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I’ve been receiving a lot of good information from experienced lenders that I trust. Everyone really needs to be aware of some drastic changes that will be occurring in 2008. The sub-prime lending mess, declining real estate market and foreclosures in the past few years has finally starting to “trickle down” and will affect almost all potential home buyers. In 2008 you will see a lot of changes to underwriting guidelines. The good news is that FHA loans will be less affected than conventional loans. The demand for FHA loans will probably increase in 2008. The guidelines will be more strict. For example:
*Conventional loan home buyers with a credit score of less than 680 and less than 30% down will see a significant increase in interest rates.
*Home buyers putting less than 5% down and a credit score of 620 will be ineligible for mortgage insurance. If you don’t qualify for mortgage insurance then you don’t qualify for the loan. This is not rocket science!!!
*Mortgage insurance companies will also require appraisers to document if a home is in a increasing, stable or declining market. If a home is in a declining market then a buyer putting less than 10% down and a credit score of 620 will be ineligible for mortgage insurance.
The problems in the lending market are really starting to take their toll on home buyers loan options. Again, most of these changes will affect conventional loans and not FHA loans. In 2008, FHA will incorporate a sliding scale for mortgage insurance rates based on credit score. This sliding scale system is more of a “reward” for higher credit guide scores than a “punishment”. As of right now, there are no major underwriting or pricing changes forecasted for FHA loans. So if you’re a potential home buyer next year, it is now even more important to make sure you use a good, experienced lender. Contact me if you need a reference for a good lender or if you have any further questions.
This Old House magazine’s latest Home Inspection Nightmares IX (9) photo gallery is hilarious. My favorite photos are #1 (8 junction boxes) & #5 (cymbal diverter). I love this photo gallery series. You can also check out past Home Inspection Nightmare photo galleries. All the photos are very funny. But, all joking aside, the photos reinforce an important part of buying a home.
First, always get a home inspection. Never skip a home inspection just to save a little money. 100% of my clients agree to do a home inspection or I will NOT represent them as their buyer agent. A home inspection contingency is one of the home-buyers best protection options. Second, make sure you home inspector is qualified. About half the states in the country have little or no licensing requirements for home inspectors. In many states, anyone can print up a business card and say they are a home inspector, even your Uncle Bubba!
I would recommend looking for a “certified” home inspector that is a member of The American Society of Home Inspectors (ASHI) or The National Association of Home Inspectors (NAHI). Both of these organizations are very good at establishing high standards of practice, inspection guidelines, professionalism and code of ethics for its members in the home inspection industry. It is very important that you make sure your inspector is a “certified” inspector. A “certified” home inspector has more experience, education and testing requirements than other home inspectors. You can search here for home inspectors in your area: ASHI home inspector search or NAHI home inspector search. Good Luck!
Below is one of our award winning buyer broker TV commericals that deals with home inspections. Check out my previous blog post for more information on our funny, informative television commercials.
Staging homes is really “storming” the real estate industry. In the past few years, staging homes has become an increasingly growing “cottage” industry within the real estate market. In 2007, The National Association of Exclusive Buyer Agents (NAEBA) surveyed their brokers & agents and found that 82% of the respondents stated that buyers were likely to get distracted from important issues when viewing a staged home. In addition, 51% of the respondents noted that staged homes often cover up 
major defects and structural damage. NAEBA is a small, international, professional trade organization that works to represent the best interests of the real estate buyer. A recent article by columnist Blanche Evans with Realty Times ATTACKED NAEBA’s position on home staging. Blanche’s article is one of the most biased pieces of journalism that I’ve ever read! In Blanche’s article she states that “NAEBA is a spoilsport when it comes to staging homes” and NAEBA’s position on staging is SILLY and can possibly do serious damage” Blanche’s article continues the trend of “old school”, traditional real estate brokers, insiders, agents, etc. that just don’t get it. Blanche’s article is just preposterous!!!
OK, let’s try and help all the “confused” Blanche’s in the world. First of all, Blanche is correct that a home-buyer’s decision (right or wrong) to purchase a home is always going to be based on three factors: emotional, practical and financial. A buyer agent’s responsibility is to properly advise their clients not to rely too heavily on the emotional aspect of buying a home. As buyer agent’s, we believe our home-buyers decision process should be ranked: financial, practical and then emotional. The sole intention of staging a home is to get the buyer emotionally attached to a home. So, why attack the “spoilsports” at NAEBA? 
There is nothing wrong with staging homes. Right now, staging homes is “red hot”. In the past, staging homes was limited more to higher end properties. Not anymore, sellers can spend a few hundred dollars to thousands of dollars to stage their homes. Done the right way, staging a home is another excellent way for the seller to market their home. But, I have no doubt, that the increased emphasis and “frenzy” on more elaborate ways to stage homes will definitely increase abuse and deception by the sellers. Sellers will be more likely to try to hide defects in their home through staging options. For example:
It is OK to add small furniture to make rooms appear bigger, but NOT OK to position furniture to hide holes in the walls or termite damage.
It is OK to play soothing, pleasant music as long as you are not trying to hide, “clangy” plumbing pipes.
It is OK to have cookies baking and pleasant smells as long as you are not trying to hide dingy mildew/mold smells.
It is OK to add a nice, expensive rug as long as you are not hiding a stain in the carpet or damaged wood flooring.
All the examples above are based on a seller NOT disclosing these issues or problems in a state required disclosure form (if applicable). Most states require sellers to provide a disclosure form to potential buyers.
It is a buyer’s agent responsibility to protect their clients by uncovering issues or problems that are listed above in the examples. I do not want to diminish the responsibilities and duties of the buyer’s agent. But as staging becomes more prevalent then deception by sellers is going to occur no matter who the buyers have protecting them.
I can GUARANTEE you that the increased emphasis on more complex and elaborate home staging will increase the number of sellers trying to hide major issues that they should have disclosed (ethically and legally).
”So, be careful out there” – Sgt. Phil Esterhaus, Hill Street Blues
Now let’s end this post on a lighter note. The all time FUNNIEST home staging mistake that our office has seen was when a seller left a ”porn” tape on a bookshelf right below their framed picture of the Ten Commandments. No joke, this funny staging “faux pas” did actually occur with one of our agents and their buyer client. Post a comment to this blog post, if you have a funny or deceptive staging story that you would like to share.
Yikes, times continue to be rough in the real estate market, especially for new home builders & lenders. Yesterday another good builder in central Ohio closed its doors for good. C.V. Perry & Co. has gone out of business due to serious financial troubles.
C.V. Perry & Co. was a good, solid builder that had been around for 60 years. C.V. Perry “folding up” was not as unexpected as Centex Homes leaving the central Ohio 
market last year. Centex Homes leaving our market was a total surprise to many people. I’m pretty confident that C.V. Perry probably won’t be the last builder in central Ohio to call it quits or to be bought out by a competitor.
Hmmm, let me guess, maybe Dominion Homes might be the next fatality. It seems like Dominion Homes has been hemorrhaging cash forever and has had a “ton” of lending problems (see additional links below). If you are new home buyer in this market please make sure you are protected. You need to make sure you fully understand your builders deposit policy. Don’t risk losing your deposit money. Contact a real estate attorney ASAP if you have any questions. Good Luck!
Additional info:
Dominion 5.9 million in red for 3rd quarter
M/I Homes post 21.7 million 3rd quarter loss
Dominion Homes sales drop nearly 25%
Beazer Homes report weak earnings
My Buyer Broker Advocate! 
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