Realtors & home-buyers have discovered that there have been MANY fewer available foreclosure listings in Denver & Aurora since November of 2008. The word that a busy REO listing agent received from a local REO attorney’s office is that there are some 9000 foreclosures that are in the system. Hard to say when those will be hitting the market, but that agent had only received one listing during the first week of February. Another listing agent reported receiving 7 listings on February 6 however, so that could be some indication that we are going to begin seeing more to coming to market soon.

With Bank of America, JP Morgan, Citigroup announcing a moratorium on foreclosures recently, it is hard to say whether those that are currently “in the system” will continue to be held or whether they will be listed. In the meantime, it can certainly play into the hands of any regular homeowners who would like to list their properties without so much competition from foreclosures.

After a recent analysis of Summer Valley an interesting phenomenon was observed. A market analysis of the same property in the Spring of 2008 found there to be a high number of foreclosure sales and no sales over $150,000 in the lower to mid-square footages. The analysis of the later 2008 sales, found several sales over $150,000. The reason for this? — Fix & Flips. 2008 was a VERY active time for investors who purchased a high percentage of the REO’s and financially distressed homes and rehabed them. This has done some very positive things for the values in the neighborhood. As opposed to one year ago, now there are at least higher sales to be used by the appraisers. Hopefully, this will give a boost to normal homeowners who have completed some updating of their properties & who are considering listing their properties in 2009. These rehabed properties certainly were given the benefit of the doubt by the appraisers so hopefully this will give regular homeowners an opportunity for higher value than this time last year.

Summer Valley should not be the only neighborhood in Aurora to experience this but any older neighborhoods that have experienced a large number of foreclosures in 2008 like Mission Viego, Meadowood, High Point, Seven Hills, etc. should be seeing similar results.

In this difficult real estate market, homeowners seem to be staying put in their current homes & weathering the storm. Many are taking the opportunity to refinance & lowering their monthly payments. Unfortunately, that does start the process of lower amounts being applied toward principal all over again as well as adding on closing costs, which causes it to take that much longer to pay down the mortgage. It appears that these great rates might hang around for a while, so it would be wise for the homeowner to check into other options before making that decision to refinance. Other options that they might consider is a mortgage acceleration software or refinancing into a First Lien Line of Credit, or what some call the Australian Mortgage. These plans work very effectively as approximately 65% of Australians own their own homes due to the these programs being more consumer friendly rather than bank profit oriented.

Both of these work very similarly in paying down the mortgage MUCH quicker than most people think is possible. Many are able to completely pay off their mortgage in one half to one third of the time. These two systems use monthly cash flow to shave off huge amounts of interest.

We will focus on the mortgage acceleration software in this post and the “Australian Mortgage” in another. Keep in mind that this writer is not a mortgage broker and is writing as a lay person and is not attempting to sell or broker loans. This writer is trained & can offer the Mortgage Acceleration software however.

Mortgage Acceleration software allows you to use either a Home Equity Line of Credit (HELOC) or even your own savings account in order to accelerate mortgage payoff. When it is set up, a family loads all expenses & income into the software so it knows the families monthly budget. Any changes during the month can also be reported to the software & it acts accordingly. The software takes advantage of the family’s cash flow each month (as well as the difference between how interest is calculated in a HELOC as opposed to a mortgage) & instructs as to when is the best time to make a payment from the HELOC into the mortgage. This utilization of the monthly cash flow drastically minimizes interest & reduces time to payoff the mortgage.

Neither of these plans are recommended for a family who does not keep themselves to a budget. For those who can not control themselves when they see available credit, these programs should be avoided. For those who do like to budget, and see the long or even short-term benefits to paying off a mortgage years early & avoiding that massive amount of interest, then these plans can be a godsend.

For additional information on Mortgage Acceleration, reply to this post or select Contact Me from the list above.

While many HUD properties seem to be hitting the market at very good prices, do not attempt to purchase one without an agent who is experienced at purchasing HUDs. They are not a typical sale as there are MANY rules which are specific to HUD & they must be followed to a “T”.

Keep in mind that HUD is offering a $100 down-payment so long as the winning bid is at least full price. Many of the well priced HUDs are going for over full price, even in this slow market. If you know the property is already priced well and you really want it, then you better offer more than full price.

The bid process is fairly simple & results are in the next day between 2:00 & 3:00. If the bid wins, the paperwork (including the original sales contract) must be delivered in 48 hours, no exceptions. A copy of the earnest check is turned in at that time but the actual check is delivered to the title company after the signed contract is returned (Generally, about a week after bid acceptance). There is also a 48 hour window to deliver the check & DO NOT delay as they will remove that buyer from the deal if timing is not met. On FHA loans, there should be an Appraisal that has already been performed so make sure that the lender orders it.

