Saint Louis MO Real Estate Today

Why Obama's Plan will Increase Short Sales and Foreclosures!

Here's a re-run of my analysis of the Obama Housing Plan:

Unfortunately, and not just for St. Louis MO homeowners who may be in trouble, it is much ado about nothing ... To complicate things, unfortunately, our friends in the media know little (and want to report less about the truths of the market – remember sensational title sell best) about the housing crisis that we're living through, but let's start talking about this new "Homeowner Affordability and Stability Plan" that was announced by the President.

Obama’s administration is saying that the plan will enable "up to 4 to 5 million responsible homeowners to refinance."  That's true ... and a great boom for loan officers and title companies, but let's look a little more at these claims that they will stop foreclosures.  It helps folks who right now aren't the ones really struggling ... and ignores the folks under water on their mortgage beyond 5%.  Please let me explain as the media and most of the rest of the world missed this 5% issue – and it’s a big one for foreclosure and mortgage relief.

Let's read directly from the White Houses' summary:

Download Home_stability_plan 

"Consider a family that took out a 30-year fixed rate mortgage of $207,000 with an interest rate of 6.50% on a house worth $260,000 at the time. Today, that family has about $200,000 remaining on their mortgage, but the value of that home has fallen 15 percent to $221,000 - making them ineligible for today's low interest rates that now generally require the borrower to have 20 percent home equity. Under this refinancing plan, that family could refinance to a rate near 5.16% - reducing their annual payments by over $2,300."

Yep, they sure can do that ... but guess what?  Most of the folks who will take advantage of this are not the folks that are in foreclosure or currently facing foreclosure!  If they have a conventional mortgage with Fannie and Freddie, they aren't the issue right now ... for the most part, the subprime garbage is.

But there's a magic number out there 105%.  Yes, that's what we're talking about.  If the loan is less than than 105% of its current market value, they might be eligible for refinance.  

Here’s the crux of the issue and why this issue will NOT fix short sales and foreclosure volume in the United States.

The vast majority of the people in foreclosure (or who have been foreclosed on in the past year) purchased with 100% financing (80/20 purchase loans) or have pulled all of their equity out via a refinance using a home equity loan and/or a ‘cash out’ first/second mortgage ...

An here’s the kicker – and a bigger issue outside of St. Louis MO’s Real Estate Market - most homes lost at least 15% of value last year, and in California, Nevada, Arizona and Florida, at least double that to more than 30%.  Obam’s plan does nothing for these homeowners.

Now let's think about this further.  In order to refinance with Fannie and Freddie, you have to not only have equity in your home (or in this case you can't be under water more than 5%), but you also have the meet the guidelines for a loan refinance.  That means you have be employed.  You must have a job.   Stated and exotic NINJA (no income, no job, no assets) loans aren't around anymore.   So everyone who just lost their job doesn't qualify for this help.

But is this a good idea, regardless of whether it won't help people facing foreclosure?  Our answer is -Yes. If we can reduce mortgage rates – thus allowing millions of Americans to have more money in their pockets – this will collectively translate into more consumer spending and a speedier and more robust recovery from the recession.   Frankly I like this idea a lot more than the $400 a year tax credit that will do little to actually help our economy.

Now back to the foreclosure / short sale problem at hand.  Unfortunately, with 80%+ of distressed properties having a first and second mortgage, modifications for those who were over leveraged is going to be next to impossible unless they've been paying extra payments to bring down their loan balance.  

If you were listening carefully you hear what Obama signaled that he supports?

Cram downs.  What is a Cram Down?  Unless you were in the real estate business in the early 1990’s during the commercial real estate S&L crisis – you likely have never encountered or heard of this term. It was commonplace then and was effective – but costly (to lenders).

That's when a bankruptcy court judge steps in and basically modifies loans and cuts its principal balance – the balance amount is crammed down to a lower amount. If you’re a lender (or mortgage holder) you DO NOT like the thought of this as it guarantees costs and losses – all from a judicial system that is supposed to figure out a fair and reasonable amount to cram down the loan principal balance amount to.   

This certainly sounds like an exciting premise if you are a homeowner facing foreclosure and ready to file or already in bankruptcy.  But here's the rub: if you violate the sanctity of contracts, you will add uncertainty (and costs – which could be significant) to the end investor, which means they are not willing to pay as much for the loan portfolio.  Bottom line here, this cram down scenario will drive up interest rates.

One of the most common question I’m getting now is the following:  In fact, I spoke with a Ballwin MO homeowner contemplating his options.  Will cram downs slow short sales?

NO! , the reason people do short sales is to save their credit and stop a foreclosure.  Do you think those doing short sales want a bankruptcy on their record – something that will certainly delay their ability to purchase a home in the future significantly longer than short sale w/o foreclosure?  NO – definitely not. 

No, those are the individuals that don't want to a short sale anyhow ... those are the ones that really want to stay in the home and believe with a modification they can afford it.

What cram downs may do is create an incentive for lenders to approve more short sales and modify more loans.  Why?  Because they don't necessarily want to roll the dice with a bankruptcy court judge. 

Another question we hear every day now – in fact I heard this from a homeowner from Webster Groves and another in a condo in Kirkwood – “But I read that these banks are putting moratoriums on foreclosures?  Won't that mean fewer REOs and short sales?”

This is a key fact that the Obama Administration and the media miss daily - Who owns the majority of loans in trouble?  It isn't the banks!  It is the investors that purchased these loans.  They then hired a servicing company to service that loan on behalf of Collateralized Debt Obligation A76XE63 in Singapore.  This is critically important: the majority of homes in foreclosure are not owned by banks, they are owned by investors who bought mortgaged backed securities.

