Brought to you by: JALEX Real Estate Services

Before the end of the year, Congress and the President agreed to extend the payroll tax cut. In that bill, there were two items of interest for those involved in real estate.

1. The hike in the Guarantee Fees charged by the GSEs Fannie Mae and Freddie Mac.

The 10 basis point increase in the fees has translated to a .375% to .5% increase in mortgage rates for conventional loans. Many customers who started their loans a couple of months ago are being “surprised” with higher than expected rates. Heck, everything you read in the papers says rates are at historic lows and will likely stay there through 2014. Many consumers feel as if their lender is being unscrupulous. However, your lender has fallen victim to the increase in Guarantee Fees and how the secondary market is passing on the cost. What looks like possible lender greed is just a passing on of the increased expense imposed by the government. Sadly, the increased revenue isn’t even being used to help aid an ailing Fannie Mae or Freddie Mac. It is being turned over to the US Treasury to cover the temporary extension of the payroll tax cut.

1. Permission for HUD to increase the insurance premiums they charge on FHA loans.

If you remember, HUD charges two insurance premiums – a monthly one and an up-front one that is usually added into the loan. Most recently, they reduced the up-front mortgage insurance premium (UFMIP) and dramatically raised the monthly fee (MMIP). It is widely anticipated that, maybe as soon as April, we will see a hike in the UFMIP with no adjustment to the MMIP. While this will help shore up the reserves in the insurance fund, it will simultaneously make buying a home more expensive. No one knows the effective date or amount of the increase. Buyers should look to buy before the increase in fees.

We always hear how our government officials tuck away things in their bills. In this case, while the headlines during the holidays praised Washington for preserving the payroll tax cut, they may have hurt us more in the long run.

For more information or for help buying or selling your home give us a call:

JALEX Shippensburg – 717-477-9326, JALEX Chambersburg 717-496-8405

or email at scoover@jalexhomes.com

Brought to you by: JALEX Real Estate Services

Number of Homes Sold in the period (3 months): 113

Absorption rate = # of homes sold / period (3 months): 37.67

Month’s supply of homes = Total active listings / Absorption rate: 13.54

(6 is considered balanced market conditions, 6 is a seller’s market and above 6 is a buyer’s market)

Total homes sold on the past 30 days, Chambersburg school district: 31

Median sales price: $150,000

High sales price: $710,000

Low sales price: $12,500

Median days on the market for all sold homes in the past 30 days: 64

Real estate sales in the Chambersburg real estate market have been more active this December and January than last December and January.  The local Chambersburg real estate market is active with buyers looking to take advantage of historically low interest rates.  When asking the question whether now is the time to buy or not just about everyone in each age group and education level is saying that NOW IS THE TIME TO BUY.

There are Five things to watch out for now as we head in to 2012:

1.  First, Buyer’s will return

In 2011, a lack of consumer confidence in the overall economy dramatically impacted the housing market. Buyers were afraid to make a purchasing decision on any big ticket item. By the end of 2011, consumer confidence began to return and sales increased. Economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify. Once that happens, home buyers will realize that now is the time to buy.

2.  Foreclosures will rise

The ‘shadow inventory’ of foreclosures which has been growing since the robo-signing challenges of late 2010 will finally be introduced to the market. Distressed properties sell at discounted prices. They will impact the housing values of the non-distressed homes in the area.

3.  Prices will soften

As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways:

• They will eat up some of the buyer demand in the market.
• They will impact the appraisal on ALL transactions in the area.

An increase in foreclosures will have a negative impact on values. This will cause more homes to be underwater.

4.  Short sales will increase

As mentioned above, we strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity. Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations. If this happens, there could be an increase in the number of foreclosures. However, we predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals.

5.  Great agents will be very successful

Real Estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.

Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as industry leaders. These experts will dominate their markets.

