Buyers Wonder, Are Short Sales Worth It?

You're all ready to househunt, and of course everyone is talking foreclosures being the way to go. Hard to avoid them really! But what about short sales. Are they worth the trouble? And what IS a short sale anyway?

Short sales - a real estate transaction in which the homeowner needs to sell the property, but owes more on the mortgage than the home currently is worth.

These sales dominate the housing market. But they aren't for everyone. What you should know:

1. Typically the homeowner is underwater and has experienced a financial hardship such as a job loss. In order to limit the damage to his credit rating, the homeowner may attempt to work with his lender to negotiate a short sale. Not only must the bank approve of the short sale itself, it also must agree to the price, since the bank will accept the difference as a loss.

2. Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant - and sometimes vandalized - property, a short sale isn't a distressed home that will sell it at an extremely low price. According to the data from RealtyTrac, short sales typically sold for nearly 10% less than the market price in the first quarter of 2011, whereas foreclosures sold at an average discount of 35%.

3. Home buyers wanting to purchase a short sale must have patience! In most cases, when a buyer makes an offer on a house, he receives a response from the seller within a few days, or even hours. With a short sale, the bank must approve of the sale and bank representatives are overloaded with cases. It may take 30 days or longer for a buyer to receive a response from the bank.

4. Even with the challenges associated with short sales, buyers should not avoid these transactions. Being prepared ahead of the time and working with an experienced REALTOR can help buyers avoid frustration and surprises down the line.

I have been trained as a Certified Distressed Property Expert and have experience in both short sales and foreclosures. Let me know if you have any questions about purchasing short sales or foreclosures!

To read more about short sales:

http://realestate.aol.com/blog/2011/08/11/short-sales-are-they-worth-the-trouble/

SELLERS! Don't Get Scammed!

Misfortune seems to bring out the good in most people; however, there are always some out there who wish to turn someone's misfortune into good for themselves alone!

A new study by CoreLogic shows banks and distressed home sellers will lose more than $375 million this year by selling undervalued houses to third-party buyers, which generally result in a quick sell and profit and tend to be fraudulent sales.

According to law enforcement and banking industry experts, the fraud works like this: Investor groups partner with local real estate agents whose job is to spot borrowers in financial distress and persuade the homeowners to sell to investors in a short sale at a low price. Then, the agent contacts the bank with the investors'
short-sale offer. So far so good. At least it appears so!

Meanwhile, the agent finds a buyer who wants to purchase the property for a higher price than that which the investor buyer is paying for the property, but the agent never presents this offer to the bank, nor does he tell the homeowner about this buyer. This new buyer knows nothing about the investor. To back up the investors' low offer - the only offer the bank is aware of - the agent produces an appraisal that confirms the low valuation. The bank then approves the sale and the investment group purchases the property. After the closing, the investors then sell the house to the other buyer at a higher price. The agent and investors then split the profits. The original homeowner never knows what hits them!

How do you keep this from happening to you? Or your friends who may be considering selling their home "short" in order to keep from foreclosure? Use a REALTOR you can trust. One who has experience in Distressed Property Sales. One who is looking out for the best interest of the seller.

I have had many years of experience in foreclosures, pre-foreclosures and short sales, on both the buyer side and the seller side. I am a Certified Distressed Property Expert. And most importantly, I can be trusted. Call me with any questions you have about your property - what it is worth, should you short sell or foreclose? Can you get a loan remodification? What options do you have? I would be glad to help you!

What the Foreclosure Freeze Means For You

Q: How have California mortgages been affected?

A: So far, BofA is the only lender with a moratorium that affects California. Other lenders, including Ally Financial and JP Morgan Chase, have halted foreclosures in the 23 states that require a court’s approval before a home can be seized. California is not one of those states. But Attorney General Brown has called for all banks to stop foreclosures until they can prove they’re complying with state law, which prohibits lenders from recording notices of default on any mortgages made from 2003 through 2007 unless the lender contacts or tries diligently to contact the borrowers to see if they qualify for a loan modification.

Q. What effect will this have on the housing market? And what does this mean to people who want to buy a foreclosed home?

A. Foreclosure sales currently account for 43 percent of the California market, according to RealtyTrac, a real estate data firm in Irvine. To the extent that these problems begin to show up in California, it could put a temporary roadblock in front of a sale. One problem: title insurance firms are shying away from any sale involving a questionable foreclosure. But real estate analysts say that as long as the problem is solved quickly - say, 60 to 90 days - it should have relatively little impact on the market. Rick Sharga, RealtyTrac's executive vice president, said he's noticed little impact from the moratoriums that have recently gone into effect.

For more information, please don't hesitate to shoot me an email or give me a quick call! I'll be happy to talk with you about what this means to you as a buyer, seller or distressed homeowner!

Part 2: Ask Yourself: Rent or Buy? Can You Really Afford This House?

