I am closing a deal tomorrow in which I helped the seller save $26,789.00.  Do I have your interest now?  Good.  The seller’s house is a product of the distressed market many homeowners are facing today.  The home had a first and second mortgage totaling approximately $119,000.  Due to the market the home would only end up selling for a net $101,850.  Obviously this presented a huge problem for the seller.  He would have to bring 28,789.00 to closing to fill the gap on what’s owed on the mortgages and the costs associated with selling the home.  Here’s what I did to help the seller save the money. 

We put together a short sale package (Don’t know what a short sale is? click here) and submitted it to the bank that holds the second mortgage.  The first mortgage will be paid in full with no problem.  The purpose of submitting the short sale package was to request that the bank accept less money than was owed on the second mortgage due to the current market conditions and a hardship situation for the seller.  Before closing we were able to negotiate with the bank to accept less than what was actually owed on the second mortgage.  As a result, the seller only has to bring $2,000 to the closing instead of $28,789.00 for a savings of $26,789.00.  Pretty amazing isn’t?  What makes it even more amazing is the fact that this seller was current on all payments to both the first and second mortgage.

 Are you or someone you know facing a financial hardship that has caused you to become late on your mortgage payment?  If so, I can help.  Contact Josh Hanson with The Hanson Team and RE/MAX Real Estate Concepts at 515-229-2619 or Josh@RealEstateConcepts.net.

During the first quarter of 2009 there were 1129 properties that sold in Polk, Dallas and Warren counties.  Of those properties that sold 221 were foreclosures and an estimated 25 were short sales(Don’t know what a short sale is? click here).  That equates to an eye opening 21.79% of the properties that sold in the 1st quarter of 2009 were distressed properties.  When you look at the overall market the distressed properties only account for 7.27% of the active properties on the market as of April 13, 2009.  What does this mean? 

 It means that the best priced properties are selling.  We have found that foreclosures and short sales are properties that are priced to sell.  Short sales are often times a win-win-win scenario for the seller, the bank and the buyer. The seller gets out of the property without going through foreclosure.  The bank takes a loss on the sale of the home and does not have to go through the foreclosure process which the absolutely do not want to do and the buyer get a great deal as some short sales are selling between 15% and 25% less than market value.

 I am finalizing the CDPE professional designation which stands for Certified Distressed Property Expert.  This designation provides extensive training in foreclosure avoidance and short sales. This is invaluable expertise to offer at a time when the area is ravaged by “distressed” homes in the foreclosure process.

Short sales allow the cash-strapped seller to repay the mortgage at the price that the home sells for, even though it is lower than what is owed on the property. With plummeting property values, this can save many people from foreclosure and even bankruptcy. More and more lenders are willing to consider short sales because they are much less costly than foreclosures.

If you, or someone you know, is behind on their payments or has been served foreclosure documents from their mortgage company.  We can help you to possibly avoid foreclosure and come out of this uncertain time better off than if you were to continue with the foreclosure process.  To learn more click here.

There is a lot of talk in the real estate market today about foreclosures, short sales, and interest rates.”  All of those topics are important to the overall makeup of the current market as we know it.  However, I think it’s also important to consider the purchase of a home as an investment.  If done in the appropriate way I believe your home will be the best investment you make in your lifetime.  For example, I was visiting with a young couple recently that was preparing to sell their home again for the third time in seven years.  They are following an investment track with the end goal being homeownership without a mortgage.  They are buying homes that need some work or could be updated, doing the work, then selling the homes and rolling all the profits into the next home. Within the next 5-10 years they will have profited enough to pay cash for their dream home and live financially free from a mortgage payment.  Is this possible?  Absolutely! The key is to have a plan.  Did you know that most americans spend more time planning a vacation than they do planning their own retirement.  No wonder we have major financial problems in this country. 

