I’ve recently heard several people tell me they were just going to walk away from their mortgage. They said they were just going to move out, give the keys back and notify the mortgage company they can have the home back. Some claimed they were given professional advice telling them to move out and just walk away from the home. Claiming letting the bank have it back would be best and really wouldn’t hurt their credit as bad as a bankruptcy and it wasn’t the same as a foreclosure. It’s amazing how wrong these folks are!!

Walkaway trends started where many homeowners found themselves upside down on their loans, owing tens of thousands more than the current market value of their homes. If they did 100% financing or have very little invested in down payments, some owners reason, continuing to make payments, even if they can afford to, may be throwing good money after bad. These people better beware its going to hurt their credit maybe worse than a bankruptcy or default foreclosure would. Why, first of all walkaway’s will have IRS tax liability. Last year federal legised that allows homeowners who negotiate loan modifications or Short Sales with lenders and have portions of their principal debt eliminated to escape tax liability for the amount forgiven. Walkaway borrows, by contrast, have nothing forgiven, and the IRS may demand taxes on the mortgage balance they never paid. This can be a substantial sum of money. In many cases filing bankruptcy or short sales may be a better route. It may have a faster turnaround time for buying another home when you have things straightened out. I’m by no means giving legal advice; I’m just letting you know you need to discuss selling your home as a Short Sale first before you consider just giving the keys back or waiting on the bank to foreclose. It could save you in a number of ways.

I want to warn people that there are a lot of people out there that are taking advantage of people’s hardships. Web sites are now advertising “I can repair your credit” for $495. Some say they will show you how to hold creditors off and avoid the due process and collection all the other broke folks go through?? Another company is offering, “Send them $995 and they will send you instructions on how to live free for a year and not pay any mortgage payments”. There is nothing legit about these magical offers. They’re rip off’s!!

The best avenue for anyone behind on their mortgage payments is to try to work something out with the lender first. An experienced professional real estate agent can help you prepare you for what the lender will require. Then there are consumer counseling services and attorney’s that can advise you on what’s best for you in the short and long run. Your goal is to make things where your credit lines come back as quick as possible.

I recently read that when applying for a new mortgage after a foreclosure, mortgage underwriters tend to be more sympathetic down the road in regards to people that faced genuine financial hardships leading to the past foreclosure or bankruptcy. Walkway

Trying to fight off a recession the Federal Reserve has cut the short term interest rates another .50%. This takes their benchmark rate to 3%. The Fed has now cut rates by 1.25% in just 9 days. They claim this is to moderate growth but cautions there are risk that still remains.

So what’s up with mortgage rates? Since the FED announcement mortgage rates have climbed. Nationally mortgage rates have climbed .375% since the FED cut rates 1.25%. Why?? Because the rate cut is on short term money, not long term money. It’s meant to stimulate the business sector not the housing sector. I believe the FED will have to lower mortgages rates in the next 60 days to help the housing sector out. One of the main concerns in the mortgage industry right now is the fact foreclosures have risen by 75% over the last 12 months. This causes more risk load that’s factored into current rates. I firmly believe some people looking to buy a home put way to much attention on interest rates. I’m asked several times a day what the rate is?? My standard answer is “depends”. There are still many types of mortgage programs out there. I simply have to know more about your long term goals!

Here are some facts I found interesting on 30 year mortgages that Jim Cramer (Mad Money) published. Did you know that only 28 times since 1971 have rates been below 6%? That means 28 out 444 months were under 6%. Only 2 months have ever been below 5.50%, March 2004 at 5.45%, June 2003 at 5.23%. From November 1978 to November 1990 mortgage rates were double digits nearly every month – including the high of 18.25 in October 1981. So rates shouldn’t be an issue to anyone thinking about buying a home today. If they are, then they’re misinformed or making poor excuses.
Mark my words a turnaround in is INEVITABLE! Buy now!!