To further complicate things – as was noted in article in the Wall Street Journal today – these very investors are now threatening to sue the servicer if they mess up a modification or mishandle a foreclosure.  "The securitization has split the interest in the home loan among so many different parties that it is difficult for servicers to make a modification without fear that some significant party may sue or do something else that hurts the servicers," Kurt Eggert, a professor at Chapman University, told the Journal.  And Obama thinks that the minor financial incentive in the plan announced this week will overcome this fear of being sued – I would not expect so! (see below for specifics on the monetary carrot offered in the plan to lenders)

So, we've talked about loan refinance and cram downs.  What about the modification for those who are in foreclosure?  What is that all about?

Under the plan announced by Obama this week - First, the lender reduces the interest rate on the mortgage to no more than 38% of the borrower's income.   (Note: what if they don't have a job...kinda hard to do, huh?).  Interesting side note – the average debt to income ratio for our short sale clients who we gain approval on their sale is 83% - BEFORE the mortgage debt is added in – with mortgage debt –their ratios are over 100% meaning they are paying more out per month at their current loan interest rate than they take in per month.   These clients would NOT be eligible for the program.

Second, the government will match dollar for dollar the reduction from 38% to 31% debt to income ratio (government is buying down interest rates, not a bad idea, but the investor has to take the hit getting to 38% which many of them won't do).

Third, lenders must keep the modification in place for 5 years.

In order to incentivize lenders, the government will pay the $1,000 for the initial modification and then will give a $1,000 payment for the next three years if the loan is current.

Then the government will give a carrot to the homeowner of a $1,000 principal reduction for up to $1,000 each year for the next 5 years.

So does this do anything to really stem the foreclosure tide?  Unfortunately not really ... because lenders know the nasty statistics that most folks don't want to talk about.

But the New York Times told it to everyone on its front page today.  Guess what?   Read it for yourself: "The nation's 14 largest banks reported that more than half of the loans they modified last year were delinquent again after just six months, according to the federal bank regulator, the comptroller of the currency."

Yes, after just six months over half of the modifications that were done went back into foreclosure.  Why?  First of all, a lot of people that never should have been homeowners became homeowners with 100% financing.  They aren't ready for the responsibility of owning a home and aren't able to manage their finances accordingly. Second, the economy has a lot of folks wiped out and they've lost their job.  And third, after paying for a property that they know is $75,000+ underwater, at some point they just walk from it because it frankly doesn't make economic sense to keep it, especially since their credit is shot already because they've missed so many payments.  They can bail out now, rebuild their credit, and buy something again in a few more years (with a short sale they only have to generally wait about 2 years).

So what really happened this week?  A big mess just got messier.  False hope was given to millions of people facing foreclosure that own homes that are never going to get refinance or modified in a meaningful manner.

If you are behind on your mortgage and looking for foreclosure help in Saint. Louis MO – have zero or negative equity or are looking to evaluate whether a short sale is the right option for you, please CALL US TODAY – 314-779-3688 or email us at shortsalehelp@cottrellrealty.com . 

For qualified homeowners – we are getting more than 80% of our short sales approved by lenders.

Readers looking for additional short sale information can click here.

We expect the volume to continue to increase in 2009 with lenders becoming MORE and not less inclined to do a short sale vs. a cram down or foreclosure.  Its saves them money and mitigates their losses.

Latest Podcast - Obama Housing and Foreclosure Plan

The latest Podcast is now available online:

St. Louis Market Overview Real Estate Podcast

"Kevin Cottrell's understanding of the real estate market in St. Louis is second to none.  Any party interested in finding out what's really going on would be well suited to listen to his analysis and advice."

          - Greg Abel, Broker/Owner - Avenue Real Estate Group

During this weeks session- Greg Abel, Kevin Cottrell and Russ Miller dive into deep analysis of the stimulus bill passed last week by Congress as well as a recap post-Obama's presentation of the housing and mortgage/foreclosure plan in Mesa, AZ today.  Discussion centers around the report's accuracy and applicability to the St. Louis MO metro.

Again, the Podcast can be accessed via the following website address.

http://www.realtyminute.com/

Stimulus Bill the Economy and Real Estate – A positive perspective for St. Louis MO

The following is our analysis and review of the Stimulis Bill and Treasury announcements made this week – This is the number one topic on every home buyer and seller in the St. Louis MO market at present.

 

The Stimulis package AND the Treasury's package related to stabilizing the markets must be reviewed holistically as in our view, as the plans compliment each other.  This is certainly how the Obama administration and team are looking at it.

 

Most real estate economists, NAR (National Association of Realtors) and we believe that 4 key tenets are needed to actually see real stimulus in the marketplace:

 

Here they are: 1) Raise loan limits for high cost areas, 2) make the $7,500 tax credit a true tax credit and NOT a loan, 3) find ways to push interest rates down (which are higher than they should be due to systemic risk in the markets currently) – our view is the premium in the market was about 200 basis points (or 2% as of last fall), and lastly 4) help provide proactive foreclosure/short sale solutions.

Now here’s the positive perspective of where the economy is at present:

 

1) Residential loan limits will be raised to $727,000 in high cost areas

 

2) The Stimulus Bill raises the tax credit to $8,000 with NO payback [aka – it’s a true credit]

 

3) Interest rates on residential mortgages have come down 125-150 basis points since the fall of 2008.  They are at historically low rates – not to take away the lament of buyers and borrowers who may have missed the absolute low point in 2009 which occurred several weeks ago.

