Real-estate TV shows try really hard to make it look real
By Mary Ellen Podmolik

Chicago Tribune

CHICAGO — Flip on your television and tune into HGTV’s “House Hunters” and you might see yet another set of Chicago homebuyers and a local real-estate agent in action.

The popular cable TV program seems to like the local real-estate market; it has certainly been featured before. And with every show, another buyer and agent learn the skinny about what’s real and unreal on reality television.

“House Hunters” is one of those programs you can stumble across and then find yourself sitting down to watch, critiquing the three different properties being shown and the buyers’ tastes, and then guessing which one they’ll pick. It also provides a sense of property values in a given locale, as in “look how much more/less house we can get if we moved somewhere else.”

So hearing the behind-the-scenes details of several episodes that have been filmed here recently is a bit like pulling back the curtain to reveal the real Wizard of Oz.

A few months ago while they were looking for another set of homebuyers, the show’s producers stumbled across the blog of Chicago Realtor Eric Rojas (score another one for social marketing) and asked if he had a willing buyer.

He did. But Chicagoans Kurt and Kelly Schnakenberg had to be more than willing to appear on television. They had to have the financial wherewithal to actually close on a home, and they had to have the right personalities for the show, something they demonstrated in a videotape sent to the producers.

Rojas, meanwhile, had to fill out a questionnaire about how he does business.

For the show, the couple looked at three properties in Lakeview: a $415,000 loft, a $355,000 vintage condo with a kitchen that needed work and a $400,000 loft-style town house that needed updating.

Of those three, one of them was the unit the couple did indeed purchase in March. Another one was under contract to someone else so the listing agent had no problem showing it. The third unit was for sale, but the couple had never seen it before and had pretty much already made up their minds.

The conversations aren’t the same, either. Kurt Schnakenberg said he and his wife did debate the merits of various condos, but it was never so serious and “usually over a bottle of wine.”

Chicago agent Carrie Georgitsis, who showed properties to her father for a different episode, had no idea how tiring it would be until she found herself involved in 40 hours of filming for what amounts to less than 25 minutes of programming. She found herself having to say the same things over and over, while the camera crew shot her conversations with her father from different angles, and had to be careful not to tip off viewers to which property was chosen.

Why can’t it be more real than it is? Here’s three good reasons: One, it’s a TV show and it’s meant to be entertaining. If it turned out that the buyers had bad credit and couldn’t close on a home, there’d be no happy ending and no “after” shot showing the new homeowners in their abode.

Two, sellers — and homeowners associations — have to agree to the filming and some don’t want to be bothered or don’t want to deal with the legal ramifications if a crew member gets hurt during filming. And three, if the buyers and the real estate agent are totally unlikable and mumble, do you want to watch them buy a house?

Rojas doesn’t think so.

” ‘House Hunters’ is house candy,” Rojas said. “It’s not realistic. It’s directed. You don’t learn anything about buying. You learn about real-estate values. You learn about how houses look.”

Despite all that, agents who’ve done it say they still watch the show, and they’d go back on it again. After all, it’s great marketing exposure, particularly because programs are repeated.

“It’s totally fake, but does anybody think reality TV is real? It’s all canned, but it’s fun to watch,” said real estate agent Karl Vogel, who also was featured in a recent episode helping a Boston native find a home in Chicago. “Who can say they don’t like to be on television, except you look fat?”

The Schnakenbergs, who’d never before seen the show, already plan to capitalize on their upcoming 30 minutes of fame when it comes time to sell their condo. “Listing it ‘as seen on HGTV’ couldn’t hurt us,” Kurt Schnakenberg said. “I’m not sure if it will get us more money, but it will help us get more showings.”

Copyright © The Seattle Times Company

Seattle Real Estate Tyler Freed

Foreclosures weigh on home appraisals
It appears that in neighborhoods with high foreclosure rates, values for all homes are being pulled lower than in areas where there are few or none.

By Alex Veiga

The Associated Press

LOS ANGELES — It wasn’t the first time that Katherine Scheri ruined a real-estate agent’s day with a low property appraisal.

Scheri, a real-estate appraiser, had sized up a three-bedroom, two-bath house in Santa Ana, Calif., for $30,000 less than what the buyers offered to pay. A typical deal-killer for a seller.

The agent urged the lender to force Scheri to consider several other properties that could back up the original $310,000 sale price. Then he tried good old-fashioned guilt, telling Scheri her appraisal was going to ruin the buyers’ shot at the American dream.

“That’s what he laid on me,” Scheri recalled. “And I said, ‘Don’t you care they could be potentially spending $30,000 too much for a house?’ ”

Across the country, agents and homebuilders are complaining too many appraisals are coming in low, scuttling deals.

