Short sales are just a big part of the housing market today as foreclosures and resale homes. Chances are if you are looking for a home in a neighborhood at least one home in there is a short sale listing.
Short sales are anything but short in time. In fact the process usually takes 30 days or more to receive an answer. The bank is willing to accept less money than is owed on the house in lieu of a foreclosure.
We have all heard of the horror stories with short sales from the long process to never really getting an answer and the buyers giving up. I have done my fair share of short sales. Thus far on the listing end I have been very successful in getting them sold.
On the buying end I had an experience that shocked me. With an offer in on a short sale with Bank of America that is about a week old; I received for the first time the most unusual request. Let me premise this by saying we offered substantially low offer on the house because of recent storms caused roof damage that had torn off the shingles and sheathing leaving the plywood exposed in an area of the roof. After some due diligence I informed my buyer this will not pass through an appraisal in it's current condition. Thus he made an offer for paying cash.
The bank requested and we supplied photos of the damage and an independent quote on the repair and damage to the roof. Our offer fell in line with the damage and the lack of financing the house would qualify for.
here is the response form the negotiator the listing agent forwarded to me:
Please provide satisfactory evidence that the buyer has been approved for financing
or otherwise has funds to close the transaction. Satisfactory evidence would be ALL
of the following:
A letter from the lender showing final approval (not pre-approval), Or the DU
Preliminary Underwriting findings.
A receipt from the title company showing that the required down payment is on
deposit with them,
Something in writing from the title company confirming the closing date.
If it’s a cash buyer, we just need proof of funds on hand to complete the
transaction within 30 days.
Upon receipt of these documents, we will proceed with processing the postponement of
the sale date. No exceptions will be made. Upon receipt of the above items we will begin negotiations on the short sale. Thank you in advance.
This was fine by my client...until we read last line. So, we went back to the listing agent and asked her to find out if they accepted our price...the response she received was the same as she received initially....yet we still do not have a price. My client and I are confused....
What are we supposed to put in escrow? how much are we supposed to get our underwriting approval for? When are we able to close, if we do not have a price?
People and Realtors want to know why it is so hard to deal with Bank Of America on a short sale? These questions were sent from the listing agent to the negotiator and the negotiator response was the same as above........
This is the reason most, if not all, Realtors cringe when they hear the words Bank of America in a Real Estate transaction as a short sale.....
Dave diCecco
Realtor/Broker
www.davedicecco.com
Thursday, August 11, 2011
Wednesday, August 10, 2011
Housing Inventory in Charlotte, NC. Decreasing
One barometer that housing "experts" use to say whether the housing market is recovering is the available inventory of homes for sale. The greater the number of homes on the market the longer it takes to sell...Thus the worse the market is. A balanced market (one that does not favor the seller or the buyer) is one with a six month supply of homes on the market.
So, I was intrigued when I read an article in the Wall Street Journal the other day that said home inventories are decreasing nationally. Is it because the market is recovering or for other reasons?
I looked it up and the available homes for sale in the month of July 2011 versus last year was down 26.5%. I thought WOW that is a large number. It was looking very promising....
I then checked the months supply of homes on the market and was impressed to see it was down 15.7% from last year.
Then I decided to check home prices versus last year at the same time. Now, with inventory levels down the average home price should be up. (it might be a little to much to ask for 20%). But here was hoping... What I found was home prices actually dropped on average 1.7% from last year.
The numbers are saying mixed reviews. If inventory levels are down then home prices should be up. However; that is not the case. As I divulged a little farther you find that bank owned homes made up almost one third of the sales for July. in the peak of the market and when the housing market is good that number is probably closer to 10% or less...
Why does that make a difference? The banks will not generally do any repairs to a house and sell the home in it's current condition. Thus there sale price reflects the house in need of some repairs or cosmetic fixes that affect the value of the house and have priced the house according to that..
Whereas; a seller selling a home will have the house in a condition that allows the buyer to move in with minimal or any repairs. Thus they can command a higher price for the house.
With the amount of homes on the market decreasing there is a dual look at this. Most experts feel it is because of all the issues with foreclosures that banks are being more cautious on them and taking longer to actually foreclose on a home.....And with foreclosures so high rental demand has increased to such a point that it is driving up the rental rates.....
The increase of rental rates has spiked for me first time buyers out looking at homes. because now what was once affordable rent is no longer that and they can own a home for less than they are paying in rent.
Those factors are having an dual impact on the housing market. You are finding more buyers looking as their rental renewals are increasing and looking to see what options are available and sellers who can afford their mortgage payments but owe more than their home is worth are taking them off the market....
Either way, with decreased inventory levels the demand is starting to increase on existing homes on the market. That is a good sign for the housing market as a whole in the Charlotte, NC. region.
