Focus Professionals, Inc Real Estate Blog

Nannette Saunders wrote:
And as part of the stimulus, which has already passed the House, homeowners would be able to seek the protection of the Federal Housing Administration for vastly more expensive homes than before. One provision of the bill would raise the limit on FHA mortgages from $362,790 to as much as $729,750 in expensive housing markets, allowing tens of thousands of mortgage holders to refinance int federally insured (read that as taxpayer-backed) loans. It would raise the cap on loans the quasi-governmental financial institutions Freddie Mac and Fannie Mae can purchase from $417,000 to $729,750.

I’ll call this part of the stimulus package a taxpayer bailout of people who made some extremely bad choices fraught with tremendous risk. What do we learn? I think this is poor policy that sets a dangerous precedent for the future.

— the image is hers, by the way (copy and paste)

I have to comment on this…

It strikes me that the current debacle is being remedied for the lenders sake, and not for the home owners sake… so the tax dollars are being directed to the lenders… the home owners are still losing their houses…

So if we are to let the home owners fail, should we not also let the lenders fail?

There are some plans to postpone foreclosures, and to freeze interest rates for home owners, and these plans will not cost the tax payer significantly… unfortunately, only the Democrats are offering up this type of plan…

So, I agree that if home owners made bad choices, and were properly informed, they should pay the penalty… but what then of real estate agents who kept pushing the buyers into homes that were just above what the buyer thought they could afford, and what of the lenders who encouraged these loans by not requiring down payments, or by creating products that were incredibly risky (ARMs in a rampantly over-optimistic market?

There is a tendency for agents to try to move the buyer to more expensive properties, and there was a tendency for lenders to create products that were untested and where the risks were unknown…

So who is at fault?

Everyone involved.

That said (I enjoy repeating myself, I think) there is some confusion here: the change in the allowable Freddie and Fannie loan purchases does not affect current home owners who are not seeking to refinance. It is not a bailout per se, since the loans will have already been made and this will only apply to new loans, or to loans being sold by lenders in the secondary market… this “bailout” is for the lenders, not for the home owners.

Also, given the price of houses today, increasing the limit on Freddie and Fannie is more an effort to account for the increase in the average cost of homes, rather than a bail out for home owners.

So, who is getting bailed out? Lenders or home owners? What relationship does the increase in Fannie and Freddie limits have with current market circumstances? We need to get a clear perception of what is going on. Buyers definitely over extended themselves, especially investors, but also many homeowners were prodded by agents into homes that should have been just out of reach for them, but were never the less they were able to finance them. So, it would appear that all three parties, lenders, agents, and buyers, are creditable with this crisis, and all should feel the pain… but alas, it would appear that home owners will take the brunt of it, lenders next, and agents will skate away with little harm, excepting a down market and inventories at very high levels…

All should take the appropriate responsibility, and redress the cause the within their respective industries, whether that is by government intervention, or through self policing… but most likely, the latter will never happen, especially in real estate.

The answers? Realtors should not push buyers into homes at the very limit of what they can initially afford. Lenders should preclude high risk loan products for owner occupied property loans, and should provide detailed information to the borrower, and of course, buyers should know what they can afford, and understand the risks, so that they avoid uniformed purchases that may adversely impact them in the near future. As for investors, they should know what they are doing, and pay the penalties for risks that failed.

What are your thoughts? You can post them at our RI Real Estate blog on Active Rain

I just posted a comment to Broker Bryant’s post about agency… he is again clear and to the point… but I thought I would elaborate my comment here…

I posted:

Bryant, again a clear and concise post… and unfortunately, I must agree with you…

I say unfortunately because one of the states we practice in, Rhode Island, has passed new legislation, which claims to abolish Dual Agency, but in typical RI fashion, really has simply changed the name, eliminating the word “Agency” but otherwise leaving the institution intact, and introducing a new classification: Transaction Facilitator… so now, according to the law in RI, there are:

1) Transaction Facilitators: “A licensee who provides assistance to a buyer, seller, landlord or tenant, or both, in a real estate transaction as a neutral facilitator who does not represent either party.

2) Designated Client Representatives: “A licensee who represents a buyer, seller, landlord or tenant in a real estate transaction and advocates on the client’s behalf.”