If you have a sub-prime mortgage on your home with a escalating interest rate then you may soon get some needed help from our government. If you’ve got one of those adjustable rate mortgages, you may qualify for a rate freeze under certain conditions. Standard fixed rate mortgages will not be affected.

The bailout is really designed for homeowners who are into trouble because their mortgage payments keep going up making it impossible for them to pay their monthly payments. If you have sufficient funds or income to pay your mortgage even if your payments have gone up then you’re not eligible for the rate freeze. You have to live in your home to qualify for the rate freeze, second homes and investment properties will not qualify for this program. You have to have taken the loan out between 2005 & 2007 with rates set to increase between 2008 & July 2010. You have to have less than 3% equity. You must be current on your mortgage payments or no later than 60 days. You have to prove you can handle the locked payment but not the higher payment. Analysts estimate this will help between 240,000 to 250,000 people out. That’s a huge number of homeowners with sub-prime mortgages. And there are many more homeowners with sub-prime mortgages that will not qualify for the rate freeze. This bailout is a half fix at best! Unfortunately many of the people that this rate freeze is trying to help out will eventually end up in foreclosure. We need a plan for other with a sub prime mortgage with diffirent curcimstances.

The current Bush administration is concerned about the fallout from the housing slump. The repercussions of the high rate of foreclosures will have a series of problems for the housing industry. Ten of thousands of American could be forced from their homes. This will slow consumer spending hurting the economy overall. All of this will cause home prices to fall even more.
This bailout deal will add some stability to the housing market, but it will not stop all the problems we face in the real estate industry right now. The same day Bush announced his plan, the Mortgage Bankers Association said that foreclosures had reached a record high in the third quarter. Mortgage foreclosures hit a record .78% up from the previous high of .65%. At the same time, delinquencies for all mortgages rose to 5.59%, from 5.12% in the second quarter. So we still have more people out there that will end up in foreclosure as time moves on. As I stated in a earlier blog, we haven’t hit bottom yet.

The Atlanta real estate market has had its share of higher than normal foreclosures this year. However it hasn’t drastically affected home prices in the North Metro Atlanta area. Supply and demand has softened our home prices more than anything else so far. It’s projected that we’ll get over million more people moving to the Atlanta area by 2011. Our job growth looks good. Atlanta will fair pretty well through this real estate downturn in the long run. The national news media wants you to think all the flood gates are open and look out below. The truth is the majority of the foreclosures are happening in three states, California, Florida and Ohio. Folks in these states will have a long journey back before they can say the word equity!! Reports claim some homeowners in these states have homes that are worth 37% to 40% less than 2006. Be glad you own a home in Atlanta. We’re actually project to have a slight increase in home values this year! But certain areas of Atlanta have been hard hit.

Keep in mind this rate freeze is really going to be a problem for the mortgage industry. Investors will think twice about backing mortgage programs that have been big money makers in the past due to uncertain returns. I don’t want to see anyone lose their house in foreclosure but Wall Street and many such firms have invested in securities that back your mortgage – there also tied into pension funds as well as mutual funds. Their clients include all sorts of people like you, teachers, fireman, policemen, etc. So……some people will have lower payments which are good……but other people will not have the kind of return on their investments which is bad for their retirement. We need much more of a fix to help the housing industry.

I’ve don’t believe the average person has any idea how many people are involved in the home buying process and the supply chain involved. The current mortgage problems are undermining what made America great! Long term financing!!

As many of you know I’ve been very optimistic as to how far home prices in Atlanta will fall and how long it will take for values to start moving up again. I still strongly feel there isn’t a bubble in Atlanta that’s just waiting to pop. Right now we’re going through a market correction. Atlanta’s population growth has us positioned for major housing needs in the very near future. But overall the US real estate market has had numerous issues and factors that’s compounding and causing some unexpected new problems that hurting the already troubled real estate industry. It’s not all because of the collapse of Sub Prime loans and that’s a fact. FHA will now finance homes up to 346K and has filled the Sub Prime void pretty well. Thursday the US government reported that new home sales hit their lowest point in seven years. Let me repeat…..seven years???

