Realty Times - Back-up Offers Make Sense In a Low-Inventory Market

Realty Times - Back-up Offers Make Sense In a Low-Inventory Market

Short Sale Guidelines Are Making a Difference

By Ruben Gonzalez

Prudential California Realty (DBA)

The theory behind short sales seems simple enough: If a homeowner owes more money on a house than the house can sell for, and the homeowner is struggling to pay the mortgage, the lender will allow the house to be sold for less than is owed.

For obvious reasons, lenders are not big fans of short sales and often make it a complicated process.

In April 2010, The Home Affordable Alternatives Program (HAFA) released new guidelines designed to streamline the short-sale process and allow more delinquent homeowners to sell their homes and move on with their lives.

In its first year, participating servicers initiated 12,266 HAFA agreements and completed 5,447 transactions.

According to the National Association of Realtors, the share of distressed homes—bank-owned properties and pre-foreclosure short sales— in April 2011 dropped to 37% of total sales volume, down from 40% in March and an average of 39% over the first quarter.

HAFA complements the Home Affordable Modification Program (HAMP), a loan modification program designed to reduce delinquent and at-risk borrowers’ monthly mortgage payments by providing alternatives for borrowers who don’t qualify for or don’t complete a trial modification.

“[HAFA short-sale guidelines] are designed to help people who are unable to keep their home under the HAMP loan modification program,” said Jeff Lischer, managing director for regulatory policy for The National Association of Realtors. “Let’s say you can’t keep your property under HAMP, the next step is a short sale, which is better than a foreclosure.”

It’s estimated that lenders lose about 40% of a property’s value on a foreclosure, whereas the figure is reduced to about 19% on a short sale. Moreover, the short sale is a graceful exit from the ownership, which is better for people’s credit scores.

New rules also add incentives for the short-sale process. One incentive helps sellers relocate by providing them with $3,000 for moving expenses. A second incentive is for mortgage servicers, who receive $1,500 from the federal government for each completed short sale. Under new guidelines, homeowners can secure a short sale approval in advance from the bank representing a minimum net amount the bank will accept.

Lenders participating in the HAFA program maintain the following requirements for homeowners considering short sale: The loan must be less than $729,750, made before Jan. 1, 2009, and the home must be the owner’s primary residence. Also, the homeowner must be delinquent and unable to pay the mortgage, and the homeowner’s mortgage payment must be more than 31% of his or her before-tax income.

Ruben Gonzalez can be reached at (562) 507-0754 or Email.

 Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Realty Times - Buying Short Sale

Realty Times - Buying Short Sale

The Trouble with Vacant Homes

By Ruben Gonzalez Jr.

Prudential California Realty (DBA)

Today’s housing market makes it tougher to get the price for a home and, often, sellers can’t wait around while their homes are on the market. They may have a new job in a different location, may have already bought their next house or need to move to their new location so the kids can start at their new schools.

If sellers already have a new home, it’s likely that they’ll take all their furniture and leave the property empty during selling process. The U.S. Census Bureau’s most current data shows that more than 2.2 million for-sale houses in the U.S. were vacant in 2008, and that number has risen over the last few years as more homes fell into foreclosure or short-sale status.

Yet it all comes down to perception for buyers, who understand that vacant homes can suffer from a wide variety of ills due to neglect and deferred maintenance. Moreover, vacant houses pose unique challenges for showcasing and selling because many buyers cannot see beyond an empty home. They’re looking to buy a “home,” as opposed to a “house,” and without furniture, wall art, rugs, lighting and décor, there are few emotional connections.

Plus, with no furnishing to focus on, a potential buyer will be on the lookout for imperfections, such as floor scratches, nail pops, chipped grout and other imperfections.

The easiest fix for a vacant home is to bring in a home stager, who can give the property a comfortable, lived-in look, enabling potential buyers to better visualize how they would use the home.

When a home buyer perceives flaws and can’t see a home’s potential, there will be fewer offers, greater price reductions, more days on the market, higher carrying costs and less profit.  

A vacant home can also hurt your negotiating power. If buyers know that you are already out and most likely paying another mortgage, they will figure you are more motivated to sell and will likely present a low-ball offer.

By staging a vacant home, you will create a proper vision for the property and achieve a quicker and hopefully more profitable outcome.

Ruben Gonzalez can be reached at (562) 507-0754 or E-mail. Prudential (dba) is an independently owned and operated broker member of BRER Affiliates, Inc. Prudential, the Prudential logo and the Rock symbol are registered service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. Used under license with no other affiliation with Prudential. Equal Housing Opportunity.

