Modifications vs. short sale … logic does not apply

I have a client who has been trying for over 3 years to work out a modification with her lender. She lost her good paying job over 3 years ago, has not made a house payment since then and recently found a job paying about half what she was making. She’s offered the lender to make a payment of $400 less per month than she was paying on her loan that, at this current time, is double what her home is worth. So, does the bank look at this, think “We can keep getting our money back on this property by trying to work with this single Mom instead of making her and her 10 year old son homeless”? NOT. Instead, they’d rather she put the house on the market for the true market value of less than half what is owed and take the loss right now. Now, another problem with this scenario is that the property is in sad shape … needs a new roof, needs soffets and gutters, needs porches and inside remodeling, and it’s a mobile on land. Almost no Lender wants to loan on these any more. So the Buyer is going to have to be either all cash or use some sort of home improvement loan to purchase. Does it make sense? Not at all, but I’m not certain the banks are looking for logic or to help anyone out… they’d rather take the hit and let the government pick up the slack. Go figure.

Everett Raises the Arts an Octave or Two

What a neat idea! The City of Everett is making artwork interactive by posting 8 unique pianos on the sidewalks in downtown Everett. Each one was barely workable when they were obtained, but through the work of various artists and piano tuners, they've turned into playable works of art. They will be on display in Everett now through August 25th and anyone is welcome to sit down and display their musical talents.

So, it's a great time to take a walk around the city and enjoy these works of art. Check out all the locations at this link: Play the Pianos.

After this month the pianos will either be auctioned off or, if shown to be a success, stored until next year to be displayed again. Enjoy them while you can!

Buyers ... the time is NOW

We need to move some inventory! Out of an "average" search of homes for sale in Snohomish County, 80% or more of listed homes are either bank owned or short sales. Only 20% and less are "normal" homes for sale. It puts "Normal" Sellers in an awkward situation of having to price their homes in competition with houses listed at "sale" prices. You'll not find this "perfect storm" situation again for years ... and maybe never in my lifetime.

Yes, real estate is cyclical, but this is a really strange cycle. You have houses at unbelievably low prices PLUS interest rates for loans at an all time low. Yes, you have to have some money to put some "skin in the game". But you can still ask Sellers (banks and short sales included) for at least the closing costs in your offer. And, FHA and VA Financing (minimum down loans) are welcome ... especially on homes that have been on the market for a long time. There are even "0" down loans out there from various government entities when you buy in geographical areas and meet their qualification requirements.

We had some agents attend the auction at the Snohomish County Courthouse last Friday and they reported back that there were lots of people there and bidding was very active. A few years ago, I attended one just to check things out and there was hardly anyone there bidding on anything. So, yes, investors are in the game and are figuring out that NOW is the time to buy. You'll be noticing lots of houses that have been vacant or neglected for a long time now being remodeled and going back on the market. I've been out showing and we've seen some really cute homes that have been updated and remodeled, and their prices are still in the reasonable price range.

So the message to Buyers is Now is the Time to Buy. Dust off that 401k and take a little money out, see if Mom and Dad can't help with some gift funds, find a way to get your own piece of the real estate pie. Prices will go up, depend on it! It may take a little while, but you can bank on it. Call your Real Estate Agent today ... or give us a call and we'd love to help.

Word for the Day ... Frustration!

I know, I know, I know ... optimism is the key word in real estate. The market is always great to buy and sell real estate; but, when dealing with banks on short sales, frustration is what happens.

The largest problem every real estate agent encounters in their day to day business is the lack of control we have over all the factors and people involved in a transaction. If it's a local escrow company or mortgage company that you work with on a regular basis and you know they do their job ... and they occasionally mess up, you can yell and scream and remind them of how much work you send their way, and they'll promise to never do it again and everyone's happy. (Or at least you're happier that you were allowed to vent your frustration.)

Now comes the wonderful world of short sales and, when we thought we had a least a little control, we now have none, zip, zilch, nada. I've had short sales in contract for six months or more, and still no decisions from the underlying lenders. They have so many people and systems in the loop, I've lost track. First you submit it, it gets logged in and you wait for it to be assigned to a negotiator. That can take weeks. Then you finally get your negotiator and they have to have you update all the paperwork because by now everything is months old. So you do all that and, should they forget to mention one item they need or you didn't quite fill something out correctly ... do they call you to tell you? NO! You call them weekly to start, (it becomes daily toward the end) leave a message and wait for a return call. Or you e-mail them weekly to start and get a reply? Not very often. And, when you finally get in touch it's, oh, so sorry, we need another bank statement or hardship letter or HUD statement. Aaarrrrggggghhhh.

Now you finally get a "preliminary" approval ... if your Seller will pay a little money or if your Buyer will raise the price, etc., etc. because another agent or appraiser went out and gave them a Broker Price Opinion or appraisal that doesn't match the numbers. So, it's back to the Buyers and Sellers to see if we can meet their requirements ... more addendums to a contract that is probably so out of date now it's growing whiskers. And, now that you return the addendums to the bank, you get to stand in line again so the "Investor" can review the contract and decide if it's up to their standards.

And, what about the Buyers who have been hanging in there prior to the April 30th deadline to close by June 30th so they can get their tax credit? If you don't have Final Approval from the bank by now and already ordered an appraisal, they are no doubt out of luck. Unless, by some miracle, congress decides to take pity on the poor home buyers who are stuck in this goo and extend the closing deadline.

