This Weeks Market Commentary

This information is courtesy of our friends at Princeton Capital. As a reminder, I highly recommend you call upon a qualified loan professional before you even start to look at properties. By doing so, you can ensure your ability to act when you find the right one. If you have any questions about the financing process, you can contact my associate Tisha Shaffer with Princeton Capital.

This week brings us the release of three pieces of relevant economic news in addition to the minutes from the most recent FOMC meeting and a speaking engagement with Fed Chairman Bernanke and a congressional committee. Only one of the economic reports is considered to be highly important to the markets and mortgage rates, but the others do carry enough significance to influence mortgage rates if they show a wide variance from forecasts.

 

Monday and Tuesday have nothing of importance scheduled, so look for stock movement to heavily influence bond trading and mortgage rates. Stock gains will probably pressure bonds and cause mortgage rates to move higher. If the major stock indexes show losses during the first couple days, we may see bonds thrive and mortgage rates remain unchanged or move slightly lower.

 

The National Association of Realtors will give us their Existing Home Sales report at 10:00 AM ET Wednesday. This data tracks resales of existing homes in the U.S. during April, giving us a measurement of housing sector strength. This type of data is relevant because a weakening housing sector makes a broader economic recovery less likely. Current forecasts are calling for an increase in home sales between March and April. Ideally, the bond market would prefer to see a decline, indicating housing sector weakness. A large increase in sales could lead to bond weakness and a small increase in mortgage rates Wednesday morning since a strengthening housing sector raises optimism about broader economic growth.

 

Also late Wednesday morning will be testimony from Fed Chairman Bernanke to the Joint Economic Committee of Congress. He will be updating them on the status of the economy and the Fed’s outlook for future growth and monetary policy. This will be watched closely and is one of those speaking engagements that can cause considerable movement in the financial markets and mortgage rates.

 

Furthermore, the minutes of the last FOMC meeting will be released Wednesday afternoon. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy and economic growth. The goal is to form opinions about the Fed’s next move regarding interest rates and their current bond-buying program (QE3). Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading Wednesday.

 

April’s New Home Sales report is the sister report of the Existing Home Sales and will be released late Thursday morning. It gives us a similar measurement of housing sector strength and future mortgage credit demand, but tracks a much smaller portion of housing sales than Wednesday’s report does. Actually, it is the least important release of the week and probably will not have much of an impact on mortgage pricing unless it shows a sizable variance from forecasts. It is expected to show gains in sales from March’s level, meaning the new home portion of the housing sector also strengthened last month.

 

Friday has the week’s most important economic report with April’s Durable Goods Orders being posted. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. These are items made with an expected life span of three or more years. It is currently expected to show an increase in new orders of approximately 1.6%, indicating the manufacturing sector remained strengthened a little last month. That would be relatively bad news for the bond market and mortgage rates, but this data is known to be quite volatile. Therefore, a small variance from forecasts would likely have little impact on Friday’s mortgage rates.

 

Overall, I believe Wednesday will be the most important day for rates, although Friday should be active also as it will be shortened due to the early close ahead of the Memorial Day holiday and has the most important report of the week. Still, Wednesday’s economic data and Chairman Bernanke’s testimony in the morning and FOMC minutes in the afternoon means we could see a couple changes to mortgage rates that day. I suspect that Tuesday will be the calmest day of the week. There is nothing to be concerned with Monday, but strong selling in bonds late Friday means there is a fairly large increase in mortgage rates waiting if your lender did not make an upward revision during afternoon trading. I don’t think we will see as much movement in rates that we saw last week, however, it is still recommended to maintain contact with your mortgage professional if you have not locked an interest rate yet.

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Timing is Everything!

MarchRealityCheck

They say timing is everything in life. And that’s particularly true when it comes to real estate. If you’ve been thinking about selling your home but are not sure if this is the right time, think again: There may not be a better time to sell than right now.

We are experiencing a severe shortage of homes for sale in our area. Our inventory of listings is at the lowest level it has been in many years. Buyers are out there each weekend scouring the neighborhoods for homes to buy; buyers are ready to make a move when they find a house to buy.

With so few homes available in this market, if you were to sell your home now you could potentially get the highest price since the downturn of the housing market. With buyers far outnumbering available homes for sale, sellers are often getting multiple offers – sometimes a dozen or more – often closing at a price that is significantly more than their asking price.