 

4)  The Stimulus Bill – as approved this past Friday - has over $50 billion for foreclosure mitigation.   Geithner’s Treasury plan, albeit poorly received this past week, has signaled that the second half of TARP and TALF monies will be used to mitigate foreclosures.  We’ll certainly hear more on this in the next week or two as the actual plan is released by the Obama Administration.

 

Our belief is that these monies will be applied through a government guarantee, used to drive down mortgage interest rates by government (Federal Reserve) purchase of another $200-300 billion of mortgage paper from the GSES's (Fannie Mae and Freddie Mac).  Such a purchase would thereby free them up to turn around and make a similar amount of new mortgages.  Finally, Fannie has just recently agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.  The pool of investors who can purchase property just got larger!

The final dynamic that entered the market this week is a much anticipated ‘voluntary cease and desist’ on foreclosure sales – initially by JP Morgan Chase and Citigroup.  Market expectations are that more than 95% of lenders will follow suit and stop foreclosures for the next 3 weeks.

 

We’ll keep you posted.  2009 is certainly shaping up to be an exciting year!

 

Kevin Cottrell / Cottrell Realty Group

http://www.cottrellrealty.com

 

 

Former HUD Secretary shares view on Job Losses vs. Home Price Drops driving foreclosures

Former Secretary shares his views on CNBC this morning in key areas that all home buyers and sellers in St. Louis should pay attention to:

*  Buyers are moving back into markets - including Saint Louis - as rates move up.  Fear that they may miss their best opportunities to buy as rates rise

*  Foreclosures are in pockets in specific areas - this is definitely true in St. Louis MO as we've outlined in previous blog posts

* Foreclosures are concentrated in California, Arizonia, Florida, Nevada - even these areas are seeing increases in sales volumes now

*  Majority of loans are government sponsored - we've certainly seen this in St. Louis - 80% of sales are below limit allowed for FHA

*  Job creation is key to turning markets around - No better time for stimulus plan - today's the day

See complete interview here

This is yet another well-placed party who is now discussing the fact that 2009 will be a tough year but things have begun to turn around for the real estate markets -  This is consistent with what we believe to be the case in St. Louis MO - as was discussed in our previous post - supply has already corrected - the number of new listings in the market for January was at a level of 2002 and availability (active listings is at the lowest levels seen in years). 

With buyer sentiment increased following positive action by Congress - we expect demand to continue its strong pace throughout 2009 - and there's even a slim chance - that buyer (demand) activity could even pick up in 2009 over 2008 levels with a great package from Congress and the Obama administration.

Stay tuned - 2009 is going to be a very interesting year!

Short Sale Frequently Asked Questions - What you need to know!

Frequently Asked Questions - Short Sales

What is a Short Sale? 

A Short Sale is the sale of a home or condo in the St. Louis MO area from which the sales proceeds are not sufficient to pay off the existing loan(s) and the mortgage lender(s) agree to accept a discounted (or reduced) payoff and agree that these reduced amounts are enough to fully satisfy the loan and allow the transaction to close and the seller to sell the house or condo.

The best part for St. Louis MO sellers is the fact that the existing lender generally pays all sales costs, including commissions, sale expenses and repair costs.  Most important - You get your home or condo in the St. Louis market sold and the loan(s) are paid off and you avoid foreclosure.

Is a Short Sale right for me?

Unlike even a year ago, most mortgage lenders are increasingly willing to work with borrowers struggling with a financial hardship and accept a reduced or discounted payoff on the mortgage. If you are faced with a financial or life hardship that makes it likely you will be unable to make your payments on your mortgage, your lender would prefer to accept less money now from the sale as opposed to taking the property through foreclosure – which often results in significantly higher losses to them.

As you consider the option of pursuing a Short Sale, remember the important fact that your lender is looking to limit any potential loss on your loan. Again, under a Short Sale, your lender has arrived at a solution that is, for them, much better than a foreclosure.

The Good news for Saint Louis MO homeowners: Your lender wants to work with you.

How much will I have to pay to sell my home under a short sale?

Great news here.  Generally Nothing. As puzzling as this may sound, in most cases you will pay literally no sales costs if your lender approves your Short Sale. All commissions, title and even most repair expenses are paid by the lender as part of the Short Sale transaction.

Cottrell Realty Group’s short sale experts include language to protect you as a seller in every contract. 

"Seller’s agreement to sell is subject to approval by existing lender of a Short Sale at no cost to Seller. Seller shall not be required to deposit funds to close this transaction."

Remember, lenders approve Short Sales and accept less than they are owed in an effort to avoid much larger losses through foreclosure.

How do I get started on a Short Sale?

It’s easy. If you would like to get pre-qualified for a Short Sale, or if you would prefer to discuss it on the phone, or set an appointment call 314-779-3688. There is no charge to you to get started. It is as simple as contacting us and we will get to work. If you later decide you don't want to do a short sale, that is okay too.

Can I simply deed my property to someone else and avoid the hassle?

Deeding your property to someone without paying off the loan is nearly always a bad idea. We have seen example after example of problems with this scenario in the St. Louis area.  In the first place, the lender still considers you primarily responsible for payment on the loan. If loan payments do not get paid, or if the lender ultimately forecloses, this will show on your credit.

Secondly, when you deed your property to someone else, you give up control of the property. Along with the deed goes the ability to control the property.

Do not deed your property to someone without paying off the loan unless you have consulted with an attorney.

What sort of hardship would my lender consider legitimate?