The National Association of Realtors says nearly one in four of its members has reported clients losing a sale due to appraisals. The National Association of Home Builders, meanwhile, said low appraisals were sinking a quarter of all new home sales and argues it’s not fair to compare distressed properties to brand-new homes.

And that gets to the heart of the problem.

Roughly 40 percent of all home sales this year were foreclosures or short sales, meaning the property sold for less than the mortgage. In some markets, like Las Vegas and Phoenix, they’ve hit more than 50 percent.

Appraisers determine the value of a property by looking at recent sales of comparable homes. They take an apples-to-apples approach, excluding or making adjustments for certain features, such as a swimming pool or a finished basement. And generally, a foreclosure isn’t used as a comparison for a standard sale.

But in some areas, appraisers like Scheri contend they are only sizing up homes according to the reality of the market, though they concede its becoming increasingly harder to pinpoint what a home is worth.

Home prices in many large metro areas, including Los Angeles and San Diego, hit bottom earlier this year and are recovering, data shows. Yet there are many neighborhoods across the country where foreclosures and other financially distressed sales are still rising.

“It used to be a very infrequent thing that you did an appraisal and the value wasn’t supported,” says Scheri, who is based in San Diego. “Now, it’s more common than not.”

So, if you’re trying to sell your home in a neighborhood where foreclosures and short sales are predominant, an appraiser could determine your home is actually worth less than what some buyers may be willing to pay.

Part of the problem, critics contend, is that many real-estate appraisers are now hired under new industry rules. Designed to limit conflicts of interest that can bias an appraisal, the rules bar mortgage brokers from ordering appraisals themselves, forcing them to do so through a mortgage lender.

Lenders may order appraisals through in-house staff or appraisers hired by outside firms known as appraisal-management companies. But neither may talk to the appraisers about the value of the property they’re evaluating.

The result, however, can mean that low-cost appraisers are hired from outside the area and don’t have the local knowledge to find homes that can be a better benchmark for regular homes.

Chris Heller, agent-owner of Keller Williams Realty in northern San Diego, recently had the sale of a home nearly thwarted for the second time because of a low appraisal.

The three-bedroom, two-bath house in the Poway suburb of San Diego was appraised for $55,000 less than what the buyer agreed to pay. The seller wasn’t willing to drop the price to $400,000, but knocked off $20,000 when the buyer agreed to come up with $35,000 in cash.

“The seller is taking less because of the appraisal,” Heller said, noting that almost all of the comparable homes used to gauge the property’s value were distressed sales.

Still, the buyer is paying a premium not to have to deal with the risks involved in buying a foreclosed home or a short sale, which can take several months to close.

So, should distressed homes sales be compared with other homes? Is one inherently worth more than the other?

A new analysis of foreclosure and nonforeclosure sales by Zillow.com found that even when most of the market is made up of bank-owned homes, nonforeclosures sell for as much as 30 percent more. Another study by Harvard’s Joint Center for Housing Studies came up with a similar conclusion.

In Las Vegas, which has one of the highest foreclosure rates in the nation, the median sale price for bank-owned homes sold in September was about 23 percent less than other types of properties, according to the Zillow study.

“There are two markets, two very distinct markets,” said Zillow economist Stan Humphries.

That doesn’t mean foreclosures don’t weigh down the value of nearby homes, although there’s loud disagreement on how much.

The Joint Center for Housing Studies examined home sales over 20 years in Massachusetts and found that a foreclosure within less than 100 yards of a home lowers the price of that home by 1 percent.

So it appears that in neighborhoods with high foreclosure rates, values for all homes are being pulled lower than in areas where there are few or none. That means you can live in one area of Las Vegas and values can be down twice as much as they are in another neighborhood just a few miles away.

When it comes to appraisals, that leaves a lot of room for interpretation.

Seattle Real Estate Tyler Freed

Standardized short-sale plan may relieve big headache

By Kenneth R. Harney

Syndicated columnist

WASHINGTON — If you’re in trouble on your mortgage and can’t get a loan modification, check out the Obama administration’s new standardized short-sale plan scheduled to roll out during the coming months.

The program, outlined Dec. 1 by the Treasury Department, is an attempt to streamline what has been a contentious, time-consuming process by requiring lenders and others to use nationally uniform documents, timelines and financial incentives.

A short sale involves a lender or investor agreeing to collect less than the balance owed on a mortgage debt out of the proceeds of a negotiated sale of the property.

Often a short sale is the last alternative to foreclosure. Say you’ve lost your job and fallen behind on your mortgage payments. With little or no income, you can’t qualify for a modification program.

