Nevada City Virtual Tour

Thursday, February 24, 2011

6 things that turn home buyers off

Here are 6 big-time home buyer turn-offs that make buyers cringe at the thought of your home, and action steps you can take to prevent your home from being an offender:

1.  Stalker-ish sellers.  I know you think you're being helpful, walking the buyer through your home and pointing out the wagon-wheel light fixture you made with your own two hands, the custom mural of a stingray you paid top dollar to have painted across your living room wall and the way the sounds of happy schoolchildren running across the front yard of your corner lot to get to the school in the next block lifts your spirits.  However, the buyers might be trying really hard to ignore, minimize or figure out how to undo the very features of your home you hold dear.  They also may want or need to have personal space and conversations with their mate or their agent while they're viewing your home - you being there, especially walking right alongside them while they're in your home, prevents them from being comfortable about doing this, or discussing all the things they would change if the home were theirs. In my experience, the more nitpicky a buyer gets about a house and the more detailed their list of things they would change, the more serious they are about considering making an offer on this place.

What's a Seller to do? Back off. Let your home be shown vacant, or leave the house when people come to see it.  If you need to be there, at least walk outside or go sit at the coffee shop down the way while prospective buyers view your home.  If the buyers have questions, their people will contact your people.

2. Shabby, dirty, crowded and/or smelly houses.  You already know this one. Yet, buyers constantly marvel. The buyers who come to see your home are making the decision whether to choose your home for the biggest purchase they've ever made during the worst economic conditions most of them have ever experienced.  Your job is to get your home noticed – favorably – above the sea of other homes on the market, many of which are priced very, very low.

What's a Seller to do?  Other than listing your home at a competitive price, the only tool within your control for differentiating your home from all the foreclosures and short sales is to show it in tip-top shape. Pre-pack your place up, getting rid of as many of your personal effects as possible. Do not show it without it being completely cleaned up: no laundry or dishes piled up, counter tops freshly washed, smelly dogs (I have a couple who smell on occasion – no judgment – but don't show your house with pet odors) or litter boxes cleaned and/or out of the house.

3.  Irrational seller expectations (i.e., overpricing).  Buying a house on today's market is hard work!  On top of all the research and analysis about the market and situating their own lives to be sure they'll be able to afford the place for 5, 7, 10 years - or longer, buyers have to work overtime to separate the real estate wheat from the chaff, get educated about short sales and foreclosures and often put in many, many offers before they get even a single one accepted.  The last thing they want to add to their task lists is trying to argue a seller out of unreasonable expectations or pricing.  And, in fact, there are so many other homes on the market, buyers don't have to do this.  When they see a home whose seller is clearly clueless about their home's value and has priced it sky-high, most often they won't bother even looking at it.  If they love it, they'll wait for it to sit on the market for awhile, hoping the market will "educate you" into desperation, priming the pump for a later, low ball offer.

What's a Seller to do? Get real. Get out there and look at the other properties that are for sale in your area and price range. Get multiple agents' take on what your home should be listed at, and don't take it personally if their recommendation is low. If your home has much less curb appeal or space or is much less upgraded than the house across the way, don't list it at the same price and expect it to sell. If you owe more than your home is realistically worth, you may need to reexamine whether you really want or need to sell, or consider a short sale, if you simply have to sell.  Don't be tempted into testing your market with an obviously too-high price, unless you're prepared to have your home lag on the market and get lowball offers.

4.  Feeling misled. Here's the deal.  You will never trick someone into buying your home. If the listing pics are photo-edited within an inch of their lives, or your home is described as an "approved" short sale when, in fact, the bank approved another offer, now withdrawn, but will require a new offer to go through any sort of approval process (even a truncated one), buyers will learn this information at some point.  If your neighborhood is described as funky and vibrant, as code for the fact that your house is under the train tracks and you live in between a wrecking yard and a biker bar, prospects will figure this out.  If the detailed information about your home, neighborhood or even transactional position (e.g., short sale status, seller financing, etc.) is misrepresented, the sheer misrepresentation will turn otherwise interested buyers off.  If you authorize your agent to "verbally approve" the buyer's offer, don't go back the next day demanding an extra $5,000. In cases where the buyer feels misled, whether or not that was your intention, running through the buyer's mind is this question: If they can't trust you to be honest about this, how can they trust you to be honest about everything else?

