Archive for the 'Seller Resource' Category
To Modify or Not To Modify?
February 3rd, 2010 categories: Seller Resource, Short Sales
The sooner the foreclosure issue is figured out, the better for all.
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Loan Modications That Don’t Work
January 1st, 2010 categories: Seller Resource
With all of new news about loan modifications we have heard for the past year, Congress recently released numbers about how the plan is working so far. Let’s just say the plan has had time to gain momentum, and it looks like it needs some revision.
Currently, only 4% of troubled homeowners have actually received some sort of permanent loan modification. 4%…wow…what an underwhelming, anticlimactic number. The actual number of people who have received long term loan modifications reported was 31,382, and a nearly equal number, 30,650 were denied long term loan modifications.
Why have so many people been denied long term loan modifications? The answers given were 3 fold:
· Not making payments on time
· Bit submitting the necessary paperwork (more on this in a minute)
· Not qualifying for various reasons (lack of sufficient income was the most common reason given)
So with a nearly 50% rejection rate let’s take an extremely high level look at the process.
1. The homeowner realizes they are in trouble due to some financial hardship.
2. Paperwork is submitted to the lender documenting this hardship, and a complete disclosure of all finances is given.
3. The lender then decides if they will grant a temporary loan modification to the borrower.
4. If the borrower is able to make 3 consecutive payments that meet the new terms of the loan modification, the loan is supposed to be permanently modified to those terms.
Seems pretty easy huh? Again, the process was described in an extremely high level fashion for simplicity, some details may have been deleted. In practice, many are finding it is not so easy. Banks are blaming the borrowers for incomplete packages, and the borrowers are blaming the banks for losing paperwork is dragging their feet in the decision making process. Many borrowers state that they fax, refax, and even rerefax (is that a word?) to the lenders, and the lenders claim they never receive the paperwork.
Is there any good news? Of course there is. The number of troubled borrowers in trial modifications stood at 697,026 at the end of November 2009. This number is up from 650,994 at the end of October. The growth (7.1% month over month growth to be exact) shows that lenders may be fixing the process, or more willing to modify loans. In either case, we see this as positive news for loan modifications.
Congress has told servicers to have more transparent conversion numbers as well, with updates of how many have applied for loan modifications, how many received loan modifications, how many were denied loan modifications, and what the reasons were for denial were. Congress has said it will dispatch a “SWAT Team” to the top 7 mortgage servicers, and this SWAT Team will break up any process logjams that will allow for more help to be given. This is also good news…too bad it took congressional oversight to show the process is not working.
If you have story about your loan modification, whether it is happy story, or a horror story, we would love to hear about it. If you have any tips for people going through the process, please pass those along as well. After all, as soon as we fix the mortgage crisis, Sonoma County, California, and the rest of the country will be better off.
If you have any questions regarding loan modifications, Sonoma County, or Sonoma County Real Estate, please do not hesitate to contact us. We look forward to hearing from you.
This article was contributed by Chris Ingram.
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Nearly 1 In 4 Mortgages Under Water
December 5th, 2009 categories: Seller Resource, Short Sales
Sometimes when I wrote articles, I write about news of the day. Today, I am writing about news, that may be construed as bad news. We think it is just news, and want to make sure we give all the Real Estate news, not just good news, or what may be seen as one sided. We like to think we are unbiased, and report on what is important to people. Anyway…with that said…
1 In 4 Mortgages Under Water
Nearly 1 in 4 mortgages are “underwater.” What does “underwater” mean exactly? It may be a new term to some, but it is all too familiar for many. Basically, an underwater mortgage is one in which the homeowner owes more on the home than the home is worth. The term “underwater mortgage” in this case, is synonymous with the term “upside down mortgage.”
Research firm First American CoreLogic found that 10.7 million mortgages were underwater…this represented 23% of all outstanding U.S. mortgages. They also reported another 5% of all mortgages were very near negative territory. Any downward shift in home prices could increase the 23% number largely.
Most of the underwater mortgages are within 4 states, Arizona, Nevada, Florida, and California. The numbers for those states were not promising…65% of all Nevada mortgages were underwater, 48% of all Arizona mortgages were underwater, 45% of all Florida mortgages were underwater, and 35% of all California mortgages were underwater. These states will help to shape the future of Real Estate prices, whichever direction they may go.
