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The National Association of Realtors said that sales of existing homes rose by 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million units. It was the biggest increase in a year and caught economists by surprise. They had been expecting a small decline.

The trade group reported that the median existing sales price in February fell to $195,900. That was the largest year-over-year drop on records that go back to 1999.

Lawrence Yun, chief economist for the Realtors, said that prices in some formerly hot markets in California and Florida were seeing significant price declines now as sellers try to attract buyers.

By MARTIN CRUTSINGER, AP Economics Writer

1. Boost your credit.Before you start searching for a new home fix your credit, even if you have good credit you can usually make it better. Speak with a mortgage consultant and ask them for advice on boosting your score. The better your score, the better your interest rate and ultimately the more money you will save. 2. Buy a home you can afford.A huge mistake of many, you start off thinking “ok, I can afford $2500 a month” but end up buying a home that costs $3000 a month. Be realistic; don’t get carried away and look at homes you know are priced out of your range. If your mortgage takes up too much of your income, any unexpected event can cause you to lose everything. Be patient and you will find the right home. 3. Buy a home in a good location.Location is a key determinant of price when it comes to real estate. A beautiful home in a bad neighborhood is worth less than a deteriorated home in a nice neighborhood. Usually homes near public transportation or shopping centers remain popular. If possible, look for homes near good schools, even if you don’t have kids. Houses near schools retain there value a lot better and are more likely to appreciate.

The following is an execerpt from an article on realtor.org.

“Significant price declines in some local markets have sharply and quickly improved local affordability conditions, and are inducing buyers to return to the marketplace,” Yun said. NAR’s housing affordability index is forecast to rise 14 percentage points to 127.0 in 2008.

New-home sales should decline 23.7 percent to 590,000 this year before rising 7.2 percent to 633,000 in 2009. Housing starts, including multifamily units, will probably fall 25.1 percent to 1.01 million this year, and then continue to slip another 2.7 percent to 987,000 in 2009.

“As builders sharply cut back production, vacant new-home inventory has consistently declined over the past year-and-a-half,” Yun said. “That will permit a quicker return to balanced market conditions in many local areas.” The median new-home price is likely to fall 6.1 percent to $232,200 this year, and then rise 5.1 percent in 2009.

The 30-year fixed-rate mortgage, which has moved erratically in recent weeks, is expected to hover around 5.8 percent most of the year, and then rise to an average of 6.3 percent in 2009.

for the complete article follow the link below to the realtor.org website:
http://www.realtor.org

If you are a real estate professional, completing a short sale should be on your resume; it shows hard work. If you have never tried it, let me provide some help. I would like to take the next few lines explaining how to perform a short sale. 

1. Qualify the Seller.

Before spending time listing a short sale, find out if the seller qualifies for a short sale. First ask the seller to write a letter explaining why he needs to short sell his/her house. Qualified reasons should include some type of hardship such as loss of job, personal injury, divorce, death, or anything that inhibits them from making payments. Simply not wanting to pay for a home that is worth less than they owe is not a good reason and will be rejected.

2. Analyze Expenses.

Next you should have the seller create a list of all his/her expenses and revenues. Make a schedule showing all monthly expenses including groceries, cell phone bill, entertainment expenses, food, and diapers; anything they can think of. On the same schedule the seller should also show how much income they are receiving per month. Again, include child support, rental income, allowances, etc. If the seller has more income than expenses, don’t waste your time.  

3. List the home for sale.

If after reviewing both of the above you determine the seller does qualify for a short sale move forward and list their home for sale (make sure you state: “subject to lenders approval” under remarks). When you list the short sale, start it at the current market price. Every week you should decrease the price by 2-4 percent. Banks usually don’t allow short sales if they have been listed for less than 3 months. Don’t start the price very low to get an offer right away. You will need time to gather paperwork and of course meet the banks time requirements. If you get an offer too soon, you will have to make the buyer wait (a big no-no) and risk him retracting the offer.

4. Gather all the documents.

You will have to submit a lot of paper along with the offer to the bank. Here is what you will need.

-Your listing agreement showing when the property was listed and every time you lowered the price (the more the better).
-Comparables showing prices of similar homes near the subject property.
-Seller’s most current tax return. 
-Seller’s most recent pay stub (if self employed show a profit and loss statement).
-Sellers most recent bank statement
-A letter explaining why the seller is in the financial situation he is in (AKA: Hardship Letter). Include proof of the hardship if possible, this is a big plus. 
-A schedule showing all the monthly expenses and all the monthly income. Make sure it’s detailed (i.e. Food: $450 Gas: $200, etc.)
-Estimated seller proceeds or sheet showing all the selling expenses including your commission (the bank will try to negotiate your commission down, don’t let them go below 5%).
-Authorization letter allowing you to speak to the bank on your seller’s behalf.  After you have organized all the paperwork, you can wait for an offer to come in.

5. Submit the offer and paperwork.

When you have an offer include it in the packet, write the loan number on every single paper (important), and fax it to the appropriate department of the mortgage company (usually the loss and mitigation department).

6. Follow up

Once you have submitted the packet follow up with the bank regularly to get the status. It will take approximately 45 days to get accepted or rejected. Make sure to keep the buyers updated so they don’t forget about the offer or change their mind.  

