Fico Scores

One of the cornerstones of the home buying process is the home mortgage. Whether or not you receive a loan chiefly depends on your employment history, how much you earn, how much you owe, how much you own, and your FICO score. As experienced Realtors who work hard to get people into home ownership, we find that of all of these lending variables the FICO score is least understood. Since your FICO score has the greatest impact on how much your loan is going to cost, we thought we would share a little about what we know.
FICO was created in 1987 as a way to quickly address creditworthiness at a time of tremendous credit expansion. The information FICO uses comes from three national bureaus that gather credit information: Experian, Equifax, and TransUnion. The FICO score is based on a proprietary algorithmic scoring model that computes scores on a scale from 300 to 850. Your FICO score is used by lending institutions to determine a risk premium. The higher your score, the lower the risk and therefore the lower the risk premium. Maintaining a high FICO score directly translates into loans that cost you less. For example, if you have a FICO score of 720 and you took out a mortgage on a $250,000 home at an interest rate of 5.9% over the life of a 30 year mortgage you would pay back $533,822. If your FICO score was 600, you would be charged a rate of 8.5%. Over the life of the same loan you would end up paying back $692,020, a difference of $158,198.
The recession created a double whammy in the lending industry. Due to increased defaults on mortgages, new government regulations require higher FICO scores which excluded a large number of homebuyers from the market. Additionally, the effect of the recession on the average American caused their FICO scores to fall. In 2006 the average FICO score was 723 and in 2011, it is was 711. Those who had a decrease in their scores will now be paying more money for the loans they get.
If you, your children, or anyone else you care about has a low FICO score now is the time to improve it. You may want to consider creating a FICO plan with a credit counselor to help guide your credit habits and maximize your FICO score. FICO is like Google in that they keep their business methods secret but we know that they gather information from five categories: payment history, length of credit history, types of credit, new credit, and debts owed. Negative information is typically captured in your payment history which makes up 35% of the total score. According to Integrated Loan Assistance, a company that helps repair credit, 79% of all credit reports contain errors and out of that, 25% contain serious errors that would deny credit. Due to the increasing importance of credit ratings, the Fair and Accurate Credit Transaction Act was created allowing US residents to obtain an annual credit report for free. It’s well worth your time to examine your credit and remove any incorrect or erroneous data.
It’s not about how much you make, it’s about how you spend. Michael Jackson, the King of Pop, earned over 2 billion dollars in his lifetime (plus 1 billion posthumously) which may not sound surprising, but what most people don’t know is that in 2007 he had a FICO score of only 563. Not too thrilling to the eyes of a loan officer since that probably wouldn’t qualify for a loan today. The best interest rates live in the land above 720, so if you’re not already there then review your credit habits or work with a credit counselor to get that score up.

Q3 Market Report: Roller Coaster Recovery

Depending upon whom you talk to, the real estate market is either doing great or it’s fairly awful. Why such a varied experience? What we all know about real estate: it’s location, location, location. The 3rd quarter statistics were released on October 2nd by the Santa Fe Association of Realtors and it’s time again to see how we are doing. Across the board, sales in the city were down considerably over this same time last year and many areas saw a decline in median sales prices, as well. Meanwhile, sales in the county increased over 11% from the 3rd quarter of 2013 and the county enjoyed an overall increase in median sales price to $420,393 from $400,000 this same time last year.

In the Northeast city limits, sales from the 3rd quarter were the same from 2013 with 38 properties sold during the 3rd quarter but the median priced slipped 1.5% to $682,500. The Northwest city limits experienced a 50% decline in sales for the 3rd quarter of 2014 but the median price increased 8% to $385,000. The Southeast city limits experienced the largest decline in sales with only 38 homes sold last quarter as compared to 63 from the same quarter in 2013. The Southwest city limits had an 8% decline in sales but a small increase in median sales price to $230,000 over $224,500 from 2013.

The areas of Tesuque and north county had a 50% increase in sales with 12 properties sold in the 3rd quarter of 2014. The median sales price dipped from $562,500 in 2013 to $522,000 for the same quarter. The Northwest quadrant had a boost in sales from 44 for same quarter in 2013 to 50 for 2014 and the median sales price remained relatively unchanged. The Southwest County had a 13% increase in closed sales for the 3rd quarter with an increase in median sale price to $291,988. Eldorado had a boost in homes sold by 17% for the 3rd quarter and the median sales price dropped by 3% to $336,083.

Overall, total sales volume for the city limits is down by almost 23% from 2013. Pending sales for the 3rd quarter are down almost 30% from the same quarter last year while overall year to date pending sales are down 8%. Closed sales are down by 5% from the 3rd quarter of 2013 however closed sales year to date are up by 3%. The days on market until a sale has increased slightly to 170 days this year from 166 days in 2013. The median sales price is down slightly from 2013, from $300,000 to $293,750. The average sales price is up slightly so far this year to $391,180 from $388,008 last year. The percent of original list price received so far this year is roughly the same as last year at 91.5%. New listings for this same quarter are down sharply from 2013 while inventory for the year has remained unchanged with 2315 homes for sale in 2014 versus 2302 at this same time in 2013.

With inventory tight in certain neighborhoods, more and more buyers are electing to build and as such land sales picked up in the county by over 13% with an increase in sales price to $117,500. While Santa Fe remains affordable and interest rates remain relatively low, it is still a great time to purchase a home. While historically the 4th quarter used to be fairly quiet, the last couple of years have seen an increase in buyer traffic and activity. We look forward to the final numbers to see how we fared on this roller coaster ride known as market recovery.

