Short Sales On The Rise

An often misunderstood transaction in today's real estate market is the "Short Sale". A short sale is when a lender or lenders agree to accept less than the amount currently owed by the homeowner.

If owners purchased their homes at the height of the market, or refinanced recently, they may now find that they owe more on their home than what its current market value is. The coupling of the current economic crisis and the drop in home values over the past couple of years is causing this increase in short sales and foreclosures.

Often a short sale will cost the lender less than a foreclosure, so it can be a good way for lenders to minimize their risks. For current owners, a short sale may not hurt their credit history as much as a foreclosure, and thus allows them to get back on their feet a little quicker.

To qualify for a short sale, the current owner will need to demonstrate financial hardship. Most qualify on the basis of employment issues (IE: they have lost their jobs, had reduced hours, or were required to relocate to another state for employment). However there can be circumstances where health dictates that a person must move out of their home (IE: unable to use stairs). Owners are surprised to learn that they can qualify for a short sale, and still keep their payments current.

Because unemployment continues to hover at high rates, the expectation is that short sales will continue to rise. Recognizing this, the federal government has designed programs for homeowners facing this process. On April 5, 2010, the US government will implement the Home Affordable Foreclosure Alternatives Program. This will help simplify and streamline the use of short sales and deeds-in-lieu of foreclosures.

It is important that buyers and sellers use Realtors with experience to assist them in navigating the challenges of short sales. We did our first short sale in 2005, so we have witnessed first hand the many changes that the short sale process has undergone. An experienced realtor will help prepare clients for the short sale process and guide them thru this difficult period.

How Buyers Search For Homes

Things have sure changed in this industry since I began 22 years ago! One of the biggest changes we have seen in our industry is how buyers search for homes. In 1999, only 37 per cent of buyers actually used the internet in their search. Today, 90 per cent of buyers are searching for their homes on line!

These internet sites have undergone their own transformations! Evolving features now can include multiple photos, downloadable brochures, video tours, neighborhood information and mapping.

Because most home buyers begin their search in this manner, the presentation of a listed home on the internet is very key to driving traffic to your property. There should be numerous photos highlighting the features of your home. The photos should be of good quality with good lighting and the rooms should be staged to focus on the selling features of your home!

Home Buyer Credit Deadline Approaching

There is much speculation on whether or not Congress will extend the current Home Buyer Credit. What we do know for certain is that to obtain the $8,000 First Time Home Buyer Credit or to be eligible for the Move-Up Home Buyer Credit, clients will need to be under contract by April 30th, and closed by June 30th.

Last fall, Congress did extend the Home Buyer Credits - but as of today we have no firm indications that Congress will repeat the extensions. For clients to capitalize on the current Home-Buyer credits, they will want to begin the preapproval process with their lender as soon as possible. It is also important to remember that it takes time to find and negotiate on a home; and once this is completed clients will need to allow about 4 weeks for the underwriting and closing process to be completed.

It's not too soon to begin this process! General real estate indications are reflecting some improvement in the real estate market - see my link "The Skinny" for more on this!

Move Up Buyers Are Stepping Up!

With the recent extension to the homebuyer credits expanding to move-up buyers, we are seeing more of these savy buyers entering into the housing market in recent months. We have the "perfect storm" of ideal circumstances for the move-up buyers - especially those with homes that are marketable to first time home buyers! Interest rates are still at historic lows, and when coupled with the increased inventory of homes on the market and the tax credits, our move-up buyers have been scoring some great deals on their move-up homes!

The most recent 3 of our move up buyers received offers on their existing homes within 10 days of listing with us, which enabled them to make some very competitive offers on their new homes! We anticipate we will see more people taking advantage of the current market, low interest rates, and tax credits to get into the home of their dreams!