Selling Your Home – Why The First Week is Critical
By · CommentsBy Emily Peck (Wall Street Journal)
Trying to sell your house? Many sellers put their home on the market at a wishful-thinking price, figuring that they could just lower it later.
That strategy could be a misfire. According to a new analysis by RedFin Corp., a Seattle-based brokerage that operates in nine states, a listing gets the most attention online when it’s new to the market. The week that a listing hits the market, Redfin estimates that it gets nearly four times more visits on real estate websites than it does a month later, likely the earliest time that a seller will consider cutting the price.
Redfin looked at traffic to listings in Seattle, San Francisco, Los Angeles, Irvine, Calif., Washington, D.C., Boston and Chicago. They considered listings that debuted in the first three months of 2010, sat on the market for at least 60 days and had undergone at least one update. The site used its own traffic data to estimate what traffic would be like to other real-estate sites.
Redfin’s graphic, below, tells the story:
The red line represents visits from the day of debut. Green shows visits to the listing after it’s updated.
Back when most folks looked for a new home by getting in the car, the freshness of a listing didn’t matter very much. But now a new real-estate listing works almost like a news story. When the news hits, people flock to read it. The next day, traffic drops off. Your home listing, says Redfin chief executive Glenn Kelman, “is just another momentary media phenomenon in an ADD-addled world.”
Sink More Money in Your Home?
By · CommentsThe housing crash has left at least 11 million people in the unenviable position of owing more on their homes than they are worth—and many more millions with properties worth far less than they paid for them.
But some might not be as trapped as they think.
Record-low mortgage rates and a new slump in home prices are presenting unusual opportunities in the housing market these days—even for so-called underwater borrowers.
A real-estate broker in Sarasota, says none of her clients kicked in cash when selling their home last year. This year, “about half are willing to bring money to closing, anywhere from $5,000 to $45,000,” she says.
Are these people crazy to be tying up even more of their cash in their homes, in effect doubling down on what has been a losing bet thus far? After all, any number of variables, from the employment picture to the credit markets, could weigh on housing for years to come.
Yet economists say trading up to new homes or refinancing existing ones can be smart—even if it means plunking down more cash to get out of old mortgages. People living in less-desirable neighborhoods might be able to find better homes in tonier ones that offer better appreciation potential. And with mortgage rates so low, such buyers can keep their monthly payments manageable, even though the new homes are more expensive.
The refinancing equation is changing, too. Thanks to rock-bottom interest rates and liberal lending terms for Federal Housing Administration loans, a person who plunks down cash to retire a higher-rate mortgage might be able to reduce his monthly payments, even as he shortens his loan term to 20, 15 or 10 years.
In the past, financial planners typically recommended that homeowners devote as little cash to real estate as possible, and to invest it in the financial markets instead. But with stocks essentially where they were 11 years ago and market volatility seemingly on the rise, people are rethinking that wisdom. Devoting extra cash to repay a mortgage early is among the safest ways to produce an investment return.
Don’t Abandon Your Property!
By · CommentsWhy Just Letting the Bank Take Your Property Could Present a Real Problem:
Your home is underwater. You owe more on the mortgage than the property is worth. Maybe hundreds of thousands of dollars more. You cannot afford the mortgage payments, the homeowners’ association dues, the property taxes, and the upkeep. Why not let the Bank take the property? Why shouldn’t you just mail the keys back to the Bank and let the Bank sort it out?
With thousands of mortgage foreclosure lawsuit being filed each month in Florida, it appears that not just a few homeowners and investors are choosing to ignore the problem and head for the hills. Many of these lawsuits are won by default for failure of the homeowner to file a response to the complaint of foreclosure.
Be careful. Ignoring this particular problem could have consequences you could not possibly have imagined.
For example, pursuant to Rule 1.560(b) of the Florida Rules of Civil Procedure, the lender may request that the Final Judgment of Foreclosure include an order requiring the judgment debtor to complete a Fact Information Sheet (Form 1.977) within 45 days of the entry of the Final Judgment. The Fact Information Sheet is a form of interrogatories in aid of execution that was adopted by the Florida Supreme Court in 2000. The information sought includes the judgment debtor’s income, employment information, bank account information, motor vehicles owned by the judgment debtor, real estate assets, paycheck stubs, income tax returns, and any other such financial statement or loan applications submitted within the last three years.