There are some general guidelines that lenders use, however, much will depend upon the mortgage company considering the short sale. The general rule or guideline is the following:  as long as the financial or life hardship is legitimate and the mortgage company believes the loan is most likely going to become delinquent or default (foreclose) as a result, the short sale request will likely be processed for consideration by the Short Sale or Loss Mitigation Department at the lender. A major factor in getting Loss Mitigation to accept a hardship is to submit a strong, well written hardship letter. The hardship letter from the seller sets the tone for the entire transaction.

Below you will find a list of some common “hardships.”  We've listed the ones that are frequently accepted by mortgage lenders.

·         Family illness or personal injury - especially with large medical bills and/or loss work

·         Illness or injury in the seller's family – especially if it forces your relocation

·         Seller Job relocation - typically when the property is equity deficient

·         Job loss or significant income loss

·         Divorce or split of domestic partners

·         Adjustment in mortgage payment or unforeseen increase in living expenses

I am current on my mortgage, will my lender consider a Short Sale?

The answer is, maybe. Some lenders will accept a Short Sale file for approval on loans that are not delinquent. Other lenders will not accept the file until the loan is delinquent. We can put your Short Sale file together within a couple days and submit it for approval. (Remember, there is no charge for this). That is the best way to determine if your lender will accept a file for approval on a loan that is current.

Why would a mortgage company agree to accept a Short Sale?

There are actually several reasons why a mortgage company would approve a Short Sale payoff, including the following;

Legal Concerns – Mortgage lenders have come under legal pressure to work with borrowers to equitably resolve situations where borrowers are unable to meet their mortgage obligation, particularly when the borrower makes an effort to arrive at a compromise solution.

Wall Street is Watching – Mortgage lenders rely heavily on their ability to package and sell bundles of loans on the secondary mortgage market. They need to sell these bundles of loans in order to put the funds back to work by loaning the money again and collect loan fees along the way. If mortgages perform poorly after they are sold it could impact the lender's ability to sell their loans on the secondary market. A successful Short Sale gets the loan payoff resolved quickly.

Asset Management Expenses- If a lender acquires a property through foreclosure, the property will be managed until it is repaired and resold. It is expensive to manage real property assets - homes – spread throughout the region, the state and possibly even the nation. Keeping properties maintained, keeping utilities on, making repairs and the administrative costs attached to these activities are all costs the lender would prefer to avoid. A successful Short Sale eliminates most of these costs

Reserve Requirement- Delinquent and non-performing loans place another burden on mortgage lenders. For all delinquent and non-performing loans lenders must set aside funds in reserve to deal with potential losses. These funds cannot be put to work generating new loan fees until the bad loans are resolved. A successful Short Sale lets the lender put more money to work.

Do lenders approve all Short Sales?

In a word, no. That is why it is critical to work with someone that has extensive experience at getting Short Sales approved.

From how to present the Short Sale package to the lender, to negotiating with the lenders Loss Mitigations Department, we know how to keep the file moving towards approval.

The first step is to get pre-qualified for a Short Sale. There is no charge for this, and it’s easy.

Contact our team today for further details.

I have two loans, can I still do a Short Sale?

Yes. We can work with both lenders (many times the same lender hold the 1st and the 2nd loans) to put together a Short Sale transaction. Even if the value of your home is below the balance of the 1st mortgage, we can normally get the two lenders to cooperate.

In the end, neither lender wants to own another home through foreclosure.

My property is in rough shape and needs work; can I still do a Short Sale?

Absolutely. In fact, lenders are more motivated to do a Short Sale on a property that needs work than on a property that doesn’t. The lender knows the risk of loss goes up when they foreclose on a property that needs lots of work.

Aside from expense of completing the work, lenders are simply not set up to get the work done. They are in the loan business, not the fix- it business.

I am concerned about my credit. How will a Short Sale affect my credit?

The big key here is to avoid foreclosure. By nearly any measure, a foreclosure is the most damaging event your credit status can encounter - worse than bankruptcy. In the course of getting your short sale approved you may miss your mortgage payments, and these will show on your credit.

By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and such) relatively quickly

My income problem was temporary. Do I need to sell my home?

You may be able to keep your home. You need to convince your mortgage company of two things:

The problem that caused the mortgage payment disruption was beyond your control – illness, injury, temporary disability or forced job change are a few examples

You are now solidly in a position to stay current on your mortgage payments and make some progress towards making up the delinquent amount.

What is a Forbearance Agreement?

A Forbearance Agreement is a written agreement with your mortgage company in which you arrange to keep your home. The agreement will normally include two primary elements:

The borrower’s promise to remain current on the mortgage going forward

Some plan for making up the delinquent interest and other charges. It may mean making additional payments to the mortgage company or the delinquent amount could be added to the loan to be paid later.

Near Foreclosure and In Need of a Short Sale

 

 

What is a Short Sale? If you have to sell your home and you want to avoid continuous late mortgage payments and/or a foreclosure then a short sale is one option. A short sale is when your mortgage company accepts less than what is owed. To cut their losses lenders will accept less for a property than the loan value. In some cases a short sale is less expensive and easier for the bank than foreclosing-especially if home prices are declining.

What are the drawbacks? You can spend countless hours researching to find out how a short sale will affect you credit. I have always been told that the bottom line is-a foreclosure is more damaging than a short sale. The impact to credit scores diminishes over time. The Internal Revenue Service may treat the difference as taxable income and issue you a 1099C statement. However, the Mortgage Forgiveness Debt Relief Act of 2007 might prevent you from being taxed. December 20th 2007, the president signed IRS Revision Bill HR3648 into law. Consult a professional tax advisor.

