Everyone is whispering about "short sales."
What are they? Let me explain.
In my opinion, a short sale is an offering of a property below the amount owed on the mortgage.
For example, a listing down the street comes on the market for $300,000. The tax rolls may indicate that the owner paid $500,000 for this home in 2005. Let's assume that the bank's mortgage on the property is $400,000.
Is this a great deal? Can you purchase this property for $300,000 or less?
Many properties are going on the market and are advertised as a short sale when the lender has not agreed to take less than the full mortgage amount.
This short sale will not go anywhere without communication and agreement from the lender to accept a payoff for less than the actual mortgage amount that is due.
If you make an offer on this type of property, you may wait a long time for it to be presented to the lender, only to learn the lender will not accept an offer less than full payoff.
Your contract for sale and purchase may be signed by the seller, but it will require approval by the lender.
Be cautious and do not waste your time if the lender has not communicated and agreed to take less than the amount owed on the mortgage.
A typical lender is not going to agree to a short sale if the seller has adequate income, is not behind on payments and has equity in other properties and assets.
If the lender is involved and communicating with the seller and the listing agent, then go for it.
You might get a great deal, but be patient. This process can take months.
If the lender now owns the property because the seller did not make payments, and the lender took over the property through the foreclosure process, this property is now offered for sale by the lender.
Do your homework and make sure the price is right for a good value.
Make sure that you, the buyer, have a pre-qualification letter from your lender and have your agent write the offer.
Sellers who bought their homes long before 2005 typically have considerable equity and can offer a hot deal if they are motivated to sell.
Do not limit your looking to just short sales and foreclosures because hot deals are here.
Study the market value using comparable listings and sales in the neighborhood in which you are looking to purchase.
When you see a property offered for less than others, check it out. This could be the beginning of a great deal.
Be wise, work smart, and you will get the best value on your purchase
Sunday, June 29, 2008
Sunday, June 22, 2008
Choice of agent and price is crucial.
Pricing your home correctly is one key to selling in today's market.
Start determining your home's value by calling two or three full-time agents for a market analysis.
Make sure to give each agent time to do this, and understand that if the agent is busy showing and selling, this is a good sign.
You may have an agent who has done well for you in the past.
Have confidence that he will work hard for you again. A good agent should provide you with the following:
--- Recently sold properties that are similar to your house.
--- Active listings that will compete with you once you place your home on the market.
--- A list of comparable houses that are under contract.
--- The number of active listings that are in your price range.
--- A complete marketing plan.
--- A personal resume showing the agent's sales volume and the organization to which this agent belongs.
Review similar sales and listings carefully. Do not choose an agent just because their analysis gives you a higher value. Market value is an opinion and is reviewed from the eyes of a buyer and not a motivated seller.
Motivated sellers must guard against overpricing in this market.
Another key to selling is signage.
In a buyer's market like this, a choice to forego a sign is a choice to limit your property's exposure on the market.
About 80 percent of buyers begin with the Internet and then choose to drive through neighborhoods after their search. Making your home easy to find is critical.
Sometimes these prospective buyers are searching for location and are sampling the surroundings even before they personally view a home they might be interested in.
Therefore, a sign is key, along with Internet marketing.
Relocation departments that bring in corporate employees from other cities vary from agency to agency, but such services can be a real boost to your chances of selling if your home is priced to sell.
Perseverance and patience is needed by all sellers.
The market continues to be active but still saturated with an oversupply.
Start determining your home's value by calling two or three full-time agents for a market analysis.
Make sure to give each agent time to do this, and understand that if the agent is busy showing and selling, this is a good sign.
You may have an agent who has done well for you in the past.
Have confidence that he will work hard for you again. A good agent should provide you with the following:
--- Recently sold properties that are similar to your house.
--- Active listings that will compete with you once you place your home on the market.
--- A list of comparable houses that are under contract.
--- The number of active listings that are in your price range.
--- A complete marketing plan.
--- A personal resume showing the agent's sales volume and the organization to which this agent belongs.
Review similar sales and listings carefully. Do not choose an agent just because their analysis gives you a higher value. Market value is an opinion and is reviewed from the eyes of a buyer and not a motivated seller.
