Too Little, Too Late for Fauquier?

Fauquier County is working to get funds from the Neighborhood Stabilization Program. The latest information says that they're seeking a grant of $2 million with which to purchase foreclosed homes. They also acknowledge that they're more likely to get only $1 million.

There are certainly still a fair number of foreclosed homes around. Out of the 75 homes sold in Fauquier last month, 28 of them were foreclosures. Out of those 28, 15 would fall into the price range (130K to 250K) that the county is looking at.

But the number of foreclosures in the lower price ranges is shrinking and they are often snapped up fast, sometimes these days, even with multiple offers. It will be interesting to see if a government entity can be nimble enough to compete with the first time buyers who are snapping these up.

The other complication here is the appraisal requirement for the program. In order to qualify for the program the Fauquier can not pay more than 85% of the appraised value of the home. Since the typical homebuyer can get a mortgage as long as the appraisal is 100% or more of the purchase price the bank will certainly find the county's offer more risky. If I'm the asset manager for the bank and I had multiple offers, I'd almost never choose the county offer.

I say all this not to trash the Neighborhood Stabilization Program. It was a good idea. The problem has been in the execution.

While in October 2008 the county was shown as having 228 bank owned properties., the MLS currently lists only 29 for sale in Fauquier County.

In the time it took to roll the program out and talk the counties into participating and then have them put together packages, the worst of the crisis has passed.

The program will still do some good if they're able to actually buy homes. It will help working families afford a home of their own in what is still a relatively high cost living area.

But no one should believe that this program will have any impact on stabilizing market conditions in any neighborhood. Time and the market appear to have already taken care of that.

How it Should Work

Short sales are a pain! You're going to hear that from any real estate agent you talk to, or more likely, even stronger language.

The relationship between banks and real estate agents on short sales has gotten to the point where you could call it adversarial. And, it shouldn't be that way. We should be working together towards a common goal, finding a deal that works for everyone and getting it closed before the house goes into foreclosure.

The thing is, I don't think it needed to be this way. Both banks and real estate agents should have sat down at the beginning of this wave of short sales and worked out some things. Here are some ways the outcomes and the working relationships could have been improved.

• Each bank should have a package of it's procedures in working with real estate agents and owners on short sales.
• Banks should have a link on their main web site that provides real estate agents with everything they need to process a short sale.
• Lending institutions and real estate companies and/or associations should have set up joint seminars where agents and lenders could meet and develop working relationships.
• Banks should have easy access on their web sites to information for their customers who are contemplating going through the short sale process.

No one item here would have completely fixed the problems with the current system. But any and all of them would have helped tremendously. And, this list is just a starting point. There are lots more possibilities.

This is a broken system. A little planning up front might have saved us all a lot of grief!

The Great Bank Conspiracy?

Fellow agent and blogger Danilo Bogdanovic just wrote a post on Agent Genius suggesting that perhaps the lack of inventory is actually a plot by the banks to all withhold their foreclosure inventory and thus drive up prices.

Danilo uses the word "Collusion". If you're a buyer right now you may find this persuasive. But I'm not convinced it's all an evil plot.

If the banks are fans of "Buy Low, Sell High" it makes sense for them to hold on to assets until prices improve. And, as inventory has gotten scarce prices are starting to improve.

A banker friend has also suggested that any publicly traded company would logically spread out losses so that they don't all show up on the balance sheet in the same quarter.

And, given what I've seen dealing up close and personal with banks on short sales and foreclosures for a couple of years now, I doubt most of them are capable of the planning that would be necessary for this level of collusion!

If you're a homeowner you're probably thinking this sounds like the best idea ever. If the banks put one or two foreclosures up for sale each year, your home might actually begin to appreciate again!

Either way, I suspect we're giving the banks way too much credit in thinking collusion is responsible for what we're seeing right now.

I66 Producing Energy

I found this tidbit today in EcoTech Daily:

Sainsbury’s Store is the first in Europe to use a green energy system where customers can create 30kWh an hour by driving over plates in the parking lot. The energy that gets made by the cars will be used to power their checkout stands. Anyone else think we should have these on every road in the world?

I immediately had a vision of all the cars on I66 every day and wondered how much power we could produce if these plates were part of the roadway. Cool!

May Numbers

May proved to be mostly a month where the numbers went sideways.

Whether you're looking at Culpeper, Fauquier, Prince William or Rappahannock County, there are no dramatic changes.

There were some subtle signals that things have slowed down a tad in Culpeper county. Both new contracts and sales actually fell last month.

In Fauquier county inventory actually rose, ever so slightly (3 houses). But sales jumped month over month from 54 to 70, well above last year's pace at this time.

Prince William continued to shed inventory with only 3.7 months of inventory now available. I continue to see buyers discouraged with what they're finding available under $400K in Prince William.

