It’s come full circle, I’m loving short sales from a seller representative standpoint due to the fact that it helps get them out of a situation that could devastating to them financially.  For a long time I’ve not enjoyed showing short sales to my buyers, simply due to the hassle.  Having closed several this year, I’ve got a new look on short sales.

So Why Should A Seller Short Sale?

First of all, you need to know what a short sale is.  GO here to read about what a short sale is .

So assuming you are a seller or home owner and have some sort of hardship and do not want to stay in your home, you can short sale.  But what is the difference between just giving the home back to the bank (Foreclosure) and a short sale.

• Foreclosures Stay with you for 7 years
• A foreclosure on your credit report will cause you to pay significantly higher rates for your next home, but also cars, credit cards, even insurance.
• A foreclosure on your credit report will require you to put more money down on your next home, but also cars and some apartments.
• Once the notice is given, the home owner will only be so for 30 days (in Georgia) and could face eviction as soon as 30 days.

A short sale on the other hand,

• A short sale stays on your credit for only 2 years
• Does not devastate your credit score as much.
• Can allow the home owner to stay in the home for up to 6 months in some cases without a payment.

So if you or someone you know is in financial distress, please call me at 770-374-4667.  If I cannot help you directly I can direct you to someone who can.

NOTE: Please consult with an attorney or accountant regarding your own financial matters.

Short sales are listed on the MLS, and you can search for all the homes in Georgia by going here.

I’ve been in Real Estate for 6 years. It’s not a long time for most at a job, but for the world of ACTUAL PROFESSIONAL REAL ESTATE, it’s an eternity.  Most of the top agents I work with have that many years, most of the ones that have gone back to their old jobs, did not.

I tell you that to say, none of us can remember being so motivated to almost call potential clients a name if they didn’t think it was time to buy.  Seriously, if you are paying $800 a month or more and have not been late on your bills and you have a job, you NEED to buy a home.

Don’t take my word for it, here’s what the NY Times says:

Unfortunately, we do not know when this golden age will begin, because we will be able to identify a bottom to the housing market only with the benefit of hindsight. But as it does with the stock market, the moment will probably arrive when everyone is feeling the most pessimistic.

That moment is certainly getting closer. Housing prices have fallen drastically from their peak levels in many areas of the country. Rates on 30-year fixed-rate mortgages are already close to 5.5 percent, and this week there were suggestions that the federal government might try to drive them down to 4.5 percent, a truly incredible figure to be able to lock in for three decades.

Meanwhile, first-time home buyers have the same advantage they have always had, which is that they do not have to sell their old place before buying a new one. That is an added advantage in areas where many available houses simply are not moving, because the people trying to sell them will not be bidding against you.

If you’re hoping for a recovery in the housing market, you ought to be cheering on the first-time home buyers. When they purchase homes, their sellers are free to move on or move up, stimulating further sales.

They finish up the article with some good advice:

Still, for anyone feeling the urge to buy, a number of practical considerations have changed in the last year or two. The basics are back, like spending no more than 28 percent of your pretax income on mortgage payments, taxes and insurance. Even if a lender does not hold you to this when you go in for preapproval, you should hold yourself to it.

As many of you know the real estate market is flooded with foreclosures.  However, there seems to be some misconceptions about what a foreclosures is.  Some mistakenly think that all foreclosures are HUD homes.

HUD homes are not the only foreclosed homes out there. Foreclosed homes are often mis-categorized. There’s Pre-Foreclosure, Auction and Post-Foreclosure homes that all get thrown into the mess. 99.9% of all post foreclosure homes are actually listed on most MLS’s.

Post foreclosure homes are bank owned, corporate owned, HUD homes, and some estate property. These are properties that did not sell at the auction or were bought back by the bank.  In the case of HUD homes, these are properties where the seller had an FHA loan on the property and the insurance (our tax dollars) kicked in.

The county usually holds an  auction for CASH for ACTUAL foreclosures, these are listed in the local paper for the area.

Pre-Foreclosures are also called Short Sales in some cases. Most of these will be listed as well.  Short sales can be a great deal and opportunity but do require patience and a easy living arrangement in case the deal falls through. Not all pre-foreclosures are short sales, but most will be.

Unless you’ve had your head in the sand all week, then you know that there’s talk of an economic bailout that should cost you and I about $10,000 a piece. It got me thinking about accountability .

