Real Estate News

Great news for this seller in Apple Valley. Final approval on the short sale! Congrats to this seller on the timeliness and accuracy on the list of paperwork needed by the banks. It can be done! For anyone considering buying a short sale, remember to ask good questions to make sure the listing agent has certifications and is experienced in these types of transactions. It helps on your side as the buyer to have better knowledge about what you are getting into. A synopsis of what a short sale consists of:
A Short Sale….
A process that is confusing to a lot of people….still. Buyers are confused, their agents could be confused and hopefully the listing agent is not confused.
A requirement for the Bank to start a short sale is a hardship. This can be one or some of the following:

• Reduced income/Unemployment
• Death of primary or subordinate
• Job transfer
• Bankruptcy
• Divorce
• Medical reasons leading to hardship

An example of the typical paperwork (short sale package), which can be lengthy and differ from institution to institution is:

• Letter of authorization, allowing your agent speak to the bank
• Seller’s hardship letter (written by the seller)
• HUD-1 or preliminary net loss sheet
• Completed financial statement(s)
• 2 years of tax returns
• 2 years of W-2s
• Recent payroll stubs
• Most recent bank statements (2 months)

After the seller accepts an offer, the listing agent will send the following items to the bank:

• Listing paperwork
• Executed purchase agreement and all related addendums
• Buyers purchasing qualifications and copy of earnest money check
• Previously mentioned short sale package

If the package is incomplete, the short sale process will be delayed. In this event, the bank might even shred the package.
The real process begins…..

 
It is at this time the buyers get anxious and ask their agent to call every day and demand an update and timeframe. This does not work, because as of now, you are working with a call taker who is simply updating the file in a computer. Subsequently, during the entire process it is the “call taker” that usually is the one you get any and all updates from. But ask thorough questions of the status! It is however critical, that once the offer is submitted, the listing agent is very prompt and consistent in follow up with both the buyers and the bank, as well as the seller if anything extra or new(which happens) is needed during the process.
What are we waiting for……?

• Completion and acceptance of ALL the correct paperwork
• The BPO
• Attorney approval
• Investor approval (true, a lot of banks don’t own your mortgage)
• Mortgage insurance company approval (likely applicable)
• Additional Bank generated paperwork (arms length affidavit…)
• Negotiator approval
• Extend and do some of this more than once for additional liens….

The least I have experienced this to all happen was 60 BUSINESS DAYS. Speaking with Bank representatives, the most common reason for delays is incomplete paperwork and timeliness in getting it complete and correct, back to the Bank.
NOW, remember the buyers still might have to perform the inspection. The lenders likely haven’t gone through complete underwriting because of the undetermined schedule. So we now begin the process to get to closing much like a traditional sale.
If you made it this far, GREAT! Now, just hope your buyer and buyer’s agent avoided the remorse and anxiety and still want the house! Glass half full…knowing what you are getting into, both as a buyer and seller, and having communication during the process will significantly improve the likelihood of success.

Home Owners Recoup More with Exterior Replacement Projects, REALTORS® Report

As part of the 2010-11Remodeling Cost vs. Value Report, REALTORS® recently rated exterior replacement projects among the most cost-effective home improvement projects, demonstrating that curb appeal remains one of the most important aspects of a home at resale time.

“This year’s Remodeling Cost vs. Value Report highlights the importance of exterior projects, which not only provide the most value, but also are among the least expensive improvements for a home,” said National Association of REALTORS® President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “Since resale value can vary by region, it’s smart for home owners to work with a REALTOR® through the remodeling and improvement process; they can provide insight into projects in their neighborhoods that will recoup the most when the owners are ready to sell.”
Nine of the top 10 most cost-effective projects nationally in terms of value recouped are exterior replacement projects. The steel entry door replacement remained the project that returned the most money, with an estimated 102.1 percent of cost recouped upon resale; it is also the only project in this year’s report that is expected to return more than the cost. The midrange garage door replacement, a new addition to the report this year, is expected to recoup 83.9 percent of costs. Both projects are small investments that cost little more than $1,200 each, on average. REALTORS® identified these two replacements as projects that can significantly improve a home’s curb appeal.
“Curb appeal remains king – it’s the first thing potential buyers notice when looking for a home, and it also demonstrates pride of ownership,” said Phipps.

http://www.realtor.org/press_room/news_releases/2010/12/home_owners_recoup

In showing some homes in Lakeville, MN, some clients pointed out something to me. They hadn’t seen any for sale by owner signs lately. In doing a little research, I found that homes sold without the help of a real estate professional dropped to a record low over the past year. According the the 2010 NAR Profile of Home Buyers and Sellers, unrepresented sellers made up only 11 percent of the market, down from 2009. Considering most for sale by owners sell to someone they already know, the actual number of homes sold on the open market without professional assistance was a record low 5 percent. This current market can bring some challenges especially when purchasing foreclosed property or trying to sell your home as a short sale. If you’re in Lakeville, MN or in any of the surrounding suburbs and considering for sale by owner, consider interviewing a Realtor about the complexities and obstacles you might encounter and how a professional might help you overcome those challenges.