So what is the big deal with underwater mortgages? The thought is that people may not want to continue investing in an asset on which they owe more than the worth. If this happens, we may see more short sales, and more foreclosures. More short sales and foreclosures could potentially pull market prices down, killing hopes of a Real Estate recovery in 2010.
If you have any questions regarding mortgages, the current mortgage situation, or Sonoma County Real Estate, please feel free to contact us, 707-771-0338 or WineCountryMoves.com . We love to hear from our readers.
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To Flip Or Not To Flip…Part 1
November 29th, 2009 categories: Buyer Resource, Seller Resource
With prices as low as we have seen them many people are back in the wonderful market of flipping. Sonoma County is a breeding pool of “flipped” houses. Why? And is flipping worth the risk?
Petaluma Ca Home “Flipper”
1304 San Jose Way - 4 Bedroom Home - Petaluma, California - Sonoma County
Well let’s look into some “real life” examples and scenarios of flipped homes so you can have a better idea of what they are all about.
Scenario 1:
Home Description: Single Family Home, Built 1986, 3 bed/2bath, 1225 sq ft. purchased for $160,500
Remodel: Floors, granite kitchen counters, lighting fixtures, french doors, interior paint, carpet, landscaping, stainless steel appliances, remodeled bathrooms. Approx. Cost: $20,000-$30,000 (2-4 week job)
Flip Market Price:$270,000-$280,000
Seller Net After Commissions/Remodel: $68,000-$73,000(2 months!)
Scenario 2:
Home Description: Single Family Home, Built 2002, 3 bed/2.5bath, 1500 sq ft. purchased for $260,100
Remodel: Floors, lighting fixtures, french doors, interior paint, carpet, stainless steel appliances. Approx. Cost: $15,000-$20,000 (1-3 week job)
Flip Market Price:$315,000-$320,000
Seller Net After Commissions/Remodel: $21,000-$40,000(2 months!)
So after examining both scenarios of an older and a newer flip with Seller net proceeds of $20,000-$73,000 in approximately 2 months can you can see why people are getting into flipping??? It’s a great way to make a little more extra income!
But what kind of properties should you consider to flip? How do you buy a flipped property in Sonoma County? Those questions will be discussed in Part 2 of the To Flip Or Not To Flip blog series.
Stay tuned!
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Now Is A Great Time For Home Improvements
November 25th, 2009 categories: Personal Notes, Seller Resource
Now it is a great time for home improvements. You may ask…Home Improvements…isn’t that a summertime thing? Typically, it may be, but I have a few reasons why now is a great time to undertake such tasks.
MATERIALS COSTS: It seems that every time I walk through Lowe’s or The Home Depot, prices keep coming down. Everything seems to be discounted; from energy efficient compact fluorescent lights, to big ticket items such as washers and dryers, and even necessary items like roofing materials. If you want to replace a front door, or some windows, this could be a great time to buy materials. We find that high end products, such as travertine tile, granite countertops, and high end appliances are seeing larger discounts than more necessary items.
CONTRACTORS MAY HAVE “WINTER RATES”: This is a slow time of year for many contractors. With that said, we know some that offer “winter rates” because they have fewer jobs, and more competition. The contractors know the value of each job, and they also know that time spent making money is better than time spent giving bids on jobs that are not competitive. They also know that a job well done will likely lead to referrals.
UNEMPLOYMENT RATE: With the unemployment rate, there are fewer contractors, and they are usually eager for new customers and new work. Also, with a higher level of unemployment, demand for goods and services is down, so the contractors have fewer opportunities for jobs. This could work in your favor, and help the local Sonoma County economy as well.
TIME: If you plan to undertake some of these tasks yourself, it may make a lot of sense. Since the night comes earlier and earlier now that we have moved our clocks back, I find myself to be in earlier than in the summer. All of this inside time may be a perfect time to undertake some interior home improvements. I stress interior home improvements, as I think it is a bad idea to do outdoor tasks in low light, especially if you are using power tools or working with electrical items. It is better than sitting on the couch watching TV right? If you are looking for something as simple as repainting a room, or replacing a bathroom cabinet, these could easily be done by the average do it yourselfer.