What are the advantages? It is less damaging than foreclosure. The homeowner can avoid bankruptcy. The homeowner can get out of a dire and stressful situation commonly caused by job loss, divorce, a sudden drop in income, or the inability to meet rising payments of an adjustable mortgage.

How much does this cost? The bank pays our commission and fees.

What are the alternatives? Foreclosure, bankruptcy, finding another person to assume your loan, deed in lieu of foreclosure, forbearance, loan modification, refinance, reinstate your loan, contact a HUD-approved Housing Counseling Agency, Home Owner Recovery Act of 2008. This new bill will allow a qualified home owner with the lenders approval, to refinance their home at 90% of the homes newly appraised value. There is one caveat to this new program-the home owner will be required to share in the future appreciation of the property with the government.

THERE IS HELP AVAILABLE-YOU HAVE TO MAKE THE CALL!

The Cottrell Realty Group is considered a reliable resource for short sale consultation. Don’t hesitate to contact us.

Phone: (314) 517-3474

Email: bill@cottrellrealty.com

Agents Click Here for Short Sale Program!!

*Note: I am not a tax professional or an attorney-please seek the appropriate licensed professional.

St. Louis MO Real Estate Total Market Overview - Real Estate Market Update

Cottrell Report – Total Market Overview for Week Ending 10/24/08

Saint Louis MO Real Estate Market Update & Overview
			Current WK	4 Weeks Prior	1 Year Ago	Trend
Active Listings			5,174	5,403	6,049	+
Pending Ratio			10.9%	12.3%	11.7%	+
Price Reductions			11.2%	9.4%	18.2%	-
Days on Market*			86.4	87.1	69.8	+
List/Selling Price(%)**			95.6%	95.3%	96.9%	=
			Cottrell Index (08/07)	109	99
			Cottrell Index (07/07)	111	86
			Cottrell Index (06/07)	108	95
*Weighted Average Days on Market for Listings Sold
**Average List/Sell% for all listings sold in past 6 months
Source: MARIS Data Deemed Reliable but not Guaranteed
Cottrell Index based on year over year analysis of ratio of new listings/listings sold
© 2008 Cottrell Realty Group/Incubation Realty Group LLC  ALL RIGHTS RESERVED

For a copy of this week's Total Market Overview Report - please send and email with TMO Please in the subject to  tmo@cottrellrealty.com

Download crg_list_to_sell_analysis.pdf

“The Saint Louis MO real estate market remained unseasonably slow this past week.  Many listings – including new or reduced priced listings – had NO showings…”

Now - For some good news!

 

Some well priced houses are receiving offers and selling (provided seller’s are motivated and realistic in their pricing expectations)  – we have negotiated 3 contracts in the past 7 days and are working several other offers currently on additional listings.

If you have a listing that has been rejected by the market – few or zero showings or showings and no offers – call us today at 314-779-3600 for a free NO OBLIGATION listing evaluation.

 

 

 Pending Ratio Declines stable again week over week!

The pending ratio declined markedly  to 10.9% from last weeks 13.3%.  This ratio very close to the lowest level of 2007 and we expect the pending ratio to decline further based on seasonal reductions of buyers in the fall and winter in

Saint Louis

MO.

 .

Listing Inventory – You are either priced correctly or not in Saint Louis

As we’ve discussed, over the past 30 to 60 days, available inventory (although considerably lower than the same week in 2007 @ 6,049) has increased dramatically to a level of more than 9 months based on the six month rolling sales number.  We’re continuing to see unseasonably slow showing activity – some listings whether new or just reduced in price (some by significant amounts) with very limited to zero showings.  This is a source of consternation for Saint Louis home sellers. 

We believe this is a continued sign of weakness from the fallout from the lack of consumer confidence resulting from the Wall Street and spreading global financial meltdown. Normally strong areas such as Ballwin, Webster Groves,  Kirkwood MO, Clayton MO, Ladue and University City MO continue to be unseasonably low and off from where they were a few weeks ago. 

Unfortunately, the fact that some sellers are not realistic necessitates aggressive and direct discussions on our part.  We believe in telling the truth – and when seller’s lack the willingness to price correctly – we’d rather terminate the listing and have them understand that they will not in our professional opinion – ever sell at the price they desire (their listing has been ‘rejected’ by the market).  Sometimes, this is a tough pill for sellers to swallow, however, we feel with our broad analysis of the market and pricing expertise, we have a strong handle on what works to get a home sold in this market – we’ve closed more than 80 homes this year. 

Unfortunately, sellers and buyers alike run into the mediocre real estate agent who is either on their way out – or already out of the business – and they hear the mantra of ‘the market is terrible’ or ‘nothing is selling’ or there are ‘no buyers.’  Our advice is simple – when you run into one of these agents who spouts this nonsense – don’t walk – run away and contact a professional agent who has a demonstrable track record of getting homes sold.   Look for a market expert who will tell you the truth.

For sellers – this may not be the price that you want… and you may decide not to sell now and compete with more aggressively priced homes – owned by sellers who have to sell – not ‘want to sell if I can get some target price. 

