Kay Kammeyer

When will the nation's property values begin to appreciate again? This is the $64,000 question that real estate professionals, investors, and mortgage professionals would like to know. The truth is nobody can accurately predict the return of the real estate market. Like everyone else, I can't predict the end of this crisis either, but what I can do is tell you what will have to happen to facilitate that change. The answer is quite simple: America must reinvest in herself once again. Without an investment, real estate is as worthless as the dollar is today.

Think back, or read a history book, about how families in the '40s and '50s used to buy homes. Young couples lived with mom and dad during the "courtship" prior to getting married, until they had saved 20% to put down on their "dream home". They made an investment in America, (i.e. the American dream). In the years that followed we have devalued that investment in lieu of credit and the easy access to it. Property values rose artificially and our nation became addicted to credit.

The value of the dollar has been demolished due to the same principle. When we place value in assets based on their ability to be easily bought and sold versus the value that has been invested in the asset, we devalue its worth. For example, two years ago I could have bought an $800,000 house (and I assure you that I cannot afford a house that expensive). The owner of that asset (the $800k house) placed value on his asset based on the availability of buyers like me who could buy the home. The problem is, this homeowner probably had less than 5% invested in the home. Where do you think that homeowner is today?

Had he put 20% down on his home, he would then own a valuable asset in which he has a real investment. This outlay of cash forces him to buy and sell his home in the same manner he would move an $800k investment around in the stock market - very carefully. Thus, the home has REAL value. However, having bought the home with little or no money down, the asset became disposable and so follows the real estate market.

So, as I said earlier, I cannot predict when the real estate market will bounce back, but I can tell you what needs to happen before it does. America needs to reinvest in herself by getting back to solid buying and selling principles. This strengthens home values, which encourages investors who employ builders who employ carpenters, painters, real estate agents, loan officers and so on. America was built on the "American Dream" which has turned into the "American Nightmare"; she can only be rebuilt by hard working Americans, not by Wall Street.

Last week I asked the question, "How do I maintain this positive attitude?" Well here's how I do it. In "Winning through Intimidation" author Robert Ringer talks of the importance of maintaining a positive attitude through the assumption of a negative result. In other words, Ringer suggests that you be prepared for the worst case scenario while at the same time putting your best foot forward to get the best possible result. This will take the mental pressure off of you and allow you to focus on getting the job done. This approach, I believe, allows you to be positive and realistic in your mental assessment of buying and selling your home.

There's an old expression in the media business, "If it bleeds, it leads." In other words, the media loves to cover negative news more than positive because it sells better. When the real estate market is in turmoil, the media loves to run these negative headlines to keep reminding people how bad things are. When buyers hear the bad news, it affects demand because the negative news drives fear, which makes buyers worry about whether the time is right to buy a home. Is the media simply reporting the news or does the media actually affect the news in this regard? The answer is obviously both. The media reporting negative news alone can't simply shape a real estate market. However, since perception is often viewed as reality, when buyers are spooked, they may shy away from buying. This affects lenders, builders, real estate agents and other professionals who rely on the real estate business for their income. It becomes almost a self-fulfilling prophecy because things get worse and the media constantly reminds us how bad things are.

But, are things really as bad as the media reports? The numbers certainly do reflect falling home prices and rising foreclosures. When you hear that foreclosures have doubled or even tripled in a particular area, this may sound catastrophic at first until you realize that the vast majority of homes (97-99%, depending on the local market) are NOT in foreclosure! Despite all the doom and gloom, there's always a buyer for a well-kept home offered at the right price and terms. In short, don't always pay attention to the doom and gloom media reports if you want to keep a positive attitude and sell your home fast!

Well done is better than well said. You sometimes have to take a whole lot of action to get your house sold in a slower market. In a good real estate market, people can sell a house fast, so when things slow down, they figure, "Oh well, there's nothing I can do." Nothing could be further from the truth. Not only is there something you can do, but there is a lot you MUST do to get your house sold. However, it's not just about working hard, it's about working SMART. You need to do things in the right order and in the right way to get the proper results.