In my last post, we saw that owning a home is generally a good thing for individual finances in the long run, even if only slightly. As a homeowner myself, there is also the relative security of knowing my landlord won't up and sell my home out from under me or raise the rent! Though homeownership carries more responsibility, for myself, it just feels good to have my home be .... well, my home!

To be sure, the recession illustrates that renters need to consider not just their desires, but also their financial realities before purchasing a home. Buying a home is a big financial responsibility - the biggest one you will ever make - and one that protects you against those rent increases. A home represents stability, the place where you want to settle down for at least five to seven years and raise your family, if you are inclined. Bottom line: You don't want to take on more square footage than you can maintain and enjoy.

Still not sure? This simple online survey (www.bankrate.com/calculators/mortgages/rent-or-buy-home.aspx) can help and so can your financial planner.

And when you are ready, of course, seek me out, Your Personal Realtor!

www.car.org/newsstand/crem/current-issue thank you to Paula Hess, senior editor of California Real Estate Magazine.

Ask Yourself: Rent or Buy? Part 1

Sixty-five percent of Americans prefer owning a home versus renting. Is this just some leftover remnant of "the American dream?" Is it a romantic notion, or can it make financial sense, as well? Is the time right for your family?

With all of the foreclosures, fragile economy and fear about where to put one's investment dollars, the question about whether it is good for your pocketbook is more important than ever.

You've heard "there may never be a better time to buy," what with home prices and mortgage rates at near historic lows. But the reason to buy should have more to do with you and your family's situation than with the market. Yes, prices are low - really low, but tighter lending requirements have made it harder to qualify for a home loan. Bottom line: You'll need a larger down payment and a higher FICO score.

Interestingly, declining home prices have made the differential between buying and renting - significant in years past - minimal in some regions. However, with a cash downpayment, buyers may be able to save an average of $100 per month paying a mortgage over rent for a comparable property.

Of course, homeowners qualify for tax breaks, most notably the mortgage interest and property tax deductions. A general tax benefit-analysis reveals that a buyer purchasing a median-priced home with 20% down and a 30-year conventional mortgage looks to save over $500 per year on taxes. Not a huge amount to be sure, but homeowners will take it, along with the knowledge that their payments can be building equity and not just going into the pocket of a landlord!

In Part 2, we'll look at the second consideration: Can you really afford this house?

Buyer Turn-Offs: What to Do if YOUR House is a Turn Off!

We talked about the features buyers look for, and some things you can do and should NOT do to make sure you show your home's best side to buyers. Now, I want to talk about the top buyer turn-offs, and what to do if your house fits the description.

The top turn-offs for both men and woman are structural damage, bad odors, a busy street, and an awkward floorplan.
First of all, a homeowner must accept reality that if any of these features apply to their home, it will make their home less desireable than a home that does not have these features. Therefore, the home must be priced below a comparable home in size and location. A buyer will naturally buy the home that appeals to them the most within their budget. Reduce the price, and you appeal to a buyer who normally could not afford a home in your area, or a home with as much square footage, or a home with a beautiful yard, etc. There is a buyer for every home, I assure you!

1. Let's take Structural Damage. This often happens to homes that were rentals for a long time, or perhaps the home was owned by folks who became disabled and could no longer either afford to keep the home up or just didn't notice the problems occuring. Perhaps there was a leak in the attic or under the house that slowly caused damage. What to do?

You have three choices: Repair the damage before you put the house up for sale, or sell the house as it is with the knowledge that much of the repairs will need to be paid for by the seller in escrow, or sell to a cash-only buyer. The fact is that unless the price of a structurally damaged house is considerably below comparables, a buyer will not purchase the home without having the damage repaired. Most buyers do not have the capital to repair structural damage. Also, if the buyer is getting a loan on the home, most banks will not loan on a home with structural damage. As your agent, I would assess what the damage is when I list your home and make recommendations based on what I observe.

2. Bad odors. It's a fact of life that we all get used to the smells in our own home! Even some odors that would knock a visitor down seem to go undetected by the resident. Obviously bad odors are a turn off, and if a home is listed without the odor having been eradicated, buyers will run the other way. What to do?

Before you list, get rid of odors caused by cigarette smoking, animals and relaxed house cleaning. Often carpets need to be replaced and walls painted to get the home smelling show-ready. Ask a friend you trust to come over and give your home the sniff test. If you choose to sell your home as is - odors and all, expect to have to lower your price below the comparables to get any buyer interest.

3. A Busy Street. This is a tough one, but not impossile to deal with. Your sales price will have to be adjusted regardless of what you do, but it is possible to make your home appealing even on a busy street. I would recommend putting in dual-paned windows at least on the side of the traffic. Dual-paned windows are a great selling point all over the house, and I would definitely recommend replacing all windows if they are single paned.

Next, I recommend a fountain in your outdoor space. A nice tinkly one that distracts from the street noise. I actually live with a busy street behind my home, and we have a wonderful fountain outdoors. Visitors rarely comment about the street noise, and we rarely notice it.