“A huge number of Saint Louis MO home sellers reduced their prices in the past 7 days – more than 500 price reductions -represents a reduction by almost 1 in every 12 listings! …”

Price Reductions continue at record levels

There are more active listings available in many submarkets in

St. Louis

, than buyers who will purchase in a reasonable timeframe. Relative pending ratios for these submarkets are well below 10%.  In these specific areas, even significant price reductions have been met with limited to no new showings.  These areas are definitely targets for sellers to consider Lease/Purchases – something we’ve   developed as a successful aggressive strategy to re-position a listing to compete with a large number of available properties.  Seller’s in some Saint Louis areas may get one and only one shot at selling their house or condo.  A seller of a condo in Clayton MO or a house in

Fenton

 who receives an offer – however structured – should carefully weigh whether this is the only and best offer they will receive.  We’ve worked with many a disappointed seller – who disregarded the advice from their seasoned agent that ‘this is likely the best offer – and likely the only offer given current market conditions that you will see.”  Smart sellers are getting aggressive and respond without judgment or ego to offers – regardless of how low the initial offering price is.

“With the stock market meltdown, many smart investors and home buyers are realizing that at no time has the

St. Louis

 real estate market ever subjected their invested capital to the extreme risk that the stock market does.  When was the last time you saw a house price decline by 7% in a day in

Saint Louis

?  - NEVER“

Significant Opportunity for

Saint Louis

 for homebuyers!

The shift in the real estate market in

Saint Louis

provides a significant opportunity for home buyers.  With the stock market meltdown, many smart investors and home buyers are realizing that at no time has the

St. Louis

 real estate market ever subjected their invested capital to the extreme risk that the stock market does.  When was the last time you saw a house price decline by 7% in a day in

Saint Louis

?  NEVER 

We have received a record number of calls from buyers and investors looking to move capital into real estate using self directed IRAs.  Be ware – your friendly investment advisor at Edward Jones, AG Edwards, etc will tell you that you can NOT do this.  This is not accurate.  Smart buyers are already converting their IRAs and investment accounts to self-directed accounts and looking to move in to a more stable investment asset of real estate in 

St. Louis.

Call us today at 314-779-3690 for more details and a referral to a company that can assist with self-directed IRAs.

As we discussed previously, as a home buyer looking in St. Louis MO, you need a market expert buyer agent who can assist with the selection of homes that represent the best value and when you find the best home in Saint Louis MO, provide the critical analysis for potential purchases (is the home priced in such a manner where it represents a significant value, has it had price a price reduction(s) – when, by how much? What do the comparable sales indicate?  These are all key things that a professional buyer specialist can provide – Just make sure your agent is a market expert!

"Based on the trend we discussed last week the current window of opportunity for home buyers in

Saint Louis

…could close between late fall and spring."

Weighted Average Days on Market remains above  80! 

Again, this measure which applies a weighting by relative activity per price range and is the aggregate measure of six whole months sales activity had been rising steadily since late fall. 

We will continue to watch this measure carefully along with the overall list to sell ratio for pricing which has remained below 96% since December 2007.  It is important to note that the list to sales ratio is considerably lower than the 97.4% seen two years ago in

St. Louis

  Both indicators show activity as well as aggressive offers being accepted from the relatively smaller pool of buyers who are active in the marketplace.   For reference, the national list/sell ratio is below 90% and in some cases – markets with significant foreclosure and bank owned inventory – way below this number.

Readers should note that both the List to Sale Ratio and the Weighted Average Days on Market are lagging indicators of market condition – they contain a rolling 6 months of data – and as such will not be the first indicator of market correction.  The pending ratio (see above) is the leading indicator and as such will show the first and strongest sign of a shift in the market. Unfortunately, the local and national press focus on other indicators that are either plainly inaccurate or lag (imagine days on market declining for 30 weeks – when pending ratio reversed trend for more than 6 of those weeks) the market in terms of shifts.

Based on this fact, the press and most real estate agents and brokers normally watching the days on market would believe that the market is improving (days on market have been declining).  However, the number of buyers under contract (pending ratio) has declined significantly (by over 24%) in the past month.  We’ll be watching this carefully for any continued degradation in the pending ratio.

Note:  Complete definitions of all terms for the Cottrell Report are found here.

Kevin Cottrell /Cottrell Realty Group in Saint Louis MO

Cottrell Realty Group's Short Sale Listing Referral Program Takes Off - Much Needed Solution for St. Louis and St. Charles area Realtors!

Short Sale Listing Referral Program

Cottrell Realty Group is pleased to announce that it has received a record number of inquiries and referrals from St. Louis and St. Charles area real estate agents since January 1, 2008 -  These  agents have reached out to our team due to our industry high rate of over 80% approval rate for short sales for area sellers.

The reasons for the inquiries from real estate agents are usually very similiar...

• These agents have listings in jeopardy of expiring - most are priced too high.
• Some of these agents call after they have gone on a listing appointment - only to find out the sellers can't sell at the price you suggest - 'we owe more than that'...or 'we can't possibly list at that price, you'll have to raise the price to get your commission.'
• Sellers who won't lower (or can't lower) their price to a level which would allow them to sell - even in this challenging market.
• They are working with sellers who owe more than the property is worth? 
• They have a seller who is facing foreclosure? 

You've come to the right place… Read on to learn about your options as a current or prospective listing agent …And earn a referral fee in the process of doing the right thing for your seller or listing prospect.

As you probably already know, once a foreclosure has occurred, the foreclosure sale notation may remain on your seller's credit report for as long as ten years, severely restricting or inhibiting their ability to apply for other types of credit.  Worse yet, it may also provide a real roadblock when they later try to buy a home.  Wouldn't it be great if you could refer them to a professional team who could provide immediate assistance - and earn a referral fee in the process.

