Just a quick note on interest rates.  It appears that we have begun to unwind the markets and rates may be on the rise.  Two factors are playing into that right now. 

One, the demand for US debt, T-Bills, is on the decline.  China and Japan have dramatically decreased their holdings inU.S. Debt recently.  That is leading to the need to increase the yields to attract new buyers.  Higher yields lead to higher rates.

The second was an increase in the discount rate yesterday that the Fed is charging banks for short term loans.  While this doesn't directly affect long term rates, it is an indicator of what is to come, and if the Fed feels strongly enough about the economy's direction to begin raising rates, watch for it to trickle down to long term rates in the near future.

What does this all mean?  It means that its getting to be now or never for buyers to take advantage of the "Perfect Storm" of home financing events. The Home Buyer Credits expire on April 30th and rates are set to increase over that time frame. 


"Technology won't replace real estate agents but an agent with technology will"




Measure to help bring stability to home values and accelerate sale of vacant properties

WASHINGTON - In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.

"As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers," said Donovan. "FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization."

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.

"This change in policy is temporary and will have very strict conditions and guidelines to assurethat predatory practices are not allowed," Donovan said.

In today's market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.


Seattle Magazine's Five Star Best in Client Satisfaction Award Winner 2009

The Truth About Short Sales

Here is some helpful information about Short Sales:

Short Sales - in which a homeowner sells a property for less than its loan value. 

They are tricky to pull off and it can take weeks or months to get mortgage companies to respond to an offer.  Mortgage servicers may balk at the purchase price.  Further complicating the matter, the seller may have more than one loan on the property, slowing the process. 

Short Sales account for 20% of home sales according to the National Board of Realtors (NAR) and this number is edging upward.  Unlike a traditional real estate transaction, a short sale requires the approval of not only the buyer & seller, but also the mortgage company.  In many cases loans have been packaged into securities -- which means that the mortgage servicer must consider the interest of investors who own the loans. 

Some buyers have waited for 4-6 months and the deal falls apart because the mortgage company rejects the price that has been agreed upon by the buyer & seller, leaving many buyers to walk away in frustration.  To make the process work, the buyer has to be willing to wait patiently.  Until you receive written lien holder/lender approval, the seller can still accept other offers, so there is a good chance that a higher offer could come in and bump you out. 

The process can be so frustrating that some real estate agents and home buyers have decided that a short sale isn't worth the effort.  Some estimate that 20% of short sale offers in the area lead to completed sales compared with 85% for more traditional sales.  

Why does this process take so long?  The mortgage company must gather all the facts and determine if the homeowner really can't continue meeting the loan payments, then get an appraisal or brokers price opinion (BPO) of the home's value.  They must also determine if the buyer has sufficient funds or the ability to get a loan.  If all those hurdles are cleared, the servicer may still need to get approval from the investors that own the loan and provide an analysis showing that the investor will be better off with a short sale than with another solution.  I haven't even mentioned the other potential lien holders and fees like the trustee sale fees, taxes, homeowners association fees, lawyer fees, etc. 

I always say that if there isn't something unique about the property then it probably isn't worth your time.  You can find a better deal on a bank owned property or a non-short sale seller.  Keep in mind that while you are waiting for the mortgage company to respond that your interest rate is changing everyday.

This information isn't given to you to discourage you from attempting to purchase a short sale property but only to educate you on the complicated process.


 James F. Smith, CSS (Certified Short Sale Specialist)

Mortgage rates fall for 2nd-straight week

Freddie Mac: Rates for 30-year mortgages fall for 2nd-straight week

McLEAN, Va. (AP) -- Average rates for 30-year mortgages fell for the second-straight week, but still remained above record lows reached earlier this year, Freddie Mac said Thursday.

The average rate for a 30-year fixed home loan was 5.2 percent this week, down from 5.32 percent last week, Freddie Mac said. At this time last year, the average rate for a 30-year fixed mortgage averaged 6.37 percent.

Rates on 30-year mortgages fell to a record low of 4.78 percent earlier this year, spurring refinance activity.

