Thanks to John for this insightful comment...  "A great cliche about the housing market (and the stock market, too): Most people get in too late, and they get out too late. The second mistake has already been made by most. Don't let the first happen, too."

John also suggests that "Trying to call a housing market bottom is folly."

With that in mind, let's entertain ourselves by making wild guesses about December sales figures.  :)  November's market report will give you a context for your guess.  There were only 40 residential sales in Harrisonburg and Rockingham County last month.  How many will we see in December?  30? 50? 75?

The closest guess will receive a small, but delightful, gift certificate to Old Dominion Coffee Company in downtown Harrisonburg.  Feel free to leave your guess in the comment section below, or send me an e-mail.

The current VHDA interest rate is already low, at 5.875%.  But for first time buyers looking for affordable housing, it can be tough to finance a purchase even at that low rate.  So....how about 4.875%? 

If you're buying at Covenant Heights, a neighborhood being developed by Hope Community Builders (a non-profit group), depending on your income levels, you may be able to have the current VHDA rate lowered by an entire percentage point!

And these are nice properties we're talking about here -- duplexes and townhomes with three bedrooms, all of which are pre-inspected and built to EarthCraft and EnergyStar standards.

If you have a friend or co-worker who is seeking affordable housing, do them a favor and tell them about Covenant Heights!

If you like eating at Dave's Downtown Taverna, you'll want to eat there this week!  (or maybe next week)

Dave's is getting very close to serving their one millionth customer, and when they do, that customer will receive a $500 gift certificate to Dave's Downtown Taverna.  Wow!

So whether you're going for their gyro, souvlaki, pizza or pasta, make sure to eat at Dave's this week!

Dave's is located in downtown Harrisonburg -- directions and a map are here.

In some real estate markets, home owners are turning to a raffle to try to sell their home.  (Thanks to Josh for the tip!)

For example, Angela Schaab in Grand Rapids, Michigan is attempting to sell her boardwalk condo by selling 2,500 $100 raffle tickets.  As of today (9/27/2008) she has sold 235 tickets. 

Or, read the story of several owners attempting raffles in the Wall Street Journal's Raffles: Real Estate's Latest Game of Chance.

So --- what do you think?  If there were a house on the market in Harrisonburg, and you could buy a raffle ticket for $100 --- would you buy one?

If you have been holding off to lock in an interest rate on your purchase or re-finance, now may be the time!

In a report released by Freddie Mac last Friday (9/12/2008), 30-year fixed-rate mortgages now average at 5.93%.  That is a significant drop from the prior week's average of 6.35%.

Yes, rates could go lower, but we're below 6% again --- which I hadn't thought we'd see for quite a while.

If you have any questions, please e-mail me (scott@cbfunkhouser.com) or call me (540-578-0102).  I'd be happy to talk things through with you, or to connect you with a qualified lender.

If you haven't owned a home in the last three years, you have a unique opportunity if you buy a home in the next 11 months (before July 1, 2009).

The new Housing Bill signed into law by the President this week provides a $7,500 tax credit to first time home buyers (anyone who hasn't owned a home in the past three years) with income up to $75,000 for single people and up to $150,000 for married couples.

When do I get the money?
A $7,500 credit will be applied to your income taxes for the year in which you close on your new home.  This doesn't reduce your taxable income by $7,500 (a tax deduction) --- it reduces the taxes that you pay by $7,500 (a tax credit).

I've heard I have to give the money back?
Yes --- the $7,500 must be paid back over 15 years, starting two years after you take the tax credit.  This is an additional tax liability of $500 per year for those 15 years.

So if I have to pay it back, why is this tax credit so exciting?
In essence, you are being provided with a $7,500 interest-free loan.  This can be the needed advantage for first time buyers to know that they can make a home purchase work for them.  The $7,500 will certainly make up for what you paid for closings costs (in most loan programs) and even part of your down payment.

If you have more questions, check out this list of frequently asked questions.

Can it be done? YES! Is it easy and fun? NO!

Properties in Harrisonburg and Rockingham County that are being foreclosed on are almost always advertised in the Daily News Record as an upcoming "Trustee Sale." When I see good opportunities in these notices, I post the trustee sale details on my blog.

Oftentimes, information about these foreclosure sales is available several weeks before the actual sale, and thus interested buyers sometimes wonder if it is possible to short circuit the foreclosure proceedings, and buy the property before the sale. The simple answer --- yes, this is possible. However, there are typically a few obstacles:

Owners in denial --- or seclusion --- or anger!

