Welcome to the Century 21 Real Estate Center of Laramie, Wyoming website. We would like to invite you to look around the site. You will find many attractive listings and helpful information. Take a moment and get to know our Professional Real Estate Agents and how we can make a difference for you. As an independently owned and operated CENTURY 21® office, we are dedicated to providing you with service that is professional, courteous and responsive in helping you market or find a property.
If you are thinking about buying or selling, don’t hesitate to contact us. We are happy to serve all of your real estate needs.
We invite you to view Bruce Guice’s stunning video of Southeast Wyoming http://vimeo.com/72949159
Home Prices: More of the Same
The most-watched home-price index of them all was released on Tuesday and nothing changed, so nothing was unexpected – home prices continued to rise.
The S&P/Case-Shiller 20-city index was up 0.9% in March, posting its largest monthly gain since November. Of the 20 cities that comprise the index, 19 showed overall price appreciation.
Despite the strong showing in March, year-over-year price appreciation remained unchanged. Overall, prices in the S&P/Case-Shiller 20-city index were up 5.4%, which is still a respectable increase when you consider that official consumer-price inflation is running at 2%.
Talk of an impending interest-rate increase was also amplified this past week. Federal Reserve Chair Janet Yellen got tongues wagging last Friday with the following statement: “Growth looks to be picking up, and if that continues and the labor market continues to improve – and I expect those things to improve – we’ll continue to monitor incoming data and assess risk to the outlook…It’s appropriate for the Fed to gradually and cautiously increase the overnight interest rate over time.” Yellen sees that probably occurring “in the coming months.”
Even so, we wouldn’t be surprised if we remained in the current interest-rate purgatory through summer, and possibly through the November election. If Fed officials have proven one thing over the years, they are willing to drag their feet.
Are Low Mortgage Rates a Free Lunch?
Low mortgage rates appear to be a double blessing. The first blessing is obvious: Lower mortgage rates translate to more affordable monthly payments. The second blessing is more obscure. The borrower builds equity faster.
A $200,000, 30-year fixed-rate mortgage serves as an example: With a 4% mortgage rate, the mortgagor’s payments for the first 12 months total to $11,458, of which $3,522 is earmarked for principal reduction. After 12 payments the outstanding balance stands at $196,478.
Now, let’s say we have a 6% rate applied to the same amount over the same time. Payments for the first 12 months total to $14,389. But, of that those payments, only $2,456 is earmarked for principal reduction. After the first 12 payments, the balance stands at $197,544. There is $1,066 more in reduced balance with the 4%-rate mortgage compared to the 6%-rate mortgage.
So, with a lower-rate mortgage, monthly payments are lower; at the same time equity builds faster. Who could argue against super-low mortgage rates, as we’ve done on occasion?
There’s more to the story. Interest rates are also a discounting mechanism.
Let’s say you have an investment that will pay you $10,000 a year in perpetuity. If the market rate of interest were 4% (assuming interest rates were your only concern), you’d be willing to pay $250,000 for an investment that paid $10,000 annually.
But if the market rate of interest were 6%, you’d be willing to pay significantly less. For an investment that paid $10,000 annually in perpetuity, you’d be willing to pay only $166,667 when market rates are 6%.
We understand that an owner-occupied home is no investment; it’s an asset. Nevertheless, the same principle is at work: On the one hand, low mortgage rates increase affordability and equity appreciation. But on the other hand, low interest rates raise the value of the putatively more affordable home. As economist Milton Friedman observed decades ago, there is no free lunch.
Information on SBA Loans just out:
Here is the latest from the SBA on the 504 refinance.
Announces SBA Administrator Maria Contreas-Sweet at today’s NADCO conference.
1. The new rules will be published tomorrow in the Federal Register. SBA will begin processing applications this June 24th.
2. The commercial mortgage/deed of trust debt to be refinanced must be at least two years old.
3. The loan (or loans – can be more than one eligible loan) being refinanced must not have any late payments in the previous 12 months and evidence of such must be presented.
4. The subject property must be a minimum 51% owner occupied and meet all other eligibility requirements of the SBA 504 program.
5. For refinance-only projects, the maximum LTV is 90%.
6. Cash-out refinancing is permitted to cover most eligible business operating expenses.
7. Unfortunately, existing “government backed” loans, such as 504’s, 7(a)’s or USDA loans, cannot be refinanced under this new program. Only conventionally financed commercial mortgages/deeds of trust are eligible.
The published federal register notice will be out tomorrow.
INTERESTING INFORMATION ABOUT ZILLOWS ZESTIMATES!
How? By selling a property for much less than its Zestimate.
On February 29, Rascoff sold a Seattle home for $1.05 million, 40 percent less than the Zestimate of $1.75 million shown on its property page a day later.