We’re not alone here in the Sacramento/Tahoe region. The low inventory of for-sale homes is creating a seller’s market throughout the country, according to an article by the National Association of Realtors®. NAR reported that “Buyers and Agents are literally waiting for the next house” to come on the market in many cities.

According to NAR, the supply of existing homes for sale reached nearly an eight-year low in January. Nationwide, there is a 4.2-month supply of existing homes for sale and it could take some time before we reach a more balanced market. There are a number of reasons for the shortage of listings. The number of distressed houses for sale is decreasing as the foreclosure crisis recedes. New home construction is improving but still at low levels in most areas of the country. And many homeowners still believe they are too underwater on their mortgage or may not have enough equity in their property to buy their next home.

But you may be surprised at how much the tide has turned in the last year.

Multiple offers and bids over the asking price are pushing up home values in many areas. Properties that looked like they would have to sell as a short sale have ended up pricing out as a traditional equity transaction with homeowners walking away with cash from the sale. We are experiencing this change in the market every day.

In a recent Money magazine article, reporter Beth Braverman said homeowners might be wise to sell now rather than hold off. “It’s tempting to postpone selling to hold out for a better price,” she said. “But if you want to move to a larger place, act sooner rather than later.”

While you might be able to sell your home for more if you wait, there’s no way to tell what the future will hold. When more homeowners eventually decide to come into the market, the balance of supply and demand could change in favor of buyers once again. And even if prices go up in the future, the appreciation on a trade-up home could be even greater.

As we travel through life, housing needs evolve. You may have outgrown your starter home and need more space now that you have children. Perhaps you want to move to a similar home on a quieter street. You’ve decided to downsize now that the kids are on their own and you are empty nesters. Or you’re just tired of maintaining that big yard in your current home.

Whether you’re moving up, across or downsizing, whatever the reason for your move, it’s important to work with a well-qualified professional Realtor® who can help make the transition a success.

In order to get the best possible price for a home, you must expose it to the largest number of potential buyers. Start by hiring an Agent from a reputable firm who specializes in your local area.

Your Agent must be able to showcase your home in a variety of traditional and online media including professional photography, direct mail, property flyers, listing syndication, social media, and electronic communication to area Agents.

Additionally, your Agent should also identify the key selling features of the home and actively promote the property to other Agents during the brokers’ tour and to potential buyers during an open house.

Your best choice is to start by hiring the Sacramento/Tahoe region’s leading real estate services company, Coldwell Banker Residential Brokerage. Our proven marketing plan will showcase your home to the widest possible audience of qualified buyers and net you the best price possible for your property.

Selling your home can be a complicated and stressful process. But it doesn’t have to be, especially when you are working with the best. As a full-service company, we are with you every step of the way, keeping you informed about the entire transaction.

As your professional Realtor®, I can help you navigate through the process of selling your home and even help you find your next home that fits your current situation. Contact me today for a private consultation and to learn more about my comprehensive marketing program.

As they say, timing is everything.

This Reality Check is brought to you by Coldwell Banker Residential Brokerage, the leading provider of real estate services in Northern California. Coldwell Banker Residential Brokerage is home to more than 3,600 Sales Associates of the region’s most successful real estate professionals.

Affordable Home Staging Strategies

These are some great suggestions. Additionally, remember to ensure your home is clean! Take the time to mop your hard surface floors and vacuum the carpets- buyers love vacuum lines! You should also pay attention to scent. It’s a good idea to place “plug-in” type air fresheners in each room. Consider alternating scents that compliment each other so that potential buyers notice a pleasant smell in each room as they enter it, instead of adjusting to the same consistent scent. Need more ideas? Give me a call- I can help! Good luck 🙂

stagingcover

Affordable Home Staging Strategies

An open house can be the selling point for potential buyers, and most sellers understand the importance of staging a home properly. However, few homeowners want to spend a great of money redecorating their homes. The good news is, there are several ways for sellers to stage their homes beautifully without reaching too deeply into their pockets.

Do some research

For homeowners who are unsure how they should stage their homes, speaking with a real estate professional is the first step. Real estate agents have most likely attended several open houses and have unique insight into what buyers may be looking for. In addition, homeowners themselves may benefit from venturing out to staged model homes or open houses in the area, and examining the techniques other sellers are using.