But rates then rose as high as 5.6 percent in June after yields on long-term government debt, which are closely tied to mortgages rates, climbed as investors worried that the huge surplus of government debt hitting the market could trigger inflation.

Since then, the yield on the 10-year Treasury note has fallen back from an eight-month high of 4.01 percent reached in June to 3.38 percent on Thursday.

Frank Nothaft, Freddie Mac's chief economist, said rates for 30-year fixed-rate mortgages fell for the second week in a row to the lowest level in six weeks "amid market concerns over a weakening labor market."

"The weak employment situation coupled with declining home values in many markets has added to greater defaults on home equity loans and lines of credit," Nothaft said.

The American Bankers Association reported that the number of home equity loans that were 30 days or more delinquent rose to a record high of 3.52 percent in the first quarter, Nothaft noted.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

This week, the average rate on a 15-year fixed-rate mortgage fell to 4.69 percent, down from 4.77 percent last week, according to Freddie Mac.

Average rates on five-year, adjustable-rate mortgages were 4.82 percent, down from 4.88 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.82 percent from 4.94 percent.

The rates do not include add-on fees known as points. The nationwide fee for 30-year and 15-year fixed rate mortgages averaged 0.7 point, while the fee for five-year and one-year adjustable rate mortgages was 0.6 point.


 Bridge Loan Update:

As you may know, the Housing Commission was working on a Bridge Loan program to use the $8000 for the down payment. This was a great idea that was approved by the legislation. However, the following is an excerpt from the announcement I received:

Information regarding the $8,000 First-Time Homebuyer Tax Credit

The Commission previously noted it was involved in discussions with the IRS and other interested parties concerning the development of a Tax Credit bridge loan program.  To guarantee repayment of a Tax Credit bridge loan the Commission requested the IRS approve an advance assignment of the tax credit refund.  If approved, the homebuyers $8,000 tax credit refund would be directly deposited into a state-owned account or mailed directly to the loan servicer for immediate payoff of the Tax Credit bridge loan.

On June 2, 2009 the IRS formally declined this request citing long-standing regulations that require refunds be paid only to the person or persons filing the tax return.  Due to financial risks associated with the Tax Credit bridge loan program and because the Commission already offers numerous down payment assistance programs, the Commission has discontinued the development of an additional Tax Credit Bridge Loan program.

So if you had anyone sitting on the sidelines waiting for this to happen, its time to get them off.

Seattle climbs list of expensive housing markets

Area home prices haven't fallen as much as those in other pricey areas

Despite falling home prices last year, the Seattle area surged up the list of most expensive U.S. markets.

Seattle moved from being the 24th most expensive place to buy a home in 2007 to 13th last year, thanks to the fact that local home prices had not fallen nearly as much as those in many other expensive markets. That's according to "Paycheck to Paycheck: Wages and the Cost of Housing in America," a study by the Center for Housing Policy of more than 200 metropolitan areas.

The study showed the median home price in King, Pierce and Snohomish counties at $335,000 in the fourth quarter of last year, down from $380,000 in the third quarter 2007, which the center used for its previous study.

Seattle was the 52nd most expensive market for renters, up from 60th in 2007, according to the study. It showed the U.S. Department of Housing and Urban Development's fair market rent for a two-bedroom apartment at $987 a month, up from $854 in 2007.

The study also compares home prices and rents with wages in 60 occupations, noting that many of the jobs the federal stimulus package is creating do not pay enough to afford a home.

Many of the stimulus jobs are in construction, but home prices nationwide remain out of reach for carpenters, equipment operators, long haul truck drivers and construction laborers, the study said. It said construction laborers also struggled to pay rents in three quarters of the U.S. markets studied, while equipment operators and long-haul truck drivers were unable to afford rents in approximately one-quarter of markets.

"Contrary to popular belief, the recent decline in home prices has not resolved the nation's housing affordability problems," Jeffrey Lubell, executive director of the Center for Housing Policy, said in a news release. "Working families -- including most of the workers who will be hired as a result of federal spending in the stimulus package -- still cannot afford to buy a home in most markets, and many also struggle to afford their rents."

