What is a short sale?
While the housing market and economy are gradually showing signs of improvement, there are still many people who are behind on their mortgage payments and unsure of how to proceed. One option is a short sale.
Short sales are when the owners sell the mortgaged property, with the banks approval, knowing that the house will likely sell for less than the outstanding mortgage amount. Some banks will then write off the difference between the outstanding mortgage amount and the selling price of the home. However, that is not a guarantee so you should talk with your mortgagor to understand exactly what they will allow and get their approval before listing your house for sale.
If you are facing the possibility of losing your home, talk to your bank and a local real estate agent about the options. Having a portion of your loan written off through a short sale will hurt your credit much less than going through a foreclosure.
Real Estate Market Changes
The real estate market has slowly been changing over the summer months. In Florida things were going quite cheap this summer. Orlando had condos asking $19,000. Prices now are starting to creep back up. Maybe its the $8,000 housing credit or maybe it is the economy and housing market starting to recover. Either way, prices are going back up even though there are plenty of bank owned properties still on the market.
While prices are going up, there are still some good deals available. However, when looking to purchase a bank owned property, be prepared to spend some money in repairs. From what I have seen, these properties are $50,000 to $80,000 off the market value. Be prepared to spend anywhere from $10,000 to $40,000 in repairs though.
Before purchasing a bank owned property, get a home inspection so you know exactly what you are getting yourself into, especially if you are a first time homeowner. Homeowners tend to find a house they love and get so excited about the house that they don’t see the flaws in the property or they don’t know what they should be looking for.
Housing, is this a good price, will it fall further, how do I know?
Florida was hit hard during the housing bubble. Prices escalated like crazy. Now they are falling like a rock. I have been researching some potential rental purchases for a client and the asking price for the houses are currently $200,000 less than they sold for in 2005/2006. That may seem like a lot, it may not, however, you don’t have all the stats yet. In 2005, one house was purchased for $360,000, today it is selling for $159,000! That is a huge difference. So what went wrong and how do I know that $159,000 is a good price or will it continue to drop even further?
There is no absolute way to know whether you are getting a great price on real estate or if the value will fall further, however, by looking at certain factors about the area, you can determine whether the price asked is realistic for the area. Sound confusing, let me explain.
During the housing bubble, many times the housing values were much higher than the average incomes in the area (City, County, etc.) could support. In Jacksonville, FL during that time, the average salary was around $30,000 per person but the average house was over $200,000. How can a person making $30,000 afford a $200,000 house? They can’t, that ’s why we are in the mess we are in. So when purchasing a house, you want to look at the average salary/income for people in that area. Not only is this important to determine whether the house is overvalued but also when considering your ability to resell the property later. If most people in the area don’t make enough to afford the house it could take a long time to sell.
Another factor that you should look at when determining whether the house is overpriced is to look at how many homes are for sale in the area. More houses available for sale drives down the price. It is the basic economic concept of supply and demand. If there is more supply than demand, the price goes down.
When looking for how many homes are for sale, you will also want to know how long the homes have been on the market. If 5 houses in the neighborhood just went on the market last month, the price of the house has likely not been adjusted yet to reflect the excess houses on the market. If the house has been on the market for a year, it is likely that the house has been adjusted down from the original listing price, but it may still be a bit high since it is still on the market after such a long time.
The bottom line is there is no absolute way to know what the best price is, you need to go with what you think the house is worth and if the seller accepts it, yeah you got it, if not move on there are plenty of other properties available.
Going, Going, Gone. House sold for $10,000!
Pinch me, I must be dreaming. A 4 bedroom 2.5 bath home with over 2,000 square feet built in 2006 is going on auction starting at $10,000. This isn’t just a rare deal, there are plenty of others available as well.
In this current market life is pretty tough if you don’t have any savings to fall back on. For those that do have a little cash lying around though, there are plenty of opportunities to invest for retirement. One of the best options that I have seen is the Florida housing market. Yes, house values are falling like crazy in Florida and getting a mortgage is incredibly difficult, however, rental rates have not fallen and people who have been foreclosed on still need a place to live.
The Cape Coral/Fort Myers area has 58 houses and 44 lots going up for auction this month. Many of these homes have never been lived in and the auctions are starting at $10,000 or $25,000 for houses and $1,000 for a lot. With so many homes being auctioned at once and the market already saturated, it is very possible that people will be walking away next weekend with a house for only $10,000 plus closing costs!
A quick check on Craigslist shows that houses in the area are renting for $950 a month for a house or $500 a month for a two bedroom condo. Even if you rent the house out for $500 a month, the potential for future earnings is enormous.
Florida isn’t the only area in the country with some great auctions going on. Check out the following website for more info.
http://www.williamsauction.com/Search/SearchResultsState.aspx?statusid=1&CategoryID=1&p=1.2