Dave diCecco
Realtor/Broker
www.davedicecco.com
So, I was intrigued when I read an article in the Wall Street Journal the other day that said home inventories are decreasing nationally. Is it because the market is recovering or for other reasons?
I looked it up and the available homes for sale in the month of July 2011 versus last year was down 26.5%. I thought WOW that is a large number. It was looking very promising....
I then checked the months supply of homes on the market and was impressed to see it was down 15.7% from last year.
Then I decided to check home prices versus last year at the same time. Now, with inventory levels down the average home price should be up. (it might be a little to much to ask for 20%). But here was hoping... What I found was home prices actually dropped on average 1.7% from last year.
The numbers are saying mixed reviews. If inventory levels are down then home prices should be up. However; that is not the case. As I divulged a little farther you find that bank owned homes made up almost one third of the sales for July. in the peak of the market and when the housing market is good that number is probably closer to 10% or less...
Why does that make a difference? The banks will not generally do any repairs to a house and sell the home in it's current condition. Thus there sale price reflects the house in need of some repairs or cosmetic fixes that affect the value of the house and have priced the house according to that..
Whereas; a seller selling a home will have the house in a condition that allows the buyer to move in with minimal or any repairs. Thus they can command a higher price for the house.
With the amount of homes on the market decreasing there is a dual look at this. Most experts feel it is because of all the issues with foreclosures that banks are being more cautious on them and taking longer to actually foreclose on a home.....And with foreclosures so high rental demand has increased to such a point that it is driving up the rental rates.....
The increase of rental rates has spiked for me first time buyers out looking at homes. because now what was once affordable rent is no longer that and they can own a home for less than they are paying in rent.
Those factors are having an dual impact on the housing market. You are finding more buyers looking as their rental renewals are increasing and looking to see what options are available and sellers who can afford their mortgage payments but owe more than their home is worth are taking them off the market....
Either way, with decreased inventory levels the demand is starting to increase on existing homes on the market. That is a good sign for the housing market as a whole in the Charlotte, NC. region.
Dave diCecco
Realtor/Broker
www.davedicecco.com
Monday, August 8, 2011
What To Look For When Negotiating A HUD Home
As we are all aware bank owned homes and short sales are increasing in percentage of sales of homes. As the number of foreclosures increased so did the inventory. Negotiating with a bank owned home is not the same as negotiating with a seller. Each bank or government runned foreclosure department runs differently.
HUD (which stands for Housing and Urban Development ) is one of the largest ones out there. In some ways they have made the process easier and in others they have made it more difficult. I have sold quite a few HUD owned homes and have worked through some of the kinks of negotiating with them. These are no steadfast rules but general guidelines that I have found that help with the negotiations on a HUD owned home.
One thing HUD does that none of the other banks do, is they acquire an independent appraisal of the house prior to putting it on the market. The appraiser is evaluating the condition of the house and giving an appraisal for the house in the current condition the house is in. or as often stated "as-is' condition.
When the house goes on the market HUD prices the house at that price. That is fair market value for the house in it's current condition. So, when you view a HUD house and are thinking of putting an offer in; check how long it has been on the market. The appraisal is probably a few weeks (at most) longer than the date the house went available for sale.
Know that HUD is figuring on getting close to that number (especially if it has just been listed) as possible. They will concede 3% of the sale price to closing costs for the buyer on financing contracts. So, if you are paying cash I inform my buyers to use that number as a discount on figuring a price for the house.
HUD will negotiate with the buyer. In the past HUD's policy was they either accepted your offer or rejected your offer. They now will offer you a counter offer. Generally that counter offer is the lowest at that time they will accept for the house. I went through one recent transaction where they offered us a counter offer and we re-countered them. They came back with the same number. We increased our number on three more different occasions and they countered at the same number each time. We got the hint...that was their bottom line on that house.
I tell everyone looking at a HUD house to view the sign in sheet. As a Realtor we are asked to sign in that we were there showing the house....I look to see if anyone else has signed in (not everyone does) and when the appraiser was last there. A couple reasons I do this. I want to know if any other Realtor has shown the house recently...this will tell me if I may have another buyer to compete against. The other is because of the appraisal.
HUD has the house reappraised every 120 days. This keeps the appraisal fresh. I recently showed a house and I noticed on the sign in sheet that the appraiser had visited the house the day before we did. That particular home had been on the market about 4 months at that time. My client was mulling over putting an offer in on the home. Two days later she decided to put an offer in on the house. As we were on the phone I pulled up to ensure that the house was still available for sale. Much to her delight we saw the house was still available and that they had just lowered the price $10,000. That was less than what she was going to offer them based on the comparable we looked at in the neighborhood. We bid and won the house.
Upon completion of the contracts I received the signed package and a copy of the appraisal which was dated the day before we put our bid in...By knowing that the appraiser was there and knowing that they change the price accordingly to the appraised value benefited my client this time... she got the house she wanted and at a better price than she had anticipated.
