Top 4 Pricing Mistakes

WHAT’S DRIVING HOME PRICES UP

My buyers are frustrated.  Buyers everywhere are frustrated.  Home prices have risen about 10% from last year and there just aren’t many homes coming out on the market.  When there is a home, most buyers are outbid or it has been sold already before they even get a chance to look at it.

Where is all this buyer competition coming from?

For one, much of the buyer interest is coming from investors.  They are either corporations pooling money together from the wealthy or private individuals all looking to get a better deal than leaving their money in the bank and let inflation eat away at their assets.  Instead of working for the bank and getting no return on their money while the bank goes out and makes interest on their money, these investors want a better return and real estate is a very high performing asset.  Income properties are generating a gross return of 5-15% depending on how much risk the investor can handle.  These investment homes are picking up many renters who used to be homeowners and lost their home to the bank but are used to the luxury of living in a house.

Now you see why there is such an incentive for investors to snatch up real estate.

Investors are hard to compete with.  They usually buy with all cash or a large down payment and that is hard to beat.  Sellers love to accept offers with all cash since that cuts the risk of a loan holding back the deal.  This is good for sellers but tough for buyers if they keep on waiting.  The ball is slowly shifting more and more in the seller’s hand.  Home prices are only going to continue to rise and buyers will find it even tougher. 

I recommend being prepared in this real estate market.  Sellers should start prepping their home for sale.  Pretty much have your home in a presentable condition and a simple and convenient way to do this is with a fresh layer of paint.  It really makes the house pop out a lot more.

Buyers should definitely be prepared (proof of funds, pre-approval, know what you want) since it will be tough.  The best thing a buyer can do is have their finances taken care of and make time for the homes they like.  One of the worst things a buyer can do is wait and miss out on an opportunity.  So I repeat, be prepared now so you can take advantage of an opportunity that might come your way.

Feel free to contact me anytime if you have questions, you already know how to get a hold of me.

I Want A Good Deal

What is a good deal?  Almost all my clients start off by initially asking me to find them a “good deal.”  The joke in the office is if we found this “good deal,” we would buy it ourselves!

Realistically, if your idea of a good deal is saving some money, which it probably is, then foreclosure auctions and short sales (read my previous articles about short sales) wouldn’t be a bad idea.  Wait, there is a twist though, you have to show up with all cash, and what you see is what you get.  You don’t get to conduct the typical buyer investigations or have a contingency period.  You win at that auction and the home is yours.  With real estate, what you see isn’t what you always get.  There could be problems with the title or the structure itself so an auction is real risky and that “good deal” you are looking for might end up being a bad deal.  Of course, most people don’t have that much cash at hand and wouldn’t want to take the risk even if they do.

Another potential “good deal” is if you buy a home that would need some fixing up.  The catch with this is you need to put some work into it but most buyers don’t consider this a “good deal” since it involves work and can’t see past the ugly to realize a home’s full potential.

Let’s examine the typical buyer and seller.  A seller wants as much as he can get for a home, and a buyer wants to pay as little as possible.  There is a conflict there don’t you think?  When both a buyer and seller meet in the middle as far as price is concerned, then a deal has been reached! 

Buyers that want a good deal must understand that homes aren’t sold by a giant company that offers clearance sales.  They are sold by private entities each wanting top dollar for their home.  Sometimes as a buyer, you may have to even offer more than what is listed.  Is an amount like $5,000 worth getting in the way of your dream home especially since most home values will appreciate?

In the reverse situation, sellers need to understand that buyers want to pay as little as they can so like any wise shopper, they will shop around and compare.  If your home is priced too high then you have priced yourself out of the market.  Think about it, you didn’t want the home you are in now because it was more expensive than other homes at the time did you? 

A competitive market analysis where similar homes in the similar condition are reviewed to arrive at a reasonable price is the best way to get a snap shot of the current market value of a home.  This is beneficial for buyers and sellers alike to get the best price on a home so it is a win – win situation for both parties.

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What Is Online Is Accurate…Or Is It?

