Archive | Tips for Sellers
Had enough of the snow? Or maybe you are thinking of downsizing since the kids are gone? Whatever your reason to sell, you may want to consider putting your home on the market sooner rather than later. Summer is our area‘s traditional selling season, and when we see the most inventory of active listings. That’s great – for buyers. If you wait, you might not stand out in the crowd and could end up selling your home for less.
Right now, interest rates are still good and the worry is that they will be rising. Inventory is tight and buyers are frustrated by the lack of choices. There is a surprising lack of move-in ready homes in many neighborhoods. Now is the time to take advantage of this situation as a seller. If you have thought about selling, why not contact us for a free market analysis of your property? We can help you with all the details from staging to repairs, if necessary, and get you top dollar for your home.
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In a recent study, the Chicago Booth/Kellogg School Financial Trust Index found that a full 36% of Americans would consider “strategic default”—another term for walking away from your mortgage—if they were underwater (owed more on their home than what it was worth).
Now that more than one in four American homeowners is “underwater,” I feel that it’s important for the community to know the truth about strategic default.
The truth is the foreclosure process carries with it credit issues, current and future employment challenges, issues with security clearance and possible debt collections.
That’s why it is vital to explain the 3 reasons why the term “strategic default” is misleading:
- There’s nothing strategic about defaulting on purpose, especially when you have options like short sales, mortgage modifications, and refinance (just to name a few) that may keep you from foreclosure.
- The waiting periods to apply for a new mortgage loan are at least five years less in a short sale vs. a foreclosure.
- A foreclosure will show up on your credit report every time you apply for a home loan, car loan, new job, etc., and will affect your financial situation for many years to come.
Foreclosures in Washoe County increased by 16% in January 2011 over December 2010, and up 23% over January 2010.
If you are underwater and can no longer afford your mortgage payments, you need to create a genuine strategy to avoid foreclosure, helping to provide stability for you and our community.
If you have any questions about what steps you or someone you care about should take next, contact me today – 775.813.2387!
I offer a free report at http://www.KevinBown.com
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While still too early in the year to make bold predictions, Truckee-based Clear Capital, a real estate valuation firm, says that there is a slight uptick in home prices – the first since mid-August 2010. The Clear Capital spokesman cited that this is the first “non-incentivized” change in prices since the economic downturn began.
Based on sales transactions through the end of January, the company’s report says “national home prices have turned the corner.” Clear Capital adds that this observed change in prices is especially meaningful as the first months of the year are typically affected by the seasonal slowdown in sales activity.
Additionally, Clear Capital cites that one reason for the increase in prices might be the slowing rate of sale of REO properties. According to the company’s latest report, the most recent rolling quarter for REO saturation has slowed considerably after gaining 3.2 percent during Q3 2010, with national REO rates only climbing 1.4 percent.
“A decrease in REO saturation indicates that an increasing proportion of fair market transactions are occurring, and as the level of distressed transactions decrease, prices tend to increase since the overall market value for an area is less affected by distressed comparable sales,” Clear Capital explained.
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Effective January 1, 2011 the State of Nevada will be requiring the seller or a certified inspector to complete a 4 page form that will then be provided to the home buyer. Click here to see the new regulation. The required form has the seller providing information about the home, monthly energy consumption for the past 12 months, information on any energy efficient improvements to the property, the use of Energy Star rated appliances, etc.
Sellers should be receiving a copy of the form when they list their property so that the form can then be provided to the buyer. The form can be waived if agreed upon by both the buyer and the seller.
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Effective Februray 1, 2011 updates to the Home Affordable Foreclosure Alternatives (HAFA) Program will take affect. These guidelines may help increase the number of approvals for homeowners seeking assistance under this program.
Here are the key changes:
- Monthly Gross Income Requirements- Servicers are no longer required to verify any financial information to determine if the borrower’s total monthly mortgage payment exceeds 31% of the borrower’s monthly gross income. This being said, the servicer is still required to verify the borrower’s hardship and may request financial documents to evaluate the hardship.
- Vacant Property Requirements – Properties can now be vacant or rented up to 12 months prior to the Short Sale Agreement as long as the borrower can prove that the residence was their primary residence and they have not bought another home in that time. Relocation no longer is limited to work related relocation and the relocation distance requirement has been removed.
