A First Time For Everything

An article appeared recently in the New York Times that beautifully illustrates the opportunities today's real estate market offers.  A mother working two jobs saved up for a downpayment and managed to buy a large home with a pool for $187,000.  Three years ago, that same home had sold for $370,000!

While sellers are still feeling pressure, buyers with stable incomes and good credit histories are beginning to spread a "feel good" vibe throughout the industry.  Conditions have literally never been better for first-time buyers.  Affordability has seldom been higher and interest rates have hardly been lower.  Selection of inventory is vast, and sellers are highly motivated.

As more buyers enter the marketplace, the ripple effect will be felt far and wide.  When they purchase a highly affordable foreclosure or "short sale," they have removed a distressed property from the listings, improving values for other homes in the area.  When they buy a "traditional" listing, that in turn sets off a chain reaction whereby the sellers in turn will purchase another home, from sellers who will in turn buy another home, and so on and so on. 

You probably get the picture now.  As we approach some stability in real estate, all indications are that prices will begin rising again.  As the market approaches recovery, don't miss your opportunity for the buy of a lifetime.


Begin Packing Yesterday

Getting ready for a big move?  You can't begin preparing too soon, because the average move takes over 200 hours!  Count on your real estate representative to provide advice and guidance during this seemingly monumental task.

Your first decision is whether to hire a moving company, or rent a moving van and ask friends and family for help.  If you're using the pros, solicit quotes from several local companies who can visit your home and offer an accurate quote.

Next, begin sorting piles of items you'll want to sell in yard sales, donate to charities, or haul to the landfill.  This is a great opportunity to give back to the community, and make a few bucks on the pieces you'll sell. Anything you eliminate now will lower moving costs later.

DO create an inventory of your belongings, in case you need to file an insurance claim for lost or damaged goods.  Allow the professionals to do your packing, because if you don't, those items that you wrap and pack won't be covered by the mover's insurance policy.

Finally, invest in additional insurance with the movers and storage facility, if needed.  It only costs about $10 for every $1,000 in high value items, so it's worth it for your peace of mind.  Ask your agent for more details to make your move as stress-free as possible.


Time is Money

Whether buying or selling a home, the Offer To Purchase is the starting point for making the sale go through.  If the sellers do not accept the offer outright, they may make a counter-offer, which the buyers may likewise accept or counter again.

In the interest of speed and success, it's best to keep counter-offers to a minimum.  If you are trying to sell with urgency (and who isn't?), weigh the buyers' offer against your need to move quickly.  Perhaps the value of the concession is quite small against the profit you'll see upon a sale.

If you are asking $200,000 and receive an offer of $196,000, that's equivalent to just 2% less, which is like offering $.98 instead of $1.  Similarly, buyers must also be realistic about the possible costs of "over negotiating" in today's rapidly changing economic atmosphere.

If you balk at the sellers' counter-offer now, and decide to walk away and begin your home search over again, you could be facing higher interest rates and/or rising home prices.  Today, time literally is money, and the longer you postpone your purchase, the more it will likely cost you.

Before making (or accepting) an offer, discuss the offer and counter-offer process with your representative, so that you know what to expect and can be more prepared to see the deal to a successful close.


When Less Is More

If you are a homeowner who can no longer make your monthly mortgage payments, you still have opportunities to avoid foreclosure and the damage it would do to your credit.  Although more complicated and more challenging, a "short sale" may prove to be the best alternative.

If you are unfamiliar with the term, a "short sale" can happen when your mortgage lender agrees to let you sell the home for less than you still owe on it, forgiving the difference.  Why would a lender settle for such a sale?  Quite simply, the lender may determine that they will still receive a higher amount of the remaining balance through a short sale than they would through the very costly and time-consuming process of foreclosure.

Why would a homeowner agree to sell the home for less than its value?  As already mentioned, a short sale keeps you out of foreclosure and reduces the damage to your credit (and subsequent ability to purchase another home).

In the middle is the real estate agent, helping the sellers, the lenders, and the buyers navigate the complexities of the transaction to reach a satisfactory conclusion for all involved.  Homeowners can trust their representative to be honest and to provide a fair assessment of value for all parties.  You can trust your agent to be your advisor and champion during difficult times.


Times Have Changed

Now that we've experienced the fallout from the subprime lending disaster, there is no longer such a thing as "easy money."  Now you need perhaps ten to fifteen percent down, an excellent credit record and verifiable proof of income when you apply for financing.

One reason for all this scrutiny is that many lenders sell their loans on the secondary mortgage market, and they are using required (and automated) software to factor in all the variables in the equation that results in a thumbs up or a thumbs down.  In other words, it's not quite as personal as it used to be.

Save yourself time, stress and heartbreak by seeking preapproval for financing before you even look at House One.  I say "preapproval," and not "prequalification," because prequalification is only an "estimate" of the loan amount for which you might qualify once your application has been fully reviewed.

Preapproval puts you in the driver's seat with sellers, because it means that you have already basically "applied" for financing with your credit report, verified income, and proven ability to make a respectable down payment.  Preapproval goes several steps beyond prequalification, and gives you the best indication of how much home you can afford.

Maximize the time spent on your home search by taking the all-important step of seeking financing first.  Then make your offer with confidence!


Beyond the Lousy Loans

Yes, it's true, many lenders in recent years have written sub-prime mortgages that could only be expected to default.  However, foreclosure is nothing new, and there are myriad reasons that a homeowner might be facing dire straits. 

Challenges might include economic hardship due to job loss, bad health or divorce, or payments that jumped too high after a rate adjustment, or simply increased cost of living outpacing income.

Whatever the reasons, the best way to avoid foreclosure is to be well educated and prepared before making a home purchase, and anticipating worst-case scenarios before choosing the loan that is right for you.

If default appears inevitable, know that there is help available, with a "short sale" being the last resort for resolution.  Such a transaction is called "short," because the home is sold for less than the amount remaining on the mortgage, and the lender willingly accepts some of the loss.

If you're facing foreclosure, contact your lender's loss mitigation department immediately.  While you are in the midst of negotiations, keep a log of all phone calls - the date, time, contact person and discussion.  Lenders are overwhelmed right now, so be patient and don't expect an immediate answer.

Whether it's a loan adjustment or short sale, there is a solution to the problem.  Your lender and your real estate agent are here to help.