06 Nov 08 Government is Going to Bailout Homeowners

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I read Jay Thompson’s blog at least once a day. Jay is an amazing blogger, an educator, an Arizona real estate broker and the owner of one of Arizona’s best brokerages, Thompson’s Realty - okay, enough about Jay.

Yesterday, Jay posted a very informative post-titled “Obama on Housing“; as the title suggests, the post talks about what Obama has mentioned, or plans to do to fix/repair/jump-start the troubled residential real estate market. A comment by a blogger on the post got me thinking about a current government proposal  - Reset mortgage loans so that the principal on the loan matches the home’s current market value -. I know what you’re thinking: “Is this going to be done monthly as home prices decrease?” and “Who decides what the current market value of the home is?”… sorry, I don’t know.

In the comment, the blogger mentioned that he was “dead set” against the government resetting loan values to match the current market value of the home. There are many reasons why the government shouldn’t reset these mortgages… it’s not their responsibility, not something all taxpayers should pay for, not fair for those homeowners that are not under on their home…the list goes on and on and on. I can see why the blogger, and others, would be against this move by the government.  I’m still not sure I’m for resetting mortgage principals and getting rid of negative equity, but I can’t help thinking of what could happen if the government decides against resetting mortgages.

In an earlier post, I mentioned that real estate has traditionally created wealth for Americans and that many Americans depend on this wealth as part of their retirement. As of right now, for millions of homeowners, that future potential wealth is off the table. For many homeowners, it’s going to take close to a decade, if not longer, for their home to appreciate back to what they paid for the home. I probably don’t have to tell you that 10 years of equity typically does a lot for a family besides retirement…new appliances, consolidating debt, school tuition etc… In addition to the overall economic effect of millions (approximately 7.5 million) retiring with less, moving less and buying less of everything, nearly 60% of the mortgages that exceed a home’s value are in Nevada, Arizona, Florida, California, Michigan and Georgia. Negative equity shared by many homeowners in these states could destroy these economies for years and inhibit growth throughout the rest of the nation. If the reset is not done, millions of homeowners may choose to foreclose on their home, which would only keep home prices declining and may end up costing everyone much more. It seems like a lose-lose situation regardless of how you look at it.

What do you think? Should the government reset negative equity home loans, and if so, would you think that; if you didn’t have negative equity in your home?

Tags: arizona, California, florida, foreclosures, georgia, hope for homeowners act, house values, jay thompson, michigan, nevada, obama on housing, phoenix real estate guy

05 Feb 08 Arizona Homes for Sale

A recent post I read on The Phoenix Real Estate Guy got me thinking about the many Arizona homes for sale and the home sellers in Arizona - maybe all over the nation. The post basically stated that some sellers are simply not motivated to sell their homes. My take on the post was that the sellers are pricing their properties too high for the current market and for no good reason. They could be holding on to what they wanted to sell the home for a year or so ago but it’s just not possible; the market won’t pay a premium for much of today’s real estate. I guess they may just have their home listed to see what happens and if this is the case, there is no problem with turning away all potential buyers.
This post is for the motivated sellers - here are some tips to help get your home sold:
Find a professional real estate agent that knows the industry and understands what you need to do to sell your home in this market.

• Price your home right. This doesn’t mean to price your home so low that it will make you lose thousands on the deal, but if you need to sell, sell your home for a price that the market will pay. Research recent comparable sales in your surrounding neighborhoods so that you know what price your home can sell for. If you’re not comfortable selling the home at the price the market will pay for it, get it off the market.

• Keep your home spotless. If you do get a visitor to your home make sure it’s clean and presentable. Make sure all renovations have already been completed and that the buyer knows they don’t have to walk into a home and start a 6-month project. In addition, buyers want to be able to picture their family living in the home so cleaning up some of the clutter e.g. family pictures and nick naks, will make for a good presentation.

• If your home is overpriced for good reason, justify it. Tell the buyer or the agent that you spent $20,000 on remodeling the home, and those homes in your area that have sold, did not. Help the buyer understand why they should pay more. If you have a great view, or a large lot with a pool, communicate these benefits to the interested party before you lose them.

• If you get a low ball offer take a minute to consider it. Will the thousands of dollars lost be lost anyway by waiting to sell at the higher price? Can you counteroffer something that will be of interest to both parties?

It’s not impossible to sell a home in today’s market. There are thousands of capable and willing buyers but they know it is deal time and they’re not willing to pay a premium price on a home they can find right down the street for less money. There are thousands of choices for home buyers and you need to convince every potential buyer that they’d be an absolute idiot if they didn’t make your home, their new home.

Tags: Arizona Homes For Sale, Arizona Real Estate, home buyers, home buying tips, Homes for Sale, housing market, phoenix real estate guy