Since the age of the internet, everyone has relied on it for information.  With the abundant amount of information out on the internet you can almost get PHD using Google.  However, the information out there may not always be the most up to date or accurate.  Wikipedia, a popular online encyclopedia is a well known lighting rod of criticism for having inaccurate data since anyone can edit it.  So it is no surprise that a study conducted by the WAV Group on behalf of Redfin found that online real estate sites are not giving consumers the full or accurate picture.

Zillow is one of my favorite sites because of all the intuitive tools they have like the mortgage calculator, however, when it comes to the data, I would not rely on it.  If you look up their Zestimate home value estimate, it is terrible with complaints on their forum board left and right.  Their estimate is either way too high or way too low.  Unfortunately some home owners and buyers take this information as if it was the law so you end up with sellers listing too high and buyers offering too low.

It is important to note that market value changes from time to time.  The most effective way to determine the value is through comparables of similar homes which is what my competitive market analysis does to get the best price for my buyers and sellers.  It is more than just comparing the homes with the same amount of bedrooms in the same city which is what some of the internet real estate sites do.  The condition, lot size, and building size must also be factored in to get an accurate picture.  A competitive analysis goes into much more detail especially since a similar home a few blocks away even in the same city is valued differently. 

Remember this, don’t just always trust what is presented to you, VERIFY.

Study Finds Gaps in Online Listing Information

DAILY REAL ESTATE NEWS | THURSDAY, OCTOBER 04, 2012

Some home shoppers may not be getting a full or accurate picture when they view listing information on some popular real estate Web sites, suggests a study conducted by the WAV Group on behalf of Redfin. 

The study evaluated the accuracy of information contained in more than 6,000 listings among 33 ZIP codes on five sites: Zillow, Trulia, Redfin, and two regional real estate brokerages — Windermere and Long & Foster. 

The Redfin study found that 36 percent of the agent-listed homes shown as active listings on Zillow and 37 percent of those on Trulia were no longer for sale on the local multiple listing service. 

“Zillow and Trulia do not dispute that their listings have some gaps and inaccuracies, though they dispute some of the particulars of the Redfin study,” The New York Times reports. “There’s a simple reason they don’t have everything their rivals do: Neither of them belongs to the local MLSs, which provide the most complete set of agent-listed properties.” 

Zillow and Trulia are not real estate brokerages. Real estate brokers can provide electronic feeds or add their listings so they appear on the real estate sites. As such, some agents that do provide feeds to the sites don’t take listings down quickly after the property sells, says Glenn Kelman, chief executive of Redfin. 

Trulia says it is forming stronger relationships with brokers so that it can improve the accuracy and completeness of its listing information, according to The New York Times. Zillow said it was making a similar effort. 

“There is no gold standard for listings data, so comparing Zillow’s MLS-only listings to an MLS isn’t going to give you the whole picture,” says Cynthia Nowak, a spokeswoman for Zillow, adding that Zillow also includes items that aren’t often listed on the MLS, like for-sale-by-owner listings and new construction. 

For those that love decorating!

Protecting Your Benefits

The Government is broke.  What do they do to fill their coffers?  They slowly but surely chip away at tax benefits and create new taxes for you.  One tax benefit that has been up in the air is the mortgage interest deduction where you can deduct your interest payments from your taxes.  President Obama during his speech at the Democratic National Convention shows his support for keeping the mortgage interest deduction which is good news for current and future home owners.  Tax benefits are one of the main perks of owning real estate.

To go further back, during the Republican National Convention, protecting the mortgage interest deduction wasn’t in their platform.  However, with the effort and pressure from the National Association of Realtors, protecting the mortgage interest deduction was inserted into the platform.

What do you think?  How would you feel if Government were to take away this tax benefit designed for current and future homeowners?

Obama Promises to Protect MID for the Middle Class

DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 07, 2012

President Barack Obama in his speech last night to accept the Democratic nomination for president said he will protect the mortgage interest deduction for middle-class families.

“I refuse to ask middle-class families to give up their deductions for owning a home … just to pay for another millionaire’s tax cut,” he said.

The president’s speech focused heavily on preserving the financial health of middle-class households, and he said that any deficit reduction and tax increases that he would seek in a second term would not affect households earning up to $250,000.