Sellers should first rely on what they have

Before going out and purchasing a new living room set, sellers should focus on decluttering their homes, cleaning it until it’s spotless and making any necessary repairs or alterations before purchasing new items. They may find that they already have all the items they need to stage their properties. If not, all the legwork will be done and sellers will have a better idea of what they are lacking before they seek out accent pieces, plants and other popular staging products.

In addition, rearranging a room to highlight certain areas or making the room feel more spacious can also have a great effect on a home staging. For example, framing a living room around bay windows and adding a bookcase or two to a home office can make a room look more appealing.

Focus on subtle changes

Homeowners who still feel their home needs sprucing up should explore small changes that may change the look of a room. For example, adding a fresh coat of paint (many suggest a neutral shade), purchasing updated kitchen appliances and putting in new lights, doors or window treatments can have a profound effect on a room. Purchasing small items, such as colorful picture frames, books and lamps may also make a staged home appear more warm and lived-in.

Lastly, homeowners who are staging on a budget may also consider borrowing small accent pieces from friends and family to cut the costs of purchasing new items.

 

Home buyers facing dilemma with shortage

Home buyers face dilemma with shortage
Kathleen Pender
Published 3:28 pm, Saturday, March 9, 2013

The home at 2334 Clipper Street in San Mateo that received dozens of offers and sold for far above the asking price. Photo: Courtesy Claire Haggarty / NBT, NBT Realty Services

The home at 2334 Clipper Street in San Mateo that received dozens of offers and sold for far above the asking price.

Photo: Courtesy Claire Haggarty / NBT, NBT Realty Services

Read more: http://www.sfgate.com/business/networth/article/Home-buyers-face-dilemma-with-shortage-4342162.php#ixzz2Nc0SDT3r

The sharp drop in homes for sale poses a tough choice for buyers: Jump in now and compete with hordes of others or wait until inventory improves.

If you buy now, you might have to pay above asking. But if you wait, you could end up paying an even higher price and a higher interest rate if you need a loan. That’s because inventory won’t improve until prices rise enough to get more homeowners to sell and more builders to break ground.

The inventory shortage is especially acute in California. Of the 30 largest housing markets, the four with the biggest drops in homes listed for sale on Zillow in February compared with February of last year were Sacramento (48 percent), Los Angeles, San Francisco (41 percent) and San Diego.

Although listings are increasing on a month-to-month basis as the busy spring season gets under way, Trulia Chief Economist Jed Kolko predicts they won’t start rising on a year-over-year basis for a year or more.

An example of that: “In all of Millbrae, there was one listing two months ago. There are about a dozen now,” says Roger Dewes, a Coldwell Banker agent on the Peninsula. In a normal market, there might be 20. “We are not there yet, but going from one to 12 is quite a leap,” he says.

Experts cite five factors contributing to the inventory shortage:

— Fewer foreclosures are hitting the market. “California did a good job of disposing of its backlog” of distressed properties, says Zillow Chief Economist Stan Humphries.

In California, where most foreclosures are handled out of court, the process is taking about 11 months on average, according to RealtyTrac. In New York and New Jersey, where foreclosures go through a court proceeding, the process is taking 36 and 32 months, respectively.

— Many people still owe more than their homes are worth. If they sold now, they would have to come up with extra cash to pay off their loan. Although prices have rebounded from their lows, 23.3 percent of homes with a mortgage in San Francisco, San Mateo and Marin counties were still underwater in the fourth quarter of 2012, according to Zillow.

— Even if they are not underwater, many owners won’t sell for less than they paid. If they bought near the peak, it may take a while before they are ready to budge.

The median price paid for a new or resale home or condo in the nine-county Bay Area was $415,000 in January. That’s less than halfway between its low of $290,000 in March 2009 and its high of $665,000 set in June/July 2007, according to DataQuick.

— Many people, even if their homes are worth more than they paid, won’t sell because they are afraid they won’t be able to buy another house. “It becomes a game of musical chairs; they are afraid to get out because they can’t get back in,” Humphries says. This becomes “a self-reinforcing cycle” that keeps homes off the market.

— The housing bust put new construction on hold.

The shortage comes at a time when demand is rising in the Bay Area, not just from regular buyers but from investors, second-home buyers and foreign buyers, especially from Asia.

‘Heck of a wreck’
The result is stories like this: A 1,500-square-foot home on Clipper Street on San Mateo’s east side, advertised as a “heck of a wreck,” attracted 97 offers in the first eight days, says listing agent Claire Haggarty of NBT Realty Services.