Another client looked at a HUD home that had been on the market for over 6 months. He put in a bid substantially lower than their asking price... They countered him less than he was willing to agree to on the house and he accepted... The longer the house sits on the market the worse it is for HUD or any of the banks. They tend to get more aggressive with their acceptance of bids.
HUD is selling the houses in as is condition. So, if you are looking at a HUD home and are in need of financing; make sure it qualifies prior to you putting your bid in. If HUD has the home as cash only....it will NOT qualify for a loan. if it states conventional then that is the only type of financing it will qualify for. If it says FHA then read the disclosure statement. Most homes that qualify for FHA have an escrow amount( amount needed for repairs to the house to make it eligible for financing). You will need to have that money set aside in a separate account or acquire financing that allows for those repairs to be done post closing.
HUD has made the process smoother in regards to placing offers on a house and negotiating with them. They give you quick timely responses (by the next business day) and taken out a lot of the guessing game from the process...... These guidelines in negotiating a HUD house are examples of situations and not necessarily what is going to happen every time.....But it should help you in formulating an offer on HUD property.
Dave diCecco
Realtor/Broker
www.davedicecco.com
HUD (which stands for Housing and Urban Development ) is one of the largest ones out there. In some ways they have made the process easier and in others they have made it more difficult. I have sold quite a few HUD owned homes and have worked through some of the kinks of negotiating with them. These are no steadfast rules but general guidelines that I have found that help with the negotiations on a HUD owned home.
One thing HUD does that none of the other banks do, is they acquire an independent appraisal of the house prior to putting it on the market. The appraiser is evaluating the condition of the house and giving an appraisal for the house in the current condition the house is in. or as often stated "as-is' condition.
When the house goes on the market HUD prices the house at that price. That is fair market value for the house in it's current condition. So, when you view a HUD house and are thinking of putting an offer in; check how long it has been on the market. The appraisal is probably a few weeks (at most) longer than the date the house went available for sale.
Know that HUD is figuring on getting close to that number (especially if it has just been listed) as possible. They will concede 3% of the sale price to closing costs for the buyer on financing contracts. So, if you are paying cash I inform my buyers to use that number as a discount on figuring a price for the house.
HUD will negotiate with the buyer. In the past HUD's policy was they either accepted your offer or rejected your offer. They now will offer you a counter offer. Generally that counter offer is the lowest at that time they will accept for the house. I went through one recent transaction where they offered us a counter offer and we re-countered them. They came back with the same number. We increased our number on three more different occasions and they countered at the same number each time. We got the hint...that was their bottom line on that house.
I tell everyone looking at a HUD house to view the sign in sheet. As a Realtor we are asked to sign in that we were there showing the house....I look to see if anyone else has signed in (not everyone does) and when the appraiser was last there. A couple reasons I do this. I want to know if any other Realtor has shown the house recently...this will tell me if I may have another buyer to compete against. The other is because of the appraisal.
HUD has the house reappraised every 120 days. This keeps the appraisal fresh. I recently showed a house and I noticed on the sign in sheet that the appraiser had visited the house the day before we did. That particular home had been on the market about 4 months at that time. My client was mulling over putting an offer in on the home. Two days later she decided to put an offer in on the house. As we were on the phone I pulled up to ensure that the house was still available for sale. Much to her delight we saw the house was still available and that they had just lowered the price $10,000. That was less than what she was going to offer them based on the comparable we looked at in the neighborhood. We bid and won the house.
Upon completion of the contracts I received the signed package and a copy of the appraisal which was dated the day before we put our bid in...By knowing that the appraiser was there and knowing that they change the price accordingly to the appraised value benefited my client this time... she got the house she wanted and at a better price than she had anticipated.
Another client looked at a HUD home that had been on the market for over 6 months. He put in a bid substantially lower than their asking price... They countered him less than he was willing to agree to on the house and he accepted... The longer the house sits on the market the worse it is for HUD or any of the banks. They tend to get more aggressive with their acceptance of bids.
HUD is selling the houses in as is condition. So, if you are looking at a HUD home and are in need of financing; make sure it qualifies prior to you putting your bid in. If HUD has the home as cash only....it will NOT qualify for a loan. if it states conventional then that is the only type of financing it will qualify for. If it says FHA then read the disclosure statement. Most homes that qualify for FHA have an escrow amount( amount needed for repairs to the house to make it eligible for financing). You will need to have that money set aside in a separate account or acquire financing that allows for those repairs to be done post closing.
HUD has made the process smoother in regards to placing offers on a house and negotiating with them. They give you quick timely responses (by the next business day) and taken out a lot of the guessing game from the process...... These guidelines in negotiating a HUD house are examples of situations and not necessarily what is going to happen every time.....But it should help you in formulating an offer on HUD property.
Dave diCecco
Realtor/Broker
www.davedicecco.com
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