“I want to reform the tax code so that it’s simple, fair, and asks the wealthiest households to pay higher taxes on incomes over $250,000 — the same rate we had when Bill Clinton was president,” he said, “the same rate we had when our economy created nearly 23 million new jobs, the biggest surplus in history, and a lot of millionaires to boot.”

Alluding to the excesses in mortgage originations during the housing boom and the subsequent mortgage crisis, the president touted the rules that are now in place to protect households from taking out loans for which they don’t have the ability to repay. “We believe that when a family can no longer be tricked into signing a mortgage they can’t afford, that family is protected, but so is the value of other people’s homes, and so is the entire economy,” he said.

The president says in a Q&A for the September/October issue of REALTOR® Magazine, which comes out in mid-September, that he’s open to ensuring the rules don’t cut off the flow of mortgage credit to otherwise creditworthy borrowers.

“We will work with regulators to strike the appropriate balance for a healthy market that is open, fair and sustainable over the long term,” he said in the Q&A.

FLOOD OF BUYERS

There has been a surge in buyer interest this year and simple economics would tell you that with more demand equals an increase in price.  Home prices have been starting to rise as well as interest rates at a slowly but surely speed.  According to Realtor.com, home prices in the Los Angeles area has risen 6.43% from a year ago.  The unfortunate reality is that many buyers were hesitant to buy before but now that everyone is interested in homeownership, everyone is trying to get in on it.  People either go to where the money is, or where the money will be.  Which one are you? 

Buyers Want a Bargain? Here's Their Chance!

DAILY REAL ESTATE NEWS | TUESDAY, AUGUST 21, 2012

For home buyers who are looking for a chance to buy low, they may not want to drag their feet too much longer.  

“Home prices have probably bottomed in most markets,” David Crowe, chief economist at the National Association of Home Builders, said in an NBC News-hosted Web chat with online visitors last week. “Mortgage rates are not likely to go down much further and will eventually rise as the economy recovers. Home builders are hungry and while you will still have to pay a fair price, you may not get a better bargain than now before all the rest of the demand comes back.”

However, the best bargains will largely depend on where you’re at, Crowe says.

“House prices are rising in some markets, notably Texas ... In a few markets that were severely damaged by the recent Great Recession, prices may continue downward for another six to ten months,” Crowe says.

Crowe says one hurdle that may slow the recovery is the inability for some home buyers to still not be able to qualify for financing due to banks’ tightened underwriting conditions in the last few years. 

But in places where the inventory of distressed homes is decreasing and demand is growing because of an improving employment picture, “housing is beginning to see some recovery, prices are picking up, and more building is occurring,” Crowe says. 

Can You Afford It?

Fun info.  Take a look at the info-graphic and see where you fit in.

Did You Ask Me A Question?

Here are some common questions that all clients have so I will take this opportunity to give my take at it.

1.) How long does buying or selling a home take?

I can’t give you a definite time frame but on average with a mortgage loan it will take approximately 45 days from acceptance of your offer to close escrow.

National Association of Realtors® says that the average buyer previews 10 to 12 homes before buying.  I know of a buyer that took 5 years before finally finding a home in Monterey Park that was right for her so it varies from buyer to buyer.  I will say though that being realistic and knowing what you want will be the key factors to how long it will take.

Sellers on average have their home on the market for approximately 90 days before selling if everything goes according to plan.  Price will be the crucial factor here.

2.) How do I know I am getting the best price?

As you probably already know, value is in the eye of the beholder so you may feel that a property is worth more or less than another person would.  That is where my “Competitive” Market Analysis comes into play.  It will allow us to gauge what other buyers are willing to pay for a similar home.  This way you are seeing if you will be getting the right deal with a competitive price. 

3.) What schools are nearby?

Many buyers plan to grow their family in the home they are buying and the school your children will be going to is definitely going to cross your mind.  In fact, schools have a positive correlation with real estate prices.  With good schools and more nerds in the area, the better the real estate prices are. 

As a REALTOR®, one of the tools that clients always value is my detailed report of all the schools in the area along with ratings that I will provide to you.  It also lists some on the local businesses nearby.  With that in hand, buyers have another tool to determine if they are indeed buying the right home.

