INFO THAT HITS US WHERE WE LIVE...Those of us who think we can participate in a housing market recovery sooner rather than later just got welcome support from some industry experts. As reported by Fortune on CNNMoney.com, "After four years of plunging home prices, the most attractive asset class in America is housing." Research firm Metrostudy, which tracks new-home inventories for 65% of the U.S. market, reports that the steep drop in construction over the last few years has reversed the supply glut, with starts now well below closings. The firm believes the low inventory should eventually lead to higher prices.
The Fortune posting also cited a new study from a major bank that found homeowners now pay only 9.8% of their income in after-tax mortgage, tax and insurance payments, down from 17.2% at the 2007 peak. This means it's now cheaper to pay a mortgage and the other major homeowner costs than it is to rent the same house in 28 out of 54 major markets.
Fortune further reports that where existing home inventories average close to seven months, a modest boost in demand will result in solid gains in home prices and new construction. This could happen quickly in markets now showing good job growth. Moody's Analytics forecasts prices going up three to four points faster than inflation over the next few years in virtually all such markets. They see home prices rising with rents, with apartments in short supply. Of course, the housing recovery still requires job creation and consumer confidence back to normal, but we finally seem headed in that direction.
Showing posts with label Real Estate Update. Show all posts
Showing posts with label Real Estate Update. Show all posts
Monday, April 11, 2011
Wednesday, September 8, 2010
Why do Short Sales Take so Long to Close?
Real estate professionals know that a short sale transaction can take months for it to be approved and closed.
The reality is that short sales usually take three to four times as much as a regular sale to finally get to the closing. From the time the Realtor actually gets the property under contract to the time the lender approves, it could take anywhere from 30 days to six months, depending on how fast the borrower provides critical information for lender and Investor approval.
Even then, you still have one more variable to account for which is the buyer waiting for all this time to get the contract approved by the lender. For this, setting the expectations is a key factor in any short-sale transaction.
Buyers Expectations
Buyers who make an offer on a short-sale property need to know that lenders have to "reverse underwrite" a short-sale and make sure that they are allowing the sale to happen close to market value. I say "reverse underwrite" because instead of determining affordability, they will look for "un-affordability."
They will check the seller's financials to verify that they can't afford the house anymore and consequently, they will order a price opinion from a broker or certified appraiser, commonly known as BPO (Broker's Price Opinion) to make sure the house is being sold close to market value. If the offer is too low compared to what is owed, it will make more financial sense to the Lender to just foreclose the property and re-sell it as an REO (Bank-Owned Property). All this will happen while the buyer is still waiting for a response so it is very important to set the expectations correctly from the beginning to avoid losing the buyer close to the end of the process.
Seller's Expectations
On the other hand, it is important to also educate the Seller and set the expectations with them from the beginning. They need to understand that the Lender takes its time responding, but when they do, they usually give a 72-hour timeframe to respond or provide the missing documentation. If the documentation is not provided within the specified timeframe, it usually ends up in a closed file and countless work-hours lost. Another common situation that is happening very often is borrowers being served with foreclosure paperwork from either the lender or homeowner's association while the short-sale is being processed. It is crucial to let them know that this might happen so that they are prepared for it and receive the documents knowing that they are in the best hands. Foreclosure and short-sale are parallel processes and one does not cancel the other. Sometimes a short-sale might delay a final sale date, but it will definitely not stop the Lender from starting the foreclosure proceedings.
Closing the Short Sale
Short sale success comes from educating not only the seller but also the buyer and everybody else involved in the transaction. Setting the right expectations is the most crucial part of a short sale. There are many hours involved in processing a short sale and the last thing you want is a seller or buyer walking away because the expectations were not set correctly.
RISMEDIA, September 8, 2010--
The reality is that short sales usually take three to four times as much as a regular sale to finally get to the closing. From the time the Realtor actually gets the property under contract to the time the lender approves, it could take anywhere from 30 days to six months, depending on how fast the borrower provides critical information for lender and Investor approval.
Even then, you still have one more variable to account for which is the buyer waiting for all this time to get the contract approved by the lender. For this, setting the expectations is a key factor in any short-sale transaction.
Buyers Expectations
Buyers who make an offer on a short-sale property need to know that lenders have to "reverse underwrite" a short-sale and make sure that they are allowing the sale to happen close to market value. I say "reverse underwrite" because instead of determining affordability, they will look for "un-affordability."
They will check the seller's financials to verify that they can't afford the house anymore and consequently, they will order a price opinion from a broker or certified appraiser, commonly known as BPO (Broker's Price Opinion) to make sure the house is being sold close to market value. If the offer is too low compared to what is owed, it will make more financial sense to the Lender to just foreclose the property and re-sell it as an REO (Bank-Owned Property). All this will happen while the buyer is still waiting for a response so it is very important to set the expectations correctly from the beginning to avoid losing the buyer close to the end of the process.
Seller's Expectations
On the other hand, it is important to also educate the Seller and set the expectations with them from the beginning. They need to understand that the Lender takes its time responding, but when they do, they usually give a 72-hour timeframe to respond or provide the missing documentation. If the documentation is not provided within the specified timeframe, it usually ends up in a closed file and countless work-hours lost. Another common situation that is happening very often is borrowers being served with foreclosure paperwork from either the lender or homeowner's association while the short-sale is being processed. It is crucial to let them know that this might happen so that they are prepared for it and receive the documents knowing that they are in the best hands. Foreclosure and short-sale are parallel processes and one does not cancel the other. Sometimes a short-sale might delay a final sale date, but it will definitely not stop the Lender from starting the foreclosure proceedings.
Closing the Short Sale
Short sale success comes from educating not only the seller but also the buyer and everybody else involved in the transaction. Setting the right expectations is the most crucial part of a short sale. There are many hours involved in processing a short sale and the last thing you want is a seller or buyer walking away because the expectations were not set correctly.
RISMEDIA, September 8, 2010--
Friday, June 18, 2010
Buyers Drive Hard Bargains in a Tough Market
Unrealistic buyers are ruining the deal for sellers who are unwilling to make extreme concessions, some real estate practitioners complain.
''We see buyers who must have learned their moves from the World Wrestling Federation,'' says Glenn Kelman, CEO of the online brokerage Redfin. ''They think the final smack-down occurs at the inspection, where the seller will be reluctant to refuse any demand because the alternative is putting the house back on the market as damaged goods.''
But buyers say they're simply being smart.
''We had the position, 'If the seller is willing to come down enough, we will buy this home.' If they weren't willing, we would have just moved on. In this market, you have a lot of options,'' says Chris Dunn, a consultant in Chicago, who sought a 10 percent reduction on a property priced at more than $500,000.
Source: The New York Times, David Streitfeld (06/17/2010)
''We see buyers who must have learned their moves from the World Wrestling Federation,'' says Glenn Kelman, CEO of the online brokerage Redfin. ''They think the final smack-down occurs at the inspection, where the seller will be reluctant to refuse any demand because the alternative is putting the house back on the market as damaged goods.''
But buyers say they're simply being smart.
''We had the position, 'If the seller is willing to come down enough, we will buy this home.' If they weren't willing, we would have just moved on. In this market, you have a lot of options,'' says Chris Dunn, a consultant in Chicago, who sought a 10 percent reduction on a property priced at more than $500,000.
Source: The New York Times, David Streitfeld (06/17/2010)
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