Santa Fe Real Estate Market Report – Q1- 2014

On April 15th, the Santa Fe Association of Realtors released the first quarter statistics of Santa Fe’s improving housing market. Along with the rest of the country, Santa Fe finally seems to be enjoying strong buyer interest and consistent appreciation in most neighborhoods. While the median price point overall in Santa Fe had a minute increase, the average sales price shifted upwards to $382,064 which indicates the gains made by Santa Fe’s luxury market. Pending sales were down over 18% from the same time last year, perhaps as choosy buyers wait for more selection sure to come with our spring and summer season. Inventory levels remain steady at 10 months but the average days on market has fallen by 10% to 171 days.

Location, location, location. The neighborhood with the biggest gains is the city limits Southeast including South Capital and the Eastside. With a 30% increase in units sold and a 22% increase in median sales price to $549,786, buyers shopping in this area know the frustration of finding a good deal. Northeast city limits experienced a surge in sales for the first quarter of 2014 with 30 homes sold versus 19 from this same time last year. The median sales price, however, is only up 2% to $645,000. Southwest city limits appears flat with 83 units sold down 2% from first quarter last year. The median sales price, too, dropped from $200,000 to $197,000.

The areas around Tesuque enjoyed some good gains this past quarter over last year. Units sold increased from 8 to 11 and the median sales price is up from $456,000 to $486,000. The Northwest County also had a surge in sales for the first quarter, up almost 65% with 38 homes sold. The median sales price here also climbed to $743,399 from $710,000 in 2013. The Southeast County including Old Las Vegas Highway sold 12 more homes than first quarter 2013 however the median sales price slipped from $372,500 to $326,000. Southwest County experienced an 11% decline in sales and an 11% decline in median sales price now $282,089 from last year’s $318,000. The decline is due to the increase in new construction being offered by Rancho Viejo and La Pradera advertising new homes starting in the low $200’s. Eldorado was dead even in sales for this first quarter as compared to last year at 27 homes sold but the median price is down 19% from $358,000 in 2013 to $290,000.

Other residential sales enjoyed small gains including condominiums. Units within the city limits were up with 67 solds in the first quarter of 2014 from 58 last year and the median sales price is up 1% to $215,000. Some ease in financing for condos will aid this market segment. Land sales in the county were down slightly but not surprising when it’s cold outside. Look for land sales to increase next quarter while the overall median sales price for a lot in Santa Fe is up 10% to $107,500.

While there were dips in certain neighborhoods, all indicators point to a strong summer selling season ahead. Interest rates are still historically low and consumer confidence has improved greatly. Santa Fe’s affordability index was up only slightly and there are still some good deals to be had. Some sellers will certainly try to test the market with higher list prices and only time will tell if buyers will take the bait. All in all, 2014 appears to be on track to be a wonderfully good year in the Santa Fe real estate market.

Santa Fe Real Estate Market Report – Q1 – 2014

The Complete Realtor

roger carson fishing jackson hole wyoming
Twenty years of trout fishing can teach you a lot about selling real estate. That may sound odd but you learn that fish are always hungry and homes are always selling. And there’s a big difference between fishing and catching fish and listing your house and selling your house. Here are some field notes from the front lines of trout fishing and selling real estate in Santa Fe.

Regardless of whether you’re fishing or selling, you must first ask yourself if you are really serious. For sellers, do you want to sell your home or are you okay letting it sit on the market? If your home is just sitting on the market and not getting any showings it’s not that there are no buyers, you are simply not in the market where the buyers are. Like fishing, you can go crazy trying things you saw on a T.V. show, reading how-to-do-it books or using the latest technology, but in order to succeed you must know the tools of the trade and understand the fundamental equation.

In real estate the goal is to create demand by positioning your property at the top of a buyer’s desirability list with the right marketing. Success in marketing comes from the right story, told effectively, in the right media, to the best prospects. For the trout fisherman, you must be equally well positioned by knowing the river, the parts of the river, and where in the river is best. You see, trout may be in the pool of water just in front of you but you need to know where they are feeding; at the surface, in the column, or near the bottom. The right fly presented in the wrong place won’t catch a thing. Landing a buyer for your home is no different.

So now you’re standing in a stream full of hungry trout and you watch as your fly drifts by, cast after cast, without any response from the fish, and you begin to wonder what’s wrong. Home sellers get a similar feeling when they prepare time and time again for showings that come and go without hardly any feedback. At this stage of the game you need to adjust the variables of the equation. The skilled angler will adjust three variables, size of the fly, the pattern of the fly, then the color. The more knowledge they have, the better choices they make with theses variables. They keep changing them until, boom, they catch a fish. Home sellers need to do the same thing. For the seller, they have two variables: the price and the condition. If you are getting showings and no offers, it comes down to adjusting the price and improving the condition. These are the two variables that add up to value for buyers.

There is a ready pool of hungry buyers out there and as they watch the daily e-mails of properties that have come on the market they will very quickly decide which properties interest them most. You know that your marketing is working when you’re getting showings. You know that your sales equation is working when you’re getting offers. If you are getting showings and no offers work on your pricing and make certain your property shows the absolute best it can. Optimism will keep you on the river, but knowing the equation will catch fish. If you are not getting the results you hoped for, don’t let optimism turn to despair, you must simply adjust your equation until you get your house sold. Until then, happy fishing everyone.