Motivated sellers must guard against overpricing in this market.
Another key to selling is signage.
In a buyer's market like this, a choice to forego a sign is a choice to limit your property's exposure on the market.
About 80 percent of buyers begin with the Internet and then choose to drive through neighborhoods after their search. Making your home easy to find is critical.
Sometimes these prospective buyers are searching for location and are sampling the surroundings even before they personally view a home they might be interested in.
Therefore, a sign is key, along with Internet marketing.
Relocation departments that bring in corporate employees from other cities vary from agency to agency, but such services can be a real boost to your chances of selling if your home is priced to sell.
Perseverance and patience is needed by all sellers.
The market continues to be active but still saturated with an oversupply.
Sunday, June 15, 2008
Buy low, sell low a winning outcome.
How does one get out of a home if you are "upside down?"
So you purchased a home in 2005 for $400,000 and now this home is barely worth $300,000.
There are several conditions that weigh heavily in the decision to sell if you are upside down.
--- How much of a mortgage do you have on this property?
--- Are you moving up? Do you want to buy a larger home for a higher price?
--- Do you want to move down? Do you want a smaller home at a lower price?
If you have little or no mortgage and you want to buy a more expensive home or a less expensive home, then go -- you will sell low and you will buy low. You are the winner in today's home market. Go buy this new home.
If you have a mortgage that is small enough to enable you to sell, pay closing costs from the proceeds and put 20 percent down on your next home, you are golden. All signals are a go.
For example, if your home is worth only $300,000 and your mortgage balance is in the range of $200,000, you can pay closing costs, and walk away with some cash.
Before you even think of selling, please go to your mortgage lender and make sure you can secure a loan for the home you wish to purchase if you sell low.
If you want to purchase a home valued in today's market for $500,000, you may have to come up with 20 percent down or $100,000 in order to purchase. Sellers, in today's market, will often be willing to pay your closing costs if you purchase their home.
If you do not have money in savings or an IRA that you can borrow from, be cautious about selling.
If you buy low after selling low, then you are doing great. The values are out there in this market.
Do not take the position that you are losing money because you are indeed making this loss up on the buy side. This is either a lateral move, one that keeps you with the same equity, or it is a win for you as the higher-priced home may begin to increase in the future and you will gain more equity.
If you have a home that is overmortgaged, that is, you owe more on your mortgage than what your home is worth, be sure you can sell or move. You may be the one who has to accept where you are and just stay and enjoy your home.
Long term will prove to be OK for you, in my opinion.
But sometimes long term is longer than you want to stay in the home. That is when you have to get creative in finding funds to pay off your home.
Have you an investment that you can liquidate and accomplish your goals? A good financial planner can assist you in this decision.
So you purchased a home in 2005 for $400,000 and now this home is barely worth $300,000.
There are several conditions that weigh heavily in the decision to sell if you are upside down.
--- How much of a mortgage do you have on this property?
--- Are you moving up? Do you want to buy a larger home for a higher price?
--- Do you want to move down? Do you want a smaller home at a lower price?
If you have little or no mortgage and you want to buy a more expensive home or a less expensive home, then go -- you will sell low and you will buy low. You are the winner in today's home market. Go buy this new home.
If you have a mortgage that is small enough to enable you to sell, pay closing costs from the proceeds and put 20 percent down on your next home, you are golden. All signals are a go.
For example, if your home is worth only $300,000 and your mortgage balance is in the range of $200,000, you can pay closing costs, and walk away with some cash.
Before you even think of selling, please go to your mortgage lender and make sure you can secure a loan for the home you wish to purchase if you sell low.
If you want to purchase a home valued in today's market for $500,000, you may have to come up with 20 percent down or $100,000 in order to purchase. Sellers, in today's market, will often be willing to pay your closing costs if you purchase their home.
If you do not have money in savings or an IRA that you can borrow from, be cautious about selling.
If you buy low after selling low, then you are doing great. The values are out there in this market.
Do not take the position that you are losing money because you are indeed making this loss up on the buy side. This is either a lateral move, one that keeps you with the same equity, or it is a win for you as the higher-priced home may begin to increase in the future and you will gain more equity.
