The House For Sale in the Real Estate Market

When hunting for a house for sale many questions come to the mind of the buyer. The house for sale falls under a special category and also a special type.

The house for sale in the real estate market may belong to either of three categories - a house for sale with a clear title, a house for sale that is under the cloud of foreclosure and a house for sale that is foreclosed upon by the government.

In the current mood of the real estate market in USA the general category of house for sale with a clear title is in the background being hard pressed by the onrush of foreclosed units that are pushing down prices drastically. But although this category of house for sale may be relatively costly it is safer as regards papers and conditions.

Under the foreclosure house for sale category there are three divisions - the pre- foreclosure house for sale, the house for sale at the foreclosure auction and the REO or real estate owned house for sale after being repossessed by the banks. Short sale takes place during the pre-foreclosure stage. Prices are low and the condition of the house is in good shape. The cheapest house for sale are those found in the foreclosure auction but the condition is the worst and one is not allowed to inspect the units as these are sold on as-is basis. The REO units are clear of all liens but the price may be slightly higher. However banks are offering huge discounts to offload the overwhelming number of repossessed homes they are sitting on.

There are many types of houses for sale in the real estate market. The Duplex generally refers to two stacked apartments on different floors. The two family-homes is a small apartment house. In USA an apartment must have bathing, cooking and sleeping facilities. These are sometimes referred to as flats. An apartment tower consists of block or flats. A condo is an individual apartment with certain common areas. A garden flat is at ground level in a multi-level building. The penthouse is on the top level of a multistory building. One of the most popular is the studio or bachelor apartment that consists of single room with a kitchenette and a bath. The lofts or the warehouse conversions are also popular. The garage apartment is atop a garage and if the garage is not included then there is a separate entry to it.

7 Tips on Real Estate

Inch your way in the world of real estate investment with the help of specialists.

Rental and Sales
You make money when you buy a property, not when you sell. If you pay too much for a property that you never have to recover as many times as you have had a better engine negotiations. The trick is to have a formula, such as not paying six to eight times the rent that you plan to make the first year. Some experts say the key is to make sure your rental income will cover costs. Anyway, sure there's enough cash reserve on the left for more surprises. Rents are not guaranteed. What happens when your tenant is more than you? It is better to have savings of at least eight months of payments to emergencies.

Get a partner
Real estate investments tend to require a huge amount of investment capital. Expert advice for an investment partner to help split the bill and risk. It need not be 50-50, but it does need someone to trust with your life, because you'll be trusted with your money.

Active or passive?
A point is not an asset unless it produces income. Anything that is a product liability costs. In other words, a person can buy a house think it is an asset. In fact, the house is a responsibility because the person would work to maintain the property and the home loan, plus interest. However, a home can be a form of long-term investment if you do the math right.

Learn from experts
What to buy, where to buy, and how to make a good investment all boils down to research. Talk to friends, real estate investors, financial advisers and family members. The final choice of your course, but talking to people and do your research online will help you make the best choices.

Savage Salvage
If you are in a situation of being lost, unless you see a recovery in the next 12 months, it is best to make your loss and review your investment strategy. If this is a home, spruce it up with a new coat of paint and arrange appointments with other buyers. An expert tip will arrange appointments with all interested parties at the same time, to generate interest and refine the results on all property has to offer.

Opportunity vs. Risk
The difference between opportunity and risk is to make an informed decision. Large companies conduct due diligence on a purchase and the same individuals. Run a check on the reputation of the sponsor, location in the long term, the proposed developments, improved infrastructure, legal issues and price levels. The only difference between amateurs and professionals is the amount of research.

All about mathematics
Real estate investment is not rocket science, but you must be able to do the math. Overstatement of revenue and expenditure underestimate May very well make a profit loss. Turnover should include your cash management, and funds generated by the property. Consider also that the asset and the leverage of funds you have already give you the profit margins higher. For example: you bought a property of U.S. $ 100, with 000 species. After a year, well appreciated by 10% and is now valued at USD110, 000. The sale of this house you earn 10% return on investment after 1 year. Otherwise, you can use the $ 100 U.S., 000 as a deposit of USD1 million home, where you can take a mortgage on the balance. After a year of 10% to assess the value, it is now worth USD1.1 million. Of course, you must take into account legal fees, laws, if they let you transfer the property in a short period of time.

U.S. mortgage applications fall to 7-month low

The volume of mortgage applications filed last week dropped a seasonally adjusted 18.9% from the week before, as refinancing activity plunged, the Mortgage Bankers Association reported Wednesday.

