SELELRS: BEWARE OF BUYER INCENTIVES

The National Association of Realtors had an interesting article on offering incentives to buyers and/or selling agents. Their warning was to beware of the risks of oversweetening the deal. In some States sellers, especially builders, are putting a car in the garage or even giving away vacation cruises. Seems that buyers aren't easily fooled. They know that the reality is that the incentive is somehow included in the price and so they are paying for it. There ain't no free lunch!

The best incentive to selling a house is to price it fairly to that local market. The best incentive is thus, a price reduction. The buyer has to like the property first anyway and an incentive is just a nudge to have them move forward. If a home has some "issues" that the seller can not or will not fix, then an incentive sometimes work. For first time homebuyer homes, having the seller cover closing costs or throwing in all the appliances often work. Coming up with an extra $2500 for either may be the barrier to a young couple moving forward.

Incentives to agents is a "slippery slope" as the NAR article states. Some states do not allow it and even if it is legal, there are ethical issues. Personally, I would never advise a client to do that. I'd rather set up several agent tours and expose the home to as many agents as possible. On the other hand, we see that homes that are listed with "no service discount fee" brokers where 2.5% is paid to the selling agent do not get shown.

Bottom-line is that a home well priced at a fair market value will sell. In this market, it will take longer than it did in the last two years, but what sells is price, condition and fair marketing.

'08 PREDICTED TO BE GOOD FOR HOMEBUYERS

Good news at last. The ABQ Journal today reported that while 2007 was a banner year for sellers, 2008 is shaping up to be a good year for buyers. Well, you heard it here first! Rates are great, inventory is high and sellers are eager to sell. If data for Jan. is any indication, the continued appreciation of homes may be slowing which is good for buyers and not so much for sellers. However, when you look at appreciation over an average period of 7 years in a home, the appreciation is almost 50%!! wow! The market is readjusting now as buyers cautiously re-enter the market, and then we tend to pick up in March and continue high activity until August. I'm ready! Give me a call.

ON THE MORTGAGE FRONT

I went to session with some local lenders this week sponsored by Tony Valencia at Superior Mortgage. The really good news is that the FHA or government backed loans are better than ever. The limit for an FHA loan here has moved from $201,000 to a whopping $271,000. That jump is incredible and bodes well for sales of home in the four hundreds or below. The buyer just needs to bring in 3% cash and there in might lie the issue as most buyers are now anticipating the old 100% loans. These are still available depending on credit scores et al. The conventional rates are hovering around 6% which is terrific even though they went up abit this last week. There is also a terrific Hero Loan program for teachers, firemen and police. The bad news for our State is that we will probably not be given any relief if the Feds ease up on Jumbo loans because we don't qualify as overinflated or distressed in that arena.

ABQ IS STILL A GOOD REAL ESTATE MARKET

Every day, and I mean every day, I get someone who says with a concerned look, "I see that real estate sales are down in Albuqueruque." Well, yes, BUT let's look at why that is not a bad thing except perhaps for those marginal realtors who got into the business last year to make a killing and are now dropping like flies. But I digress.



The important fact is that we never really saw a real estate "bubble" in terms of terribly inflated prices of homes that sold. We did see an increase in inventory of both new homes and resale homes. The builders not only overbuilt but they moved away from building homes that people could afford in ABQ and now are stuck with their inventory that is moving slowly. Well, that was, and is, their problem for poor planning, not the market's problem.



We did have some sellers, and still do, who think they can get more for their home than the market is willing to pay, but that is the seller's problem not the market's. Seller's assumptions of assumed appreciation need to match the buyers assessment of value. So now we see sellers pulling their homes off the market or reducing their prices. That's okay. It's a good adjustment.



We also had out-of-state investors who dove into this market when AZ, CA and NV stopped looking so good. They paid way too much for homes, particularly in the UNM and Rio Rancho areas. They expected to sell houses within months or raise rents to meet their investment goals. Well, the market stopped buying and you can't raise rents in NM unless wages go up which they are not so now those investors are "stuck" but for sure, they aren't buying much anymore. The only ones we have are those who are looking to buy homes in foreclosure, fix them up and sell them. This is not a bad thing as they can bring in the cash to make the homes marketable again. Bottom-line, investors pumped prices up some in some specific areas, and now the prices are back to normal.



So yes, the volume of sales is off from the past two years, but the value of homes is still appreciating. We are not seeing the artificial appreciation of over 10% a year we saw when the market was hot here, but we are back to our steady 4-6% a year that we usually expect. In the race between the turtle and the hare, we are the turtle..... slow and steady. So my advice is to relax. We have a solid market with some short term adjustments that are healthy. ABQ has a fair, steady, appreciating real estate market with no bubble to burst. My advise: BUY!

