Hazelwood Title & Escrow - Realtor Alerts

Virginia Home Sales Report - November 2007

Virginia home prices show increases around state
Median home prices in Virginia are consistent with figures seen last month and higher than September, according to the Virginia Home Sales Survey published by VAR. The state's median price for November was $232,500, a slight change from last year's $237,250.

Median Prices Up
Ten of the 21 Virginia regions reporting saw an increase in median sales price over November 2006. The highest year-to-year percentage price increases were seen in Lexington/Buena Vista, Martinsville, Henry & Patrick Counties, and the Northern Neck.

"It's important to remember that all real estate is local," commented VAR President Pat Jensen of Charlottesville, "and that what we're seeing nationally may not be the case in many Virginia localities. Whether you're looking to buy or sell, pay attention first to sales price trends, volume and inventory in your target market or region, rather than to misleading headlines about national sales trends."

A buyers' market exists when conditions put the home buyer at an advantage, as is the case today. "Now really IS the time to buy," Jensen explained. "Housing inventory levels are the highest in years, and interest rates are low. If you're a buyer, this market is for you. If you need to sell first, be patient, and price your home correctly. Right now Virginia homes sell after an average 136 days on the market, just a few more than the 10-year average of 122. This actually provides a unique opportunity for both buyers and sellers, as it allows time for the Realtor to work with either side on credit issues, preparing the home for sale, and so on."

Despite the adjustment many of the nation's housing markets continue to experience this year, the value of a Virginia home as a wealth-building investment remains stronger than ever. A home purchased for $139,325 five years ago could sell for as much as $232,500 today, a 67 percent increase in value.

Virginia Home Sales Report - October 2007

Virginia home price valuation continues to beat national figures
Median home prices in Virginia were up in October over the same month last year, as well as two percent ahead of September 2007's median price of $229,000, according to the Virginia Home Sales Survey published by the Virginia Association of Realtors. Virginia's median price in October was $232,478, compared to $231,075 for the same period last year. The October national median existing home price for all housing types was $205,700, down 6.3 percent from a year ago, according to the National Association of Realtors.

Value of home ownership continues to be demonstrated
Despite the adjustment many of the nation's housing markets continue to experience this year, the value of a Virginia home as a wealth-building investment remains stronger than ever.

The median price of a Virginia home purchased in October 1999 has risen 96 percent, from $118,513 to $232,478.
The median price of a Virginia home purchased in October 2002 has risen 49 percent.
A home purchased in Northern Virginia in 1999 at the then-median price of $190,000 is now $435,000, a 129 percent increase.
A home purchased in Roanoke in 1999 at the then-median price of $108,650 is now $172,000, a 58 percent increase.
A home purchased in Hampton Roads in 1999 at the then-median price of $107,400 is now $230,000, a114 percent increase.

Housing is a long-term and wealth-building investment
"The market adjustment continues to bring housing sales back into line with a normal and more stable market," said VAR President Pat Jensen of Charlottesville. "Even with the recent price corrections, the value of home ownership remains an important foundation of a family's financial success. Housing is, and always will be, a solid long-term investment."

Homes sold in Virginia back to historic norms
Through October, 83,140 homes sales transactions closed in Virginia, down 5 percent from last year's 87,879, but remarkably similar to figures shown before the market expansion began in 2001.

Virginia Home Sales Report - September 2007
Median home prices in Virginia rose 5.53 percent in September over the same month last year. Median home prices nationally declined 4.2 percent for the same month. The September national median existing-home price for all housing types was $211,700 this past September; in September 2006 the median was $220,900, according to the National Association of REALTORS®.

Here in Virginia, the September median sales price statewide was $229,000, compared to $217,000 for September 2006 (see September Home Sales Report).

Home Ownership Value Proposition Remains Intact
Despite the adjustment many of the nation’s housing markets continue to experience this year, the value of a Virginia home as a wealth-building investment remains stronger than ever:

A Virginia home purchased in 1999 for the then-median price of $125,000 would realize an 83 percent return if sold in today’s market.
A Virginia home purchased in 2002 at the median price of $144,480 has appreciated 58 percent in the past five years.

Reality Check
"There are three things any homeowner or prospective purchaser needs to keep in mind in this current real estate market," said VAR President Melanie Thompson of Fredericksburg.