What's a Seller to do?  Buyers rely on sellers to be upfront and honest – so be both.  If your home has features or aspects that are often perceived negatively, your home's listing probably shouldn't lead with them (like the ad I recently saw with the intro line: "this place is a mess!"), but neither should you go out of your way to slant or skew or spin the facts which will be obvious to anyone who visits your home.  Make sure you know what the listing of your home reads like, before it's published to the web, and that a prospective buyer will not feel misled by it.

5. New, ugly home improvements.  Many a buyer has walked into a house that has clearly been remodeled and upgraded in anticipation of the sale, only to have their heart sink with the further realization that the brand-spanking-new kitchen features a countertop made, not of Carerra marble, but brand-new, pink tiles with a kitty cat in the middle of each one (I saw this once, people – no joke).  Or the pristine, just-installed floors feature carpet in a creamy shade of blue – the buyer's least favorite color.  New home improvements that run totally counter to a buyer's aesthetics are a big turn-off, because in today's era of Conspicuous Frugality, buyers just can't cotton to ripping out expensive, brand new, perfectly functioning things just on the basis of style – especially since they'll feel like they paid for these things in the price of the home.

What's a Seller to do?  Check in with a local broker or agent before you make a big investment in a pre-sale remodel.  They can give you a reality check about the likely return on your investment, and help you prioritize about which projects to do (or not).  Instead of spending $40,000 on a new, less-than-attractive kitchen, they might encourage you to update appliances, have the cabinets painted and spend a few grand on your curb appeal.  Many times, they will also help you do the work of selecting neutral finishes that will work for the largest possible range of buyer tastes.

6.  CRAZY listing photos (or no photos at all).  At Trulia, we've seen listing photos that have dumpsters parked in front of the house, piles of laundry all over the "hardwood" floors touted in the listing description, and once, even the family dog doing his or her business in the lovely green front yard.  Listing pictures that have put your home in anything but its best, accurate light are a very quick way to ensure that you turn off a huge number of buyers from even coming to see your house!   The only bigger buyer turn-off than these bizarre listing pics are listings that have no photos at all; most buyers on today's market see a listing with no pictures and click right on past it, without giving the place a second glance.

Article courtesy of Trulia

Tuesday, February 22, 2011

Credit Scores After Short Sale or Foreclosure

Credit Scores After Short Sale or Foreclosure

On your record, these are general numbers....:

1) Foreclosure is 7 years

2) Deed-in-Lieu is 4 years. 7 years for second homes and investment properties regardless of LTV.

3) Short Sales is 2 years

4) Bankruptcy is 4 years

According to TransUnion,  foreclosure won't in and of itself impact credit, particularly since it arrives on the heels of hard financial times.

"Foreclosure will be regarded as a derogatory action on a credit report and will have a more serious impact than a loan modification or a short sale, but only if it is publicly reported," ……If a property is going into foreclosure, more than likely the damage has already been done to the person's credit report with missed mortgage payments that resulted in the foreclosure."

Note: its the MISSED payments that do the most credit damage vs the actual short sale or foreclosure. So dealing with your situation, if you know it won't change anytime soon, you should get your home sold using a short sale.

A bankruptcy causes a credit score to tumble a maximum of 365 points and appears on the credit report for seven to 10 years, depending on the type of bankruptcy. Again, if the starting score is already low, bankruptcy will drop that score significantly fewer points than if the starting score is high. So, if you have a B/K and your credit score is already low the actual credit point drop is LESS compared to someone with a higher score.

A licensed real estate agent is neither an attorney nor a CPA….as we all know.