One of the primary problems in purchasing a HUD property is the condition & do not even think of buying without a professional inspection. Do not forget to complete and turn in the Utilities Turn on Request form & arrange for the utilities to be turned on yourself. I arrange this for my clients but some realtors do not.

Do not assume that the plumbing does not leak, simply because the property has been winterized. I have seen numerous winterizations that have been completed with leaky pipes. Do not assume however that the furnace does not work simply because HUD’s inspector reported that the furnace did not work. The last 4 HUD deals that I have been a part of had a repair escrow for the furnace as it did not come on during HUD’s inspection. All 4 of them did prove to work upon the buyer’s inspection & an HVAC contractor had to write a report stating that the furnace did indeed work in order to remove the escrow amount from the deal. 3 of the 4 of mine were newer furnaces.

There are forms for any changes that need to be made during the deal & rules on those changes must be followed specifically. Extending the closing date is even possible but the buyer must present a cashier’s check with the extension request with a charge of $15 per day. The request must be for at least 15 days so a check for $375 must be delivered with the request. It is HUD’s perogative to return that money if the closing happens promptly.

There are many pitfalls to purchasing a HUD property, but if the price is right & the inspection results are not too bad, some families are able to get some good deals buying HUD properties. Just be sure to have an experienced Realtor to assist in the process because some HUD rules can challenge even experienced agents.

One of the most difficult things for Realtors is assisting our clients with the pricing of their homes. Unfortunately, too many want to price according to what they WANT or NEED, and not what their property will bear in this market. Many of our neighborhoods have seen depreciation or at least have remained flat in recent years, which has caused sellers to actually bring money to the table rather than walk away with proceeds. Of course, when there are no funds to bring & they must move, we are seeing more & more people who are asking their banks to accept short payoffs (this I will address in a future post).

Our training is to guide our clients but they are the ones who are responsible for actually setting the price of their home. I make it a point to show my objectivity by working through the recently SOLD comparables in the neighborhood with my clients. While some are very good at recognizing the value through this exercise, some are in complete denial. I have had a couple of folks who even though I shared very objective data, they still insisted on setting the price grossly above the market. I should have simply declined but chose to go along with the plan for enough time to show them that the market does not like their price. Of course, both of these “experiments” did not turn out well as both were so out of touch with reality, that they eventually blamed me for not being able to find someone who would purchase their over-priced homes.

I feel that it is important to emphasize to my clients, that it is not what they think their home is worth, what I think, or even what a buyer thinks — the most important is what the appraiser thinks. The sold comparables do not lie & they will be the same ones that the appraiser will use. Since the press is always looking for someone to blame, the appraisers certainly did take some heat for the foreclosure “crisis” & I have seen quite a bit more conservatism during the last year. The lenders are also getting much more sensitive to making sure that they are not loaning more than what the property is worth. So, it is not surprising that I am hearing more and more examples of properties that are not appraising, and since this is usually done closer to the closing date, it is always a particularly bad time to find out that the sale can not take place without a substantial price reduction.

This will generally not be an issue, if the property is priced reasonably close to the other solds in the neighborhood. I do not at all recommend it, but if one absolutely must test the market on the high end, be sure that this experiment only last for a couple of weeks and not months. Beware however, as in this market of reduced buyers, you might be missing THE ONE who would have seen the property while it was fresh & new, but who declined to view it due to its price. A low number of showings is a definite sign of being over-priced. Showings with no offers or other expressions of interest reflect negatively on the price and/or condition.

Thank you for visiting my blog! To be perfectly honest, I have never been a big blogger in the past but during my day-to-day business, I realize that I am constantly educating my clients. I continuously think to myself, “I should write all of this down”. So for the benefit of my past, present & future clients, I am going to catalog my real estate experiences & knowledge in the form of a blog. The primary focus will be real world real estate information, but so much of finding a HOME has to do with the neighborhoods & communities in which we live & what makes them enjoyable or interesting, so I am sure that I will delve into other things like restaurants, schools or shopping. I certainly like to hear when someone has a memorable meal or has had a really good experience with a handyman or painter, so I hope to create some categories that will discuss those types of things.

I particularly believe that what makes a truly successful & informative blog is the knowledge that can be gained from others, so I strongly encourage comments. I also hope to receive questions or topic requests in order to make sure that I am providing information people want. I live in Aurora, Colorado, so I am sure that a great deal of the community discussion will revolve around the Aurora & Centennial area. I do work all around the Denver Metro area so my experiences will not completely focus on my own community, but we do naturally focus on what is most familiar.

I hope that I will provide enough interesting content that you will want to subscribe to receive e-mails when something new is added to the blog. I also hope that you will refer it to your friends.