We think these suggestions are great for the typical homeowner who wants to add value, and also for the seller who wants to put a premium product on the market. In this current market of multiple offers, we think this could really pay off when it comest o higher offers.
If you have any questions about Sonoma County Real Estate or if you need a referral to a quality Sonoma County contractor, please feel free to contact us here or visit the Wine County Business website.
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Deed For Lease Program Allows Some To Avoid Foreclosure
November 21st, 2009 categories: Seller Resource
There is a new way for troubled homeowners to avoid foreclosure. Fannie Mae has implemented a new deed for lease program, which allows borrowers who do not qualify for loan modifications an option to stay in their home.
Foreclosures are a growing problem, both here in Sonoma County, and also nationally. So what options are there for troubled homeowners? Borrowers have always had the option of short sales to avoid foreclosures. With the new making homes affordable plan, there are also have loan modifications (for those that qualify) as an option to help people stay in their homes and avoid foreclosure. Now, there is a new option, the deed for lease program.
So what is the deed for lease program, and how does it help people stay in their homes? The deed for lease program allows eligible homeowners to transfer the deed of their property back to the lender and they can then sign a lease to remain in the home. Borrowers must live in the home as their primary residence, and must also be released from any subordinate loans before this program will be approved for a homeowner.
The deed for lease program is very similar to a deed in lieu of foreclosure situation, however, the homeowner gets to stay in their home, as a renter, after the deed is transferred.
The deed for lease program helps those who are in trouble financially to have a place to live and avoid moving costs. The program also helps to minimize the number of foreclosures that would be abandoned due to neglect and disrepair. Homes that are neglected, and lose value due to disrepair, not only lower their own value, they also decrease the value of homes in the surrounding areas. In effect, the new deed for lease program allows lenders to help maintain the property values of home to be leased, as well as the value of surrounding homes as well. The deed for lease program will help to maintain the value of neighborhoods and communities, and will mitigate them turning into areas with high vacancy rates, which often times lead to higher crime rates.
I do want to be clear that the deed for lease program is not part of the loan modification program the U.S. government recently unveiled. The deed for lease program is an effort by Fannie Mae to assist is stemming the foreclosure crisis.
To qualify, one of the big hurdles is for the homeowners to prove they can afford market rent. Affordability, in this case, is defined as the potential rental payment can be no more than 31% of the homeowners (would be renter) pre tax income. The leases will be for 12 month terms with possible month to month extensions. If the home is sold, the new buyer must honor the lease that is in place.
It is also fair to note, that the tenants of homeowners who are have financial difficulty may also qualify as potential renters.
Some critics of this program have said that this only delays the inevitable; however we think it is a good thing. No data has been shown on either side of this debate, however, it just feels and sounds like it will help.
If you have any questions regarding how to avoid foreclosures, or Sonoma County, please feel free to contact us.
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National Median Home Sales Prices Increasing
November 15th, 2009 categories: Buyer Resource, Foreclosures, Seller Resource, Short Sales
Home prices nationally seem to be stabilizing. I said stabilizing, but over the past 6 months home prices have actually been increasing.
Most U.S. cities saw median home prices increase over the previous quarter, the second quarter in a row for price appreciation. The median home prices are still down from the 3rd quarter in 2008, but we will take any gains we can get.
The national median home sales price was listed as $177,900, a $7,000 increase from 2Q09. While this is down 11.0% from 3Q08, it is much better than the 15.4% national median home sales price decline saw in 2Q09 vs. 2Q08.
This is showing us that declines are moderating, and as we have seen here in Sonoma County, home prices in the lower and mid range price ranges are actually increasing.
So what is driving the home sales price fluctuations, up and down? There are currently fewer homes on the market, and the $8,000 tax credit has added a lot of fuel to the fire. A consistent stream of financially qualified buyers is essential to keeping any momentum we have going. This is precisely why I wrote that open Letter To Barack Obama, and precisely why the U.S. government wisely agreed to extend the First Time Homebuyer Tax Credit.
