Real Estate Information

I’m sure I’m going to take some heat from my peers for this, but I’ll take that risk to present the following long-range views on the subject.

There’s a lot of “buzz” in the St. George real estate market right now about the upcoming “Utah Real Estate Auction”, (www.UtahREA.com). I’m not sure what that buzz looks or sounds like outside of my professional peer group, but it seems that every time I turn around this week another agent is talking about it. 

The concept behind the auction is quite simple, and on the surface, makes complete sense: Put together a huge list of properties that are (supposedly) distressed and ripe for deal-seekers. Compile them all into a big online database, roll out the direct mail and billboards announcing “deals of the century”, and set the “contract room” up for hungry Buyers and elated Sellers.

In theory, everyone wins. Sellers get what they want, Buyers the same, and any involved Realtors pick up a quick, albeit reduced, commission.  So what’s wrong with the program?

Nothing, perhaps, but if you take a long-term view of the market and the perceptions that get created when things like “auctions” take place, there are some potential pitfalls. Here are a few to chew on:

Potential Pitfall #1: Buyers’ perception of possible savings become distorted.  For months and months now, the average home in Washington County has sold for 85-100% of the list price. Now hold on for the next part: many homes, almost all bank foreclosures, are selling for 100% of the list price or MORE! I am hearing weekly of “bidding wars” being created on homes priced so aggressively that multiple buyers are trying to get in on the action.

With the hype of an auction, buyers, especially out of town buyers, get the idea that they can come to town and “name their price” when the reality just isn’t so. This creates disappointed buyers and lots of wasted time.

Potential Pitfall #2:  3^rd-Party lender and lien-holder buy-off. Many of these homes are “short-sales” and lack the required 3^rd party approvals at their current prices….what happens when bidders come in and offer another 25% lower?

What happens is more disappointment. We saw this happen in the past 90 days in Northern Utah. It was all over local and state news. Would-be deal seekers showed up an a similar commercial auction, made their bids and had them “accepted” at the auction…only to find out later that the banks and 3^rd-party lien holders wouldn’t buy off on the high bids. I saw some ANGRY people on the news that day……whoops.

Potential Pitfall #3: The “perception” of a good deal does not a good deal make. I am always reminded of the story my Keller Williams Sales manager told me about his first iPod purchase on eBay. The poor guy stayed up ½ the night to ensure a winning bid, only to find out later he had paid higher than retail price!

In a KSL piece dated August 6, 2008, Paul Nielson wrote about the fact that real estate auctions are not always a good investment. This goes back pitfall #1. Read the following excerpt from that article: “As for those great deals where people can buy a home at auction for less than half it's worth, some attorneys say that's not really happening in Utah right now. Sometimes at foreclosure auctions, the bank will charge what it is owed, even if it's more than what the house is worth.”

Well that’s interesting. Unfortunately, just as there is always a dummy who will respond to an email from the “Princess of an African King” to make a few million dollars, there will always be people who will show up to a real estate auction and over-pay for a property due to the inherent “perception” of a good deal.

Now can I be completely frank with the following? When you go to the auction website you will see the "Estimated Value" vs. the "Opening Bid." There are very "Estimated Values" that I can comfortably say are the "Actual Values." From my personal observation, many of those estimated values seem high to the tune of 5-15%. In many cases the "Opening Bid" is just about the actual current market value. DO YOUR HOMEWORK!

And don't forget that they are tacking a 6% "premium fee" on top of the winning bid price!

Here is a link to the auction inventory which stands at 72 properties at this writing: http://www.utahrea.com/auctions/properties.php?auctionid=14

So why go?

Lots of reasons. Sheer Curiosity and the fact that you really might find a sweet deal are two really great reasons. Another is that you will just learn a lot in the process as a bystander.

The Utah REA people and their local contacts are doing a super job promoting the even and all of the potential pitfalls aside, it is great exposure for our local market.

The other thing I really like is that in a market of "bystanders," these people are actually out making it happen. There is also the potential to move a large volume of inventory in a very short period of time....very cool.

Here are some useful tips to make sure you don’t end up as one of the “dummies” I described above:

1. Do your homework first. This means contacting a good local Realtor who has solid contacts with people like home inspectors. Get out and physically view the properties in advance, ask questions, and have your agent run some “comps” (comparable sales data) to determine what would be a good price for the home.

If you’re concerned about how your agent, as well as “listing” agents get paid (cause you don’t want to pay more than you have to, right?), contact me directly for a copy of the auction company’s rules, forms, etc.