Being in situation where you can't pay your mortgage any longer, and the bank is foreclosing on your home is not AT ALL a fun situation to be in. I don't at all intend to make light of the unfortunate light that some homeowners find themselves in. And thus, if you are hoping to purchased a foreclosure property prior to the trustee sale, it is important to consider the perspective of the homeowner.

Many such homeowners are in denial --- thinking or hoping that they will catch up on their mortgage payments such that the sale will not take place. Others will be very difficult to reach, and it won't be possible to discuss a way to help them sell their home without being foreclosed upon. And some homeowners will be downright angry if someone contacts them about their home, and it's status as a pre-foreclosure property.

The lender can't sell you the home before the trustee sale, so if you are to attempt to purchase it beforehand, you'll have to deal with the homeowner. Be careful how you broach the subject, and be sensitive to a time of difficult life circumstances!

The timing will be tight!

While there are often several weeks between the first notice of a foreclosure and the actual foreclosure sale, if you are financing the purchase, you will need every last day of it if you hope to purchase the property before the sale takes place. If you are purchasing the property with cash, or if you already have your financing lined up, you may not have as much of a time crunch.

Sometimes the lender will postpone the foreclosure sale if they can be assured of a pending successful sale of the property that would pay off their loan. If they have doubts as to the buyer's performance, or doubts as to whether the purchase price will pay off the remaining balance of the loan, they may foreclose as planned.

If you are going to attempt to buy a foreclosure property before the sale, be sure to have all of your financing details arranged ahead of time!

Those second lenders don't like being in second place!

Finally, it is important to recognize that there is sometimes a second mortgage or line of credit on the property being foreclosed upon. If a primary loan of $180,000 is being foreclosed on, it won't necessarily work for you to swoop in and offer the owner $181,000 because you know this will pay off their first mortgage and because you know the property is worth $200,000. If a second mortgage (of perhaps $10,000) is in place, the owner won't be able to sell the property to you unless they have other funds in place with which to satisfy the second loan.

The potential existence of second mortgages doesn't mean you shouldn't pursue a foreclosure property prior to the sale, but it does mean that it will be worthwhile to do some preliminary research before making a proposal to the homeowner.

It can be beneficial for multiple parties to purchase a home before it is foreclosed upon. You, the buyer, can get a good deal on the house. The seller can avoid a foreclosure scar on their credit history. The lender can avoid the hassle and cost of foreclosing on a property. But if you are going to attempt this feat of real estate acrobatics, be sure to review the factors above and consider how to adjust your proposal to make the scenario work best for all involved parties.

Some additional light reading on foreclosures:
- Types of Foreclosure Opportunities
- How & Why To Buy Property At A Foreclosure Sale

Multi-family properties often provide different cap rates than single properties.  Let's take a look at some recent multi-family sales in Harrisonburg . . .

1710 Park Road, Harrisonburg = 5.1%
1986 Brick quad
Sold for $400,000 in February 2008
( ($2030 per month x 12 months) - ( $1023 insurance + $2002 taxes + $1,000 repairs ) ) / $400,000 sale price

325 Colicello Street, Harrisonburg = 10.6%
1919 triplex
Sold for $184,500 in April 2008
( ($21600 per year) - ( $658 insurance + $678 taxes + $750 repairs ) ) / $184,500 000 sale price

331 Grace Street, Harrisonburg = 3.4%
Duplex
Sold for $282,000 in September 2007
( ($1040 per month x 12 months) - ( $720 insurance + $1538 taxes + $500 repairs ) ) / $282,500 sale price

As you can see, in multi-family properties, the cap rate is not as predictable as in singe family rental property.

Related Posts:
Harrisonburg Single-Property Cap Rates
What Is A Cap Rate?

For the past seven years, Coldwell Banker Funkhouser Realtors (the company where I work) has represented the builder/developer of Beacon Hill Townes.  Up until the most recent six months, the townhouses that have been built have been of high quality, with several exciting standard features such as hardwood floors on the main level.

Now, everything has changed!  All of a sudden, the builder has decided to throw in even more upgraded features as standard components to the townhouses currently being built. 

Gone are the standard "builder's brass" light fixtures, door knobs, etc.  Now, you'll find exciting (and contemporary) features such as decorative lighting and plumbing fixtures, upgraded cabinetry, decorative door hardware, and more.

