Weekly Rates + Market Update

Mortgage bond prices remained nearly unchanged last week holding mortgage rates steady. Trading remained extremely volatile with daily movements in discount points often exceeding 1/2. The Treasury auctioned a total of $66B in two and five-year notes last week in the continuing effort to fund the massive bailout programs recently announced. While neither auction was "stellar," the indirect bidder participation, an indication of foreign central bank demand for US securities, was "decent". Traders remained concerned about the massive supply of new debt being created by the TARP program as the US Government battles the credit crisis.

The Year Ahead
This year begins in a similar fashion to last year. Last year at this time 30 year fixed rate mortgage interest rates were historically low. Most pundits predicted steady interest rate increases with little or no opportunities for additional refinancing. Mortgage interest rates did spike higher as oil prices and inflationary fears hit all-time highs this past summer. Then the global economic turmoil hit full force and economies across the world stumbled. The housing market continued to weaken and the Fed and US Treasury had to step in to buy mortgage-backed securities in an effort to push mortgage interest rates lower. Now, 30 year fixed rate mortgages remain low and once again future predictions are all over the board.

What will occur in the future, economic recovery or additional weakness will continue to be debated. There is no certainty in predictions. But most of the recent signs show the economy continues to struggle at least in the short-term. Data can be used to support both sides of the debate. What we can be certain of is the fact that until the economy gains some stability, mortgage interest rates are likely to be volatile. Historically, mortgage interest rates seem to improve slowly. In contrast, when rates increase, it is often fast and furious. One negative day often erases a month’s worth of improvements.

It is possible for mortgage interest rates to push lower considering the Fed continues to purchase mortgage bonds. However, we are in unprecedented times. While the Fed is trying to push rates lower there are no guarantees. The Fed isn’t the only player in the mortgage bond market and there are many others buying and selling the securities. Remember that the Fed does not directly dictate that mortgage interest rates will be at a certain percentage. Rates are determined by the supply and demand for mortgage-backed securities. As of late, every time the Fed comes in to purchase mortgage bonds, rates have headed lower, only to jump back up as others sell into the Fed buying.

Only time will tell if the Fed can accomplish the goal. With that said, it's a great time to buy or refi with historically low interest rates

Rates for December 26th, 2008 Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 4.875%, 4.988%APR
30 Year Fixed Interest Only 6.50%, 6.613%APR
15 Year Fixed Conventional 4.75%, 4.863%APR
3/1 LIBOR ARM Conventional 5.625%, 5.738%APR
5/1 LIBOR ARM Conventional 5.50%, 5.613%APR
5/1 LIBOR ARM Interest Only 5.75%, 5.863%APR
30 Year FHA/VA 5.50%, 5.726%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 5.50%, 5.601%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
5/1 LIBOR ARM (Conforming) 6.375%, 6.882%APR
5/1 LIBOR ARM (Jumbo) 6.75%, 7.257%APR
*60 Day Locks

6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.
Prior to modification, a free one-time float down is available. (30 Year Amortization)

For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

Bank Owned Bargain Listings

Weekly Rates + Market Update

Mortgage bond prices rose last week, which helped mortgage interest rates improve, but only slightly. We saw a huge rally following the Fed rate cut Tuesday. Unfortunately the gains were short-lived and most were erased the following day. Trading remained volatile throughout the remainder of the week. The White House stepped in to help the troubled auto industry Friday, which sent stocks higher that morning at the expense of mortgage and Treasury bonds. The Treasury auctions will set the tone for trading this coming week. Foreign demand for dollar denominated assets will be the focus. The bond market will close early Wednesday ahead of the Christmas holiday Thursday. Trading will resume Friday. This shortened trading week may lead to mortgage interest rate volatility

Rates for December 19th, 2008 Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 4.875%, 4.988%APR
30 Year Fixed Interest Only 6.50%, 6.613%APR
15 Year Fixed Conventional 4.75%, 4.863%APR
3/1 LIBOR ARM Conventional 5.625%, 5.738%APR
5/1 LIBOR ARM Conventional 5.375%, 5.488%APR
5/1 LIBOR ARM Interest Only 5.125%, 5.238%APR
30 Year FHA/VA 5.50%, 5.726%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.875%, 5.976%APR
15 Year Fixed (to $600K) 5.875%, 5.956%APR
5/1 Treasury ARM 5.50%, 5.601%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
30 Year Fixed Conventional 6.375%, 6.882%APR
5/1 LIBOR ARM (Jumbo) 6.75%, 7.257%APR
*60 Day Locks

6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

November Market Snapshot for Dynamite Mountain Ranch

Right now we are looking at an 8 month supply of homes, not too bad when compared with other areas of the Valley. $200K seems to be the magic number for an average sales price currently, average sold price per sf is $106.02 @ 61 days on market. Overall the homes are moving fairly well right now, hopefully the trend continues...

