding rooms, or modernizing existing areas
3. Rent out property that is owned or purchased by the investor

Most investors do a combination of these. For example, a developer can buy a property, build a shopping center, and rent out the stores to businesses. An investor can buy a house in desperate need of repair, renovate it, and either sell or rent it to a family. Real estate investment is necessary to a healthy economy because not every family and business can (or wants to) own real estate.

However, it is not a profession for the faint of heart. Many things can go wrong with a real estate investment: prices can drop; tenants can fail to pay the rent; roofs can develop leaks and water pipes can break; disasters can happen; laws can be passed that effect what you can and can’t do with your property or your tenants. Diligent investors can make a lot of money, sure, but it’s not foolproof.

Lately, I have heard ads on the radio for two different “make money investing in real estate” seminars. As much as we need investors, I am wary of this. I don’t think anybody can reasonably learn enough about real estate investing to avoid pitfalls in one day. I also am concerned that amateur investors armed with little more than a few hours training and maybe a couple of books could artificially raise prices. Since they would most likely be competing to purchase properties with buyers in the lower priced end of the market, not only would they be keeping cost-conscious buyers out of the market, they might end up purchasing properties that need a whole lot more work than it appears. I am concerned that these investors — like many investors who bought near the top — may find themselves in over their heads with no choice but to let the bank foreclose.

Real estate investing is a great way to make money, but you will need more than a copy of Rich Dad Poor Dad to make it work. You will need the advice of people who are experts in local real estate market conditions and the laws that apply to real estate transactions. You will need someone who is willing to point out the problems as well as the benefits of a particular property as it relates to your financial goals. And you will need to think for yourself about what those experts tell you, because many times those experts only get paid at the end of the transaction.

Serious about investing in Las Vegas? I can help find suitable properties and set you up with a quality property management team too. Lets talk!

Lead abatement — the process of getting rid of the lead altogether and properly disposing of it — is an expensive proposition. However, yesterday HUD announced that they will award $13,000,000 in grants for 25 local projects including lead abatement, research, public education, and related activities.

Lead paint has not been put in American homes since 1978, but there are still a lot of homes that have lead paint contamination. The Department of Housing and Urban Development (HUD) estimates that number at roughly 24,000,000 homes. Under federal law, the buyer of any home built before 1978 has to be warned of the possibility of lead contamination, if the seller knows about lead based pain he must disclose it (even institutional sellers like banks must sign this disclosure), and all buyers must receive this pamphlet on the dangers of lead based paint (PDF).

Oddly enough, this phenomenon isn’t important enough to make the Wall Street Journal’s list of 5 real estate trends to watch in 2010. In the meantime, cash offers are still the most successful way to get a winning purchase offer signed.

I do not have an intimate familiarity with how Professors Case and Shiller get these numbers, but I suspect that there is no accounting for the lower prices and worse condition of distressed properties. Theoretically, I should be seeing prices much lower than they actually are — and while I do see super-cheap properties, I see solid pricing in the mid range.

Please remember, in the Las Vegas Valley properties priced under about $60,000 should be considered cash only due to difficulties getting financed. It’s an opportunity for investors with lots of cash and even more patience, but not an opportunity for first time buyers who are thinking they can buy a place for the same monthly outlay as a crappy apartment. Between downpayment issues, appraisal issues, and repair issues, mortgaging such properties almost never works out. Seriously, save the downpayment for the pricier place, preferably without involving the FHA.

Even though it could be handled separately, in Nevada the title company and the escrow company are usually the same place and one set of people does both tasks.

As the “escrow” staff, they act as a third party between the buyer and seller to make sure that all the money is impartially accounted for. They make sure that all the documents are in order, that everybody’s name is spelled right, that the numbers add up correctly. They arrange to have a notary on hand for signing documents. They make sure that everybody signed and initialed in all the right places. Once everybody has signed and the mortgage money has come in, they make sure the seller is paid and the new deed recorded at the county offices.

As the “title” staff, they have the very important job of making sure that the seller gives “clear” title to the buyer. Clear title means that the new owner really owns it, with no mysterious debts from the past attached to the property. In short, it means the new owner can sell the property. The title officer checks to see who owns the property, who used to own it, whether there are any restrictions on how the property can be used, what liens may be against it, if there is an outstanding mortgage and to what bank, whether there are fees owed to the homeowners association, whether the taxes are up to date, and a dozen other details.

They stand behind their findings with something called “title insurance.” The buyer and seller will each have their own title insurance policy. Because in some ways the buyer’s policy protects the buyer’s mortgage company, it is sometimes called the “lender’s” policy. Title insurance protects against a variety of problems from bad and forged deeds to property tax issues. However, just like most other kinds of insurance, there is more than one level of protection. While exact policy details may vary, there are 2 basic kinds of policy: CLTA and ALTA. The ALTA policy in turn has two basic forms: residential and extended. ALTA does cost a bit more, but it covers a lot more too. As a REALTOR, I generally recommend ALTA coverage. However, if you have questions about exactly what coverage you need, it is a good idea to ask your local title/escrow officer.

Some of the details I have mentioned are specific to Nevada. For questions about how things work in your state, call a local REALTOR. To learn more about real estate in the Las Vegas Valley, be sure to check in with BridgetMagnus.com every Friday for Friday Figures.

Don’t get to thinking this is a trend.

The reason we had so many closings in October is that buyers were trying to get the deal completed before the first time homebuyer’s tax credit was supposed to have expired. Nobody knew when those contracts were signed that the credit would be continued and expanded. I don’t know how much impact that will have going forward, as most qualified first time buyers have already made their move, and one in 5 current homeowners can’t buy because they are underwater on their primary residence.

For a property to sell in October means there was most likely a signed contract in September, if not last August. It won’t be until mid December before we have accurate, national numbers for November property sales (I will continue to post local data every Friday).

So in short, we may still have a bubble problem in some areas of the country.