My heart bleeds for the Buyers and Sellers stuck in this mess. It seems to me, if the banks would streamline their approval process and make decisions sooner, maybe they wouldn't be so backed up that they can't get on top of their paperwork. Just an opinion from a lowly old Real Estate Broker that's been around a long, long, long, long time.

First Quarter Numbers Are Published!

And I do believe we've bounced, finally! The NWMLS reported on April 5, 2010, that the Member Brokers have reported a 51% jump in pending home sales over the same month a year ago. While entry-level home sales have been driving the market, March showed that 91 residences in the NWMLS area sold for $1 million or more; compared to only 40 homes in this price range for the same period last year.

NWMLS Brokers also reported a year-over-year increase in the number of new listings added to the inventory, up 26.7% over a year ago. However, even though listings are up, so are sales, which takes DOWN the inventory approximately 2.8% from a year ago. That's good news for Sellers.

Closed sales also outpaced year-ago totals by a wide margin, a 47% increase over last year. And, even with sales being up, prices are still down somewhat, about 2% system side; however, prices have increased 1.8% since January of 2010.

Home Buyers are still experiencing some frustration, however, in actually getting offers accepted. Homes that are priced well (basically short sales and banked owned real estate) frequently have more than one Buyer interested and therefore the best offer wins. And, we are still experiencing long waiting periods for Bank Approvals on shorts sales, too. Buyers are still reluctant to offer over list price to make the deals work. And, with the Home Buyer incentive going away at the end of this month, sales may take a small dip.

If you'd still like to take advantage of the Home Buyer Tax Credit, you only have until April 30, 2010, to have a signed around accepted contract. You still have until June 30, 2010, to get it closed, but the window of opportunity is closing fast. Please call us if you'd like more information or assistance with a purchase or putting your home on the market.

Statistics for this article taken from NWMLS News Release of April 5, 2010.

CENTURY 21 is giving away Twenty One $8.000 Cash Prizes

And you could be a winner! The Connect 2 the 1 Campaign runs from April 1, 2010 through June 30, 2010, and it allows you to enter your name in a drawing to win one $8,000 prize. One winning name will be drawn each month for 3 months in each of the 7 zones of the country designated by CENTURY 21: Desert West, Pacific West, Midwest, Northeast, Mid-Atlantic, Southeast and South Central. (Kansas, Missouri, New Jersey, Oklahoma and Rhode Island are not able to participate due to State Regulations). Drawings will be held on or about the 20th of May, June and July and winners will be notified by mail, e-mail or phone.

So, how do you enter? You can enter by 3 simple ways: 1) List your home for sale by your CENTURY 21 Professional during the campaign period. 2) Ask your CENTURY 21 Professional for an entry form, fill it out and give it back to them to send in for you. 3) Write your name, complete address including zip code, phone number, e-mail address and age (must be 21 to enter contest) on a 3x5 piece of paper and mail it to: "$8,000 List Your Home Sweepstakes", c/o ePrize, LLC, PO Box 5046, Kalamazoo, MI, 49003-5046. Only one entry per person during the campaign and non-winners for the month will be added to the drawing the next month.

No purchase is necessary to enter; complete rules and regulations can be obtained from your local CENTURY 21 Professional or on line at CENTURY21.com on the Connect 2 the 1 icon starting April 1st.

So double up those chances ... be sure to have your Purchase and Sale Offer written and accepted by April 30, 2010, and close by June 30, 2010, to receive your tax credit from Uncle Sam; then be sure to enter our CENTURY 21 Connect 2 the 1 Campaign for a chance at more money! Talk to your CENTURY 21 Professional today; and, as always, we're here to answer any questions for you, so give us a call!

Short Sales ... the good, the bad and the ugly

Face it folks ... we're in the short sale market and there's little we can do about it except live with it. So, here's a short sale primer for Buyers and Sellers.

THE GOOD: For Sellers it's a chance to get out from under crushing payments on a house that is worth less than you owe on it and to move on with your lives. For Buyers it's a chance to make a good deal on a house and quit paying rent. Also, you may get $8,000 or $6,500 credit on your taxes provided you can close on this house before June 30, 2010.

THE BAD: For Sellers, you are going to be out of a house and out of the house purchasing market for a while because your credit is going to take a hit. For Buyers, it takes patience ... lots of patience. There may be several offers on this house and Banks reserve the right to look at all offers (in most instances) and yours may not be the offer accepted. This you may not find out until months down the road, precious time that is wasted on waiting for a bank to make up its collective mind.

THE UGLY: For Sellers it's all the time wasted trying to work with a bank to get this accomplished, and then they make unrealistic requirements on closing the deal. And, you may end up having to sign a note to the bank for unpaid debt or the bank may decide to go after you in court for the deficiency amount. For Buyers it's the not knowing IF and WHEN you may get this house, whether or not your Lender's appraisal agrees with the underlying lender's appraisal (which throws you back into negotiations) and the fear of not closing in time to get your tax credit.

Just a few of the ramifications I've run into recently. As always, get a professional's advice before proceeding with any type of sale on your property and I can't stress enough that, should you decide to short sale your property or buy a short sale property, get an Agent who is knowledgeable and experienced with them. Then, let the games begin.

As always, please call us if we can ever help with your real estate needs.