U.S. mortgage applications plunged to a seven-month low last week as demand for home refinancing loans tumbled 30 percent, data from an industry group showed on Wednesday.

The drop does not bode well for the hard-hit U.S. housing market, which has been showing some signs of stabilization, with sales rising and home price declines moderating in many regions of the country.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications USMGM=ECI, which includes both purchase and refinance loans, for the week ended June 26 decreased 18.9 percent to 444.8, the lowest reading since the week ended Nov. 21, 2008.

Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, said mortgage rates are just one factor driving potential borrowers.

"Rising unemployment, concerns about job security, potential buyers' inability to sell their existing homes and problems with appraisals coming in too low are all weighing on demand," he said.

"The government needs to take more aggressive action to bring mortgage rates back down to below 5 percent as that seems to be a key level for the market," he said.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.34 percent, down 0.10 percentage point from the previous week, but significantly higher than the all-time low of 4.61 percent set in the week ended March 27. The survey has been conducted weekly since 1990.

Mortgage rates remained above 5 percent for a fifth straight week, but were well below year-ago levels of 6.33 percent.

Thirty-year mortgage rates had mostly been on a downward trend since the Federal Reserve unveiled its plan to buy mortgage-backed debt in late November. But the Fed met resistance in the bond market in late May and early June.

Treasury yields, which act as a benchmark for mortgage rates, rose sharply during that period. Treasury yields, however, have come down recently, allowing rates to fall.

The MBA's seasonally adjusted purchase index USMGPI=ECI fell 4.5 percent to 267.7.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 9.2 percent.

WEEKLY REFINANCING ACTIVITY PLUNGES

The Mortgage Bankers seasonally adjusted index of refinancing applications USMGR=ECI decreased 30.0 percent to 1,482.2, also the lowest level since the week ended Nov. 21, 2008.

Refinancings accounted for 46.4 percent of applications, down from 54.0 percent the previous week and significantly lower than the peak of 85.3 percent in the week ended Jan. 9

The U.S. housing market is in the worst downturn since the Great Depression and its impact has rippled through the recession-hit economy, as well as the rest of the world. Economists contend that the economy might not emerge from its slump unless the housing market stabilizes.

The shares adjustable-rate mortgage activity increased to 4.3 percent in the latest week, up from 4.1 percent the previous week.

Fixed 15-year mortgage rates averaged 4.81 percent, down from 4.93 percent the previous week. Rates on one-year ARMs decreased to 6.52 percent from 6.54 percent

Board of Realtors: New prez for tough times

When Kimberly Evans first tried her hand at real estate in 1985, it was in Texas, where, she says, “We had more foreclosures than new sales and mortgage rates were 18 percent.”

Perhaps that’s why she’s undaunted by the current economic climate. In fact, the Asheville Board of Realtor’s new president holds fast to her optimism and works hard to spread it around. “I’m excited to be leading [the board] during such a time,” says Evans, 43.

She exudes energy and confidence, qualities that made her a top earner in her rookie year, a co-owner of a large real-estate firm soon after moving to Asheville, and savvy enough to switch gears a few years ago by selling that company and getting into property management. “I wish I could say I saw the market drop coming,” Evans jokes as she explains the career move.

Of course, such energy sometimes meets resistance. When Evans first came to town, she pushed to get the Multiple Listing Service computerized and was also a supporter of making it more accessible to the public. While some real estate agents hesitated to “give away the data, and I caught a lot of flack for that,” she says, she thought there were potential benefits. “Even though all that data is out there, most people are still not buying directly from the Internet. They still need Realtors.” The Internet makes the legwork of property searches much easier for both agents and customers, she says.

But the Internet can’t change the current market. Evans acknowledges the challenges: “The market has slowed, and [home] values have dropped here, but not as far as [in] some areas.” Times are tough, and there may likely be a reduction in the number of real-estate agents working the market. It’s time, she argues, to adapt and prosper, whether you’re a Realtor or not.

“It’s a great time to buy, not just because home values have dropped, but because there’s a good selection of inventory and interest rates are low,” Evans continues. “My outlook is this: All real estate is local. Just because it’s raining in Oregon doesn’t mean it’s raining in Asheville.” She encourages her colleagues to focus on the job at hand, focus on the customers, and stick to the basics.

Evans adds that there’s a lot of assistance out there for homeowners in trouble. “This is a time when we need to have a little more compassion and a little more leniency,” she concludes.

