Archive for the 'Short Sales' 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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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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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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What Happened To Our Short Sale Offer?
November 12th, 2009 categories: Buyer Resource, Foreclosures, Short Sales
A client recently had a short sale offer that was ultimately accepted by the homeowner, but not accepted by the lender. The lender ultimately decided to force the property into foreclosure, opting to recover their proceeds via a longer, usually more costly, and more litigious process. So after 6 weeks of waiting for approval from the lenders, our buyers were ultimately turned away.
Short Sales are very common in today’s Real Estate climate, and even with that fact, some people are still somewhat confused as to what a Short Sale actually is. A short sale occurs when the sale of Real Estate does not cover the full obligation that is owed by the borrower. In the case of a short sale, the lender (AKA lienholder) agrees to accept the sale and thus the loss, as opposed to pressing the current borrower, and then releases the borrower from further obligations.
For a short sale to occur, at least 4 parties must agree to the offer.
- Offeror – Potential buyer of the property in question
- Seller – Homeowner who listed the home for sale
- Lender – The lienholder who is owed the money. In many cases, the initial lender sells the loan to an investor, and then services the loan (acts as a middleman accpeting monthly mortgage payments on behalf of the investor) for a small fee.
- Investor – Party who purchases the loan from the lender as an investment vehicle.
For a mathematical example of a short sale, let’s suppose that a homeowner purchased a home for $500,000 in 2005, and took out a 90% loan. This means the homeowner still owes $450,000 to the lender. Currently that same home might sell for $320,000. After factoring in transfer costs, Real Estate fees, etc, the net sale might leave net proceeds of around $300,000. In a short sale situation, the lender might agree to accept the $300,000, generating a loss of $150,000. This is a substantial loss, one that all lenders may or may not be willing to accept.
Even if a property is listed for sale, and is a short sale, the lender or lenders, are under NO obligation to accept or even acknowledge those offers. We think it would be short sighted for lenders not to acknowledge an offer, as it may be in their best interests, but they are definitely under no legal obligation to accept an offer, any offer, that is less than what they are owed.
After the offer has been accepted by the seller, the offer is sent to the lender. The lender will review the file (including the sellers financial information) and if they feel it is in their best interests to accept the offer, the will order a BPO, or Broker Price Opinion. The BPO is similar to an appraisal, in that it gives an objective opinion of value for the property from a trusted third party. If the offer is found to be line line with market value, the offer will likely be accepted by the lender. If the offer does not fall into the range of market value the lender expects, the offer may be countered, or the bank may elect to take the property into foreclosure.
Short sales can take months to close, and at times it seems as if there is no progress, even if the file is perfect. Just know that we are currently in a busy time for lenders as there are many short sales, foreclosures, and loan modifications. A little (a few months of) patience may pay off in the long run for buyers who have found the perfect home, even if it is a short sale. Sonoma County Short Sales are little different than short sales in other areas, and delays are probable.
If you need help with a short sale or any other Sonoma County Real Estate situation, please feel free to contact here or at WineCountryMoves.com.
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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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Should We Buy A Sonoma County Fixer As A Primary Residence?
October 27th, 2009 categories: Buyer Resource, Foreclosures, Seller Resource, Short Sales
We were recently asked about buying a Sonoma County Fixer as opposed to buying a home with the improvements already made. This is really a great question, and one that brings a lot of Real Estate buying fundamentals into play.
Here is the situation: Our clients had a significant amount of cash on hand (around $100,000), and were interested in purchasing a Sonoma County Home. They were going back and forth about an issue that many of our readers may have also contemplated; whether or not to purchase a fixer or to purchase a home that does not require any work.
Purchasing a fixer allows the opportunity for the buyer to add value to the home with sweat equity. Conversely, purchasing a home that does not need repairs is more convenient for buyers who may not have the time, or know how to complete needed repairs. Is there anything else to consider other than the time involved? We think so…and here is why.
