Eileen Landau, ABR, CRS, e-PRO

According to high government sources reported by both the New York Times and the Washington Post late last night the government is planning to take control of both Fannie Mae and Freddie Mac.

This move, which I thought might have happened last weekend, will protect the quasi-governmental agencies while they continue to operate.

According to the NY Times, over 70% of the mortgages written are backed by either Fannie or Freddie. As part of the take over, there will be changes in the operational aspects of the company.

The take over will also wipe out both the common and preferred stock holders. And, as many pension funds held stock in these companies that will make some people very unhappy.

The take over will end up costing the taxpayers lots of money. Expect billions. And, expect our taxes to increase to cover this. But, it will keep the fragile mortgage market together. And, we need that.

Those of you old enough to remember back in the early '90's when the government also did a take over of Long Term Capitol Management, will know that these forced moves insure against greater chaos.

Can Fannie and Freddie Survive?

“Washington-based Fannie Mae and Freddie Mac, have lost a combined $3.1 billion between April and June,” according to an article in the Chicago Tribune today, August 20, 2008. “The two government-sponsored companies are the largest source of funding for home mortgages in the U.S,” the paper added.

Now we know that government can not, repeat, can not, afford for these lenders to go under.

So a rescue plan will be devised…probably by the end of the year.

And, who will pay? Why, you and me and every other tax payer. But, keeping these quasi-governmental companies alive is necessary, as they’re the only ones doing low down payment mortgages.

And we thought that a $3 billion loss was a lot of money. Wait till this is over…and the total will probably reach $5 billion.

Could this have been prevented? Yes…but that’s another story.

© 2008 Move UP to Naperville Blog, Eileen Landau

Yesterday I was out "on tour." That's where listings are available for agents to see without an appointment.

And, I noticed the following at one of the listings:

1) the lawn was brown and weedy

2) the cement pad at the front door was severely cracked and coming apart

3) there were weeds in the landscape area near the front door

4) the screen door was ripped

5) there were rust stains on the front door

Now, these were just the front door impressions. In today's market, when a buyer has a choice of 25, 50 or even 100 homes in his price range, if your home doesn't have curb appeal you're not going to get the buyers into the house.

Remember, that almost all of our listings are online and they either have the exact address or a map which shows the approximate block. I know that most of my buyers do drive-bys of property to cull the list. They'd take a pass on this one.

So, what are the things that sellers need to know in today's market?

1) Price

2) Location

3) Condition

4) Financing

Price: It can't be low enough! If all the similar homes have sold between $375,000 and $390,000, then don't expect a buyer to pay $400,000 or more. It's not going to happen!

Location: Next to freeways/tollways or busy commercial streets, electric high wires, landfill dumps, devalue the property. Could be by 2%; could be by 10% or more.

Condition: It must look like a model! Store your "stuff." Or better yet, have a garage sale and what you don't sell, donate. Hire a home stager.

Financing: FHA/VA financing permit a first-time buyer to get into a property. Don't hold out for "conventional" financing. And, do offer to help with closing costs.

Now, the above only applies IF you're motivated to sell!

And, if you're motivated to sell...then contact me!

C Move UP to Naperville Blog, Eileen Landau

Some more interesting Naperville Stats

Our Mainstreet Organization of REALTORS publishes monthly stats for each town in the Chicago Metro area.

Here’s a comparison of March 2007 and March 2008

Wow! As there were 1179 homes on the market this March. So, I guess this is NAR’s definition of a “slow-down.”

And, have we hit bottom yet?

This market really brings back memories of the early 1980's.

Yesterday, I talked to a client from Michigan who has decided to rent a house in Naperville for the next year. That was in the morning. In the afternoon, I received a referral from a Florida agent. Again, his client wanted to rent a home in our area. And, yes, they can search thru our rental listings. There are over a 100 properties for rent, ranging from one bedroom condo units to five bedroom 2-story homes priced over $3000 monthly.

Currently, I have five clients coming to our area from California, Michigan, Florida, New Mexico and Nevada who are looking to rent as they can't buy. Why? Well, their homes are on the market...unsold...and they are afraid of owning two homes. I can't blame them. It's a tough decision to leave your home vacant and unsold.

The people who are making these decisions are doing so based upon their current jobs. If a new job in Naperville offers better salary and benefits, then the move is made. And, life goes on.

Back in the early 1980's, when mortgage rates climbed up to 18%, many people decided to rent also. They waited for several years until the rates came back down to 12%. Then, they bought. This will probably be what happens here. We need another two years for the market to get back into balance.

In the meantime, many Naperville agents have become rental agents.