Thursday, January 27, 2011

Short Sale Low Ball Offers

There is no question that short sales are like the wild West. Almost every single sale is different. Each lender and even the investors that hold the loan may have different procedures on how they want things done.
There are some folks that believe that because a home is a short sale it is an automatic invitation to make an unrealistic low ball offer. Even some Realtors who have not been educated on the dynamics of a short sale believe they are just like a bank owned property.

Part of the problem could be late night television where you see so called Real Estate guru’s telling you how to buy and sell Real Estate to become an instant millionaire. Fat chance!

The kind of garbage spewed on these late night shows could not be the further thing from the truth. While Short sales and REO’s are both considered distressed properties they are nothing alike. If you are short selling your Wisconsin home this becomes a very important point.  There is a strong likelihood that you will may receive an offer that should not be accepted.

The problem with a lot of short sale transactions is that Realtors are jumping in and representing sellers with no knowledge of the process. If the Realtor you have hired does not know how to guide you properly how can you expect to have any success?

If you are a Wisconsin home owner who is short selling a home what you really need to understand is that the lender is going to send a representative out to your home after it has gone under contract to do an appraisal or broker price opinion. The lender is doing this to find out what the fair market value is for the property. If the offer that you have accepted is not within the ball park of the actual value of the property your short sale is going to be REJECTED!

The worst part of this is that you probably will already have been waiting for months to find out if the short sale was going to be approved. If the buyer does not increase their offer to the banks counter proposal, the deal will be dead and you will have wasted an awful lot of precious time. Maybe time that you don’t have if the lender decides to start foreclosure proceedings.

This is where your Real Estate agent should have counseled you properly.  
In a short sale your home should be priced aggressively in order to get
an offer as quickly as possible but not so much that it will be turned
down by the lender.

On a weekly basis I am seeing agents improperly handle short sales by either submitting low ball offers signed by the seller to the bank or collecting multiple unsigned offers and just submitting them all like some kind of free for all. This is NOT the way to handle a short sale!

An offer should be collected from someone who has a strong desire for the property and is willing to wait the time it takes for short sale approval. Generally speaking most short sales take three to six months to get approved. The buyer you work with should be educated on this fact.

The contract should be executed by both buyer and seller. I would also suggest some kind of clause that locks the buyer in for some amount of time to wait for short sale approval. On all my short sale contracts the buyer is required to wait for a minimum of 90 days or they would forfeit their escrow deposit which typically is 5% of the homes purchase price.

If you are going to short sell your Wisconsin home make sure you pick a Realtor with experience in getting these transactions completed! Accepting low ball short sale offers is just one of many mistakes you will want to avoid!

If you are needing to complete a  short sale of your home or condo in I would love to interview for the chance to represent your best interests.

Article compliments of Bill Gassett

Wednesday, January 26, 2011

Considerations For Renting or Selling a Home

Suddenly out of the blue you have found out that a new position has opened up within your company and they are asking you to relocate your family to the other side of the country. The job opportunity is too good to pass up so you decide to take the position. You realize with an impending move you are going to need to either sell or rent your home.

Considerations for renting or selling a home

Anyone who is considering selling a home in 2011 and has bought in the last six or seven years faces the real possibility that they will be losing money on the sale. The thought of losing money is never pleasant but unfortunately is part of today’s Real Estate reality. In my experience the immediate thought process of most home owners is to rent the home and not sell for a loss. This is kind of similar to the stock investor who hangs on for dear life with their losing picks but sells their winners instead.

In many cases they will ride the loser for an extended period of time until they realize it will take a very long time for that stock to come back to where it once was when purchased. Anyone who has ever invested in stocks including myself has been guilty of this. It is hard to give up on a loser because there is always the thought that it will come roaring back. So is renting the home really the best move or should you unload this asset that is working against you?

Where is the local Real Estate market headed?

One of the considerations of whether to sell or rent your home is to find out from a local Real Estate expert where they feel market values are  headed both in the near term, as well as longer down the road. A knowledgeable Realtor that has been in the business for a while should be able to help you determine the trend of where the market is headed at least in the short term.  Crystal balls are a hard thing to come by in Real Estate. Those that are lucky enough to have one are often times millionaires. Unfortunately knowing exactly when the Real Estate market will turn around requires one.

Most economists believe that once Real Estate markets do hit bottom the climb back up will be a slow and steady one. The opinions of most are that yearly appreciation will return to more normal historic levels of  3%-4%. Of course this is an average and states, cities and neighborhoods that are desirable could rise at a slightly higher clip.

As a home owner what you should be trying to figure out is how long will it take you to get back to a break even point or even something you can financially stomach. You should also be asking yourself is the time it takes to get back to break even worth it to you?

For example, lets say you bought your home for $500,000 and it has dropped in value by 25% and is now worth $375,000.  Lets further assume that the Real Estate market beats the economists predictions and rises by 5% yearly. Do you realize it would take seven years to get back to break even?

If you have equity in the home you need to figure out if you would be better off taking the loss and putting your equity somewhere that could potentially earn you more money. If you don’t have any equity you would need to figure out if you have the necessary funds to bring to the closing table or would need to explore other alternatives like a short sale.