Builders are slashing new homes prices 7.5% on average in the US. With a bloated supply of new homes for sale it’s clear it’s a buyer’s market. The Atlanta Builders have clearly realized this and are making the price adjustments and concessions to try to stimulate sales. But the resale home market isn’t following this trend. Thus leaving the new home builders without many move up buyers.

I recently attended a Re/Max of Georgia Platinum Club meeting. The format was town hall, round table, questions and answers. During our time together a very successful agent made the statement “without listings your dead”. I replied “No sir, the fact is without good listings your dead”. Listings and good listings are two totally different animals.

I’ve been fortunate to have had a steady flow of business this year and I’m very thankful for people putting their trust in me. However, most of my commission checks this year have come more from buyers I represented, not sellers I’ve represented in 2007. I’ve always consistently had equal buyers to sellers in the past. But this year representing buyers has kept me alive. However, buyers are struggling to find good homes to purchase in the Marietta, Smyrna, Powder Springs, Acworth, Kennesaw, Roswell and Alpharetta areas. Over my 15 year career my average buyer looked at 17 homes before buying. If we looked at many more than 20 homes I would scheduled a meeting with the buyer to analyze what the problem was. Could it be that I’m not be listening to them? Or was it the fact their dream home didn’t exist within their limits??

Today my buyers are having too view 25 to 40 homes before finding the one they may consider buying. Nothing is knocking them over right now. Why can’t these buyers find homes? A huge percentage of the resale homes on the market have either pricing problems or neglected maintenance issues. Surprisingly most don’t have as much of a home pricing problem as they do with neglected maintenance issues. I don’t blame the sellers in regards to this situation. I fully blame Atlanta Real Estate agents for not telling the sellers the right price and the condition a home has to be in order to sell.

Regardless of what you’re selling, whether it’s a car, playground equipment, or a house, the consumer has to see the value. Something they feel good about. Something that will make them say “I’ll take it”!! Nobody pays full book value for a car with a dent in the fender and a busted tail light; nobody pays full retail for a swing set missing a sliding board. So how are you going to sell that house that needs paint and carpet?? You’re not!! If you cannot sell your home stand back and take a good look at the things you would do if you were going to stay in the home. Then do them!! Don’t wait!! Real estate agents need to be honest with their sellers and let them know buyers want move-in condition. Inside and out! We will all see a significant upturn in the market if the median priced home inventory looked better. If this price range home begins to move faster, then the dominions will start falling and higher priced homes will have buyers that sold the median priced homes. I believe one of the reasons the Atlanta real estate market has slowed is because the median priced home inventories aren’t in the best selling condition!!

WHATS HOT!

PRICING DIRECTION: As predicted the market has softened and prices have adjusted downward over the last several months. Many are saying the fed’s will drop interest rates towards the end of the 3rd qtr 2007 to stimulate the housing market. But right now mortgage rates are moving up.

HOMES THAT ARE PRICED RIGHT: This isn’t the 2005 real estate boom times. Forget cocktail party chit-chat. If you want to sale your home you better price it right for the current market. Not what homes in your neighborhood sold for 12 months ago? Sellers have to look at all the recent sales in their market not just one sale that brought top dollar! You’ll most likely make up for any downward price adjustment you took when you purchase your new home in this market.

ONLINE HOME VALUE SITES: I’m finding most of these sites aren’t up to date in th3 Atlanta area. It’s a great starting point if your thinking about buying or selling a home. But if you want accurate information call a professional real estate agent.

HOME OFFICES: Very hot feature for a home. We’ll see an increase in two home offices being in demand. With more and more people working from home commute times and gas prices with keep home offices in demand. I’m seeing more home offices that have built-in cabinets and work areas just like a professional work place. Windows and exterior doors are a huge plus. People will also look for homes located near alternative work spaces that will bridge the home office with places that will charge hourly rentals or monthly fees allowing SOHO’s to meet clients in a professional environment offering technology and privacy.