- Release of Subordinate Liens (Paying Off Second/Junior Liens) - the 6% cap to pay off junior liens has been eliminated. The servicer determines the percentage going to each junior, but the $6,000 cap is still in place.
- Timing For Issuance of Short Sale Agreement – now for both HAFA short sales initiated by the servicer and those requested by the borrower, the time line for the servicer to respond to the borrower is 30 calendar days. (Please note that many servicers are not adhering to this guideline simply because of the volume of HAFA requests. There does not appear to be any penalty to the servicer for not meeting this timeline.)
- Timing For Response To Alternative Request For Approval of Short Sale – if the borrower submits an executed sales contract, Alternative RASS and signed Hardship Affidavit or RMA, the servicer must communicate approval or disapproval, or a counter within 30 calendar days.
- Real Estate Commissions – the 6% cap remains, but servicers must now include a statement in the Short Sale Agreement that they will not deduct 3rd party vendor fees from any agent commission.
- Alternative Deed-In-Lieu (Deed for Lease) Programs – these programs did not previously qualify for the borrower to receive relocation incentives. They now are included but only when the DIL is final.
- Borrower Notices – Servicers can now consider a borrower for HAFA while the borrower is considering HAMP.
Servicers are not required to, but may re-evaluate borrowers who were previously ineligble before the guideline were changed.
For more information contact me for the full Supplemental Directive 10-18.
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Kind: adj. warmhearted, friendly; kindness n.
In the 13th century “kind” was used to mean “wellborn” and “of good nature”; in other words “possessing all the (good) qualities usually attributed to those of good birth”. Today – the meaning is the same, yet the actions in today’s day and age may not…
Or are they? In the Real Estate world, the best showing of kindness may be hearing the Seller say, “of course we’ll fix that”; or the Buyer who accepts the terms even if “they don’t include the snow blower” (a commonly used piece of machinery in Truckee/Tahoe); the agent who willingly travels across town for a signature; not to mention the local Title Company who prints out documents over the week-end in order to facilitate for the out-of-area-Buyer. What’s kindness to you…?
The Chinese say – …”never filling your own cup but always filling that of someone else, who would return the favor” – now that’s kindness to me…..
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Once you’ve winterized your home it’s time to curl up by the fire and enjoy the snow outside, right? Almost. There are still some important safety tips to follow to keep you and your home safe throughout the colder months.
The Home Safety Council urges homeowners to protect themselves against house fires by using portable space heaters safely and properly using and maintaining fireplaces and wood-burning stoves. Keep flammables away from both, ensure that they are in clean and good working condition, and never leave them unattended. Read more about fire safety here.
Snow safety is important as well. Storms in Truckee-Lake Tahoe can drop feet of snow at a time. Ensure your pantry is stocked and you have plenty of fresh drinking water in case it takes more than a few hours for snow to be cleared. Sometimes snow and ice can affect power lines and cause power bumps or loss. Keep candles and flashlights handy, along with board games and cards, to keep your family in the light and entertained until power is restored. Oh, and remember to keep lots of cozy blankets handy too.
As you shovel snow around your home be sure to knock loose any large accumulations along the edge of your roof as well as large icicles which may drop and cause hazardous conditions. Carefully sweep snow away from propane and gas tanks and nozzles to prevent accidental damage and gas leaks. And last, be sure to salt or sand walkways to prevent ice accumulation and slippery conditions.
Read more about weather safety and awareness and get tips for driving in inclement weather.
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New statistics show that 1 in 7 homeowners are facing difficulty paying thier mortgage. Homeowners facing these issues often wonder how they can afford to get help. I am here to tell you that you can get the help you need from an experienced short sale real estate agent and most, if not all, of the costs will be deducted from what is recieved from the sale. There is no need to pay a short sale company or attorney to faciliate a short sale for you. In most cases your lender will agree to pay all the typical seller closing costs and the comission to the agents as part of the short sale approval. In most short sales the homeowner is not responsible for these costs and in turn is not allowed to recieve any proceeds from the sale. The key is making sure you are working with an experienced short sale real estate agent.