Most importantly, this Rule specifically states that “Failure to obey the order may be considered contempt of court.” Civil contempt is defined as the failure to do something ordered by the court for the benefit of a party to a civil action. Accordingly, it is within the court’s power to issue an arrest warrant against a judgment debtor who refuses to complete the Fact Information Sheet. It is becoming increasingly common for aggressive lenders to pursue entry of an order of civil contempt against a party who continues to ignore a judgment creditor’s legal right to discovery of the debtor’s financial condition as part of the creditor’s efforts to collect on deficiency judgments. In other words, the legal system does not let you simply ignore or walk away from the problem.
While your situation may seem hopeless, relief may be had by attacking the problem head-on. Keep open communication with your lender and explore loan modification options. If that doesn’t work, hire a Realtor that specializes in short-sales immediately, to assist you in the sale of the property. And if you decide to pursue a short sale, with some persistence, your lender may even agree to waive their right to pursue the loan deficiency balance remaining after the sale of the property or negotiate a lesser amount.
If you have been served with a foreclosure lawsuit, hire an attorney. Your attorney can assist you in defending the foreclosure, buy you additional time to obtain a short-sale, and also assist with your negotiations with the lenders. Making this effort to mitigate your damages can result in a reasonable settlement and may help you escape liability for a large amount of debt.
Alternative to Foreclosure Gains Traction
By · CommentsKen Harney (Herald-Tribune)
Short sales have been the hot solution for financially stressed homeowners and their lenders for the past year, but here’s another potent foreclosure alternative that’s about to take center stage: deeds-in-lieu.
Some of the largest mortgage servicers and lenders in the country are gearing up campaigns to reach out to carefully targeted borrowers with cash incentives that sometimes range into five figures, plus a simple message: Let’s bypass all the time-consuming hassles of short sales and foreclosures. Just deed us the title to your underwater home and we’ll call it a deal. We won’t come after you to collect any deficiency between what you owe us on the mortgage and what we obtain from the home sale. We might even be able to wrap up the whole transaction in as little as 30 to 45 days.
Mortgage companies say troubled borrowers increasingly are signing up.
One of the largest servicers, Bank of America, has mailed out 100,000 deed-in-lieu solicitations to customers in the past 60 days, and its volume of completed transactions is breaking company records, according to officials.
What precisely are deeds-in-lieu? The full name is deeds-in-lieu-of-foreclosure. They are voluntary transfers of property ownership from borrowers to creditors that make court-directed foreclosures unnecessary.
The concept is one of the oldest in real estate, but it got a special boost earlier this year when the Obama administration included it as an option in its Home Affordable Foreclosure Alternatives program, and mortgage giant Fannie Mae cut the penalty-box time for homeowners who use the technique from four years to two before they can qualify for another home mortgage.
Deeds-in-lieu also are surging because they provide a win-win for borrowers and mortgage investors that short sales often cannot match. Tops on the list: speed. Travis Hamel Olsen, chief operating officer of Loan Resolution Corp., a Scottsdale, Ariz., firm that works with lenders to solve troubled borrowers’ problems, said deeds-in-lieu represent “a very expeditious way to move on” for underwater borrowers who are facing potential foreclosure.
“A lot of owners just want to be finished with it, now,” he said. “They don’t want to deal with (the house) anymore.” They don’t want to deal with real estate agents or signs on the front lawn that reveal their financial squeeze to neighbors. They don’t want to haggle with potential buyers coming in with lowball prices. But they also don’t want to simply walk away — strategically default — because that will crater their credit files and scores for as much as seven years.
Greg Hebner, president of the MOS Group Inc. of San Diego, which also works with banks and investors across the country to resolve defaulting borrowers’ situations, said a key motivation now is that lenders are stuck with massive backlogs of underwater homes that haven’t yet gone through foreclosure and been put on the market — the so-called shadow inventory.