While there are still a lot of foreclosed homes that have yet to hit the market, there are also a lot of short sales as well. These short sales will likely turn into foreclosures, and these will weigh on future home prices. I say that short sales likely turn into foreclosures, as it has been predicted that only 1 in 3 short sales actually closes…the other 2 turn into foreclosures.
So what about the first time homebuyer tax credit…hasn’t this had positive effects? The tax credit has had a lot of positive effects, and these will continue until June, 2010, and by then, hopefully we will see the light at the end of the tunnel. Currently, there is too much fog to see too far into the future. What will the unemployment rate do? Will it increase from the current 10.2% level, the highest in 26 years? Will more jobs come from the economic stimulus plan?
So what is going on locally around the country? It depends on where you look. One area, Cape Coral, Florida, saw a 40% median home sales price decline over the past year. This is due to a glut of foreclosures that has never been seen before. The area around Cumberland Maryland (parts of Maryland and West Virginia) saw a 19.2% increase in median home sales price. The national picture is not the best gauge, as many local markets are seeing extremely different pictures. Each area has unique aspects of supply, demand, taxes, employment numbers, median home sales prices, etc.
We like to give not only a local flavor, but also like to give you some national news as well. If you have any questions about Sonoma County, or the Sonoma County Real Estate market, please co not hesitate to contact us.
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First Time Homebuyer Tax Credit Extended
November 7th, 2009 categories: Buyer Resource, Seller Resource
The $8,000 First Time Homebuyer Tax Credit has been extended. On Friday, November 6th, President barack Obama signed an extension of the very popular, and much needed $8,000 First Time Homebuyer Tax Credit.
The First Time Homebuyer Tax Credit was set to expire on December 1st, 2009, but the United States House, the United States Senate, and then President Barack Obama pushed through a bill extending the expiration date. So when is the expiration set for now? There are 2 deadlines basically, you must be in contract by April 30, 2010, and you must close the transaction by June 30, 2010.
Strategically, this is a great move, as it keeps the homebuying market moving. There are also some changes that benefit a wider range of buyers, and it is also good because I had predicted it in a past First Time Homebuyer Tax Credit Article, and it makes me look like I may know what I am talking about.
Are there any other changes to the First Time Homebuyer Tax Credit plan? Of course there are. Income limits were also increased. The new limits extend benefits to single buyers who earn up to $125,000 per year, and also married couples that collectively earn up to $225,000 annually. Also, even though this tax credit is designed to help first time homebuyers, the bill also extendeds a $6,500 opportunity for those who have owned and occupied a home in 5 of the past 8 years (Please Note: must be 5 consecutive years), allowing for those who want to trade up to do just that.
If the first tax credit had worked, would we need this one? If the first one did not work as well as planned, why will this one work? These are really good questions. The first tax credit did work, and locally, it would have worked better if we had more inventory. Many of our buyers over the past 6 months have been very curious about the First Time Homebuyer Tax Credit and how it affects them. Further, this plan will work because it keeps the momentum going, and also the new plan extends the tax credit to a couple new sets of buyers…those that earn more, and those that are looking to trade up into another home.
So what caused all of this to happen? Perhaps it was my Letter To Barack Obama? ummm…maybe. Perhaps it was the fact that not all Sonoma County Home Buyers were able to take advantage of the program initially? Ummm…maybe. Likely it was because we need it. The unemployment rate nationall just hit 10.2%, the highest level in 26 years. Locally, our unemployment is even high, above 12%. No matter the reason the First Time Homebuyer Tax Credit was extended it was, and we should all be thankful. This is an amazing opportunity, one that you should look into, and consider.
If you have any questions regarding the $8,000 Tax Credit, Sonoma County, or Sonoma County Real Estate, please feel free to contact us. We look forward to hearing from you.
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Sebastopol Real Estate Has A New Look
October 31st, 2009 categories: Buyer Resource, Sebastopol, Seller Resource
Sebastopol Real Estate has a new look….SebastopolRealEstate.com.
We have changed the website to be much more user friendly…MUCH more user friendly.
Where should you go when you want to learn more about Sebastopol CA Real Estate? SebastopolRealEstate.com of course.
Do not know much about Sebastopol? Read more about it Here!
