Is a distressed property the right deal for you?
With the first-time homebuyer tax credit deadline having come and gone, you may be asking yourself, “What now?” Fortunately, the door is now open to a new wave of savings: distressed properties.
For many buyers, the term foreclosure brings up images of run-down homes with no heat and rotting wood. While this is still the case for some homes, it’s no longer the standard. In fact, first time buyers are snatching up distressed deals in decent condition for great prices.
According to a November 2009 Keller Williams Research Buying Distressed Properties Survey, 40 percent of all buyers for bank-owned foreclosures (REOs) were first-time buyers in 2009. 50 percent of all short sale buyers were first-time buyers.
By definition, a distressed property is one that was purchased with a loan and the homeowner is no longer able to make their mortgage payment resulting in foreclosure – or if they’re lucky a short sale – meaning they owe more on the home than it’s currently worth. With a 20 percent increase in foreclosures from 2009, distressed properties still remain a large portion of home sales and are going to continue well into 2010 as homeowners continue to feel the effects of an economy on the mend.
If you’re in the market for a home and are prepared for a unique transaction, a distressed property can be a great option. Here’s why:
Prices are low – Buying a foreclosed property is an excellent way to get a home for less. Research shows you can save 10-40 percent over the price of similar properties in a traditional sale.
Mortgage costs are low – With rates hovering near historic lows, financing costs to are favorable. Keep in mind, rates are always changing. It’s important to begin the pre-approval process so that you know how much you can realistically afford.
You have options – The number of homes in some stage of the foreclosure process still remains high. RealtyTrac, a site dedicated to tracking foreclosures across the country, estimates that there are approximately 2.1 million homes in some stage of foreclosure in the United States.
Sellers and lenders are motivated – According to data from RealtyTrac, in April, one in every 387 households in the country has received a foreclosure filing. The bottom line is that many sellers are still feeling the pain of a down economy and are anxious to out get from under a home that is putting stress on their current financial frustrations. While it is still an emotional transaction, these sellers are willing to come down on price or even consider concessions such as helping out on closing costs. Banks holding on to large portfolios of Real Estate Owned (REO) properties want to unload quickly – and price these home to sell.
Your best ally when purchasing a distressed property is an expert. Always have a professional REALTOR® by your side to help you make informative decisions. If you’re interested in learning more about purchasing a distressed property call The Property Shoppe Team at 608-469-5199 or email us today!
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A shorter wait to buy after deliquency | Inman News
Should You Buy A “Fixer Upper”?
Many home buyers find that buying a “fixer upper” and using their imagination and effort to create their dream home is a rewarding and enjoyable venture. If you’re one of these people, here are some pointers to help you find a house with good potential:
- Have the home inspected to get a realistic idea of how much mechanical, system and structural work needs to be done.
- Look for a house that is structurally sound and needs only cosmetic changes.
- Research the neighborhood to find out if what you spend on the home today can be recovered if you decide to sell.
- Consider who will help you do the work and how much it will cost if you need to hire people.
- Make sure you are financially able to finance your home and still afford to pay for improvements and repairs.
If you or someone you know is looking for a “fixer upper” or has another real estate need or question, please call me at 608-469-5199 or email me at propertyshoppe@kw.com or visit my website www.yourpropertyshoppe.com for buying and selling tips, MLS property searches, town and community information and more.
SEARCH FOR FORECLOSURE PROPERTIES
Nearly 14% of Mortgages are Delinquent
Nearly 14 percent of all mortgages were in trouble in the fourth quarter of 2009, according to a report released Thursday by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
More than 4.7 percent of all mortgages were more than 90 days past due in the fourth quarter, a 21.1 percent increase from the same quarter in 2008. The number of troubled borrowers with prime mortgages increased 16.5 percent year over year.
Foreclosure sales, short sales, and deed-in-lieu-of-foreclosure actions rose by 8.6 percent from the third quarter to 163,224 and were up 44.5 percent from fourth quarter 2008.
The report, which reflects 34 million loans with nearly $6 trillion in principal balances, said: “Loan servicers reported that they expect new foreclosure actions to increase in the upcoming quarters as many of the mortgages that are seriously delinquent may eventually result in foreclosure as alternatives that prevent foreclosure are exhausted.”
Source: Reuters News (03/25/2010)
How To See If You Qualify For A Short Sale With Your Bank.
If you’re interested in working with your bank to accept a short sale, there are many documents you’ll need to gather. Most banks have a loss mitigation department who’s job it is to resolve problems associated with a defaulted loan. Most often you’ll be working with a loss mitigation officer charged to help the bank minimize the loss due to a loan in default. Though each bank has its own guidelines, many banks will not consider a short sale until you actually are late on your loan, and have received an offer on your property. Its vital to have the short sale package of required documents ready so that you can work thru the process quickly. Most buyers do not want to wait weeks or months to navigate a short sale, so to facilitate a successful sale, get your paperwork in order. Most commonly, the following items are required:
- Listing contract
- Sales contract
- Hardship letter
- 2 years W-2’s or tax returns
- 2 months pay stubs
- 2 months bank statements
- Recent statements for 401k, retirement, investment accounts
- Financial statement listing current liabilities, assets and income information
At times a lender or loss mitigation department may request additional information and documentation in order to verify the change in the borrowers financial situation and hardship. Important to note that some of the requested documention may lead to re-verification of your financial status at the time of your loan origination. And remember, even though you do everything your lender asks, provide all the documentation and obtain an offer, it is still solely the bank’s decision as to whether to accept the short sale terms. Some find that no matter what they do, foreclosure is inevitable. But that is why, more than ever, it’s vital to have the right real estate professional on your side.