When contemplating a fixer versus a home that does not need repairs, there are several things that need to be considered:
- Price Of The Home To Be Fixed
- $ Amount Of Repairs Needed
- Price Of Home That Does Not Need Repairs
- Loan Amount
- Down Payment Amount
- Cash On Hand
- Time For Repairs
- Who Will Be Completing The Repairs
- Do The Repairs Need Permitting?
Let’s look at a mathematical example:
Home A: Fixer which costs $250,000.
- Down Payment (10%) – $25,000
- Closing Costs (1.5%) – $3,750
- Repairs – $50,000
- Time For Repairs – 30 Days
- Value After Repairs – $325,000
- Cash On Hand 90 Days After Closing (After Repairs) – $21,250
- Annual Mortgage Amount – $1,5330.36
- Real Estate Taxes (1.15%) – $2,875
Home B: Home that does not need repairs, and costs $325,000.
- Down Payment (10%) – $32,500
- Closing Costs (1.5%) – $4,875
- Repairs – $0
- Time For Repairs 0 Days
- Value – $325,000
- Cash On Hand 90 Days After Closing – $62,625
- Annual Mortgage Amount – $19,929.36
- Real Estate Taxes (1.15%) – $3,737.50
The annual savings for purchasing the Fixer equals to the difference in the annual mortgage ($4,599) + the savings in Real Estate taxes ($862.50) = $5,461.50. The difference in the cash positions, $62,625 – $21,250 = $41,375. Excluding interest, payback period is is $41,375 / $5,461.50 = 7.58 years. When interest is factored in, the payback period jumps to over 9 years. (Take our word for it…the calculations are too long to write out in this article). So, it appears that purchasing a home to fix up, when factoring in likely repair costs, may not make sense if you plan to own the home for less than 9 years.
The payback period is an important consideration for investors and the investment minded buyer. Whether you are thinking of purchasing Sonoma County Short Sales, a Sonoma County Foreclosure, or a traditionally sold home, this is a good exercise to undergo. All buyers should at least consider these types of things, as all purchases are some form of Real Estate investment.
Important Note: In general, the higher the price of a home, the fewer buyers look at it, and you may end up getting a better deal when you purchase a higher priced home.
If you have any questions regarding Sonoma County Fixers or any other Real Estate tradeoffs, please feel free to contact us.
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California Bans Upfront Fees For Loan Modifications – Senate Bill 94
October 26th, 2009 categories: Foreclosures, Seller Resource, Short Sales
California has banned the charging of upfront fees on loan modifications. Governor Arnold Schwarzenegger signed Senate Bill 94 on October 13th, 2009 making the act of charging upfront fees on loan modifications immediately illegal. There have been many people who were taken advantage of by companies who promised to help the struggling homeowners modify their mortgage, only to find that the loan modification companies did little and were ineffective in anything other than taking their money.
The loan modification process is a complex one, and the average homeowner does not have the time, patience, or skills to navigate the internal processes of some of these companies. Where do these people turn for help? Usually to one of the first firms they see advertising their loan modification services, whether it be on TV, or the Internet. On the Internet, it is probably much less expensive to look like a first class legitimate company, and some smooth wording can and has convinced many people to do many things in the past. Unfortunately, the abuse of some consumer got so bad, that a law was needed to protect the general public. It is unfortunate that was needed, however it is great that the law has been passed…now all we need is for these companies to follow the law…whether or not these companies do in fact follow the law will remain to be seen.
The ineffectiveness of many of these loan modification companies lead to more short sales, which in turn lead to more foreclosures, people losing their homes, destroyed credit, and little chance of these people being homeowners again in the next 7 to 10 years.
The good news is that California Senate Bill 94 will end the unscrupulous practices of many of these so called loan modification services. Basically, many of these services were found to simply take your money, and then do virtually nothing to help modify your loan. No wonder they would charge up front fees…if they had tried to charge fees for an effective loan modification, then they would have collected little or nothing.