After you visit the new look of Sebastopol Real Estate, look around, stay awhile and please take some notes. As always, be sure to give us feedback and let us know what you like, what you do not like, and possibly what you would like to see.
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What Does “Motivated Seller” Actually Mean?
October 29th, 2009 categories: Buyer Resource, Seller Resource, Short Sales
Motivated Seller. What do you think of when you hear that term? It really makes a lot of people think; gets some excited, makes some skeptical, and means little to others.
Most buyers, they think the seller will lower the sales price dramatically just to accept their offer…this may be wishful thinking. To other buyers, they may wonder why the home has not sold and may think there are issues with the home. Other buyers think this is just saying that the seller is willing to negotiate. I think of very little when I hear the term “Motivated Seller” and I am sure there are other valid thoughts as well.
My thought is that some Real Estate Agents say a seller is a Motivated Seller just to get attention on the listing. Very rarely do I see a listing that has an accepted price more than 10% below asking. Some listings DO sell for big discounts, and we will investigate any of those situations for you; just ask!
Motivated Seller could mean so many things to so many people. I believe that to truly know what the term means in any given situation, go to the source…ask your Real Estate Agent to ask whoever is saying it. It is a fair question, and one that SHOULD be asked of any listing agent who uses the term. Unless the seller agrees to such aggressive wording, I would argue that it does a great disservice to the seller, potentially frustrating buyers who have different ideas about the meaning, and an angry buyer does not usually close a deal.
On a side note, VERBOSE RANT RATHER, there are durable good known as commodities. These are good that are virtually similar to other goods. Bottled water is one example of a commodity that most people are familiar with. How is store brand water different from name brand water such as Dasani or Arrowhead Springs? It really is not, so why would anyone pay more for water? Branding and advertising work to make their product appear vastly different…in this example of store brand versus name brand water…is the name brand designer water twice as good as the store brand water? Likely not, so why is the name brand designer water twice the price?
There is a whole commodities exchange in Chicago, IL; the Mercantile Exchange where goods such as gold, corn, soybeans, frozen concentrated orange juice, etc. are traded. The “Merc” is in the scene from Ferris Bueller’s Day Off where Cameron is making hand signals (Three Stooges Gestures I believe) at the floor traders? Remember that? Anyway, at the Merc, traders buy and sell commoditized products from all different sources, and pay the lowest prices for a given product…showing no differentiation other than price. Low Cost Wins in the case of commodities.
So what is the point of that name brand versus store brand commodity rant? I am getting there… So…Commodities are SO similar that the rational consumer should choose the one with the best price, and focus on nothing else. So when an agent says “Motivated Seller” and is using pricing as the main strategy, they are overlooking the positive aspects of a property that makes it unique. ALL properties are unique in some way, and that is what listing agents should focus on, NOT price…unless a home is so cookie cutter there truly is no difference. In reality, all homes compete on age, price, square footage, bedrooms, bathrooms, layout, and the often overlooked yet extremely important condition. Homes compete on many different aspects, and in my opinion are rarely the exact same. Even homes in the same neighborhood, built by the same builder in the same year, are unique in lot location, view, and condition…these three attributes can mean huge swings in value of a home, which is why I argue most homes are unique in some way and should not compete on price only…so why would an agent advertise on price? The free market will ultimately decide the value of Real Estate…the free market in this case is the collective group of rational buyers and sellers.
We do not have any real issues with what a listing says, unless it is untrue or intentionally misleading. My personal opinion for truly motivated sellers is to lower the list price to their rock bottom price or very close to it, and hope for multiple offers, potentially raising the price above asking. If an offer comes in below the bottom line amount, respond with a counter offer with a price that is what the seller needs it to be. If the seller is out of the market with their price/needs, then there are other alternatives (rent if possible, short sale, foreclosure, deed in lieu of foreclosure, loan modification, etc), and that is a whole other subject to discuss…at a later time.
If you ever see a listing that states that a Motivated Seller is selling their home, feel free to ask us to check it out. We will find out for you, and report back with all relevant information. Maybe it is a great deal, or maybe it is just some uninspired verbiage from someone who can say nothing interesting about the home. We look forward to speaking with you about Sonoma County and all of the unique properties here.
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