If you have a home that is overmortgaged, that is, you owe more on your mortgage than what your home is worth, be sure you can sell or move. You may be the one who has to accept where you are and just stay and enjoy your home.
Long term will prove to be OK for you, in my opinion.
But sometimes long term is longer than you want to stay in the home. That is when you have to get creative in finding funds to pay off your home.
Have you an investment that you can liquidate and accomplish your goals? A good financial planner can assist you in this decision.
Sunday, June 8, 2008
Building equity the right way
Equity is the value of your property, minus your mortgage. This should be an important part of your net worth.
I have always advised my adult children that when they sell a home, take all of the proceeds of the sale and put it all down on your next home.
Yes, we all are tempted buy that new TV and great sofa and then maybe a down payment on a new car with the cash before we put that equity down on another house.
Bad idea.
All of the preceding items: TV, sofa, car, depreciate rapidly. But your home should, if you have selected the greatest location and are in for the long haul, build equity over time and appreciate in value.
This is the safe way to buy.
I am not sure I would advise an equity line of credit for property improvements unless an equity line is the only way you can improve your property.
Taking funds each month from your own paycheck and gradually improving your home, paying for these improvements as you go, is a method of forced savings and building equity.
Taking any money you may get on a tax refund and placing this down on the principle balance of your mortgage is a method of paying off your home earlier than expected. Your home equity will build rapidly if you make this part of your normal financial plans.
What are the improvements that add to the value of your home?
One of the most important improvements is landscaping.
Enhancing the exterior appeal of your home entices people to want to look at your property.
Even if your home is not for sale, you and your neighbors will enjoy the look of a beautifully landscaped home.
Fruit-bearing trees are often a wise move, because freshly squeezed orange juice is something Northern buyers and visitors will love.
In most areas of Florida, a pool adds value to your home.
It does not always add the full cost of the pool, but you can enjoy that pool and know that buyers for Florida real estate, will typically, pay more for a pool home.
Normal maintenance is an absolute must for building and holding equity.
Homes depreciate rapidly if they are not cared for in every way.
Pest control and routine termite inspections are critical to safeguarding the integrity of your property.
Painting inside and outside, routine air conditioning servicing, maintenance of irrigation systems, and overall care of your home, is most important. Maintenance is the way to safeguard unnecessary depreciation.
Last but not least, if your earnings climb each year, those home-sale proceeds really help you move into a more expensive home and keep moving up.
Your equity will increase and your dream home will be a reality.
I have always advised my adult children that when they sell a home, take all of the proceeds of the sale and put it all down on your next home.
Yes, we all are tempted buy that new TV and great sofa and then maybe a down payment on a new car with the cash before we put that equity down on another house.
Bad idea.
All of the preceding items: TV, sofa, car, depreciate rapidly. But your home should, if you have selected the greatest location and are in for the long haul, build equity over time and appreciate in value.
This is the safe way to buy.
I am not sure I would advise an equity line of credit for property improvements unless an equity line is the only way you can improve your property.
Taking funds each month from your own paycheck and gradually improving your home, paying for these improvements as you go, is a method of forced savings and building equity.
Taking any money you may get on a tax refund and placing this down on the principle balance of your mortgage is a method of paying off your home earlier than expected. Your home equity will build rapidly if you make this part of your normal financial plans.
What are the improvements that add to the value of your home?
One of the most important improvements is landscaping.
Enhancing the exterior appeal of your home entices people to want to look at your property.
Even if your home is not for sale, you and your neighbors will enjoy the look of a beautifully landscaped home.
Fruit-bearing trees are often a wise move, because freshly squeezed orange juice is something Northern buyers and visitors will love.
In most areas of Florida, a pool adds value to your home.
It does not always add the full cost of the pool, but you can enjoy that pool and know that buyers for Florida real estate, will typically, pay more for a pool home.
Normal maintenance is an absolute must for building and holding equity.
Homes depreciate rapidly if they are not cared for in every way.
Pest control and routine termite inspections are critical to safeguarding the integrity of your property.
Painting inside and outside, routine air conditioning servicing, maintenance of irrigation systems, and overall care of your home, is most important. Maintenance is the way to safeguard unnecessary depreciation.
