The Time is Now: Move Up to your Dream Home! Part I of a II Part Series

February 22nd, 2010

With all the negative news about real estate today, many people have lost sight of a very important fact:  It is a great time for homeowners to sell and move up to their next home!

While this may sound counter-intuitive, a number of factors contribute to making this an opportune time to move up.

First, there is the current market to consider.  In many communities the numbers of homes on the market are very limited.  In fact, real estate professionals report a need for more homes to sell since there are multiple offers on many properties.  This is particularly true in moderately-priced neighborhoods.  A seller is in the best position to sell at the best price and terms when many buyers are in the market to buy.  With the extension of the first-time homebuyer tax credit and with interest rates remaining low, many sellers are able to choose from numerous well-qualified buyers who are bidding on their homes.

Home Buyer Tax Credit

While not designed to be tax advice, basically the new homebuyer tax credit allows for new homeowners (anyone who have not owned a residence in the last three (3) years) to be eligible for up to $8000 in a tax credit.  The actual amount is dependent on a number of factors, but this program is one factor that has the buyer market buzzing.  That is good news for sellers!

Secondly, there is the move-up neighborhood to consider.  Sellers of larger homes or homes in higher-priced neighborhoods report that their homes are remaining on the market longer than they would like with fewer buyers so this allows buyers in the move-up market to negotiate the best possible price and terms.  Buyers are in the best possible negotiating position when sellers have few or no offers to consider.

Finally, the savings on these homes is increased with a tax credit aimed at current homeowners!

Current Home Owner Tax Credit

Current Homeowners may be eligible for up to a $6500 tax credit when they sell their current home and purchase a new one as long as they meet eligibility requirements.

Clearly, today’s sellers of moderately-priced homes are in a great position as a seller and also a great position as a buyer of higher-priced housing.

We will share more information about why this is a good time to buy in Part II of the Move Up Market series. To read the full series now, go to www.SDViewOnline.com and click on the News tab.

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More on the Move-Up Market – Part II

February 22nd, 2010

Coldwell Banker realizes that in any market, people sometimes have a need to move.  Perhaps they have a child beginning school or a new addition to the family and more space is needed.  Whatever the reason, many sellers have equity in their homes and can take advantage of the current homeowner tax credit and excellent interest rates to get in a larger home or a home in a preferred school district.

Seller Questions:

Question: Won’t I be selling my home for less than it was once worth?

Answer: Yes, that is possible.  However that worth was on paper and the same percentage decrease in your current’s home value applies to your new, larger home, too.

Example:

The Problem:

John and Mary Jones purchased their home for $200,000 in the last “hot” market.  Now they want to buy a larger home, but the market has depreciated by 15%.  John and Mary do not feel that they will be able to sell their $200,000 home without taking a loss and still be able to purchase the $400,000 home they now want.  CAN THEY AFFORD TO MOVE UP?

The Solution:

$200,0000                                         
- 30,000 (15%)
$170,000

$400,000
 -60,000 (15%)
$340,000

$60,000 savings on the purchase of their new home
-$30,000 loss on the sale of their old home

$30,000 gained !

The Joneses CAN AFFORD to move up!

When exploring this possibility, it helps to work with a professional REALTOR® who can assess the real value of you home in today’s market and can offer suggestions about the most attractive move-up markets.

Coldwell Banker agents are trained to help sellers look at both sides of their prospective transactions.

The tax credits are limited to a deadline of April, 2010, but the move-up market will be an excellent idea for many months to come.  Call today to locate an agent who can help you look at all your options.

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Buying and Selling Distressed Properties - Part I

November 17th, 2009

In a depreciating market like the one we have experienced in the last few years, both unhappiness and opportunity sit side-by-side.  For sellers, and even buyers, of distressed properties, emotions run high and understanding the process is a good way of reducing the stress and emotion of the market.

The most common types of distressed sales are foreclosures and short sales.  What is the difference?

Foreclosures are often referred to as REO’s, an acronym for the technical term, Real Estate Owned.  These properties have been sold or taken back at the foreclosure sale because of the previous owners’ default on the loan(s).  A short sale, on the other hand, occurs when a homeowner wants to liquidate the property but the debt against the property exceeds the anticipated sales price.

With a foreclosure, the seller is the bank or lender; with a short sale the seller is the homeowner but the lender has to approve the price and terms of the sale.

In a series of articles in the View, we will explore the pros and cons for sellers and buyers of each type of sale.  To read the full series now, go to www.SDViewOnline.com and click on the News tab.

For sellers who want to sell but find themselves over-encumbered on their property, it is important to consider a number of things prior to making a final decision to pursue a short sale.

To begin with a short sale can take up to six (6) months or longer once the lender receives a fully- negotiated signed offer from both the buyer and the seller.  The process frequently moves slowly.  Currently, a number of lenders are re-vamping their systems to streamline this process, but it is also important to have a real estate professional who understands the process on your team.

Also, homeowners should be aware of their options before considering a short sale.  Other alternatives include loan modification, refinance, offering a deed in lieu of foreclosure, foreclosure, and bankruptcy.  Non-profit counselors are available to advise homeowners on the advantages and disadvantages of each of these options.  A directory of approved counselors may be obtained at www.hud.gov.

If, after considering all the options, sellers choose the short sale option, understanding the process is most helpful.  We will explore that in Part II of our series.

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Buying and Selling Distressed Properties - Part II

November 17th, 2009

For sellers who have considered their options and are choosing to pursue a short sale, many questions remain.

Why would a lender agree to a short sale?

