Luxury Real Estate

Courtesy of Merry Nash of Islandia Real Estate

Many of my customers ask if mortgages are available in the Virgin Islands. I have gathered some information to share on the subject. Home mortgages offered by First Liberty mortgage brokers include a 30 year fixed at around 4.50% and a 15 year fixed at around 3.75%. Generally 20% is the required down payment but for a primary residence the amount down can be as little as 3.5%.

For more information from First Liberty contact Brice McLaughlin at 340 774-1101 or brice@firstlib.com. View blogpost.

Courtesy of Luxury Homes by VAPF

After a tough 2009, Spanish real estate agencies selling luxury properties are starting to see the back of the crisis with double-digit increases in sales. The luxury real estate market is enjoying a resurge and real estate agents who target luxury homes are starting to look at the crisis through the rear-view mirror. People with more buying power are taking advantage of the opportunities available on the market right now, and are also finding an alternative haven for their investments in these products.

In the case of Valencia, the city is attracting many foreign companies and managers. For second homes, classic destinations like Javea, Altea, Moraira and Denia are setting the pace. This strength against the crisis also contributes to the diverse origins of the buyers with Germans, Russians, Poles and Ukrainians being the main requestors.

And against foreign buyers, the Spanish (mainly businessmen and professionals) are reclaiming their role. There is a strong latent domestic demand. That said, negotiations between buyer and seller require a master degree in patience. If before deals in the luxury segment were closed in a month, nowadays this timeframe can extend to over half a year.

The fact is that is the raw material that these real estate companies feed on, in other words, the rich and wealthy, grows even in times of crisis. In 2009, according to the study by Merrill Lynch Global Wealth Management and Capgemini, this privileged group in Spain had already reached 143,000 people or 15,900 more than in 2008. With these figures, Spain remains in the twelfth position of the global list of nations in the world with highest number of HNWIs. We’re talking about those who have a minimum of one million dollars (723,000 euros) in investment assets, excluding primary residence and consumables.

Clearly these people play in a different league. A competition which luxury real estate agents are taking advantage of. For many of the regular buyers, the big problem today obtaining loans but this is not something that happens to buyers of high level homes, as they don’t have as many difficulties in obtaining a mortgage and also tend to have their own funds to meet the full cost of the operation.

The only news from the foreclosure fiasco that doesn’t seem to change by the minute is the word “mess” everyone is using to describe it. Back when the news first captured the nation’s attention several days ago, it looked as if banks would back away from pursuing any new foreclosures for at least 30 to 90 days—perhaps longer—while they re-examined the efficacy of their paperwork and procedures. But suddenly that timeframe dwindled to less than two weeks with Bank of America, the nation’s largest mortgage lender, boldly declaring it has thus far found no significant problems to justify a lengthier moratorium. GMAC Mortgage and J.P. Morgan Chase immediately followed suit and other large lenders are expected to do the same in an aggressive response calculated to debunk the growing public perception that the mortgage market is fatally flawed.

So what initially looked like a two-to-three month window of opportunity for sellers of non-distressed properties to sell in an environment stripped of the most heavily-discounted properties—has turned into a surprising new opportunity for sellers of short-sale properties.

For the first time since the term “short sale” went from being an arcane transaction to a household word, banks finally have major incentives to streamline the process in order to move these properties quickly off their books and into the “sold” column. Obviously the threat of legal and financial liability can move mountains. What once took upwards of six months to complete—if you were incredibly patient and lucky—can now proceed from start to finish in as little as a two to three weeks. So for now, at least, short sales are the most user-friendly transactions in the marketplace for buyers determined to purchase distressed properties with the least potential for deal-breaking title defects. Sellers of non-distressed properties—provided they are aggressively priced—are also in a position to benefit, as are buyers with the ability to pay cash in this era of tightened credit.

Sloppy paperwork could very easily amount to just cause for legally re-opening some foreclosure cases and possibly lead to favorable reversals for some borrowers. But clamping down on most foreclosure resolutions would have the devastating effect of further stalling the housing recovery—and by extension our nation’s overall economic recovery. Moreover, with the average foreclosed-upon homeowner behind by a full 14 months in their mortgage payments, even a year-long moratorium wouldn’t be humanitarian enough to prevent them from losing their home.

According to late breaking news from Washington Post (just before this column’s Tuesday deadline), federal law enforcement officials are now investigating possible criminal wrongdoing in connection with the foreclosure crisis; examining whether financial firms broke federal laws when they filed fraudulent court documents to seize people’s homes. Claiming the whole problem of faulty paperwork is a minor glitch that can be resolved quickly; the banks were rudely rebuffed by attorneys for the financial institutions that purchased these mortgages of uncertain legitimacy after they were bundled into securities. “We’ll see you in court,” the lawyers said. So clearly, once the full extent of this “mess” is known, the process of recriminations and restitution will drag on in the courts for years.

At Michael Saunders & Company we pride ourselves on adapting quickly to changing market conditions in order to best serve the interests of our clients and customers. The unfolding mortgage mess is so fluid and fast changing that predicting the outcome at this early stage in the investigation is impossible. As one economic pundit put it, “solving this problem is like looking under a rock. Until you turn it over completely and shine the light in, you just don’t know whether you’re going to find a bucket of worms—or nothing at all.” In fact, we waited until the last possible second to pen this column in order to keep it as accurate and up-to-date as possible.

