Register Real Estate Advisors

WASHINGTON, D.C. (Mortgage Bankers Association) – Foreclosure and delinquency rates were down across the board for Texas in first quarter 2012, according to the Mortgage Bankers Association’s National Delinquency Survey, which was released Wednesday.
Texas’ overall delinquency rate dropped from 9.1 percent in fourth quarter 2011 to 7.3 percent in first quarter 2012, the lowest rate since second quarter 2008.
Mortgages seriously delinquent (90 or more days delinquent or in foreclosure) declined from 4.7 percent in fourth quarter 2011 to 4.4 percent in first quarter 2012.
Loans in foreclosure increased slightly from 1.8 percent to 1.9 percent. However, loans 90 or more days delinquent fell to 2.5 percent in first quarter 2012 from 3 percent in fourth quarter 2011 and from 2.8 percent in first quarter 2011.

Looking for a luxury penthouse in Downtown Houston? This loft comes completely furnished with an amazing view of the new soccer stadium and Minute Maid Park. With a wrap around balcony on this corner top unit, you will love this two story condo that has a game room, stainless steel and island kitchen, living area, two baths, and two bedrooms. Details below and a video:

505 Bastrop St, Houston, TX 77003 (MLS # 13816700)

D-town luxury living at its finest! Perfect 2-st Penthouse, 2 bdrm finished loft w/enclosed beams/pipes, gamerm up has granite bar w/sink,wine cooler,wine glass rack & ice mker. Kit w/isl. raisd bar w/granite, slate backsplash, stainless appl. & kegerator. Tiled downstairs w/slate bathrms, carpet bdrms, Oak hardwood stairs & upstairs. 2 prime prkg spaces, add l storage closet/deep freezer, lg closets, wrap around balcony facing Minute Maid. Fully furnished, goes w/the sale. Amazing skyline view!

Property Type(s): Mid/Hi-Rise Condo

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Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Register Real Estate Advisors

(view all details for MLS #13816700)

Seller Financing is when the seller is the lender.  I works like this – the seller passes ownership of the property to the buyer by deed. The deed describes whatever matters affect the ownership (or title) to the property and contains a promise by the seller to defend the buyer’s ownership (or title) to the property.  The seller gets a note for the difference between the sales price and cash paid by the buyer; this is money owed to the seller. The note generally provides for equal payments of principal (what is required to pay off the amount owed/borrowed over the time provided for repayment) and interest (the extra amount paid, as profit to the seller/lender, for having provided the money). Because of the interest, a note is a type of investment (a way the seller/lender can make money).  The property becomes the security for the note: the seller/lender gets the property back if the buyer does not pay the note as agreed.  The mechanism used to make the property security for the note is a document called the “deed of trust.” This document creates a lien against the property. When the note is paid in full, the seller/lender releases his lien, and the buyer owns the property “free and clear” of the lien. If the note is not paid as agreed, the seller/lender can recover ownership of the property by foreclosing on his lien.