What you may NOT be aware of is that you do have options - don't let your sellers face foreclosure unnecessarily.  Please don't immediately dismiss listing prospects or cancel listings with zero or negative equity.

Why refer your listing or prospects to Cottrell Realty Group?

Experience Matters!

Cottrell Realty Group has helped numerous homeowners around the Saint Louis/St. Charles MO metropolitan area stop foreclosure and stay out of trouble with their lenders. We are proud to provide you with THE BEST solutions in the Saint Louis area so you won't need to lose sleep over your seller's situation.  In fact, our track record for short sale approvals is above 80%.  Compare that to the 'we buy ugly houses' or investor short sale approval rate of 30-35%.  For most agents we speak with, they have never worked on a short sale or have completed less than 3 successful sales.  This is not the market to be learning on the job with your clients at risk.

We employ full-time highly experienced short sale negotiators on our team.  We would strongly suggest that you not try to work on a short sale until you've reviewed the process with us in detail.  If after speaking to us you want to proceed, our tips and suggestions will place you and your clients in a better position to succeed.  If not, we'll enter into a referral agreement and assist your client with their short sale.

You DO have options right now. Click Here or Call us today at 314-779-3600 to discuss our short sale referral program.  Your next referral fee is only a phone call away.  Think about how many referrals your grateful clients will send you over your career if they understand that you were intrumental in assisting them in avoiding foreclosure.

Pre-Foreclosure / Short Sale a Viable Alternative for Many Troubled Saint Louis and St. Charles Homeowners

"Record number of St. Louis and St. Charles area homeowners Seek Help to Avoid Foreclosure!"

Click here for immediate help!

For Saint Louis / St. Charles metropolitan area homeowners struggling to make payments, sitting with a home or condo with no or negative equity (and unable to refinance a rapidly increasing adjustable loan) the options may seem dismal.  Many are looking at the possibility of facing foreclosure.

We are getting a record number of calls from homeowners who need help immediately!  If this is the case with your situation or someone you know.  You've come to the right place… Read on to learn about your options…Are you behind on your house payments? One of the scariest things in life can be staring into the face of a foreclosure. The Cottrell Realty Group we are experts in stopping foreclosure FAST!

"In many states, including Missouri, there is only a 21 day period that your lender has to announce before they can foreclose, so the longer you wait, the less options you allow yourself."

As you probably already know, once a foreclosure has occurred, the foreclosure sale notation may remain on your credit report for as long as ten years, severely restricting or inhibiting your ability to apply for other types of credit.  Worse yet, it may also provide a real roadblock when you later try to buy a home.

What you may NOT be aware of is that you do have options. Cottrell Realty Group has helped numerous homeowners around the St. Louis /St. Charles MO metropolitan area stop foreclosure and stay out of trouble. We are proud to provide you with THE MOST COMPLETE AND BEST solutions in the Saint Louis / St. Charles MO area so you won't need to remain hopeless and lose sleep over your situation.  As the real estate market in Saint Louis/St. Charles area continues to soften, we expect an ever increasing number of homeowners to be faced with the possibility of being unable to sell and/or foreclosure.

We're here to help now. Remember, regardless of how hopeless things may seem, you DO have options right now. You don't have to watch your home get taken from you. It's time for YOU to decide to take action and call us today at 314-779-3600.

"It is also a common mis-conception that you must already be behind on your payments in order to begin the short sale process with your lender."

Many people facing foreclosure become paralyzed and simply freeze, do nothing to resolve their situation, and hope for a financial or other miracle. Please Don't fall into that trap!

Just because your lender hasn't sent you any formal notices or has stopped calling doesn't mean that  they have granted you relief.  In many states, including Missouri, there is only a 21 day period that your lender has to announce before they can foreclose, so the longer you wait, the less options you allow yourself.

Also, beware that once the foreclosure process has begun your lender will accelerate your loan.  Unfortunately, this means that they will likely no longer accept a payment less than the full amount due, including back payments.  Even if you send them anything less than the full amount owed, they will likely send it back to you, asking for the entire loan balance.

Also, beware that the longer you delay, the more court costs, late charges, and attorney's fees that will be assessed against your loan balance. Please DON'T WAIT. Time is your enemy. You're taking the first major step by taking initiative. You're already better off than many others that are facing your same exact situation today! And the faster you allow us to help you, the more options you'll allow yourself!

So What Are The Options?

Click here for immediate help!

Forbearance Agreement
Often times your lender will work with you to help you get caught up on your back payments. Keep in mind that your lender does not WANT to foreclose on your house.

The bank is not in the real estate business. They are in the business of loaning money, and when they have to take back a house on a foreclosure, it looks bad on their records. Many times, if you ask them, they will work with you to help you get caught up.

For example, if your normal house payment is $1000 per month, and you're 3 months behind, sometimes the bank will allow you to make up that $3000 that you're behind over the next 6 months. Then for the next 6 months you will pay your normal house payment of $1000 per month, PLUS an additional $500 per month, until you're caught up. If you are able to make that additional payment for a while, and your lender is willing to do this, sometimes the solution is as easy as that.

However, in this situation, it is essential that you are 100% confident that you can live up to this agreement and pay ALL of your future payments on the exact due date that is agreed upon. Often, if you are even one day late on any future forbearance agreement payments, the lender will immediately initiate a foreclosure again, and you will not be given a second chance.

Cottrell Realty Group can help you get through this process - free of charge!

Get Help Making Up Back Payments
Is it possible that you have overlooked a way to make up the back payments?