Does this mean that homeowners are completely off the hook and won’t have any costs? No, in some cases depending on your financial situation the lender may ask the homeowner to contribute to the loss with a cash contribution or promissory note. An experienced short sale real estate agent can assist you in minimizing these and working on a win-win solution for both the homeowner and the lender. In some cases the cash contribution or promissory note can be the key to having the lender release the homeowner from any future liability.
How can you afford not to do a short sale? When the alternative is foreclosure which can be devastaing to your credit, your future ability to purchase a home again, and result in larger tax consequences – how could you afford not to consider a short sale?
If you are a homeowner facing difficulties making your mortgage payment, consult an experienced short sale agent as soon as possible.
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According to data from the Northern Nevada Regional MLS, sales in the Sparks area (which includes Spanish Springs and Wingfield Springs) had short sales leading in the 3rd Quarter of 2010. Short sales accouted for 35.4% of the sales in the quarter, traditional sales 34.9% and bank owned 29.8%. Compared to 3rd Q 2009 when bank owned sales topped the charts at 41.43%, traditional sales at 26.7% and short sales at 26.5%
The total number of sales for the Sparks area (MLS area 108) dropped slightly from 2009 to 2010, down about 6.1%. In addition, the median price also fell from $170,000 in 3rd Q 2009 to $160,700 in 3rd Q 2010, a drop of 5.5%.
There are currently (as of 10-22-2010) 568 active listings available to buyers in the Sparks area market. Of these 48.6% are short sales, 34.4% are traditional sales and 16.9% are bank owned. Key here for buyers is to make sure you have a buyer’s agent working for you that knows the ins and outs of short sales – doing your homework before making an offer on a short sale is key.
Bank owned properties continued to earn the highest list to sale price ratio. In 3rd Q 2010 bank owned lisitngs got an average of 99.6% of the asking price, short sales 98.9% and traditional sales 97.4%. Fewer foreclosed properties at low prices, continued mis-understanding of short sales and over-priced traditional listings drive these numbers.
As expected short sales have the highest average number of days on market. For 3rd Q 2010 short sales averaged 184 days on market, bank owned 79 and traditional sales 77. As a note the average number of days to close a short sale is relatively the same between 2009 and 2010. We keep being told by the banks that they are improving their processes. Hopefully this will reflect soon in our average days to close a short sale.
According to a Yahoo.com report on 10-20-2010 more than 55% of the active mortgages in the Reno-Sparks area are upside down. I think we will continue to see more and more short sales as homeowners become more educated about short sales as an option to foreclosure. The key is making sure that you select an agent that is highly skilled in the short sale areana and get legal and tax advice as well.
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On August 6, 2010 The Federal Housing Administration (FHA) announced it will be rolling out a new program on September 7, 2010 that will offer new FHA insured mortgages to underwater homeowners who are current on their mortgages provided the homeowner’s lender will agree to write off at least 10% of the unpaid mortgage balance.
Sound too good to be true? Well there is a catch. The homeowner must get their lender (servicer) and the investor who owns the mortgage to take a short payoff of the loan. Many lenders and investors are reluctent to do this. So although the program looks great to homeowners it may be easier said than done.
Who qualifies?
- Homeowner must be in a negative equity position (underwater).
- Must be current on the existing mortgage.
- Homeowner must occupy the property.
- Homeowner must qualify for new FHA loan and have a minimum FICO score of 500.
- The existing loan cannot be an FHA loan.
- The existing lien holder (lender) must agree to write down at least 10% of the unpaid balance.
- The new re-financed FHA first mortgage cannot have a loan-to-value greater than 97.75%.
- If there is a second lien it can be re-subordinated to the new loan, but the 2 loans combined cannot be great than 115% loan to value.
Interested homeowners should contact their servicer for more information. When I looked on Bank of America’s website, my servicer, I found mention of the program but that they had not worked out the details and to keep checking back. With the program scheduled to roll out in early September, you may find this to be the case with many lenders.
If you would like a copy of the FHA Mortgagee Letter that details the program, please feel free to contact me.
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Had enough of the snow? Or maybe you are thinking of downsizing since the kids are gone? Whatever your reason to sell, you may want to consider putting your home on the market sooner rather than later. Summer is our area‘s traditional selling season, and when we see the most inventory of active listings. That’s great – for buyers. If you wait, you might not stand out in the crowd and could end up selling your home for less.
Friday, March 25, 2011 By: Barb Wilkinson
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