Jesse & Kathy Clifton, REALTORS® 907.699.6024

11-29-2007
Housing Issues Will Slow But Not Derail The US Economy

A new report out today by the US Council of Mayors paints a less than glowing picture of the housing market in the coming year. An estimated 1.4 millions homes, representing an equity loss of $519 billion, will go into foreclosure in 2008 pushing the total loss of equity at a staggering $1.2 trillion.

Home prices are projected to decline by as much as 7% nationally while home sales are expected to decline by 10%. This would mean the average sales price in Fairbanks would be back to levels not seen since early 2006 and homes sales would decline to 2004 levels.

The council did offer a few solutions to the housing crisis;

♦ The addition of more foreclosure counseling services and promoting their services to buyers facing foreclosure

♦ The development of an REO contact database which would allow local officials easy access to REO managers to ensure that bank-owned real estate wasn't allowed to deteriorate thereby further decreasing surrounding property values.

♦ Legislation aimed at ending predatory lending practices

♦ Giving the Federal Housing Administration more tools to help borrowers facing foreclosure.

There is good news amid all the gloom and doom. Although the Federal Reserve recently amended their growth projections they are still projecting the US economy will grow at a healthy pace. Growth projections for 2008 are between 1.8% - 2.5% with projections between 2.3% - 2.6% through 2010.

If policies are put in place now to stem the flow of foreclosures and foreclosure related loses the economy will take a hit but ultimately won't be derailed. The keyword here is "IF". If the powers at be fail to take quick and decisive action that $1.2 trillion dollar equity loss will be felt in every sector of the US economy. Not only will the borrowers who lost their homes suffer but so will every affiliated business and homeowner in the country.

Have questions or comments?  Feel free to contact us, we would love to hear from you.

Property Discovery; Your Rights and Responsibilities

Locally, our standard purchase and sale agreements include a fifteen day discovery period beginning at contract acceptance during which buyers have the opportunity to have a “licensed contractor or other qualified professional inspect and investigate the subject property for possible defects…”

Most buyers opt to have the home inspected by a structural engineer or professional home inspector. While this is a good start, depending on the property, it may be just that; a good start. Standard tests for general structural integrity, energy efficiency, water quality, radon gas, lead-based paint, soils testing, mechanical (HVAC), electrical, domestic plumbing, wastewater adequacy testing, environmental hazards and underground fuel storage tank integrity are all designed to give you, the buyer, a comprehensive overview of the condition of the property.

The costs for inspecting the property are typically done at the buyer’s expense, unless otherwise negotiated in the purchase agreement.

Once complete, the testing or inspection firm will provide you with a written report outlining any defects discovered during the inspection. A repair addendum outlining the requested repairs along with supporting documentation must be submitted to the seller within the contractual discovery period. Although sellers are not required to complete any repairs, as a general rule, sellers will make those repairs deemed necessary by the lender for financing the property. A repair-credit or closing costs credit equal to the cost of repairs is also a fairly common occurrence.

If you are not satisfied with the results of any test performed during your contractual discovery period you have the right to cancel the contract and receive a full refund of your earnest money. To qualify for this refund you, or your representative, must notify the listing agent within two business days of receipt of the inspection report. If you choose not to have the property inspected or if you fail to notify the seller, in writing, of any defects within the property within the 15 day calendar period, it is understood you have accepted the condition of the property as satisfactory.

When evaluating a potential purchase, bear in mind that new construction properties should receive the same scrutiny as existing homes. Reputable builders will provide you with copies of the energy rating certificate (if available) and the building inspections, which show the property has been inspected at every stage of construction from the footings and foundation, framing, mechanical, electrical and plumbing to the final inspection after the home is complete.

The cost of inspections can run from $400-$500 for a simple home inspection to several thousand for a full battery of inspections. When you consider the average price of a single family home in Fairbanks is $221,600 the money spent on inspecting the property is very inexpensive insurance against discovering a major defect after you move in.

Thursday, November 15th

As the market continues to adjust to the continuing credit crunch, sellers are left trying to court a decreasing number of ready, willing and able buyers.  Our local economy is pretty healthy but with swelling inventory of homes listed for sale, it’s critical to be prepared for the market.  Help you agent help you sell your home.