 Are you looking for a good investment?  Have you ever thought about buying a donkey?  A friend of mine named Chuck moved from the midwest to Texas and bought a donkey from a local farmer for $100.  The farmer agreed to deliver the donkey the next day. The next day the farmer drove up and said ‘Sorry Chuck, but I have some bad news, the donkey died.’  Chuck replied, ‘Well, then just give me my money back.’  The farmer said, ‘Can’t do that. I went and spent it already.’  Chuck said, ‘OK, then, just bring me the dead donkey.’  The farmer asked, ‘Whatcha gonna do with a dead donkey?’  Chuck said ‘I’m going to raffle him off.’  The farmer said ‘You can’t raffle off a dead donkey!’  Chuck said, ‘Sure I can. I just won’t tell anybody he’s dead.’  A month later, Chuck ran into the farmer in town and the farmer asked, ‘What happened with that dead donkey?’  Chuck said, ‘I raffled him off.  I sold 500 tickets at two dollars a piece and made a profit of $898.’  The farmer said, ‘Didn’t anyone complain?’  Chuck said, ‘Just the guy who won. So I gave him his two dollars back.’ 

Are you looking for a good investment and/or are you sitting on a dead donkey? If you need help finding a good investment or getting rid of your dead donkey in this market please let us know as we can help. 

The main focus of this post is to share with you three things:

1. What got us here

2. Your choices moving forward

3. Prepare you for what to come

Let me begin by giving you a brief history of what got us here (in laymen’s terms).  Between 2004 and 2006, some investment bankers decided it would be profitable to package hundreds of millions of dollars worth of mortgages in something called an MBS (mortgage backed securities) or a CDO (collateralized debt obligation) and sell them on Wall Street.  It wasn’t just lucrative, it was like striking gold everywhere you set your pick down.  So much so, that these investment banks and lenders began to get very aggressive about who they’d loan money to.  The more loans that were done, the more MBS’s and CDO’s they could sell on the stock market.  The sub-prime boom ensued.

What these investment types didn’t account for was the massive number of borrowers that would eventually default on these loans (most of them were adjustable rate mortgages with exponentially increasing rates).  As a result, many of the companies that were holding these investments lost their “assets” when these loans stopped performing (i.e. people stopped making payments).  The foreclosure boom ensued.

Due to the rising number of foreclosures, property values around the country began to plummet and the housing market slammed it’s brakes on and came to a screeching halt.  Because the housing market is a driving force behind the nation’s economy, companies in almost every industry were affected.  Even more important to mention, the GDP growth we saw as a nation was almost entirely based on purchases made possible by acquiring new debt.  People who’s homes appreciated were tapping the equity to purchase goods and services.  Credit card debt skyrocketed.  The debt boom ensued.

So, now here we are with an ailing economy and some choices to make moving forward.  Here’s my recommendations -

1. Have at least 6 months worth of reserves in the bank.  This gives you the ability to weather a financial storm such as a lay-off, or unforeseen expense.  It’s not a one-size-fits-all solution, but your home equity may be the source for your emergency fund.  Two reasons: a) it’s not earning you any rate of return, and b) rates are about as low as they’ll ever be, so refinancing now is a great option.
2. Look for ways to cut everyday expenses.  The most common way to do this is to evaluate your fixed monthly expenses.  What is the rate on your car loan? Credit card? Mortgage?  Do you have a higher deductible on your auto or home insurance to minimize those expenses?  Do you have a programmable thermostat? Have you had MidAmerican Energy do an energy audit of your home?  It’s not about shrinking, but about being mindful of efficiencies you’re missing out on.
3. Have a back-up plan.  In elementary school, there was always a plan for dealing with tornadoes or fires in the building.  It allowed the teachers and staff to mover everyone calmly toward an exit or to safety.  There wasn’t mass chaos, but controlled motion.  The same is true for a financial emergency in your life.  Have a back-up plan in place.  Update your resume. Boost your savings.  Network with more people.  All of these options could be part of your back-up plan.
4. Consult a professional.  The Hanson Team, Josh Hanson and Lance Hanson, are here to help with all of your real estate needs.  If you are interested in selling your home, buying a new home, your behind on your mortgage or your facing foreclosure please take the time to contact one of the most respected real estate teams in the Des Moines area.  If you need someone to help you with your financing, whether a refinance or a new purchase, please contact Adam Carroll at Four Legacies Mortgage.  Special thanks to Adam for providing some insight into some of the content presented in this post.