4.) What if something is wrong with the house?

Product defective? Too bad?  Well, with real estate it is completely different.  Laws governing real estate transactions protect the buyer.  Sellers are required to disclose all known defects and anything that would affect the price.  It even goes as far as requiring sellers to disclose any known deaths in the home within the last 3 years since you know, not all ghosts are going to behave like Casper the friendly ghost.  Buyers have nothing to worry about because they have the right to continue doing inspections even after the offer is accepted.

What if something is wrong?  Well then, the seller is not going to be too happy because the buyer has the right to back out and get their deposit back.  That’s just the way it works so honesty upfront is very important in every transaction.

5.) But the news is saying home prices are going (up/down) and you are telling me otherwise?

Before you start thinking I am crazy, understand this, the real estate market is stratified.  That means it is different in every market or neighborhood.  What the media does is average out all the markets together and that doesn’t give you a realistic picture of the home we are discussing.

Info that I am giving you is market specific.  I conduct detailed research and report back to you and of course it is different than what the newsman with the pretty background will be telling you.

Example: Let’s say home prices nationally are going up 15% every year.  However, the City of Make Belief sits on the mountainside and have been hit by constant landslides.  That will definitely affect the home prices for the City of Make Belief as you can imagine.  The real estate market in the City of Make Belief will have depressed home prices while communities all around it will continue to have the rising prices.

Yes, it was far-fetched but it demonstrates the point.

What Is This For?

What Is This For?

Don’t you hate it when you are charged with hidden fees?  Well, it happens when you are buying a home too!  Chances are you will be taking out a loan from a lender unless you are a cash buyer of course.  Then you will use an escrow service to close out the transaction.  Both your lender and escrow provider will have many small fees tacked on.  That is how they make their money.  However, did you know you can dispute some of the fees?

Your lender is required by law to give you a HUD1 after receiving your mortgage application.  HUD1 is an estimate of all your closing costs and shows you what fees they will be tacking on to your loan.  Third party services that are shown such as appraisals and inspections can’t really be disputed because it is a service they do not provide.  What you can do is dispute or lower some of the fees the lender or escrow is charging you!  One of my favorite ones I advise my clients to dispute is an “Overnight Messenger Fee” that some escrows charge.  I know for a fact that there was no work being done overnight.  So when you get your statements, look over it carefully and see what fees you can dispute or lower based on your situation.  Who knows, maybe you might need to sent messages to your escrow overnight, messages that they will take a week to respond to anyway.

TAKE A LOOK AT ARTICLE BELOW

Gulf Between Good Faith Estimate and Actual Closing Costs Troublesome

DAILY REAL ESTATE NEWS | MONDAY, JUNE 04, 2012

A home buyer gets ready for settlement day only to discover right before the “Big Day” that they are going to have to bring a lot more cash to close the deal than they originally thought. The surprise can sometimes threaten to derail a deal. 

Lenders are required to provide buyers a good faith estimate of closing costs within three days of receiving borrowers’ mortgage applications. But these good faith estimates reportedly are sometimes underestimating—or even greatly over-estimating—the true costs of settlement. 

The Consumer Financial Protection Bureau is working on revamping the good faith estimates and the HUD-1 settlement sheet, which is given to borrowers prior to closing listing the costs. The revamp is expected to provide more clarity to borrowers on closing costs and also make it easier for borrowers to shop around for their mortgage. 

Title professionals report that a lot of the times the estimates provided to borrowers on the good faith estimates over-estimate the true cost of the loan. 

“Lenders' estimates for services rendered by third parties such as appraisers and surveyors are supposed to be within 10 percent of the final figures,” The Chicago Tribune reports. “If the charges listed on the HUD-1 exceed the tolerance, lenders are required to eat the difference.”

As such, many title agents report in a recent survey that some lenders “pad” their initial estimates so they ensure they come within that 10 percent limit at closing. 

“Overquoting” violates the law, says Michelle Korsmo, American Land Title's chief executive. Korsmo says that even if borrowers aren’t charged for items like document preparation and warehouse fees, lenders who provide inaccurate information on good faith estimates make it difficult for home buyers to shop around for the best closing services. 

