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.
Should I consider a short sale?
Today nearly 1/3 of all homeowners owe more on their homes then the homes are worth. If the homeowner can continue to make the mortgage payment and isn’t planning on moving anytime soon, that is not a problem. However, if the homeowner needs to sell the home being underwater on the house can be a huge problem.
In certain areas of the country, the real estate market is flooded with short sales and foreclosures. Home sales are picking up but buyers are still able to name the prices they are willing to pay for the properties. Increasingly, banks are holding the homeowners responsible for the balance left between a home’s selling price and the selling owner’s outstanding mortgage. Banks have taken a hit and now the stimulus money the got from the government keeps their top executives from earning the big bucks they want from salary and stock options so the banks are doing their best to repay the government and avoid needing any additional stimulus because the CEO wants his millions. That may sound a bit harsh, but the reality is, banks are not as willing to negotiate a short sale down and write off the balance now as they were a year ago.
Before starting a short sale, talk to your banker to see if you qualify for a loan modification or some other program that will let you stay in your home
Florida Real Estate Auction
http://www.condo.com/Auctions/
I just discovered a great new website. This site has info on condos for sale around the country, including auctions.
Check out the auction in Orlando coming up next month. The bank is auctioning off 179 condo units in 3 different complexes around the city. The condos are FHA approved and there is no minimum bid reservation.
Getting Value for Your Money
In many parts of the country housing prices are falling. Areas that were hit first were those that had a large escalation in price during the bubble period. Now other parts of the country are getting hit as well due to the increase in unemployment. With fewer people able to purchase and keep making payments on their mortgage and more houses coming on the market all the times, housing prices are bound to drop, its simple supply and demand. Right now there is a lot of supply but not much demand. So how do you know whether the property you are looking at will hold its value?
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.
1. Compare Average Income to Average Housing Prices
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.
2. Look at Number of Homes for Sale in Area
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.
3. Look at How Long the Homes Have Been on the Market
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.
4. Look at Employment Opportunities
Currently in Florida there is an interesting situation, communities are springing up with no real industry or jobs to support the local market. If you don’t know the area, one tip that there might be an issue like this is when the town you are looking at has average housing prices quite a bit lower than neighboring towns. Once the bubble burst, people realized that they couldn’t sell these homes because people needed jobs to pay the mortgage and there were little to no real jobs in these towns other than bagging groceries. As a result, these housing prices have fallen much more dramatically than those of the surrounding communities and will be slower to return to their higher values.
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.
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.
Need to Sell Quick to Avoid Foreclosure? Check out these tips to sell your house.
Many homes today are being sold in short sales. Short sales are when the bank agrees to allow the homeowner to sell the house for less than the outstanding balance of the mortgage. This can be a great option for banks as it saves them the cost of going through a foreclosure proceeding and if the house sells, it keeps the bank from having to sell the house. This can also be a better option for homeowners as a short sale looks better on a credit report than a foreclosure.
Before proceeding to offer your house for sale under a short sale agreement, you should first talk to your bank about your situation and see what they would advise and the amount that they would be willing to agree for you to sell the house for. It would also be a good idea to consult a real estate lawyer as some districts require the homeowner to still be liable for the difference between the selling price of the house and the outstanding mortgage.
Once you have decided that a short sale is a viable option for you, contact a realtor to list the property and take a good look at your house. To you it is a home and all the nicks and stratches on the walls may have memories, however, to potential buyers these only represent extra expense that they will have to sink into the home to bring it up to their standards.
It might be worthwhile to hire a person to come in and stage your house for potential buyers. Staging is when a person comes in and makes some changes to the house to make it more appealing to potential buyers. This can include things from decluttering rooms to make them appear more spacious, rearranging furniture, and adding homey touches like fresh flowers.
There are plenty of homes on the market right now so you need to differentiate your house from the others through staging or making a few changes to update the house. At the moment there are plenty of out of work homebuilders willing to work for excellent rates so if you were considering getting rid of that 1970s shag carpet and outdated wallpaper this is a great time to do it. You don’t need to replace it with top of the line products, but making a few simple changes like that will definitely make your house more competitive.
Investing for Retirement - Real Estate
Real estate prices are falling, stock prices are falling, so where can I put my money? While few people have money to play with these days, it doesn’t take a lot now to have some nice savings later.
Yes, market prices are dropping. While this isn’t a great market for people trying to sell, it is great if you have money to spend and it doesn’t cost as much as you might think.
Real Estate Auctions. If you have some money set aside for a down payment, consider checking out auctions. You can get some excellent deals as long as you have money for the initial payment and can come up with a mortgage or the remaining balance within 30 days of the close of the auction.
http://www.williamsauction.com/ This website has auctions on a monthly basis with some properties starting at $1,000. While the lower end auctions often need rehab work, if you are not interested in rehabbing, there are plenty of other properties in very good condition. Check back every month for the new properties because while there might not be something you are interested in one month, the next month there might be several.
When attending auctions in person or online, you need to first check out the property you are interested in. Look for any repairs that will be needed to modify the property for your needs. If you are going to rent out the property, does it have appliances, are new carpets needed, what repairs are necessary to make it hospitable. You need to take all these costs into consideration when determining how much you are willing to bid on the property. Once you know all these expenses, determine what you are willing to bid and stand firm. In these auction settings it is easy to get caught up in the excitement and desire to win, however, you can’t let that cloud your judgment. Once you have determined what you would like to pay, you should also determine the absolute most you would be willing to pay and still be profitable.
Real estate auctions can be a great way to find a vacation home at a great price or to start developing a few properties to rent out for some extra income.
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