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Fix What’s Broken in Our Real Estate Market - 2010-03-07 |
All agree that our real estate market is suffering. Here are three areas where I think the system is “broken” with some possible fixes:
1. It’s the foreclosures, stupid!
The real estate market is trying desperately to make a modest recovery, but it is impossible to establish any kind of pricing stability when the market is flooded with foreclosures, which undermine values and are absolutely toxic to any neighborhood in which they are located.
POSSIBLE FIX: Encourage meaningful loan modifications to keep owners in their homes.
Loan modifications could allow millions to stay in their homes and continue making some level of monthly payments. But servicing lenders are currently unwilling to offer them because they fear their liability to the note holders will come back and bite them.
Appropriate federal legislation could allow lenders to be held harmless of liability if they engage in a good faith effort at restructuring and the loan eventually is charged off.
2. The existing inventory of vacant bank-owned homes is poisoning markets nationwide as they sit empty and deteriorate. They attract crime and vagrancy, and decline in appeal until their value approaches zero. But financing is only available to owner-occupants for homes in excellent condition.
POSSIBLE FIX: MAKE COMMON SENSE FINANCING AVAILABLE TO INVESTORS
The FDIC has so restricted banks ability to lend on real estate that it's almost impossible for investors to acquire these vacant houses for rehab and return to market. And even if they do it with personal funds, no “take-out” refinance mortgages exist from Fannie Mae or FHA to allow investors to replace their funds and rehab the next house.
Federal legislation could make “common sense” loans available to investors who are ready, willing and able to return these homes to the market.
3. Restrictive code requirements and expensive federal rules make it harder than ever for anyone to repair a damaged house. Lead based paint rules and codes requiring complete upgrades artificially boost the costs of rehab.
POSSIBLE FIX: Provide one-time exemptions for homes which are in or have avoided the foreclosure process from onerous regulatory requirements unrelated to safety. Stop using licenses, EPA regulations and county codes to achieve social ends, at least temporarily.
A good example of this problem is a recent regulation in DeKalb county. It requires any applicant for water service to prove that all water consuming devices in the residence have been professionally replaced with so-called "low flow" devices. Not only does it add significantly to the cost of a rehab (or even the sale of) any existing home, the work may not be performed by anyone other than a licensed plumber.
While the idea of water conservation is laudable, it puts renovators and home sellers at a substantial disadvantage at a time when we can least afford it.
These suggestions may not solve all our nation's economic woes, but I believe they would be a step in the right direction.
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Upcoming Events
"EPA CERTIFIED RENOVATOR" TRAINING
Do You Work with Real Estate? You Must Be LEAD SAFE CERTIFIED as of April 22nd.
To all owners, realtors, investors, property managers, contractors, electricians, plumbers and painters. Do you ever engage in any level of renovation? If so, read this:
Any renovator, from owners to contractors, from plumbers to electricians to painters, who disturbs lead paint while working in a pre-1978 home, school or day care center, now must be Lead-Safe Certified. If you’re not, you can face tens of thousands of dollars in fines. Plus, you put the health of yourself, your workers and your customers at risk, which could result in lawsuits. One simple 8 hour class certifies you for five years. It’s that easy.
Since April 22, 2010, there are new Federal rules regarding how you perform any work that disturbs lead-based paint in homes, child-care facilities and schools built before 1978. You now must be EPA certified and follow specific work practices to prevent lead contamination.
Failure to follow the new rules can result in federal fines of up to $32,500 per day or up to 5 years in federal prison, or both. Don’t take a chance - it’s not worth it.
How To Become an EPA Certified Renovator:
In just one day, John Adams will teach you how to meet all EPA requirements and become an “EPA Certified Renovator.”
Don’t wait - register now! Click on “Seminars” and choose your day!
- Friday, July 30th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 06th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 13th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 20th at Suburban Plaza, 2643 North Decatur Road
and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 27th at Suburban Plaza, 2643 North Decatur Road
and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
Total Course Cost: $295, includes exam and EPA-HUD 400 page manual
Space is limited to 20 participants.
Training services provided by Seagull Environmental Management Co, Inc.
Courses are approved for purposed of certification under Section 402 of TSCA for the Certified Renovator.
This course has been approved by the Georgia Real Estate Commission for 7 hours of Real Estate Continuing Education
For more information, call toll-free 888-373-0029
Click above on the "Seminars" button to register
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John Adams Presents
“The MetroVestAtlanta.com REO Bus Tour”
Get on the bus for a tour of South DeKalb County’s “Real Estate Owned”
homes. Each house you visit will be available that day for purchase at
a giveaway price, regardless of current condition. Financing is
available!
Throughout the day, we will hear from mortgage providers, people in the
construction business and property managers all discussing today’s
situation with Bank Owned REO properties.
Who Should Attend: Investors, Realtors, Lenders, Prospective Buyers, and
anyone who might want to buy a super-bargain house and either do the
rehab themselves or have all the work performed by the pros.
You will see abandoned dumps and finished products, and everything
in between. And Snap will be there to answer all your questions and
explain the rehab and rental strategies.
Saturday, August 21st, 9:30 AM to 4:00 PM
Your $49 fee includes the bus tour and lunch. You must make reservations. No walk-ups.
There is limited seating and the seats are filling fast. ACT NOW before you miss the bus.
We will be meeting at Suburban Plaza, 2643 N. Decatur Road and Church Street, Lower Level, Decatur 30033 (beneath Hancock Fabrics, in the arcade.)
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