Take A Look Below At Rates!!

Posted By: Jon Tobias, Nova Home Loans

Mortgage bond prices rose last week pushing mortgage interest rates lower. Trading remained volatile with wild swings in both stocks and bonds. The economic data released was within the estimated range and indicated the US economy continues to weaken. The meeting on Tuesday of the Federal Open Market Committee will be the most important event this coming week. Look for rates to be potentially volatile Monday as traders position themselves ahead of Tuesday's meeting.

All eyes will be focused on the Fed meeting next Tuesday. Most analysts predict another rate cut as the economy continues to struggle. As of trading late last week, futures contracts showed a greater than 80% chance of a 75 basis point cut.

The United States central bank, the Federal Reserve, coordinates the borrowing and lending activities of federally chartered banks. The principal reason the Federal Reserve was created was to reduce severe financial crises. One way of accomplishing this goal is to control the amount of money that flows through the economy. By manipulating the US money supply, the Fed influences inflation, unemployment, and the level of US economic activity. The Fed has a variety of tools that it uses to control the money supply, but its chief policy tool is the manipulation of short-term interest rates.

Keep in mind that a Fed rate cut does not automatically mean mortgage interest rates will improve. The Federal Reserve has direct control over the level of short-term interest rates. The Fed's influence over longer-term interest rates with rate cuts is less certain. However, the unprecedented recent direct purchasing of mortgage bonds is a strong effort to push longer-term rates lower as well.
Remember, rates are historically favorable. While there is a strong possibility rates could improve, there are no guarantees in these uncertain times. As a reminder, just a few months ago analysts overwhelmingly predicted gas prices would continue to rise.
If you have any questions over the weekend or need a 2nd opinion on a loan scenario, please call my mobile at 480-225-2987 or go straight to www.creativefinanceaz.com for urgent care files.

Rates for December 12th, 2008 Rates Change Daily. Call for current pricing. #0902429
PROGRAM / LOCK PERIOD
30 Year Fixed Conventional 4.875%, 4.988%APR
30 Year Fixed Interest Only 5.875%, 5.945%APR
15 Year Fixed Conventional 4.75%, 4.863%APR
3/1 LIBOR ARM Conventional 5.375%, 5.456%APR
5/1 LIBOR ARM Conventional 5.375%, 5.488%APR
5/1 LIBOR ARM Interest Only 5.50%, 5.613%APR
30 Year FHA/VA 5.50%, 5.726%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.875%, 5.976%APR
15 Year Fixed (to $600K) 5.875%, 5.976%APR
5/1 Treasury ARM 5.50%, 5.601%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
30 Year Fixed Conventional 6.375%, 6.882%APR
5/1 LIBOR ARM (Jumbo) 6.75%, 7.257%APR
*60 Day Locks

6,9,12, and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

Buying a REO (Bank Owned Property)

An overview of the process and what to expect as a buyer

By Dan Mullarkey, REO Specialist with Re/Max Excalibur Realty

So, you’re in the market for a home and you’ve heard the buzz about the tremendous deals available on REOs. First off, you’re asking yourself what is the heck is an REO? This is a term that you will hear often when discussing foreclosures and the next section will explain what this term means.

REO is an acronym meaning “Real Estate Owned”, a shorthand term for a foreclosed property. This is a property that was previously mortgaged and has reverted back to the bank after an unsuccessful foreclosure auction. REO is not a term that banks want to see on their books because after all, they are in the business of lending money for homes, not managing them.
Many of these properties do not sell at an auction for several reasons. First, the property usually does not have any equity to satisfy the loans and liens, as many homes bought over the past few years have negative equity. Most foreclosures do not even receive a bid because the minimum bid includes the loan balance, attorney fees, any accrued interest and all costs associated with the foreclosure process. To even bid on these properties, you need a cashier’s check in hand, ready to go, for the full amount of your bid. If you are the winning bidder, you receive the property in complete “as-is” condition-meaning someone could be still living in the home, other outstanding liens against the property, and possible structural or environmental issues with the home that could cause enormous problems for you later.

