Transportation costs may soon become a recognized expense for mortgage applications if the Natural Resources Defense Council study holds up.

The San Francisco Chronicle reported that the study showed that higher transportation costs resulted in a higher foreclosure rate:

The draft report looked at trends associated with 40,000 mortgages in San Francisco, Chicago and Jacksonville, Fla.

The release date for the final study has not been announced. The research included borrowers’ income and expenses, credit scores and loan-to-home value ratio.

It focused on the average number of vehicles owned per household in a neighborhood, and through a complex formula, found that the likelihood of mortgage foreclosure increased as neighborhood vehicle ownership rates rose.

If transportation costs were as much as 17% of a household budget, as the study suggests, a $5/gallon price for gasoline could negatively impact a family’s budget. Recent years’ foreclosure activity suggests that compunction towards making mortgage payments has given way to liquidity concerns. Moreover, a legal scholar suggests that any moral consideration associated with a strategic default is passe.

Let’s consider the hypothetical case of a family, with jobs in Los Angeles County, who purchased a $400,000 Riverside, CA home in 2007. The home price has withered to $300,000 and the family has “lost” their $80,000 down payment; they are $20,000 “in the hole”. This has them feeling despondent about the future of the property as an “investment”. Continue reading this post

This is my first contribution to HomeGain and thought what a better place to start then at the beginning – the importance of home staging and why it is such a hot industry in the real estate market.

In 2009 HomeGain released its national survey results for the top Return on Investment (ROI) for home sellers. HomeGain surveyed over 1,000 realtors across the country and found that the number one home improvement ROI was cleaning and de-cluttering. These two are inexpensive and truly the first two necessary steps in preparing any home for sale. The second best ROI was home staging — followed by lighting and landscaping.

The previous survey released by HomeGain was in 2007 and placed home staging behind lighting and landscaping. HomeGain estimated a 585% ROI, with average costs under $5K, and I am not surprised given the importance and success in this growing industry.

Although many have claimed starting the idea of home staging, the industry really was born out of necessity for realtors who were selling run down and cramped houses. Back then there just was not a name for it.

Savvy realtors realized that some homes needed serious help before they could put the home on the market. Continue reading this post

If I wasn’t constantly being told be the TV, radio, newspaper, and magazines that we are in a financial downturn, would I know that from my every day life experiences over the last year?

My answer is no.

My life has gone on pretty much unchanged from what it was prior to this “down turn.”  No, that’s not right.  Truthfully, it is much better. My business has remained very good. As a matter of fact, the last couple of years were the best in my career.  There have been a lot of eager buyers — eager to buy a home, and eager to take advantage of the $8000 tax credit.

In some ways, business is much easier now.

Sellers are much more willing to deal and try harder to put a sale together and keep it together.  Also, builders are paying nice bonuses for selling their homes — homes that I probably would have sold anyways to the buyers that I have.  Everyone seems much more appreciative of my efforts — co-op agents, builders, mortgage lenders, title companies, etc.

As far as listings go, sellers have been less likely to try to cut commissions. Continue reading this post

HomeGain Advisors Group – January 2010 Conference Call

The HomeGain Advisors met for their quarterly meeting last week on Thursday, January 21st. The Advisors represent top real estate agents across the country who provide insight into HomeGain products and services, market trends and Realtor behavior.

We had several interesting discussions with our Advisors board last week that are worth sharing with our Blog readers — about home buyer tax credit, appraisals, forced registrations.

Home Buyer Tax Credit

Firstly, HomeGain Advisors in all regions of the country expressed hesitation in terms of how effective the first time buyer tax incentive is currently. In previous calls, many mentioned that most of their business was coming from buyers who mentioned that their motivation to purchase was based on the tax incentive.

In a call prior to the positive comments, they had expressed doubt about how effective the tax incentive was going to be. Clearly, there has been some change. They are attributing the current lack of impetus to the fact that many consumers are still not aware of the incentives and they were doubtful that the April 30 deadline would be extended.

Appraisals

A couple of Advisors spoke about the difficulties they had closing deals due to problems with appraisals. Continue reading this post

As a consumer, have you ever walked in to a store, let’s say an electronics store, seeking the advice of one of the helpful salespeople and found that their lack of knowledge throttled their confidence level to the point that they were really of no use to you and as they try to muster an answer to a question about which TV to buy, you lose confidence in them?

There are pros and cons for each TV and you as the consumer need answers to make the right choice but you can’t get them because your salesperson does not have any confidence that they know the answer. As a consumer, we unconsciously pick up on subtleties of people like this salesperson and we lose confidence in them very quickly! We naturally gravitate towards those who we automatically recognize as confident about their work.

So it goes with real estate agents working with home buyers or sellers.

I encourage that you spend some time every week working on aspects of your business that can help you increase your confidence. It doesn’t matter if you are new or have been in the business a while. If you know what you are doing it will show through loud and clear to your clients in that ever important first impression. That’s confidence. Continue reading this post

A few months ago we announced the top 12 do-it-yourself (DIY) home improvements for people selling their home.

With the environment and sustainability in the hearts and minds of many Americans, HomeGain has also surveyed Realtors for the top 9 GREEN DIY home improvements.  Nearly 1,000 REALTORS® responded to the survey.

While the results show that green home improvement projects may not be as popular as traditional non-green improvements (percentage of Realtors who recommend them), the GREEN trend does seem to be catching on as people realize the benefits. (See Realtor comments below.)

According to a McGraw Hill study, 70% of homebuyers would rather buy a green home than a non-green home in a down economy. The Management Information Services/ICMA has said that “landscaping, especially with trees, can increase property values as much as 20 percent.” According to Move.com, to date, around 1,100 Realtors have earned the NAR Green Designation (out of 1.3 million registered Realtors in the U.S.).

Based on national average cost and return on investment (ROI) to sellers…

The top 5 GREEN home improvements that Realtors recommend to home sellers are:

1. Plant native trees and plants ($141 average cost / $399 average price increase / 284% average ROI / 65% of agents recommended)
2. Replace air filters ($76 cost / $201 price increase / 266% ROI / 63% recommended)
3. GREEN home staging ($223 cost / $445 price increase / 199% ROI / 47% recommended)
4. Weather strip and caulk doors and windows ($169 cost / $313 price increase / 185% ROI / 68% recommended)
5. Install programmable thermostats ($146 cost / $249 price increase / 170% ROI / 62% recommended)

The complete 9 GREEN home improvements are as follows:

Continue reading this post