After talking with your attorney and your CPA, talk to me, this is because you will need to do some digging for applicability to your personal financial situation.


Wednesday, February 16, 2011

1031 Exchanges - Real Estate Investing

1031 Exchanges
Where to Put your Investment Dollars?

Real Estate as an Investment

Investors have many choices in today's market as to where to place their investment dollars.  Many choose the stock market, in part because it is the easiest place to get started as an investor.   However, those wanting to build significant wealth over the long term should consider real estate.  Aside from the fact that over time, as populations tend to increase, land values should naturally increase, investing in real estate has many strategic advantages not available with other investments.  Some of those strategic advantages include:

Income and Appreciation
It is very possible in today's market to find properties that will be cash flow positive.  This means that the rents collected from the tenants will more than cover the costs (expenses and financing) associated with owning the property.  Few stocks in today's market pay significant dividends, most are held for future appreciation.   Those stocks or bonds that are acquired for cash flow tend not to appreciate well.  With real estate, investors can have the best of both worlds: income and appreciation.   

Leveraged Appreciation
The basic idea of leverage is that an investor can acquire a very high valued asset for a much lower investment amount.  This works in the investors favor in an appreciating market, magnifying the returns on investment.  For example, an investor may purchase a million dollar property with 30% down.  If that property appreciates 10%, the return on investment is 33%.  In the same example, with 10% down, the investor can achieve a 100% return on investment.  

Although not impossible, it can be difficult to use leverage when investing in the stock market.  Using leverage to acquire stocks is referred to as "buying on margin" and at best investors may only borrow 50% of the purchase price of the stock.  Investors who choose to buy on margin are also subject to margin calls (adding more funds to the brokerage account) should the value of the stock decline significantly.  The Federal Reserve Board also regulates which stocks are marginable, so options may be limited.  

Tax Advantages
Although Wall Street can offer investors tax advantaged vehicles like the tax free municipal bond or the ability to buy and sell stocks through an IRA or 401K, the tax advantages Wall Street can offer pale in comparison to what is available with real estate.  With real estate, there are tax advantages available while both owning and selling real estate.    Let's first discuss the advantages available during the course of real estate ownership:

Mortgage Interest Expense
The government allows all of the interest associated with the financing of the property to be written off as an expense of owning the property.  For many real estate investors, especially those with interest only loans, this expense deduction can be substantial.

Depreciation is a method for matching the costs of acquiring property over the properties estimated economic life. The IRS now requires that most properties be depreciated using the straight-line method of depreciation (27.5 years for residential properties, 39 years for commercial properties).  Depreciation will act as an intangible expense and will shelter income from taxes.  

Expense Deductions
Many of the costs associated with owning and managing a real estate investment, such as management fees and insurance premiums, are deductible.  One deductible expense worthy of note is the travel expense.  Many real estate investors acquire real estate in places they like to (or have to) visit, and each time they travel to the property, the travel costs are a deductible expense.  Not a bad deal if the property happens to be in Maui, or around the corner from a relative.  

Passive Losses
Due to depreciation and expense deductions, it is possible to own a property that is producing positive cash flow, but for tax purposes showing a loss.  These "passive losses" are subject to certain restrictions, but in many circumstances can be used to offset passive income from another investment.      

There are also specific tax breaks available when selling real estate.  The tax breaks available depend on the type of real estate sold. If a primary residence is sold, Section 121 of the Internal Revenue Code allows the seller to avoid paying capital gains taxes.  If an investment property is sold, Section 1031 of the Internal Revenue Code allows the seller to defer the payment of capital gains taxes.  Both sections of the tax code merit further discussion:

Section 121
Upon the sale of a primary residence a taxpayer can avoid paying capital gains taxes on the first $250K of gain if single, or the first $500K of gain if married.  The seller(s) must have owned and lived in the home as their primary residence for two out of the past five years.  

