Babs DeLay

Babs DeLay

2012

            Utah’s rate of foreclosed homes has dropped 49% in the first three months of 2012. That should be great news for home sellers, right? Maybe property values will stabilize or stop falling?  Hold onto your bootstraps-Salt Lake City is still in the top of the pile of mortgage muck for the nation in foreclosures, according to RealtyTrac, Inc (a national data track service).  Data released last week by RealtyTrac Inc. shows one in 415 Utah housing units saw a foreclosure filing in March. That's still behind the rates of most of our neighboring states but we’re in the top seven in the U.S. Arizona, Nevada and California are all about tied for bad news, in that-1 in 300 homes in those states are in the foreclosure process. In addition, Utah is 1:415, Colorado 1:591 and Idaho 1:839. And the really creepy part to these statistics is that RealtyTrac reported that more U.S. homes in general are entering the foreclosure process this year and “setting the stage for a surge in properties repossessed by lenders this year.” 

            Hear that wet sucking sound as you pull your shoe out of the mortgage mud? That’s the unpleasant noise of more foreclosures, which equals lower home prices. As a seller, that stinks. For buyers, this is great because lower prices means better deals.  Even if Utah may be experiencing a brief respite from foreclosure filings, the nation is up 7% this year in first time foreclosure notices says RealtyTrac, Inc.

            How does a foreclosure work here is Utah? First, we don’t have state laws that usually make your lender take you to court if you’re late on your payments. Most lenders just have to file a notice of default against you after you’ve become late at the County Recorder’s office. The lender can do it in person or on line. They also have to send you a notice of default to the address they have on file on you.  Once that notice is filed, you get three months before the property is sold at public auction…supposedly regardless if you claim you never received the notice.

            You can make up your payments and any late fees within those three months. Be very careful how you make the payments to the lender to insure you get confirmation they’ve received the monies. If you don’t pay up though, 20 days before the ‘sale date’/ auction date a notice is taped up, stapled or nailed onto your property for you and all your neighbors to see. I saw a notice the other day when I was visiting friends at a townhome. The paper was attached with blue tape onto the middle of the front door of a vacant property next door my friends townhome. We walked over to get a look at what the notice said as we were leaving for dinner. By the time we got back from our meal, the notice had been removed. It’s embarrassing as hell to have a foreclosure notice put on your property!  The lender also may run three weeks of ads in the local paper about the sale (per law) to add salt to the wound.

            Foreclosure sales are held as public auctions at the county courthouse with the property going to the highest bidder. If the sale price is above and beyond the amount owed to the lender, the extra monies go first to any junior lien holders and then to the borrower.

2012

   The State of Utah has a pretty terrific non-profit that helps lower and middle income families here own homes. They’ve not necessarily been known as the ‘second time’ loan brokers, but with the economy as such, Utah Housing Corporation  is now providing second mortgages to current and previous home owners as well as first time home buyers, for the down payment and closing costs required to purchase a home.

    This public corporation was created by the State legislature in the mid-1970’s to raise money to assist in creating housing purchase opportunities for low income Utahns.  You have to go to a lender to actually get a UHC loan, as they just raise the funds and oversee them, and sadly foreclose on you if you don’t pay back the funds.  Think of UHC as your friendly local group of folks who want to get you into a home and work with lenders to help you with a down payment to get into that house or condo.

     UHC can help you get 6% of the sales price towards a down and the mortgage closing costs of a home loan. For first timers you have to have a credit score of at least 660 and not make more than $57,300 to buy a home or condo up to $250,000. With the new ‘HomeAgain’ or second time purchase, UHC provides money for a down payment via a 30 year fixed-interest second mortgage loan that is 2% more than the rate on the first mortgage. The HomeAgain loan can be granted to sales prices up to $320,000 to people with an income of no more than $81,000.

     It’s good to mention, too that Utah Housing Corporation is also give out help to folks who have credit scores of 620 or above, with a maximum income of $81,000 and a sales price of no more than $250,000. The down payment /closing cost assistance on this loan is up to 4%.