Plant screening plants to block the view of the busy street from windows. And of course, make sure your home is clean and staged before listing!

4. And lastly, the Awkward Floorplan. If you've got it, you may not even know it, you are so used to it. Buyers are looking for open floorplans these days. If you have no remodeling $$$ to remove walls, you must know that your sales price will need to be below the comparables to make up for the floorplan. Sounds ridiculous, but buyers know what they want.

For floorplans that are set in stone - no way to change it - I would recommend focusing on the positive features of your home mentioned in my prior article. Make sure you have a killer backyard, or a killer kitchen. Something that stands out that buyers want that makes up for the floorplan. Make sure your home is clean and freshly painted. As your agent, I will help you arrange your furniture to distract from the floorplan.

There IS a buyer for every home. Sometimes it takes elbow grease, and often it takes being realistic about the features your home is lacking and the turnoffs your home has that you have no control over, and adjusting your price to compensate. As your agent, I will evaluate your home and take your home's best foot and put it forward and center in order to get you the best possible price in today's market!

Would You Rather Rent or Own?

And the survey says ...

Americans prefer homeownership!

A new national survey gauging attitudes toward housing finds 2/3 of Americans (65%) still prefer owning a home, despite the challenging economic environment and the housing downturn. The Fannie Mae National Housing Survey, conducted between December 2009 and January 2010, polled homeowners and renters to assess their confidence in homeownership as an investment, the current state of their household finances, views on the U.S. housing finance system, and overall confidence in the economy.

Being More Careful!

The survey did reveal that homeowners and renters alike are taking a more cautious approach to homeownership. Nearly a quarter of renters polled (23%) said they will buy a home later than once planned. In addition, Americans with traditional, fixed-rate mortgages with predictable payments are significantly more satisfied than those with other types of mortgages.

Why Do We Want To Own? Getting Rich Quick Days Are Over!
Respondents cited non-financial reasons such as safety (43%) and quality of local schools (33%) as driving factors in wanting to own a home, ahead of financial considerations.

Should You Walk Away If You Can't Make Your Payments?
Most respondents (88%) believe that walking away from an underwater mortgage is NOT acceptable, but those who know someone who has defaulted are more than twice as likely to have seriously considered stopping payments on their mortgage.

How about you? Would you rather own or rent, and why? And how do you feel about walking away from a mortgage you can no longer afford?

How to Time the Real Estate Market

A good time to buy? Yes, but no need to rush.

Many housing economists have said that for borrowers with stable incomes, good credit history, and FICO scores of at least 620, now is an opportune time to purchase a home. Although inventory rates are below the long-run average, there still are plenty of options available for buyers.

Are you trying to time the market so you can purchase your home when prices are likely to rise again? You might consider taking a different approach. According to one real estate consultant, while home prices have stopped declining in most areas of the state, and even have risen in many areas of San Diego County, mortgage rates may rise, offsetting any potential savings.

Early last year, the Federal Reserve began purchasing mortgage-backed securities, which helped maintain low interest rates for consumers. However, the Fed’s purchase program ended in March, and some analysts forecast interest rates to increase throughout the rest of the year. One financial publishing company predicts that rates likely will rise to 5.5% by mid-2010 and close the year at 5.75% to 6%. The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) projects rates on 30-year fixed-rate mortgages to average 5.6% this year.

Timing the market, even for economists, is a 50-50 chance at best. What we see now are home prices lower than they have been in many years, along with very low interest rates. For those who are ready to buy a home, this is a very good TIME.

April Sales Highest In Eight Months!

What happened? While we were all reading and listening to the bad news, someone has been buying homes! Dataquick reported that Southern California homes sales in April are at the highest levels since August of 2007. The bulk of the sales have mainly been in homes under $500,000 as those looking for great deals took advantage of the price slump and foreclosures. Thirty-seven percent of the homes sold last month were foreclosures.

In San Diego County, Chula Vista is among the highest areas of sales activity in Southern California. We have been searching for property for a client around the $350,000 range in Chula Vista, and we are finding multiple offers being made on multiple properties of interest to our buyers. It is not only Chula Vista where we are experiencing the phenomenon of multiple offers, we are also encountering it in other areas of the county in properties under $400K. It very much feels like San Diego has decided to buy while the bargains are hot.

"Quite a few more buyers stepped off the sidelines last month to snap up homes at substantial discounts relative to the market's short-lived peak," said Marshall Prentice, DataQuick president. "It's no surprise, given the magnitude of the price declines in inland areas and the fact sales have been so amazingly low for so long. We continue to look for evidence of a sales bounce in the mid-priced and higher-end markets along the coast. If the higher conforming loan limits are making a difference in those areas it's certainly not a large one, at least not as of the end of April."

According to DataQuick, indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, and, understandably financing with adjustable-rate mortgages is way down. However, down payment sizes and flipping rates are stable, and, interestingly, non-owner occupied buying activity is increasing.

All we know is that we are happy to see our first-time buyer clients finally being able to shop for a HOME!