Eric Murrietta

It's mid-week and you are wondering, "How can I get a couple of these buyers off the fence???"

They keep asking:

• What if prices drop further?
• Have we reached the bottom of the market?
• Should I look for a short sale or a foreclosure?
• Isn't it still a buyers market? Can't I put a low bid on the property, I don't want to offer full price?

All that said; here are some little tidbits of information to counter-act those common questions.

• Prices have dropped 53% since the peak median price in June of 2006. However, the current market shows that for the past three months the median price has gone up from $116K in April of 2009. Let's say there is a slight possibility that the home prices drop 5% in the next year. Consider though that most people (outside of VA and USDA Rural Housing program) are committing at least 3.5% towards the down payment. Worse case scenario they lose 1.5%. Further, consider that if after we lose the last 5% we begin seeing normal/historical levels of 3% appreciation, then after 14 years of living in the home (this is the Census Bureau's estimate of how long someone owns a home after purchasing it) the homeowners have gained 37% in appreciation. On the down payment of $4,375 (initial investment) and the future potential sale of $171,250 in 14 years the borrower stands to have a return on investment of 1000%. Clearly a scenario in which the borrower wins, even if prices drop further.

• Like anything in life, everybody looks for the best deal. The question isn't when the best deal happens it is what side of the deal you want to be on. For example, would your rather buy right before the bottom of the market or right after the bottom of the market? I vote for right before the bottom (even if you lose 5% - see scenario above). The reason right before the bottom is the best is because you, as the buyer, still have the advantage. If you ask for the fans to come with the house in a market where the sellers are eager to sell, you will have an easier time getting them. If you ask when the sellers are having an easier time selling their item, they might want you to pay for the fans. It's just a classic example of why buying right before the bottom, when people are fearful is better than buying when people begin to get greedy. Don't give the seller that opportunity.

• Short sales are on the rise. In June, there were 9,350 total sales per ARMLS. Of those 9,350, 13.4% were short sale and 57.2% were foreclosure. That is highest number of closed short sales and lowest number for foreclosure percentage since the beginning of the year. However, the moratorium on foreclosures was recently lifted and so we may see an increase in that percentage in the next few months. Why would you steer the client away from short sale? Time, Effort, and most important cost. Short sales on average cost $82.88 per square foot while Lender Owned homes cost $63.36 per square foot. Basically there is more foreclosure inventory and a better price to be had for that foreclosure inventory.

• Depends on your Market!!! Homes from $349,999 and down have a maximum of 4.6 months of supply, while homes under $99,999 have only 1.9 months of supply. Those markets are quickly becoming a sellers market, where closing cost contributions and any help from the seller will be limited. However, if you have a savvy borrower that can get into the $350+ range, they may still make out like a bandit in this market. According to ARMLS, the inventory jumps up to 7.4 months of supply from $350K and on range. You might still be able to get a lower offer into a $400K property and make it fly, perhaps even to the point where they could use the max financing for FHA of $346,250.

See it really depends on easing the minds of your client. It is never easy, but with statistics and examples, it is easier to persuade someone that they are making the right move, best offer, and are generally moving towards their home purchase in a manner that sets up for success and limits failure.

Best of luck and Keep on Selling!

All statistical data taken from ARMLS for Greater Phoenix.

Rates were up, then down and have now closed the week where we left off last week. Overall though, they are faring better towards the end of this month, then they did at the end of June.

REMINDER: MDIA (Mortgage Disclosure Information Act) went into effect yesterday so be on the lookout for lenders that aren't on top of the deals because too many changes can cause delays to closings.

Week In Review:

• Economic News:
  • Value of homes increased for the first time in 3 Years...that's right the article discusses how the value of homes has increased, however slight the impact was there is still cause for concern as pointed out in the article, "Is the Housing Market Recovering?" by Anthony Mirhaydari. My opinion, the lower end properties have reached their low point with a few oddities and deals here and there, the higher end homes though may still see some dropping in prices as the loss of jobs and economy impacts the wealthier individuals.
  • Gross Domestic Product dip was smaller than expected - We aren't out of the "recession" as the economy is still shrinking, but we are making progress. Some top economists believe the businesses have made the "necessary adjustments" and will begin to grow through the summer. The only concern is that the Unemployment Rate is still climbing and expected to hit 9.7% when the July numbers are made available. That would mean 1 in 10 people don't have jobs. That isn't so good.

• "Cash for Clunkers" - A slight success: Call it what you want, but this little gem of a program still proves that we will do whatever we can to get stuff for cheaper. The $3500-$4500 incentive to trade your old "clunker" in for a newer, more fuel efficient car had an impact on car sales and on the availability of the government funds. The government, because we all had such beat up cars (wink, wink), had to allocate more money to the program because people were being turned away. I get the idea of the program but am still amazed at our willingness to take on more debt in an effort to get a newer car.

For example: Say you own your 99 "clunker" free and clear, it runs well and you can put another 60K miles on it and you average about 15K a year...so you have four more years with the car, if you maintain it. Now with the incentive you go look at a Toyota Camry Hybrid and its MSRP is $26,150.

The dealer probably won't come down much because of the program, so let's take off $4500 and your new base price is $21,650. Now they aren't offering additional incentives but they do give you a rate of 4.5% on a 72 month term. You bring in an extra $3500 of your own money to put towards the car. So you are looking at $18,150 plus taxes (we will leave out the fees) which brings the total to $19,656.45. Your monthly payment is now $322.56. So for the next six years you will be paying the $322.56 a month.

