Intown Atlanta Musings

Credit Tips from one of our favorite lenders!

Let me know what you guys think!  It looks like great advice to me, and now is the best time imaginable to protect your credit...interest rates are at historical lows and good credit scores will mean even more savings!

-Wayne and Pam

5 Credit Cards You Should Never Close

Many consumers close credit cards after becoming what seems like too delinquent to catch up. There seems to be the notion that closing cards makes delinquency go away. Not only is this not the case, closing out a delinquent credit card will hurt your credit more than it will help.

Here are five credit cards that you should never close.

1. Any credit card that still has a balance.
   When you close a credit card that has a balance, your total available credit is lowered to $0. Since you still have a balance on that credit card with no credit limit, it looks like you’ve maxed out. The amount of debt you have is 30% of your credit score; so a maxed out credit card, or one that appears to be maxed out, can have a very negative impact on your credit score.
2. Your only credit card with available credit.
   Closing out this card will decrease total available credit and increase your credit utilization, which, as before, is not a desired situation.
3. Your only credit card.
   Since part of your credit score into consideration the different types of credit you have, keeping a credit card in the mix will add points to your credit score.

You could get turned down for a credit card in the future because the creditor thinks you don’t have enough experience with credit cards.

1. Your oldest credit card account.
   Closing out your old credit cards shortens your credit history. Lenders tend to view borrowers with short credit histories as riskier than borrowers with longer histories.
2. The credit card with the best terms.
   Why let a good thing go? If you have a credit card that has a low interest rate, no annual fee, and other perks like travel insurance, keep it. A credit card that charges you less for making purchases is far better than one that charges you more.

It’s ok to close out a newer credit card that you no longer use as long as the card does not have a balance and you have other credit cards.

In identity theft and fraud situations, your creditors will advise you to close the credit card to keep the thief from damaging your credit even further.

The proper way to close a credit card is by sending a written notice to the card issuer. For your records, you should request written confirmation that the account was closed in good standing.

You should be just as selective about the credit cards you close as the ones you open. Before you pick up the phone to alert your creditor that you want to close your account, make sure it’s not going to affect your credit score in a negative way.

Taken from: credit.about.com/od/toughcreditissues/a/closecards.htm - 22k

Let me know what you guys think!  It looks like great advice to me, and now is the best time imaginable to protect your credit...interest rates are at historical lows and good credit scores will mean even more savings!

Exposing the Myths of the Real Estate Market Bubble: Part 3 - Inman Park

Good morning everyone!  I appologize for this next post taking so long to come up...you know we realtors actually have to do some real estate oriented work every now and then:) 

This post is going to focus on the current maket statistics for Inman Park.  Like the previous two market update posts, we'll be looking at the number of sales, median sales price, and the average days of market for the years 2005, 2006, and 2007.  So, without further adieu....

2005

Total Number of sales: 49

Median Sales Price: $415,000

Average Days on Market: 83

2006

Total Number of Sales: 37

Median Sales Price: $434,000

Average Days on Market: 89

2007 so far...

Total Number of Sales: 25

Median Sales Price = $472,500

Average days on Market = 120

**So Inman Park is on track to do the exact same number of transactions as last year, with about 8% appreciation.  Again though, it looks like the average number of days on market has increased by 50%...one of the highest increases amongst the intown Atlanta neighborhoods.  Another reason why pricing homes right, and staging them will be imperative for a sale. 

Until next time....

Wayne Tyndall - The CARE Team - www.thecareteam.net - wayne@thecareteam.net - 404-978-CARE

Exposing the Myths of the Real Estate Market Bubble - Part 2: Morningside

1. For part two of our market update series, we chose to focus on Morningside--Virginia Highland's neighbor to the north.  As in the last post on Virginia Highland, the numbers to be examined are the number of sales, median sales price, and the average days on market for the given year.  Here's what they look like:

1. Number of Sales 2005 = 174
2. Median Sales Price = $473,300
3. Average Days on Market = 63

1. Number of Sales 2006 = 181
2. Median Sales Price = $563,500
3. Average Days on Market = 98

1. Number of Sales 2007 thus far= 112
2. Median Sales Price = $512,500
3. Average Days on Market = 101

So here's our opinion as to what's going on:

It's unfortunate to see that Morningside has seen a decreased number of sales,  a decrease in median sales price, and and increase in the number of days on market.  In addition the inventory levels have been growing in comparison to the buyer pool. 