Here are some negotiable points when using seller financing:
• Typically, the buyer pays taxes and insurance. The seller/lender can decide to collect the money to pay these items along with the monthly payment on the note (collecting 1/12th of what will be due and paying the tax or insurance premium when it becomes due) or to allow the buyer to pay these items directly and provide proof of payment. The appropriate provision must be put in the deed of trust.
• If the buyer is late in making the monthly payments due the seller/lender, a late charge (typically 5% of the payment amount if the payment is made more than ten days after it is due) can be collected by the seller/lender along with the payment. The appropriate provision must be put in the note.
• If the buyer wants to pay off the note early, before the scheduled payoff date, the seller/lender, who will not receive all of the interest he would have received over the full term of the note, can charge a prepayment penalty. However, the prepayment penalty cannot exceed the amount of interest the seller/lender would have earned if the note had been paid as scheduled.
• In the event that the buyer wants to sell the property before the note is paid in full, the seller/lender must decide whether he will allow the note to be assumed by a new buyer or require that the note be paid off at the time the buyer sells the property. The appropriate provision must be put in the deed of trust.
o If the seller/lender allows the note to be assumed, there is a requirement that the seller/lender be satisfied regarding the new buyer’s credit and ability to repay the note. The seller/lender must also decide whether the original buyer will remain liable to pay the note or will be released from liability to pay the note.
o If the seller/lender requires that the note be paid off, then a “due on sale clause” is put in the deed of trust.
• If the deed of trust contains a “due on sale clause” and the buyer sells the property without paying the note to the seller/lender, the seller/lender can get ownership of the property back by foreclosing on his lien.
• Prior to the foreclosure process, the buyer would be given certain notices. If the buyer fails to pay what is owed, the property is sold at a public auction to the highest bidder.
o If the property is the principal residence of the buyer, then the buyer must be given a warning notice that the payment under the note is delinquent. The buyer is given 20 days from the date of the sending of the notice to pay what is currently owed. (If the property is not the buyer’s principal residence, then this notice does not have to be given.)
o If the buyer does not pay the delinquent amount in full, then the seller/lender can “accelerate the note”; the seller/lender can say that all money due under the note (whatever is required to pay the note in full) is due. A notice that the note has been accelerated is sent to the buyer.
o A Notice of Foreclosure Sale is filed with the County Clerk and put up (posted) at the place in the county provided for public notice of foreclosure. The Notice of Foreclosure Sale is also sent to the buyer, usually with the notice that the note has been accelerated.
o Foreclosure sales are held on the first Tuesday of each month. The Notice of Foreclosure Sale must give the buyer at least 21 days to pay everything that is due on the note. Therefore, the foreclosure sale will be held on the first Tuesday of the month that occurs more than 21 days after the Notice of Foreclosure is sent.
o The foreclosure process is generally conducted by the Trustee under the deed of trust. If a foreclosure sale does occur, the Trustee takes bids from all interested parties. Usually the seller/lender bids the full amount owed on his note, and usually the seller/lender is the successful bidder. If someone else bids more, that person has to pay cash for the property, and the seller/lender’s note gets paid off.
o The Trustee conveys the property to the successful bidder at the foreclosure sale, and the buyer loses ownership to the property.
• There are two (2) situations which can interfere with the foreclosure process:
o The buyer can file bankruptcy. In this situation, the seller/lender will either be allowed to foreclose, but under the timing allowed in the bankruptcy proceeding, or the note will be paid off in accordance with a plan developed in the bankruptcy proceeding.
o The buyer can die. In this situation, the seller/lender can foreclose after a probate proceeding on the buyer has been started or after the seller/lender can identify the buyer’s heirs-at-law.
• Lender’s title insurance (loan policy). The seller/lender should get a loan policy that insures the lien created by his deed of trust.
o The loan policy protects the seller/lender against title defects, but is particularly useful if the seller/lender wants to sell the note and get cash, rather than waiting for the note to be paid off.
o If obtained at the same time as the owner policy to the buyer, the loan policy only costs an extra $100 plus endorsements. If obtained later, a credit may be given, but the charge will not be as minimal as it would have been if the loan policy was obtained at the same time as the owner policy to the buyer.

Want to know more about Contract for Deed?

Below is the process:
1. The seller and buyer execute a document called a Contract for Deed. By law, the document must be recorded in the real property records of the county.

2. The document provides that the seller/lender does not provide a deed to the buyer until the purchase price for the property is paid in full. The payment of the purchase price is similar to payments on a note, and the payment schedule is set out in the Contract for Deed.
3. If the buyer does not make the payments set out in the Contract for Deed, the seller/lender can take possession of the property.
a. If the buyer has paid less than 48 payments or less that 40% of the purchase price on the Contract for Deed, he is given a notice of delinquency. If he does not pay the delinquency within 30 days, the seller/lender can cancel the Contract for Deed, take possession of the property, and record a notice canceling the Contract for Deed in the real property records of the county.
b. If the buyer has paid more than 48 payments or more than 40% of the purchase price on the Contract for Deed, he is given a notice of delinquency. If he does not pay the delinquency within 60 days, the seller/lender can foreclose in the same way that a deed of trust would be foreclosed.

Some considerations:
• The risk to the buyer is that the seller/lender may do something to affect the title before the buyer can pay off the purchase price and get the deed from the seller/lender. Recording the Contract for Deed protects the buyer against any creditors of the seller/lender that have rights arising after the date that the Contract for Deed is recorded.
• The Contract for Deed is often used when the buyer does not qualify for a loan at the time of sale but expects to obtain a loan in the foreseeable future.
• Title insurance may be issued on a Contract for Deed transaction. Only an Owner Policy is issued (because there is no note and lien, just a contract for the buyer to pay money and the seller/lender to convey title sometime in the future). The insureds under the policy are both the seller and the buyer.
• A real estate commission can be collected on a Contract for Deed transaction.

