Short Sale? What you need to know.
Are you familiar with what a, “short sale” means, in real estate?
It doesn’t refer to the sale of one level homes, thats for sure. I received a call from a past client, yesterday, who purchased a home within the past several years, and was curious about their lack of equity, should they decide to sell.
In discussing a short sale option with them, it was clear that it was not clear to them, what a short sale, meant. I suspect that there are many others who are not sure about what it means, either.
I will attempt to clarify what a short sale transaction, is.
In simple terms, a short sale refers to a situation where a home owner owes more on the house than the house is worth, and generally, does not have the means to make up the difference at closing. For example, if a homeowner had a mortgage balance of 500,000 on a property, and the property is currently worth 450,000, there is no way for the owner to sell the property, unless they had sufficient assets to pay off the mortgage at closing, so that the mortgage lien could be removed at a closing.
Generally speaking, in a short sale, the bank agrees to accept less than what is owed to them. Most short sales leave a deficiency balance for which the home owner/borrower may or may not still be liable for, depending on negotiations with the lender. In any event, if the lender approves the short sale, the home owner will be able to sell the home.
Banks do not agree to short sales, out of any concern for home owners. It is usually in the banks interests to encourage a short sale because the process is much quicker and cheaper than the alternative, which is normally a foreclosure.
The short sale process is not new. I actually negotiated a short sale for a client almost 10 years ago. What is new, is the amount of short sale and bank owned properties currently on the market. Although the Yardley, Newtown, Upper Makefield market is not as impacted as other parts of the country, there are more distressed properties on the market now, than ever before. From a personal perspective, I have found the banks to be very difficult to work with. They are often extremely slow to respond to offers, and often unrealistic about fair market values. If you want some examples of bank decisions that don’t make sense, please feel free to call or email me.
If you would like information on distressed properties in our area, please contact me.Continue Reading > Add a Comment
First Time Home buyers….do you qualify for the tax credit?
As many probably know by now, there is a new, first time home buyer tax credit in place, which modifies the previous credit. For those who qualify, it could make this year an ideal time to purchase your first house. So here is the deal:
Maximum credit amount was increased to $8,000.00
There is no repayment required.
Home must be purchased after Jan 1, 2009 and before December 1, 2009
Full amount of credit available for individuals with adjusted gross income of not more than $75,000, ($150,000 if filing a joint return)
Phases out above those caps. ($95,000 and $170,000)
This tax credit is available for first time home buyers only. As a way of clarification, that means that the purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to the purchase.
Since interest rates are hovering at or near all time lows, and prices are so signifcantly down, this added incentive may be just the thing to create an unbelievable opportunity for qualified, first time home buyers.
Please feel free to contact me directly, if you have any questions about this provision, and to discuss some of the fabulous buying opportunities in the market, today.Continue Reading > Add a Comment
Selling a house for more than $1,000,000? Facts you need to know for selling in Upper Makefield.
Selling In Tough Times
I don’t think that there is anyone, who does not know that the real estate market is challenging for sellers, right now. The question for anyone selling a home in Upper Makefield , is whether you are aware of how tough it really is?
As of the end of December, there were 134 single family houses on the market in Upper Makefield. This compares with 138 at the end of November, and 128 at the end of December, 2007 .
Further, there were 100 homes that sold in 2007, and they sold at 93% of the asking price. In 2008, 71 homes sold, and they sold at 91% of the asking price.
Basically, that means that inventory was up from 2007, and unit sales are off. All of this translates to a 22.6 month supply of homes in inventory, compared with 15.4 months, at the end of last year. All of these statistics, are fairly typical of the local market, in general.
Times Are Tougher For 1 Million Plus Homes
Here is where it really gets tough.
In the over 1 million market, of which there are many in Upper Makefield, the statistics are much worse. Currently 63% of the houses on the market in Upper Makefield, are priced over a million. In that specific market segment, sales are even slower. At the current rate at which upper end houses are selling, it would take more than 7 years for the inventory of those houes to sell.
That is pretty sobering, if you are trying to sell a house that is on the market for more than a million.
How do you sell, given those forebodding odds? I will go into much greater detail, in a future post, but basically it requires extremely aggresive pricing, and comprehensive marketing.
Sellers need to be sure that their house is priced correctly, shows as well as possible, and is exposed to the market in every way possible way.Continue Reading > Add a Comment
Why is it time to finally test the real estate waters?
have a number of people who have been following the local real estate market for many months, and in some cases, more than a year. I watch as these folks search my website for listings, and we actually have actually looked at homes, from time to time. According to an article in the Wall Street Journal, yesterday, some people are finally deciding that the time is right to take advantage of the glut of inventory of houses to choose from, as well as low interest rates, and are taking the plunge.
As the article points out, the housing bust, appears to be creating a new group of winners; first time home buyers. People who watched as friends rushed to buy homes several years ago, are now in a position to take advantage of what look like, incredible deals. According to the National Association of Realtors, first time home buyers made up 41% of all buyers at the end of 2008, up from 36% in 2006.
First time home buyers are in a great position. They are lured by home prices that are obviously depressed. In some markets, prices have fallen by as much as 40% from peak levels. Fortunately, in Bucks County, prices have not fallen as significantly, but they are definitely lower. Houses are clearly more affordable.
First time home buyers are in a great negotiating position when making offers. Having nothing to sell, makes them extremely strong buyers. Often sellers are willing to accept lower prices, knowing that a first time home buyer, with strong credit, is presenting offers that are clean, meaning that there is no worry about the sale of another house.
Because of the amount of inventory, buyers can be patient and selective. Although we won’t know where the bottom of the market is, until it is too late, it appears to be an ideal time for first time home buyers, to get into the real estate market.Continue Reading > Add a Comment