REALTOR® Magazine-Daily News-Voters Say: Don’t Mess With the MID.

Outside the voting area at Hosanna Church in Lakeville, MN I was having a conversation with someone about 1^st time buyers, investors and the interest rates.  Most indicators and industry professionals point to the rates not being this low for too much longer and predict them to go higher in 2011. This person is looking at purchasing to rent out the home versus living in it, but in either case, investing or buying as a principle residence, short sales or foreclosures, home prices and interest rates make this a great window of time to buy.

As the mercury inches downward outside, grab your favorite hot beverage and let’s review the buyers and sellers weekly dance card. Bear in mind that current activity may look especially slow compared to last year’s tax-credit-induced performance.

For the week ending October 9, sellers continued to pick up their tempo by introducing 1,479 new listings to the marketplace. That’s only 4.1 percent fewer new homes than last year at this time, as the year-over-year comparison gap continues to narrow. Buyers danced to a slower beat. The 523 pending sales for the week were 44.8 percent fewer than last year. That’s the largest decline in 13 weeks.

With seller activity slowly returning and buyer activity remaining sluggish, inventory levels are still high. There were 26,866 active listings as of October 18. Keep a close watch on this metric, as it emphasizes the dynamic balance between supply and demand—the most critical forces affecting the market.

There is some good news in the mix. At 220, housing affordability is at an all-time high. The availability of low cost homes combined with low interest rates have created an extraordinary buying opportunity

While a lot of this information is personal experience mixed with some documented fact, it unfortunately cannot be held as 100% gospel as the rules seem to be ever changing and sometimes foggy from the beginning. I have been hearing a lot of people discuss with strong opinion that you can get a better deal on a short sale. In fact, a lot of banks are pricing foreclosure listings so competitively they are getting multiple offers. Also, with a short sale, you are never guaranteed that the sale will actually ever happen, depending on if if some screening was done prior to the property being listed. Short Sales do take much longer between offer, final acceptance, and closing, but you likely will get some more disclosure on the property and in some cases are receiving a home that was still being very well cared for. Some foreclosure transactions are very heavy with bank addendums indemnifying them from just about everything you can imagine in the conveyance of the property to you. Obviously, it is best to handle your potential purchase on a house by house basis with your agents and sometimes attorneys help.

As long as you know the rules of the game when buying or selling shorts sales, you’ve fought half the battle. I was talking with a client looking for short sales in Lakeville, MN around the area by Hosanna Church in Lakeville, MN. While still at times a great price bargain, I explained there are other important things to consider when purchasing a home listed as a short sale, such as offer time, disclosures, personal property, counteroffers, and bank negotiations. A lot of the process is still negotiable despite requiring lender approval.

Most buyers purchasing with FHA loans are doing so needing seller concessions to avoid depleting all of their savings. FHA currently allows seller concessions up to 6 percent. They are proposing a rule which would reduce the seller concessions to a maximum of 3 percent. In some states, (read OURS) closing costs are often hight than 3 percent. NAR (National Assoc. of Realtors) President Vicki Cox Golder said a reduction in permitted seller concessions will have a detrimental effect on the recovery of the real estate industry and make it more difficult for buyers to purchase a home. In a letter dated 8/16/2010, sent to FHA Commissioner David H. Stevens, NAR comments on the “Federal Housing Administration Risk Management Initiatives: Reduction of Seller Concessions and New Loan-to-Value and Credit Score Requirements” Federal Register Notice.

NAR also calls on FHA to lower the proposed the credit floor exemption for all FHA-insured borrowers seeking to refinance and to ensure that borrowers with nontraditional credit scores are not unduly burdened manual underwriting. FHA proposes a temporary exemption for refinances that involve a reduction of existing mortgage indebtedness but this excludes borrowers with a credit score below 500. Many borrowers have had credit scores above 500 when they purchased their homes but now have lower credit scores and they may still be good candidates for a refinance. Lastly, FHA proposes manual underwriting requirements for borrowers with nontraditional credit histories. NAR believes that the Technology Open to Approved Lenders (TOTAL) scorecard was created to consider unique factors presented by borrowers with nontraditional credit histories

FHA LAUNCHES SHORT REFI OPPORTUNITY FOR UNDERWATER HOMEOWNERS

Effort designed to encourage principal write-downs for responsible borrowers

WASHINGTON – In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today provided details on the adjustment to its refinance program which was announced earlier this year that will enable lenders to provide additional refinancing options to homeowners who owe more than their home is worth. Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.

http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-173