Here’s a step-by-step action plan to take in the event that your mortgage is about to start adjusting.
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Technorati tags: real estate investor, loss mitigation department, financial paperwork, going to extremes, affordable mortgage
I won’t pretend to know what it means, but I’m seeing pricing like it was 2006! And, that my friends, is what’s selling! If you price aggressively and not try to price for the most recent comparable data AND you are staged properly for marketing, the property sells! Right now what’s moving in the local Portland marketplace is priced less than the sparse and oft-times unusual comparable sales data. There is a real estate market out there and it is definitely buying & selling. The buyers are looking for a “deal” or a “steal” but will settle for a present-day market value if the location & condition is good. The sellers are still adjusting (and, rightfully so) to a new & different marketplace. This is very apparent in the condo & townhouse market, where the choices are many & the sellers are competing with new construction and developer/builders who must now offer incentives & builder added options to keep prices “appearing” to not go down within a project. If it’s any consolation, I’ve seen this cycle multiple times and we always “pull-out”. However, I’m sure that’s minor consolation to anyone caught in the “vortex” with a time-based need to sell right now. Just one gal’s opinion!
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| I now have an agent working with me who is familiar with “Short Sales” or “Foreclosure Avoidance”. |
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| To effectively work short sales, agents & sellers need to be familiar in three areas: |
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The subject property
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| The first step in working a short sale is to know something about the existing property being marketed. Does it qualify for a short sale? Most lenders will only allow short sales if certain circumstances exist. For example, will the subject property only bring a certain amount of money based on the local market area? Of course the value will need to be less than the current mortgage amount owed. To determine this, the lender will require a bare minimum of a Competitive Market Analysis (CMA) from the real estate professional. In many cases the lender may require a fully fledged appraisal; however you still need an agent to be familiar and competent on what the values are in your area. |
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The borrower
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| The Realtor (and, ultimately the lender) will need to know what are the circumstances and why is there a need to do a short sale? These questions and many more will need to be answered and submitted to the lender for consideration. Understand that most lenders will not allow a short sale to someone who has made poor decisions and is just looking for relief from their home loan. Generally there should be some crisis situation or extenuating circumstance that has put the borrower in a compromised financial state with his/her mortgage. |
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The existing lender(s)
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| Finally, you will have to find out if there is qualification for a short sale, and what documentation the lender will require to make this transaction possible. The Realtor and homeowner will have to find out if the lender will require a pay-back, or, if the short sale will go against the borrower’s credit report. Many lenders will have a checklist of the necessary items required to make a short sale possible. Don’t quit on one call, many times you’ll need to ask and ask until you find the right person who can authorize a short sale. |
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| In Closing |
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| A homeowner who might need a short sale should absolutely speak to legal counsel before proceeding with a short sale. That homeowner should consult with a tax attorney or CPA as a prudent step. Many short sales result in a 1099 being issued for the shortage the lender writes off on the transaction. Good advice from the proper channels in advance can save everyone future headaches and additional problems. |
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| Your Realtor should prepare a checklist of items that you should consider regarding a short sale. This will help to determine your eligibility. A little preparation in advance and valuable insight into new solutions for paying off a mortgage in a market where property values are down are the least you should expect from your Realtor. After all, no one wants to lose a home in foreclosure, and if the lender provides an alternative for relief to the seller, it might be an option to consider. |
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| Note that there are many more details and issues to explore and investigate prior to doing a short sale. This article is only a brief explanation of some of the issues and areas to consider regarding short sales. |
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Technorati tags: competitive market analysis, mortgage amount, mortgage market, current mortgage, real estate transaction
Is it always a good time to buy real estate? There is, of course, no absolute answer to this question as there are a million stories in the city! Real estate stats & numbers are useful, but don’t paint the personal picture that we individually may need. The particulars of any one person’s situation dictates the answer for the moment! The first question is: do you have to sell to buy? It is definitely more of a buyer’s market than we’ve seen in years. There is actually “negotiation” taking place in our local real estate market. And, the Portland real estate market, in general, has not been hurt like some other markets. But, don’t try to convince someone who is trying to sell a condo, for instance, of that fact. As with a lot of life processes, it’s all about timing. We can’t rely on general statements about the market without knowing the personal details of the individual’s situation. It might be a good time to sell & buy, but it depends. For instance, if you purchased a condo in the last couple of years you most likely do not have enough equity built into your home to be thinking of trying to trade in this market if you don’t have to sell. The condo & townhouse market is stuggling presently. Not to worry, the condo market will rejuvenate with time and the right opportunity will surface! However, if you’ve owned your condo for a while and you can price for the 2008 market, not 2005, then you’re golden. Detached housing needs to be priced competitively, staged properly and positioned in the marketplace to be perceived, at the very least, as a deal! Having owned the home long enough to have acquired some equity definitely allows the seller to “price to sell”! If you are an investor, there are some “steals” and “deals” out there. If you are a first-time buyer, this is YOUR market! In my opinion, this is one component that our present market adjustment is all about. We needed to get the first-time buyer back into marketplace thru affordability and inventory to start the tiered progression of real estate sales!
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Should I keep renting or is it time to buy?
With every rent check you write, you’re helping to build equity in your landlord’s property. You are paying off their loan. That money should be going towards building equity in a home of your own. If you think you can’t afford a home right now, think again. Today’s rates are low enough that your house payment could be as low as your rent payment! There are many advantages to owning a home, including:
INVESTMENT- Payments on your mortgage loan mean you are acquiring a major possession; instead of rent, you own more and more. With many homes in the Portland area appreciating around $2000-$3000 per month, the equity you gain in one year is skyrocketing. The garden you plant, the permanent improvements you make - all enhance your way of living as well as the value of your home.
CASH EQUITY- Better than a savings account, your home can appreciate to keep pace with inflation. Over time, history has shown that owning a home is one of the very best financial investments.
TAX ADVANTAGES - Your real estate taxes and the interest on your mortgage are deductible from your income tax. The government is basically subsidizing your purchase of a home. All of the interest and property taxes you pay in a given year can be deducted from your gross income to reduce your taxable income.
FINANCIAL INDEPENDENCE - Most people start on the road to financial independence through home ownership. Your principal and interest payments can remain the same for the full term of your mortgage while your rent usually goes up as the cost of living increases. Imagine how much rent might be ten, fifteen, or even thirty years from now? How much of your home would of been paid off if you decided to buy. Which makes more sense?
SECURITY - A feeling of security that comes from owning a home and the knowledge that your home is a safeguard against inflation.
ENVIRONMENT - You get to choose the area, schools, safeness of your community. Your children grow up in the neighborhood of your choice.
SATISFACTION - Home ownership offers special advantages that make life more enjoyable - backyard barbecues, large family gatherings during holidays, a home workshop, a chance to enjoy your family’s companionship in the privacy of your own home. Renting, You have to get permission to make certain types of improvements. Nor does it make sense to spend thousand of dollars painting, putting in carpet, tile or window coverings when the main person who benefits is the landlord and not you.
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Janeese Jackson
Bill Norris