Since in today’s market most people who purchased in the last few years are upside down in their homes, very few of these auctions are successful. After all, if the owner had equity in the home, they would have sold it versus foreclosing. If the auction is unsuccessful, then the property reverts back to the bank. It is now referred to as a REO, and the bank wants it gone ASAP.

Now It’s an REO, What’s Next?

So now the bank owns the property and the previous mortgage loan is gone. Next issue is, “How does the bank sell their REOs?” Most banks hire an outside company, called a Default or Asset Management Company to handle the sale of the property. These companies usually take a percentage of the commission that they give to a local real estate broker or agent to sell the property. That broker in turn offers the buyer’s agent a portion of the sale, same as any other real estate transaction. The Default Management Company employs asset managers who may manage several hundred properties at once, in many different states. The local REO agent is their eyes and ears to the sales process and has many duties to make sure that the property is in saleable condition and being marketed aggressively.
The listing agent is in charge of arranging cleanup and even eviction if the former owner or a tenant is still occupying the property. After the home is vacant and cleaned up, the agent turns in their BPO (Broker’s Price Opinion) which is similar to an appraisal but completed by a Realtor to give the bank an idea of what the home will sell for. Finally, the home is listed on the local MLS and ready for offers.

Offer Received!

Once an offer is received, the bank may take several days to respond. It is customary with some banks to always counter the offer, even if received at full price---this practice is diminishing though as in many areas banks are competing with other REOs and becoming more motivated to sell. As a general rule of thumb, the longer the home has been on MLS, the more motivated the bank is to sell it at lower than list price. If more than one offer is received, the bank may request a “Highest & Best” from all parties- meaning that each buyer has 24 hours to submit their best offer, not knowing where the other offers stand. This is difficult situation for buyers and another reason to be working with an experienced REO agent to help advise you on how to proceed.

Offer Accepted!

Okay, so the bank has accepted your offer and now it’s time to order inspections, right? Well, it might take a few days to get the contract signed by the bank, even after you have an acceptance. During this time, they usually have a policy where they can still look at and accept other offers. So again, make sure your Realtor is working to get the contract signed ASAP, otherwise you could still lose out on the home. The bank will most likely have their own addendum to the purchase contract which supersedes the contract you submitted, SO READ IT CAREFULLY!!! They may change terms such as: length of inspection period, contingencies, per diem charges if buyer does not close on time, seller performance, seller concessions and various other items. The main purpose of the addendum though is to release the seller from any liabilities and warranties of the home since they have never occupied it. When buying from a traditional seller, the buyer is given a disclosure statement-with REO you will never see one.

Inspect, Inspect, Inspect!!!

I ALWAYS recommend getting a professional home inspection, no matter the age or condition of the property. This can be even more important with REO as items not seen with the naked eye may be huge problems in the future. Remember, you are not limited to just a general home inspection…you can use a roof inspector, HVAC specialist, plumber; whoever you feel will give you the best advice for the specific mechanics of the home. Home inspectors are not roofers or HVAC specialists, so their scope can be limited on some items. Get the inspections done early and quickly as time is of the essence, some banks limit the inspection period to 5 or 7 days.

As-Is, or Is It?

True, REO is sold As-Is at the time of purchase unless noted otherwise. But what if the A/C is inoperative or a leaky roof is discovered? Many banks will fix the mechanics of the home to qualify it for financing, especially now with FHA being used so often.
What if you have a laundry list of issues that are discovered that were unknown at the time of contract? Depending on the demand for the home and the length of time it has been listed, some banks will either make additional repairs or credit the buyer for repairs. Again, this is where an experienced REO agent comes in handy. They can truly save you money and negotiate with the bank to make the home acceptable to you. After all, the parties involved in the transaction want to see it close just like any other home, and you as the buyer may have more leverage than you think.

