What Can We Do To Help The Local Economy?

Things in our area have certainly been financially impacted more than we've seen in a long, long time.  It has been perplexing for many reasons, especially in the real estate world.  Interest rates are still very good.  Prices are back in the range of where they were in 2002 and 2003, but it goes beyond that.  Cash flow in the community seems to have come to a relative standstill. 

Now is a time of opportunity.  Our youngest son bought a house this week.  Instead of the 1,100 sq.ft. home he could have bought a couple of years ago, he was able to buy a 1,900+ sq.ft. home with living and family rooms, huge kitchen, two brick fireplaces, big fenced yard, great location, good condition, and the Seller paid the closing costs.  All that and the payment is less than rent would be on a comparable home.  What can you buy today?  Do you know… or are you listening to the media convince you how bad things are?

There is a window of opportunity for home Buyers right now.  Bank-owned properties have been driving the market down due to their lack of maintenance and the low selling prices they accept to clear their books.  Recent efforts by IndyMac, BofA, Citibank and JP Morgan Chase will forestall and perhaps prevent many foreclosures.  Fannie Mae and Freddie Mac also unveiled Home Retention programs this week.  With the concerted effort to slow/stop foreclosures … finally and really this time… the market should get some traction as the bank-owned properties become a scarcity.    

Hoarding your cash, or saving it?  The difference may be subtle, but we think significant.  If you have sufficient savings and are able to carry on your commerce as usual … do it.  If you are locked up socking it away then you are contributing to what has become a global problem … severely minimized cash flow.  The cash must flow for the economy to sustain itself.  Nobody can live in a vacuum – if you aren't financially acting in a normal or as normal of a manner as you can, then you might find yourself without stores at which to spend your hoardings.

Our advice: Shop locally and support the merchants that operate businesses in our town.  They are here to serve you … if you let them.  Have confidence- don't be afraid to live and participate in this economy.  Remember "Go with the flow"?  Now "It has to flow to go".  With cash flowing and homes selling, the freefall real estate pricing will stop and the stores will remain open.  Buy now while the banks are desirous of clearing their inventory.  The 170-plus properties in Douglas County that now have Notices of Default (preforeclosure) may not be coming on the market like you think with the new home retention programs in place.

While you watch the National effort for a stimulus package, remember to implement your own Carson Valley Stimulus Package.  Smile, be confident, and help your friend and neighbor by buying what you want and need locally … and do it now.  Experience is Priceless!  Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, www.carsonvalleyland.com

We Still Keep Hearing About Short Sales … Are They Real and Why Should We Do It?

Short sales are very real but they have become as confusing as the market itself.  There are several aspects to a short sale when you are considering one.  The first is to make sure you qualify, i.e.- you owe more than the property is worth (call your agent for a current value – things are changing quickly), have limited other assets, inability to pay, don't own other real estate, etc., in other words … you have a genuine need for debt relief.  Once you've determined that (not hard if you are truly qualified!) the next step is to consider options – short sale vs. foreclosure vs. bankruptcy.  Each has it merits depending on your circumstances.

Bankruptcy is usually the least desirable.  It can extend the time you can live in the home but has many extended adverse impacts on you, your credit, and your mind.  Foreclosure is the likely option, inevitable in some cases, if you can't or won't put together a short sale.  So what is the difference to you?  1. A short sale will typically last 3-4 years on your credit report.  A foreclosure will be there 7 years.  2. With a short sale your credit is not as severely impacted.  A foreclosure can reduce your FICO score up to 400 points.  A short sale will impact it 50-180 depending on how it is reported.  3. A short sale is a more dignified solution.  You sell your home to another person just like your neighbors do.  A foreclosure often results in the home being vacant for months, signs promoting the bank ownership of the property, dead landscaping, etc.  4.  It is usually easier to rent a home to move to with a short sale than after a foreclosure.  Most landlords check credit on tenant applicants these days. 

There is now tax relief due to a law passed last year and signed by President Bush in late December.  It does not help every individual that gets mortgage relief, but it will help many.  Regardless of the tax relief you get, or don't get, it is generally better to control your own destiny and work to effect a short sale, or settled agreement with your lender. 

Our Advice:  The foreclosure option requires no action …don't make your payment…wait until the date of the sale…and move out.  The short sale requires marketing your property, providing the bank with proper documentation of your need including a hardship letter, financial statement, pay stubs, tax returns, bank statements, etc. - work on your part, often unpleasant because of your present financial circumstances, but it is usually worth it for the long term positive effect on you.  Additionally, helping the lender out of their investment problem instead of forcing a foreclosure is something you can do to help the institution that committed to help you when you wanted help … when you wanted to buy your house.  Make every effort to implement a short sale … you will be happier in the shorter-long run.

A short sale involves a lot of work by your agents, it also requires them to have specific knowledge of how to navigate the inevitable maze the corporate lender makes agents run through. If you are having difficulties making your payment call your agent immediately to explore your options.  Waiting won't solve the problem. 

