REALTOR® Dave Harris shares his Top 8 reasons that now is the best time to consider a move.

 
“1. Prices to buy are incredible

Quite potentially, there hasn’t ever been a better market to buy a home.

It’s doubtful that if in my real estate career, we will see a better buyers market this good again. As an example, in a period of six weeks, I sold four houses that were foreclosures; each of them was purchased for $100k less than the sellers had paid three years ago.

To put that in perspective, my people bought them for about 50 percent of the price from three years prior. 50 percent! Of course every situation is different, but there are truly some great deals out there!

2. Prices may get worse

So what is your plan? Stay for a couple more years and sell when the market ‘turns around?’ Not to be Debbie Downer, but things are going to be this way if not worse for 3-5 years according to most predictions.

As long as people are still out of work, and still getting laid off, we are going to see more foreclosures and more short sales. Buyers pay what the neighborhood homes are selling for.

Meaning if that foreclosure down the street sold for much less than what they paid two years ago, that sale affects the value of your home as well.

Statistics are showing that notices of mortgage defaults are on the rise. Translation is the people who are three months or more late on their mortgage.

3. Historically Low Rates!
Rates are historically low floating around 5 percent for a 30-year FHA fixed rate loan, and they won’t last forever.

Many of the ‘old timers’ in the real estate business will tell horror stories of the day that they started, rates were double digits – P.S. it wasn’t that long ago! Can you imagine?

Once the demand in the market begins to pick up, guess what will happen to the rates? Banks make money on interest rates. There is already much talk that rates are too low now and should be raised.”

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Anthony Gonzalez blogs about the latest program from the Obama administration which sees it as a way to help speed up the process and prevent foreclosures.

 

“The government is trying everything they can to end the mortgage crisis and there is another new program they have devised in hopes of helping the 5 million plus homeowners behind on their mortgages coming in April.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

So far, President Obama’s $75 billion loan modification program has only helped a small amount of those 5 million plus homeowners.

The government acknowledges that more needs to be done and the efforts need to be aggressive. They do not want to see all these people lose their homes.

As of April 5th, homeowners will be encouraged to sell their homes by way of the short sale process. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

The government wants to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender.”

There are high hopes that this program will help end the logjam of homeowners currently trapped in loan modification limbo.

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Kay Kammeyer blogs about what you need to know when in comes to the short sale process.

“So, who approves the short sale? Normally it is the SMI. The SL only has authority to service the loan, which means deal with the borrowers.

For this, they receive a portion of the payment as their fees. The rest is passed on to the SMI who owns the note. However, all short sale proposals are required by contract to go through the SL.”

As with everything else, the more you know going into a certain process, such as entering into a short sale, the better off you will be.

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If you have an agent who is experienced with short sales, they will understand and help the buyers meet those requirements. Sometimes, great agents who just have not worked with short sales in the past may not understand the reasons or the process.

Kay Kammeyer blogs about the process of preparing a purchase contract during a short sale transaction.

“First, the buyer should add a statement: ‘Buyer understands and agrees that acceptance of this offer is subject to third party lender approval within 120 days.’

Why 120 days? Because short sales are taking that long to obtain approval very often. Sometimes even longer. Sometimes shorter. You must be prepared to wait and remain patient.”

When you understand what it is your agent is doing for you during a short sale transaction, you will feel more comfortable and confident, and hopefully more understanding of why the process can take so long.

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A “short” sale can actually take a long time to transpire. Are they truly the deal of the century, and are they better than foreclosures or standard sales?

 Doug Hill blogs about how to know whether or not a short sale is the right transaction for you.

“Buyers perceive short sales will be in better condition because they are sometimes still occupied by tenants and/or the owners, and sometimes still furnished and being maintained.

There’s something about a vacant, bank-owned, home that sends some home buyers, especially first-time home buyers, running for the hills.”

Short sales are here to stay for now, in fact, many real estate experts predict their numbers will rise this year. Are they the way to go for you?

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But they are also a complex and complicated transaction that requires some knowledge and research. As with any real estate transaction, make sure you are working with a skilled and professional REALTOR®.