Loan Docs Are In, Ready To Close

After the bank has made any necessary repairs (the appraiser may need to visit the home again to confirm), the closing process is pretty much the same as any other home. Escrow length is typically 30-45 days but can be quicker depending on the buyer---I’ve closed cash deals in under a week and financing in less than 3 weeks. The seller usually signs the closing docs fairly quickly. Once the buyer’s loan funds and records, the home is yours! Now it’s time to get moving and go enjoy your new home!

A few things to remember about REO:

1) Contrary to late night infomercials, they are not sold for pennies but are usually priced aggressively for a quick sale and can be a great bargain.

2) It may take some time to get an acceptance, so patience is a virtue.

3) Working with an experienced REO buyer agent does not cost the buyer and can save time, headaches and money.

4) Fully inspect the property as they are typically sold As-Is.

5) Many REO listing agents deal in volume and may have hundreds of properties listed. Their interests lie in selling as many REOs as quickly as possible so working in the buyer’s interest is not a priority---one more reason to use a REO buyer agent.

REOs can be a tremendous value but there are many things to consider. Working with an experienced agent can help guide you through the potential pitfalls and is absolutely a vital asset when considering these types of properties.

For more information or to search Phoenix Area homes, please visit www.DanMullarkey.com
Copyright 2008 Dan Mullarkey, Re/Max Excalibur Realty

Weekly Rates + Market Update + Website

You'll notice a new feature on my website www.creativefinanceaz.com my "Urgent Care" program, where my team will care for your urgent files immediately. As many of you know, much of my business consists of closing loans when others have not been able to do so. With that in mind, I created a feature to my site that serves the needs of your clients with the utmost urgency and care. Please click on the medical button on my site to be directed to a web application that will be sent to us immediately for review. We have the ability to close Government loans in less than a week and are here for you and your clients 7 days a week!

This Week in the News

Mortgage bond prices rose last week pushing mortgage interest rates lower. Mortgage bonds were initially helped by reports the Treasury would try to get rates lower. Unfortunately, a lot of the gains seen mid-week were erased Friday following mixed employment figures. Unemployment was not as bad as anticipated and average hourly earnings showed a surprise increase. The payrolls component was bond friendly but it wasn't enough to overshadow the headline figure. For the week, interest rates on government and conventional loans fell by about 1/8 of a discount point.
The retail sales data Friday will be the most important release this week. Look for any additional moves by the Fed, the US Treasury, and legislative developments to also result in mortgage interest rate movements. This will be the last full week of data before the next Fed meeting.
And some really good news, which may create more business for us all!...

The Treasury Department is strongly considering a plan to intervene directly in the mortgage industry to dramatically force down rates and stimulate the moribund housing market, according to sources familiar with the proposal.
Under the initiative, the Treasury would offer to buy securities that finance newly issued loans for home purchases, according to the sources. But to participate in the government's program, mortgage lenders would have to set exceptionally low interest rates, for instance, no more than 4.5 percent for traditional, 30-year fixed-rate loans. See the below article:
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/03/AR2008120302889.html

Rates for December 5th, 2008
Rates Change Daily. Call for current pricing.

PROGRAM / LOCK PERIOD
30 Year Fixed Conventional 5.125%, 5.238%APR
30 Year Fixed Interest Only 6.375%, 6.488%APR
15 Year Fixed Conventional 4.75%, 4.863%APR
3/1 LIBOR ARM Conventional 5.50%, 5.613%APR
5/1 LIBOR ARM Conventional 5.625%, 5.738%APR
5/1 LIBOR ARM Interest Only 5.875%, 5.988%APR
30 Year FHA/VA 6.00%, 6.252%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.875%, 5.976%APR
15 Year Fixed (to $600K) 5.875%, 5.976%APR
5/1 Treasury ARM 5.50%, 5.601%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
30 Year Fixed Conventional 7.25%, 7.482%APR
5/1 LIBOR ARM (Jumbo) 7.375%, 7.882%APR
*60 Day Locks