The gap between the Zestimate of Rascoff’s former property and its sales price has decreased only modestly since then.
Zillow readily acknowledges that Zestimates can be inaccurate, but some consumers can still take them at face value, causing he
Citing the chasm between the sales price of Rascoff’s former home and the property’s Zestimate may be one way for real estate professionals to show clients that Zestimates are, as Zillow says, only a conversation starter for pricing a home, not the final word on its value.
Philip Gray, a San Leandro, California-based appraiser, is taking this approach. Bringing up the Zestimate of the property Rascoff recently offloaded will help him deal with the frequent pushback he receives from homeowners “who think Zillow is the magic 8-ball,” he said.
Zestimate’s on Rascoff former home have certainly been overstating the property’s value, said Zillow Chief Analytics Officer Stan Humphries.
“The fact that we missed and there are empirical reasons we missed — that’s a great conversation that real estate agents should have” with consumers, he said, citing the property’s irregular lot and location on a busy road as partly responsible for its Zestimate’s inaccuracy.
But he expressed hope that, in the same discussion, agents also won’t instill “data nihilism” in consumers, and that they acknowledge that humans also can miss the mark.
Smaller gap at start
In July, the Zestimate of Rascoff’s former property wouldn’t have raised the eyebrows of anyone who’s familiar with automated valuation models (AVMs). At $1.388 million, the property’s Zestimate was 7.3 percent higher than its listing price of $1.295 million at the time.
Since Zillow only shows revised historical Zestimate data on property pages, the home’s property page currently indicates that the property’s Zestimate was around $1.6 million in July 2015, somewhere in the neighborhood of $200,000 more than the Zestimate that actually appeared on its property page on July 17, 2015.
For all anyone knew in July 2015, the property might have eventually sold at a price closer to its Zestimate than its listing price.
But that didn’t happen. The home later sold for $1.05 million, 19 percent below its July listing price. Undergoing a number of price cuts, the property was listed and de-listed several times between when it was originally listed on July 7, 2015 and when it sold on February 29, 2016.
If Rascoff thought his home was worth its July listing price, the outcome of the sale might have come as a disappointment. But if the success of the transaction were judged by the property’s Zestimate, it was a failure.
The home’s Zestimate was $1,750,405 on March 1, the day after the property sold for $1,050,000.
If that Zestimate were accurate, it would mean the chief of the biggest name in real estate and the recent co-author of a book about “the new rules of real estate” would have sold his home for 40 percent less than it was worth.
Automated valuations vary
In addition to highlighting the shortcomings of Zestimates, the Zestimate of Rascoff’s home also brings into focus the potential for some automated valuations to be more accurate than others.
Unlike Zillow’s property page on the home the day after it sold, Redfin’s page on the home showed that the sale had occurred. At the time, it displayed a valuation of $1.1 million — much closer to the property’s sales price of $1.05 million.
On Thursday, May 5, Redfin’s estimate of the home’s value was $1.3 million.
So while Zillow’s estimate had come down by around $140,000 since the home sold, Redfin’s had increased by about $200,000. Both differed from the price the home sold for a little over two months ago by hundreds of thousands of dollars.
Zillow has since added the sales price of Rascoff’s former home to its property page.
The property’s Zestimate had slipped from $1,750,405 the day after it sold to $1,608,670 on May 5, but its Zestimate on May 5 still only represented 65 percent of what the home sold for a little over two months before.
To judge the Zestimate’s accuracy based solely on the gap between the sales price of Rascoff’s former home and its Zestimate would probably be unfair. The discrepancy is unusually wide, according to what Zillow says is the Zestimate’s median error rate.
Zillow puts the Zestimate’s national median error rate at 7.9 percent, meaning half of Zestimates nationwide are within 7.9 percent of a home’s sales price and half are off by more than 7.9 percent. The listing portal claims an even higher level of accuracy in Seattle, where Rascoff’s former home is located.
There, Zestimates for half of homes are supposed to be within 6.1 percent of their sales price, while half are supposed to be off by more than 6.1 percent. This suggests that the Zestimate of Rascoff’s home missed by much more than normal in Seattle.
Why was that?
One reason is that the home’s Zestimate was comparing Rascoff’s former home, which is located on a triangular lot, to recently sold homes located on rectangular lots, according to Humphries.
Since rectangular lots provide more utility than triangular lots, he said, that meant the Zestimate was overvaluing the plot of Rascoff’s home.
Another reason was that Rascoff’s home was located on an “arterial” road while nearby recently sold homes sat on quieter streets.
Zillow continues to research how to program Zestimates to account for such factors, but “we haven’t fully cracked the nut on that one” yet, Humphries said.