The study shows the need for long-term solutions, said John McIlwain, chairman of the Center for Housing Policy, senior resident fellow at the Urban Land Institute and the institute's housing chairman.

"By acquiring well-located properties made vacant through foreclosure and by instituting policies that can ensure that a modest share of future development is affordable, communities can bring housing within reach of working families," he said.

In Seattle, carpenters averaged 44 percent of the $108,843 in annual income needed to buy a median-price home, and equipment operators, long haul truck drivers and construction laborers made even less, the study said. It found all of these workers except laborers made enough to afford a two-bedroom apartment, while laborer income was below even the one-bedroom level.

Construction manager was the only one of the 60 occupations that paid enough to afford the median area home price, although many were over the halfway mark, meaning couples with in those jobs could afford to buy.

For the income needed to buy, the study assumed a 10-percent down payment, and monthly payments including principal, interest, taxes and insurance; and defined afforable as payments taking up no more than 28 percent income. For rentals, it defined affordable as gross rent of up to 30 percent of hourly wage.

San Francisco remained the most expensive place to buy or rent at the end of last year, despite the median home price falling from $770,000 in 2007 to $575,000 last year. That area's rent was $1,658 a month last year, up from $1,551 in 2007.

Areas that went from being more expensive than Seattle for buyers in 2007 to less expensive in 2008 were: Los Angeles, San Diego, Santa Barbara, Oakland, Santa Rosa, Salinas and Vallejo, Calif., Bethesda, Md., Naples, Fla., and Cambridge, Mass. Seattle moved into a tie with Oxnard, Calif.

Saginaw, Mich., and Youngstown, Ohio, tied for the least expensive purchase markets at the end of last year, with a median home price of $73,000. Wheeling, W.V., was the least expensive rental market, at $577 a month.

Buyer Stimulus Package

A proposal to provide a $15,000 tax credit to homebuyers was stripped from a $789 billion economic stimulus package that appears headed for a vote Friday, but a restoration of higher loan limits for Fannie Mae, Freddie Mac and FHA loan guarantee programs appears to have made the cut.


The $15,000 homebuyer tax credit -- included in an $838 billion economic stimulus bill passed by the Senate Tuesday -- was scaled back to $8,000 and limited to first-time homebuyers as part of a compromise between Democrats and Republicans.


The Congressional Budget Office estimated the larger tax credit would have cost $35.5 billion, a price tag that proved too tough to swallow in conference committee negotiations where differences between House and Senate versions of H.R. 1, The American Recovery and Reinvestment Act of 2009 were ironed out.


Instead, the compromise bill falls back on language approved by the House Jan. 28, which would have eliminated the repayment requirement on an existing $7,500 tax credit that is currently available only to first-time homebuyers through July 1.


According to a summary of the compromise bill released by lawmakers Thursday, the tax credit will still be available only to first-time homebuyers -- those who haven't owned a principal residence in the last three years. But they won't have to pay it back, as is currently the case, and the credit will be increased to $8,000 and be available through the end of November. The smaller tax break will cost taxpayers closer to $6.6 billion over 10 years, a savings of nearly $30 billion.


The compromise version of H.R. 1 would nevertheless increase the statutory limit on the public debt by $789 billion, raising it from $11.3 trillion to $12.1 trillion.


While not everything that the industry was hoping for, the National Association of Realtors nevertheless welcomed the more limited expansion of the tax credit.


Eliminating the repayment provision on the first-time homebuyer tax credit could drive more than 200,000 additional home sales, NAR President Charles McMillan said in a statement, which will help stabilize home values. The National Association of Home Builders had estimated a $15,000 tax break for all homebuyers would have generated nearly 500,000 home sales.


McMillan said the compromise bill will also reinstate the $729,750 loan limit in high-cost areas for Fannie Mae, Freddie Mac and FHA loan guarantee programs that was in place throughout much of 2008, which he said would help reduce inventory and improve liquidity in the overall mortgage market.