Last but not least, if your earnings climb each year, those home-sale proceeds really help you move into a more expensive home and keep moving up.
Your equity will increase and your dream home will be a reality.
Sunday, June 1, 2008
Learn lessons from '05
The government rewards us for being homeowners.
And why not?
We are investing in the American dream, which for many people includes homeownership. The government allows us to write off our mortgage interest and taxes on our federal tax returns.
In addition, if we own investment property, we can depreciate this property over time.
What a way to go.
Make your plans and take your time to think of your future. Real estate is not a get-rich-quick scheme. It is a long-term, deliberate choice to buy, enjoy and build equity.
The mistakes of 2005 tell us over and over again that we are not in the kind of market to buy and "flip" or sell quickly and make a profit. Those times are gone.
However, 2005 has taught us the following:
--- Be careful in looking for mortgages. Make sure you find the best interest rates and the lowest closing costs.
Make sure you understand the consequences of possible pre-payment penalties or changes in the interest rate that could negatively affect you.
Do not be afraid to ask questions and talk to several lenders.
Understanding closing costs isn't always easy, so ask about "typical costs," "mandatory costs" (like taxes) and "garbage fees" (unnecessary lender charges).
Most important, do not go for the mortgage you can just afford, but be conservative and go for the amount of mortgage payment that you are comfortable with.
--- Be careful in looking for homes. Do not view more than five homes in one day.
A trained Realtor can keep up with the numerous combinations, but most people start losing track after three -- remembering such basics as location, floor plan, colors and particular features of the home.
The most important part of purchasing a home is the location. It should be convenient to work, schools and shopping.
Rank the homes that you see and eliminate the ones that do not work for you.
Think and be critical about the homes you have viewed, but remember that many features, such as paint color, landscaping, carpet and flooring, can be changed.
Location, floor plans and neighborhoods cannot. These are most important.
--- Know about the sales contract that you will sign and make sure this contract is contingent on any inspections of the home being satisfactory to you, in all respects OR you reserve the right to cancel this contract.
--- Make your home purchase a priority. Find a knowledgeable agent you trust.
A good agent will guide you and assist you in this most important decision.
Make this decision wisely. Lessons learned from 2005 are good lessons.
And why not?
We are investing in the American dream, which for many people includes homeownership. The government allows us to write off our mortgage interest and taxes on our federal tax returns.
In addition, if we own investment property, we can depreciate this property over time.
What a way to go.
Make your plans and take your time to think of your future. Real estate is not a get-rich-quick scheme. It is a long-term, deliberate choice to buy, enjoy and build equity.
The mistakes of 2005 tell us over and over again that we are not in the kind of market to buy and "flip" or sell quickly and make a profit. Those times are gone.
However, 2005 has taught us the following:
--- Be careful in looking for mortgages. Make sure you find the best interest rates and the lowest closing costs.
Make sure you understand the consequences of possible pre-payment penalties or changes in the interest rate that could negatively affect you.
Do not be afraid to ask questions and talk to several lenders.
Understanding closing costs isn't always easy, so ask about "typical costs," "mandatory costs" (like taxes) and "garbage fees" (unnecessary lender charges).
Most important, do not go for the mortgage you can just afford, but be conservative and go for the amount of mortgage payment that you are comfortable with.
--- Be careful in looking for homes. Do not view more than five homes in one day.
A trained Realtor can keep up with the numerous combinations, but most people start losing track after three -- remembering such basics as location, floor plan, colors and particular features of the home.
The most important part of purchasing a home is the location. It should be convenient to work, schools and shopping.
Rank the homes that you see and eliminate the ones that do not work for you.
Think and be critical about the homes you have viewed, but remember that many features, such as paint color, landscaping, carpet and flooring, can be changed.
Location, floor plans and neighborhoods cannot. These are most important.
--- Know about the sales contract that you will sign and make sure this contract is contingent on any inspections of the home being satisfactory to you, in all respects OR you reserve the right to cancel this contract.
--- Make your home purchase a priority. Find a knowledgeable agent you trust.
A good agent will guide you and assist you in this most important decision.
Make this decision wisely. Lessons learned from 2005 are good lessons.
Subscribe to:
Posts (Atom)