However, don't focus too much on perfection before you take action. You're probably familiar with the phenomenon of the "C" student who outperforms the "A" student in real life. This is because the "C" student is often satisfied with having a "can do" attitude. The "A" student's mentality often leads to paralysis of analysis and inaction. In other words, the bottom line is getting your house exposed to as many buyers as possible, not getting it done perfectly. For example, many sellers want to show their house only when it is convenient to them and the house is in perfect shape to be shown, instead of when the buyer is ready. While showing a house in its best condition is a priority, it doesn't make senses to put off a ready and willing buyer for too long just so you can have everything perfect.

Many people reading this are prone to inaction because of fear of doing it incorrectly. Remember, it is not a matter of doing it perfectly, but putting forth you best effort! As I stated earlier, a lot of effort at a "C" level beats doing less things at an "A" level.

Lack of knowledge certainly makes it difficult to sell a house fast in a slow market, and is probably the single biggest drawback for the average person. Most homeowners only have the opportunity to sell a few houses in their lifetime and often need to rely on professionals to do the work. Thus, the average homeowner does not have enough practice and experience to get really good at the task at hand. In fact, a majority of real estate agents in the business are hardly good at it...the top 20% of agents in any market do the vast majority of the business! Taking the time to learn what to do is an important part of the success in selling your house. There are two types of knowledge when selling your home, general and specialized. Certainly there are a lot of materials floating around out there offering general knowledge, but only an experienced real estate agent ( like Kammeyer Realty Group) will reveal the specialized knowledge you'll need to get your house sold fast and at the highest price you can get in your market!

Keep that positive attitude!!

By:Kay Kammeyer, Kammeyer Real Estate Group, F.C. Tucker
www.KammeyerRealtyGroup.com

Are you wondering how much of a down payment it takes these days to purchase a new home? Well, if you've listened to the nightly news since the credit crisis and mortgage meltdown began, you have probably heard that it requires a down payment of at least 20%, and a minimum credit score of 700. While it is true that mortgage guidelines have tightened in the last two years, it is not nearly that difficult to obtain a mortgage and realize the American dream.

A standard FHA loan currently requires only a 3.5% down payment, and a minimum credit score of 620 for most lenders. In some cases, borrowers with credit scores of 580 to 619 are also eligible. These guidelines are a far cry from the what the press has been reporting of late. It's is still reasonably easy for most Americans to buy.

Let's take a look at the different types of loans and their requirements:

FHA Loans- (Federal Housing Authority, which provides mortgage insurance for FHA approved lenders.)

As stated above, FHA requires a3.5% down payment. FHA does not have a minimum credit score requirement, but lenders place their own requirements and currently credit scores of at least 580 is what they are looking for. The maximum loan amount for FHA loans in Indiana is $271,050. If you are looking to borrow a higher amount than this, you may need a Conventional loan.

For more details on FHA Loans: http://www.indymortgagesource.com/FHALoans

Conventional Loans - There has also been a lot of talk on the news of late regarding GSE's (Government Sponsored Enterprises). The GSE's you have heard about recently are Fannie Mae and Freddie Mac. These are two separate entities that serve basically the same purpose.....they establish loan guidelines and facilitate the purchase of loans from Banks and other financial institutions to free up cash for additional lending. Fannie and Freddie loans are called Conventional Loans and have different requirements than FHA loans. The down payment minimum is typically 5% , though we have an option available for a 3% down conventional loan product, and the maximum loan amount is $417,000. Minimum credit scores vary depending on the down payment amount, but suffice it to say that these loans are for stronger credit borrowers than FHA.

There are a couple of ways to purchase a home with less than FHA's 3.5% requirement:

VA Loans - (Veterans Administration) VA loans are reserved for Veterans of the armed forces. The VA offers home loans with no money down to qualified veterans. Most lenders are requiring a minimum credit score of 620. For VA loan details: http://www.indymortgagesource.com/VALoans

FHA Loan with a gift -Conventional loans mandate that your minimum down payment is made from your own money that you have saved up. FHA will allow you to receive a gift from an immediate family member to put towards the down payment and purchase of your home. The gift donor signs a gift letter stating that the gift does not have to be repaid.

