The real estate blog.

Sometimes a picture really is worth a thousand words. That was a screenshot from CNNMoney’s coverage of the Countrywide story where the company reported a 3rd quarter loss of $1.2 billion dollars.

$1,200,000,000 lost!

More unbelievable than the loss is the statement/belief/prayer the company has already turned around and will post a profit in the current quarter.

The Countrywide results have been eagerly awaited as many analysts consider the country’s largest mortgage servicer and originator as a barometer of the real estate market as a whole.

Countrywide’s stock leaped after the earnings result and though it lost some of its position, still showed a double digit gain. Wall Street as a whole also jumped positive, though we’ll have to wait until closing to see how permanent
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I wanted to address a few things that have come up this week. I’ve been trying to keep this blog more Utah centric and focus the national discussion over at Easy Mortgages, but this seems to be the best forum for discussion.

If I had tried to answer this question even a month ago, my advice would have been, “Yes, refinance into the lowest fixed rate available. Buy down your rate if you’re able to do it.”

Given the changes in the mortgage market since then, my advice has changed as well. Yesterday’s announcement by Countrywide that it will refinance borrowers with adjustable rates, even though they don’t qualify, just made it more difficult for the vast majority of homeowners who are making their payments on time. It’s also punishing homeowners that took out fixed rate loans as downward pressure on the bond markets is making new loans less expensive than old ones.

If this were a one time occurrence, I would advise everyone to go out there and refinance to take advantage of it. However, it appears
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I’ve often stated that one of the most important factors in your success as a real estate investor is your ability to select, screen, and retain quality tenants. This is something that I think I’m pretty good at, which has helped me as an investor.

I was going to write an article about this not to long ago when, bam, I ran into a problem: tenants who stopped paying.

The tenants were a flaky young couple that I knew I might be taking a chance back when they signed the lease in May. But I decided to rent to them and mitigated my risk by signing a short lease (six months, with renewal contingent on timely payment), charged them first and last month’s rent upfront, plus one month’s rent as deposit. I won’t go through the boring details, but they ended up breaking the lease and abandoning the property while they owed me money. If you find yourself in a situation like this one here are some points to keep in mind.

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It is expected that the Australian real estate investing market will continue to grow in the near future, however, the rate of growth is expected to slow in NSW and Western Australia where the markets are expected to correct themselves.

Although, some regional areas of NSW such as the Newcastle / HunterValley area will probably continue to grow at a steady rate and Western Australia is still experiencing a high demand which is largely dependent on the resources boom.

Queensland, particularly South East Queensland, is expected to maintain strong capital growth in the residential property market as a result of continued migration from other states. However, rental yields are not expected to increase substantially despite low vacancy rates.

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I got some interesting emails from readers responding to my recent posts on real estate fraud. Here’s one of them (posted w/ permission from the author, with names and minor details changed):

________________________

Chris,

I was approached by an acquaintance, Phil, to invest into a get rich quick scheme. I was to be the buyer and mortgage holder for two houses, but all documents and paperwork would be mailed to Phil’s residence and Phil would be responsible for all mortgage payments and monthly maintenance fees. I was promised a gift of cash in exchange for using my good credit. All was good for several months, and then I started receiving calls from American Servicing Company for non-payment.

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Yesterday I posted a YouTube video about a sting operation busting some shady “Investment Advisors” who had defrauded a group of investors using a common tactic.  This was a variation on the standard buyer-seller kickback scheme that I previously wrote about.  Here’s how it works:

I love real estate.  There are millions of honest, ethical investors out there making prudent, informed responsible investments to secure their financial future, but there are also a brigade of scumballs busying ruining it for the rest of us.  Keep your eyes peeled. 

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I’m pleased to announce a new feature of the Salt Lake Real Estate Blog. Today was the inaugural issue of The Inside Scoop, an e-newsletter put out by local real estate agent Mark Alder of Windermere Realty and myself.

Mark has been sending out this newsletter for two years and wanted to add greater value to his subscribers. I’ve been wanting to put out a newsletter, but didn’t have an established base. Voila, The Inside Scoop.

Mark is also keenly interested in real estate blogging and has been writing his own blog this year. We are offering unique content in the newsletter you can’t find anywhere else, so it’s well worth the 5 seconds it will take to sign up. We’re not interested in spamming you either and our list is maintained by a trusted third-party - Constant Contact. You can easily opt out at any time.
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Third quarter numbers are out for Utah’s real estate market and they aren’t pretty. I previously reported that volume was down, but the average sales price held up pretty well.

The new numbers reflect median sales prices which turned out to be 50% lower than the average.

Selling prices in Salt Lake County were up 5.4 percent in the third quarter, to $253,000, compared with the same period in 2006. Prices in Davis County were up 9.7 percent, to $230,500, with Utah County increasing 8.1 percent, to $241,000.

Having gains is still better than many other areas of the country, but it’s clear the market psychology in Utah has changed. How long this will last is yet to be determined.

News reports, lower access to loans and highly publicized cases of mortgage
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You may have noticed a number of Countrywide commercials on TV pitching a no closing cost loan. I’ve wondered for some time whether this is a true “no fee” loan or just a “no out of pocket” loan where the fees are added to the new loan.

I got my answer on Friday in an email from Countrywide. As a past customer - not by choice - they end up servicing a large number of loans regardless of the original lender - I “qualified” for their promotion. The email was titled “We want you back” and disclosed the terms of their “no fee” offer.

Upon examination, it is truly that, a “no fee” loan. Countrywide is taking a lot of bashing and I’m one who has been piling on. They deserve it, but not for this promotion. Their fine print says -

Some upfront fees (ex. credit report
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