Ok. The real estate market for sellers has been very challenging over the past 12 months or so and by most accounts will continue to be until at least this time next year. But some sellers are taking advantage of one method of selling there home that hasn't been around in a long time. That method is seller held financing!
Seller held financing is becomming more popular and I feel is a great way for sellers who may own their home outright, to sell their current home to buyers who may not have the necessary down payment to qualify for conventional financing. Lending requirements have tightened significantly over the past 12 months eliminating many buyers from the market. Previously buyers who otherwise had great credit but may not have had down payment could qualify for conventional financing. Or perhaps the buyers had enough for some down payment, perhaps 3% but the property was priced outside of current FHA loan limits. How does this process work?
It is quite simple. In essence the seller becomes the bank. The buyer and seller enter into negotiations for the purchase of the sellers property. In addition to price, closing costs/dates, down payments etc, the buyer and seller also negotiate financing terms between buyer and seller. At closing the buyer agrees to give the seller a lien against the property and seller agrees to accept payment from buyer per the terms of the contract. In most cases sellers will build into the financing a balloon payment at a future date. For example the seller accepts payments with interest for a period of 2 or three years and at that time the balance is due and payable. This gives the buyer the option of selling the home or refinancing the property and paying the seller off at that time.
I know this may not work for all sellers or for some buyers. But for those sellers who are able to wait for the balance of the sale it may be a great way to offload the property and make some extra money in the interim. There are risks and I would strongly encourage anyone who considers this option as a method of transferring title of a property to seek the council of a licensed Real Estate Attorney.
Wednesday, July 30, 2008
Friday, July 25, 2008
Floridas Housing Market Improves!
Have you ever heard that it takes the media about 3 months to report on changes in the nations economy? It's pretty much a fact. So what I am about to share with you may seem a bit naive to you right now, because we are trained to only believe something if a nightly news anchor ways in or we see it discussed on the Sunday talk shows. But based on hard facts and numbers brought to us from the National Association of REALTORS, Florida's housing market showed some good signs of strengthening in June 2008.
Most of us in the business have noted a slight improvement in our business over the past couple of months. We have not been good about sharing that with folks but it seems like that is about to change. According to a recent article from PRNNewswire: "The statewide existing-home median price in June was $205,500, up 1 percent from May's median price of $203,300. The median price of an existing condo last month was $183,700, also up 1 percent from May's figure of $181,800." The article goes on to state: "Several of Florida's metropolitan statistical areas (MSAs) reported increased sales of existing homes in June; a few MSAs also showed gains in condo sales. Realtors around the state reported heightened buyer interest in their markets, with a responding increase in telephone calls, home showings and other business activity."
This is a very good sign for future performance. NAR also feels like there will be an upswing in activity towards the end of the final quarter of 2008 and first quarter of 2009. Traditionally the summer months are more active for home buyers and sellers but I feel that activity will remain constant until the end of the year and beginning of next year when we will begin to see a return to a more normal market.
While sales activity has increased home values have eroded significantly from the same period last year. The article states the following: "Florida's median sales price for existing homes last month was $205,500; a year ago, it was $244,400 for a 16 percent decrease." Although as stated earlier median prices have increased from last month.
Based on this information I am not willing to say that we are through the fire, just yet. Congress has approved a plan to help nearly 400,000 home owners avoid foreclosure and have strengthened Fannie Mae and Freddie Mac. Anything that helps to reduce existing inventory is a great first step.
In my next article I will relay the results of an interview with a local Property Appraiser to see how existing foreclosures and short sales are affecting home values.
Most of us in the business have noted a slight improvement in our business over the past couple of months. We have not been good about sharing that with folks but it seems like that is about to change. According to a recent article from PRNNewswire: "The statewide existing-home median price in June was $205,500, up 1 percent from May's median price of $203,300. The median price of an existing condo last month was $183,700, also up 1 percent from May's figure of $181,800." The article goes on to state: "Several of Florida's metropolitan statistical areas (MSAs) reported increased sales of existing homes in June; a few MSAs also showed gains in condo sales. Realtors around the state reported heightened buyer interest in their markets, with a responding increase in telephone calls, home showings and other business activity."
This is a very good sign for future performance. NAR also feels like there will be an upswing in activity towards the end of the final quarter of 2008 and first quarter of 2009. Traditionally the summer months are more active for home buyers and sellers but I feel that activity will remain constant until the end of the year and beginning of next year when we will begin to see a return to a more normal market.
While sales activity has increased home values have eroded significantly from the same period last year. The article states the following: "Florida's median sales price for existing homes last month was $205,500; a year ago, it was $244,400 for a 16 percent decrease." Although as stated earlier median prices have increased from last month.
Based on this information I am not willing to say that we are through the fire, just yet. Congress has approved a plan to help nearly 400,000 home owners avoid foreclosure and have strengthened Fannie Mae and Freddie Mac. Anything that helps to reduce existing inventory is a great first step.