In a separate development, investors were cheered Thursday by a report that the Obama administration is planning to launch a program to subsidize mortgage payments for troubled borrowers who can pass a standardized re-appraisal and affordability test. A Reuters report on the Obama administration's foreclosure prevention plan helped stocks recover much of their losses for the day before Thursday's closing bell.


The foreclosure prevention plan is presumably part of a comprehensive housing program that Treasury Secretary Timothy Geithner promised Tuesday the administration would roll out in coming weeks as part of a "TARP 2" financial stability plan for banks.


In announcing the plan, Geithner suggested an expansion of a $600 billion Federal Reserve program to drive down mortgage rates could also be in the works. That program has already driven down mortgage rates to around 5 percent through purchases of mortgage-backed securities and debt issued by Fannie Mae, Freddie Mac and Ginnie Mae.


Reuters reported that the Obama administration has shelved a plan for the government to stand behind low-cost mortgages with rates between 4 percent and 4.5 percent.


Why make a back up offer?

Just because the home of your dreams has an offer doesn’t mean you can’t go and make a back up offer.  All sellers love to see more than one offer.  This would ensure that you are in first position when & if the deal flips.  The first offer can fail for several reasons but the main ones seem to be the buyer’s financing and inspection.  Lenders have tightened their grip on lending and are requesting a lot more documentation from the buyer.  Sometimes the buyer can’t meet all the lender requirements and therefore losing financing.  The buyer’s inspection could fall apart because the seller and buyer couldn’t come to terms on what the seller would have to fix or replace.  So don’t be discouraged just because someone beat you to the punch with an offer.  They say that 50% of all transactions fall apart and you could be the lucky buyer sitting in the back up position. 


Dress for Success


Looking good is important when you want to make a great impression, whether at a job interview or a social function.  The same is true for your home that is on the market.  When the “For Sale” sign goes up in the front of your home, it should be “Dressed” for the occasion.  Since buyers first impression will be the front of the house, a well groomed exterior is crucial.  Give your home a thorough inspection, looking at everything from the landscaping to the paint.  The exterior of your home should be clean and tastefully decorated.  Take care of any cosmetic repairs that are needed, such as cracked plaster or missing roof tiles.  A sparkling kitchen and shiny bathrooms, clean windows, and the absence of clutter will help you home “show well”.  Keeping your home is hard work especially if you have children or pets and are packing for a move.  You only get one shot at making a first impression, so you might as well make the best of it if you want to sell quickly for top dollar.


Why Buy Now?


The Federal Government bailed out Fannie Mae and Freddie Mac which means that more cash will be available for lenders to loan out!


Now Is The Time To Buy!


  1. We have good inventory to choose from.
  2. Prices are low.
  3. Interest rates have dropped.
  4. Since more buyers can buy, the inventory will start disappearing and prices will start to increase.


Sell Wholesale or Buy Wholesale

      or wait and…

Sell Retail and Buy Retail.



Why use a real estate agent to buy a property?

1.  You want someone looking out for your best interest.  The seller's agent is only looking out for the seller's best interest.

2.  Using a agent will save you money, time and peace of mind.

3.  Agents are trained on all the lastest real estate rules and regulations and can negotiate you a good deal.

4.  It is free to use a real estate agent to buy a home because the seller pays the commission.

5.  As your real estate agent, I would provide my buyers with a home warranty.


Top 5 reasons to use the

James Smith Home Team:


1. The best customer service in the business.

2. The best marketing plan in the business.

3. The best technology in the business

4. The best virtual tours & professional pictures.

5.  One stop shopping for all your real estate needs.

Meat on the grill

With summer in full swing, the time is just right to head out of the kitchen and into the backyard for a little cooking al fresco. Whether a quiet evening at home with the family or a full-fledged block party, there's nothing quite like a meal freshly cooked and hot of the grill. Here are some grilling tips for novices and summer pros alike!

The All Important Grill

Gas vs. Charcoal: This one can spark heated debates between even the closest of friends. Gas cooks at an even temperature, is easy to use, and requires little clean up. Propane/gas grills are also healthier than charcoal grills

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