‘The classic luxury homes problem’
Zillow Senior Economist Skylar Olsen added that the Zestimate of Rascoff’s home represents “the classic luxury homes problem.”
Zestimates can’t take into account “non-quantifiable facts,” such as layout design or lighting, and these facts can have much more of an effect on the values of luxury homes than less expensive properties, she said.
Real estate agents can see how special features impact a property’s value, but the “Zestimate algorithm can’t know” and “at this point in time, it’s not designed to know,” she said.
The reason why the Zestimate of Rascoff’s former property hasn’t dropped dramatically since selling at a much lower price than Zestimates leading up to the sale is that the Zestimates have a “smoothing function” designed to keep them from overreacting to recent property sales.
The Zestimate on the Rascoff’s former property will gradually come down to more closely resemble its sales price. And upcoming updates to the Zestimate’s algorithms will adjust the smoothing function so that the Zestimate of a home that sells will come to more closely mirror its sales price much faster.
Also worth noting is that Zillow does not have access to sold listing data from the Northwest Multiple Listing Service, the MLS that covers Seattle. Automated valuation models (AVMs) that crunch sold MLS data can have an advantage over AVMs that only use public sales records — which are the only sales records used by Zestimates covering Seattle.
While Zillow says on its website that most consumers understand that Zestimates truly are only estimates, the listing portal concedes that, sometimes, “someone will come along that insists on setting the price they are willing to buy or sell for based solely on the Zestimate.”
Zillow goes on to say that “education is the key” and that, armed with knowledge of how Zestimates are calculated along with their local median error rate, agents can explain “why the Zestimate is a good starting point as well as a historical reference, but it should not be used for pricing a home.”
While Zestimates can create hassles for agents, some agents would certainly agree with Zillow’s assertion that understanding how a Zestimate is calculated, along with its strengths and weaknesses, “can provide the real estate pro with an opportunity to demonstrate their expertise.”
The gap between the Zestimate of Rascoff’s former property and its sales price may have made it easier for agents to seize that opportunity.
Zillow’s Humphries’ hopes that, when putting Zestimates in perspective for consumers, agents will also acknowledge that Zestimates do have a scientific basis, and that nobody’s perfect — even trained professionals.
He noted that a study released by Zillow in 2012 showed that the typical gap between a home’s Zestimate and its sales price wasn’t that much larger than the typical gap between a home’s initial list price — which is often set based on a real estate agent’s recommendation — and its sales price.
“We acknowledge humans are great at this, and we’re great too — but they’re greater,” Humphries said.
Please take time to look at the information from these pages. This was provided by Jon Vierk from Wallick and Volk
NEW LOAN PROGRAM FROM WCDA
To: WCDA Approved Lenders Memorandum 2016-2
From: Carol A. Wilson, Director of Single Family Programs
Re: Announcing WCDA’s new Home$tretch Down Payment Assistance Loan Program!!!
WCDA is excited to announce our Home$tretch program. We believe the Home$tretch program is a financially responsible down payment loan program for low-moderate income borrowers seeking affordable housing throughout the state. Let the Home$tretch Down Payment Assistance Loan program $tretch your borrowers buying power!!!
The Home$tretch program modifies the current Down Payment Loan terms and details outlined in the following Summaries of Forward Commitment:
The current WCDA Homebuyer Assistance program is hereby discontinued.
Home$tretch funds may be used with all of our current loan programs – Standard Mortgage Revenue Bond with FHA, VA & RD financing, HFA Preferred and HFA Preferred NO MI, Advantage with FHA & RD financing and Spruce Up II with FHA 203k and RD financing programs. The transaction must be a purchase transaction and may not be used with a refinance transaction.
The new Home$tretch Note and Mortgage are on Lender Online and must be used when closing a Home$tretch loan. We have also posted the Home$trech Checklist for your use as well. The Legally Enforceable Obligation Letter, MPP Form 220 will continue to be required when the Home$tretch Down Payment Assistance Loan is utilized with an FHA insured 1st mortgage.
Home$tretch funds are limited to $1,000,000 – first come, first serve. Help your homebuyers $tretch their buying power today!
As always, please feel free to contact LoanReview@wyomingcda.com if you have any questions.
Our most recent blog p0sts!
10 Reals FSBO’s Don’t Sell!
Very good information if you are thinking of selling your house on your own.
Top reasons why FSBOs fail in real estate
There are a lot of reasons why FSBOs fail and do not sell. Some of the top among these are:
1. Too many people to negotiate with
Those deciding to take the FSBO route often have to negotiate with many people. Some of them are likely to be:
- The buyer, seeking the best possible deal.
- The buyer’s agent, who represents the buyer’s best interest.
- The buyer’s attorney (in some regions of the nation).