What is the local home rental market like?

Again you should consult with a local Realtor to determine how well the rental market is performing. Has the rental market done as poorly as the Real Estate market or is there demand for rental housing? Some areas rental markets have done very well.
There is a good possibility there are folks who would like to rent a nice home rather than commit to purchasing if they feel they could be transferred in a short time period or feel market values are still sliding and don’t want the risk.

The rental home becomes an investment property

Relocating home owners need to remember that a rental home becomes an investment property. Owning a home as an investment property has the potential to help or hurt you tax wise. This is definitely something you would want to consult a tax professional for guidance.
Although you will be taking in rent you need to remember that you will still have principal, interest, taxes and insurance to pay. If the property is a condo you would more than likely also be paying the condominium fees as well. As a landlord you will also be required to maintain the property and fix any necessary issues that come up.

Many landlords that have relocated out of state will also consider hiring a property manager. The typical charge for management services runs around 8-12% of the rent. So if you are charging $2000 a month for rent you can expect to pay a manager in the neighborhood of around $200 a month. There are some excellent tax deductions for rental property that could play a factor in your decision making.

Taking on landlord responsibilities

As a landlord one of the 1st steps is going to be choosing the right tenant. Over the years I have seen a few occasions where the renter did not treat the home the same way an owner would. The owner was left with paying to replace carpets and do quite a bit of painting. These kind of costs can add up fast. Picking a responsible tenant becomes critical.

There are also considerations such as handling tenant complaints, maintenance issues or even legal issues such as eviction. In the end there is a lot to think about when deciding whether selling or renting your home makes the best fiscal and practical sense.

Article compliments of Bill Gassett

Wednesday, January 19, 2011

Can anyone identify this man?

Hint -- Its national "SOUP" month and national "SOUP SWAP" month

Definition of Soup
Soup is a liquid food that is made by combining ingredients, such as meat, vegetables or legumes (beans) in stock or hot water, until the flavor is extracted, forming a broth.

Soup Facts
We all love soups don't we. In fact how could we not love soup since we've all been raised eating it. Every country in the world has soup recipes and family traditions from long ago.  In fact it's no surprise that soup is probably the oldest form of food right up there with bread.  Here are some fun soup facts that history tell us.

  • Soup can be dated back to about 6000 B.C. and was first made of hippopotamus. 
  • Boiling was not a common cooking technique until the invention of waterproof containers (which probably came in the form of pouches made of clay or animal skin) about 9,000 years ago.
  • History also tells us that soup was first known as "sop,"  which was a piece of bread served with some type of liquid. (broth) People use to pour sop over a piece of bread or over broken off chunks of bread in a platter allowing it to soak up all the broth and then they would eat it.  As time went by sop was placed in deeper bowls and the liquid became the focal point instead of the bread as it once was. "Sop" soon became "Soup"  and the bread was then dipped in soup or thick stew.  In modern day the word sop is a definition of sopping up food.  Gruel is a fine example of sop which also goes back a long way in our History.
Please swap your favorite soup recipe...
                                      here is one of MINE

2 lbs. stew meat
1 or 2 small onions
1 stalk celery
6 carrots
6 potatoes( I sometimescheat and use the whole canned potatoes)
2 tsp. salt
1 tablespoon sugar
2 tablespoons tapioca (use more if you want juice to be thicker)
¼ cup V8 or tomato juice  I usually use quite a bit more as I like it juicy so I used a whole bottle of tomato juice.  
Layer ingredients in order given in about a 9x13 pan.  Do not brown meat.  Cover with foil.  Bake at 300 degrees for 5 to 6 hours, stirring once or twice.

Most Americans Say It Is a Good Time to Buy a Home

We have been making two major points for several months. If you are selling a house, you must do it now AND if you are buying one, you must also do it now. This sounds crazy – but it is true.

PRICE is the most important thing to a seller. With prices projected to fall through the first half of 2011, if you want to sell, do it now. The alternative might be to wait over a year just for prices  to recover to current values.
The second point revolves around the fact that buyers are more concerned about COST (price AND interest rate). Fannie Mae, the National Association of Realtors, the Mortgage Bankers Association and the PMI Company are all projecting interest rates to rise this year. If you want to buy, your best time to purchase could be right now.

We have had people question us on the second point. We truly believe it is a good time to buy however. And a new survey says that the majority of Americans agree with us. Gallup just released a poll showing that 67% of Americans think this is a good time to purchase a home. The interesting thing is that the same poll showed that more people believed that prices would decrease (27%) than increase (21%). Most people realize that this is a opportune time to purchase even if prices continue to soften.
Even the Gallup people weighed in on the subject:
Overall, there is good reason for most Americans to think now is a good time to buy a house. Interest rates remain near historic lows. Home prices are down sharply, providing many incredible buys. 

Bottom Line

There may be people advising you to use caution before buying a home right now. That is probably good advice. However, there is a difference between caution and fear. Fear could paralyze you and prevent you from making a good decision. Caution will make sure you make the right decision. And remember: if you do think it makes sense to buy your home today, 2 out of 3 people agree with you.

Compliments of KM Blog

Tuesday, January 4, 2011