The home was listed in mid-January at $375,000, which Haggarty considered “a little under market.” It sold for $510,000 in an all-cash deal with no inspections, no contingencies and a 10-day close.

At some point, prices will rise enough to shake lose more inventory, but it won’t happen immediately.

Based on what’s happening around the country, Kolko says inventory tightens fastest in the first 12 months after prices hit a bottom. “Everybody wants to buy at the bottom and nobody wants to sell at the bottom,” he says.

About 12 months after hitting bottom, inventory continues to decline, albeit at a slower pace. But it won’t increase on a year-over-year basis until at least two years after hitting bottom, he predicts.

If you adjust for the mix of homes sold, Kolko says prices bottomed in February 2012 nationwide and in most parts of California and the Bay Area. (The San Jose metro area bottomed earlier, in June 2011.)

Although DataQuick shows Bay Area home prices bottoming in 2009, that’s when most homes being sold were low-priced. The middle and upper end of the market bottomed in early 2012, says DataQuick’s Andrew LePage.

If you believe Kolko’s two-year rule, inventory won’t begin increasing on a year-over-year basis until at least early 2014 in most areas.

Humphries says it might improve earlier, by the end of the year, but “this spring will still be challenging from an inventory perspective.” If you wait until next year to buy, the market may be cooler but prices are likely to be higher. There’s also a risk that interest rates will be higher, he says.

Sweet spot
The sweet spot for buyers might be this summer. Even though inventory is falling year-over-year, “the seasonal pattern means there will be more homes on the market in the summer,” Kolko says. “Search traffic peaks in the spring, but inventory peaks in July.”

Many buyers also go on vacation in July and August, Dewes says.

The decision to buy or wait “really comes down to a fundamental decision about how long you will be in a home,” Humphries says. “If you want to be in a home long enough to make buying better than renting, make that decision as soon as you can.”

In the city of San Francisco, the breakeven point where it makes more sense to own is 3.7 years, Humphries says. “If you will be there more than 3.7 years, I’d say buy now.”

Home inventory drops steeply
Change in the number of homes listed on Zillow in the largest 30 metro areas, February 2013 vs. February 2012.

Region Change
Sacramento -48.0%
Los Angeles -45.7
San Francisco -40.9
San Diego -39.4
Minneapolis-St. Paul -36.7
Riverside -36.2
Kansas City -32.4
Atlanta -32.1
Las Vegas -32.1
Denver -32.1
Orlando -27.1
Phoenix -26.4
Boston -24.2
Houston -23.7
Washington -23.3
Detroit -21.9
Seattle -21.2
Dallas-Fort Worth -20.7
Portland -20.5
Tampa -20.1
New York -18.9
San Antonio -18.7
Philadelphia -18.1
Baltimore -16.9
United States -16.6%
Chicago -16.2%
St. Louis -13.2%
Cleveland -10.5%
Miami-Fort Lauderdale -6.9%
Pittsburgh -4.0%
Cincinnati -0.5%
Source: Zillow

Kathleen Pender is a San Francisco Chronicle columnist. Net Worth runs Tuesdays, Thursdays and Sundays. E-mail: kpender@sfchronicle.com Blog: http://blog.sfgate.com/pender Twitter: @kathpender

Read more: http://www.sfgate.com/business/networth/article/Home-buyers-face-dilemma-with-shortage-4342162.php#ixzz2NbyjotD1

You’ll notice that Sacramento is at the top of the list with 48% fewer available properties year over year. We’ve seen a sharp increase in home prices as a result of this supply shortage. What are your thoughts on the matter?

Reality Check | Homebuyer Growing More Optimistic

HomebuyersOptimistic
A new homebuyer/Agent sentiment survey by Coldwell Banker Residential Brokerage’s parent company has found a growing sense of optimism among buyers as the nation’s housing market continues to improve. In particular, buyers are becoming more confident about the stabilizing and increasing value of home prices.The annual homebuyer survey, which drew 5,865 responses, was designed to discover what was behind the recent increases in buyer demand. The key finding here seems to be a growing optimism about improving prices, which appears to be driven by an extreme shortage of homes for sale in many markets.

While low interest rates and change in life situation were cited as the two highest factors motivating buyers, expectation that home prices will rise – a very new sentiment among buyers – came in a very close third. This optimism over values grew the most over the last 12 months (61 percent) closely followed by “increased optimism around selling” (51 percent).