- Home inspection companies, working for the buyer, which are likely to find some problem or the other with the house.
- Your bank, in case it’s a short sale.
- The appraiser, if the home’s value needs to be assessed.
Without the help of experienced real estate agents, dealing with so many different parties alone is often a tough task for homeowners.
2. Homeowners do not know how to prepare the home for sale
A majority of homeowners don’t know about the prelisting tasks that FSBOs should do before they list their home for sale. These usually include:
- Painting the rooms with a fresh coat of paint.
- Getting necessary repairs done.
- Getting the home floors and carpets cleaned by professions.
- Ensuring curb appeal of the home.
- Replacing outdated light fixtures.
Because homes for sale by owners just have one chance to impress potential buyers, neglecting these home sale preparation tips often reduces the homeowners’ chances of selling the house.
3. Owners do not know how to screen potential buyers
FSBOs often have no idea about the difference between prequalification and preapproval, and they don’t know that buyers should ideally be preapproved or at least prequalified.
No wonder they let unqualified buyers inspect the house and waste their precious time. Not knowing if a buyer has the ability to purchase the home acts as a big deterrent for homes for sale by owners.
4. Owners fail to solve buyer’s queries
Handling inquiries from buyers on their listings and coordinating showings for their homes are prerequisites for making a sale. However, many homeowners either aren’t able to handle such inquiries on their homes or don’t have the time for them.
Even organizing showings might become an uphill task at times. Because these days potential buyers and their agents want quick responses to their inquiries, they don’t think twice before moving on to the next potential property if their inquiries and requests are unanswered.
5. Owners don’t understand the concept of golden time
According to this concept, homeowners get the most money for their homes in the first week of putting the property on the market. The longer homes for sale by owners stay on the market, the less money people will be willing to offer for them.
If a buyer tries FSBO first and then hires an agent, the buyer would have already lost the “golden time” window. This will eliminate the buyers who have already viewed the home, might have offered unrealistically low prices and have already moved on.
6. Owners fail to understand the contract procedures
The contract to buy a home involves much more than just the price offered by the buyer. Also, real estate contracts have lots of timelines and clauses and involve several common contract contingencies, such as inspections and mortgages.
Many FSBOs don’t have a firm understanding of such contracts and might not know what they are agreeing to or how to negotiate particular parts of the contract.
7. FSBOs don’t know how to handle the home inspection findings
Home inspections almost always find some issues with houses even when they are relatively newer structures. In such cases, the buyer requests problems be fixed or corrected before moving forward with the transaction.
However, many FSBOs believe that there is nothing wrong with their home, which is why they refuse to address the issues brought forward by home inspections. As a result, the offer falls through.
8. FSBOs incorrectly price their homes
FSBOs often price their homes incorrectly due to lack of experience. They set the price too high, which hinders their chances of closing the deal.
9. FSBO homes lack exposure
Homes for sale by owners are often listed on a few websites, but there are many that don’t allow FSBOs to list their property. Thus, FSBOs are unable to give their homes adequate exposure in the market.
However, when buyers hire a real estate agent, the professional can give a property online exposure as well as exposure in the local real estate segment of the newspaper. The agent even has tools to extend the exposure further, which FSBOs don’t have.
10. FSBOs fail in the closing process
Even after an offer is accepted, many things still need to be done prior to the closing. For instance:
- Get the inspections completed within the allotted time.
- Ensure the attorney(s) approve contracts.
- Ensure that instrument survey is ordered.
- Check if the buyer has obtained written mortgage commitment.
- Find out if title work is reviewed.
- Learn whether abstract is redated.
With so many things acting against FSBOs, it’s natural to find very few homes for sale by owners in the market.
Here are a few websites you may want to visit for information.
We hope these charts help you get some buyers off the fence!
Closing Rules Take Effect: Understanding the Changes. The Consumer Financial Protection Bureau offers an online “Real Estate Professional’s Guide” to help you and your clients understand the new TILA-RESPA Integrated Disclosure rule, or TRID, that took effect Oct. 3. The guide, part of the bureau’s larger ” Know Before You Owe” initiative, include a look […]
Marc Lichtenfeld, Chief Income Strategist, The Oxford Club Editorial Note: As we explained yesterday, the Fed’s decision to keep interest rates low will likely have disastrous long-term consequences. “Thanks to the death of interest rates,” Andrew Snyder wrote, “gone are the days of ‘safe income.’” Without a doubt, pensioners and retirees are the ones most […]
The following is a reprint from Inman and gives us an insight into the market from Sept 8 to Sept 11th 2015. MBA’s Builder Applications Survey for August 2015: Mortgage applications for new-home purchases decreased by 6 percent month over month in August. Conventional loans comprised 68.5 percent of loan applications; FHA loans comprised 19 […]