2. Pre-determine your absolute max asking price in advance. This will also ensure that you don’t get caught up in the wave of emotions that can come along with an auction-type setting.
3. Be sure about your big “why” before bidding. Do you need a home or are you just someone who buys 5 pallets of Diet Coke at Costco because it’s “on sale?” Real estate investment may be the greatest long-term wealth building tool in the world, but buying and “flipping” homes like the masses did in 2005 is a dangerous game nowadays, so but be sure you have a solid game plan put together before bidding at an auction.

Auction Date: Thursday February 13th - 7:00 PM.

Location: The Dixie Convention Center - 1835 S. Covention Center Dr., St. George.

I will be there. We will be driving the SoUtahForeclosureTour.com shuttle…you can’t miss us! Please chime in with your thoughts and opinions about the auction process. Good? Bad? Indifferent?

If you are a Buyer or Seller, or intend on sometime being a Buyer or Seller, or simply enjoy staying up on the Real Estate market, you will find the following information extremely intriguing.

I am going to take a very brief moment to share with you some information that may seem a bit like "bragging", but it.........ok, it is.

Yes, my sentiments exactly (get it? Holy.....Cow...?)

Wow, a hint of positive news....at least for Utah's Dixie. In an article released this morning by the Associated Press, St. George, Utah, Ithaca, N.Yand Fairbanks, Alaska are among the handful of the nation's 363 metropolitan areas expected to see employment remain flat or increase slightly.

New York, Los Angeles and Miami are forecast to get hit hard.

If this holds true, it confirms a conversation I had Saturday while out with a couple from SLC searching for a 2nd home (which will eventulally become their primary). The question was posed, "what do you think is going to happen with the market?........I am personally surprised that this area hasn't been hit harder."

First, I agree and I, too am suprised at the resiliancy of Southern Utah. That said, my answer to "why" this is has everything to do with qualify of life. Yes, people are losing jobs here and moving elsewhere, but it is pretty easy to pick up and leave many of the so-called cities (a.k.a."hellholes) when things get ugly.

But Dixie, on the other hand, is just a wonderful place to be, live, visit, drive, BREATHE, etc. (see: "Wasatch Front Inversions...")

"Escape to St. George".....

We have not stopped growing in this economic downturn - people keep coming (for better or worse). Why? Quality........Of............Life. And now that real estate values are coming back into line with reality it just makes this area that much more appealing.

Eat your heart out big city folks.....and we don't even have to pay to park!

Full article here:

http://news.yahoo.com/s/ap/20090119/ap_on_bi_ge/city_job_declines_1

Not more than 1 year ago they would take your home from you 180 days to the day from your first missed payment.

Now it is typically taking MUCH longer and in many cases, the banks are coming up with all sorts of creative "loan modifications" to avoid taking back any more property and to allow the homeowner to stay put.

Call it a "band-aid" if you will.......

This is a bit of a throwback to a piece I wrote on Nov 11th about "at risk" borrowers. I found this piece today through who knows what channels. I think it is interesting because it is specific to one geographic area, but tells the story of what is going on nationwide.

Check it out here and share your opinion freely!

http://www.indystar.com/article/20090111/LOCAL18/901110400/1195/LOCAL18

My business (and this industry) is heavily steeped in annual goals, projections, figures, etc. The good part about that is that it keeps us focused. The bad part is that after a year like 2008 you get to wake up Jan 1 and say "should we do it again or just move to an island?"

....this looks better than selling real estate.....

The Larkin Group has elected to go at it again. After serving 32  buyers & sellers in 2008 I decided to throw caution to the wind and shoot really high in 2009: we've committed to 60 transactions in 2009. Why not, isn't this a great real estate cycle we're in? heheheh..

Promotional plug: What that really means is this: There will be thousands of real estate transactions in the St. George area this year and about 90% will involve licensed agents. The Larkin Group takes a sincere interest in the well-being of their clients as as such, I feel very strongly that our services and market knowlege merit at least 60 of those sides and those who choose to work with us will be VERY GLAD THEY DID.

The video below is our "welcome" to the 2009 real estate year and contains some great information regarding:

-Our monthly Foreclosure Tours

-Millionaire Real Estate Investor classes

-and a short, POSITIVE story for all of you out there who need some inspiration to get going this year after a hellish economic 2008. Check it out and stay tuned for next week's video: "Timing the Market," a critical subject for would-be buyers & investors.

Enjoy.

I wish I could say YES, but I'm afraid the answer is NO. First let's look at recent efforts to curb the foreclosure tidal-wave.