Dan Barnett, senior vice president of marketing for Coldwell Banker Residential Brokerage’s parent company, said there is a very clear correlation between a growing optimism over prices and buyer frustration over the lack of homes for sale. The graph below depicts results by various NRT local operating companies:

GroiwingChart
Despite increased buyer and seller optimism overall, there still does not seem to be a big increase in move up buyers. About 42 percent of Agents said move-up buying was increasing “modestly” and only 7 percent said it was increasing significantly.Below are the results of the survey:

What is motivating buyers to look now (factor is “very motivating” or “motivating”):

83% Low interest rates
60% Change in life situation
57% Expectation that home prices will rise
51% Job relocation
46% Real estate investment value
43% Confidece in personal economic outlook
42% Increased optimism around selling
37% Rising rental prices

Which factors have become more important now than a year ago:

61% Expectation that home prices will rise
51% Increased optimism around selling
44% Low interest rates
35% Real Estate investment value
34% Confidence in personal economic outlook
28% Rising rental prices
27% Change in life situation
22% Job relocation

What are buyers complaining about:
(% saying “frequently” or both frequently and “more often than not”)
41% (69%) Lack of inventory
19% (52%) Uncertainty in economy
11% (44%) Home affordability
19% (43%) Difficulty with mortgage appraisal
18% (42%) Difficulty qualifying for a mortgage

How do buyers cope with limited inventory (Agent could pick more than one):
87% considered expanding the geography they would consider
85% prepared to pay more
74% considered distressed properties
70% stopped looking
54% considered buying new construction
54% considered foregoing a move

What is happening in the overall market:

Prices:
63% of our Agents found that home prices were increasing, with larger increases identified on the west coast. Half of the San Francisco Agents described home prices as increasing significantly.

Inventory:
78% of our Agents found inventory to be decreasing. Atlanta, Florida, Hawaii and Sacramento are feeling the most constrained by low inventory.

Transaction volume:
Agents report that transactions are up somewhat – 40% – with the most activity being reported in the Midwest and West.

Buyer confidence:
60% of Agents report that buyer confidence is increasing, across the board. Sacramento and Harrisburg, while generally positive, lag the nation.

So what does all this mean for you? Every day, both buyers and sellers are growing more confident as the housing market continues its steady rebound. If you have been thinking about buying a home, you shouldn’t wait too long. We have a good window of opportunity right now when interest rates are low and prices are still very affordable. But that won’t last forever, as history has shown us. Even a small jump in mortgage rates could significantly change how much you’ll end up spending on a home. If you’ve been considering buying a home, there may not be a better time than now. I’m ready to help you find the home of your dreams today. Let’s get started!

©2013 Coldwell Banker Real Estate LLC. All Rights Reserved. Coldwell Banker® is a registered trademark licensed to Coldwell Banker Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity. Each Coldwell Banker Residential Brokerage Office Is Owned by a Subsidiary of NRT LLC. If your property is listed with a real estate broker, please disregard. It is not our intention to solicit the offerings of other real estate brokers. We are happy to work with them and cooperate fully. DRE License #01908304

#ChuckLoses 5/9/12 Because All the #CoolKids are Doing it ;o)

When the Boogeyman goes to sleep every night he checks his closet for Chuck Norris. Chuck Norris checks HIS closet for KRIS VOGT- Future 2012 LLS Man of the Year. http://www.facebook.com/berelentless2012Chuck knows that any man who runs 24 hours in the name of curing cancer is NOT a man to be messed with.

We’re inviting everyone in the Twitterverse to join us in supporting Kris Vogt’s 2012 LLS Man of the Year Campaign at Chevy’s on the water on Wednesday, May 9th from 5pm-9pm. Chevy’s has generously agreed to contribute 15% of all proceeds from food and non-alcoholic beverages to LLS in support of Kris Vogt’s fundraising efforts.

This is where philanthropy meets partying- bring a friend and take this opportunity to meet some of your favorite twitter folk!

Register Here

Housing Crisis to End in 2012 as Banks Loosen Credit Standards (Maybe)

While I certainly don’t expect to see any major improvements in the local housing market this year (with respect to average sales prices or price/sqft), I also don’t anticipate any drastic declines. Elk Grove currently only has 238 Single Family Residence listings available on the market (this includes equity sales, short sales, and bank owned homes- one house on one lot).  Couple this with the fact that there are currently 855 Elk Grove Single Family Residence listings in contract (this includes homes listed as short-contingent, pending, and pending/bring backup), and you’ll realize that we are actually seeing the pendulum swing back in the direction of this being a seller’s market! This is NOT to say that prices will sky-rocket. However, the simple laws of supply and demand still apply. There are more buyers out there looking to purchase homes in Elk Grove than there are listings. We’re seeing a lot more bidding wars over competitively priced homes and the average “Days on Market” time before listings are going into contract has dropped substantially.  Dare I say it? Stabilization may be on the horizon.