Advice to buyers:  Act now!  it's an amazing time to buy--if you have money to put down and you have an established relationship with a lender you can trust. 

Advice to sellers:  With so much competition, it's more imperative now than ever to have a great agent working for you (raises hand!).  Further, professional staging is also an essential part of your marketing plan.  In order to sell, you will also need to be prepared to pay some or all closing costs.  If you are concerned about the amount of time on the market, remember this - Two things will ultimately control whether or not your home sells; its condition and its price.  In the current market, pricing your home in the bottom 1/3 of the comps and having your home in the top 1/3 of the comps based on condition will ensure a speedy sale...who knows...you may even get multiple offers!

Look for more next time!

Wayne Tyndall - The CARE Team - www.thecareteam.net - wayne@thecareteam.net

Exposing the Myths of the Real Estate Market Bubble - Part 1: Virginia Highland

In recent months, the media has really ramped up their coverage of the real estate market across the country.  While that's awesome, there's a big problem with the way they are portraying what's going on. Real estate happens in a localized market--not on a national one.  Sure, regional and national economics certainly impact what happens within the smaller community--but it certainly isn't the end all, be all.  So with careless phrases like "the bursting real estate bubble" and "house values are declining rapidly" being thrown around out there, Pam and I thought it important to give our neighbors in the Intown Atlanta market some real numbers to work with in their particular neighborhoods.  We'll be focusing on two different important indicators in this series:

1. Median Sales Price (Looking at median sales price instead of an average removes the influence of the abnormally high, and abnormally low home sales in a neighborhood that appraisers are allowed to use in comparables anyway, but have a huge impact on the numbers when using the average approach.)

2. Days on Market  - Just how long are homes up for sale?

To start off the series...let's take a look at the numbers in Virginia Highland:

1. Median Sales Price 2005: $440,000
2. Average Days on Market 2005: 78 (Total # of sales = 162)
3. Median Sales Price 2006: $499,900
4. Average Days on Market 2006: 85 (Total # of sales = 142)
5. Median Sales Price 2007 to date: $570,000
6. Average Days on Market 2007 to date: 84

So, Virginia Highland residents, it looks like what the media has been saying doesn't really apply to you guys!  Essentially what we've seen in this particular neighborhood is an increase in the number of homes that are For Sale...almost double what they were last year...especially in the million dollar+ range.  In addition to that, the number of homes sold has been decreasing. What that means for sellers is the same thing we've been saying over and over again....price your homes right, and stage them, stage them, stage them! 

More next time!

Wayne Tyndall - wayne@thecareteam.net - 404-978-2272

Selling During a Slow Market

The article below is from Realty Times.  I figured I'd share it with everyone since it seems to be pertinent to what we are facing right now.  The important thing to remember is that here in Atlanta, housing prices, as a general rule, HAVE NOT FALLEN.  We certainly have seen an increase in days on market and more inventory, but unlike many parts of the country, prices have remained steady.  I'll make comments throughout the article about what Pam and I feel are true for what we're facing here in Atlanta, and what may not be as applicable to us.  Our comments will be in Red!!

Selling Your Home in a Slumping Market by Ralph Roberts

In a tight housing market, remember that you are competing with all of the other homes for sale in your neighborhood. The key to success is to make your home and the deal itself more attractive than what the competition is offering without giving away too much.

If you find yourself having to sell into a slow market, here are some tips to help you make your home more attractive and sweeten the deal to generate more interest in your home:

Price it to the market, don't be greedy. Most sellers tend to set the price too high, thinking their home is worth more than it really is. Check the sales prices of comparable homes that recently sold the asking prices of comparable homes that are currently for sale in your neighborhood. (What ends up happening when you overprice your home is that you end up chasing the market with price reductions instead of getting ahead by pricing it right from the start! Remember, the price you'll get from a home is often directly proportional to length of time it's been for sale.)