Healthy Home Tips & Green Alteratives for Homeowners
Healthy Home Tips & Green Alternatives for Homeowners
The home buying process is an exciting time, but one that may bring additional responsibilities into your life. Many homes may need renovations or inspections, especially in areas that are susceptible to natural disasters. Having the assistance of an experienced and honest real estate agent will make this process smooth and stress free.
Some older homes may still contain obsolete building materials. Citizens of this great state are striving to move to a green lifestyle, advocating environmentally sustainable methods to be used throughout the state. Building or remodeling your homes with eco-friendly materials can lower utility and water bills, higher real estate value, purer air quality, reduced waste sent to landfills and conservation of natural resources.
Asbestos + Healthy Tips
Asbestos is a fibrous mineral that was used in construction applications for the greater part of the 20th century. Often appearing as insulation, piping, roofing and flooring, homes and buildings could still contain asbestos materials if they were built prior to 1980.
If you locate any suspected asbestos in the home, most experts suggest leaving it un-disturbed until a home inspector can examine your property, take evaluations and determine the safest course of action. Sometimes the best action is no action at all. Disturbing asbestos in good condition may cause its fibers to be released into the air. The removal of asbestos must be undertaken by a professional abatement contractor who is trained in handling dangerous materials.
Exposure to this material can lead to the development of mesothelioma, a lung ailment associated with asbestos exposure. Though a cure does not exist, mesothelioma treatment options such as radiation, chemotherapy and surgery may be available to patients to battle the disease. Mesothelioma compensation has become tough to predict for victims and their families because diagnosis can take 20-50 years. For this reason, many people refer to it as a silent killer.
Removal of asbestos in public facilities, workplaces and homes should be performed by licensed abatement contractors as long as the National Emissions Standards for Hazardous Air Pollutants (NESHAP) are not violated. They must wear protective equipment such as masks and gloves to avoid any exposure. The materials should be removed in as large pieces as possible and places in disposable bags.
Green Building Benefits
Each and every human being would like clean air to breathe and crisp water to drink. It takes a lot of effort and political advocacy to achieve this on a macro level. The implementation of eco-construction, green energy solutions will play an important role in the transformation to a healthier and sustainable world. Many locations throughout Alabama are swiftly changing their construction practices to suit the environment and the health of human beings.
There are many green, eco-friendly materials that replace the need for asbestos and can reduce energy costs annually. These include the use of cotton fiber, lcynene foam and cellulose. Cotton fiber is quickly becoming a favorite for home builders and renovators. Made from recycled batted material, it is also treated to be fireproof. Research has demonstrated that the use of eco-friendly insulation alternatives can reduce annual energy costs by 25 percent.
Implementing green methods of building can have positive environmental, health and economic benefits. These include: Conservation of natural resources, enhancement of air quality, energy sustainability, increase property value, improve quality of life, improvement of pulmonary/cardiac health and reduction of waste.
For further information, contact Jesse Herman with the Mesothelioma Cancer Center at jesse@asbestos.com
This Month In Real Estate – October 2009
Banks Express Hope for Fed Short-Sale Effort
The federal government is launching a program to simplify and speed up the short-sale process by providing standardized documentation, cash incentives to lenders, and a $1,500 moving allowance to borrowers. Holders of second liens will get up to $1,000 to relinquish their claims.
Banks say the short-sale process has been taking so long because both their employees and real estate practitioners are learning as they go.
David Sunlin, vice president in charge of short sales at Bank of America, says he hopes the new government plan will help. “About half of short sales never close. We see it as a big lost opportunity, and we need to improve the rate we close them,” he says.
Wells Fargo says it has cut its short sale average turnaround time from 90 days to 30 days by preparing a guide from real estate practitioners and putting in place procedures to handle short-sale requests.
[Editor's note: The federal government announced its short sales initiative in May at the annual Washington meetings of the NATIONAL ASSOCIATION OF REALTORS® and the association maintains short-sale resources for practioners.
Source: USA Today, Stephanie Armour (08/05/2009)
Wisconsin Foreclosure Assistance
The Wisconsin REALTORS® Association (WRA) has officially kicked off an online public education project aimed at keeping people in their homes. Dubbed the Wisconsin Foreclosure Assistance Resource Center, the Web site at www.wisconsinforeclosurekit.org breaks down the foreclosure timeline, provides a glossary of terms and lists answers to frequently asked questions about the foreclosure process. In addition, it includes steps homeowners can take to avoid foreclosure, such as loan modification and quick sales. E. Joe Murray, WRA’s director of political and government affairs, reports that the association designed the Web site to be “a comprehensive tool that people could use no matter what stage [of foreclosure] they were in.” The site has three main sections, covering everything from survival tips to prevention tips to general information. Each of the three sections includes video clips with experts from such groups as the WRA, the Wisconsin Bankers Association and the Wisconsin Housing and Economic Development Association. WRA President Bill Malkasian concludes, “The purpose of the online resource is to provide a ready source of credible help that takes emotions out of the equation and replaces fear with a clear course of action.”
