Short Sales and Foreclosures – A general overview

SHORT SALES

A short sale happens when the proceeds from a sale of a home are not enough to pay off the seller’s mortgage balance.  In other words, the seller has come up short of money.  The seller’s lender(s) must approve this type of transaction, as the bank loses money on the loan. 

Property values have dropped since their peak in 2005, and that means that many sellers cannot recoup what they paid for the house several years ago.  The best option for homeowners would be to hold on to the property until the home appreciates in value, but sometimes the home must be sold quickly due to relocation, death, divorce, etc.  

Sometimes the homeowner can no longer afford the monthly mortgage payments due to the rising interest rates of Adjustable Rate Mortgages (ARMs), job loss, illness, unforeseen expenses, and the general downturn of the economy.  Many of these sellers were qualified for no-downpayment (100% financing) loans in which they have no equity in the property.  In this circumstance, the owner has limited choices, one being to refinance the home (which is not always possible), another being to sell the home, or to let the home go to foreclosure.

Recent Housing Stats Show Market Improvement

Last week, the National Association of Realtors (NAR) released several statistics that suggest a possible uptick in real estate sales activity. First, the Pending Home Sales Index showed a 2.1 percent increase, based on contracts signed in February. In the Northeast, the increase was close to 11 percent.In addition, NAR’s Housing Affordability Index rose to a record high, indicating the most favorable relationship between home prices, mortgage rates and family income since tracking began in 1970. Improved affordability combined with stimulus incentives like the $8,000 tax credit for first-time buyers, means the buying power of a typical family has never been better.

Lawrence Yun, NAR chief economist, expects “home sales to gain momentum in the second half of the year with first-time buyers absorbing a lot of the excess inventory. Under these conditions, we should see price stabilization in most markets by the end of the year.”

10 Reasons to List Your Home Now

1.  Homes show well during the holidays.  Decorations draw a positive emotional response from most people.

2.  Many people have use it or lose it vacation during the last 2 months of the year.  It’s a great time for them to look at homes.

3.  Many people have to buy by the end of the year for tax purposes.

4.  Although there may not be as many buyers in the market, those that are out are serious.  It only takes one buyer to buy a home!

5.  Good interest rates, good financing programs, limited inventory.  It’s a great time for buyers to buy.

6.  Conversely, in the near future, FHA loan limits will decrease, making it harder to get a higher loan amount with a lower down payment.  Mortgage insurance will increase next year, which will increase the rate of an FHA buyer, which will lower their amount of buying ability. 

7.  If you wait until the spring market, which traditionally begins in January, you will have more competition as more houses will come on the market. 

8.  The longer you wait for more short sales, REOs and foreclosures to settle, the better chance you have of having appraisal issues when you do sell your home.

9.  The end of the year is the biggest transfer time for corporate relocation.

10.  Post-election moves are happening right now in the DC area.  There will be more buyers looking for homes within the next few months.

DC Home Sellers Are Smiling

Channel 9, WUSA, had a good story which aired Sept. 11, 2008, with quotes from Steven Fuller, the head of the Center for Regional Analysis at George Mason University.  (If someone knows how to embed this video, let me know!  I’ve tried the code offered by WUSA and read the WordPress how-to’s…but it just doesn’t want to make it that easy!)

Channel 9 newsclip

Preparing Your Home For Sale – Improvements

As a real estate flipper, I rehab properties to the point where a buyer is willing to pay more for the home than I did. I know that certain improvements will help sell the home, and others eat away at my bottom line. My goal is to maximize profit, so each dollar I spend has to have a return on investment.

As a realtor, I can’t tell you the number of times buyers have told me that they would consider a home that needed a little cosmetic work, but end up buying something move-in ready…even if it means they have to pay more for it. One of my clients told me that they only wanted a townhome, but wrote an offer for a smaller, more expensive, condo with amazing updates.

There are a lot of homes on the market right now and buyers can have their pick. Homes that need updates sell eventually, but if buyers have to do any work themselves, they are going to deduct the cost of the update from their offer price. So sellers, listen up! In order to get top-dollar and sell your home fast, you need to make your home stand out in a good way. I’m about to share with you my investor secrets of relatively small improvements that make a big impact.

Having a problem selling your home? Bury Saint Joseph!

In this market, it can be tough for a seller to get a contract.  The home is priced right, updated and staged.  Their real estate agent is holding open houses every Sunday, advertising the home online, in newspapers and magazines…but still no offer.  It seems like only divine intervention will help sell the home.  Well… 

Some sellers are turning to St. Joseph.

Saint Joseph Kit sold on Amazon.com

St. Joseph is the patron saint of carpenters and house hunters.  According to Snopes.com, the legend is that if a homeowner buries a statue of St. Joseph in the yard, the home will sell in a relatively short period of time thereafter. 

There are a few variations of how a seller is to go about doing this, but the realtors in my office tell me to bury the statue of St. Joseph in the front yard, upside down, and say a prayer.  Once the home has sold, the seller is supposed to dig up the statue and place it in their new home. 

Google “St. Joseph Real Estate” and you will find many articles with testimonials from home sellers in seemingly hopeless real estate predicaments who within, just hours, days or weeks after burying a statue of St. Joseph, sold their home. 

Does it work?  I don’t know, but I’m about to try it on one of my listings.  I’d be interested to hear readers own experiences with St. Joe.

Home Warranties

My washing machine just broke…again.  It’s only 1 year and 3 months old!  Before this GE washer, I purchased a new Maytag when my husband and I bought our home in 2004.  The one that came with our house was the original 1970’s olive green machine.  It still worked well, but I felt kind of gross washing my clothes in something older than me.  The Maytag started having problems a few months after the manufacturer’s warranty had expired.  Finally, the tub cracked and the home warranty company gave us the new GE machine.  Now that machine is having issues.  They just don’t make things the way they used to!

Thank goodness we have a home warranty.  A home warranty is a renewable yearly service contract that protects sellers against the cost of unexpected repairs or replacement of major systems and appliances in their home.   It’s basically an extended warranty for the parts of your home.  When a part breaks, you call the home warranty company and they send a contractor out to fix it.  If it is beyond repair, they replace the item with another one of similar quality.