In addition, Karen Schlosser blogs about what you need to be sure to ask of a listing agent should you find yourself interested in a short sale listing.

“Before embarking on viewing or purchasing a short sale listing, the listing agent should be asked questions to obtain as much information about the status of the short sale as possible.

The purpose of asking questions ahead of time is to help assess the status of the short sale and, hopefully, set realistic expectations of the prospective transaction.”

A short sale could be an opportunity to get a potential homeowner into a great property. And any listing agent will most likely be more than happy to supply you with any information about the property that you may need. The best buyer is an informed buyer. So know what questions to ask.

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What exactly are the differences between each situation? Each process is complicated and complex, and as always, your best bet is to get yourself situated with a trusted and experienced REALTOR®. It also helps if you understand, at least to a certain extent, the processes yourself.

Natascha Tello clears up the confusion and clearly defines short sales, foreclosures and REO.

“Short sales, in most circumstances, are the first step to avoid foreclosure. Although the lender(s) will recover less than the total loan amount in a short sale, they may prefer this in lieu of foreclosure. The costs of foreclosing on a property may be more than the bank’s loss by taking a short sale.

Also, the property may not sell at auction and then the bank would be forced to take it back as an REO (Real Estate Owned) property, which then they would have to maintain, list and sell themselves.”

Short sales, foreclosures and REO are all feasible options if a homeowner is unable to make their monthly mortgage payments. But before you jump in and decide which is the best option for you, be sure to talk to your Realtor. The same applies for potential homebuyers looking for a great deal. These options may just be the ticket for you.

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Does the previous owner of a short sale have any rights to the home after closing? My husband heard they have up to a year to reclaim. We are moving to Brevard County, FL.

-Kathy

The simple answer is “no.” Short Sale is a final sale that must have the bank’s approval in order to sell, i.e. the seller owes more than the home will sell for and does not have the money to pay the difference.

Hence, the bank must approve in order to make up the difference by either waiving the money owed, or in some rare cases, filing a “deficiency judgement” against the sellers. The second rarely happens and usually happens when investors are trying to walk away from their bad investments (even though they may have made hundreds of thousands in profits on previous ones).

I have seen many investors try to “lawyer up,” to avoid paying what they are due. But none of this has anything to do with the buyer. The buyer closing is final, and title is passed at closing. And in Brevard County, Florida, the bank will end up having to pay/forego the shortfall, which will include the majority of the closing cost. In Brevard County, the normal is that the seller/bank has to pay for title insurance and (assuming your buyer’s contracts are written correctly), the seller/bank will have to pay off all liens as well, so that a clear title is passed. If a lien appears after the closing, then that is what title insurance is for.

Dave Congdon is a Broker Associate Islands International Realty in the Brevard County, FL area.

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 Would it be possible to purchase a foreclosure or short-sale home and then rent out the remaining rooms to pay the mortgage?

-Jeanette

Buying a home as a short sale or foreclosure has no impact on your decision to live in or rent the property after the close of escrow, just like a regular private sale. What will affect your ability to rent, will be the type of loan you arrange with your lender (eg. Owner occupied or investor purchase) and the laws in your town or homeowner’s association agreement.

To clarify that last statement, check the zoning laws to make sure you can rent multiple rooms, and if you live in a condominium, make sure the HOA allows you to rent the unit and does not have restrictions on doing so.

Allan Glass is a real estate broker at ASG Real Estate Inc and a consultant in the Los Angeles market specializing in REO, foreclosures, and short sales. Over the past 17 years he has sold over $1 billion in commercial and residential real estate.

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So what’s going on here? Pete Goodman blogs about what many see as the “social experiment” of real estate.

“The government and big banks have performed and are still performing a social experiment on a grand scale with housing. They are busy taking care of each other while making the rules and seeing how consumers react.

If you put 10 cigarettes in a rat cage what do you think will happen? Odds are, the rat will take the bait and chew on a cigarette. The government and banks change the rules of the housing market in a similar way to see if we take the bait and do what is expected.”

The end result appears to be to assist in getting potential homebuyers into a home. However, we also know that the goal of bankers, lenders, the government, etc. is to make money, so we must be careful and take everything into consideration.

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