Whatever happened to personal responsibility?

As I finished my workout today I passed someone having a conversation about that very topic.  Apparently this person’s child had stolen something and didn’t think much of it.  The distressed parent did not know what to do.  Her ultimate method of "accountability" was to let the child know that if it happpened again and he got caught, then she would let the authorities deal with it.

What’s somewhat funny about this story is this is exactly what has happened to our economy.  Re-read that story above and let’s replace some words:

[Our Country's ] ultimate method of "accountability" was to let the [Industry ] know that if it happpened again and they got caught, then they would let the [Government ] deal with it.

Sorry, but that’s not really what I want.  I doubt you want the Government to take your money at gunpoint [TAXES] and bail out these financial districts either, when the solution is a simple, time tested word, ACCOUNTABILITY.

In Real Estate, there is no accountability.  There’s almost no barrier to entry for the mortgage industry or to be a real estate agent.  The public puts absolutely no weight in these professions.  Realtors are often compared to used car salesmen and when it comes to selling a home, most home owners would rather have a colonoscopy than think of paying a Realtor for their services….

Mortgage Broker and Real Estate Professionals are responsible for handling, for most, what is the biggest investment of their entire life. In the case of Real Estate Agents, in some states they have a fiduciary responsibility to look out for their client — this is the same responsibility that an attorney has! It’s hard to believe then that the state and the industry know the value of a Real Estate Agent but the public and the agent themselves don’t take the responsibility seriously… and WHY?  Because there is no accountability.

Mortgage Broker gives you a loan that on paper looks ridiculous but still clears underwriting.  What can you do?  At best, file bankruptcy.

An Realtor suggests a price to win your listing and is not honest about the market.  You are happy in the short term but in a declining market, you’ve just signed your foreclosure papers.

Now I’m done with my rant, but I’d much rather see accountability and standards added to the Real Estate industry as a whole than see these bailout plans.

In this month’s Georgia Association of Realtors magazine there was a nice reprint of RetlyTrac’s statistical information.  I thought it was well worth sharing!

8 is the Rank of Georgia out of 50 states for foreclosures.10 is the average number of years that it will take for a home’s value to double in Georgia. 

34 is the average age of a first time home buyer. 

60 is the PERCENTAGE of the average home owner’s wealth that comes from their Georgia Home’s equity. 

112 is the percent increase in foreclosures from 2nd quarter 2007 to 2nd quarter 2008

5 is the rank of 2007 in terms of existing home sales

171,000 is the average net worth in dollars of a home owner.  

36 The number of times a home owner’s net worth is more than a renter’s (almost).  (The average renter’s networth is only $4,800)

I was particularly intrigued to see the networth number. We all have probably sat down and worked those numbers out and I’m as jaded as the next person when it comes to the seemingly astronomical figure that comes out of it (my car does not add to my net worth in my opinion). The fact remains that a home is like a forced savings account and holding real estate long term is a proven piece to your financial success.

I’ve gotten several questions from new buyers and other from my previous blog post about short sales that I’d thought I’d right a little something about Short Sales.

A short sale is what happens when the bank takes less then what they are owed.   For example,  a buyer buys a home for $150,000 in 2007.  Unfortunately, they lose their job in early 2008 and cannot pay their bills.  They try to work something out with the bank on their late payments and their account rep suggests a short sale (not usual).  From there they put the home on the market with a Realtor and get and negotiate a sale for $125,000.  They avoid foreclosure, eviction notices and investors knocking on the door at all hours… well maybe.

The real world isn’t so clean.

What has to happen in order for a bank to consider a short sale:

• Some sort of hardship - job loss, death in the family, medical bills (KEY: MUST BE DOCUMENTED HARDSHIP)
• Must be "upside down" and owe more than the home is worth when sold through a Realtor

Some things that will absolutely help you if you are in this situation:

• Go look and get approved for an apartment or rental immediately
• Keep all documents for eveything as soon you know you’re falling into foreclosure
• Don’t be fooled, filing bankruptcy can help you stay in the home longer but won’t stop the foreclosure process.

Benefits of a short sale to owner

1. Get to stay in the home a little longer with no payments.
2. Some lenders look at it as slightly better than a foreclosure when purchasing another home.
3. Some banks will NOT make you sign a promissory note!
4. Avoid foreclosure process.

If you have any questions, feel free to comment or e-mail me.