Rappahannock County had the biggest jump in sales with 7 units selling last month. This being Rappahannock and the universe being so small, it appears to be a big jump (SALES TRIPLED!). But inventory is exactly where it was a month ago and we're unlikely to see any sudden movements in this quiet corner of the market.

Overall, signs would still seem to indicate we're at or very close to a bottom. Prince William still looks to be on its way back up with price appreciation. And, with a tiny amount of inventory available, prices there will likely continue to rise throughout the summer months.

Zero Down Payment

The on again, off again, opportunity to use the $8000 tax credit as a down payment is back on again. At least if you get a VHDA loan.

The guidelines for the program are here. The program utilizes a second mortgage to make this happen. That second mortgage requires no mortgage payments for the first year and has a 0% interest rate during that year. You have multiple options on how to deal with the second mortgage after that first year.

It's worth taking a look at this program if the only thing keeping you from owning a home is coming up with a down payment.

If you need help finding a VHDA lender, let me know. I'd be happy to help!

No Money for Us

Governor Kaine announced the Virginia recipients of the Neighborhood Stabilization fund grants yesterday. Unfortunately, neither Fauquier or Culpeper made the cut. Incredibly, Prince William county doesn't appear to have gotten a dime!

This would have had a small impact, but every little bit helps.

There was a little money given to Shenandoah, Frederick and Warren counties, $2.5 million for all three combined.

I'm not sure you could argue they are harder hit than places like Culpeper. In fact, I'd make a pretty good argument against that.

CLARIFICATION/CORRECTION:

It appears Prince William got funds as part of an earlier $7 million award, along with Fairfax county.

The original announcement said there was $20 million available for the Open Submission portion of the program and another $10 million available for the Competitive Program. Between the $17.5 announced yesterday and the earlier $7 million awards, there should be another roughly $5 million available. So there may yet be funds available for Fauquier and Culpeper.

Your Mortgage is Paid

A real estate firm in Ohio is offering clients a sweet deal. If you buy a home using their agents and their mortgage company, they will pay your mortgage for six months if you lose your job.

By now you've probably seen the car companies doing something like this. And, I know of some builders with similar programs. But I've yet to see a real estate firm try this.

In Ohio, this is not a small commitment. The unemployment rate in Ohio is one of the highest in the country and will likely continue to rise given the number of auto-related jobs in the state.

So, hats off to Real Living HER for taking this gamble! I'd love to see a local firm in Northern Virginia step up and try this. It's far less of a risk here and this market could definitely use a little more innovation! And, with 90%+ of the real estate agents locally telling you it's a great time to buy (for at least the last three years!) I'd love to see them put their money where their mouth is!

I don't know that someone who wasn't going to buy is now going to because of this offer. But if you're going to buy a house anyway, seems like you'd be crazy not to use this brokerage.

LATE UPDATE: My apologies to the local firms who have already stepped up and are offering similar programs! (Google let me down on this one!) Long & Foster and REMAX Regency (Warrenton & Manassas offices) are now offering this type of program. Kudos!

Love in the Time of Foreclosure

You'll laugh. You'll cry. You'll identify.

If you're not reading the Love in the Time of Foreclosure blog, you're missing out on some great writing.

At  the very least every real estate agent/broker ought to be reading this.

But I'd argue that it deserves a larger audience. I hope they're reading it at the White House.

Amissville Auction

There was an auction in Amissville last week. The property that was sold was 16 Lantern Lane, an equestrian facility and bed & breakfast. It features a 4 bedroom, 4.5 bath home on 10 acres. The home was built in 2005.

The property features an 11 stall center aisle barn as well as some fencing for horses.

The home was originally listed for sale in February of 2008 for $949,900. The price was reportedly reduced to $795K at some point. It never sold and was taken off the market in August of that same year.

The auction produced a sale price of $550K. If you look at comparable properties in Rappahannock County (minus foreclosure) they're listed for about $600K to about $1 million. (Granted, the $1 million home has no interior photos.)

Given what I see out there, someone got a good deal last week. That's not always true at an auction. Auctions depend on adrenaline kicking in and people bidding more than they intended.

Since prices in Rappahannock County are less elastic than elsewhere in the region it'll be interesting to see if there's any impact on pricing for these similar properties.

$8000 is Back

If you remember, a couple of weeks ago HUD announced that the first time homebuyer tax credit of $8000 would now be allowed as an upfront loan that could be used as a down payment. Because of concerns over no down payment purchases in general and down payment programs in the past, that announcement was recalled almost as fast as it was put out there.

The new and improved version is now out. The $8000 can not be used as a down payment. However, you can get taht $8000 up front, rather than waiting and using the tax credit on your 2009 taxes, provided you use it for closing costs.

The details are in a HUD letter on their web site. I'm a little skeptical that this will be a huge boost to the market. Most sellers were already paying a substantial portion of the buyer's closing costs. But I do appreciate that the government continues to look for ways to backstop a tough real estate market.