Get rid of the clutter:
• Clean out the garage so people can visualize their cars (and stuff) in it.  Paint the walls and floors to give it a clean, fresh look.
• Go through and empty your kitchen cabinets, junk drawers, linen closets, clothes closets, etc. of unused and unneeded items.  There’s probably a ton of stuff being saved “just because” that, if cleaned out, will make your home seem twice as spacious.
• Take down your wall of family photos and shelves of collectables; let buyers focus on your house, not your ‘stuff’.

Decorate to sell:
• Eliminate any unnecessary furniture to make your rooms appear larger.  Move the biggest pieces of furniture as far away from the entrance to the room as possible. 
• If it’s been more than a couple of years since you’ve painted the interior, now is the time.  Painting is by far gives you the biggest return for the money.  Be sure to pick a light neutral color that will appeal to the most buyers.
• Get rid of heavy drapes and curtains; light is the key, unless you’re selling to a mushroom.

Spring Cleaning… anytime:
• Consider hiring a professional cleaning service to come in and thoroughly go over the house.
• Have the carpets professionally cleaned; refinish your hardwood floors (as applicable).
• If you don’t do windows, find someone who will (see the above professional cleaning service).

Finish Your Honey-Do List:
• Replace leaking/loose kitchen or bathroom fixtures.
• Service and tune up the boiler/furnace.
• Replace any old/torn carpet or vinyl flooring.
• Replace outdated light fixtures.

Enhance Your Homes Curb Appeal:
• Keep your yard lawn and hedges trimmed and neat; invest in some flowers to add a little color to your yard. Now that it’s winter, keep your sidewalks and driveway clear of ice/snow.
• If the house needs painting; do it.  Buyers will notice.
• Keep bikes, kids/grandkids toys out of sight.
• Paint or replace your front door to make your home more inviting.
• If your lockset and deadbolt are showing any signs of age; replace them.

Pets Are Part of The Process Too:
• First and foremost, please make sure if at all possible, your pets are not home for showings; at a minimum keep them in their kennels.  Pets can be a distraction and a hazard if underfoot.
• Eliminate any pet odors; this is a major turn off for buyers.

It’s Show Time:
• Sellers; take your pets for a walk.  For those of you without pets; run an errand, go shopping or go to lunch, just don’t be at home.
• Make the property available to buyers, even if that means short notice showings.  Buyers will move to the next house on the list if they can’t get an appointment.
• Turn on all the lights, open up all the curtains/drapes and turn on some soft soothing music.

Pricing:
• I’m putting this at the end of this list because unless you’ve addressed all the items above, your price isn’t going to matter unless you’re substantially priced below market value.  You can sell As-Is, but it will cost you.
• Make sure you price your home based on what the market will bear and NOT what you need or want to net on the sale of your home; the market doesn’t care what you need or want. Building in a little ‘negotiating room’ is always a bad idea because it means you’re overpricing your home and overpriced homes don’t sell.

Homes that are in good repair and show well will invariably sell faster and for more money than homes that don’t show well.  Time and again I see sellers asking top dollar for a property that isn't in top-dollar condition.  Remember that buyers will be comparing your home against every other home on the market; the cleanest, best maintained home with the lowest price "wins" an offer. 

I received this today from a friend at Wells Fargo...

Wells Fargo Home Mortgage is offering a $500 closing cost credit to new buyers who close a loan with us in 2007*. (Excludes FHA loans)  Buyers could also get an additional $150 just for having deposit accounts with Wells Fargo Bank**   That is a potential savings of $650.

Liz Rhow Home Mortgage Consultant
Wells Fargo Home Mortgage
324 Old Steese Hwy Fairbanks, AK 99701
907-374-2006 Direct Line
liz.rhow@wellsfargo.com 
Apply on line at http://www.wfhm.com/wfhm/liz-rhow

*Loan must fund by December 31st, 2007 to qualify for discount.
** The additional $150 is if the borrower wants to open new accounts with Wells Fargo prior to closing of the mortgage loan or they are already existing Wells Fargo Bank customers with enough qualifying accounts.