Sunday, March 21, 2010

What Is A Short Sale?

A short sale is a transaction in which the lender, or lenders, agrees to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt. Yes even after your transaction is done unless it is specified in writing as part of the contract a lender can pursue you years later for the balance of the loan.


Why is the number of short sales rising?

Due to the recent economic crisis, including rising unemployment, and drops in home prices in communities across the nation, the number of short sales is increasing. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses. The cost of running the home including mortgage, taxes, utilities, upkeep etc are still squarely on the shoulders of the homeowner. In a foreclosure the lender will be responsible for those after the foreclosure is finalized.

A short sale can also be the best option for homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially. Check with a lender to see the ramifications of a short sale on your credit report.

What challenges have short sales presented for REALTORS®?



Absence of a uniform process and application

Currently, both short-sales documents and processes are lender-specific, making it very difficult and time-consuming for REALTORS® to become knowledgeable and efficient in facilitating these transactions. In other words there is not a standard process to follow. Each lender is requiring different forms and basically has their own rules on the transaction. Standard practices in the transaction are superseded by the lenders insistence on final say on all aspects of the contract. In a normal transaction you get an answer to your contract in a day or two. Once the lender takes over the procedure it could take months to get the transaction offer answered. There is usually a clause in the contract specifying that the buyer or seller can walk away from the deal with no penalties after a specified date like say a month after the contract is submitted but you are still tied up in a transaction for that time.

The buyer is usually responsible for all repairs including Township violations. Think of it like an auction where you are buying the home “as is”. We have even seen instances where the lender wants to renegotiate the commissions or make the buyer pay the realtor commission for their agent which is normally paid by the seller. You are still entitled to your inspection though and can specify you can walk away if you do not like the results. It must be stated in your contract that you are taking the inspection option allowing you to do that.

Multiple lenders

When more than one lender is involved, the negotiations are much more difficult. Second lien holders often hold up the transaction to exert the largest possible payment, in exchange for releasing their lien, even though in foreclosure they will get nothing



As a result of these challenges our members have reported difficulties with: unresponsive lenders; lost documents that require multiple submissions, inaccurate or unrealistic home value assessments, and long processing delays, which cause buyers to walk away.

So the bottom line is yes you can get a deal on a home because normally the price is lower than the norm. You have to be prepared for the transaction to take much longer than a normal one. You have to have your inspections to see what all the repairs will cost. The township does not normally do their inspection until alter all the papers are signed by both parties so you could be surprised by another set of repairs prior to settlement. As a buyer you may be responsible for paying some or all of the buyer’s realtor fees. Remember you are basically buying the home “as is” and will not get any help from the seller because they are already in difficulty with their finances.

Century21 Alliance
Jim & Deborah Brady Realtors
Licensed in Pa #RS276048
Office: 610-853-2700
Direct: 610-853-8416
Cell: 610-613-3381
Fax: 610-853-4835

Website: http://www.bradyhometeam.com/

Our Blog Pages: http://yourrealestatequestionsanswered.blogspot.com/
http://www.trulia.com/blog/jim_brady/
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Saturday, March 13, 2010

A Day In The Life Of A Realtor Showing Homes

We were contacted by a young couple over the phone looking for a home in Haverford Township. They seemed focused and already had a list of ten homes they wanted to see. After communicating with them some more over the phone and sending them the available homes they had a list of about 20 homes they wanted to see. Yikes that is a lot of homes so we narrowed it down to 9 homes that looked the best of the lot. They had nice pictures up and many were touting the fact they were move in condition which our clients were interested in since they both worked and had one child with another baby on the way.

We met at the first home and they were lovely people and had their child and grandparents with them to help out. The first home was decent looking if plain but as soon as they realized it had no rear yard but a driveway instead we left quickly after seeing the first floor. That is much easier on everyone if you have a lot of homes to see. Why look in every nook and cranny if you know the home does not work for you.

The second home was the same basically and it also had a driveway and garage in the lower level so we did not even go in. Both homes were brick twins and were kind of plain with nothing that really jumped out at you.

The third home was a single cape that had a lot of charm inside and a nice rear yard. Capes typically have a bedroom on the first floor and our clients decided that would not work with the children. It was also on a busy street which was a negative with no fenced in front.

The fourth home was a beauty. A huge twin that did not seem to need any work. Completely updated with new kitchen, floors, heater, the works. It had a nice rear yard and a family room for an office and playroom but for some reason the home did not click for them. It was brand new on the market. I think they were looking for a different neighborhood look than this one. You can tell when you are in a home if it grabs a client or not and this one they were subdued.

The fifth home was a small single that had a lot going for it but it to had no yard and instead a driveway and garage. It was also on a busy street. Had charm and was ready to move in but needed some updating.

The sixth home was another big twin that grabbed the clients as soon as they entered. It had the layout, colors, space and decorating style they identified with. It had a small office also. The neighborhood was more like they had in mind. They even thought the squirrel entering the roof facia through a hole was charming. It had trees shading the front and rear. But guess what? No rear yard again. It had a deck overlooking a driveway and garage.

The seventh home was in Bala Cynwyd and had a great rear yard but the steps out of the kitchen to the yard were missing! Inside was a nice open layout with lots of light and hardwood floors. The second floor had a beautiful bath and one bedroom. The third floor had two small bedrooms up a tight stairway that they decided it would be a hard trip at night carrying the children to bed. It was a 75 year old home so that layout was common. The street was also very steep making stroller navigation tough.

The eighth home was under contract already and the ninth home was for sale privately and they never returned our call to view their home. Makes it tough to sell if you will not let the clients see it.

So after viewing the homes on our list we had a great feel for what the clients wanted. They were leaning toward a neighborhood like Ardmore, or Wynnewood. Wanted a home with a fenced in rear yard on a quiet street with lots of charm, hardwood floors, open layout with an office or playroom and move in condition.

Of the homes we saw only one had what they were looking for but they did not seem to care for the neighborhood. All of the others had something wrong with them in their eyes and were not being considered. It only took about two hours because they were reasonable and when they realized the home did not have what they wanted we moved on. Only a couple of the homes were truly move in and updated. The other all needed updates in the kitchen and bath or needed other updating. Only one had a finished basement that I saw. Oh well back to the drawing board.

If you want to sell your home in this market you have to have it updated and ready to move in or you are not going to get top dollar. See our previous blog on getting your home ready to sell.

Our clients sent us five homes we picked out of the rest of the available and while we were out showing and drove by them and narrowed it down to 2 because of the yard requirement and a quiet street requirement.

Talked to our clients and they made arrangements to see them in two days. Then we got an email from them that night saying they were going to put their house hunting on hold for a while and contact us at a later date. Yikes, so we were back to square one with them. I think they were just frustrated at the shortage of homes meeting their requirements. Anyway they were lovely clients and we would work with them in the future but would narrow the search down considerably after meeting with them and see what they were really looking for.

Oh, on a side note the one twin we showed that was truely move in condition was on the market 3 days and had two strong offers which is unheard of in this market. It just shows a home where the sellers maxed out their potential and showed it properly will still move quickly even in a slow market.



Century21 Alliance
Jim and Deborah Brady Realtors
Licensed in Pa #RS276048
Office: 610-853-2700
Direct: 610-853-8416
Cell: 610-613-3381
Fax: 610-853-4835
Website: http://www.bradyhometeam.com

Our Blog Pages: http://yourrealestatequestionsanswered.blogspot.com/
http://www.trulia.com/blog/jim_brady/
http://www.haverfordblog.com/cgi-bin/yabb2p4/YaBB.pl?board=HT-Real-Estate
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