Don’t do it!  There are many reasons why I recommend seller financing over rent to own in Texas.

If a buyer does not have adequate funds for a down payment and has poor enough credit or income to keep a lender from offering them a loan, I don’t think they should be purchasing a home.  If they do have the income or the down payment, regardless of credit, then seller financing is a great option for them.  I don’t believe a landlord should offer to sell to someone that has poor credit, limited down payment, and unsteady employment.  That sounds like trouble to me – so I would never recommend this to one of my landlords or sellers.

If a tenant needs more time to get adequate financing, then I feel they should  purcahse a home at a later date – that is my opinion.  What if they are never able to get their credit in better shape and now the seller/landlord has agreed to sell their house to this renter?

It doesn’t help that ForSaleByOwner.com is now offering a lease to own advanced search option.  Other states that have different real estate laws, may be more suitable for rent to own tenants than Texas.

All rent to own contracts should be written up by attorneys or atleast reviewed by a real estate attorney.  The contract has to have a lease component and a sale component.  They are legal in all the United States, but I do not recommend doing it.

What if the seller is entering foreclosure?  Would you the tenant buyer know it?  If they got foreclosed on, you’d lose all your equity and get booted out of the house.  There has also been fraud associated with rent to own transcations.

Now for more down side to buyers – what if prices go down and you are locked into purchasing the home for more than it’s worth.  What if interest rates go way up?  If you don’t buy the home, then you lose all your money that was supposed to be going to the down payment.  Some contracts say that if buyers are late on a payment, that payment cannot count towards the down payment.

Realtors don’t have promulgated forms for rent to own options, so you have to pay an attorney to write it up.  Do you know everything you need to put in that contract to protect you and your property?  Neither do I.  That’s why I encourage rent to own buyers to instead use the option of Seller Financing.   Seller Financing can be completed on Realtor promulgated forms and all title company attorneys can write these up easily.  I believe seller financing is a better option for both sellers and buyers/renters.  It’s not just about the forms.  The forms are there because seller financing is more simplistic.  The buyer takes possession right away.  They don’t have to wait to own the property.

If you want to rent to own a home, I recommend you set up seller financing if you are in the state of Texas.  Call me if you want more details.  I can explain better over the phone – 281.288.3500.  Let me know if you want the buyer or seller’s point of view!

Below is a reprint of an Article by Ali Anari that was found in the July 2011 Tierra Grande Magazine – I think this is great information for consumers and real estate professionals!

During the past decade, Americans witnessed a home price bubble develop and then burst.  The aftermath showed how broadly these bubbles impact the U.S. economy.

To monitor real estate price movements leading to price bubbles, a Real Estate Center research program developed economic indicators that help detect bubbles at both the national and regional levels.

Detecting Bubbles

Real estate bubbles are rapid rises in real estate prices not related to or driven by economic fundamentals, followed by rapid price declines.  In residential real estate markets, property rents, family income and population are economic fundamentals for house prices.  That is, in the long run, home prices are driven mainly by these three economic indicators.  In the short run, the availability and costs of residential mortgage loans, changes in local job markets and imbalances between housing supply and demand can boost home prices, though these are not economic fundamentals.

Economists have developed several economic indicators for monitoring and forecasting real estate price movements by investigating the relationships between economic fundamentals and real estate prices.  Comparisons of long-term real estate price forecasts with their short-term price fluctuations can provide insights into the probable directions of prices.

The Real Estate Center has developed two major economic indicators for monitoring residential real estate prices:  housing costs as a percentage of total family income; and, sales-price-to-rent ratio.  A Center research study (see Center Publication 1944, “Consumer Spending Survey:  Texas Downturn had an Upside”) found that the larger the share of housing expenditures in consumers’ budgets in large metro areas, the more home prices declined from 2007 to 2009.  That study showed the importance of monitoring the percentage of family income spent on housing as a leading indicator for future home price movements.  This indicator offers insights into the likely growth rates of home prices in a region.