6,9,12 & 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

Fannie Mae and Freddie Mac suspend foreclosures through Jan 9th

http://www.bloomberg.com/apps/news?pid=20601087&sid=aF7wDyLQ9xx0&refer=worldwide
In other news, mortgage bond prices rose last week pushing mortgage interest rates lower. Trading remained choppy with small improvements the first portion of the week. The majority of the releases showed continued economic weakness. Oil fell below $50 a barrel Thursday, jobless claims escalated, stocks generally fell, and deflation talk increased.
St Louis Federal Reserve President Bullard indicated deflation was only a very remote risk with core inflation currently over two percent. Deflation is generally defined as a contraction in the volume of available money or credit that results in general price declines. In inflationary periods, fixed payments buy less each year. In deflationary periods, fixed payments are worth more every year. The purchasing power of $100 in one year increases the following year in a deflationary environment. When investors think deflation is coming, they typically buy Treasuries, which we have seen recently. Other bonds such as corporate or mortgage bonds however do not usually have the same demand. Deflation makes debt payments more difficult each year. Treasuries are backed by the US government, which can print more money when needed. Companies and homeowners don’t have that luxury. In severe deflationary times bankruptcies generally increase. This casts doubt over the performance of corporate and mortgage bonds. This is one reason Treasury rates have fallen significantly while mortgage rates have not been as fortunate.

FHA loan limits will be changing January 1st, 2009. Every county in Arizona except Coconino (new limit $333,500) will be reduced to $271,050. This will change with new FHA case #'s issued after Jan 1st, 2009. Get your buyers off the fence to take advantage of these limits before it's too late. Lastly, FHA down payment requirements will be increasing from 3% to 3.5% with the new changes!

Please give me a call if you have any financial questions or if you need a second opinion on a loan scenario.

Have a great weekend,

Jon

Nova Home Loans is proud to announce 1% down FHA financing for qualified buyers.

This program is designed to assist low to moderate income 1st time homebuyers with little down through a partnership through our Bank.

- Program is open to all 1st time buyers or anyone that does not own other property
- No geographic restrictions
- Underwritten to FHA standards
- Maximum income level of $73,380
- 6% typically needed for closing cost contribution

Don't let your 1st time homebuyers be discouraged and don't trust your buyers to less experienced Loan Officers. Call or email today for more information! Please give me a call if you have any financial questions or if you need a second opinion on a loan scenario. If you are calling after hours or on weekends, please call 480-225-2987 for immediate pre-qualifications.

Jon Tobias Loan Officer
http://www.askthelendingadvisor.com/
http://us.mc655.mail.yahoo.com/mc/compose?to=jont@novahomeloans.com

Fed cuts rates again

Fed cuts benchmark rate by a half-point as it continues to fight the ongoing crisis in the credit markets.

NEW YORK (CNNMoney.com) -- The Federal Reserve cut a key short-term interest rate by a half-percentage point Wednesday and expressed continued worries about the damage being done to the economy by the ongoing crisis in the financial and credit markets.
The rate cut put the central bank's federal funds rate at 1%. That matched the lowest level for this overnight bank lending rate ever -- the last time it was at 1% was from June 2003 to June 2004.
Investors had been expecting a half-point cut and some were betting that the Fed would even cut rates by three-quarters of a point to 0.75%.
The Dow Jones industrial average, which had been higher ahead of the Fed's decision, turned lower shortly after the announcement.
The fed funds rate is used to set rates for a wide variety of consumer loans, including home equity lines and credit cards, as well as for many business loans. The lower the rate, the more the Fed hopes to spur economic activity.
The Fed said in a statement that it was concerned about the drop-off in consumer and business spending due disruptions in the credit markets and warned that the economic slowdown is likely to get worse.
"The intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit," the central bank said in its statement.
This is the ninth time that the central bank has lowered rates since September 2007 in an effort to deal with the problems in the U.S. economy and credit markets. The Fed also lowered its discount rate by a half-percentage point to 1.25%. That is the rate at which it lends directly to banks and Wall Street firms.
The Fed's last cut was an emergency half-point reduction on Oct. 8. Six other central banks around the globe also lowered rates that day in a coordinated move. The European Central Bank and the Bank of England are scheduled to meet next on Nov. 6.
While rate cuts are traditionally the key tool the Fed uses to stimulate the U.S. economy, it has had to take other steps to address the current credit crisis.
The Fed has loaned hundreds of billions of dollars to banks through a new lending facility and is starting to loan money directly to major businesses by purchasing commercial paper, which is what some banks and businesses use as their primary method to fund day to day operations.
In its statement, the Fed also appeared to concede that these actions would not lead to an immediate return of economic growth. The Fed projected improved credit markets and a return of moderate growth "over time." And it warned that "downside risks to growth remain."