OLD RAIL YARD TO BE FILM COMPLEX

One of the most intriquing historic areas of ABQ is the old railroad yard in the Barleas District just east of downtown. Over the last few years many ideas have been proposed for it's restoration and use, but today the announcement was made that ABQ Studios rent the area from the city indefinitely to develop it as a film complex. ABQ Studios now has it's new sound stages at the Mesa Del Sol area south of the airport. Nick Smerigan, COO of the Studios, is effusive in his excitement about the possibilities at this 27-acre sute. "It's one of the coolest things I saw when I got off the plane. It's beautiful and can be used for so much." His studio recently filmed major movies including "Game", "The Spirit" and the pilot for the new "Terminator" series.

Tax Hikes for New Homeowners in ABQ

New homeowners are being hit with a tax increase that is angering many who feel it is unfair. Until a couple of years ago, the assessor did not have access to the purchase price of a home. Their estimates of assessed value were in many cases, way off base. Now that NM is a disclosure state, the title company has to tell the assessor what the home sold for. This is a problem if the price is significantly greater than the value assumed by the assessor. Also, there is a 3% cap on rate increases UNLESS the home is sold, in which case all bets are off. This then is the issue with many saying that such an unpredictable and uncontrolled rate hike is unfair and will discourage people from moving here. There will be more on this issue as politicians step in to find more acceptable solutions.

Falling Homes Sales in ABQ

The bad news is that home sales in the last quarter of 2007 for New Mexico fell 38.7% which is one of the three largest drops in the USA. The good news is that prices did not fall and in fact appreciated about 6% for all of 2007. The market picked up in Jan. so we will see what the new interest rates does to our home sales. It's a great time to buy here for those who can get financing.

For all your real estate needs, go to www.JudyPierson.com, one of ABQ's top realtors and in the top 4% of Coldwell Banker nationally. Why settle for less than the best?

Mortgage Rate Adjustments in Some ABQ Areas

This just in from my friend, Jason Pike at Countrywide: You might have heard about a 5% reduction to the maximum loan-to-values (LTV) on properties that are classified as "soft market". This is starting to hit the street and if you have concerns, pay close attention to offers that are coming in with zero down payment. In December, the Albuquerque Area made the map as an area that could see values decline. The category that our area falls into requires the lenders to rely on the appraisal. Other areas such as Phoenix and Las Vegas are mandated to follow this policy regardless of what the appraisal states. The MAXIMUM LTV must be reduced by 5.00% IF the appraiser identifies the property as follows: 1. The property is located in a declining market. 2. OR the area has an over supply of inventory. 3. OR the property lies in an area that has a marketing time of six months or greater. What does this mean? The first thing to understand is that it means NOTHING on FHA or VA transactions!!!!!!!!!!!!!!!!!!!!!!!!!! This only affects HIGH LTV's. So if a borrower planned on a 5% down payments and the property was identified as above, the borrower would need to be relocked into a 100% program. If the borrower planned to finance 100%-they would be out of luck!!! INVESTORS - Assume the required down payment is 20% and the property falls in one of the categories. The investor would be required to have an additional 5% down payment.

Real Estate Newsletter Feb. 12, 2008 from Judy Pierson

Here is a link to my weekly "REAL ESTATE NEWS CHANNEL":Click Here This week's segments are full of interesting and useful information that I think you will enjoy whether you are a buyer, seller, homeowner, or renter.Some of the topics covered this week are:Real Estate Outlook - If you stand back and only look at the negative economic and housing news this week, you might feel a bit numb and a little discouraged.Mortgage Moment - Jan Demas asks the question "Did you ever wonder how Mortgage Pros get the best Interest Rates?"Market Condition - Realtor Zach Frederick in Austin, Texas reports that the local market has remained relatively free of the chaos that is troubling the rest of the nation.Ask the Expert - "On the good faith estimate some of the items payable in connection with the loan are categorized as "PFC" and "POC." What do these letters mean?" Video of the Week - This week's amazing video.You can also tour my latest listing as well as view some of my personal favorites.I hope you enjoy this week's show. If you have any comments, please e-mail them to me at jpierson@cblegacynm.com

Interest rate changes on ABQ Real Estate

Pushing to Raise Loan Limits Sarasota Herald-Tribune (FL) (02/06/08); Pollick, Michael The economic stimulus bill passed by the House would increase the conforming loan limit in certain high-cost markets, meaning borrowers of loans up to $730,000 in such markets as Naples, Fla.; Greenwich, Conn.; Honolulu; and San Diego would be eligible for lower interest rates. However, the mortgage industry is lobbying the Senate to institute state-by-state limits--or, preferable, a national standard--so that buyers in other markets can benefit from lower interest rates as well. According to Mortgage Bankers Association lobbyist Francis Creighton, "We believe you should have one number for the entire country, 150 percent of the current conforming loan limit of $417,000, so $625,000." As it currently stands, buyers in markets where the conforming loan limit stays the same would have to pay jumbo rates on mortgages above $417,000. http://www.heraldtribune.com/article/20080206/REALESTATE/802060655
Jason PikeHome Loan Manager2440 Louisiana Blvd. NE, Suite 160Albuquerque, NM 87110505-828-9400 direct800-264-2114 toll free505-872-2947 faxhttp://www.fastermove.com/Customer Care remains my top priority. If I have not met expectations, please contact john_freeman@countrywide.comCountrywide Bank, FSB