"The past three years were extraordinary for real estate markets, in terms of both sales and price appreciation; now we’re experiencing an adjustment, and it’s somewhat misleading to compare this year’s more normal markets to the historic highs of the past three years. It’s likely that despite this year’s so-called slump, 2007 may actually end up being the fourth or fifth highest home sales year in history. That’s because it’s also a remarkable opportunity for buyers. There’s substantial inventory, and seller’s are having to face reality in their pricing."
"While we’ve seen some price adjustments in some of the more populous areas of Virginia," according to Thompson, "those adjustments followed an unsustainable bidding up of prices over the past couple of years. The fact that we continue to see healthy price appreciation in the current Virginia housing market – as these September numbers show – is proof of the soundness of market fundamentals. Homeowners need not be worried; the value of their homes should continue to grow at a healthy pace."
"Don’t forget that the vast majority of homebuyers don’t buy homes to flip them. They buy them for shelter. It’s a long-term investment that builds wealth, establishes roots and enhances communities, and that isn’t affected one iota by this current downturn in homes sales. Those folks can rest well knowing their investment is secure, whether they’re in a starter home or a gated community."

Virginia REALTORS® continue to be concerned about the impact of adjustable mortgage rate adjustments on homeowners in certain kinds of ARMs. Virginia REALTORS® are supporting several key pieces of legislation in Congress to address this issue, and to see to that underwriting requirements are strengthened so that this situation can’t recur in the future.

Median Prices Up
Nine of the 21 regions saw an increase in median sales price over the same period in 2006. The highest year-to-year percentage price increases were seen in Eastern Shore (+29%), Massanutten (+19%) and New River Valley (+13%).

The median price of a home statewide was $229,000. In Richmond Metro, it was $223,000. The median price of a home sold in Hampton Roads/Peninsula in September was up slightly, at $278,705, over September 2006, when it was $271,881. Northern Virginia’s median price, at $445,000, remained virtually unchanged over last September’s.

Homes Sold
Buyers continue to hesitate, however, waiting for the market to ‘bottom out’, for a current property to sell, or cautious about obtaining financing under today’s tighter lending standards. The time to buy, however, is now because of the recent cut in rates, the choice in homes available on the market, and sellers’ willingness to negotiate. Through September, 76,252 homes sales transactions closed in Virginia, down from last September’s 87,879.

Virginia Home Sales Report - July 2007
The Virginia Home Sales Survey as reported by the Virginia Association of Realtors (VAR) includes the following highlights:

- 9,636 home sale transactions closed in July
- 60,583 home sale transactions closed year-to-date
- Five of 24 reporting areas showing increase in July 07 over July 06
- Declining number of days on market

"The home sales figures for July show that on the average, homes are selling slightly faster than in previous months. The average number of days on market in July was 119, compared to 125 in June and 128 for May. Plus, there are now five areas of the 24 reporting that are indicating an increase in closed sales, and another five areas that are down only five percent or less."" said VAR President Melanie Thompson of Fredericksburg.

The Virginia Association of Realtors (VAR) is the business advocate for real estate professionals in Virginia. VAR represents more than 39,000 REALTORS active in all phases of real estate brokerage, management, development and appraisal.

Difficult Times/Dangerous Deals
Courtesy of the Virginia Agency Council
As you know, the future does not look bright for many sub-prime lenders or their borrowers who took on loans they cannot repay. These problems will only add to the pitfalls the title insurance industry faces in connection with schemes designed to enrich third parties at the expense of homeowners and/or lenders. The variety of these schemes is only limited by the imagination of those who seek to be enriched. These schemes are widespread throughout the country. This Bulletin is intended to advise you of the hazards (which often are not obvious) to closing and insuring these transactions.

Foreclosure Consultants: These schemes often involve the "consultant" taking title to property from a defaulting homeowner, with a promise to make mortgage payments and reconvey to the owner at some time in the future. Inquire into aspects of a residential sale that appear out of the ordinary. Be particularly careful (a) if you know about or suspect a pending or threatened foreclosure or (b) if you receive a payoff showing more than one delinquent or past-due payment or (c) if you suspect a leaseback or repurchase agreement. Question any transaction in which a delinquent or defaulting borrower/seller will remain in possession. Are there written or oral agreements that would constitute a leaseback, lease to own or a reconveyance agreement? In order to insure the transaction, you may need additional representations from your seller and may need to take additional exceptions, for example, to possession and repurchase rights. For those Virginia agents also doing business in other states, be aware that Maryland and other jurisdictions have enacted homeowner protection laws that must be complied with in these cases, so contact each state office for that information.

Short Sales: A short sale occurs when there are not sufficient funds from the sale to pay the existing mortgages in full and is sometimes referred to as a short payoff. A lender may choose to accept less than a full payoff rather than foreclose; this is particularly true of subordinate lenders who could end up with nothing if the senior mortgage is foreclosed. When faced with a short payoff you must be in direct contact with each lender, receive a release in escrow or a binding payoff letter and obtain the approval of all disbursements from each lender (lender(s) being shorted and new lender(s)). When a foreclosure attorney and/or Trustee is/are involved, you must be certain that the short payoff includes all fees and costs.