Weekly Rates & Market Commentary From Jon Tobias

A Message from Jon Tobias

Well it was another volatile week on Wall Street. Stocks tumbled Friday with the Dow down 312 points, or 3.6%, to 8,379, its lowest close since April 2003. The Dow, S&P 500 and Nasdaq all dropped toward their intraday lows of Oct. 10, their lowest levels of the year. But, the good news is none fell below the 2008 low, a possible signal of support. At the same time, oil prices crumbled, falling 5.4% to $64.15 a barrel in New York, its lowest close since May 2007. This will continue to help us at the pump! The Fed will meet Tuesday and Wednesday and may announce a rate cut at the meeting's close.
Now some goods news, existing-home sales jumped to a 5.18 million annual rate, a 5.5% increase from August's unrevised 4.91 million annual pace. Though the sales levels are still deeply depressed from 2006 highs, the uptick shows that buyers are taking advantage of lower prices in many markets, especially in the West. Based on the sales rate, the inventory of unsold homes dropped to a 9.9-month supply, down from the 10.6-month supply seen in August.


Jon Tobias Loan Officer

http://www.askthelendingadvisor.com/

http://us.mc655.mail.yahoo.com/mc/compose?to=jont@novahomeloans.com

The Art of Negotation

Negotiation can be a complex matter and all transactions are unique. Both sides--buyer and seller--want to have a favorable outcome, or at least gain a fair balance of interests. In the usual case there is a bit of bluff, some give-and-take and neither party gets everything they want.

So how do you develop a strong bargaining position, one that will help you get the most from a transaction? Experience shows there are five basic keys that will determine who wins at the negotiating table.

These (5) elements are key to winning the negotiation between buyer and seller.

1. What Does the Market Say?
Know (read, interpret, study, understand) the Market. Why is it a good time to buy or sell?

At various times we're in a "buyers" market, a "sellers" market or a market where supply and demand are roughly equal. If possible, you want to be in the market at a time when it favors your position as a buyer or seller.

Because all properties are unique, it is possible to buck general trends and have more leverage than the marketplace would seem to allow. For instance, if you have a property in a desirable neighborhood with few sales, you may be able to get a better deal than elsewhere. Or if you're a buyer who can quickly close, that might be an important negotiating chip when dealing with an owner who just got a new job 500 miles away.
Knowing the other side’s main reason for buying or selling is a negotiating advantage.

2. Who Has Leverage?

If you're on the front page of the local paper because your business went bust--and the buyer knows it--you have less clout in the bargaining process. Alternatively, if you're among six buyers clamoring for that one special property, forget about dictating an agreement--the owner can sit back and pick the offer that represents the highest price and best terms.
Know the motives (purpose, intention) of both positions. What’s your bargaining power (tool)?

3. What are the Details?

A lot of attention in real estate is paid to transaction prices. This surely makes sense, but the key to a good deal may be more complex.

Consider two identical properties that sell on the same day for $275,000. The houses are the same, the sale prices are the same, but are the deals the same? Maybe not. For instance, one owner may have agreed to paint the property, replace the roof, purchase a new kitchen refrigerator, and pay the first $5,000 of the buyer's closing costs. The second owner made no concessions.

In this example, the first house was actually sold at discount--the $275,000 purchase price less the value of the roof repairs, closing credit and other items. If you're a buyer, this is the deal you want. If you're a seller, you would prefer to be the second owner and give up nothing.
Know the (specifics, particulars of) offer. In addition to price, does the seller offer concessions (allowances or contributions) or financing options?

4. What About Financing?

Real estate transactions involve a trade--houses for money. We know the house is there, but what about financing? There are several factors that impact the money issue.

Has the buyer been pre-qualified or pre-approved by a lender? Meeting with a lender before looking at homes does not usually guarantee that financing is absolutely, unquestionably available--a loan application can be declined because of appraisal problems, title issues, survey findings and other reasons.

But buyers who are "pre-qualified" or "pre-approved" (these terms do not have a standard meaning around the country) at least have some idea of their ability to finance a home and know that they are likely to qualify for certain loan programs.

The result is that pre-qualified buyers represent less risk to owners than a purchaser who has never met with a lender. If the seller accepts an offer from a buyer with unknown financial strength, it's possible that the transaction could fail because the buyer can't get a loan. Meanwhile, the owner may have lost the opportunity to sell to a qualified buyer.