Recently released 2009 housing data from the U.S. Census Bureau allowed the Center to investigate whether changes in home prices in Texas metropolitan areas from 2007 to 2009 were related to share of housing costs in family incomes.  The research shows that home price appreciation was lower in Texas cities where housing costs represented a larger portion of family income.

The sales-price-to-rent ratio also can predict real estate price bubbles.  This idea is borrowed from asset pricing literature and the stock market, where the ratio of stock prices to dividends, earnings or profits is used to determine whether stock prices are overvalued or undervalued.  Stock prices are the discounted values of expected future earnings–the larger the expected future earnings, the higher the stock prices.  If expectations prove unrealistic, stock prices generally fall.

Price-to-rent ratios in real estate markets resemble stock-price-to-earnings ratios in stock markets.  Large ratios of home prices to annual rents are indications of potential home price bubbles.  Estimating price-to-rent ratios for Texas metropolitan areas and comparing them with national averages, the Center asserted in two previous articles that the risk of a price bubble in the Texas residential markets was low (see Center publications 1731, “Bubble Talk” [July 2005] and 1854, “Bubble Watch 2008” [April 2008]).

Great Recession Housing Costs, Prices

The median value of owner-occupied housing units in the United States fell 4.7 percent from 2007-09, from $194,000 to $185,000 [see table].  Over the period, only two Texas metro areas, Tyler and Victoria, recorded home price declines.  The median value of owner-occupied housing units in Victoria and Tyler fell 3 percent and 1.5 percent, respectively, from 2007 to 2009.

Odessa had the largest percentage of home price appreciation (28.3 percent) followed by Abilene (13.7 percent), Beaumont-Port Arthur (13 percent), Midland (12.1 percent) and El Paso (11.1 percent).  Home price appreciation in the Odessa and Midland petroplexes likely was influenced by record high oil prices in 2008 when the price of West Texas intermediate crude oil reached an all-time high of $140.20 per barrel.

The state’s larger metropolitan areas also reported home price appreciation during the Great Recession.  Austin-Round Rock experienced the largest increase (6.7 percent) followed by San Antonio (5.5 percent), Dallas-Fort Worth-Arlington (3 percent), and Houston-Sugar Land-Baytown (3 percent).

Housing costs include property taxes, insurance expenses, maintenance costs and mortgage costs.  Housing costs as a percentage of total income in all Texas metro areas were lower than the national average of 25 percent, except in Brownsville-Harlingen (26.5 percent), Laredo (28.7 percent) and McAllen-Edinburg-Mission (25.7 percent).  The higher than national average percentages of housing costs in these three metro areas mainly reflect lower total family incomes rather than higher housing costs caused by higher home prices.

Odessa housing costs represented the lowest percentage of income (17.7 percent), followed by Midland (19.6 percent), Beaumont-Port Arthur (19.6 percent) and Longview (20.6 percent).

Among the larger metro areas, Dallas-Fort Worth-Arlington had housing costs representing the highest percentage of total family incomes (24.3 percent) followed by Austin-Round Rock (24 percent), Houston-Sugar Land-Baytown (23.3 percent) and San Antonio (22.6 percent), all lower than the national average of 25 percent.

Plotting home price appreciation in the Great Recession against the housing costs as a percentage of total income for Texas metropolitan areas in 2007 reveals a negative relationship between home price appreciation and share of housing costs.  The larger the share of housing costs, the smaller the home price appreciation.

Texas, U.S. Sales-Price-to-Rent Ratios

Sales-price-to-rent ratios for all the state’s metro areas in 2009 were smaller than the national average of 18.3.  Austin-Round Rock ha the largest price-to-rent ratio (17.4) followed by Dallas-Fort Worth-Arlington (14.7) and El Paso (14.6).  San Angelo has the smallest price-to-rent ratio (10.1) followed by Odessa (10.3) and Brownsville-Harlingen (10.9).

Comparisons of housing costs as percentages of family income and price-to-rent ratios for the state’s metropolitan areas with the corresponding national averages once again show that the risk of a major home price decline is low in the foreseeable future and that Texas has a healthy residential real estate market.

HOUSTON (TxDMV) – As if moving wasn’t already stressful enough, now consumers are being warned to watch out for illegal moving companies that may be out to take a person’s personal belongings on a permanent vacation.

As the summer moving season gears up, state and moving industry officials cautioned Texans to do their homework before hiring a moving company and encouraged the law enforcement community to take note of a new state law that imposes fines and jail time against unlicensed movers.