      The bottom line of this help is that you are going to get a first mortgage at a really good interest rate (under 4% right now) and the second mortgage that’s going to help you get into the house with down/closing cost help is going to be at 2% more, say 6%, for the life of the loan.   When you add it up, it’s still cheaper than rents these days.  Is there any ‘catch’ to this great loan program?  Yes, no part of the property can EVER be rented out. If you all of a sudden have to move and can’t sell your property and must try and rent it, Utah Housing will call your note due immediately if they discover you being a landlord.

      For more information, go to www.utahhousingcorp.org. You must go in person or apply online with one of the 40 mortgage lenders or 300 bank branches around the state to apply for the loan program.  Obviously I can’t list all the lenders here who do Utah Housing loans, but I can guide you enough to say that any lender that offers FHA/VA loans generally does these programs and that I think it’s a really great option for folks who don’t have quite enough money for a down payment.

2012

   “There are a million homes for sale! What do you mean this property has multiple offers on it?!” says the buyer who just lost out on a home that had been for sale on the market for five months.

     Welcome to our world these days.  Yes, there are a ton of homes for sale on the market but the majority of them are being offered as ‘short sales’.  If you’ve heard there’s 15 months of housing inventory on the market right now, take out the number of short sales and foreclosures out of the mix and we only have about 4 months of homes available.  At least that’s my gut feeling lately after talking to fellow agents.  For example, I was to show homes to a buyer who just relocated here from back east this past weekend. I pulled up his price range and area where he wanted to live and got 28 listings that matched.  Of the 28, 19 were short sales-all of which each had at least two offers pending on them. Of the remaining 11, 6 were on main roads like 700 and 900 east. The buyer has a dog and didn’t want to live on a high traffic road.  Of the 5 left to see, 4 were ‘so-so’ and only one kinda rocked his world. So, I wrote an offer for him and submitted it to the listing agent and we waited.

     Within an hour that agent called to say another offer had come over and she was expecting a third offer later that day.  My buyer, a virgin ‘first time buyer’ was a bit miffed when I called to tell him what was going on. He said, ‘I submitted first, so they have to deal with me first!’.  Um, no. The seller can do what they want, really.  The seller is looking to get the most money they can get from the sale of their home so of course they want to look at ALL offers.

            The seller’s agent will most likely recommend to the lucky seller to do one of several things with the three offers:

            1) put all the buyers agents on written notice that there are multiple offers and give them each 24-48 hours to re-write, up their offers or resubmit the same offers;

            2) accept one offer and put the other two offers in back up position( if the back up buyers want to be in that position);

            3) counter just one of the offers, or 4) reject all of the offers (because they were so low).

        I find that most listing agents in a multiple offer situation will advise their seller(s) to put buyers agents on notice and give them time to put their ‘highest and best offer’ on the table before the seller(s) makes a decision.  Its darned exciting for the seller and nerve wracking for the buyer(s) when there are multiple offers on a property.   Recently two large apartment complexes were sold in Utah in the multi-million dollar range, and there were over 40 offers on each property before it sold to the highest bidder.  There is also a way for the buyer to almost guarantee they get the property in a multiple offer situation, by writing in an escalation clause. But that’s a whole other blog!

2012

   No matter what industry you work in, there is always a year end wrap up and January prediction/ forecast available from some industry expert out in the world. Glass blowers and fuzzy sock makers want to know the prices of materials and demand for products each year just as much as home builders and Realtors want to see into the future of housing. Realtors, economists, builders, commercial agents, banks got together last week in Salt Lake to look at the data and see what this year foretells. Basically, the news didn’t suck.

    The bad news isn’t any news at all. New home construction is down 76% from 2005.  That means 76% of any construction industry related jobs also went down the economic toilet during those years.  Many new home developers do not list their product on the local MLS and thus don’t report sales data to the MLS, but James Wood from Utah’s Bureau of Economic and Business Research says that in 2011 existing home sales were seven times higher than new home sales. What’s that mean for you? That means you can probably get a really really good deal on a newly constructed home and I’ll bet the builder will throw in a lot of bells and whistles to make you happy to buy their home…like paying for your loan costs, giving you upgrades on appliances and flooring, redesigning rooms for free, installing sprinklers and sod, etc.