In my next article I will relay the results of an interview with a local Property Appraiser to see how existing foreclosures and short sales are affecting home values.
Thursday, July 24, 2008
Facing Foreclosure? Try a Short Sale!
OK. Over the past couple of weeks the amount of press on foreclosures has been overwhelming. With good reason. The amount of foreclosures has risen dramatically across the nation. There are ways of avoiding this devastating event without falling prey to "white night investors" which I call equity thieves. I will discuss them in a another post later. But believe me...they do not care about your financial situation. Borrowers can choose to explore the opportunity to sell their home short. What does this mean? Well I am glad you asked!
A "Short Sale" is when a homes value and or sale price does not cover the principle balance of the primary or secondary loan amount. Basically the homeowner is upside down in the house. Many people believe that the only option in this scenario is foreclosure. Especially if the homeowner is suffering from financial hardship and has fallen behind in their mortgage payments. In a short sale the lender agrees to accept less than the principle amount of the loan as repayment. This allows the homeowner to avoid having a foreclosure show up on their credit report.
How does this work? There are several things that a homeowner needs to have available in order to pursue this option. A letter of hardship indicating why the short sale needs to take place. Several months worth of bank statements and the ability to show financial resources to the lender. If a homeowner has the ability to come to the closing table with cash the lender will not allow a short sale to take place. The lender will seek an appraisal of the home and may even conduct a standard home inspection to determine the condition of the property. If the lender agrees to allow a short sale they will stipulate the minimum sales price which is usually much lower than the principle balance of the loan. I have seen lenders accept considerably less than the principle balance. $30 - $50 thousand dollars or more. A lender is not in the business of selling homes and having homes on the market is very expensive and they will usually work to avoid foreclosure if at all possible.
This is great news for those homeowners who wish to avoid foreclosure. Even better news is that congress recently rescinded the law that required homeowners from paying taxes on the forgiven debt! In any case this is much better than the damage a foreclosure will have on ones credit.
Unfortunately the homeowner will still need to find the buyer. This is where I can assist you. Or rather a knowledgeable REALTOR can assist you. Ask your broker if they are familiar with short sales. If not find someone who is. Selling a home short requires patience and a willingness to work with the lender. The process is different than a standard real estate transaction. Lenders understand the current market and are usually willing to pay for the brokers expenses and commission.
A "Short Sale" is when a homes value and or sale price does not cover the principle balance of the primary or secondary loan amount. Basically the homeowner is upside down in the house. Many people believe that the only option in this scenario is foreclosure. Especially if the homeowner is suffering from financial hardship and has fallen behind in their mortgage payments. In a short sale the lender agrees to accept less than the principle amount of the loan as repayment. This allows the homeowner to avoid having a foreclosure show up on their credit report.
How does this work? There are several things that a homeowner needs to have available in order to pursue this option. A letter of hardship indicating why the short sale needs to take place. Several months worth of bank statements and the ability to show financial resources to the lender. If a homeowner has the ability to come to the closing table with cash the lender will not allow a short sale to take place. The lender will seek an appraisal of the home and may even conduct a standard home inspection to determine the condition of the property. If the lender agrees to allow a short sale they will stipulate the minimum sales price which is usually much lower than the principle balance of the loan. I have seen lenders accept considerably less than the principle balance. $30 - $50 thousand dollars or more. A lender is not in the business of selling homes and having homes on the market is very expensive and they will usually work to avoid foreclosure if at all possible.
This is great news for those homeowners who wish to avoid foreclosure. Even better news is that congress recently rescinded the law that required homeowners from paying taxes on the forgiven debt! In any case this is much better than the damage a foreclosure will have on ones credit.
Unfortunately the homeowner will still need to find the buyer. This is where I can assist you. Or rather a knowledgeable REALTOR can assist you. Ask your broker if they are familiar with short sales. If not find someone who is. Selling a home short requires patience and a willingness to work with the lender. The process is different than a standard real estate transaction. Lenders understand the current market and are usually willing to pay for the brokers expenses and commission.
A Great time to Be in the Real Estate Market!
There is a statement you probably haven't heard very often! All we hear on a daily basis from the media is the doom and gloom! "Foreclosures are at an all time high!" 'Mortgage lenders are folding daily!" "Freddie Mac and Fannie Mae may be insolvent!" "The world is coming to an end!!" O.K. enough with the melodrama. Yes these things are happening in todays housing market, but is this really as bad as it sounds? Nope! The market is correcting itself from poor business practices and choices of both consumers and lenders...and maybe even a few REALTORS! What does this mean to you if you are getting ready to enter the market to buy a home or...gulp...sell your current property?
