Showing posts with label home equity. Show all posts
Showing posts with label home equity. Show all posts

2/12/2024

Bay Area vs Kansas City Price Comparison

San Francisco and Kansas City home market prices!
This graphic is at the end of 2023, showing median sales prices as of the 4th quarter in the Bay Area vs Kansas City.

If anyone is thinking of relocating to Kansas City or any other area, just get in touch!


 

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

3/10/2023

Homeowners May Be Losing Millions When Selling to "We Buy Houses" Investors

I'm sure you've seen the yellow signs with black handwritten lettering on the corners as you drive by, advertising all cash purchase, fast sale, easy sale, etc.  There are also some TV advertisers along the same lines.

Single family home with attached garage, car in driveway
Here is a story about research done in a Philadelphia market where such purchasers approach poor and vulnerable homeowners in areas where owners may not want to approach a real estate agent for various reasons.

A report from a Drexel University Nowalk Metro Finance Lab states sellers are often short-changed when selling the people behind the "We Buy Houses" signs, visible throughout the Philadelphia area. This report found that owners selling to such investors without listing on the multiple listing service (MLS) typically receive less than half the value they would receive if using the traditional method of selling. In that market, a seller received $126,000 less than a similar home on the MLS, an estimated $500 million loss in the Philadelphia market over 4-1/2 years.  This study also states only two cities and four states regulate the wholesale market, which unlike real estate agents, does not require a license to work in.

The investor may approach an owner with a price in mind that accounts for his/her after-resale value minus their capital costs and then quotes a price to the homeowner. If the purchaser is not a contractor himself/herself who will do the work, then that investor may be looking for a connection who is looking to enter that market and sells the contract to them for a profit to the investor.

In Philadelphia these transactions are concentrated in certain areas where the majority of homes never go on the MLS.  The Finance Lab looked into the reasons why these owners would not list with an agent and skip getting a higher price - it had to do with factors involving racial discrimination, economic discrimination, and lack of knowledge and assistance on how to fix up a home for sale in today's HGTV-style market. So a lot of home equity ends of being lost to the owner, and eventually the sale leads to gradual gentrification of neighborhoods by new owners.

Not addressed in this article are the more recent Fair Housing and Fair Appraisal requirements which are now required in Realtor contracts, but which appear to be completely washed over in the Philadelphia areas because investors are typically unlicensed free agents, not regulated except where described above.

There are also licensed groups operating in a similar way in the wider real estate market in many states, including California, with the same aim - to buy low and sell high.  Sellers of these properties often feel they are being saved the hassle of preparation to sell, especially if they are near foreclosure, a short sale, or are low of funds to paint, repair and fix up to sell. But so often it's the same story - they don't realize how much money they're leaving on the table -- and in fact, there are now some loan programs which will analyze the equity and front the money to owners for just that purpose, who can they repay the short term loan out of escrow proceeds -- and still walk away with profit.

If you are wondering about a cost-to-sell, or a value for selling without prior repairs, this is the time to find out, as non-investor buyers are looking for a chance to own.

Please contact me, an experienced Realtor with 28 years experience, for a no-obligation market estimate for your house, condo or multi-unit residential property.

 

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

12/23/2013

Housing Equity 2013--The Gap Narrows

Housing Equity 2013

A borrower who purchased a median priced home in 2004 and held it for nine years, the current median tenure of a homeowner according to NAR’s annual Profile of Home Buyers and Sellers, would have $28,114 in equity from the combined benefit of price appreciation and paying down the mortgage principle. A borrower who bought a median price home in 2012 would have more than $23,000 in equity.
Borrowers who purchased in 2006 and 2007 at the peak of the market and thus those who experienced the sharpest price declines are now nearly in positive equity. A person who purchased in 2006 and owned through 2012 (not pictured) would have been underwater by roughly $28,200, but by 2013 this gap was down to $4,700. Continued price growth in 2014 will help to further ameliorate this gap. Homeowners who purchased since 2007 are in positive equity.
Even through the vicissitudes of the great recession, for most homeowners housing remains an effective vehicle for building equity and wealth.

8/08/2013

Long Beach Area Sellers Have An Optimal Time to Move, Now

 
For the first time in years, sellers have an optimal time to sell, because more people are looking for a better place to live.  Interest rates are still lower, and prices are too (yet rising in areas as well).  Rising prices in some areas have lifted some sellers out of negative equity, or very close to it, so that they now may feel they can move on. 
 
It's an optimal time, take advantage of it now.
 

2/25/2011

A Short Course in the Meaning of Home Equity

What is your property's equity? This topic came up just recently in a discussion, and though we think it's a basic real estate question, we can't always assume that everyone knows how it gets answered. 

Basically, equity is the amount equal to the current market value of your home, minus all your liens, or what you owe. Ideally, if you bought a house for $200,000 and your only outstanding lien is your total mortgage amount of $150,000, then you have $50,000 equity in your house.

Some people may think that because they invested a certain number of dollars in their house as a down payment, i.e., $50,000, plus their additional funds to pay for closing costs, that they will get the remainder back when they turn around and sell.

But just like the disclosures advise about deposits into investment funds, that depends on what's happened to the market values in the time you've owned the property. And what improvements you've made to the home, and how they are currently valued (but not usually by the dollar amount you spent on them). And the location, and the condition of the property, and how your property may be perceived by the target group of buyers searching at any given time for a home like yours. In addition to these "standard" value issues, we have the following:

As is well known now, property values increased greatly a few years ago, and then started to fall--all due to numerous complex global market forces. This was great for people who sold their homes on the upswing: That $200,000 house might have sold for $400,000, and the owner's gross net at the close of escrow, after paying off their loan, was approximately $250,000--before paying closing costs.

But for people who did not sell until the market went down, maybe they broke even: Perhaps their home was worth $165000 on the current market and they had just enough left over to pay off the loan and their closing costs. Or, or if their home value declined even further to $150,000, then they are digging into their pockets to pay off the $150,000 mortgage plus the extra money for additional closing costs. This why many people, possibly as much as 30% of all mortgage borrowers at the present time, are in a short sale position, or "under water" in the market value of their home. If you don't have a need to sell, then you should not be affected by the downward cycle. However, if your employment income has been affected and you cannot continue with payments and you have to sell, or you have experienced some other stressful impact to your financial status, you are most likely in a short sale situation because the market values may have decreased below your mortgage balance (which is tied to your amortization schedule, not the economy), and therefore you have no equity.
First of all, you should get a good assessment of your current home value, some people actually still have some equity, or could possibly "break even", and a short sale could be avoided. If, however, you think you might be in a distressed situation, please contact me to find out your options, or you may go to the Distressed Properties section at http://www.juliahuntsman.com/ for a few free reports.

Real estate goes in cycles, and it always has. Some are harder than others. There are many many people who, through no fault of their own, have experienced a negative equity situation or even the loss of their home. But before that happens to you, you should find out if you're able to get a loan modification, or it not, what a short sale vs. deed-in-lieu vs. foreclosure would mean for you. It will cost you nothing, and could help you from the most severe impacts and a faster recovery in the future.

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