We want to note that there ARE legitimate firms out there who are performing legitimate loan modification services, getting good results, and charging fair prices to consumers. We do not mean to take anything away from these legitimate firms, unfortunately they were lumped in with some bad associations…that does happen. The legtimate loan modification services are excited about this new law, and applaud the forward thinking of the California Government. Did I just say “Forward Thinking” and “California Government” in the same sentence?
So does this law just apply to Sonoma County? Of course not…Senate Bill 94 covers the entire state of California…so whichever company you choose, know you are legally protected from abuse.
If anyone out there has story about their loan modification process, whether it be a horror story or a story with a happy ending, we would love to hear the outcome, the details, and who you were using.
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Sebastopol Real Estate Is HOT!
October 21st, 2009 categories: Buyer Resource, Foreclosures, Sebastopol, Short Sales
Sebastopol Real Estate is HOT! We have so many buyers interested in Sebastopol that it is amazing. I always find it interesting how some areas get popular in a matter of weeks…this is one of those cases I suppose. And why not? Sebastopol really is a great place. There is a sense of community that is truly unique, not just in Sonoma County, not just in California, but beyond…way beyond.
Sebastopol’s Local Flavor Global Vision campaign is picking up steam and has the attention of many local residents and want to be residents as well. This is a grass roots think globally act locally type campaign, a message we can all support. And remember…local produce is thousands of miles fresher. I recently heard that vitamin dissipates from fruits and vegetables very quickly, 50% of the vitamin is lost in the first 7 days from harvesting.
Sebastopol Home prices have come down to more affordable levels, the best prices in many years. Currently there are Homes, Condos and Business Opportunities for sale in Sebastopol that are priced less than $300,000.
Sebastopol also has many bank owned properties, foreclosures and short sales that are adding to well priced inventory. With all of this well priced inventory, Sonoma County Home Buyers are taking note. We are not 100% sure if it is the Sebastopol lifestyle that is attracting would be buyers, or if it is the new level of affordability in Sebastopol that is attracting buyers, we think it is probably a little bit of both. We just want you to realize that with all of the great deals here in Sonoma County, there are plenty of great deals in each area, even those that have been tradtitionally higher priced.
Sebastopol Real Estate is still some of the most expensive Real Estate in Sonoma County, even with the recent downturn in Real Estate prices. This should not deter anyone from looking at Sebastopol, as Sebastopol has so much to offer, which is why the prices were higher than other parts of Sonoma County to begin with. The lifestyle and weather are great in Sebastopol, there is a lot to do and see, and Sebastopol is still much more affordable that neighboring Marin County and San Francisco.
If you are one of the many people interested in Sebastopol Real Estate, please visit SebastopolRealEstate.com. And as always, feel free to contact us directly and give us your opinions…whether it is on Sebastopol Real Estate, or Sonoma County in general. We look forward to hearing from you soon.
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Sonoma County Foreclosure Lists FOR FREE
October 20th, 2009 categories: Buyer Resource, Cotati, Foreclosures, Fountaingrove, Petaluma, Rohnert Park, Santa Rosa, Sebastopol, Short Sales, Sonoma
“FREE Sonoma County Foreclosure Lists? Are you kidding me?” That is a typical response we receive when people ask us the best way to find new Sonoma County Foreclosures and Short Sales and we tell them we offer that service for free. Even after we explain to them that we can provide lists of ALL currently listed Foreclosures and Short Sales, many of our clients are amazed.
FREE Sonoma County Foreclosure Lists are a great asset for all buyers, included the investment monded buyer. Many of our clients had paid for this same exact service from other sources, and realize how much money they would have saved just by talking to us. Even better is the fact that we can customize your list to show you exactly what you want to see, not every single foreclosure or short sale…if you want to see all of the properties…great, we can provide that, or we can save you time with a customized list.
Many people look at foreclosures as the best way to buy the best priced Sonoma County Real Estate. We like to think a great Real Estate agent on your side is also essential.