• Use a seasoned Realtor, a veteran who has already experienced price wars in the housing market. According to the National Association of Realtors®, a home sells on average for 16-percent more when the seller uses as certified Realtor. (Enough said!!)

Have your home professionally inspected before showing it. Get everything repaired so lookers won't have an excuse not to buy.

Have your home professionally staged. A professional stager can transform an empty or overly cluttered house into a warm and welcoming home. (We can't seem to stress this one enough!  Homes that are staged well tend to sell TWICE as fast as those that are not...and for top dollar too!)

Don't move out before it sells, or if you have to move out, make sure you leave the home staged, so it looks lived-in. Vacant houses feel more like uninhabited caves than homes.

Be willing to pay closing costs for the purchaser, up to 6 percent. (I would think that in our market, the number would be more like 3%...but it depends on how well you have priced your home.)

• Make sure your Realtor is marketing your home on at least eight Internet sites, including Craigslist and Backpage.

Realtor commissions are negotiable. Consider offering a higher commission to your Realtor as an added incentive. (It's sad, but true...listings with a higher commission paid to the buyer's agent generally get shown alot more.)

Keep your home in ready-to-show condition at all times. Do not require a 24-hour notice.

Focus on curb appeal and making a good first impression. You do not get a second chance to make a good first impression.

Be open to negotiating on things like leaving furniture or appliances behind.

Although you may be tempted to take the first offer that comes along, be careful (however, note that the first offer received on a home is often the best one). Not all offers are created equal. Here are some warning signs to watch out for:

• Someone tells you to take your house off the market for a period of time, and in exchange, the person will pay you more than the asking price later. This is usually a sign that the person plans on using your home as part of a mortgage fraud scheme in which he obtains a loan for more than the house is worth, pays you a little more than what you were asking, and pockets the excess proceeds.
• A cash back at closing deal in which the person offers you more than the home is worth if you agree to kick back the extra money at closing.
• The buyer is not pre-approved for a mortgage loan. This person can tie up your home, preventing you from considering better offers. (We take this one a step further, requiring that any buyer submitting an offer on one of our listings be pre-approved, or receive a commitment letter from our preferred lender.  This ensures that the buyer is definitely able to obtain, and close on a deal.)
• The person is offering no or very little Earnest Money Deposit. The lower the EMD, the more likely the deal will fall through. (I don't know that I agree with this one...however, earnest money should be at least 1% of list price.)
• The prospective buyers make the purchase agreement contingent upon their home selling, and for that to happen, several other transactions must occur first. This is know as the domino effect, and you should avoid it, if possible.

I hope you found that as interesting as we did!  It's essentially the same information we've been giving our sellers for years:)

Pam & Wayne

Current State of Mortgage Financing...What's going on!?!?!

Current State of Mortgage Financing...What's Going On?

Anyone watching or reading the financial news over the last few weeks has seen a lot of angst and consternation over the state of the mortgage industry. In fact, one of the larger lenders in the US, American Home Mortgage, was forced to shut down operations recently. But why? What is happening, what does all this mean to you and most importantly... what should you be doing do right now to make sure you are protected?

Here's the scoop.

Over the past several years, many loans were made to homeowners with somewhat non-traditional or "non-conforming" situations, be it a poor credit history, inability to document income, or any number of factors that do not fit within the traditional "box" for home loans. These loans are often called "Sub-Prime", or "Alt-A", meaning that they were somewhat riskier in nature than A credit, prime, or traditional loans. Another type of "non-conforming" home loan is one where the credit and income might be perfectly fine, but the loan amount is higher than $417K, which is the current maximum loan that can be done using pools of money from mortgage giants Fannie Mae (FNMA) and Freddie Mac (FHLMC). If the loan amount is higher, it can certainly be done - it's called a "jumbo loan" - but the end money comes from private institutions, not from the large government sponsored entities of Fannie and Freddie.

Most non-conforming loan product rates popped significantly higher recently. Here's what happened.