01/24/2012BY: KRISTA FRANKS Printer Friendly View

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

 

See Actual Article Here.

What’s the DEAL with Short Sales?!

This is a question I hear on a daily basis.  It’s important to understand and accept that a short sale will take longer than a straight equity sale, and even a bank owned home in most cases.

Here’s a quick break down of the overall process, and why it seems to take so long.

  • Once an offer is made it has to first be accepted by the home owners.  This is usually not a difficult step, as the average home owner is not overly concerned with the net sheet because it’s ultimately not that person’s net loss.
  • After the homeowner accepts the offer, their agent then submits it to the bank(s).  In the best case scenario, the subject property will only have one mortgage, and in turn one bank to negotiate with.  We’ll assume that this the case for now, and then go over the possible differences at the end of my spiel.
  • Normally, the agent will put together a short sale package containing a myriad documents that are requested by the bank to go along with the offer.  Each bank has its own requirements, but almost all banks will ask for the following:
  1. Listing Agreement
  2. MLS history for the property
  3. Comparable Listings to justify the list price (usually 3 active, 3 sold, and 3 pending if possible)
  4. Executed Purchase Agreement
  5. Pre-Approval letter or Proof of Funds for the buyer making the offer
  6. A HUD-1 Statement for the purchase (this breaks down the banks expected net loss from the sale after all fees are accounted for)
  7. Financial Statements for homeowners applying for the short sale including but not limited to: bank statements, retirement accounts, investment portfolios, pay stubs, evidence of other income, a signed 4506-T granting the bank access to your tax returns, a completed budget worksheet which breaks down the homeowner’s end-of-month net after all necessary expenses are deducted from their gross income, etc.
  8. A well written, one page hardship letter explaining what event(s) have occurred that have left the homeowners less able to pay their monthly mortgage payment than they were on the day they were approved for their home loan.  It’s important to note that being upside down in itself is not generally accepted as being a true hardship for the purposes of a short sale.  There must be an extenuating circumstance that lessens your ability to afford your regular payment, i.e. loss of employment, death in the family, unexpected medical expenses, an adjustment in your ARM loan, reduction in income, or some other catastrophic event.
  • When your agent submits this well organized package to the bank, there will be an administrative person who receives it from the bank’s short sale department in most cases.  This person’s function is to ensure that the package is complete and ready to be reviewed for negotiation. If your package is not complete, it will not be sent to a negotiator’s desk, so make sure everything is done right the first time around.
  • Once your file has been reviewed and accepted as a complete package it will then be assigned to a negotiator.  This alone may take two to three weeks.  Keep in mind that yours is just one of many files on the negotiator’s desk, which will absolutely mean a delay between the time he/she receives your file and the time he/she actually begins reviewing it.
  • The negotiator’s job is to protect the bank financially.  He/she needs to examine the numbers and ensure that the net loss on the short sale will overall be less expensive than a foreclosure would potentially be.  He/she also needs to determine that foreclosure is eminent if a short sale is not approved (this is where all of those financial documents and hardship letter come in).  Keep in mind that in most cases the bank sells off mortgage debt to third party investors which means the bank must be able to justify any losses to those individuals.

IF the homeowner can be financially interpreted on paper as being able to afford the mortgage payment, then there is no real reason for the bank allow that person to do anything less than what was agreed upon in their contract- which is pay the full amount due, with interest, as promised .

IF though, that person’s financial situation has drastically changed and it’s clear through their financial records and hardship letter explanation of their circumstances, that there is just no possible way for them to continue paying the loan payments, regardless of whether or not a short sale is granted, and if it isn’t granted then the home will in all likelihood end up in foreclosure (an expensive process in itself), then the bank will be more likely to negotiate for an acceptable loss.