Steve Coover

Associate Broker, Owner JALEX Real Estate Services

717-496-8405 Chambersburg Office – 717-477-9326 Shippensburg Office

scoover@jalexhomes.com

Number of Homes Sold in the period (3 months): 40

Absorption rate = # of homes sold / period (3 months): 13.33

Month’s supply of homes = Total active listings / Absorption rate: 11.40

(6 is considered balanced market conditions, 6 is a seller’s market and above 6 is a buyer’s market)

Total homes sold on the past 30 days, Shippensburg school district: 14

Median sales price: $120,000

High sales price: $225,000

Low sales price: $6,000

Median days on the market for all sold homes in the past 30 days: 255

Real estate sales in the Shippensburg market have been more active this December and January than last December and January.  The local Shippensburg real estate market is active with buyers looking to take advantage of historically low interest rates.  When asking the question whether now is the time to buy or not just about everyone in each age group and education level is saying that NOW IS THE TIME TO BUY.

There are Five things to watch out for now as we head in to 2012:

1.  First, Buyer’s will return

In 2011, a lack of consumer confidence in the overall economy dramatically impacted the housing market. Buyers were afraid to make a purchasing decision on any big ticket item. By the end of 2011, consumer confidence began to return and sales increased. Economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify. Once that happens, home buyers will realize that now is the time to buy.

2.  Foreclosures will rise

The ‘shadow inventory’ of foreclosures which has been growing since the robo-signing challenges of late 2010 will finally be introduced to the market. Distressed properties sell at discounted prices. They will impact the housing values of the non-distressed homes in the area.

3.  Prices will soften

As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways:

• They will eat up some of the buyer demand in the market.
• They will impact the appraisal on ALL transactions in the area.

An increase in foreclosures will have a negative impact on values. This will cause more homes to be underwater.

4.  Short sales will increase

As mentioned above, we strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity. Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations. If this happens, there could be an increase in the number of foreclosures. However, we predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals.

5.  Great agents will be very successful

Real Estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.

Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as industry leaders. These experts will dominate their markets.

Steve Coover Associate Broker, Owner JALEX Real Estate Services 717-477-9326 Office

Brought to you by JALEX Real Estate Services

Brought to you by: JALEX Real Estate Services

Every aspect of a listing’s marketing can impact its sale price, even the word choice. For agents, making sure descriptions capture a serious buyers attention is key to getting your sellers the most money.

When describing a home, the details matter.  In the bestselling book Freakonomics, authors Steven Levitt and Stephen Dubner explain that “An analysis of the language used in real-estate ads shows that certain words are powerfully correlated with the final sale price of a house…. A ‘fantastic’ house is surely fantastic enough to warrant a high price, isn’t? What about a ‘charming’ and ‘spacious’ house in a ‘great neighborhood!’? No, no, no and no.”

Levitt and Dubner say, “If you study the words in an ad for a real-estate agent’s own home…you see that he or she indeed emphasizes descriptive terms (especially, ‘new,’ ‘granite,’ ‘maple,’ and ‘move-in condition’) and avoids empty adjectives (including ‘wonderful,’ ‘immaculate,’ and the telltale ‘!’).” Also, don’t make it appear that your clients are desperate to sell, as in “Must Move Quickly” or here’s one I see all of the time locally, “motivated seller” (who is more motivated, the seller or the listing agent?)  You’re going after the buyers looking for their dream home – and willing to pay for it—not the bargain hunters!

Here are some words and phrases that kill deals or decrease profits: fantastic, spacious, “!”, charming, great neighborhood, “This one won’t last long”, “Bring offers, motivated seller”.

Here are some words that make deals or improve profits: granite, energy-efficient, state-of-the-art, maple, gourmet, “new”.

The Smart Words Philosophy

When it comes to writing descriptions, the smart thing to do is to be very specific. Don’t be vague and use words like “fantastic,” “spacious,” or “charming.” Boring!  Avoid sweeping adjectives.  Give specifics using descriptive, straightforward terms that tell the physical attributes of your home, as in “Marble,” “Spiral Staircase,” “Gourmet Kitchen with New Viking Appliances, and “Solid Bamboo Flooring.”  Remember, home buyers are interested in the facts not your (possibly biased) opinions.  I see agents use the phrase, “This one won’t last long” all of the time and we just laugh because then we see the listing has been on the market 6 months or more.

Descriptions Matter

This time of year, there are many new listings hitting the market. Pay attention to these key power words that can help your listings get the right attention and ultimately the best prices. What power words are working in your market that might be missing from the list?