Facing the Current Real Estate Reality

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In today’s economy, despite things improving, we are still seeing countless Americans dealing with the aftereffects of the housing market crisis from just five years ago. What that means for many people is that they continue to struggle with keeping up on their mortgages.

Today, we want to talk about knowing and understanding the options that may be out there for you – and realizing before it’s too late that you can seek alternatives to foreclosure.

During a discussion with Attorney Michelle Adams of the Law Offices of Jill Pogach Michaels in Rothwell Maryland, a number of options and some very valuable insight came up with regard to the homeowners trying to deal with their homeownership crises. Specializing in short sales, settlements and loan modifications, the law firm is often met with frustrating circumstances that might have been avoided had their clients been informed properly ahead of time of their options.

Particularly at a time when homeowners approaching and crossing the retirement age are facing challenges in their real estate endeavors, Michelle urges that consumers be educated as much as possible about how to handle their upside down mortgage or financial strife leading to an underwater property.

Her very first and most important advice is for homeowners to never tap into their retirement funds to be able to keep up with their mortgages. This will only compound the problem. Further, without knowing the consequences of refinancing their property, many people end up unable to seek relief from government programs designed to assist them in the first place.

Accessing Retirement Funds Will Backfire

Addressing homeowners’ retirement funds first, it is critical for people that are 55 years and older to reassess their living arrangements rather than use their retirement fund to keep up on their mortgage. Not only will they hardly be able to make much impact on the loan but also the damage to their retirement fund will almost be irreparable.

Conversely, they should consult with a real estate agent and also an attorney to evaluate their loan modification and/or short sale options. There is a very good chance they may be able to sell their property rather than face foreclosure and be left with nothing to retire.

Refinancing Will Undo Any Chance of Government Relief

A program that is designed to assist homeowners struggling to deal with a property valued less than what is owed on it can be just the thing to help them stay afloat. The HAFA program is one of many that has helped millions of Americans. However in order to qualify the loan had to have originated prior to January 1, 2009. The moment a refinance is done on a property, the clock restarts and the homeowner will no longer be eligible for the Home Affordable Foreclosure Alternatives program.

Important to Assess Your Situation Before Taking Any Steps

Before moving ahead with anything, it is absolutely imperative that homeowners in difficult situations of property distress evaluate their situation and look at the bigger picture. Consider short, medium and long-term plans. Review where you are right now and then look at your earnings. What percentage is the mortgage? What happens upon retirement?

A very important component of knowing what to do next is to understand your goals and be able to identify the areas where you can engage in alternatives. A meeting with an attorney will provide some perspective and direction as to what to do next. Maybe filing for bankruptcy is not the answer. It could be that you may be able to settle through arbitration. Depending on whether or not your state is a judicial or non-judicial state, you may have limited options and may need to take more immediate action.

Through it all, it is important to keep in mind that the closer you get to retirement the less time you will have to recover from the situation. So before it becomes too late, even if you are current on your mortgage payments – contact us today for a conversation about your options.

Marc Cormier: 703.564.4026 or 301.660.6272 or www.help2ownahome.com

Things to Know Before Making An Offer On a Short Sale Property

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Many real estate agents these days don’t even like to write an offer for short sales because right now national statistics show that less than 40% of all short sales actually make it to the closing table. This is because of more than one reason. First, lack of financing largely contributes to offers on short sales not being successful. Also, lack of cooperation from either side is also a reason for unsuccessful short sales.

Short Sales Are Often Better Deals Than Foreclosures

But some of the best opportunities in this market are in short sales – so if you are a buyer, here are some things to keep in mind when considering making an offer on one of these properties.

Contrary to what many buyers believe there are much better deals to be had in short sale situations as opposed to foreclosures. The main reason for this is that in the case of a short sale, there is much more time involved and discounts on the price of the property work to accommodate that extra time.

Some Extra Preparation Is Needed, But Not Much

Another problem that arises often is when buyers’ real estate agents advise their clients not to do an appraisal and home inspection during the process of buying a short sale. These two aspects are critical for the purchase of a short sale and can make or break your decision in a huge way. If you are unwilling to do either of these, it might be time to consider whether you are a good candidate to buy a short sale.

The reason I suggest having a home inspection and appraisal done ahead of time for short sales is mainly because of the time commitment it takes to do such a transaction. It is far more beneficial to learn ahead of time of any issues with the home or whether or not your bank would approve your home’s financing based on its appraisal. To go through months of processing only to learn that there is a problem that becomes a deal breaker can be avoided by getting these things done in advance.

Appraisals make sense because one of the biggest reasons that short sales do not go through is when the bank’s valuation of the property does not line up with the market value of the property. A way to avoid this misaligned value of the home is to get an appraisal done in advance so you know what you are dealing with.

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For more information on this or other short sale related concerns, I invite you to contact us today at 703.564.4026 or 301.660.6272.

What Determines the Value of Your Home?

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Basically, a home's worth is determined by its market value. How is "market value" determined? Most often, it's figured by a comparison ("comp") with homes similar to yours in the surrounding area. So, if the homes in your neighborhood average, say, $250,000, then it's likely that the value of your property will fall in the same range. But market value is also determined by a number of factors including the following:

External Factors 
There can be several external factors influencing the value of your home. One is "curb appeal", or the first impression your property makes upon prospective buyers. A home that's in excellent condition on the outside will make a great first impression; a home in poor repair instantly loses its appeal to buyers. Other factors can include lot size, popularity of an architectural style of property, water/sewage systems, paved roads, sidewalks, etc.