Section 1031
Upon the sale of an investment property a taxpayer can defer the payment of capital gains taxes.  In order for the entire tax liability to be deferred, the taxpayer will need to reinvest all of the sale proceeds and purchase a property of equal or greater value.  The new property must be acquired within 180 days.

Many investors can use both Section 121 and Section 1031 together for maximum tax advantage.  An example would be an investor who conducts a 1031 Exchange into a rental home.  After establishing the property as a rental for two years, the investor moves into the property.  Once the property is established as a primary residence, taxes can be avoided on the sale via Section 121.

Obviously investors have many choices available to them on Wall Street.  With a little education however, many investors might find that investing in Main Street, or Elm Street, might be a better long term decision.  

The subject matter in this newsletter is intended as general information only and not intended as tax or legal advice. 
Please always consult your tax or legal advisor for any specific tax or legal matters.
Newsletter information courtesy of 1031 Exchanges by a x 1 0 3 1

Friday, February 11, 2011

What do I need to do a short sale

This isn't the "carved in stone" package to process a short sale. Consider it a guideline and pretty much the basic starting point for most lenders. You'd likely need no less than these items to effectively submit a package to the short sale lender.

1. Dated, signed listing agreement with commissions listed.

2. Full MLS report from your real estate agent.

3. A seller signed authorization form for the agent and/or attorney to negotiate with the lender on seller's behalf.

4. Signed, handwritten hardship letter explaining the circumstances. This hardship is crucial to approval.

5. A complete seller financial statement.

6. Two (months) recent bank statements.

7. Two months of pay stubs or written explanation of unemployment. Proof of Social Security or pension if receiving.

8. Dated, signed purchase agreement — the sale contract.

9. Buyer's fresh proof of funds or preapproval.

10. Three recent, like-kind, comparable sales.

11. Last two years of seller's tax returns.

12. List of repairs for the residence, if needed.

13. Preliminary HUD1 statement provided by attorney or title.

On a case by case basis there are going to be other items the lender may ask for. They will probably ask for the same stuff more than once, likely twice, possibly ad nauseum. After a few weeks, they may request updated paperwork, statements, proof of funds, etc., because they just have to make sure the sellers didn't hit the megaball between then and now.

You have to try. This is usually a much better option than having a foreclosure and or bankruptcy on your record. Give me a call.


Wednesday, February 9, 2011

what is a short sale in nevada city or grass valley


Short Sale

Nevada City Nevada County Grass Valley

What is a Short Sale?
A Short Sale occurs when the proceeds from the sale of a home do not fully pay off the existing loan(s) and the lender(s) accepts a discounted payoff to fully satisfy the loan. The existing lender usually always pays virtually all sales costs, including commissions, escrow and title fees and repair costs. You get your home sold, the loan(s) paid off and you avoid foreclosure.The down side is that you may be hit with a 1099 tax bill from the lender(s) for the forgiven part of the loan. Click here for some Q&A on debt relief from IRS.GOV.

What is an approved Short Sale?
An approved Short Sale occurs when the lender(s) have worked the file to completion and have decided the value of the property and approved that price. These are the best short sales to go after if you can.

Is a Short Sale right for me?
Lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a discounted payoff on a mortgage. If you are faced with a hardship that makes it likely you will be unable to meet your obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through the expensive foreclosure process. Remember your lender is looking to limit any potential loss on their loan to you. By completing a Short Sale, your lender has arrived at a solution that is much better for them and you, than a foreclosure. The Federal Government and Lenders are currently working on programs to help people in your situation. Please
contact them immediately to see if you may qualify.

How much will I have to pay to sell my home in a Short Sale?
In most cases you will pay literally no sales costs if your lender approves the Short Sale. The lender pays all commissions, title and escrow fees, and even most repair expenses as part of the Short Sale approval. I include proper verbiage in the contract to protect you during a Short Sale. Remember, lenders approve Short Sales and accept the resulting loss in an effort to avoid bigger losses through foreclosure.

