Fairbanks Ak Real Estate News & Info

A new report out today by the US Council of Mayors paints a less than glowing picture of the housing market in the coming year. An estimated 1.4 millions homes, representing an equity loss of $519 billion, will go into foreclosure in 2008 pushing the total loss of equity at a staggering $1.2 trillion.

Home prices are projected to decline by as much as 7% nationally while home sales are expected to decline by 10%. This would mean the average sales price in Fairbanks would be back to levels not seen since early 2006 and homes sales would decline to 2004 levels.

The council did offer a few solutions to the housing crisis;

* The addition of more foreclosure counseling services and promoting their services to buyers facing foreclosure

* The development of an REO contact database which would allow local officials easy access to REO managers to ensure that bank-owned real estate wasn't allowed to deteriorate thereby further decreasing surrounding property values.

* Legislation aimed at ending predatory lending practices

* Giving the Federal Housing Administration more tools to help borrowers facing foreclosure.

If policies are put in place now to stem the flow of foreclosures and foreclosure related loses the economy will take a hit but ultimately won't be derailed. The keyword here is "IF". If the powers at be fail to take quick and decisive action that $1.2 trillion dollar equity loss will be felt in every sector of the US economy. Not only will the borrowers who lost their homes suffer but so will every affiliated business and homeowner in the country.

There is good news amid all the gloom and doom. Although the Federal Reserve recently amended their growth projections they are still projecting the US economy will grow at a healthy pace. Growth projections for 2008 are between 1.8% - 2.5% with projections between 2.3% - 2.6% through 2010.

At this point you have done your homework; you know what you personally can and want to afford and you have a pretty good idea of what your future home should look like. Before you begin house hunting I recommend enlisting the services of a qualified agent to represent you in the transaction. Real estate represents the bulk of most American’s total net worth. According to an Investment News report published in July the average investment account balance hovers just above $121,000 while the nationwide average price of a single family home is $211,000. Just as you would hire a professional investment brokerage to manage your liquid assets, retaining a buyer’s agent to assist you in the purchase of real estate is equally important.

A seller’s agent works exclusively for the seller; their job is to sell their clients property for the highest amount and on the best terms. Disclosing any personal or confidential information to this agent is akin to disclosing it directly to the seller. Your qualification amount, available funds, credit scores, negotiating strategy would be information not to disclose to anyone other than your buyer’s agent. Your buyer’s agent will help ensure the home you eventually purchase not only fits your needs but will promote and protect your best interests throughout the transaction.

The best way to find an agent is to ask your family, friends and/or colleagues for recommendations. Armed with their recommendations call each agent and ask for an appointment. The purpose is to meet with and understand how each agent works and what they can do for you. You’ll also likely cull a name or two from the list based on personality conflicts. If so, that’s fine. Your agent will know a great deal about your personal finances and you will need to rely on and trust their judgment and advice.

Things to consider: Is the agent a full time practitioner? It would be difficult to handle the myriad of details in a typical transaction working only a few hours a week. Do they belong to the Multiple Listing Service? Access to this database of homes for sale is vital. Are they seasoned, experienced agents? Experienced agents bring enthusiasm to the table as well as the skill set necessary to be a proactive buyers advocate. How will they be compensated? Expect an experienced agent to provide you with a personal services contract that outlines their objectives and obligations to you as well as how they will be paid. Sellers typically pay the sales commission through closing but not all sellers have the equity or willingness to pay. Will they provide references? Agents are generally happy to provide references to past buyer and seller clients; contact them and see how their agent performed. Do they maintain affiliations with related lending, title/escrow, appraisal, inspection and engineering firms as well painters, gardeners, plumbers, etc. Having reliable partners to turn to can mean the difference between a smooth transaction and a bumpy ride to the closing table

Next Step: Shopping for your new home

Fairbanks continues to feel the effects of the housing slowdown. 13 homes sold this week ranging in price from a $115,000 fixer-upper to a unique $395,000 hillside property that spent more than 14 months on the market. This represents a near 20% drop in the number of home sales from this time last year.

Three new construction properties went off the market, including one zero-lot line in Lazelle Estates. Not to worry, if bland, homogenous, expressway adjoining townhouses are your style there are still more than two dozen available.

549 homes are currently available for sale with an average of 138 days on the market. This week the absorption rate (the time it will take to sell all the listings currently for sale) jumped to 5.25 months from 4.8 last week.

Now that you have finished your needs and wants assessment and have an idea of what your future home should look like, it's time to start shopping... for your mortgage. Before you cross a single threshold it's important to investigate your mortgage options and secure your financing. The reason for this is twofold; first and foremost it's important to know what you can afford and from there determine what you want to spend. Second and equally important, without having secured your financing, you'll be at a disadvantage to those buyers that have their financing in place when you find your dream home and decide to make an offer. Although our standard purchase and sale agreements include a financing contingency, buyers who are pre-approved carry more weight with sellers when they are deciding which offer to accept.

In Fairbanks nearly 94% of all buyers financed their home purchase, a figure slightly higher than the national average. Although the sub-prime market meltdown has made certain non-conventional home loans all but impossible to get, virtually anyone with a decent credit score and sufficient income can still obtain a mortgage.

Pre-Qualified vs. Pre-Approved

Loan pre-qualification is a simple process. It can be done over the phone, in person or via an online form on a lenders website. It takes into account basic information about your income and assets and provides an amount for which you may qualify. The keyword here is may. The amount you are pre-qualified for is based on unverified information you provide without a thorough examination of your financial background.

A pre-approval on the other hand, is a much more involved process. In order to be pre-approved a lender will ask for and review detailed information regarding your employment, income, assets, debts and credit history. Most major lenders utilize an automated underwriting system which can give you preliminary loan approval almost instantly. This pre-approval will tell you the exact amount you qualify for.

After receiving your pre-approval it's important to take a little time and review your budget. Just because the bank will loan you $300,000 doesn't mean you are necessarily comfortable with making that monthly payment. Look at your current spending habits too see if your projected mortgage payment will put you out of your comfort level. The last thing anyone wants is to be burdened by a mortgage payment. Make sure to include the cost of utilities in your planning; electricity, water/sewer fees, trash collection and natural gas/heating oil, all of which can total 20-30%% of your total monthly mortgage payment.

Next: Selecting an Agent

The time has come that you’re ready to buy a home. Perhaps you’ve been renting and are ready to start building equity instead of helping build your landlords or maybe you’re already a homeowner looking to make due to a lifestyle change. Either way, congratulations.

Real estate is a fairly unique commodity in that it’s not something you purchase on a whim. Making the best decision means taking the time to do a little planning. By taking a little time of front to identify what your new home should look like you’ll take a great deal of stress out of the buying process. Your first step is to figure out what you need and want in a home. For some it’s a spacious home in the country while for others it’s a maintenance free condominium.

Start by making a list of what you absolutely must have in your new home. Think bedrooms, number of bathrooms, garage size (here in Alaska a garage is pretty important), distance to/from your place of work, and school district for example. The amenities on this list are items that are your base criteria your agent will use in searching for a home.

Next a list of what amenities you would like your new home to have such as granite counters, hardwood flooring, size and number of closets, view, acreage, age, etc. In a perfect world it would be easy to find a home that had everything you needed and wanted in one tidy package. The reality is that your new home most likely be a blend of the two lists. Even with the largest budget it’s difficult to fulfill every wish.

Focusing on your needs and wants before you start shopping you will help your agent eliminate properties that are not at all what you’re looking for and instead focus on homes that will suit you and/or your family perfectly.

Next: Financing the dream