Needless-to-say, we think it is of vital importance to keep the public, our agents and their buyers and sellers updated as we continue to learn more through hourly reports in the media; along with industry updates received throughout the day at our in-house title and mortgage divisions MSC Title and MSC Mortgage. As these matters affect the plans and goals of our clients and customers, we will continue to look for new opportunities to help them make the most of a difficult situation. Please stay tuned.

By Jim Walberg of Caribbean Islands Realty

Jim Walberg provides a first hand experience regarding what is becoming the next BIG hurdle for Buyers and Sellers of real estate, and it is starting right now!

We just concluded an escrow that has given us a glimpse of what may be the next BIG hurdle for your next real estate purchase - APPRAISALS. We sold a listing this month in the high 900,000s. It was the lowest priced sale since 2003 in this neighborhood of homes that have the largest floor plan - 3,450+ square feet. ( The reduced listing price reflected the fact that the Sellers had already moved out of state and wanted to just close the chapter on their time in the East Bay.) Their home was the most beautiful home in it’s class in our geographic area.

So, the appraiser for the Buyer’s lender comes in and completes his work. The lender had chosen an appraiser that had very little knowledge of our specific area. Because of this fact we sent the lender a list of the comparable sales in this neighborhood for the last two months in order to provide the appraiser with data that we knew were sales of comparable homes. The lender told us they were not able to forward them to the appraiser because they are required to keep an arms length distance from any of their appraisers because of the new law that is officially going into effect May 1, 2009.

“The lender or any third party specifically authorized by the lender (including, but not limited to, appraisal companies, appraisal management companies, and correspondent lenders) shall be responsible for selecting, retaining, and providing for payment of all compensation to the appraiser. The lender will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by any other third party (including mortgage brokers and real estate agents).”

This was the first clue we were going to have a different experience with this appraisal. The appraiser used only two comparable sales, both of which were homes that had been purchased back by relocation companies that had no comparison to our listing. One of the homes used even backed to a storage unit complex. Our listing has unobstructed views of our mountains and very private. The appraiser would not consider using any of the comparable sales that we had provided within the neighborhood.

The appraisal came in $50,000 LESS than the purchase price that was already a bargain in our market area! We and the Seller were stunned! We called the lender and asked what their review process was. They said there was none available. Again, we were stunned. This one event has now created a situation that the similar homes that are within a mile of our listing are all going to be impacted by this appraisal, and it will have a detrimental effect on all of their values for months to come. Our Sellers have been short-changed by this experience and any future sellers will need to price their home using this new reduced price as the basis for their homes.

The National Association Of Mortgage Brokers has begun a legal battle to reverse this latest law. They believe, and so do I, that this new regulation will negatively impact both sides of the real estate sales transaction. It will also add costs to the appraisal process, because there will now be a new entity springing up in the midst of the home buying process - third party companies that order appraisals. The increase in costs will be to these companies in order to the have the appraisers still be paid a fair fee. Stay tuned! This specific regulation will have an impact on pricing in all of our communities. So, have any of you had similar experiences with appraisals yet?

By Jim Walberg of Caribbean Islands Realty

We currently have the lowest mortgage rates in recorded U.S. history. Is it time for Buyers to take action? YES! Jim Walberg’s conversation with Michael Tacconi.

Two days ago I sat down with one of the key loan officers in the East Bay, Michael Taconni, and had a discussion about what is happening with interest rates in 2009 and when should Buyers take action. It was a very interesting discussion. Here were three of the questions I presented to Michael to address.

When should home Buyers consider buying a home in 2009? Michael’s immediate answer was NOW! He said that Buyers have never had better home mortgage rates (YouTube) to chose from than right now - April 2009! Never in all the years of recording mortgage interest rates have they been so low. The mortgage options available are all in this same category - from five year and seven year adjustable rate mortgages, to 30 year fixed mortgages. He told me that the huge amount of activity of home purchases and refinancing that has hit his firm in the last few weeks has been like a “sumami”.

Will mortgage interest come down further in 2009? Michael’s take on this question was an emphatic NO! He let me know that the Fed rate is between ZERO and .25% (YouTube). He said that there is no further room for it to go down further. Again, the mortgage interest rates have never been as low as today in U.S. history!!! So I followed it up with the next logical question…

Will mortgage rates go up in 2009 and when? He was just as emphatic with his answer to this question - YES, and soon! He gave me some indicators that Buyers need to pay attention to (YouTube). The first one was watching the stock market and see if the March 2009 rally was actually going to be sustainable. If it continues to rally, those that are currently invested heavily in bonds will start moving back into the stocks. He referred to a blog that Elizabeth Weintraub posted late last year titled, Top 10 Real Estate Predictions For 2009. Here were her predictions for mortgage rates.

“Because mortgage rates are influenced by mortgage bonds and mortgage-backed securities, not fed rate cuts, I predict interest rates could rise to 7% in 2009. Maybe more if investors continue to worry about inflation and the government adds a new supply of U.S. Treasuries to the market to offset the looming deficit.”

Michael believes that these record low mortgage rates may not last longer than a month or six weeks at the most. The Federal stimulus package is starting to be felt in a very positive manner throughout the economy. As the consumer confidence begins to change direction, the stock market will continue it’s climb and rates will certainly go up. He even felt it will be a dramatic interest rate climb that will leave many Buyers in the dust who are waiting for a better time to buy. TODAY is the day to contact your mortgage professional, and your Realtor if you want to purchase a home in 2009. Contact me today if you would like to talk about you needs further.