How do I get started?
The Short sale process requires proof of financial hardship. You can not have any available funds that could be drawn upon and must show that you have taken every possible step to avoid this. We would prefer to speak with you in person to talk about your options. Our goal is to help you avoid loosing your home. Sometimes we can work things out to help you stay in your home and other times it is better to list and sell it. It all depends on where you are financially and what is the right thing for you to do. If you would like to get pre-qualified for a Short Sale
contact us.  There is no charge to you to get started. It is as simple as contacting us and we will get to work. If you later decide you don't want to do a short sale, or we find a better option for you, that is okay too.   Be sure to contact a lawyer (we can give you a list) and tax professional to see if this all is in your best interest.

What is a legitimate hardship?
Below is a list of "hardships" that are common and frequently accepted by mortgage lenders.

  1. Family illness or injury
  2. Illness or injury in the extended family – particularly if it forces relocation
  3. Job relocation when the property is equity deficient
  4. Job loss or significant income loss
  5. Divorce or split of domestic partners
  6. Adjustment in mortgage payment or unforeseen increase in living expenses

Loss Mitigation Department handles all Short Sales, and to some extent, will decide if the hardship is legitimate. If the hardship is real and the mortgage company believes the loan is likely to become delinquent as a result, the Short Sale request will usually be processed by the Loss Mitigation Department. A strong hardship letter is a big key to getting Loss Mitigation to accept a hardship. The hardship letter sets the tone for the entire file. This is usually best written by you, since your emotion and feelings will be put into it.

Will my lender consider a Short Sale if I am current on my mortgage?
Maybe and it is increasingly likely. Some lenders will accept a Short Sale file for approval on loans that are not delinquent, while others will not accept the file until the loan is delinquent. We can put your Short Sale file together rather quickly and submit it for approval. (Remember, there is no charge for this). That is the best way to determine if your lender will accept a file for approval on a loan that is current.

Why would a mortgage company agree to accept a Short Sale?
Below is a list of reasons why a mortgage company would approve a Short Sale;

  1. Legal Concerns – Mortgage lenders have come under legal pressure to work with borrowers to equitably resolve situations where borrowers are unable to meet their mortgage obligation, particularly when the borrower makes an effort to arrive at a compromise solution.
  2. Investors are Watching– Mortgage lenders rely heavily on their ability to package and sell bundles of loans on the secondary mortgage market. They need to sell these bundles of loans in order to put the funds back to work by loaning the money again and collect loan fees along the way. If mortgages perform poorly after they are sold it could impact the lender's ability to sell their loans on the secondary market. A successful Short Sale gets the loan payoff resolved quickly.
  3. Asset Management Expenses- If a lender acquires a property through foreclosure, the property will be managed until it is repaired and resold. It is expensive to manage real property assets – homes – spread throughout the region, the state and possibly even the nation. Keeping properties maintained, keeping utilities on, making repairs and the administrative costs attached to these activities are all costs the lender would prefer to avoid. A successful Short Sale eliminates most of these costs
  4. Reserve Requirement- Delinquent and non-performing loans place another burden on mortgage lenders. For all delinquent and non-performing loans lenders must set aside funds in reserve to deal with potential losses. These funds cannot be put to work generating new loan fees until the bad loans are resolved. A successful Short Sale lets the lender put more money to work.

Do lenders approve all Short Sales?

The answer is no. From the presentation of the Short Sale package to the lender to working with the lenders Loss Mitigations Department, I know how to keep the file moving towards approval. I have a team of experienced individuals who can help, if needed. The first step is to get pre-qualified for a Short Sale.

Can I still do a Short Sale if I have a second loan?
Yes. It takes more work, but we will work with both lenders to put together a transaction. We can sometimes get the lenders to cooperate, even if the balance of the 1st mortgage is greater than the value of your home. Many times the same lender hold the 1st and the 2nd loans, which simplifies the process. In the end, neither lender wants to own another home through foreclosure.