Why, you might ask?  Was the change made to try to eek a little bit more profit out of each townhouse sale?  Actually --- the prices have remained some of the most competitive (low) prices of all new construction townhome subdivisions in Harrisonburg.  One reason for the upgrades is to finish out the last section of Beacon Hill with the most exciting units yet, to keep the excitiment for the subdivision high all the way to the end.

Whatever the reason --- the new townhouses being built are quite stylish, and give a wonderful impression to buyers who have been shopping around and looking at other new construction townhomes.  I'm curious to see how long it will be until other new townhomes in Harrisonburg start to include some of these stylish upgrades.  Soon, I hope --- as it certainly benefits Harrisonburg townhome buyers!

For some time now, I have been posting the details of foreclosures on my blog. I began to post all Harrisonburg and Rockingham County foreclosures because I have had clients interested in buying foreclosed properties. I'm making a change starting today, that I believe will still well serve my clients, and those interested in foreclosure properties.

First, let me explain that I categorize foreclosures into three areas:

• Terrible Opportunities - where the original amount borrowed (or my estimate of its current balance) is at or above the assessed value. Here is one example, where the original loan was for $231k, and the current assessed value is $157k.
  
• Good Opportunities - where the original amount borrowed (or my estimate of its current balance) is close to, but below, assessed value. Here is one example, where the original loan was for $270k, and the current assessed value is $316k.
  
• Great Opportunities - where the original amount borrowed (or my estimate of its current balance) is well below the assessed value.  Here is one example, where the original loan was $87k, and the current assessed value is $196k.

A few observations about the people who may be interested in foreclosure properties:

• Investors who hope to flip foreclosure homes (buy, fix, sell for profit) would likely be interested in the "great opportunities."
• Buyers looking for a home for themselves would likely be interested in the "good opportunities," and certainly the "great opportunities" as well.
• I have yet to meet someone who is interested in the "terrible opportunities," mainly because they aren't likely to be able to buy them at a reasonable price -- the bank will take the houses.

Unfortunately, for those who hope to do well buying a foreclosed home, most foreclosures in this area fall into the "terrible opportunities" category.  For example, yesterday a home on Chestnut Oak Lane was in the Daily News Record with an original loan amount of $343,920 --- and an assessed value of $316,700.

As I move forward, I will only be posting the foreclosure properties that I would categorize as a "good" or "great" opportunity.

The City of Harrisonburg is accepting bids on the two parcels of R-2 land labeled below.  The first parcel (labeled "1" below) contains 3.119 acres.  The second parcel (labeled "2" below) contains 5.018 acres.



This land, zoned R-2, provides for a great residential development opportunity --- a convenient location close to Route 11, Route 42, Port Republic Road, Keister Elementary, and more. 

Bids will be accepted until 9:00AM on April 8, 2008, and the bids will be opened at the City Council meeting at 7:00PM on April 8, 2008.


View Larger Map

In two out of my most recent three closings, my buyer clients bought at a fantastic price --- below appraised value. 

Scenario #1 --- buyers offered a quick closing, with no home sale contingency, and paid $13,000 under the appraised value.

Scenario #2 --- buyers bought from a relocation company, and paid $10,000 under the appraised value.

Why is it happening?  In both cases, the buyers made aggressive offers --- instead of opting not to make an offer based on a higher than reasonable asking price. 

As I noted a few weeks ago, buyers currently seem to be hesitating to make offers, and sellers are hesitating to lower their prices.  For the buyer who is willing to negotiate, this means there are opportunities to buy at great prices!

 

Property Characteristics
Finished SF	2,400
Circa	1997
Bedrooms	3
Bathrooms	3.5
Lot Size	0.234 acres
Pricing
Original Amount of Deed of Trust	$269,600  (11/3/06)
Assessment: Land	$80,000  (2008)
Assessment: Improvements	$235,700  (2008)
Assessment: Total	$315,700  (2008)
Most Recent Sale	$337,000  (11/3/06)
Trustee Sale Details
Date/Time	March 18, 2008 at 4:59 PM
Location	Rockingham County Courthouse
Deposit	10%

Property To Be Sold:  1182 Portland Drive, Harrisonburg

Date/Time of Sale:  Friday, March 5, 2008 at 3:15 p.m.

Original Principal Amount of Deed of Trust:  $177,882

Assessed Value:  $193,000

Deposit:  $15,000 or 10% of the sales price, whichever is lower

For Information Contact:
Samuel I. White, P.C.
5040 Corporate Woods Drive, Suite 120
Virginia Beach, VA 23462
757-457-1460 (call between 9:00am and 11:30am)
ASAP# 993440

Per the Daily News Record, February 21, 2008