     Wood also reported that there are 480,000 mortgage loans in Utah and that 124,000 of them in 2011 have negative equity or near negative equity.  That doesn’t mean those 25% are delinquent on payments. I take that statistic to mean that it would be hard to sell a home without any equity and that logically people would rather stay put than try and sell a home and walk away with no money. If people can’t move up, down or out, they will possibly remodel, which boosts that industry and potential sales at hardware stores for the DIY crowd.

     Prices on homes fell 22% in Salt Lake County during the past 4 years and 9.5% in 2011.  Pay attention-prices on homes are low and the forecasters predict prices will drop another 3-5% this year. Then prices will STOP falling and bottom out.  This doesn’t mean the value of your home is going to start creeping up this summer or for quite a while. It just means your home won’t be losing much more equity. Phew!

      Mr. Wood was commissioned by the Salt Lake Board of Realtors to interpret the MLS data for the members. The SLBR is a part owner of the MLS, along with two other Boards in the state of Utah. The data shows for 2011 that the average median sales price of a home in Salt Lake County was $199,000 and the average sales price of a foreclosure property in the County was $149,950.  Foreclosures are a great deal but I’m seeing multiple offers on many foreclosures, often cash offers from investors wanting to pick up rental inventory.  Keep a watch on both the number of foreclosures and how asset managers will be packaging them this year to woo investors to more easily pick up multiple properties of different types in different locations under one blanket of one offer.

November 26, 2011

Use Your VA Benefits!

2011

       We just commemorated our service men and women on Veterans Day. Unless you are a Vet, it’s hard to understand the commitment that military service requires. There are over 25 million Vets in this country.  Thanks to President Franklin Roosevelt (in 1944), Vet’s can get assistance in buying homes as a reward for their service to all of us.  Known as the GI Bill of Rights, the VA Loan became law in 1944 and gives Vets who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous during peacetime. There is a two year requirement if the Vet enlisted and began service after Sept. 7th, 1980 or was an officer and began service after Oct. 16th, 1981. There is also a six year requirement for National guards and reservists.

          The G.I. Bill offers education and housing benefits to Vets. The big deal for potential buyers is that Vet’s don’t have to put a single dime down as a down payment in order to purchase a property, whereas the minimum down these days for a non-Vet buyer for an FHA loan is 3.5%.  A VA loan pretty much has the same requirements of all loans: 1) you still have to have a job and good job history; 2) you have to have decent credit; and 3) you have to live in the property. VA loans are made by any licensed bank, credit union or loan/mortgage company.

          It’s really important for any Vet to work with a good lender when applying for a VA loan, as there is another layer of paperwork to the mortgage process-proving your military service and getting the right forms out of the Veterans Administration. A savvy lender will help you track down your discharge paperwork (DD-214 form) if it’s been lost through the Veterans Administration.  I have always found the Veterans Administration willing to go overboard to help get a Vet into a home and expedite any paperwork needed.

          A VA loan can be used to buy a house, a townhome, or a condo, or a farm if there is a residence on the land. You can use the loan to build a home from scratch, buy an existing home and improve it simultaneously, or buy a manufactured home and/or lot (the manufactured home must come with the lot, which is rare in some parts of Utah). The Vet can buy property with a married spouse or with another person they aren’t married to, however there are rules about that: 1) the Vet can buy/co-sign with another Vet; 2) the Vet can buy/co-sign with a non-Vet, but there’s a formula used to figure out how much of the Vet’s benefits can be used in the total transaction.

          My lender friends tell me that most of the VA loans granted in Utah are used in the Ogden/Tooele areas-close to military operations. I’m always surprised at how many Vet’s don’t understand their benefits in how to buy a home, who think they don’t qualify to use benefits or think they have used their benefits up in a previous purchase.  Again, get to a good lender and see how you can buy with no money down.  And, thank you from all of us for your service to this country.

November 08, 2011

Who Slept In Your Bed?