Also complicating the picture, title agents report in a survey that often times borrowers are receiving more than just one good faith estimate. Sometimes borrowers are receiving two or even up to seven estimates of their potential closing costs. 

Bank of America offering up to $30,000 for short sales

Bank of America offering up to $30,000 for short sales - May. 15, 2012

WHAT MAKES AN OFFER MORE ATTRACTIVE THAN OTHERS

Some things are out of the buyers control.  A 100% cash offer at the asking price is always the most attractive offer to a seller.  If there is none, then the next best thing is whichever offer has the highest down payment.  This is where the problem lies for a buyer that is only able to make a very small down payment.  In a hot market where there are multiple offers, you will run into trouble and have a hard time finding a seller that will accept your offer if you are making a low down payment.  A FHA loan with the minimum 3.5% would be a prime example.

The reason a low down payment is less attractive than a higher down payment is because with a low down payment the seller sees more potential for complications and because that’s just the best way to pick the most attractive offer if they are receiving the same asking price from a few different buyers.  There are other factors of course but money is always the main one.

One thing that might come up is the loan to value that a lender is willing to lend and the buyer will have to make up for the rest.  With that in mind, a higher down payment gives the buyer more wiggle room.

If you are in a slow market or neighborhood then it is no big deal having a low down payment because the seller will have no other choice.  Your offer is probably the only one that has been made on the home so they will just have to accept your offer either way and take their chances.

This really goes back to clients that ask me how much down payment they should make.  There really is no definite answer and the best way to approach it is the higher the better because it makes your offer that much more attractive and you will have a lower mortgage payment.

Rude awakening

Bidding Wars Catch Buyers Off-Guard

DAILY REAL ESTATE NEWS | MONDAY, APRIL 30, 2012

Home buyers are unexpectedly finding more competition this spring in landing their dream home. Bidding wars are increasingly being reported in markets across the country, from California to Florida, The Wall Street Journal reports. 

"It's a little surprising because we thought bidding wars were done with," Andy Aley, a home shopper in Seattle, told The Wall Street Journal. Aley says he was outbid on a home earlier this year, even though he offered to pay $23,000 above the listing price and also waive inspections and other closing conditions.

Home buyers are frustrated and caught off-guard about the bidding wars re-emerging, real estate professionals report. 

"We're writing a record number of offers, but we're not seeing a record number of closings and that's because it's so competitive," Glenn Kelman, chief executive of Redfin Corp., told The Wall Street Journal.

Why are things getting so competitive? Many housing markets are seeing a drastic decrease in the number of homes listed for-sale, leaving home buyers with fewer options and more bidding on the same house. Housing analysts say the shortage in supply is from sellers unwilling to take much less for their home than what they originally paid for it and pulling their homes off the market. Also, a surge in investors has made the market more competitive, as investors snatch up homes in bulk in all-cash deals. 

“The bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump,” The Wall Street Journal reports.

Indeed, the National Association of REALOTRS® reported late last week that pending home sales in March reached their highest level in nearly two years and are up 12.8 percent from a year ago.

Source: “Stunned Home Buyers Find the Bidding Wars Are Back,” The Wall Street Journal (April 27, 2012)

30 DAY NOTICE

Sounds intimidating huh?

By law you have to give your tenant at least 30 days notice if they have been living on your property for less than a year.  If they have been living there for over a year then you will need to give them a 60 day notice.  If you have been renting out to Section 8 renters, then you will need to give them a 90 day notice because it is harder for Section 8 renters to find a new place. 

Some tenants you probably wouldn’t want to keep around for whatever reason so giving them a 30 day notice is the right thing to do.  You are the landlord after all.  Should they decide to stay past the 30 day notice, you can file for an unlawful detainer to evict them.

Do know that you can hand them the 30 day notice any day of the month.  It does not have to be at the beginning of the month.  Your tenants are still responsible for paying their rent and utilities.  Should they decide to forgo their responsibilities of paying rent, prorated rent, go ahead and serve them a 3 day notice to pay rent or quit and you can evict them for not paying rent as well.