We Offer Free Lists Of:
- Bank Owned Homes
- Bank Owned Luxury Homes
- Bank Owned Condos
- Bank Owned Townhomes
- Bank Owned Investment Properties
- Bank Owned Commercial Properties
- Bank Owned Land
We offer free foreclosure and short sale lists for Sonoma County, Napa County, Marin County, Solano County, and Lake County as well. If you need these lists beyond those areas, be sure to ask for a list of our contacts in other areas…we have a trusted network of Real Estate professionals in many areas.
Foreclosures and short sales are not just limited to low priced properties. There are many foreclosures in all price ranges, from properties under $100,000 to well over $1 million dollars, and include areas such as Rohnert Park, Sebastopol, Santa Rosa, Fountaingrove, Petaluma, Cotati, Penngrove, Sonoma, etc. Contact us via this website (contact info at top right of this page) or at WineCountryMoves.com to sign up.
So once you have the free list of Sonoma County Foreclosures and Short Sales, what do you do when you have found a house? Call us to set up a showing of the home and discuss details of writing any offers. We have years of experience helping people buy and sell foreclosures and short sales and we can help you navigate the process with ease. We will give you an objective view of the market, keep you up to date all all relevant items, and advise you of offers that will give you the best chance at saving money and getting the home of your dreams.
Visit Foreclosure Buying Tips to learn more about buying foreclosures. Should you have any questions regarding Sonoma County Foreclosures or Sonoma County Short Sales feel free to contact us; we look forward to hearing from you and helping you save money.
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Sonoma County Short Sales Are Worth A Look
October 19th, 2009 categories: Buyer Resource, Foreclosures, Seller Resource, Short Sales
Sonoma County Short Sales were once considered untouchable…likened to the plague if you will. As I wrote in the July 14th article Short Sales AKA Long Sales the process was often frustrating for many involved, on both sides of the transaction. Many buyers knew the process with buying a short sale took a long time, and thus avoided many of them. There are still buyers that avoid short sales, and also many agents who do not work with short sales.
Lately, many lenders, such as Wachovia, have improved their internal processes, and have made the process more efficient. This is great news for many buyers AND sellers.
If you have a Wachovia Mortgage and think a short sale is the answer, please contact us. Wachovia has opened a new Northern California Department that helps to streamline the process. Contact us, and we can put you in direct contact with those in charge who can help speed up and streamline the process. Our contacts can save you months in processing time, and may even help save your credit as well.
Short Sales still are a third priority at most lenders, behind 1. REOs (Bank Owned Homes that have already gone through the foreclosure process) and 2. Loan Modifications – since the government has given financial incentives to lenders to help keep people in their homes. Even though short sales are still not the top priority at many banks, we are finding many lenders much easier to work with than in months past.
The main reasons why the short sale process has improved:
- Internal process improvements at the lenders themselves – The flood of short sales showed the flaws and inefficiencies in past processes, and this took time to correct.
- Fewer properties to review – Currently, there is little inventory on the market, and thus fewer homes for lenders to review.
- Lenders have added personnel – Knowing there will be more and more short sales coming as the unemployment rate continues to rise, banks are adding bench strentgh to get ahead of the problem.
- Lenders have felt the pain of the foreclosure process – Banks understand that a short sale can avoid months of labor and tens of thousands of dollars in additional losses.
Although Sonoma County Foreclosures are much easier than short sales to deal with for all involved, short sales are no longer to be avoided. The buying process may take longer with short sales, but there is more to inventory to choose from as well, and with presumably less competition (as some buyer and some agents avoid them) than foreclosures, there may be better deals as well.
If you plan to purchase a short sale, just make sure you have a competetent Real Estate agent on your side, a prequalification letter, a competent lender, the ability to close on a loan, and some patience as well. Now is a great time to consider a Real Estate purchase as prices are extremely low, mortgage rates remain near record levels, and affordability is near all time highs.
If you would like more information regarding Sonoma County Foreclosures or Sonoma County Short Sales, feel free to contact us. We look forward to hearing from you.
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