2011

   I’m just about to put a home across the MLS that is rather historic…it is the birthplace of Gordon B. Hinkley, the 15th president of the Church of Jesus Christ of Latter-day Saints.  There’s not a bronze plaque outside the front door noting the significance of the property, but there could be if the owners wanted to get one to display there.  Would President Hinkley recognize the place if he were still alive?  In this example of a historic property, yes, the President would easily recognize his childhood manse as the house is virtually intact on the outside with a wonderfully restored and upgraded interior inside.

               If you own a historic home that may be in need of a makover and would like to find money to rehabilitate it, your ship has come in!  Thanks to the lowest interest rates in history, home owners can get loans from the Utah Heritage Foundation for restoration, rehabilitation and repair at half of the current U.S. Prime Rate.  You have to have good credit and income to apply and receive the money from the UHF and there are a few rules as to what the money can be used for:

First priority for funding is placed on exterior improvements, including: brick, chimneys, doors, foundations, masonry, porches, reconstructing existing additions, roofs, seismic retrofitting, siding repair, and windows.  Second priority for funding is placed on interior systems, including: code compliance, electrical systems, heating, insulation, and plumbing. Third priority for funding is placed on interior finishes. For example, UHF will not fund a kitchen remodel if the roof needs to be repaired. However, a kitchen and/or bathroom remodel can be funded if they are incorporated into a more comprehensive rehabilitation project.

   How do you know if your property is historic?  The UHF can help by having one of their staff come visit your home. The basic criteria would be:  1) is it listed on the National Register of Historic Places? 2) Is it listed on a local register of historic or cultural resources? And 3) Is it eligible to be a contributing building within a local or national historic district?  To quote them, “In general terms, to be eligible, a building must be at least 50 years old AND retain its architectural integrity.”

               The loan cannot be used for concrete pads (parking/patio), fences, incompatible materials (like vinyl windows in a Victorian house), landscaping, new construction (tearing down a home or building one on a vacant lot), refinancing mortgages and putting up retaining walls.  Then again, what you want and need is decided on a case by case basis by the staff.  The terms of the loan are good because of the low interest rates and offer low monthly payments based on a 20-year amortization schedule, but the payment term for the loan is 5 years with a balloon payment of the remaining principal and interest due at the end of the fifth year.

               The Utah Heritage Foundation has been around since the 1960’s grants loans all over Utah and is helping to protect our history and architectural past. You can follow them and their projects on facebook at www.facebook.com/utahheritagefoundation  or go to their site at www.utahheritagefoundation.com and learn more about what they do for all of us Utahns. There’s also a great kids game on their home page - a hunt for the secret silver coins of the Kearns Mansion.

2011

   Wow-the economy is crazy! The Dow Jones has tanked, the U.S. credit rating got downgraded for the first time in our history and many people think that this may indicate the sky is falling.  I find it an interesting parallel that many home owners out there need a loan modification ( so does the U.S. government with all the countries that have loaned us money) and have seen their credit ratings drop (like the U.S. rating dropping for the first time in history form three stars to two stars). 

     What does this do for the home buyers?  IT MAKES INTEREST RATES on mortages GO DOWN!  You’re hearing radio and TV ads that ‘now is a better time than ever’ to buy a home or refinance one. If you have a stable job and need the tax deduction of annual mortgage interest, then yes, it is a GREAT time to buy a home because it will be cheaper than rent and save you money on your income taxes. 

      If you got a mortgage for $200,000 you’d have a payment at 4.5% interest of @$1300 per month (principal loan payment including interest, property taxes, homeowners insurance and mortgage insurance).  If rates go down to 4% your payment would go down to @$1200 per month-a savings of $100 per month.

     Seriously, have you tried to find a decent rental lately?  A landlord that will allow both your dogs and cats?  A home in a safe feeling neighborhood with a yard and decent parking?  Rent’s are moving UP as more people can’t qualify to get a loan, and landlords are raising rents. I just had a friend desperately search for a three bedroom place to rent, and she was finding that landlords wanted $1500 a month on the average for a nice house in the neighborhood where she wanted to live, plus first and last month’s rent and a huge non-refundable animal deposit.  The amount it would have cost her just to get into a rental would have been the almost the same amount as a down payment for a home. The average loan is 3.5% down and there are legitimate loans out there for 0% down as well (slightly higher interest rate).