Evans is working at adapting, too. One of the twists in today’s market is that more rental properties are available simply because some homeowners find they can’t sell, and renting is an income-producing option. The market for high-end rentals, in particular, has exploded. “It’s one of Asheville’s best-kept secrets,” she says.

Realty sector in death spiral, BSE Realty down 86% y-o-y

MUMBAI - The current economic problem has its roots in the vast expansion of debt across the globe over the last few years. Much of this debt is tied to residential real estate.

Despite the BSE Realty Index correcting 86 per cent year on year, experts are advising investors not to go bottom fishing in the real estate sector. Some experts feel that the sector is in a death spiral and given the future valuations, some stocks are expensive and need to correct further.

In the third quarter of FY 09 major players like DLF and Unitech reported dismal results. DLF saw its third quarter net profit decline to Rs 670.79 crore, less than one-third of the same in the year-ago period.

Infrastructure major Unitech said its profit after tax was down 94.71 percent to Rs 19.50 crore in the quarter ended Dec 31, 2008 as against Rs 3.69 billion in the year-ago period.

Industry analysts have always known homebuilders never earn enough money selling homes to pay for the capital that's needed to buy and hold the land they require. Through its entire history, the realty sector has been a consumer, not a producer, of capital.

Experts opine that the core issue in the real estate sector has shifted from 'affordability' to 'demand'. Job cuts and increasing insecurity and low business confidence have become key concerns. Studies reveal that during times of severe economic uncertainty, consumers postpone big ticket purchases.

As such, developers indicate that they do not expect demand to resurface in the near to medium term, even if real estate prices correct 20-25%, and mortgage rates decline 200-250 basis points.

Developers have been forced to cut prices for new and under construction projects by 30-45%. Until recently, such discounts were not publicly reported and were available only to large investors. In the last two months, several large reputed developers have issued public advertisements about discounts, hoping to stimulate demand and lower inventory.

“RBI has introduced measures such as priority sector lending status to low-value loans, restructuring of loans taken for commercial property, and reduction in excise duty on inputs like steel and cement. Banks' special treatment to real estate companies may result in long-term benefits for the sector but this relief could, however, be ephemeral in short term. If transactions fail to pick up, some of the debt-laden companies could find difficult to survive," said Jonathan Paul, senior analyst at Krug and Brodman Advisory.

Subsidized interest rate on housing loans of up to Rs 2 million is likely to improve buyer sentiment and help revive demand. However, as very few developers have offerings in the range of Rs 0.5-2 million/unit, the rate cut measure is likely to remain only a sentiment booster.

“We expect FY09-10 to be a period of consolidation, in which industry leaders would be differentiated from peers. We believe developers with staying power would utilize this consolidation phase to emerge stronger. Focus on companies with high visibility on monetization of assets over the next 3-5 years, low leverage and robust financials, and strong execution track record. However, avoid this sector from short-mid term view," said Sameer Sinha, fund manager at Spark Wealth Management.

Tuesday on BSE the Realty Index slumped 7.55 per cent. The major losers were DLF (-13%), India Bulls Real Estate (8.85%), Housing Development (6.15%) and India Bulls Real Estate (-6%).

California home foreclosures top 236,000 in 2008

More than 236,000 homes were lost to foreclosure in California last year, topping the previous nine years combined, data released Tuesday show. And the number of borrowers who defaulted on their payments hit a record high of more than 404,000.

The wave of foreclosures, which began in early 2007, was initially triggered by falling home values and resets on adjustable-rate loans. But lenders and industry analysts say the trend is now being exacerbated by rising unemployment, which has shot up to 9.3% in California.

"The people who are defaulting now are not really people who recklessly got into loans they never could have afforded," said Evan Wagner, the communications director for IndyMac Federal Bank, a big mortgage lender that, having collapsed last year, is being bought by private investors. "These are people who have lost their jobs or who have had their hours cut back at work."

Wagner said that up to 80% of the borrowers seeking an easing of their loan terms are doing so because of the loss of a job or income.

More evidence of that trend can be found in the default rate on "prime" loans, those made to borrowers with good credit. Defaults on these loans rose 340% in the three months ended Sept. 30 over the same period in 2007, according to the latest data from the Mortgage Bankers Assn.

California was last hit by massive foreclosures in the early 1990s, when the state was also struggling with an economic downturn and rising unemployment. At that time, there were about 10 foreclosures for every 100 layoffs, said John Burns, an Irvine real estate consultant.