Realty Times - Short Sale Fraud All Too Common

Realty Times - Short Sale Fraud All Too Common

Make Your Offer Stand Out

By Ruben Gonzalez Jr.

Prudential California Realty (DBA)

Real estate consumers are realizing that there has rarely been a better time to buy a home. In fact, historically low mortgage rates coupled with lower home prices have even sparked bidding competition in markets around the country.

A good home in a solid location may attract ample attention only hours after being listed. Home buyers can make their offers stand out from the rest through one or more of the following strategies:

Price. Obviously, price tends to be the primary consideration for sellers. When you’re competing for a home, to get an edge, think about adding a clause stating that you will beat the highest offer by “x” dollars up to “x” amount. Cash offers can be more attractive to sellers as well. Although sellers will receive their money at closing whether buyers pay with cash or take out a loan, cash offers don’t require lender approval.

Financing. It’s not enough to be pre-qualified. Pre-qualification only tells how much you can afford. Pre-approval goes a step further. Your lender will thoroughly evaluate your application—including verifying employment information and financial disposition—then clear you for a loan of a determined amount. Having your loan pre-approved gives you a sizeable advantage by putting you on equal footing with cash buyers.

Good Faith Deposit. Buyers offering a larger-than-customary amount of “earnest money,” a deposit that accompanies an offer, may get a seller’s attention. By committing more money up front, buyers demonstrate greater sincerity and motivation to close the transaction. Your real estate professional can guide you as to the appropriate sum for your specific transaction.

Contingencies. Consider minimizing contingencies, those clauses that allow buyers to back out of a contract if certain conditions are not met. For example, it’s common for buyers to make the purchase contingent upon their securing satisfactory financing. Obviously, offers with the fewest conditions tend to be more attractive to sellers.

From a contingency standpoint, first-time buyers are often better prospects for a seller’s home than move-up buyers. That’s because first-time buyers’ offers are not contingent upon the sale of a present home. Even if a move-up buyer has an offer in hand, that buyer’s offer may be contingent on another contingency, and so on down the line. If one transaction derails, they all might.

Relationship. Help the seller get to know and identify with you by looking for ways to connect. Find common interests, such as a shared appreciation of gardening. You can then persuade the seller that her prize roses will be well tended. Share brief family stories. The more the seller gets to know and like you, the better chance your offer will stand out in a competitive environment.

Considerations for Short-sale and Foreclosure Transactions – Bank-owned properties represent a significant portion of today’s housing inventory. Competition can be most keen for these homes as their prices can run 10% to 20% below current market value.

Banks conduct extensive research to set these prices and generally base them on current market value less the cost of required repairs. Make your offer based on your own check of comparable sales and other due diligence. Banks won’t get offended by a low offer, yet a realistic offer will more likely keep you in the running.

Remember, patience is essential when buying bank-owned property as the process can take up to six months and longer.

Contact me today in order to begin work on buying your dream home or investment property. My knowledge, skill and expertise will help you make sound real estate decisions today or any other time.

Ruben Gonzalez  can be reached at (562) 507-0754 or E-mail. Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. 

Realty Times - Assistance Comes to Residents Across Nation

Realty Times - Assistance Comes to Residents Across Nation

How Foreclosures Affect Buyers And Sellers | Bankrate.com

How Foreclosures Affect Buyers And Sellers | Bankrate.com

The Skinny on Short Sales

• In a short sale, homesellers ask their lender to accept a buyer’s offer that is less than the amount needed to pay off the balance of the mortgage. Lenders who agree to a short sale also typically agree to forgive the remaining debt.
  
  


• Many call short sales a win-win for lenders and homeowners. The homeowner avoids foreclosure and banks avoid the cost of carrying the property through the lengthy foreclosure process, not to mention the hassles of selling an empty property in a market saturated with other foreclosures.
  
  


• On average, lenders lose approximately 19 percent of a mortgage’s value with a short sale but lose an average of 40 percent on mortgages that proceed to foreclosure, according to one source.
  
  


• The problem with short sales? Like other foreclosure mitigation efforts, the challenge is in determining which financial entity “owns” the loan and, thus, has the final say on a short sale offer. Banks also have been slow to ramp up internal processes needed to review and approve short sale packages. Delays and last-minute dickering often prolong or even derail transaction closings and creates frustration for potential homebuyers and their real estate agents.

To read more on short sales check out this great article:

Banks Miss an Easy Housing Fix

See you around the neighborhood!