The lower the interest rate, the larger the pool of potential buyers. More buyers equal more potential demand, good news for sellers.

Alternatively, high rates or even rising rates may drive buyers from the marketplace--and that's not good for anyone.

It used to be that downpayments were a major financing hurdle--but not anymore. For those with good credit, loans with 5 percent down or less are now widely available. In fact, 100 percent financing--mortgages with nothing down--are now being made by conventional lenders. Reduced downpayment requirements are good for both buyers and sellers.
Know the financing options available before making or accepting an offer. What options add credibility/assurance to the transaction?

5. Who Has Expertise?
Knowledge is Power. Working with a qualified real estate professional gives you that power.

Imagine you're in a fight. The other guy has black belts in 12 martial arts--and you don't. Who's going to win?

Brokers have long represented sellers, and now buyer brokerage is entirely common. In a transaction where one side has representation and the other does not, who has the advantage at the bargaining table?
Know the market, the advantage of your position, and current financing options and win the negotiation between buyer and seller. When looking for your next home, contact an Accredited Buyer Representative (ABR) to help promote your best interests.

*This articles publisher is unknown, my summaries are listed in bold.

A call for a housing bottom worth listening to

A handful of economists and analysts predict that home prices will level off by next summer.
By Les Christie, CNNMoney.com staff writer
September 11, 2008: 3:53 PM EDT

NEW YORK (CNNMoney.com) -- Alan Greenspan famously declared the worst was over back in November of 2006. And the National Association of Realtors' erstwhile chief economist David Lereah called the bottom a few times, starting in May 2006.
Plenty of other economists and real estate analysts have attempted to do the same - and of course they've all been wrong.

But a consensus seemed to emerge among experts at a housing forum held by Standard & Poor's and the Chicago Mercantile Exchange on Wednesday in New York. Readers will be forgiven for taking this pronouncementwith a large grain of salt.
Several panelists, including Economy.com's chief economist Mark Zandi, Goldman Sachs (GS, Fortune 500) economist Charlie Himmelberg, S&P managing director David Blitzer and S&P senior economist Beth Ann Bovino all agreed that home prices would stabilize sometime during the summer of 2009.

"The bottom of the housing market is coming into view," said Zandi, whose recent book "Financial Shock," examines how the subprime mortgage crisis occurred. "House prices, based on the S&P Case-Shiller index, are down 20% peak-to-trough and I expect them to fall another 5% to 10%."

"The key is housing affordability," Zandi said. "The [price] decline is beginning to restore affordability, which is now near its long-term average. In some places, Boston, Chicago, Denver, Orange County, affordability has been restored and those markets have stabilized."
More declines ahead

One piece of good news noted was home sales volume. The number of homes sold each month has already leveled off nationally, staying within a narrow range nearly every month this year at an annualized rate of about 5.5 million units a year.

Bovino said her forecast for home price decline is slightly more bearish than Zandi's, mostly based on S&P's belief that the country is now in a recession. With the economy struggling, job losses rising and a tough lending environment, she expects prices to fall another 10%.
"We think there will be an overshoot [with prices going beyond their logical bottom]," she said, in part because so many buyers are afraid to get into the market. "Nobody wants to catch a falling knife," she said.

And after prices do bottom out, Himmelberg expects them to remain fairly flat for a year or so.
Everyone on the panel agreed that the government takeover of Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) should help the housing market.
"We expect Fannie and Freddie to be more aggressive [in buying loans] over the next few months," said Zandi. "We are at a low point in credit availability right now."
The panelists were careful to couch their optimism with caveats. Zandi, for example, points out that there is a lot of uncertainty about the fate of Fannie and Freddie, in the wake of their government takeover.

There is some speculation that the companies will be downsized by a new administration after the presidential election in November.

"Neither candidate," said S&P managing director David Blitzer, "has decided what they want to say about that."

MY THOUGHTS:

I tend to agree with this article, once affordability increases prices will stabilize. I don't think this is over, we will see a flat if not slightly decreasing market over the next 6 months. Rents are not decreasing, and once mortgage payments are equivalent to rent in an area we will have a healthy housing market. One thought to keep in mind-the good deals are going very fast right now, some with multiple offers. Buyers are out there-they know what they want and what they will pay for it.