Easy enough right?  

Experience negotiating shorts sale is important, but even more important is finding someone with good marketing skills to sell your home. Short sales require a lot more advertising because people are unfamiliar and scared of trying to buy a short sale. Agents will steer their buyers away from short sales because they pay less than other homes and run the risk of not closing. Without an offer from a buyer your short sale cannot sell. All the experience negotiating short sales will not help if you can’t get an offer.

Short sale negotiating companies are a good option because they focus on the short sale transaction allowing the agent to focus solely on marketing and getting the home sold. But be careful because many companies ask for half of the agent’s commission.

Back to the marketing; ask your agent where he/she advertises your home. There are so many free places online to advertise real estate: shortforsale.com, craigslist.com, trulia.com, the list goes on. There should be no excuse for not having your home on 4 or 5 sites. Sorry but the real estate company’s own website doesn’t count.   

You may have heard, short sales are a great way to save thousands on a new home. But you probably have also heard that it can be a very long wait to purchase one. There are a few things you can do when purchasing a short sale to make sure the process goes smoothly and the deal actually closes.

1. Get prequalified. When you submit an offer for a short sale, you must also submit a prequalification letter with it. This tells the bank you can actually buy the house you want and you are not wasting their time.
2. Get confirmation from the listing agent. If you are going to make an offer on a home, make sure the listing agent has all the paper work ready to submit along with your offer. There is a lot of paper work that must be submitted to the bank and if the listing agent does not have everything ready to submit with your offer, don’t bother. Save your time!
3. Follow up. Have your agent follow up with the listing agent. The listing agent needs to keep in touch with the bank to see if the packet was received; the file has been assigned a negotiator, and whether the file is being reviewed. If the listing agent doesn’t keep in contact with the bank, the short sale will take longer.
4. Don’t make ridiculous offers. Yes, you can offer less than the asking price for short sales, but don’t go too low. Below market value is ok, but if you go too low you will get rejected in a heart beat and you will have wasted your time, the agents’ time, the banks time, and the sellers time.
5. Closing costs. Don’t make the bank pay all the closing costs. Yes, in a buyers market sellers will usually help with closing costs, but short sales are different. The bank does not want to lose money and still have to pay all your costs. Lower your offer a bit more to help cover some closing costs, but don’t tell the bank, “Pay my fees”.

Buying a short sale is not much different than purchasing any other home, or at least it doesn’t have to be. Money isn’t free and neither are short sales. Short sales can offer great savings but will require some work.

According to the Center for Responsible Lending, over 7 million homes have subprime mortgages, and over 14% of those are now in default. Projections estimate one of every five subprime loans issued between 2005 and 2006 will end in foreclosure.

Currently Stockton California leads the top ten list of worst affected cities with 1 of every 31 households delinquent on their loans. Of the top ten cities, half are in California. Cities include: Stockton, Riverside, Sacramento, Bakersfield and Oakland.

Although the delinquencies continue to rise, the number of homes that are actually foreclosed on remain lower. One reason is that banks are now more willing than ever to allow short sales, which is becoming one of the new ways to make money in real estate.  

Today the Fed announced its second consecutive decrease in rates, cutting another 0.25% from the Fed Funds Rate. This change could directly impact millions of American borrowers.

Are you one of them?

Adjustable Rate Mortgages
If you currently have an ARM that is scheduled to reset in the next 14 months, then today’s news is good for you. Now is the time to investigate your options. Even if you have a pre-payment penalty or you’re behind in your payments, don’t delay. There may still be options available to get you out of your ARM and into a mortgage you can afford, including FHA or the new FHASecure program introduced by the President.

Important: The FOMC does not meet in November, so ask yourself this: Can you really afford to roll the dice until its next meeting in mid-December?

Buying at the Bottom of the Market
If you’re looking to invest in real estate in the next six to twelve months, and recent rate cuts have inspired you to start taking action, now is the time to prepare yourself for intense credit scrutiny. There are a lot of great real estate deals to be had today. But if your credit doesn’t stand up in today’s tight-fisted credit environment, then you could easily miss out on an exceptional opportunity.

What’s the point of taking advantage of discounted home prices if you can’t qualify for the right mortgage or interest rate that makes it all worthwhile? Get pre-approved now and know exactly what you can afford. And with the right REALTOR® on your side, you can have incredible negotiating power in a buyers’ market!

Refinancing – Know Your Options
While rate cuts often spark ideas of refinancing, this may not be the best choice for everyone. In some cases – especially in a market where home values are declining – refinancing may be impossible or disadvantageous. Call me today for a free mortgage review. Based on your individual goals and financial needs, we can explore every available option for you and your family.

Please feel free to contact me if you would like more information in regards to refinancing or purchasing hector.r.orozco(at)gmail.com

According to the Census Bureau report there are about 2.07 million vacant homes for sale. If all this house were put together in one city like Detroit (which it has 2.08 Million homes) all the house and condos in the city will be empty.

Since the over building of new houses and the changes in the mortgage market (making it harder for people to finance homes)  do not expect for the number of empty house to come down any time soon.  CNN.com