Remember to get everything in writing.  Sure you verbally gave them a 30 day notice to vacate, but then a day later they forget you even told them anything and can claim you never said a word!

WHO WILL BE THE “CHOSEN ONE”?

WHO WILL BE THE “CHOSEN ONE”?

Often times I have to remind my clients that they aren’t the only ones in the market looking to buy a home.  I can understand why they don’t bother to think about that because I give them my full attention as if they were the only buyers out there plus they never really see the other buyers out there.  In essence, their competition is invisible so understandably not much thought is given to it until they get outbid a few times and start to realize that they are not the only home buyer around. 

I always give my clients a heads up that chances are they will see a few homes they like and even make a few offers on homes they really want before finally getting an offer accepted by a seller.

One thing a buyer can do to increase their chances of getting the home they like is acting swiftly once I find them a home they like.  I tell them every time that I can’t guarantee the home they like will still be on the market by the time they think it over and it is true because by the time they have thought it over they didn’t even get a chance to make an offer.  Someone else had already bought the home.  Do realize, just because you make an offer and it gets accepted, it doesn’t mean you have to buy the home.  There are many contingencies that will allow you to walk away from the offer should it ever come to that.  I will talk about that in a future article

Most sellers will wait at least a week after putting their home on the market before making a final decision if they are receiving multiple offers just in case a higher offer comes in.  They don’t always do this though because on the offer contract, the seller is given 3 days to respond to the offer or else the contract can be automatically considered withdrawn by the buyer although many times the buyer still wants the home even after the 3 days.

 Check out the article below

Bidding Wars Are Back, Agents Say

DAILY REAL ESTATE NEWS | MONDAY, APRIL 02, 2012

Some real estate markets are reporting that home buyers are having to pay more than asking price to get the home they desire, as the supply of for-sale homes has shrunk, Bloomberg News reports.

Bidding wars were a common part of real estate in 2006. But when the market turned from a “seller’s market” to “buyer’s market,” more sellers started seeing lowball bids than high bids. Now times are slowly changing, and bidding wars are being reported in several markets, such as in Seattle, Boston, Silicon Valley, Miami, and Washington, D.C., Bloomberg reports.

The inventory of homes for-sale is near a six-year low. Mixed with the low inventory, the job market has been improving and buyers are being lured to the record level of affordability in the housing market. Existing-home sales and pending home sales are up more than 8 percent compared to a year earlier, the National Association of REALTORS® recently reported. Trulia Inc. also reported that falling home values and low mortgage rates have made home buying a better deal than renting in 98 of the 100 largest metro areas.

“The housing crash is finally giving way to recovery in an increasing number of markets across the country,” Mark Zandi, chief economist for Moody’s Analytics, told Blommberg. “The decline in unsold listings and vacant homes and the increase in rents presage better times ahead for single-family housing.”

Working with a REALTOR can help safeguard yourself from potential scams

Renters Beware: Fraudsters Still Lurking on Craigslist

By Krisanne Alcantara - Posted Mar 12th 2012 4:04PM - AOL Real Estate

With a burgeoning "sharing economy" and the growing amount of trust in peer-to-peer marketplaces like Craigslist, consumers have become increasingly comfortable with online transactions. These days, it's no exaggeration to say that people are willing to look for almost anything online. Whether it's finding a roommate, a vacation home, a life partner or a rental apartment, this "Craigslist culture" offers no-cost or low-cost services that are quick and, most importantly, convenient.

But experts warn that convenience can sometimes come at an unexpectedly high price, particularly for those who turn to free classified sites like Craigslist for real estate-related transactions. Despite the media spotlight on the dangers of Craigslist in recent years, it appears that online rental scammers are still out in full force, preying on unsuspecting renters and landlords alike.

Just this January, a couple from Lynchburg, Va., were scammed out of $1,000 and confronted by the police because of a fake rental listing they'd responded to on Craigslist.

Richard and Faith Shive (pictured left) thought they'd found a beautiful vacant home and planned to rent it from the listing's author. The landlord claimed in the ad that he was away on a humanitarian "mission," and needed to rent the property in the interim. Convinced the story was true, the Shives wired a requested $1,000 fee to the renter, received the keys, and then moved into the empty house.

