Short sales – a real estate transaction in which the homeowner needs to sell the property, but owes more on the mortgage than the home currently is worth – continue to dominate the housing market, but these real estate transactions aren’t for everyone.
- Typically with a short sale, the homeowner is underwater and has experienced a financial hardship such as a job loss. To limit the damage to his credit rating, a homeowner may attempt to work with his lender to negotiate a short sale. Not only must the bank approve of the short sale itself, it also must agree to the price, since the bank will accept the difference as a loss.
- Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant – and sometimes vandalized – property, a short sale isn’t a distressed home that will sell at an extremely low price. According to data from RealtyTrac, short sales typically sold for nearly 10 percent less than the market price in the first quarter of 2011, whereas foreclosures sold at an average discount of 35 percent.
- Home buyers wanting to purchase a short sale must have patience. In most cases, when a buyer makes an offer on a house, he receives a response from the seller within a few days, or even hours. With a short sale, the bank must approve of the sale and bank representatives are overloaded with cases. It may take 30 days or longer for a buyer to receive a response from the bank.
- In a traditional real estate transaction, it is common for a home buyer who currently owns his home to make his offer contingent on selling his current home. In short sales, most banks will not approve an offer that is contingent on the buyer selling his current home, as too many things can go wrong.
- Banks also typically won’t consider short-sale offers that have inspection contingencies in them, so buyers can either do an inspection prior to making an offer or get no inspections.
- Even with the challenges associated with short sales, buyers don’t have too avoid these transactions. Being prepared ahead of the time and working with an experienced REALTOR® can help buyers avoid frustration and surprises down the line.
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New law gives added protection to
short-sale hopefuls.
On Friday, Gov. Jerry Brown signed Senate Bill 458 (Corbett) into law. The new law, which contained an urgency clause and became effective upon signing, protects homeowners pursuing short sales by barring first and secondary lien holders from going after sellers for money owed after the short sales close.
More info on the story….
A short sale – a transaction in which the homeowner sells the property for less than is owed on the mortgage – must be approved by the lien holder or lien holders, if there is more than one.
Under previous law (SB 931 of 2010), a first mortgage holder could accept an agreedupon short sale payment as full payment for the outstanding balance of the loan, but the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens.
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) sponsored the bill and urged lawmakers to pass this much-needed legislation.
“The signing of this bill is a victory for California homeowners who have been forced to short sell their home, only to find that the lender will pursue them after the short sale closes and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce. “SB 458 brings closure and certainty to the short-sale process and ensures that once a lender has agreed to accept a short-sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full, and the homeowner will not be held responsible for any additional payments on the property.”
Reprinted with permission from the Calif. Assco. of Realtors.
In anticipation of the expiration of current loan limits on Sept. 30, 2011, Bank of America has decided to stop accepting conventional and government applications for loan amounts that will exceed the permanent loan amounts. The deadline to submit loan applications was July 1.
According to an email from Bank of America, conventional loans that exceed the permanent loan limits will now be required to use non-conforming programs.
Barring Congressional action, the maximum FHA, Fannie Mae, and Freddie Mac conforming loan limit will decline to $625,500 beginning Oct. 1, 2011, from the current $729,750 limit, though the majority of counties will fall far below the $625,500 maximum. The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee.
Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.
This information was obtained from the Calif. Asso. of Realtors, and used with permission.
When deciding which home improvements to make, many homeowners consider the amount of resale value the improvement may or may not make and compare that against the cost of the renovation. Homeowners concerned with making home improvements that will pay off when it’s time to sell the property, should consider the following tips.
The first improvement/repair homeowners should consider are those that impact the home’s basic structures and systems. Potential home buyers generally do not want to face expensive repairs, and if items such as the foundation, roof, air conditioning, water heater, or other basic structure need to be fixed, the property will be considered a fixer-upper and its market price will be discounted accordingly.
Some minor replacements will produce big results for minimal cost. Replacing and coordinating bathroom and kitchen hardware and fixtures are generally inexpensive, but tend to make a big difference. The same can be said for getting rid of any dated finishes, such as old wallpaper and brass light fixtures.
Homeowners who don’t know when or even if they will be able to sell their home are advised to choose home improvement projects carefully. Unless the home is located in an upscale neighborhood and the property already is immaculate, owners can skip expensive upgrades – such as remodeled bathrooms – and focus on the fundamentals.
Information obtained by the Calif. Assco. of Realtors with permission. Photo by Barry Ripp.
Alameda County Planning staff is urging the Board of Supervisors to adopt an ordinance that would require property owners to complete energy efficiency retrofits prior to their homes being sold. The proposal is part of the latest version of the County’s draft Community Climate Action Plan (CCAP). Bay East members and staff worked with the County during 2010 to remove the point-of-sale requirements from the CCAP. However, in response to a threat of litigation from another interest group, County staff is now suggesting the retrofits be added back into the plan.
If the County Supervisors accept the the staff recommendation of including a Residential Energy Conservation Ordinance (RECO) in the CCAP, all homes being sold in Castro Valley, San Lorenzo, Fairview, Sunol and the rest of unincorporated Alameda County would be subject to energy retrofits at the time of sale.
The Alameda County Board of Supervisors will review the draft CCAP at a meeting on May 17.
Our Realty World cameras video taped almost every major city in Northern California. This should help you learn more about the city that you may want to move to. Just click the city you are interested in. Please enjoy the show.
I look forward to helping you in anyway I can.