Internal Factors 
The condition of a home's interior also has a huge influence on prospective buyers. When you've demonstrated "pride of ownership" and kept up the maintenance (quality paint, trim, molding, etc.), a buyer's interest will immediately perk up for the simple reason that they know your care and concern will result in less cost and maintenance for them. Other internal factors include construction quality, condition of appliances, size and number of rooms, heating/cooling type, energy efficiency, etc. 

Supply and Demand
"Supply and demand" simply refers to the number of homes for sale versus the number of buyers. When there are more homes than there are buyers, prices tend to be lower. When there are a lot of buyers chasing few homes, then prices tend to rise. In effect, supply and demand affects how quickly your home will sell. Location More than likely, you already know the old saying, "There are three main factors in real estate - location, location, location." While that's not the whole story, desirability is a big factor for home buyers. They may want to live in particular school district known for its education excellence…a great and safe neighborhood with rising property values…etc. 

But I Know My Home Is More Valuable Than a Lot of Comparable Homes in My Neighborhood 
Aren't Allowances Made for This? Definitely! Sometimes, it can be difficult to find homes exactly comparable to your own. So, dollar adjustments are made for the differences between your home and comparable properties. 

Where Do I Find Sales Comparison Information? 

The easiest source to access is your Realtor. After all, it's his or her business to know such information! But, there are also other sources you can tap into in order to get a complete picture of your home's value in comparison to others in your neighborhood. Here's an overview of them:

1. ) The Local Assessor's Office 
It's very likely that your local assessor will be able to provide the sales history of a particular house, neighborhood, or style of architecture. Many assessors also provide lists of recent sales which you can browse and compare to the assessment roll. Today, many municipalities provide local sales and assessment information online making it very easy to access. Check with your local government agency to find out if they provide this service. 

2.) Online Private Companies 
You can search for these companies using the Google search engine and the keywords "comparable home sales" or "comparable sales." Some companies offer free information; others charge a nominal fee. If you wish to get more specific, you can Google "real estate database" and type in the name of your particular state to get additional property information. 

3.) Your Local Newspaper 
It's likely that your local newspaper is a great source of specific real estate information. Look for quarterly sales reports in the real estate or business sections.

The Key to Getting the Price You Want (or Close To It) for Your Home
The key to getting the best value is finding and matching the right buyer to your home. And that's the job of the Realtor! He or she should work hard to qualify those buyers upfront so the right people are viewing your property! In other words, the Realtor should weed out "lookers" and other unsuitable buyers as a first step in working with you. See how I do that for you by calling me today!

Be Un-Emotional When Buying a Home In Order to Get the Best Value!

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Want to break your heart and your bank account at the same time? Then buy a new home based on the fact that you've fallen in love with it!

Needless to say, you should never do this!

In some cases, when you fall in love with the "pretty face" of a house, you fail to look underneath and find problems like bad wiring, leaky roofs, bad foundations, etc. This is an extremely expensive way to buy a home!

A funny and sad example of this is shown in the 1986 film, The Money Pit, starring Tom Hanks and Shelley Long. They make the mistake of falling in love with a home and think they're getting a $1,000,000 property for only $200,000.

Once they get into the home, they find out it'll cost a million to repair it! It's got wood rot, a bad roof, bad plumbing, bad electricity, even bad raccoons!

Well, that's Hollywood exaggeration, of course. After all, The Money Pit was a comedy. But, when things like that happen to you, it's no joke. Repairs can cost you a lot of money and heartache, not to mention dangerously rising blood pressure!

So, again, never ever fall in love with a house at first sight! Easier said than done, you say? How do you avoid this tendency? Below, I offer some solutions to the problem!

Solutions 1: Get Cold Hard Facts about the Home!

When I talk about "cold, hard facts," I'm talking about getting the house evaluated by a certified home inspector.

It's well worth the money to have this job done because the inspector will cast the objective eye you lack on the property. He or she will evaluate every aspect of a house - roof, plumbing, wiring, foundation, etc.

And then, that inspector will provide you with a written report that may range anywhere from 20 to 50 pages. It will give you a point-by-point summary of what needs to be corrected.

The cost of a home inspection varies with the region of the country. Nationally, they range from $200 to $400. But, for the investment of, say, $200, you prevent yourself from losing thousands of dollars in repairs in two ways.One, you can simply walk away from the deal. Or, two, you can require that seller fix all items before you sign a contract!

Bonus: Often, you can ask that the seller pay for the home inspection!

Solution 2: Cool Off and Take Your Time!

Infatuation with a home is fun and exciting, and you can have the overwhelming temptation to buy an attractive home practically "on the spot."

My advice - walk away and come back several hours later, especially after you've viewed other properties! By then, it's likely you'll have a more objective eye.

Solution 3: Keep It Simple!

By this I mean that you should stick within your price range. You want the best hom e at the best price within your means! So, if you see an outwardly gorgeous home at, say, $10,000 above your price limit, say, "I love you, but you're way too pricey for me!" and walk away from the temptation!

Solution 4: Rely on Your Realtor!

At heart, I and other professional realtors like me, want you to have a home that meets your needs in the best way possible. That means preventing you from buying a home that's in substandard shape and/or beyond your means.

To be perfectly blunt about it, I rely on great word of mouth from satisfied customers to make the most of my real estate career. So, you have my promise that I'll do my absolute best to get you into the house of your affordable dreams!

Need that objective eye to help you make a smart home-buying decision? Contact us today.