Experience is Priceless!  Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com or www.carsonvalleyremax.com , email us at carsonvalleyland@hotmail.com  775-781-5472 toll free at 800-814-8799 ext. 254.

You might have caught wind of Fannie Mae's Announcement 07-22 dated December 5, 2007.  That announcement established some new guidelines for lending in a "down market", the most impactive of which is the requirement for an additional 5% down in such a market.  Example: the requirement will mean that a 100% loan (no money down) would then require 5% down.  It only applies to loans with application dates on, or after, January 15, 2008, and only in down markets. 

The guidelines require the lender to get the additional 5% if the appraiser notes in the appraisal that they are in a down market.  If the appraiser does not make such a notation, "Fannie Mae strongly urges lenders to implement processes and apply supplement sources and tools to validate current housing trends and not rely solely on the information reflected in the appraisal."  The lenders and appraisers can use the following services: Standard & Poor's - S&P/Case-Shiller® Home Price Indices ,

Office of Federal Housing Enterprise Oversight (OFHEO) , and National Association of REALTORS (NAR). There are other subscription/fee based services that they may use.

Also being implemented by some lenders is risk based pricing for conventional products.  In such a situation borrowers with credit scores below 620 (or missing score – no credit established) would pay an additional 2 points.  Credit scores of 620-639/1.75 points, 640-659/1.25 points, 660-679/.75 point.  This is, of course, in addition to the normal punitive points and higher loan rate related to the lower credit score.

Our Advice:  Recent conversation with an active local lender revealed that we are not locally in a "declining market".  There are areas so identified across the nation, but nothing in our service area.  Of course, this can change, we certainly have had a drop in our prices, and we have been told that some lenders are already treating our market as if it were in a "down" status, requiring the additional down of their borrowers.  If you have limited funds for a down payment and are trying to time the market drop, we suggest that you act now to make sure that you can buy a home. 

If our area achieves a "declining market" status and you are caught with the requirement of additional down payment funds that you don't have, you might have to wait until the market starts rising again to buy your home.  As the market rises the money you might have saved will certainly be lost – maybe forever if you are priced out of the market as we have seen in the past.  We anticipate that the market will bounce high and fast when it turns – timing is the only question.  Control your own destiny and get on with your life.

Save money and maintain a good credit score.  Lenders still want to make loans – they are just exercising better discretion on who they make loans to than they have in recent years.  Make yourself a desirable borrower and you, too, will enjoy the American Dream.

Experience is Priceless!  Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com of www.carsonvalleyremax.com , 775-781-5472.  Email us at CarsonValleyLand@hotmail.com

Whether you can't, or won't, reduce your price, we understand that it is frustrating to sit in this market without action.  The best way to generate action is to reduce your price to be the best priced property on the market for what you are offering.  Having said that, here are a few options available to you other than a price reduction. 

For some Sellers a lease/option can help you achieve your goal.  A lease option is in actuality a lease agreement, and an option to purchase agreement, that are tied together by language in the agreements.  A lease/option provides you with cash flow from the option consideration and monthly lease payments while you wait to see if the option will be exercised.  Since the price paid at the time the option is exercised is agreed to at the time the option agreement is signed, it is usually a higher than market price.  This is because of the extended term of the option period, typically 12-24 months, and the anticipated increase in market value at the end of the term. 

Lease/options can be a risk for both parties since nobody really knows what prices will do, but it gives the Seller cash and cash flow, and buys time for the market to change.  The Buyer can get in to the home knowing that they have the opportunity to buy it in the future.  This works well if they, too, are waiting to sell, repair credit, or any number of reasons that are holding them back from a normal purchase in today's wonderful Buyer's market.  The fact that Sellers today are considering lease/options is another sign that it is, indeed, a Buyer's market.

If you know where you want to go after you sell, look in that market for somebody that is looking to move to our community.  A simple ad in their local paper might produce a Buyer that can't sell their home.  So what do the two of you do?  Trade your homes!  You might advertise your willingness to do so in your local Carson Valley advertising.  We've found that people looking to move to the Carson Valley look here in preparation for their move.  A needle in the haystack?  Yes, but with the right intention you just might beat the odds.

Our Advice:  There are a number of other options, each with its own inherent risk factors, and one should be careful when considering such an option.  These include selling with a Contract of Sale, All Inclusive Trust Deed, or simply renting your home until the market recovers sufficiently to allow you to accomplish your next real estate objectives.  Auctions have a certain intriguing appeal, but have not proven very successful from our observation unless it is involves a distressed property, or a very unique and expensive property.  Be flexible and maintain a bigger perspective when weighing your options.

Remember, it is only money.  Don't let yourself get so affected by this market that you lose your health or family … money can be replaced.  Experience is Priceless!  Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com , 775-781-5472.  