First, if you are looking at entering the market to buy a home or investment property there are some things that you have to do first! Go out and buy a bottle of champagne because it is definitely going to be a party for you! Foreclosures are on the rise along with short sales(will explain short sale later I am on a role right now) these, along with the increasing number of homes entering the selling inventory has put tremendous downward pricing pressures on sellers. Basically home values have declined significantly from a high of about 18 -24 months ago. Why has this happened! That is an article for another time..but it has to do with a large number of speculators off loading inventory, home owners selling for typical reasons, and lending guidelines (as the result of the sub prime meltdown) have eliminated many folks from the market who previously qualified for a loan. Any way, the result is, there are a ton of homes out there to choose from and prices have come down. Believe it or not there are still lenders out there who are actually underwriting mortgages! You can get a mortgage! Requirements for loans may have tightened but we have seen a huge up tick in government guaranteed and insured loans such as VA and FHA. With home values falling, many of these homes are now eligible under FHA and VA lending guidelines. So take advantage of this time. We are at the bottom! There is no where else to go but up in most areas. Especially here in Jacksonville.
Considering selling? It is still a good time to sell your home! Yes that's right I just said what you just read! If you are considering selling your home but feel like maybe you will wait a year or so until the market comes back. Comes back to what? The most astonishing real estate market we have seen in over 40 years! I don't think the market will come back to that level in a very long time. Believe it or not homes are selling. If you have equity in your home consider yourself a lottery winner! You can sell your home for a strong price and in a reasonable period of time. You may have to be willing to help buyers with closing costs, or buy some points on their loan or offer some other incentives but your home will sell. I know what your thinking! What if my home does not have any equity! What if I am one of those people who bought at the height of the market with a %100 loan and now you are upside down in your home. There is still hope for you. I strongly encourage people who are in this situation and who have a legitimate reason to sell their home(job, military, divorce, etc)to contact their lender and discuss options. Lenders are willing to assist home owners with issues. I have heard stories of lenders adjusting interest rates, reducing principal etc. Never keep your lender in the dark with your situation.
If you have fallen behind on your mortgage payments...you can still sell your home, even if you owe more than it is worth. This is called a short a sale. When the principal balance of the loan is higher than the current market value of your home. You can avoid foreclosure! Contact your lender to explain your situation and ask for a Short Sale Application. In most cases lenders are agreeing to sell homes for less than the principal balance of the loan. If you would like more information about short sales or the value of your home call or email me or visit my website http://www.mattsellsjax.com/
This market will recycle around in the next 12 - 18 months. We will get back to a normal cycle again. So please remember that when you hear the medias doom and gloom...understand that they know if it bleeds it leads! Keep your head up and jump into this market ... the water is great!!
First, if you are looking at entering the market to buy a home or investment property there are some things that you have to do first! Go out and buy a bottle of champagne because it is definitely going to be a party for you! Foreclosures are on the rise along with short sales(will explain short sale later I am on a role right now) these, along with the increasing number of homes entering the selling inventory has put tremendous downward pricing pressures on sellers. Basically home values have declined significantly from a high of about 18 -24 months ago. Why has this happened! That is an article for another time..but it has to do with a large number of speculators off loading inventory, home owners selling for typical reasons, and lending guidelines (as the result of the sub prime meltdown) have eliminated many folks from the market who previously qualified for a loan. Any way, the result is, there are a ton of homes out there to choose from and prices have come down. Believe it or not there are still lenders out there who are actually underwriting mortgages! You can get a mortgage! Requirements for loans may have tightened but we have seen a huge up tick in government guaranteed and insured loans such as VA and FHA. With home values falling, many of these homes are now eligible under FHA and VA lending guidelines. So take advantage of this time. We are at the bottom! There is no where else to go but up in most areas. Especially here in Jacksonville.
Considering selling? It is still a good time to sell your home! Yes that's right I just said what you just read! If you are considering selling your home but feel like maybe you will wait a year or so until the market comes back. Comes back to what? The most astonishing real estate market we have seen in over 40 years! I don't think the market will come back to that level in a very long time. Believe it or not homes are selling. If you have equity in your home consider yourself a lottery winner! You can sell your home for a strong price and in a reasonable period of time. You may have to be willing to help buyers with closing costs, or buy some points on their loan or offer some other incentives but your home will sell. I know what your thinking! What if my home does not have any equity! What if I am one of those people who bought at the height of the market with a %100 loan and now you are upside down in your home. There is still hope for you. I strongly encourage people who are in this situation and who have a legitimate reason to sell their home(job, military, divorce, etc)to contact their lender and discuss options. Lenders are willing to assist home owners with issues. I have heard stories of lenders adjusting interest rates, reducing principal etc. Never keep your lender in the dark with your situation.
If you have fallen behind on your mortgage payments...you can still sell your home, even if you owe more than it is worth. This is called a short a sale. When the principal balance of the loan is higher than the current market value of your home. You can avoid foreclosure! Contact your lender to explain your situation and ask for a Short Sale Application. In most cases lenders are agreeing to sell homes for less than the principal balance of the loan. If you would like more information about short sales or the value of your home call or email me or visit my website http://www.mattsellsjax.com/
This market will recycle around in the next 12 - 18 months. We will get back to a normal cycle again. So please remember that when you hear the medias doom and gloom...understand that they know if it bleeds it leads! Keep your head up and jump into this market ... the water is great!!
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