     Sit down and look at your living situation and your finances, and even take the time to talk to a good lender to help give you ideas and numbers on how to buy a home or condo. With values at all time lows, and interest rates at all time lows, the planets are aligning that you should stop renting and start the buying process.  Whether you have money invested in the stock and bond markets, it’s not only important to watch those investments but to pay attention to whether the Dow Jones is dropping. The more the Dow drops, the more likely you will see interest rates on home loans drop.

      I always tell potential buyers/renters to make a Xerox of their previous tax return and pencil in an example of a $12,000 mortgage interest deduction and see how that changes what they could have gotten back from Uncle Sam if they had had owned a home that tax year. Do it-look at your taxes and see how owning a home could make your life better in more ways than one!

2011

   How many times have you heard someone shopping for a home to say, “We saw the perfect house, perfect neighborhood, but needed (insert) a) a new kitchen b) another bathroom c) central air d) all new carpets e) all of the above?!

   If you’re getting a bank loan to buy a home for say $200,000 with a 3.5% down FHA insured loan, the bank isn’t going to give immediately give you another loan for $50-100,000 with of upgrades for you to do yourself with or without a contractor. Yes, there is the argument that you can get a second mortgage later, but why not do it all at once?

   There is a loan out there called an FHA 203K which is perfect when you find an almost perfect house. It works basically like this:  You get a contractor(s) to bid out the work you’d like to have done on the property once you get it under contract.  The bank has an appraiser go to the house and determine so see if the $50,000 in improvements will make the house worth $250,000. If it looks like a good plan, then the bank gets you a $250,000 loan at closing (still with the 3.5% down payment) and you close on the home. You have six months to complete the work via the contractor(s) the bank has approved.  The contractor completes each step of the work and the bank sets up a ‘draw’ in order to get him paid each step of the way. 

   This loan is particularly attractive if the home is great but needs say, just a new roof in order to pass FHA standards for a home loan, and where the seller has no equity in the property to make any repairs on behalf of the seller.

    What I’ve found is that this loan takes a few weeks longer to close than a normal transaction because of the work bids that must be reviewed. Also, you must use contractors who have gone through a short process to get approved by FHA and the bank. You can still use your favorite contractor but they must be approved by the bank. It’s very difficult to use an out of town ‘on line’ lender for one of these loans as the ‘draw’ process must be local to get contractors paid quickly during the work. 

     This is a terrific loan to get work done on a home that needs minor or major work done on it. I’ve found it’s a great help when I find a buyer a foreclosure where the AC has been ripped out, the carpets are crappy, and the bathroom needs updating. The bank who took the property back from the seller doesn’t want to do a thing but get rid of the property from its inventory.  The interest rate on an FHA 203K loan is slightly higher than a regular FHA loan, but worth it if you don’t have extra money to do rehabilitation to a property once you’ve put out the 3.5% down payment for the loan. 

2011

It’s been a snowy, rainy year in the State of Utah. The wildflowers are lush, the hills are green. Pretty!... and pretty scary if we get a hot summer. We could get massive wildfires, many which could be started by fireworks and lightening storms. What was Utah’s largest wildfire on record? The ‘Milford Flat Fire’ that started on July 6th, 2007 and ended up burning 567 square miles of Utah before it was finished.  Firefighters said it was the fastest fire they had ever seen take hold and sections of I-15 had to be closed down to protect the public.

 

          Home fires are even scarier. Thousands of people every year die in home fires and or are badly injured by those accidents. A little over 1/3rd of home fires have causes that remain unknown reports the U.S. Fire Administration. They have research that has found that cooking accidents are the number one cause of home fires (26.4%), followed by heaters (11.4%), candles (5.4%), smoking (2.1%) and children playing with matches (.04%).

