24 Jun 08 
Can Homebuyers Trust Online Real Estate Valuators?
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As more and more homebuyers turn to the Internet to help them in their search for their next home, many have stumbled upon home valuator websites such as Zillow.com and Cyberhomes.com. The premise of these websites is simple – they allow the user to enter an address and a computer generated value is then outputted. While these services are designed to aid homebuyers when researching a prospective home, problems have continuously arisen with inaccurate values being taken far too seriously by users.
The San Francisco Chronicle recently did a report on the accuracy of these types of websites. They reported that the percentage of errors on home estimates from such websites is still very large. After reading the story, I decided to enter my home address into both Zillow.com and Cyberhomes.com.
Zillow.com estimated my home to be worth $478,500, while Cyberhomes.com estimated my home to be worth $514,701. Zillow.com told me that my home is 1,833 square feet, 3-bed, 2-bath, on a 17,056 square foot lot; Cyberhomes.com didn’t know how many bedrooms there were, stated my home to be 2,090 square feet, with 2 bathrooms, on a 22,220 square foot lot. In reality, my home is 2,200 square feet, 4-bed, 3-bath, and to be honest I do not know the actual lot size or its current market value.
These particular discrepancies can be very misleading for a potential buyer, should I ever decide to sell. I am willing to bet that discrepancies exist in the majority of home valuations created by these sites, especially for users that do not have comparable sales in the area of the home they are researching.
The truth is… a home is only worth as much as someone is willing to pay for it, and in today’s market I wouldn’t suggest anyone base their asking price on the estimation of a website using computer generated figures. For a true valuation of your home, I strongly recommend hiring a professional home inspector to conduct a walkthrough inspection of your house and then a professional appraiser. I also suggest that you compare your home to those of homes in your neighborhood that are currently listed, or have recently sold.
Curious to see how far off Internet home valuator websites are on your home? I am! If you have the time, let us and our readers know!
Tags: cyberhomes.com, home estimates, home inspection, home valuator, home values, homebuyers, house value, market value, the san francisco chronicle, zillow.com
23 Jun 08 Buy and Bail: A Solution to an Upside Down Mortgage?
“I am more than $200,000 upside down on my current home and the bank won’t entertain a loan modification and I want out of this situation!”
This statement is pretty common these days.
It’s hard to see your same exact home now on the market for HALF of the price you paid for your home. It sure would be nice to have half the mortgage payment you have now for the same house!
The Wall Street Journal wrote this article that basically brought a hush, hush secret into the light. Every loan person knows how to do it! Banks turn their head and ignore the issue! Realtors practically endorse it! Now they want to change it?
If you are upside down on your mortgage and your mortgage was giving you some “issues” then there is a pretty good chance the thought to “Buy and Bail” has crossed your mind.
Buy- Keeping your current home and buying a new one
Bail- Once you close escrow on your new home you let your current home go into foreclosure.
Although the article states there are some changes being made to the guideline for lenders, I have been in and around the business on a daily basis I haven’t seen any changes as of yet!
“So what does it all mean? How can I get it to work for me?”
(Let me state something for the record, I am actually against the “Bail” part of this as I believe you need to find out every option you have before you pack up and leave)
· Understand what it takes to buy: The general rule of thumb is that you will need to buy a bigger home (in square footage) or be relocating to another part of the city or out of state in order to fall inside the guidelines. If you want a home that is equal to or smaller and you are NOT relocating then chances are you will have some trouble buying a new home.
· Bail: Accomplish this with limited impact to your credit: I know the popular choice is to go ahead and start missing payments on your home but before you do this obviously you will need to buy first. Once that is done you will need to address your mortgage company properly. One of the best ways to bail will be with a short-refinance. This is similar to a short sale but you can arrange for a negotiation with the current lender by an attorney for an affordable fee! To make this scenario that much more appealing, it is possible to have this go through WITHOUT missing any payments! I know you want to get rid of the property, so read more about a short refinance here.
· Take advantage of this window of opportunity: The rule they plan on changing will make you financially responsible for both payments on your old house and your new one.
I will leave you with this, take advantage but do so in an ethical way. The banks/lenders may not seem to be helpful on the outside but you can get them to work with you if the information is presented to them properly. Seek professional advice because that will be the difference between success and failure!
Brent Lane
The Lane Group
http://www.thelanegroup.blogspot.com
Tags: brent lane, buy and bail, home loan, loan, mortgage, short refinance, the lane group, upside down mortgage, wall street journal
19 Jun 08 Wall Street Hedge Fund Managers Surrender to FBI
Former Bear Stearns hedge fund managers, Ralph Cioffi and Matthew Tannin, turned themselves in to the FBI Thursday. The FBI intends to charge the two men with intentionally misleading investors in two hedge funds, which reportedly caused investors to lose ninety cents on every dollar they invested.
The Bear Stearns funds were created in 2006, with the intent of taking advantage of the credit boom during its peak. The funds generated money for several months during the remainder of the year; however, in early 2007 the funds experienced troubles as the ABX indexes reversed and began to rise.
Issues arose when Cioffi moved $2 million of his own money out of one of the troubled funds - and placed it into a third Bear Stearns hedge fund – a month before reassuring investors that he was “cautiously optimistic” about the ability to hedge its subprime holdings.
Furthermore, in April of 2007, the funds experienced a loss of 19 percent of its value; but Cioffi apparently reported to investors that the fund only lost 6 percent of its value during the same month.
Cioffi and Tannin’s lawyers issued a joint statement stating that the subprime mess “took everyone by surprise, including the Fed and Treasury,” and led to more than $300 billion of losses at financial firms.
The two men are planning on fighting the claims that they did anything wrong, and have suggested that they too have been victimized by the whole subprime mortgage crisis.
Read this story in its entirety from CNN by clicking here.
Photo Credit: Associated Press & CNN
Tags: abx indexes, bear stearns, cioffi, cnn, fbi, fed, hedge fund managers, matthew tannin, ralph cioffi, subprime mortgage crisis, tannin, treasury, wall street