Oh Crap........

As many are aware, foreclosure filings dipped in November by 7%, most likely due to Freddie Mac and Fannie Mae-imposed Moratoriums designed to give lenders and borrowers more time to sort through loan modifications or other means of staving off the foreclosure wolves.

In addition to the moratoriums, the following factors also aided in slowing filings:

• New Laws - Many states requiring lenders take greater action to avoid foreclosures such as  requiring contact with borrowers earlier in the default process.
• Loan Modifications - I mentioned recently that I had contracted with a company whose' chief aim was to be the "middle man" between lender and borrower to put in place some type of modifcation to the loan to keep them in the home.

So why will they go back up? Because we are simply treating the symptoms, not the disease. 

According to a recent report on the subject, more than 1/2 of the homeowners who received loan workouts in the first half of 2008 are ALREADY behind again!

The disease is the following: We were living  above our means, typically on credit borrowed from our homes, now our homes are worth enough, home sales are down, and suddenly we are out of work. It is a vicious cycle.

The symptom is foreclosure, whether it be on a home or a car or a ski-boat.

For what it's worth, the states with the highest foreclosure rates in November were (surprise, surprise) Nevada, Florida and Arizona.

What does this mean locally? Tough to know, but what we DO know is this: Most people who took out risky ARM mortgages took them out in 3, 5 or 7 year increments. Well I'm no math wiz, but this summer's foreclosure boom was exactly 3 years from the peak of the market.

One wonders what could happen in 2010 (5 years) and 2012 (7 years).

The good news for St. George / Southern Utah is that, frankly, it is one of the best places to live on the entire planet and numerous magazines and independent groups will corraborate that statement.

A place like Mesquite, Nevada (sorry folks) could see some real trouble as Randy Black shuts down casinos and hundreds of laborers leave for greener pastures.

A question to all: How do we treat the disease?

Departing from Real Estate talk today!

Am I the only one who feels that way about vacations? We spent last weekend at the Disneyland Resort with my parents and the bulk of my siblings with their kids. Was it a blast? YES...I will tell you right now that I am a Disney Maniac in every way.

Many people of course don't like the crowds, the prices, the works. I understand that, yet I can tell you that 1 day at Snowbird Ski Resort will cost you $80 for a lift ticket, and 5 hours of frustration at an up-scale golf course the same.....and they don't even have Mickey, the Matterhorn or Churros (which will set you back $3 each).

Yet I have to laugh at the fact that once you are there, you happily spent that $3 because it is part of the experience. Did I mention the turkey legs and chimichangas from the little carts?.........

Of course I still always leave that place so exhausted that I have to seriously consider taking a few days off just to recover! I told my wife that we should do 3 days there, then spend 4 more in Maui sleeping on a lounge chair.

That said you should all go to Disneyland during the Christmas Holidays which they consider all of November and December. The "overlay" they put on the park is absolutely intriguing. It is SO extensive that they shut down the Haunted Mansion for a whole MONTH just to put on the Nightmare Before Christmas overlay, then another month to take it down!

Christmas music is playing everywhere and the general decor, colors and holiday lights just add to the already amazing MAGIC that Disney provides! 

My 3-year old Eli was the "MVP" of the trip. He LOVED such rides as the Tower of Terror and Splash Mountain and actually CRIED when he wasn't tall enough to get on California Screamin' and Indiana Jones!!  I was probably 16 years old before I dared step onto a legitimate roller coaster......wuss!

Happy Holidays and please tell me about your favorite Disney experiences. Also ask me about what I like to call my "insider's guide to navigating the parks..." my family and friends can vouch for it!

This is straight from CNN.com:

NEW YORK (CNNMoney.com) -- Mortgage giantsFannie Mae and Freddie Mac have directed their network of servicers to halt all foreclosure and eviction proceedings between Nov. 26 2008 and Jan. 9, 2009, meant to give a recently announced rescue plan time to work.

The Streamlined Modification Program, set to launch Dec. 15, enables delinquent borrowers to get a modified mortgage that lowers payments to no more than 38% of their gross incomes.

"By delaying these foreclosure sales, the nation's servicers will have the opportunity to work with more borrowers who could qualify for a modification under the new [program]," said Freddie Mac CEO David M. Moffett in a statement.

Hmmmm.....like so much of the news we have seen lately, this news leaves homeowners saying "that sounds great, but what does it REALLY mean for me?"

