November 22nd, 2007 categories: Design, Finances, For Fun, Mortgages
2007 has been a busy, strange and wonderful year. Some of the events may have a long-term impact on the industry while many others will be little more than a footnote in history. To refresh your memory, the folks over at RISMedia came up with a few of the “big” stories (in no particular order) that come to mind:
The Break Up of Cendant and the Creation of Realogy
Now we know what the ballpark price tag could be if someone aspired to buy themselves a major chunk of the real estate brokerage industry. In a spin-off from Cendant, newly created Realogy was sold to Apollo Management LP for $8.5 billion. Realogy stock has ceased to trade on the New York Stock Exchange and the stockholders are to receive $30 in cash for each share of common stock that they hold.
The Collapse of the Sub Prime Market
If anything dominated 2007, it was the velocity with which the secondary mortgage market came to a grinding halt, and with it pulled down everyone heavily involved with sub prime lending. Few were spared with the 10th largest mortgage lender American Home Mortgage filing bankruptcy. Even the largest mortgage lender in the U.S., Countrywide, experienced major cash flow problems, which opened the door for Bank of America to enter with a $2 billion, bail out and a potential 16% ownership of the company.
DOJ releases study on Real Estate Brokerage
A new report by the U.S. Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ) states that they have decided to participate in the transformation of the industry by deciding that certain existing laws, rules and regulations need to be repealed. It is their feeling that as commission fees “do not vary in proportion to changing home prices,” they are considered to be “relatively inflexible” and therefore have in real terms become too high. The FTC is recommending that state “legislators and industry regulators” should consider repealing existing laws, rules and regulations like minimum-service and anti-rebate provisions that limit choice and reduce the ability of new brokerage models to compete.
Revival of Better Homes and Gardens
Once a popular real estate franchise, this very well established brand disappeared off the brokerage radar after a sale by its former owner, Meredith Corporation, to GMAC in the 1997, with the requirement to phase the BH&G brand out. This time Realogy re-introduces the brand after signing a 50-year licensing agreement with Meredith.
Closing of Foxtons
Born in the Web 1.0 era, lasting through the crash and surviving with a name change from YHD to Foxtons, the discount real estate brokerage company filed for bankruptcy in October 2007 - listing $40.9 million in total liabilities and $488,000 in assets. For many this was an affirmation that the discount model isn’t viable while many others see it more as just a precursor to a declining real estate market that will still claim the “lives” of many real estate companies, irrespective of the model.
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November 22nd, 2007 categories: Real Estate
Matt Carter at Inman News says, “spending on online real estate advertising will continue to grow during the housing downturn, surpassing spending on print ads by 2011, according to a forecast by Borrell Associates Inc.
The migration of real estate advertising dollars to the Internet won’t happen fast enough, however, to prevent the total real estate ad spend from declining from a peak of $11.8 billion in 2006 to a trough of $10.2 billion in 2009, Borrell predicts.
Although Borrell expects growth in total real estate advertising to resume in 2010, the $11.2 billion projected real estate ad spend in 2011 would still fall short of the record level of spending at the height of the boom.” - Full Story
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November 20th, 2007 categories: Finances, Mortgages
In the beginning of the foreclosure process, homeowners can still save money, their credit or their house if they act quickly. Even when declaring bankruptcy, avoiding a foreclosure on your credit report can salvage your ability to rebuild credit and buy another house, which makes the struggle against a possible foreclosure well worthwhile.
The folks over at Bankrate.com compiled this list of dos and don’ts to survive the struggle:
6 possible dos when foreclosure looms:
1. Sell the property: If you can find a buyer before the house is auctioned, you can sell it and keep whatever equity still exists.
2. Work out a deal: Your lender may be willing to work with you, rather than lose money at a foreclosure sale.
3. File Chapter 7 bankruptcy: If you can’t get caught up in time, you will not be able to keep the house — but you’ll generally be able to delay the foreclosure sale a month or even several months. Any remaining debt to the lender will be wiped out.
4. File Chapter 13 bankruptcy: If you can afford to make the future mortgage payments and the delinquent payments, too, file Chapter 13 bankruptcy. This is different from Chapter 7, in which assets are liquidated but debts are wiped clean. With Chapter 13, you keep your assets and, under court supervision, you repay your debts under a three- to five-year plan.
5. Short sale/deed in lieu of foreclosure: A short sale takes place when the bank allows you to sell your property even though their mortgage won’t be paid. Be careful — the bank may allow the sale to go through, but only on the condition that you repay the deficiency. In a deed in lieu of foreclosure, the property is signed over to the bank in exchange for the bank giving up its rights against you. Why might a bank agree to either of these? Lenders spend $30,000 or more to foreclose on a property. Most lenders will consider these options to avoid foreclosure costs.
6. Walk away from the house: Pack your things and leave. The only issue remaining is whether your lender can sue you for any deficiency still owed after the sale, and that depends on the state you live in and the type of mortgage you have. You’d be wise to speak to an attorney before taking this step.
Any sale or transfer of property has tax consequences, including a foreclosure sale or a deed in lieu of foreclosure. Seeing an accountant is probably a good idea, as well.
Here are two options NOT to consider. In other words, they’re scams.
2 don’ts when foreclosure looms:
1. Signing over your property title to another company: Some companies say that after the mortgage is current they will re-sign the property back over to you. This rarely happens. Instead, the company is likely to pull out equity, not make any mortgage payments and allow the property to be foreclosed. You will not be able to save the property from future foreclosures because the property is no longer in your name.
2. High-interest second mortgage: When a property has equity, there are companies that will give you a second mortgage, in an amount as high as 70% of the equity available. The interest rate could be as high as 18% and the fees can be exorbitant. They are hoping that you’ll blow the money and default — which allows them to take the property from you.
When facing foreclosure, you have options, but you need to avoid the scams and act quickly if you want to have the best outcome. Delaying only makes foreclosure inevitable.
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November 20th, 2007 categories: For Fun
As the infamous Black Friday approaches, bad economic news and homeowner concerns could bring good buys for holiday shoppers this year according to RISMedia.
High gasoline and food prices have retailers so worried you won’t spend generously this holiday season that they’re rolling out some of their deals well before the traditional day-after-Thanksgiving kickoff. And while those Friday deals typically offer some of the best discounts of the year, there are ways you can find good buys throughout the shopping season.
If you are willing to do a little shopping homework, you should be able to snare some of the best deals and perhaps avoid long lines or the unending search for a parking spot. - Full Story
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