CAVING: Man and women alike are requiring more dedicated spaces where projects, hobbies or just a place to chill without being disturbed.

DUEL SLEEPING AREAS IN MASTER BEDROOM: Snoring rooms. I’m not kidding here. You’ll see a big demand for these as more are being offered in upscale homes. Snoring rooms are secondary bedrooms or sleeping areas within the master bedroom. People will love these as they are an alternative to the couch or guest bedrooms.

MODULAR BUILDING: I’m surprised we haven’t seen more of this here in Atlanta already. With the rising cost of building a factory production home is the only alternative. Don’t think double wide when I say modular building. Factories will construct panels (A-B-C) for framing that can be used in many different floor plans. The panels will be shipped and deliver to the job site. These panels could have electrical junction boxes, switches and HV/AC heat ducts already installed. The benefits are huge because of cost and time reduction. Quality control will greatly be improved. When finished these homes will look just like an on site stick built homes

SUBSTAINED DESIGN: Sustainable Design is based on three areas; energy conservation, indoor air quality, and resource conversation. Natural forms of energy cannot be ignored any longer. Wind, solar and geo-thermal will be in high demand in the very near future!

CABINETS: Start mixing finishes and counter tops. It was only a short while back when all my clients started wanting granite and maple cabinets in there new home. I told all of my associates that this was going to date homes quicker than avocado appliances. Many of these people kept picking the same granite and cabinet colors. I now have buyer looking at homes saying they already look dated. Oh those millennium years.

HOME WIRING: Category 5 or above, data lines and multi line phones are very important in newer homes. Its must have!

HIGH DEMAND: Large kitchens, upgraded appliances, custom laundry rooms, basements or even better a finished basement, custom garages with industrial type flooring, highly finished screened in porch’s with fireplaces, stone patios, rear stairs, pools or room for pools, swim & tennis communities, public schools, custom wall and window treatments, brushed door handles and hinges, mixing different counter tops in the kitchen. Three + car garages, mixed stone, brick and heavy wood exteriors.

WHATS OUT!!

AS IS MARKETING: Buyers see this as a red flag. There is way too much competition out there. Don’t chase buyers away. Also don’t except a contract and inform the buyer their welcome to have a home inspection but you not willing to do anything. Let time take its course.

BUYER OR AGENT INCENTIVES: Free cars, gas credit vouchers, gourmet dinners and Plasma TV’s don’t sell homes anymore. Realistic pricing does!! Cut to the chase and drop the price if incentives are being considered! Agents chasing or steering their clients towards homes with these types of incentives are not looking after their clients best interest in some cases.

ENDLESS OPEN HOUSES: The OPEN HOUSE pendulum has swung the other way. Internet placement is essential. Only 1.5% of the homes in the nation sold because of an OPEN HOUSE. With gas being over $3.00 a gallon people don’t drive around looking at homes like they use to. Keep in mind they can surf the web for about $1.00 a day. Many agents are scared to be alone in an open house. It’s just a dinosaur marketing mentality. Home buyers have moved past OPEN HOUSES I’m just wondering when some sellers will?

FULL PRICE OFFERS: Not in this market. If a home is priced right for the market you can expect to see offers within 2.5% of the true market value. Don’t confuse buyer interest or lookers with a hard written contract from a willing and able buyer. Negotiate every contract presented to you till the buyer signs or walks.

FADING TRENDS BUYER TRENDS: Small bedrooms, lots of glass on upper kitchen cabinet doors, bowl shaped sinks that are mounted on top of a vanity, stainless steel appliances, granite counter tops are starting to fade, oversized front foyer staircases, 2 story great rooms, sponged wall painting, home remodeling projects not done to professional standards, drop ceilings in basements, any brass fixtures or brass shower frames, wall paper, painting old kitchen cabinets, bamboo or laminate flooring.