Alameda, California – http://www.youtube.com/watch?v=umg9CUVhcm0
Albany, California – http://www.youtube.com/watch?v=UHtBnoRUEe8
Berkeley, California – http://www.youtube.com/watch?v=99hulMyHn50
Blossom Valley, California – http://www.youtube.com/watch?v=-NnhW9Aa8qo
Campbell, California – http://www.youtube.com/watch?v=0vW1XRohxnA
Carmel, California – http://www.youtube.com/watch?v=d_fv8raJvJs
Cupertino, California – http://www.youtube.com/watch?v=-t5-VBa-xDI
Dublin, California – http://www.youtube.com/watch?v=TrCa7J8vseY
Emeryville, California – http://www.youtube.com/watch?v=nIVFzcKDqJM
Fremont, California – http://www.youtube.com/watch?v=GxBg9z_aZX0
Gilroy, California – http://www.youtube.com/watch?v=zpIcevWc1T0
Hayward, San Lorenzo, California – http://www.youtube.com/watch?v=hj-9Q44DxoE
Livermore, California – http://www.youtube.com/watch?v=wIceLQhYBeo
Los Altos, California – http://www.youtube.com/watch?v=NGbdSewOpzs
Los Gatos, Monte Sereno, California – http://www.youtube.com/watch?v=xjz7pIcPVnI
Milpitas, California – http://www.youtube.com/watch?v=L70mGkUN-Ug
Monterey, California – http://www.youtube.com/watch?v=L5tAE6JFD9I
Morgan Hill, California – http://www.youtube.com/watch?v=zMtQmrp20-8
Mountain View, California – http://www.youtube.com/watch?v=UMRVDVYCNZE
Newark, California – http://www.youtube.com/watch?v=2G5FT6SGeio
Oakland, California – http://www.youtube.com/watch?v=3okcJIUIlwI
Palo Alto, California – http://www.youtube.com/watch?v=FkJBK3-R_Aw
Piedmont, California – http://www.youtube.com/watch?v=ErZ_obcGb54
Pleasanton, Sunol, California – http://www.youtube.com/watch?v=voAFmyM3NGw
Salinas, California – http://www.youtube.com/watch?v=R-EYkmN7WR8
San Jose, California – http://www.youtube.com/watch?v=dcK3X9J-awU
San Leandro, California – http://www.youtube.com/watch?v=OAu1Up1PNnw
Santa Clara, California – http://www.youtube.com/watch?v=AnmCscnxXKs
Santa Cruz, California – http://www.youtube.com/watch?v=o1_mh1uLlF8
Saratoga, California – http://www.youtube.com/watch?v=kESZB-7tyeg
Sunnyvale, California – http://www.youtube.com/watch?v=_LcGBiK7e1Y
Union City, California – http://www.youtube.com/watch?v=zFXiAOe1Yck
Due to recent struggle in the real estate market, it’s now more difficult to get approved for a loan. Underwriting standards have tightened, meaning that borrowers need higher credit scores, more income and larger down payments in order to qualify. But that doesn’t mean you can’t buy a new home. Here are the biggest hurdles to home financing and what you can do to overcome them:
Higher credit score requirements – although you may get approved with a 620 credit score, you likely won’t get the most favorable interest rate and fee. The solution?? Contact all three credit reporting agencies—Equifax, Experian & TransUnion, by calling 1-877-3222-8228 or going to www.AnnualCreditReport.com . Once you get your credit reports, check all information for accuracy. If you find any discrepancies, report it to the credit company immediately.
Greater scrutiny of income & assests – mortgage lenders have to verify your information, so be prepared when you apply for your loan by having documentation that supports your income & assets. Have copies of tax returns, paystubs, bank statements and any investment accounts.
With a little preparation, you’ll be able to take advantage of today’s low interest rates and reasonable home prices…and buy the home of your dreams.
The Calif. Assoc. of Realtors (C.A.R.) released the results of a statewide survey on short sales and the challenges REALTORS® face in working with lenders and servicers.
The most frequent problems REALTORS® cited in working with lenders and servicers during the short sale process include unresponsiveness, onerous procedures, and long processing delays. The survey also found that fewer than three of five short sales close in California, illustrating the complexity and difficulty of navigating lenders’ and servicers’ short sale procedures.
“The lack of standardization, long approval process, and lack of lender approvals are hampering what should be a 45-day short sale process,” said C.A.R. President Beth L. Peerce. “Instead we’re hearing the typical response time for lenders is at least 60 days, and in many instances, their response time exceeds 6 months.”
It’s important to work with experienced real estate agents. So call me with your real estate questions. I’ve been helping clients since 1985.
California home sales rose in January, marking three consecutive monthly increases and posting their highest level since May 2010, while the statewide median price declined to its lowest level since June 2009, according to data C.A.R.
“With lower home prices and rates edging up from their historic lows of late last year, prospective home buyers should consider the opportunities in today’s market,” said C.A.R. President Beth L. Peerce.
California home sales rose 5.1 percent in January compared with December, to a revised pace of 520,080 units. Sales also increased 2.5 percent in year-over-year comparisons, marking the first year-over-year sales increase since May 2010. The statewide sales figure represents what would be the total number of homes sold during 2011 if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
The statewide median price of an existing, single-family detached home sold in California was $278,900, down 8.6 percent from a revised $305,020 in December and was down 2.0 percent from the $284,600 median price recorded for January 2010. The January 2011 median price was the lowest since June 2009, when it was $274,640.