We have seen the rise of the "loss mitigator" or "mortgage rescue" companies, which may have altruistic purposes, but whose methods create a problem for title companies. In these situations, distressed borrowers or sellers respond to an advertisement or are contacted by someone in the business of negotiating short payoffs. They are often insistent that the title agent not contact the existing lender for a payoff. This is a serious red flag, and the transaction will need to be discussed with and approved by your local agency underwriter. However, distinguish those otherwise standard transactions with judgment liens; you should in those situations obtain permission from the judgment debtor before contacting the lienholder for a payoff.

Proceeds or Disbursements to Third Party: It is always a red flag when buyer's actual purchase price is more than the seller's actual sales price. Often the property has been on the market for a number of months and is listed at a reduced price. The buyer is induced to buy the property for an inflated amount, which might include the property's highest appraised value, yet the seller is paid based on the lower list price. A third party, who arranged the deal (or the purchaser) ultimately receives the difference between the list price and higher price paid. The third party or would be rescuer might promise the buyer to pay a few mortgage payments or other incentives for the buyer's agreement to pay the higher price. This transaction is often documented by unusual, undocumented or unverified disbursements shown on the HUD 1, for example, landscaping, decorating or renovation costs that often, ultimately, are returned or promised to be returned to the purchaser. When the third party fails to perform as promised, the transaction is scrutinized. The duped purchaser and lender may attempt to include you and all other parties involved in a claim of mortgage fraud. Please be mindful of all such unusual requests, do not let yourself be deceived or talked into participating in what could be criminal activity.

Property Flipping: Watch for a large unexplained price increase; review the consideration on prior deeds. Often the parties flipping property will transfer it among their own companies, increasing the consideration with each transfer. If you notice that the same person is an officer of subsequent owners in the chain of title and the consideration is increased on these deeds, please treat this as a red flag, and call your local agency underwriter. Flipping can also be a method of deceiving the seller's lender into agreeing to a short payoff. For example, a seller transfers property to a middleman (perhaps a trust) and the HUD-1 reflects a sales price that is insufficient to payoff the mortgage/deed of trust. The middleman then "sells" the property to the true ultimate buyer for a higher (true) sales price. The seller's lender never sees the second HUD-1, and is duped into believing there is insufficient equity in the property to pay off its loan.

Bankruptcy Concerns: Aside from the significant claims loss potential created when a transaction involves actual fraud, when a financially distressed seller receives less than reasonable consideration for the sale of his real estate, there is always a possibility that the seller will file bankruptcy after the sale is complete. In Virginia, a transaction can be challenged as fraudulent transfer for a period of 5 years. Further, a Bankruptcy Trustee may move to set the transaction aside; the ramifications of such a result can be both serious and expensive. We have incurred recent losses in Virginia based on a mortgage that was set aside by the Bankruptcy Trustee. The 2003 Homeowner's policy does not contain a creditors' rights exclusion. Even with the exclusion, if the deed of trust is not recorded within 30 days (even inadvertently) a Bankruptcy Trustee can avoid the transaction as a preference.

This risk is real. Please be vigilant in compliance with Virginia's Wet Settlement Act and CRESPA; get your documents to record within 48 hours and disburse only after recording. Other Reports/ Concerns of Fraud We have had reports of a wide variety of forged documents. Be on the lookout for forged payoffs, lender instructions, Bankruptcy orders and of course, identification. Always make sure you are dealing with the lender directly rather than a broker or other representative. Contact the Court directly for confirmation of any Bankruptcy order or dismissal that will affect title. Do not accept documents from the seller without verification. Check and double check id's; verify and compare signatures when appropriate. Do not release checks to anyone other than the payee; make sure the proceeds are made payable to all individuals listed as your seller or payee on your HUD 1. Be cautious of relying on any Power of Attorney that is not signed or notarized in your office. Confirm that you have "good funds" before recording and disbursing. [NOTE: ACH (Automated Clearing House) funds may be reported with wired funds but will be noted "ACH". ACH funds are NOT considered good funds. ACH funds are often originated by a credit card, debit card or intrabank transfers and may be recalled for up to 90 days.] Call your agency underwriter for guidance if you have suspicious documentation or funds.

The bottom line is this: There will be times when we will not want to insure transactions such as the ones described above and will not want our agents to be involved in the closing of such transactions. We have seen agents named in class action suits when the agent had received no financial benefit from the transaction other than standard closing fees and premium. There is always the potential for buyer/seller/lender's remorse when there is a question of honest and equitable treatment of a financially distressed seller, a low-income buyer of distressed property, the pay-off lender or the purchase money lender. Please help in protecting your customers, yourself and this Company. Contact your local agency underwriter before committing to close and insure such transactions. We can help with underwriting guidelines and suggestions that might allow you to close the transaction or, if necessary, help you graciously withdraw or pass on a questionable transaction.