3) Dual Facilitators: “a licensee who assists a buyer AND seller, or landlord AND tenant in the same transaction and must be neutral as to any conflicting interests between the parties to the transaction”

and

4) Transaction Coordinators: “a principal broker or his or her designee who supervises a real estate transaction in a neutral capacity.”

–> Dual Facilitator????

Wait, did I miss something?

Well, as with all things Rhode Island, this is what the “community” wanted, so they got it…

We shall see how this goes… If I could, I would argue to get rid of this NEW category…

For you buyers and sellers out there, be clear on one thing, it is by definition impossible to represent the conflicting interests of two distinct parties to a transaction at the same time… If you are a buyer, and go to an open house, and use the listing agent to represent your interest, you can rest assured that your interest is not getting the best representation… Get your own agent to represent your interests and work on your behalf… you will benefit greatly…

And so 2007 ends, and we enter another year! We at Focus Professionals, Inc. wanted to take this time to wish you all a great a prosperous 2008… the market may be difficult in many places, but mortgage rates are low, inventory is high, and prices of homes are low… cant beat this market for buying… with that in mind, we wish all of you who are agents out there the best year year yet, and to all you consumers and investors we wish you good purchases, growth, and health in the coming year…

With oil prices climbing ($100 a barrel as I write this), the mortgage industry weakness, and a soft market for property owners, it is hard to see clear to a bigger and better year, but it is possible, even likely, if we all do the right things, and keep our minds about us as we move forward… Our firm had one of its best years last year, and we are looking forward to a strong January… we hope this coming year will lead us to better business, personal growth, comapny strength, and joy for all.

Once again, wishing you and yours a very prosperous and healthy New Year, may it bring you all that you hope for…

The Team at Focus Professionals, Inc.

So you have found the house that fits your needs best, or so you think, and you are ready to buy. Do you have an agent representing your interests? Or are you relying on the good will of the listing agent to look after your needs? There is a big difference, and here is a story that makes for a frightening read… we hope you never experience anything like this could have been, and the best way to ensure that it does not, is to get yourself a quality buyer agent to represent your interests in your entire process of finding, offering to buy, and purchasing your next home!

These days, with foreclosures as they are, and bank owned properties on the market in near record numbers, always be sure to get an inspection done on your new purchase home. Whether it is new construction, or a pre-owned home, being sold by a private seller, or a bank, do not miss this opportunity to verify the condition of the home.

Banks will most often not make any allowance for faults found in the inspection report, but at least you know what you are getting into, and can back out if there are substantially material defects. This sounds obvious to most, but you would be surprised at how many people waive the inspection clause when a property is being sold AS IS. 

But here is the sinister aspect of all of this: we have seen several homes in the last couple of months that, when the inspection was performed, the house was in relatively good condition, and while it may have had some defects, the buyers were still going ahead with the purchase, only to find upon a walk through of the property on the day of the closing, that someone had entered the property, and literally removed all traces of copper, such as wiring and pipes, removed the boiler units, and removed, of course, all of the appliances!

The seller’s agent, in the most recent instance of this, did not encourage the buyer (who was unrepresented by a buyer’s agent) to do the walk through. I am not saying that the seller’s agent had foul play in mind, and you can make your own judgments there, but it is certainly a standard practice to do a walk through on the morning of the closing, and for what ever reason, this agent did not advise it. Of course, they were the listing agent, and did not represent the buyer, what ever the buyer thought, so it is understandable that they did not have the buyer’s interests at heart. But the buyer read our website section on the process of buying homes, and insisted on doing the walk through. They later sent us a letter stating that our website had saved them great aggravation and trouble, and that in all future instances of their buying property, they would use our buyer services.

Not trying to toot our own horn here, but just imagine what would have happened if they had NOT done the walk through of the property that morning! We did not make any money on this transaction, but we are very pleased to have provided information to the buyer that saved them from serious trauma.

Be sure you have representation when you buy a home, and make sure you do your home work and understand what processes are best to ensure a quality purchase and a quality process. 

We have changed our name! We are now called Focus Professionals, Inc.!

We are doing this so that we can expand into several markets where we had not previously done business, and where, unfortunately, there was another firm with a very similar name to ours which had been there previously.

Of course, our excellent personalized and professional service will not suffer from this change, but we like to think will actually improve.

If you are looking for a buyer agent in your area, think of us! If you are looking to sell your property, think of us! If you are an investor and are looking to either sell or buy property, think Focus Professionals for all of your real estate needs.