 

          If you live in an apartment building or condo complex, you should have overhead fire suppressant sprinkler systems and fire sensors in your unit. All new construction multi-unit properties must have these items, but many old, old buildings have not upgraded to a current sprinkler system. When you’re considering renting in a multi-unit complex, do look for safety concerns before you put down a deposit. A friend of mine and her son lived side by side in a big complex by the University of Utah, and both units were lost in a major fire a few years back despite the sprinkler system.  Also, consider renters insurance on your possessions-it’s pretty darned cheap!

 

          Home builders aren’t required (yet) to put in full sprinkler systems in new construction houses, although some are leaning towards that safety feature as an upgrade.  Everyone knows we’re supposed to put in our own fire alarms throughout our homes, but how many of us check them periodically to see if they are working?  Take out your smart phone and just put in a 6 month (repeat forever) date to ‘test fire alarms’ for your own safety.

 

          Most of us never think about our furnaces and air conditioner units until we are using them at full blast. In most Utah homes, the furnace runs the air conditioner some how (I’m so NOT mechanical). Clean out flammable debris from around your live flame areas of your furnace and hot water heater storage room.

 

          Also, this is a big BBQ weekend for many!  Yeah! Celebrate!  And celebrate safely!  DON’T light your charcoal with gasoline. Don’t put your grill under your patio eaves or close to your house. Find that dusty old fire extinguisher you bought a while back, test it and keep it somewhere where you’ll remember it- in case of emergency. Clean the darned grill of old grease that could flame up unexpectedly. If you use propane, check to make sure the connections are tight.  The last thing you want at a holiday party is for the paramedics and fire department to race to your home to put out a house fire or administer burn care to something other than your infamous ‘blackened’ chicken and ribs!

2011

    People often ask me what is the difference between a Realtor and a real estate agent?  Simple answer: a Realtor is a real estate agent, but a real estate agent isn’t necessarily a Realtor.  A Realtor is a member of the National Association of Realtors, is THE largest trade organization in the United States. The Association became the largest trade group in the 1970’s and has over 1.2 million members, 54 State Associations (including Guam, Puerto Rico and the Virgin Islands) and more than 1400 local Associations..  The NAR was founded with 120 members in 1908 at a convention in Chicago, Il., to ‘unite the real estate men of America for the purpose of effectively exerting a combined influence upon matters affecting real estate interests.’ Soon afterwards (1916) the NAR adopted a Code of Ethics for its members to follow while selling real estate.

 

          To sell real estate on the behalf of others, you must have a real estate license. That license is issued in each and every state in the Union, and the licensing requirements are different in each state.  Basically, you must go to a real estate school (live or on-line) for a specific amount of hours and learn about national and state real estate laws and practices. Then, after passing a state-issued test and paying fees, the new licensee can sell real estate by affiliating with an already licensed real estate broker.

 

          Once you receive your license from the state, you are qualified to join the NAR and its local entities. Here in Utah you would join say the Salt Lake Board of Realtors or the Park City Board of Realtors, and also the Utah Association of Realtors simultaneously.  In joining, you pay more fees and promise to abide by the NAR Code of Ethics. The license here is issued by the Utah State Department of Commerce.

 

          Both the word REALTORS and REALTOR are registered with the United States Patent and Trademark Office and only Realtors in good standing can use both the word ‘Realtor’ and the recognizable ‘R’ trademark in advertising.  The NAR has vigorously defended the ownership of these words and trademark successfully over the years in courts throughout the country.

 

          As the word ‘Xerox’ has come to mean ‘copy’, the word ‘Realtor’ has come to mean ‘real estate agent’ to many people.  Yet it is Realtors who openly stand behind a stated Code of Ethics (see www.realtor.org) and who fight for the property rights of individuals in the U.S.  Realtors lobby Congress and State governments to keep the mortgage deduction on your tax return and also help police the real estate industry by calling out crooks who attempt to scam homeowners into bad mortgages and false loan modifications.

 

          It’s worth a minute to Google the Realtor Code of Ethics and look for yourself as to what Realtors promise to abide by in their day to day practice. All real estate agents must abide by the laws of their state and the U.S.  Realtors have an extra layer of rules and regulations we must try and follow every day in addition to the law, and are proud to say at the end of the day that we take extra steps to do good by our clients and customers.