This was interesting:

Freddie has told its servicers to immediately contact the 6,000 borrowers who already have auction sales or evictions scheduled for between the specified dates to tell them the sales are postponed. Fannie estimated that 10,000 of its borrowers will be affected. Borrowers facing eviction between Nov. 20 and Nov. 26 were not expected to get relief.

As an Industry Professional, it is truly a crazy time. We are being contracted to do things that would have made your head spin had we mentioned 3 years ago. One of those tasks is a "Home Retention Consulation."

This is a process in which licensed agents, like myself, are contracted with to go and contact homeowners who are #1 - in default on their loan, and #2 - not responding to lender contact about the situation.

I was contracted with this past week to work with a group called "Titanium Solutions" to do just this. The goal is to first make contact, and ultimately assist the borrower in making a loan modification, much like that described above, so they can keep the home. It's better for the bank, and if the borrower can get their finances in order, much better for them and their credit. Everyone wins, really.

"Home Loan Consultant'......who would have THUNK it?!?!?!? Stay tuned for more!

Full article HERE.

If you were a prospective buyer (which you may be), it would be a no-brainer right? THEN WHAT ARE YOU WAITING FOR?

“Buyer’s Markets” are very interesting because ironically, Buyers tend to NOT buy but instead WAIT (and miss out on opportunity.) Conversely, in a “Seller’s Market” most

Buyers can’t seem to control the impulse to buy (and make very stupid mistakes – just see what happened to Hitler HERE).

This $10,000 deal is not a hoax by the way, it is actually a TEMPORARY (meaning this WILL go away when they run out of money) down payment assistance program being put on by the City of St.George. / Five County Assoc. of Governments.

If you add that to the $7500.00 tax credit (which must be paid back so ask us about this), being offered by the Federal Govt…you’ve got a lot of incentive to buy a home right now.

Here is an email I received earlier this morning from one of our very favorite lenders, Blake Bench of Countrywide:

Let me get on a soap box for a second and talk about first time buyers.  I know that consumer confidence is scary low right now and people don't want to do anything but the media may be hiding some real opportunities.

I put a deal together yesterday for a first time buyer with a 610 credit score.  He has limited money in the bank for a down payment.  I hooked him up with a $10,000 down payment assistance program for a house in the city of St. George.

Couple that with the $7,500 tax credit he will get and we are talking about $17,500 of interest free money that we are getting this kid to buy a house. To me that is a total NO BRAINER.

Here is why buyers need to act soon.  If they wait until 2009 to buy they will have to wait until 2010 to get their tax credit.  The $10,000 tax credit is available until the organization runs out of money.  If they don't get it now while it is available they may never get it.

That all said, I can’t make a decision for a buyer as to whether we have “hit bottom” or if this is the “right time.” I simply know #1 - these kinds of opportunities only come in seasons, and #2 – If you forego those grants, PLUS interest rates climb 1% in the next year, you may need the market to fall another 20-30% to make up the difference! (see an analysis of something similar HERE).

The basics:

• This program is ONLY available in the St. George City Limits
• Sale price limit of $301,083
• Is a non-interest loan payable when you sell or refinance, but after 15 yrs is forgiven!
• Income limits apply

You can email me or Blake direct with questions about the program. If you want to see a copy of the guidelines, we will also send that to you. Blake_Bench@Countrywide.Com or larkin@gostgeorge.com.

In the meantime, tell your friends and family about it – they will thank you!

WOW. One morning you wake up and realize that your alleged home equity is gone, you are faced with losing your cars, boat & TV that you bought on a HELOC, and your former realtor or mortgage broker is now serving coffee at Denny's.....ouch.

Every once in a while you see or hear something that absolutely knocks you off your chair. It could be an advertisement, a song, a movie or something in a book. This video clip was that moment for me. Maybe it's because I'm a real estate "geek", but I doubt it.

I'm sure I'll take heat from someone for having Hitler mentioned in my blog, but it may be completely worth it for the joy of sharing this stuff with the majority.

If you are living, breathing US citizen, and especially if you are a homeowner (or formerly a homeowner....) you will have to smirk when you watch this. It even takes jabs at the National Assocication of Realtors as well as Realtors in General. That is what makes it even more hilarious to me.

This is the most incredible sattire of the current housing market experience ever created!

Enjoy as Hitler laments his personal downfall after:

• taking out a "liar loan" to purchase his home
• buying a flat-screen TV & luxury car with this home equity line
• and now faces the reality of losing his "Vintage Camaro SS."
• And his former Realtor now considers taking a job as a dog groomer.....

WOW.