In this cycle, he said, there will be about 15 for every 100.

"The price declines have been more severe this time, and the job losses are looking worse," Burns said. "Consumers are more likely to give the keys back to the bank because they don't have anywhere to turn."

In California, the number of homes lost to foreclosure rose 180% last year compared with 2007, according to MDA DataQuick, a real estate data firm. It was the largest number of foreclosures since DataQuick began tracking them in 1988.

The number of foreclosures actually dropped this fall, to about 14,000 in November from about 25,000 in September. But that decline was probably a temporary blip due to a new state law that forced lenders to make more efforts to contact borrowers before foreclosing, and doesn't signal a reversal of the trend, said DataQuick analyst Andrew LePage.

Indeed, foreclosures rose 14% in December from November. And notices of default, the first step in the foreclosure process, also dropped this fall but had rebounded sharply by December.

"We know the new law has impacted the filings, and there is some catch-up going on now," LePage said. "And there are all of these other avenues that lenders can steer borrowers into now that aren't going to show up as foreclosures. It could be that we're holding steady, and it could be that the distress out there is climbing and not showing up in the numbers."

An analysis by investment bank Credit Suisse suggests that foreclosures will start to taper off this year because the number of subprime loans resetting to higher interest rates has peaked. But there is another potential time bomb: Resets on prime loans will peak at more than $40 billion in mid-2010.

Many of those loans could go into default if the borrowers cannot refinance because they've lost their jobs or their homes have plunged in value, analysts say.

"I think that we're in some ways uncharted waters in terms of the magnitude of the situation that we're facing today," said Peter Tatian, a senior research analyst at the Urban Institute in Washington. "That's why we need some very radical steps to pull us out of the nose dive that we're in."

On the positive side, lenders have come under pressure to work out new payment terms to prevent foreclosure.

"We are working out two troubled loans for every one on which we foreclose, nearly double the ratio of a year ago," said Jumana Bauwens, spokeswoman for Bank of America's Countrywide division, the nation's largest mortgage lender.

But modifications work only if people can show they have the income to make the lower payments.

"You can't work with the bank to modify your loan if you have no income," said Ralph R. Roberts, a coauthor of "Foreclosure Self-Defense for Dummies." "And usually when people lose their jobs and reenter the market they end up with a lower income. That means they will be trying to cover the payments they missed and the new payments with less money."

In California, the areas that have been hardest hit by foreclosures include the Inland Empire, the Antelope Valley and the Central Valley, where many first-time homeowners flocked to buy new homes.

In some San Bernardino County ZIP Codes, there were more than 20 foreclosures for every 1,000 homes. Foreclosures have tended to be less common in more established communities.

The glut of foreclosures has changed the real estate market in dramatic ways. For one thing, they have helped drive down prices. The median price for a home in Southern California was $278,000 in December, down from $415,000 in January 2008.

In addition, most of the homes being sold now are foreclosures.

"My guess is that you have a fair amount of speculation going on, which might not be the best thing in the long run," said Conrad Egan, president of the Center for Housing Policy in Washington. "But I'm sure that people in those neighborhoods are glad to have an investor buy a home and stick a renter in there than to see it sit empty and boarded up."

Foreclosures have become so common, in fact, that they are straining the ability of the market to handle them all.

"Probably for most of the state, we've reached the point where the lenders and the market really can't absorb that much more foreclosure activity," DataQuick analyst John Karevoll said. "The operating manual for the real estate market has been thrown out."

US Real Estate Market Case Study:Home Prices down to Lowest Levels in Almost Five Years

The nation's home prices continued their downward spiral, falling a record 18.2% through November in the 20 largest metropolitan areas including metro Detroit.



The S&P/Case-Shiller home price indices released Tuesday also showed the top 10 metro areas saw home price declines of 19.1%.

Home prices have fallen every month since August 2006, according to the index.

Metro Detroit home prices fell another 3.1% from October and are down 20.7% from November 2007, according to S&P/Case-Shiller. Detroit remains the only metro area where home prices have fallen below the level set in 2000.

"Overall, more than half of the metro areas had record annual declines," said David M. Blitzer, chairman of the index committee at Standard & Poor's.

Eight areas posted their largest monthly declines on record through November -- Atlanta, Boston, Charlotte, N.C., Chicago, Dallas, New York, Portland, Ore., and Seattle. Dallas and Denver had lower declines with prices falling 3.3% and 4.3%, respectively, in the past year.