FHA Loan Purchasing a HUD Property - A borrower taking out an FHA loan to purchase an eligible HUD home (a foreclosed property owned by HUD) may purchase said property with a down payment of only $100. For more details: http://www.indymortgagesource.com/HUDHomes

USDA Rural Housing Loan - (United States Department of Agriculture) Rural Housing loans are available with NO down payment. The property being purchased must be outside of city limits and there are income restrictions . For eligible properties and income limits: http://www.indymortgagesource.com/RuralHousing

By: Steve Jackson
Mortgage Consultant
Dilger Financial Group, LLC
www.indymortgagesource.com

More than 1,600 Central Indiana homes pended in February, with two counties reporting significant increases compared to the same time period last year, according to pended sales statistics compiled by F.C. Tucker Company. Madison County posted a 14.7 percent increase, and Boone County sales rose 11.4 percent.

February pended home sales in the nine-county area were down 20.6 percent with 1,643 homes pending compared to 2,069 in February 2008. Year to date, overall pended home sales are down 19.6 percent compared to the same timeframe in 2008.

Available homes for sale in the nine-county region dropped 14.3 percent in February 2009 with 15,377 homes on the market, 2,566 fewer homes than in February 2008. Three counties experienced significant inventory declines. Shelby County experienced the greatest decrease in inventory at -23.4 percent, followed by Marion County with -20.4 percent and Hendricks County at -17.2 percent.

"The continual drop in inventory is a good sign for the overall market," said H. James Litten, president of F.C. Tucker Company's Residential Real Estate Services Division. "It's a strong signal that our local market is strengthening."

Tucker's data also indicates that one Central Indiana county - Johnson County - saw an increase in average home prices for the second consecutive month, compared to January and February of last year. Homes in Johnson County sold for an average of $141,208 in February 2009, compared to $135,178 the February 2008, a 4.5 percent increase in the average home sales price.

"Conditions have been improving for home buyers," said Litten, "Improved affordability, low interest rates and first-time buyer tax credits are catching the attention of buyers who may have otherwise waited on the sidelines."

I am sure that you all have heard the expression, "Attitude is everything." This is so true. Right now, it is simply your attitude and mentality that will give you the edge over others who are trying to invest in this highly volatile market and buy a home. You've undoubtedly heard the importance of thinking positive and having the right attitude. Most people are smart enough to know that this statement is true. Some people reading this will argue that a positive attitude doesn't always work. Well, maybe not, but I know one thing for sure...negative thinking and a negative attitude NEVER works! So your only choice and your only chance for success in finding a new home in today's market are to pick the positive things in life and maintain a positive attitude at all times!

I once read a fortune cookie that said, "An optimist is someone who tells you to cheer up when things are going his way". I know that if you are reading this, times may be difficult and you may need serious answers to your burning questions such as, "Will my new home be a sound investment and grow in value?" There are many answers to this question, but first I need to explain to you some items of relevance.

About every ten to twelve years, real estate values on the average tend to double in many areas. As an example, in the 1920's, the original colonial homes sold for just under $2,500 in Long Island, New York. Since then, real estate prices have doubled almost 8 times in the last 80 years! That averages out to a 100% increase approximately every ten years. Now that may not be the case here in central Indiana, but most homes in central Indiana historically have increased on the average ranging from 35% - 65% over a period of ten years. An interesting note to this that about every ten to twelve years, real estate values must correct before they enter their next growth cycle.

The process of real estate value correction is three steps forward and one step back. For example, imagine a major value increase occurring in three steps of one-third parts each. The last market cycle of the 1980's was one in which real estate values nearly doubled, followed by a correction of the early 1990's, which equated to a 20-30% decrease over a three to five year period. This cycle was then followed by the post 2000 cycle boom where values increased substantially from the high point of the previous cycle. We are now in NATURALLY OCCURING phase of the correction in the cycle. This essential and beneficial adjustment gives the market a time to reflect and re-gather momentum and strength for the next major increase in value of the cycle! Please rest assured that this has occurred time and time again because the long-term demand for housing is still growing at an exponential rate based on population growth to almost double in the United States by the year 2050! These people will be in demand for a place to live, thus driving prices higher as it naturally has for the last 100 years!

Since we now know that real estate values will grow based on past history, it's not a matter of if; it's just a matter of when. If you are planning on staying in your perspective home for more than five years, now is the time to buy! If you are still a little apprehensive about purchasing a home, would you by your parents' home for what they purchased for it? I bet your answer would be "YES"!

How else do I maintain this positive attitude? I'll answer more in next weeks article!!

Keep that " Can do"attitude!