In this situation — grim as it is — your best move may be to see if your lender will accept a short sale. Though the idea sounds straightforward, in practice it is not.

First, the bank needs to be convinced a short sale will yield it more money at the bottom line than a foreclosure.

This usually means you need to bring in a real-estate agent who knows the ropes and can pull together the key information needed by the bank: recent comparables on closed sales, local market trends and the likely selling price of your house.

Plus you’ll need to have a buyer for the house, one who’ll pay a price acceptable to the bank and has financing to close the deal. If you happen to have a second mortgage or home-equity credit line on the property, you’ll also need to negotiate how much that lender will receive from the sale proceeds.

That can be tricky. In depressed real-estate markets, the second-lien lender may be holding a note that’s worthless in a foreclosure because plummeting property values have wiped out the collateral.

Yet that same bank is in a pivotal position: It has the legal power to block the short sale by refusing to sign on to the deal.

Equally troublesome is the fact banks, mortgage servicers and bond investors often have conflicting requirements for documentation and financial yields that can complicate and drag out the haggling for months.

Enter the Obama administration’s new streamlining plan.

Besides requiring lenders and servicers to use uniform documentation, preapproved short sale terms and accelerated turnaround times, the plan also provides financial incentives for key players:

• Homeowners who successfully complete a short sale under the program receive $1,500 to defray relocation costs.

• Mortgage servicers can receive $1,000 per case.

• Investors get $1,000.

• Second-lien holders receive up to $3,000 from the sale proceeds.

Even real-estate agents get something: The rules prohibit banks from forcing them to cut their commissions from the listing agreement as part of the final deal.

Sounds like a formula for encouraging a lot more short sales, right? The jury will be out on that for months, and most major lenders are still studying the fine print of the Obama program. But early reactions from big banks appear to be positive.

Dave Sunlin, a senior vice president for Bank of America, said, “We’re very pleased. We welcome any effort to reach standardization for all parties” in short sales.

Faith Schwartz, executive director of Hope Now — a Washington, D.C.-based group representing the country’s largest banks, mortgage servicers, bond investors and consumer-counseling organizations — said the plan should bring “uniformity and standards” to a process usually characterized by “mayhem” among the negotiating parties.

Scott Brinkley, a senior vice president for First American, a firm that provides market data for banks, said “you’re going to see a lot of cooperation” by lenders and investors.

But there could be a major pothole: The Obama plan tilts to consumers by requiring second-lien holders to drop all financial claims against short-selling borrowers beyond the $3,000 they take out of the deal.

Travis Hamel Olsen, chief operating officer of Loan Resolution, a Scottsdale, Ariz., consulting firm, says the $3,000 payment won’t be enough for many second-mortgage lenders.

Today they frequently get additional short-sale compensation from sellers as the price of their participation — in cash or through promissory notes — far beyond $3,000.

“I’m concerned that that could limit participation” by second-lien holders, Olsen said.

Bottom line for homeowners: Don’t have wild expectations, but definitely ask your servicer whether it plans to participate and whether the forthcoming standardized plan for short sales just might work for you.

Kenneth R. Harney: kenharney@earthlink.net

Seattle Real Estate Tyler Freed

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Seattle Real Estate Tyler Freed

Homebuyer credit helps keep area housing market afloat
by MAI HOANG
Yakima Herald-Republic

Buy YHR Photos Enlarge photo

ANDY SAWYER/Yakima Herald-Republic
Real estate agent Thomas Parker shows a home to Maria Valdez Wednesday, Nov. 11, 2009.

YAKIMA, Wash. — Since he was a young boy, Ricardo Velasco was told by his parents that he needed to own a home.

For Velasco, a 25-year-old Toppenish resident, it was tough to find an affordable home in the right area.

But when he heard about the federal tax credit for first-time homebuyers, he decided to start looking.

Velasco and his wife, America, and their three daughters, expect to close on their first home later this month and move in just in time for the holidays.

A federal tax credit of up to $8,000 for first-time homebuyers, along with record-low interest rates, has given the local real estate industry extra business.

“It’s given us a talking point to get people interested,” said Rick Fairbrook, broker at John L. Scott Real Estate.

Velasco was one of those interested buyers. He ended up finding a two-bedroom, one bathroom house for $74,000.

Velasco plans to use the money he gained from the tax credit to do some remodeling on the house which include installing a new roof and installing a new heating system.

“The $8,000 did really push us to get the house,” he said. “We’re just thankful this house came along.”

*******

Fairbrook and others in the local and statewide real estate industry believe an influx of first-time homebuyers, lured by the tax credit, has kept the market viable.