Can I still do a Short Sale if my property is in need of repair?
Yes, and in fact, lenders are usually more motivated. The lender knows the risk of loss goes up when they foreclose on a property that needs lots of work. Aside from expense of completing the work, lenders are not in the handyman business, but rather the loan business.

How will a Short Sale affect my credit?
The big key here is that you avoid foreclosure. A foreclosure, by nearly any measure, is worse than bankruptcy and the most damaging event to your credit. If you miss your mortgage payments during the course of getting your short sale approved, these will show on your credit. By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and such) relatively quickly.

Do I need to sell my home if my income problem was temporary?
You may be able to keep your home. You need to convince your mortgage company of two things:

  1. The problem that caused the mortgage payment disruption was beyond your control – illness, injury, temporary disability or forced job change are a few examples
  2. You are now solidly in a position to stay current on your mortgage payments and make some progress towards making up the delinquent amount.

This is usually done by a Forbearance Agreement. I recommend that your lawyer draw this up for you.

What is a Forbearance Agreement?
This is a written agreement with your mortgage company in which you arrange to keep your home. The agreement will normally include two primary elements:

  1. The borrower's promise to remain current on the mortgage going forward
  2. Some plan for making up the delinquent interest and other charges. It may mean making additional payments to the mortgage company or the delinquent amount could be added to the loan to be paid later.
If you would like to get pre-qualified for a Short Sale contact us.  There is no charge to you to get started. It is as simple as contacting us and we will get to work. If you later decide you don't want to do a short sale, or we find a better option for you, that is okay too.

Friday, February 4, 2011

10 Cities Where Home Prices Will Rise in 2011

10 Cities Where Home Prices Will Rise in 2011

While home prices are expected to continue to fall in most metro areas, Clear Capital's Home Data Index report says a few cities are already on the rebound and showing some gains in home values.

"There really is this segmentation of these markets occurring where the one-size-fits-all national level numbers to represent all numbers really isn't valid anymore," Alex Villacorta, senior statistician at Clear Capital, told MSNBC. "Overall we're seeing prices start to stabilize going into 2011, but unfortunately some of those markets will stabilize in the downward direction where others will see a sustained recovery."

Clear Capital takes into account unemployment rates, foreclosure rates, and real estate inventory in its index.

The following is a list of 10 cities that Clear Capital expects will rise in property value in 2011:

1. Washington, D.C.: 6.5 percent price increase
2. Houston: 3.6 percent price increase
3. Honolulu: 3.4 percent price increase
4. Memphis, Tenn.: 3.2 percent price increase
5. Columbus, Ohio: 2.1 percent price increase
6. Dallas: 1.4 percent price increase
7. New York: 1.3 percent price increase
8. Birmingham, Ala.: 0.9 percent price increase
9. Pittsburgh: 0.8 percent price increase
10. New Orleans: 0.5 percent price increase

Meanwhile, Clear Capital reports that real estate markets in Florida and the Western parts of the U.S.—such as cities in Arizona and "Breadbasket metros" like Oklahoma City, Okla., and Dayton, Ohio—likely will see the largest price drops in home values over the year. Virginia Beach, Va., is expected to have the highest drop in 2011, with a 12.8 percent price decrease, according to Clear Capital report.
My take.
Here's the rub. Real Estate is hyper localized. Don't make assumptions based on what you heard on TV.
Ask a local realtor for market data regarding your home in your neck of the woods!
The year-over-year decline has been much less in Grass Valley and Nevada City, a data mining company DataQuick reported.
In western Nevada County, the median price for December was $245,000 for 77 residences with sales that closed, compared to $265,000 for 79 residences in December 2009, according to our Multiple Listing Service figures of sales closed.

PLUS, the same month, 153 property sales were recorded countywide — a big change from the winter months a year ago when fewer than 100 property sales were recorded.

Gary J. Tippner
Short Sales and Foreclosure Resource SFR Certified  
Network Real Estate
DRE# 01871153
1-877-311-GARY Direct
1-888-965-0018 FAX - Don't buy or sell - till you have read my special reports
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