• Do you have a 401K you can borrow from?
• Can you borrow from friends or family?
• Do you have a credit card you can cash advance to help get you caught up?
• Can you get a cash advance at your current job?
• Do you have anything of value that you could sell or even borrow money against?

Sometimes, lenders will give you loans no matter what your current credit situation is if you have something of value to use as collateral.

Just make sure that you're not borrowing MORE money to get you FURTHER in the hole. The last thing you want to have happen is to be in this same situation 3 or 4 months from now AND owe other people money too!

Sell your house
Have you tried to sell your house with no luck? Have you even considered the option of selling? In some situations, the best answer is to just sell the house and start over fresh with something new.

More often than not, however, this is not simple task. It is very common for potential buyers to ask the sellers to fix everything in the house before they will move in. If your house needs any repairs at all, this could pose a problem. Also, as you may already know, it's pretty easy for the buyer to back out of a contract at the last minute if everything does not go as planned. Sometimes, you may even owe more on the house than it's able to sell for. (If so, refer to the "Short Sale" option below)

Cottrell Realty Group has the best and most experienced licensed realtors in the St. Louis area on staff to assist you in the selling of your home. And we don't just stick with the "traditional" ways to sell your house. We've got dozens of cutting edge and innovative ways to market and sell your house...ways that most traditional realtors can't even imagine! Just keep in mind that sometimes a traditional sales process can only work if given enough time.

If your foreclosure date is just around the corner and there proves to be not enough time to sell the house, we'll have an extensive network of investors who will actually BUY it! How's that for a guarantee?

Initiate a "SHORT SALE" with Your Lender
What in the heck is a short sale you may ask? A short sale is when the lender is willing to "discount" what you owe them in exchange for a total payoff, so that they don't have to foreclose.

What does that mean? Here's an example… let's say that you owe $200,000 on your home, and it's only WORTH $200,000 or possibly less. In this case, it would be difficult to sell the house fast, because you would have to find someone willing to pay full price for your home.  PLUS, the buyer would have to be willing to close QUICKLY, so that you could sell the house before it goes to foreclosure.

Cottrell Realty Group can initiate a short sale with your lender to "create" the equity that will help sell your home quickly. Even if you currently owe more money than the house is worth! And even if it  needs repairs! No matter how pretty or ugly the house is, and no matter how much you owe on the house, we can help!  It is also a common mis-conception that you must already be behind on your payments in order to begin the short sale process with your lender.  Don't delay, call us today to discuss your situation. 314-779-3600. 

Best of all, in a short sale, the lender pays all the costs of the sale - including the commissions of the real estate agents. 

Was your home listed with another agent and expired? 

Was it listed and you felt that you couldn't lower the price any further as the loan balance would exceed what you would net?

A short sale is a great option for sellers who had tried to sell previously with a traditional old-fashioned agent who suggested pricing the home at a price high enough to cover the costs of the sale (including their commission). In the soft market we're experiencing in the Saint Louis/St. Charles MO metropolitan area, over priced homes are not selling.  We find that we are able to quickly help sellers by correctly pricing their homes - obtaining a contract - and completing a short sale

Note:  This is not a solicitation of your listing if you are currently listed for sale with another Broker.  If you are listed for sale with another Broker, please have them call us with regards to our highly successful Short Sale Listing Referral Program. 

Under this program, your agent can have us take over the listing and still get paid a referral fee when the transaction closes.  Talk about a win-win - you get a successful sale, avoid foreclosure on your home in the St. Louis/St. Charles area, and your agent gets paid for getting you connected to the best in the business in pre-foreclosure/short sale prevention.

Refinance Your Home
In some cases, we can help you refinance your home to help you get caught up on back payments. Sometimes we can even LOWER the interest rate that you're currently paying, which will in turn LOWER your monthly payment. That may be all you need to get back on your feet. If you've seen some tough times lately, but now you have things back under control, a refinance may help you get a fresh start.

File for Bankruptcy Protection
We are not legal practitioners - and as such can not offer legal advice.  Only an attorney can determine whether this option makes sense.  We do know, however, that in most cases we've seen, the filing of bankruptcy only delays the foreclosure process.  In fact, we have yet to see a case where the lender wasn't granted the right to foreclose by the bankruptcy court - sometimes as quickly as 91 days after filing. 

In addition, the best mortgage professionals in the St. Louis market have informed us that it would be far better for a borrower who was looking to purchase in the future to complete a sale or short sale, then file bankruptcy, only if absolutely necessary and the best option for them.  The reason lies in the fact that with certain loan programs, including those offered by the Federal Housing Administration (FHA), allow a buyer who has filed for bankruptcy to get a mortgage in as little as 24 months following the successful completion of their bankruptcy case. 

The combination of a foreclosure and a bankruptcy extend this period well beyond 24 months.  Beware, you can NOT complete a short sale - your lender will be precluded by the provisions of the bankruptcy law - from working with you - if you file for bankruptcy.  If you are considering filing for bankruptcy, please consult a reputable attorney. We'd be happy to discuss the best options - including completing a short sale before filing - with you and your attorney.

I've heard enough! I'm ready for Cottrell Realty Group to HELP ME!

Download short_sale_borrower_authorization3.pdf 

By clicking on the above link ...you can download our lender authorization form. Just fill out the form (one for each loan/lender you have), sign and fax it over to 314-667-3536. This will allow us to call your lender and start figuring out your options! Keep in mind, this doesn't allow us to do anything other than contact your lender and inquire about your account. It's safe, completely confidential, and the best part? It's FREE!

Just remember, when facing foreclosure Time is of the Essence. You MUST act fast to protect your rights.