Existing home sales in Yakima County during the third quarter had a year-over-year increase of 1.7 percent, according to data from the Washington Center for Real Estate Research released this week. The county also showed a 12.6 percent increase from second-quarter figures.

Statewide, existing home sales increased 2.6 percent, the first year-over-year gain since the fourth quarter of 2005. That figure was up 15.6 percent from the second-quarter data.

The Washington Center for Real Estate Research, which is based at Washington State University, also did a study in late September and early October that shows about half of all home purchases statewide during the third quarter were from first-time homebuyers. About 60 percent of those purchases would not have happened without the tax credit.

“About 30 percent of the (overall) market was attributed to the (first-time buyer credit),” said Glenn Crellin, executive director for the Washington Center for Real Estate Research. “That’s about the same of the overall increase in (sales) activity.”

First-time homebuyers likely made up the majority of buyers in Yakima County. Nearly 72 percent of existing single-family homes purchased in the county during the third quarter cost less than $200,000, according to data from Headwaters-The Source, a Selah-based firm that provides real estate data for the county. About 30 percent of those homes were under $100,000.

There’s no county-level data showing how many of those purchases were a direct result of the tax credit, but local agents believe it was a driving factor.

Mike Kokenge, of Coldwell Banker Associated Realtors, estimates that about 60 percent of the company’s business was from first-time homebuyers.

And it also helped that the tax credit was happening in the summer months.

“People get more motivated to buy,” he said.

*******

While a tax credit may attract first-time homebuyers, other buyers have remained timid, making a dent on the median home price.

The price was likely driven down because first-time homebuyers tend to be in the market for lower-priced homes.

In Yakima County, median prices dropped 1.4 percent from a year ago to $154,200, while statewide numbers dropped 7.8 percent.

According to the Washington Center for Real Estate Research, there are enough homes in the $250,000 to $500,000 price range to supply the local housing market for more than a year if no more homes were placed for sale.

For homes above $500,000, there’s nearly a four-year supply.

And part of the loss in this market is reflective of a tough real estate market outside the area.

For several years, sales activity for Yakima County’s higher-priced homes was partially driven by buyers from areas like Seattle or California. Those buyers could buy higher-end homes in the Yakima area because they sold a modest home for much higher prices at their previous residence.

“That has stopped,” said Chris Nass of Rose & Associates. “Because of the economic climate, (out-of-town buyers) can’t sell those homes for big bucks in the communities where they’re coming from.”

The market has also had an impact on new construction.

Building permits in Yakima County for single-family homes during the third quarter declined 62.5 percent from a year ago, according to the Washington Center for Real Estate Research.

*******

The real estate industry is shifting its attention to an extension to the first-time homebuyer tax credit, which was approved by Congress and signed by President Barack Obama last week.

The tax credit was slated to end in November. Under the extension, homes purchased or under a binding contract by April 30 (and completed by June 30), now qualify for the credit.

That was a relief to Velasco. By the time he closes on his new home, it will be two months since he started the home purchase process.

“We were kind of worried,” he said. “It was one of the first things (our real estate agent) told us — that it was going to take a while.”

With banks taking more time to screen potential borrowers during the loan qualification process, the time it takes to complete the purchase process is longer than in past years, Crellin said.

A few years ago, a home purchase could close as quickly as 30 days, said Tom Trepanier, broker and owner at Windermere Real Estate in Yakima. These days, closing a home could take as long as 45 to 60 days.

A second tax credit is also in place to spur activity from repeat buyers, which may cause increased activity for homes in the $200,000 to $300,000 range.

Under this credit, homebuyers who have owned a home in five of the last eight years may qualify for a tax credit of up to $6,500 for homes that are under a binding contract between now and April 30. Again, home purchases under binding contract must be completed by June 30 to qualify for the credit.

“We’re hopeful that this new tax credit will influence the higher price ranges,” Trepanier said.

But for some existing homeowners, the repeat buyer credit might not be enough to drive them to buy a higher-priced home, especially if they already get tax breaks from paying interest on their current mortgage, said Ron Anderson, an agent with Creekside Realty.

“(The credit) is not going to be enough to make them go further into debt,” he said.

And real estate agents note that other things have to change for the market to have a full recovery, such as increases in employment levels and consumer confidence.

“People have been more cautious in how they spend that money. I’m sure it extends to home buying,” said Fairbrook, of John L. Scott Real Estate. “I think we’re in for a long, slow improvement. We’re not going to see a sudden jump in sales activity in any of the (price) ranges.”

* Mai Hoang can be reached at 509-577-7685 or mhoang@yakimaherald.com.

Seattle Real Estate Tyler Freed