  • Usually the negotiator will calculate a “Magic Number” so to speak that the bank needs to be able to net in order for it to be financially sensible for them to accept a short sale, but of course they will not normally share this number with the agent until the very end of negotiations (if at all) in an effort to maximize their earnings from the sale.  They will then take the difference between that number, and the number at hand with the given offer on the table and attempt to trim costs as necessary.  They may do this any number of ways.  For example: it’s very rare that a bank will pay any non-essential fees, or costs that could potentially be passed on to the buyer (i.e. home warranty, closing costsexcessive commissions, etc.)
  • Once all of this back and forth has been handled you might be ready to close!  UNLESS THERE ARE SECONDARY LIEN HOLDERS OR MI COMPANIES (and there often times are).
  • IF the property has mortgage insurance, a 2nd mortgage and/or a HELOC you will need to negotiate a payoff with them as well.  All of the same rules that come with negotiating with the 1st bank will apply to the other bank(s) involved in the financing.  Other possible lien holders include Home Owner Associations, or government entities for unpaid tax liens.  Each secondary lien holder will have to be settled independently of each other.  Once the secondary lien holders have agreed upon their respective payoffs, your agent will then add their payoff amounts to the HUD-1 to be paid through escrow once the home is sold.  The bank that holds the 1st mortgage must agree to the payoff amounts for each secondary lien holder, and each secondary lien holder must be paid through escrow.  It is ILLEGAL for a buyer to pay a secondary lien holder outside of escrow!

If all the payoffs have been negotiated and approved by the 1st lender, AND if the remaining balance after those payoffs are made is still enough to satisfy the 1st mortgage’s previously mentioned “magic number” THEN you will have the makings of a successful short sale.  Of course all of this is dependent upon a very strict time table, because in many cases there may be a looming foreclosure on the horizon.

Bottom Line? Short Sales are complicated, and time consuming, and stressful.  That’s just part of the deal.  They are also a means of salvation for the struggling home owner under water who is looking to minimize the long term damage to their credit so that they can start rebuilding towards future home ownership.  AND they are often competitively priced because of the added frustration that comes along with the process, which means a golden opportunity for buyers on a budget!

Feel free to contact me if you have any questions or concerns specific to your situation that I may be able to address for you.  Before you consider a short sale, I highly recommend you speak with a real estate attorney to determine the possible consequences that may or may not apply to your unique situation.

From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.

 

 

What Should You Expect from Your Real Estate Agent?

I am committed to providing you with more than just a successful real estate transaction.  I believe my clients are entitled to an experience that is convenient, stress-free (or as close to- as possible!) and remarkably satisfying.  Here’s how I do it:

  • Constant Communication. Communication is a key factor in every real estate transaction.  I make a point to ensure that my clients are well-informed with the progress of their transaction from start to finish.
  • Personal Attention to Every Detail.  Real estate transactions are complex by nature.  It is imperative that your agent have the ability to multitask in an organized manner so that nothing slips through the cracks.
  • Price your home competitively.  I have a deep understanding of this marketplace, and always conduct thorough research before suggesting a listing price.  In pricing your home too high, you may be essentially pricing yourself out of the market.  When buyers search for a new home, their paramount search criteria often revolves around pricing.  Even your home fits all of their other needs to a T, they will never see your listing because of the price.  Of course, the risk of improper pricing is a double-edged sword.  Under pricing your home could lead to your receiving an offer quickly, but it could also mean a missed opportunity, or worse- it could mean the bank rejects your sale in the case of a short sale.
  • Help find the right buyer for your home.  I market every listing actively, meaning I do everything possible to ensure the maximum number of prospective buyers see your listing during their search.  In cases of multiple offers, I assist my clients in deciphering the differences between them.  Most people have a natural inclination to assume that the highest offer automatically gets the property.  However, depending on the seller’s needs, price may not always be their first concern.  If the sellers are anxious to move as soon as possible, they may want to consider an all cash offer that’s slightly lower than an FHA funded offer.
  • Problem solving skills backed by experience and a strong brand name.  There are often bumps in the road to success.  Knowing how to navigate through them is key.  I pride myself on being an expert in my field.  In cases where I feel a second opinion is necessary I need only look to my amazing team.  I am fortunate enough to be a part of the Coldwell Banker Elk Grove Office- one that is highly trusted and respected, with more than 100 years of experience that I can draw upon in supporting you, the client.

If you’re in the area and looking for a real estate agent, please consider contacting me first.  If you already have an agent, make sure that person is servicing your transaction completely and thoroughly.  Please feel free to contact me if there’s anything I can do to assist you.


From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.