Two days later, police officers showed up at the Shives' "new home," demanding that they leave. It turns out that, while the home was legitimately listed for rent on the market, the unscrupulous party that advertised the rental on Craigslist was not the rightful landlord. The police informed the couple that the scammer had broken into the home and posed as the rightful owner only to make off with their deposit.

"They just made it sound believable," Faith told CBN News. "I didn't suspect anything."

And it's not just renters getting swindled -- landlords appear at risk, too. In another recent incident, Georgia resident Robert Fulton claimed that he got scammed out of $2,200 by a pair of prospective renters after he'd posted an ad on Craigslist to lease out his empty basement.

The pair reportedly sent him a $3,500 check as an advance on the rent, then asked him for a favor. Fulton claims that they requested he send the $2,200 they had "overpaid" him to an acquaintance of theirs to help "cover moving expenses." Though Fulton says that he had his suspicions, he went through with the transaction as the first check appeared to have cleared.

But it hadn't.

"A couple weeks later I got an email from the bank saying the check was no good," Fulton told WSB-TV. He told the television station that after he'd called the scammers about their ploy, they propositioned him to join them in making counterfeit checks, just like the one they'd allegedly used to rip him off in the first place.

"They said, 'Why don't you get involved with us and you can make some money? You can make all your money back,' " Fulton said.

But experts are skeptical that such duped consumers will ever see that money again.

An Online Money Trap

"Unfortunately, it's not likely Fulton will get his $2,200 back," Janet Hart from the Better Business Bureau told AOL Real Estate. "It's probably in another country and he doesn't even know about it. Wire transfers are irretrievable."

Hart, an expert on consumer fraud, reveals that sadly, Craigslist real estate scams are still happening very frequently. Cashing in on fake advance rent checks, like in Fulton's case, is one of the "most popular" Craigslist scams, she says, along with selling and renting "fake" homes. (That's advertising unlisted homes for bargain prices to out-of-town buyers who cannot physically check on the home, and then asking for a "holding fee" to be wire-transferred to an account, like in the Shives' case.)

How to Protect Yourself

Hart warns consumers that diligence is key. You can help safeguard yourself from these scams by avoiding any wire transfers, unless it is to or from a large and reputable organization. Also, if someone's offering you a lot more money than you're asking for in a simple real estate transaction, just don't take it.

"If it sounds too good to be true, it probably is," Hart advises.

AOL Daily Finance also advises that if you are renting a place online and cannot physically see the place for any reason, at the very least you should Google the home's address and do some online research on the property before forking over any money. If the home shows up as a "for sale" home, there could be a problem.

"You can never be too careful," Hart adds. "Ask around and do your research before any online transaction, especially with things involving a lot of money like houses and cars."

A Gift Like No Other

Realistically most people can’t purchase a home without taking out a loan which is why it is necessarily to meet with a lender to get all the details.  Okay so now you are working on getting a loan because you can’t purchase a home entirely on your own but then the lender will require a down payment from you.  You have never saved up enough to make the down payment that the lender requires.

What now?

Down payment.  Not everyone has saved up enough to make a down payment but perhaps someone in your family such as your parents have the kind of money that is required for your down payment.  They can help you on your down payment.  Down payment gifts are common since not everyone has the money saved up to make a down payment. 

Every lender has different guidelines for this because some will want to see more of your own money put into the home.  They will require a letter of some sort stating that it is indeed a gift and not a loan that needs to be paid back.  The transaction receipt showing the deposit and withdrawal of the down payment gift would be requested by the lender as well.  The declared gift amount should match the deposit and withdrawal receipts exactly.  Nothing more and nothing less.

Don’t let the fact that you might not have enough saved for a down payment scare you away from taking advantage of record low interest rates and low home prices.

Another Hint Of Recovery

Sales contracts for homes rose 2 pct. in January

Sales contracts for US homes rose 2 percent in January, approach level considered 'healthy'

By Derek Kravitz, AP Real Estate Writer | Associated Press – 3 hours ago

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WASHINGTON (AP) -- The number of Americans who signed contracts to buy homes rose in January to the highest level in nearly two years, supporting the view that the housing market is gradually coming back.