What’s to come in the future?

The straight answer to that is, if I knew, I wouldn’t be in this business.  I can make some predictions based on historical perspective and also clue you in to some information that I subscibe to that may give you an upper hand.

The predictions:

1. The market will come back…it always has.  Housing prices have declined approximately 25% from the peak and the economy is predicting an additional 10% decline.  The bottom will occur in late 2009, with a relatively flat 2010 and prices starting to rise in 2011.
2. People will continue to buy homes…they always have.  Foreclosures are going to continue to drive prices down improving affordability.  Inventories have peaked and interest rates are still at historical lows.  The new tax credit is creating some traction in the first time home buyer market and I believe will drive other segments of the market as well.

I leave with one last sobering thought on the housing market.  The economy does not expect housing to reach its 2006 peak value until 2020.  What does that mean to you? It means that there will be a lot of REALTORS updating their resumes and looking for employment in the highest unemployment rates we’ve seen in a long time (8.1% as of last week).  The Hanson Team has over 25 years of experience selling real estate in the Des Moines area and we are passionate about making our business about your needs and desires.  Contact us today to learn more.  After all, you do get two full time REALTORS for the price of one.

If you are renting, living with family or graduating from college soon and are wondering whether you should buy a home, consider what bestselling author David Bach said: “The average homeowner is worth 35 times more that the average renter.

The Hanson Team would advise you to take action immediately and start saving a little every pay check to help accumulate a down payment.  Yes, you actually need to have some money set aside to buy a home now (the ability to fog a mirror is not the only qualification any longer).

The longer you wait the harder it is to get into homeownership.  If it’s the market conditions that have scared you off, you may not be considering both sides of the coin. Your home becomes part of your investment portfolio, provides tax benefits and allows you to build equity over time. Buying a home now can provide some real negotiating power to request improvements, price reductions, paid closing costs and more. 

Many sellers are facing troubling situations due to poor market conditions and the economic downturn, making the market ripe for buyers.  Affordability is better than anytime since 1970 according to The National Association of Realtors’ housing affordability index.  With numerous foreclosures on the market and prices dropping, now is a good time to buy.  To create profitability on your purchase you might consider these items.

How long are you going to live in this home? If you are planning to live in the home for a few years or longer then buying would be a wise decision. On the other hand, if you are considering moving within a year, then renting would probably be better due to the expenses associated with moving.

How much can you really afford? No, really, how much can you afford?  Although there are tighter lending regulations today, don’t let that scare you.  Instead, focus on how much home is realistic and avoid trying to buy too much home because you “qualify” for it.

Mortgage rates are at or near historical lows and are highly appealing.  Good credit is required, a down payment or down payment program is essential and lots of documentation of your income, assets and employment will be a necessity. 

There is a lot of inventory in many areas including new, exisitng, and foreclosure homes to choose from.  Buyers can study the market and have some freedom to be picky and choose the home they really want.

And last, but certainly not least, is the tax credit benefit that will provide first-time home buyers (defined as not having owned a home in the last 3 years) with up to $8,000 in the form of a tax credit. Consult your tax advisor on the actual impact to you and your tax situation provided by the tax credit.

What are you waiting for? 

We would like to welcome you to the new look and feel of www.DesMoinesAreaHomes.com .  We are extremely excited with our new look and most of all the new capabilities we will be able to provide to you.  We will do our best to be your foremost resource for Des Moines Real Estate information, listings and resources.  We are open to and welcome all feedback.  Please feel free to leave a comment below about the new site and provide any suggestions you may have.  We are always striving to get better and provide the information you desire on the site and with your feedback we can do just that.  We look forward to hearing from you and helping you, and your friends, with all of your real estate needs.

 It’s a great life,

Josh Hanson, Lance Hanson and The Hanson Team