Easily search the entire Northern Nevada MLS  or email Lisa and Jim with questions or for additional information.

One of the hidden casualties of the foreclosure crisis are the tenants.  When the landlord doesn't make the mortgage payment and the property sells at a foreclosure sale, most leases are worthless.  Statistically, just over 20% of all foreclosures are rental properties.  A foreclosure will most often trump a lease – the note and Deed of Trust were in place before the lease agreement was signed.  Regardless of how long you've rented your home, how early you pay your rent, or how much you have improved the property – if the owner of the house isn't making the payments you have great exposure of being evicted with very little warning after a foreclosure sale.  Note: this does not occur in a conventional sale situation where the Buyer acquires the property subject to your lease terms and conditions.

Some precautions you can take include looking at your owner's information online at the County Recorder's site - you can get the name of how they hold title at the County Assessor's site.  If you see a Notice of Default, check the date.  You will have approximately 120 days after that date before the property will sell.  If you see a Notice of Sale, you have about three weeks.  Either way – call your landlord to see if they intend to correct the situation … and how.  He should understand that the consequences of his loss will dramatically affect you. 

If your landlord is in default you might want to pay your rent into an escrow account and contact an attorney who specializes in foreclosure property issues.  Other options: You can file a legal action against the landlord for non-performance on the lease, and try to recover expenses, damages and costs of relocating you incur as a result of the foreclosure.  You can also try to contact the new owner (after the foreclosure sale – they likely won't talk before the sale) and try to negotiate a short-term occupancy offering to protect the property for them while you search for new housing.

Our Advice:  Keep an eye out for signs that your owner might be in financial trouble.  Are people driving by looking at your house … even stopping to take pictures?  Is the property suddenly on the market at a low price?  Is your landlord suddenly screening calls?  If you have a friend or relative that is renting be sure to share this information with them.  Forewarned is forearmed.  Imagine finding out one day that you have but three days to get out of your home!  You will have to find a place, pack and move … or your belongings could be put on the street.  It is a tough situation, but it is legal and real.  Of all the proposed mortgage industry crisis solutions none so far have included remedies for non-owner occupied, investor owned, properties.  If your landlord is in trouble he had better have resources to solve his problem for there is little chance help will be coming any time soon to stave off an imminent foreclosure.

No matter how good of a relationship you have with your wonderful landlord … desperate people do desperate things.  If they are being squeezed financially and it becomes you or his family that will feel the pain … start packing.  Be prepared and you will be fine.  Experience is Priceless!  Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com, 775-781-5472.

We believe that the reasons for the "discovery" of the Carson Valley as a wonderful place to live will continue to attract people wanting to move here and enjoy it on a daily basis.  The local natural beauty is a joy every day – whether a beautiful sunset or a raging storm boiling over the mountains – it is simply gorgeous.  We are ideally located in relationship to other Western States and we have a true Western mindset in our community – better yet - a Nevada mindset.

Our biggest faith for the future of our community, however, is the people.  We believe the people of the Carson Valley are one of its biggest assets.  A close look at the goings on around town reveal a consistent giving nature in the population.  Traffic backed up and heavy – there's the guy waving you in from the side street.  Animal on the road – people will nearly wreck their car to save the animal and will cause a traffic jam while they get the animal to safety.

We were awakened at 5:00 a.m. last Sunday morning by the doorbell.  It was our neighbors, Paul and Sue Brunnelle, telling us the sheriff's office had called them reporting that our horses were out.  Great!  It was dark.  It was eighteen degrees.  Did we say it was five in the morning?  The problem – we couldn't find the horses in the dark.  The neighbors didn't just go home and get back in bed.  No, they drove around looking for the horses, located them down the road eating another neighbor's lawn, and helped us walk them home.  All the time with a smile on their face and reassurances that we would find them that cold dark morning.  It's the people.

A few weeks back one of our neighbor's replacement dairy heifers was out and on a busy road.  A caring couple stopped to tell us, and we all went out to help the scared animal.  It was nice to see all the cars, a busy road at a busy time, stop … and the drivers smile … understanding the situation.  People also "stop" in the Carson Valley to help individuals and families in need … whether from health, accident, or life circumstance misfortune.  The Carson Valley takes care of its own … every time.  It is a true community of great people that let you live your life without intrusion, and rally to help those in need - whether animal, child, or family - when needed.

Our Advice: Real estate values will always fluctuate, but what is important in the long run is that the integrity of the Valley remain intact so the lows are higher and the highs dependable.  We are confident that the People of the Valley will see that it does.  The quality of life that is so dear to those that live here … and those that want to live here … is essential to the overall real estate values.  There is no doubt that it will, in time, serve to protect local real estate investments … including those made in 2005, 2007 and 2008.  Have faith … in the people.

Buy now with confidence.  The many reasons you want to live here are exactly why your Carson Valley real estate investment is safe.  Experience is Priceless!  Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com , 775-781-5472.