The National Association of Realtors said Monday that its index of sales agreements rose 2 percent last month to a reading of 97. That's the highest reading since April 2010, the last month that buyers could qualify for a federal home-buying tax credit and the last time the reading was above 100.

A reading of 100 is considered healthy.

The Realtors' group also released revised data for 2011. That lowered November's initial 19-month high of 100.1 to 96.9. But contracts have been markedly up since the summer when some feared a second recession loomed.

Contract signings typically indicate where the housing market is headed. There's a one- to two-month lag between a signed contract and a completed deal.

A sale isn't final until a mortgage is closed. One-third of Realtors complain that they've had at least one contract scuttled in January, December, November and October, according to the Realtors' group. That's up from 18 percent of Realtors in September.

Nonetheless, the gain in signed contracts supports other evidence of improvement in the housing market.

Pierre Ellis, an economist at Decision Economics, said home sales and building is in the midst of "ongoing general, but gentle, progress."

Builders are growing more optimistic after seeing more people express interest in buying this year. Sales of previously occupied homes are at their highest level since May 2010. More first-time buyers are making purchases. And the supply of homes fell last month to its lowest point in nearly seven years, which could push home prices higher.

Homes are the most affordable they've been in decades. And mortgage rates have never been cheaper.

Much of the optimism has come because hiring has picked up. More jobs are critical to a housing rebound.

"Easier mortgage lending criteria, very low rates and the improving labor market are all contributing to the beginnings of a real upturn in home sales, if not yet prices," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Sales may also be rising because of an April deadline for higher mortgage application fees for Fannie Mae and Freddie Mac-backed home loans. The government-controlled mortgage buyersown or guarantee about half of all U.S. mortgages and 90 percent of new loans, and have been telling customers to submit their applications now.

Analysts caution that the damage from the housing bust is deep and the industry is years away from fully recovering.

Potential buyers are holding off for a number of reasons. High unemployment and weak job growth have deterred many potential buyers. Loans are harder to come by. Lenders are requiring bigger down payments and strong credit scores to qualify.

Even those with good credit and stable finances are hesitant to buy out of concern home prices will keep falling.

Rising Slowly, But Surely

Rate on 30-year mortgage rises to 3.95 percent

Average rate on 30-year home loan jumps to 3.95 percent after 3 weeks at all-time low

By Derek Kravitz, AP Real Estate Writer | Associated Press

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WASHINGTON (AP) -- The average rate on the 30-year fixed mortgage jumped after standing pat for three straight weeks at record lows. But the rate stayed below 4 percent for the 12th straight week, keeping home-buying and refinancing attractive for those who can qualify.

Mortgage buyer Freddie Mac said Thursday the rate on the 30-year loan rose to 3.95 percent. That's up from last week's rate of 3.87 percent, the lowest since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage rose to 3.19 percent from 3.16 percent. It hit a record low of 3.14 percent three weeks ago.

So far, low rates have done little to help the housing market, which is slowly improving. Few people can qualify for the rates and many who can have already done so.

The four-week average of home purchase applications dropped in late January and February while refinancing is mostly flat, according to the Mortgage Bankers Association. Refinancing now makes more than 81 percent of mortgage activity. 

But the housing market is flashing signs of health ahead of the spring-buying season. Sales of previously occupied homes are at their highest level since May 2010. More first-time buyers are making purchases. And the supply of homes fell last month to its lowest point in nearly seven years, which could push home prices higher.

The job market is also improving, which is critical to a housing rebound. In January, employers added 243,000 net jobs — the most in nine months — and the unemployment rate fell to 8.3 percent, the lowest level in nearly three years.

Frank Nothaft, Freddie Mac's chief economist, said the housing market is gradually starting to pick up. Still, home sales remain weak and it could take years for the market to fully return to health.

To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fees for the 30-year and 15-year loans were unchanged at 0.8.

For the five-year adjustable loan, the average rate fell to 2.80 percent from 2.82 percent, and the average fee fell to 0.7 from 0.8.

The average on the one-year adjustable loan fell to 2.73 percent from 2.84 percent, and the average fee was unchanged at 0.6.