Not only is it cheaper for them to do deeds-in-lieu to gain control of those properties, but with current mortgage rates below 5 percent, they’re likely to be able to resell them faster and on potentially more favorable terms in the summer and fall.
“If you can get a lot of inventory moving in the next couple of months” of prime home-buying season, said Hebner, “you are solving a lot of problems.”
Matt Vernon, Bank of America’s top short sale and deed-in-lieu executive, said the technique works so well for both borrowers and mortgage owners that his company is running pilot programs in major housing markets to alert borrowers who might benefit but are not familiar with deeds-in-lieu.
To sweeten the pot, Bank of America is offering cash incentives that range anywhere from $3,000 to $15,000 — and is getting a strong response, according to Vernon.
What are the downsides or limitations of deeds-in-lieu for homeowners?
Probably the most important, say experts, is that they don’t work for every situation involving serious mortgage default. For example, if you have equity in the property, you’ll probably want to pursue a loan modification first, then a short sale, rather than hand your equity stake over to the lender.
Deeds-in-lieu usually don’t work when there are multiple mortgages from different creditors encumbering the property.
Also, though deeds-in-lieu do less damage to borrowers’ credit histories than foreclosures or bankruptcies, they definitely leave a mark.
Fair Isaac, developer of the widely used FICO credit score, says on its “MyFico” Web site that deeds-in-lieu and short sales are both treated as “not paid as agreed” accounts, and are treated the same by the FICO scoring model.
How Bad Will Housing Market Get?
By · CommentsBy Nick Timiraos (Wall Street Journal)
Most analysts expected housing might hit a rough patch after the home-buyer tax credit expired in April. But is the plunge in demand becoming worse than expected?
It’s a fair question, given Wednesday’s report that new home sales plunged 33% in May from April and were off 18% from one year ago.
Moreover, the Mortgage Bankers Association reported that mortgage rates fell again, down to 4.75% last week from 4.82% two weeks ago. By comparison, rates were slightly higher one year ago, at around 5.3%.
Yet demand for refinancing or for taking out new loans is tepid. The index that tracks new purchase-loan activity was down 2.3% from last week and nearly 37% from one year ago.
That weakness is also showing up in home sales contracts signed in May, which the National Association of Realtors estimates is down 10% to 15% from one year earlier. Those deals won’t close until later this summer, which means that we could be in for several more months of gloomy housing indicators.
One big question is how quickly demand will bounce back as the market works through the post-tax credit hangover. Another big question: How quickly will new supply come onto the market in those intervening months? If more banks put homes on the market this summer and more sellers list their homes, that pushes up inventories and pushes down prices.
Housing economists are gloomier about the prospects than just a month ago, which suggests that there may be more evidence that the tax-credit lull won’t be as temporary as once believed.
The answers to those questions could foretell whether housing prices drop just 5%, or if there’s truly a “double-dip” in store, that would mean drops of around 10-15%.
Home Buyer Tax Credit Being Extended?
By · CommentsHome buyers may get an extra three months to finish qualifying for federal tax incentives that boosted home sales this spring.
Senate Majority Leader Harry Reid, D-Nev., said Thursday he wants to give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000. Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.
The proposal would only allow people who already have signed contracts to finish at the later date.
The National Association of Realtors estimates that about 180,000 buyers who already signed purchase agreements are likely to miss the deadline.
The tax credits have helped propel sales in Southwest Florida for the last several months, taking the levels of homes changing hands back to the boom times of mid-2005.
Sales have not declined in the Sarasota-Bradenton market for nearly a year. They were up 32 percent in April. In Charlotte County-North Port — which has not seen a drop since December 2008 — sales rose 6 percent last month, according to data from the Florida Association of Realtors.
Condominium sales also rose dramatically in April — up 70 percent in both Sarasota-Bradenton and Charlotte County-North Port.
Reid introduced the proposal as an amendment to a bill that would extend jobless benefits through the end of November. Joining him were Sen. Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn.
The Senate is expected to take up the amendment next week. Senate Democratic leaders hope to finish work on the jobless benefits bill next week, but they have yet to secure enough votes.