Many factors affect a lender’s decision to agree to a short sale.  Foreclosures take time and are rather expensive.  A short sale on a property may make better business sense to a lender.  Also, federal and state governments have been urging a reduction in foreclosures which makes short sales a preferred alternative in some instances.  Remember, short sales are not automatic and are decided upon on a case-by-case basis.

One thing is for sure.  If a foreclosure has already occurred on a property, a short sale is no longer an option.

Once a seller decides on a short sale, engaging the right professionals is the next step.  Sellers should locate real estate professionals who have training and a track record with short sales.  As with any professional relationship, sellers should beware of those who offer to take control and easily get them through the process.  It is complicated and takes time and expertise to succeed at short sale transactions.

Sellers may also need to consult with an attorney or tax professional at various times during the negotiation and before the final agreement with the lender.  Realtors® are not accountants or attorneys.

Finally, sellers need to prepare to disclose their whole financial picture to their real estate professionals and to their lender(s).  They will be providing a hardship letter in some instances as well as financial documents, pay stubs, tax returns if self-employed and any relevant details regarding their current financial situation.

What if there is a second mortgage or home equity line against the property?

Shorts sales are still possible.  The second lien holder should be notified at the same time as the principal lien holder because all lien holders will be involved in the negotiation and will require the same information from the seller.  It makes sense to work with all of them together at the same time.  If there is mortgage insurance on the property, they, too, will need to be notified. A well-trained, experienced Coldwell Banker agent can help organize all these details.

Read the full series at www.SDViewOnline.com right now.

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Buying and Selling Distressed Properties - Part III

November 17th, 2009

Distressed properties can provide buyers with amazing opportunities to own homes that were once out of their reach.  However, many buyers are finding these transactions frustrating.

What should you, as a buyer, know about foreclosures and short sales?

Foreclosures are often referred to as REO’s, an acronym for the technical term Real Estate Owned.  These properties are now owned by the bank or lender who foreclosed.  A short sale occurs when a seller liquidates a property for less than is owed on the property and the bank or lender approves a sale short of the total amount owed.

REO’s often provide for quicker escrows, but some lenders are now asking for cash-only buyers which limits a buyer’s ability to compete with investors and groups of investors who are buying many foreclosed homes presently.  Since most buyers need financing to purchase a home, foreclosures might not be the best option for them.

In short sales, the homeowner still determines price and terms and approves offers, but the lender(s) have final approval authority over price, terms and conditions.  There are many items to negotiate and this can take up to six (6) months or longer in some cases.  Being a successful buyer on a short sale takes patience and a trained, knowledgeable real estate professional.    While there are no standards throughout the banking industry for negotiating these offers, some lenders are currently working on streamlining the process to shorten the time required for answering a buyer’s offer.

Also, buyers should be prepared to provide proof of down payment and credit worthiness at the time the offer is submitted.  If possible, it helps to be flexible with closing dates since lenders often favor quick closes after the short sale is approved.

How can you find a qualified real estate professional?

You may have a close friend or relative in real estate, but if that person does not know anything about short sales, working with him or her may hurt your chances of a successful closing.  Choose your representative carefully.  A qualified Realtor® will be able to show you short sale listings, help negotiate the purchase when you find the right property, and ensure smooth communications with the seller’s representative.  Not every short sale request is approved by the lender.  Working with a knowledgeable professional familiar with the process and possessing the necessary tools to properly package and present your offer will increase your chances of success.  Be sure your Realtor® uses the standard forms approved by the State Realtor® Trade Organization.

Read the full series at www.SDViewOnline.com right now.

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Buying and Selling Distressed Properties, Part IV

November 17th, 2009

Many buyers have had negative experiences trying to buy short sales.  Some lending institutions are working on streamlined systems which could help them make quicker decisions.

Once a buyer has researched and chosen a real estate professional who has training and experience with short sales, arranged financing and executed a purchase agreement on a house he or she wants, what happens?

The offer is presented to the homeowner as in any other transaction.  The price and terms are subject to full negotiation by buyer and seller before being submitted to the short sale lender(s).  Even after agreement is reached with the homeowner, the seller’s lenders (or lenders, if there is more than one mortgage) must approve the sale before anyone can close the transaction.  In some cases the lender will offer a conditional approval, meaning that either buyer or seller will have to modify the offer and terms in order to offset the loss to the lender.  While neither buyer nor seller is obligated to agree to modifications, the lender’s approval may be linked to agreement to acquiesce to their demands.

If the approval is conditioned on the seller retaining liability for part of the loan or the need for additional cash contributions, the seller may refuse to proceed with the short sale at that time.

Also, buyers may ask for repairs or a credit on a short sale transaction, but it is not likely that a lender will approve these items.  Lenders are absorbing significant losses as well as clearing other debt and costs of sale on these transactions and they may not be inclined to agree to requests for repairs or credits.

The best offer a buyer can submit is one with the fewest conditions for a lender to consider, but all transactions are different so buyers should ask for what they want.

Before writing an offer, is there a way to find out more about the property?

It is a good idea to review a property profile (tax assessor records) with a Realtor® before writing the offer to purchase.  By doing so a buyer will gain a clearer understanding of the number and amount of all loans currently attached to the property.  Buyers will not be in a position to find out about other seller indebtedness not attached to the property.

Final Words

While there are risks associated with a short sale, buyers with patience, time and perseverance can take advantage of a home-purchase opportunity unlike anything seen in the marketplace in years.

If you missed any part of this series, go to www.SDViewOnline.com and click on the News tab.

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Welcome to San Diego and Temecula Valley View Online!

August 18th, 2009

Welcome to San Diego and Temecula Valley View Online!

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