Let's go back to the top. You keep your $3500 in the bank and begin adding the $322.56 a month to it for the next four years and at that time you will have $18,982.88 in the bank by keeping your old car. Just shy of the total price but two years short of what you still owe if you had purchased the car. What does it all mean? Pretty simple you save yourself $7,734.24 over the two years that you don't have the loan. Factor out the incentive and you still lost $3,234.24 by using the "cash for clunkers" program. Not only that but you are saddled with HAVING to pay the $322.56 a month vs. the flexibility if you were to need to allocate it somewhere else.

Nothing's perfect and you would have to assume the maintenance costs on the new car would be similar to that of the old car during the same 4 month stretch, but in reality it might be a better way to go. Maybe the incentive isn't so great after all - but it doesn't keep us from buying new stuff when we have a little incentive.

• Couple Questions to you As Realtors??? - You can respond by commenting in the post.

• • Would you prefer more transparency in the lending side of the equation? (i.e. automatic email updates during the loan process on appraisals, docs drawn, etc.)
• • How much knowledge do you prefer on the loan side (i.e. guideline changes, updates, basic loan information, etc.)? A Ton, Some, Not Very Much, Very Little, None
• • What is the best way that a Lender can help you as the Realtor? (Listing Fliers, Phone Calls, Open Houses, etc.
• • What are some creative ways that a Lender has helped you or could help you?
• • What is the number 1 most important attribute in a Lender that is working for your client and ultimately, you?

Just some questions I have wanted answers to for a long time.

Thank you and have a great weekend.

Another week has come and gone but the heat still remains. We all live in Arizona for a myriad of reasons but usually the heat isn't the first one that comes to mind. What I can say is that when it cools off and we aren't dealing with snow or anything of the sort we will say, "This is why we live in Arizona."

With that in mind, I thought I would give you some information on some "Cool" Deals that you could take advantage of over the next couple of months.

1. Desert Ridge Marriot -At the Desert Ridge Marriot they have a couple of great deals that you could take advantage of. One of them is a "Golf for Two" package and the other is a "Spa Package for Two" - the spa package can be with a friend or a loved one. These packages range from $249-$259. That really is a great deal for a night at a resort, a spa treatment or golf and even breakfast for two people. Not too mention they have a great "lazy river" where you can relax during the heat of the day. A great way to COOL off in the summer.

2. MOJO, A cool treat in the summer heat - Basically my wife kept telling me about this place called Mojo's. She would say, "They have the best yogurt and it's fun because you get to choose your own toppings." My response was always a bit less than enthusiastic. Don't get me wrong I listened but I thought, "Eh, it's just yogurt." Then last Sunday before our foray to see "Transformers: Revenge of the Fallen." (Side note: Great if you like to see things blow up but I started to fall asleep at what were maybe the most important parts of the movie. Guess that tells you how important they really were...not very.) I had promised that we could get Mojo's. Best idea I ever had. It was fantastic and though it melted quick because of the intense heat, it was definitely a great treat for the summer time heat. They have them at the Biltmore, Tempe Marketplace, and at City North, so you can find the location that is best for you and go.

3. Ice Skating - Okay, so it is a bit lame and a tad cliché but in all honesty where can you go in AZ where you have to where pants and a long sleeve shirt because it is cold. Not too many places, unless you are like my wife. She has to carry a jacket because she gets cold inside restaurants during the summer. Me, nope! It takes me all through dinner just to cool off and then BAM, right back into the heat. But in all seriousness, it is a cool activity, both figuratively and literally, that you can do in the heat of the summer. Check out the local rinks...you can google: Polar Ice AZ, Arcadia Ice Rink AZ, Ice Den AZ and they will all pop up.

All right...hopefully it gives you some ideas for the weekend or for later this summer. Either way, it is sure to be warm for a while so you have time to figure out what you might want to do.

Rates are slightly improved this week from last week (see the attachment). Especially check out the rates on the 15 YR Loans, they are really pushing those right now so if a borrower could swing it, that might be the way to go.

Do You Wonder...

* What is Causing Delays in Loan Fundings?

* Why are Appraisals so Difficult to Get?

* Are there any new Mortgage Products available?

* Why can't my client get Mortgage Insurance?

Stop Wondering and find out at the "Obtain More Buyer's" Seminar. You will learn about snags in undewriting, pre-approval vs. pre-qualification, credit concerns, and much more.

It will help turn those serious leads into buyers!

WHEN: THURSDAY, JULY 23RD, 2009

WHERE: DHI TITLE - ARROWHEAD

7025 W. BELL ROAD, STE. #2

GLENDALE, AZ 85308

COST: FREE!

In a market where the buyers are beginning to make themselves noticed, take the guesswork out of the loan process and find out how to be successful in screening your potential customers.

Call for more information: 602-670-3272

We forget that life is cyclical, history often repeats itself, and nothing is really new under the sun.

Such is the way with rates - though recently it has been more difficult to really "predict" (if that word can even be used) what may happen with rates.

We are clearly in a different rate environment than we have been since December of last year, but remember that things could be much different - see interest rates in mid 1980's.

The President of 1st Advantage Mortgage posted this explanantion for the trend patterns with rates and if it does prove to be true we will start seeing some downward shifting of rates in the next 4-6 weeks.

Hope you enjoy the video.

http://www.1amtv.com/lueken/00360-01.html