The end investor for Subprime or Alt-A loans will charge a premium for taking on a pool of these loans, because they know that traditionally, they might have a higher rate of default and delinquent payments within that risky pool. But lately, default and foreclosure has been on the rise - partly due to the fact that with credit tightening and a soft real estate market, many troubled homeowners are unable to refinance or sell in order to get out of trouble. So now, these end institutions are demanding a much higher "risk premium" for taking on these pools of loans, as they see the rates of default are climbing higher.

But since these institutions are purchasing these pools of loans sometimes months after the borrower has actually closed at a given rate, this increase to the risk premium means that instead of paying $101K for a $100K loan that will bear interest, they may only be willing to pay $95K for that $100K mortgage to account for the risk. Multiply that times thousands upon thousands of loans...and you have millions upon millions of dollars in loss for the company trying to sell the pool at a much lower price than they were expecting. This is called a "liquidity crisis", and is exactly what happened to American Home Mortgage - there was no mismanagement, but they simply got caught holding too many "hot potato" loans, forced to sell them at massive losses...and eventually they had to make the decision to close the doors and stop the bleeding.

Further, even when a lender is able to take some losses, they may be subject to a "margin call". This means that as their losses and risk premiums increase, the value of their loan portfolio decreases. As the value decreases, the credit lines that are secured by those portfolios begin to issue margin calls as the value of the asset that they are secured on is now diminished. This is exactly like margin calls in the Stock market. If you have a loan against a Stock that is losing value, you will get a "margin call" and need to pay down the loan, as the underlying Stock is losing too much value to be considered adequate collateral any longer. So for the big lenders, as their portfolio is losing value due to increased risk premiums and losses...the margin calls start coming in, and they are required to pay down their balances. In turn, this means that they have less availability to fund their new loans, which then exacerbates the problem.

In response to seeing this situation play out in the demise of American Home Mortgage, lenders of other non-conforming loan products increased their interest rates dramatically almost overnight to be better prepared - and likely over-prepared - for increased risk premiums down the road.

Even though loans above $417K are not presently suffering from increased delinquencies like the Subprime and Alt-A loans are, these rates popped higher as well, because they are being purchased by smaller private entities that can't afford to take on any margin of risk.

What happens next?  The major damage is probably already done, and the present situation will likely settle out over the coming year.  Lenders will stop pulling products off the shelf, and the rates on products that have moved so significantly higher now should trend lower down the road as delinquency rates stabilize. 

But here are a few important things YOU should do right now:

ONE:  Even if you are not presently in the market for a home loan of any type, make sure that your credit standing is as solid as possible. Many people in the market for a home loan didn't expect they would have a need, and didn't plan in advance to ensure their credit would qualify them for the best possible financing. With no immediate need for a home loan, time is on your side... why don't we take a few minutes together and just make sure you are prepared, should a need arise down the road?  Call or email me right away.

TWO:  If you are in the market for a home loan, or know someone who is - understand that now is the time to be working with a real qualified professional who can keep you informed of changes in the market and get your loan funded quickly. Now is NOT the time to be playing the risky game of trying to scour the entire nation to find someone who promises to save you a paltry amount on costs, or deliver a rate that seems too good to be true.

Your home and your financing are just too important, and times have changed. I am here to help and advise during these volatile times - and would welcome calls from you, your friends, family, neighbors or coworkers.

**Information Provided Courtesy of:

Carrie Danbom of SunTrust Mortgage - 770-421-2263 - carrie.danbom@suntrust.com

We have arrived!

After attending MEGA Agent Camp in Austin, TX this past week, I have decided that it's high time for The CARE Team to join the rest of the tech universe and begin blogging!  Pam and I are INCREDIBLY excited about the possibility of keeping all of our favorite Atlantans up-to-date on what we're learning and what's going on with the real estate market--and some personal tid-bits as well:) 

The purpose of the blog is to provide a place for The CARE Team, Intown Atlantans, and others interested in the area to have an open forum for discussion about issues related to what's going on in our neighborhoods. 

Pam and I are looking forward to an exciting new way to keep in touch with everyone!

Wayne Tyndall