More than 60 percent of the moving complaints received at the Texas Department of Motor Vehicles (TxDMV) deal with unlicensed movers. To operate legally, a moving company must display a valid TxDMV (TxDMV licenses moving companies) or United States Department of Transportation (USDOT) license number on the truck.

Perhaps the best advice is the most basic: always know who you are dealing with before starting a move.

“[Consumers] need to stop for a minute and ask themselves ‘Who am I about to let into my home?’ because it might just be some guy living in a basement or with a criminal record who is going to show up with a rented moving truck to cart off everything you own,” said Linda Bauer Darr, president and CEO of Virginia-based American Moving & Storage Association.

And where should you never go to hire a mover? Free internet advertising sites, said John Trevino of the Houston Police Department’s Special Investigation Command.

Before hiring a moving company, Texans can find out whether the company is licensed by going to Moving Companies on the TxDMV website.

There are mortgage programs that are aimed specifically for foreign nationals moving to the United States.  If you are a foreign national moving to the United States to live in the Houston area, contact RREA’s in house lender to get qualified for a loan specialized to your needs.  Properties that are eligible for foreign national loans are both single family homes and condominiums.  These loans do require at least 25% down payment.  Call RREA today at 281.288.3500 to talk with our in house lender about qualifying and to our Realtors who can help you purchase a home.  Realtors work differently in Texas than in other parts of the world, so talk with a Realtor before you purchase a new or resale home in the states.

COLLEGE STATION (Real Estate Center) – Home sales in Texas cities were hot last month, rising in Austin, Dallas-Fort Worth, Houston and San Antonio.

According to the Multiple Listing Service (MLS) report by the Austin Board of Realtors, 1,852 single-family homes were sold in the Capital area during March, up 15 percent over the same period in 2011.

The Dallas-Fort Worth region reported a 13 percent increase in single-family home sales, with 6,126 properties sold in March, according to a report from the MetroTex Association of Realtors.

The Houston Chronicle reported 4,996 single-family homes sold in Houston in March, up 7.8 percent from the 4,634 homes sold during the same month last year.

San Antonio also showed improvements in March, according to the San Antonio Board of Realtors, with 1,637 homes sold in the area, up 4 percent month-over-month.

The median sales price rose to $200,000 in Austin, up 8 percent from March 2011. The median price in DFW jumped 11 percent to $155,000, with San Antonio reporting a 4 percent increase to $155,600. The median sales price in Houston set a monthly record in March at $161,750.

COLLEGE STATION (AgriLife Today) – Agricultural losses in Texas from the 2011 drought totaled $7.62 billion, setting a record for the costliest drought in history, according to economists from Texas AgriLife Extension Service.

Record-high temperatures, coupled with record-low precipitation and high winds, devastated production. Water supplies dwindled, thwarting production of hay and other crops, as well as inciting large sales of livestock.

Texas’ biggest category loss was livestock ($3.23 billion), followed by cotton ($2.2 billion), lost hay production ($750 million) and corn ($736 million).

The deficit from the 2011 drought is higher than the $5.2 billion in losses previously reported.

AgriLife Extension economists have recorded losses from droughts six times since 2000. The previous record was set in 2006, with $4.1 billion in losses.

This is a great list for getting your home ready to market.  Before you sell, spring clean!  It will make all of your marketing and advertising photos look better, too.  Buyers love a clean and clutter free home with curb appeal! 

• Remove and donate unwanted items, reorganize and clean closets, attic, basement and garage
• Power wash exterior walls, porch floors, deck, patio, driveway and sidewalks
• Clean outdoor furniture and outdoor light fixtures
• Clean out gutters or have new ones installed
• Clean out refrigerator and freezer, making sure to vacuum the grill and coil
• Remove lint from the hose attached to back of clothes dryer
• Vacuum baseboards, walls and ceilings, wipe down walls
• Steam clean carpets and area rugs and upholstery
• Reseal natural stone surfaces (travertine, etc)
• Reseal and repair grout in bathtubs and showers
• Clean window treatments, dust and clean blinds and shutters
• Remove items from all shelves, dust and clean
• Oil hinges

If you need a recommendation for anyone to help you with this list, call me for a referral.  And when you are ready to sell your home, give me a call!