Foreclosure -basics

Yesterday I wrote about Short Sale basics, today will be about Foreclosures.

A foreclosure is the legal process for the termination of a loan and the securing of the property by the bank and or other lenders.

This will not happen unless you miss a payment or stop paying all together. In pre-foreclosure there are certain “work-out” steps that can be taken to avoid foreclosure. One is a loan modification where the lender will rework part or all of the loan by either lowering monthly payments and extending the loan out another 10 years, or depending on the type of loan another arrangement may be worked out. Another way is forbearance (similar if not the same as a loan mod.) where there is postponement of payments or reduced payments for a period of time. In rare cases there is bailout loan but 65% loan to value is needed. There is also the short sale, which we discussed in yesterday’s post.

If none of the above can be worked out the foreclosure process is started with a letter of acceleration with the request that loan be made current. If no payments or attempts to correct are made within 60 days than a notice to accelerate is sent, whereby all past due payments plus late fees must be paid.

If still not response than a Demand Letter is sent and is usually from the lenders lawyer formally notifying you that the foreclosure process is now going through the courts.

If after the Demand Letter you have not paid up the lender then files foreclosure notice with the court. You have 20-30 days to respond. A public notice of default is then put in the paper once a week for three weeks stating that the property is in default and lists the amount owed and the sale date/place/time. A notice is also posted on the house (front door/window).

If property is not sold beforehand or loan is not brought current it is auctioned off at a Sheriffs Sale. If the property does not sell at the auction then it goes back to the lender. It is then put on the market for sale as a bank owned property otherwise known as an REO.  And that will be tomorrow’s topic!

If you have any questions or comments please feel free to post or e-mail me: mary@heritagewifi.com or www.BoiseRealEstateChick.com

Short Sales – Basics

What is a short sale? A short sale is when the homeowner owes more on the house than they could sell it for. Another reason for a short sale is if the homeowner has a hardship (unemployment, medical issue, bankruptcy, death)

The first thing the homeowner must do is prepare a short sale financial package and submit to the bank. There are some banks that will not even consider a short sale unless the owner (with the help of their realtor) can prove that the home will not sell for the amount of the mortgage. This proof is usually in the form of an offer. Most  banks are getting (finally) better at working with the owner on a short sale.

Buyers should make sure that when they make an offer they have recent comparables on properties that have sold to back up their price. The asking price on the short sale property is usually set by the realtor to try to gain an offer. The lenders do not give guidance up-front as to what they will accept, so the price is (or should be) based on recent solds. 

Once the buyer makes an offer the seller can accept or reject it (depending on how much of a hit they want to take). The offer, if accepted, is then submitted by the listing agent to the lender for approval. While the lender is not part of the purchase and sale contract they have the final say so as to whether they will accept the deal or not. On a side note, the buyers agent needs to stay very much involved in the transaction and the progress being made. Many listing agents take on short sales and do not follow through with the paper work that is requested from the lender throughout the process. This will kill a deal pretty quick. The lenders have pretty strict guidelines and timelines and are not very flexible with them. 

The response time from the lender can take anywhere from several days (rarely) to several months. Many buyers get tired of waiting and usually walk from the deal. The rule of thumb right now is it takes three deals before a short sale closes (that can be 6 months and more). There is also a foreclosure process that will have started. Because sellers usually have to miss at least one payment before the bank will talk about a short sale, the bank will start the foreclosure process. Unfortunately, many homes go to auction (foreclosure) before a short sale is completed.

 (I will discuss the foreclosure process in tomorrow post)

If you have any comments or questions please feel free to post here or contact me: mary@heritagewifi.com or www.BoiseRealEstateChick.com

Boise Real Estate Statistics for January 2011

The numbers are out for Boise home sales, pending and active listings for the month of January 2011. The good news is that the available inventory of homes  continues to shrink. Prices have continued to remain relatively flat for the past few months with the exception of Eagle, which has actually seen a 10% increase in the median sales price.

The bad news is that the number of vacant homes is around 57%.  That is much to high and is an indication of the large numbers of distressed properties that are still a large part of the market. Even though this percentage number is high, with the available inventory shrinking, so too are the  overall number of distressed properties. 

Ada County

January Market Statistics 

Available Homes

# Available: 2,283

# Vacant: 1,293 (57%)

Average Asking Price: $197,500

Median Asking Price: $155,000

Pending Sales

# Pending: 584

Average Asking Price: $194,000

Median Asking Price: $150,900

Closed Sales January 2010

# Closed: 298

Average Sales Price: $200,807

Median Sales Price: $168,900

Closed Sales-January 2011

# Closed: 381

% Change: +18.5%

Average Sales Price: $175,200

% Change: -12.4%

Median Sales Price:$135,500

% Change: -20.1%

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Meridian

January Market Statistics

Available Homes

# Available: 606

# Vacant: 349 (58%)

Average Asking Price: $192,044

Median Asking Price: $165,000

Pending Sales

# Pending: 152

Average Asking Price: $189,100

Median Asking Price: $162,400

Closed Sales – January 2010

# Closed: 104

Average Sales Price: $182,891

Median Sales Price: $171,500

Closed Sales – January 2011

# Closed: 97

% Change: -6.7%

Average Sales Price: $177,100

% Change: -2.9%

Median Sales Price: $155,000

% Change: -10.6%

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Eagle

January Market Statistics

Available Homes

# Available: 194

# Vacant: 87 (45%)

Average Asking Price: $441,800

Median Asking Price: $352,300

Pending Sales

# Pending: 57

Average Asking Price: $371,300

Median Asking Price: $348,00

Closed Sales – January 2010

# Closed: 26

Average Sales Price: $364,080

Median Sales Price: $357,000

Closed Sales – January 2011

# Closed: 21

% Change: -19.2%

Average Sales Price: $402,344

% Change: + 10.5%

Median Sales Price: $393,000

% Change: + 10.1%

 If you have any questions please feel free to contact me : mary@heritagewifi.com or www.BoiseRealEstateChick.com

And please feel free to leave your comments!

Owning vs. Renting

I recently came across an article in the recent National Association of Realtors magazine that I found interesting. In the article they discuss the merits of home ownership vs renting.  But what I found most interesting was the overall benefits not just to the homeowner but to the community as well.

The article mentions a survey that shows that 56% of homeowners vs. 36% of renters were extremely satisfied with the quality of  life in their community. And that 51% of homeowners vs. 37% were extremely satisfied with the family oriented environment. Now this seems to make sense since the majority of renters are generally single or newly married so community involvement and a family environment  is not very important. It goes on to state that 82% of homeowners vs. 73% of renters read or listen to local news and the 78% of homeowners vs 58% of renters voted in local elections.  

What can we read into these numbers? Well, aside from the financial benefits of ownership, there is a sense of belonging. Owners have a personal stake in their community to ensure its safety and long-term stability for themselves and their families. Renters will not have that long-term committment to their community because generally a renter will stay renting for a few years and move to another complex or home.

Their article also showed a financial disparity between renters and homeowners. In 2007 the median net worth of those renting was $5100 compared with $234,200 for homeowners. Pre- real estate boom in 1998 was $5400 for renters and $168,200 for homeowners, so you can see that the gap has been pretty big between the two regardless of the market.

So renters, if you are looking for the financial benefits of  homeownership and a sense of community, homeownership is great investment in your future.  It is still a great time to buy, and trying not to sound like a stereotypical salesperson, time is ticking!

Article referenced-Home Ownership and the American Dream by Brian Sumerfield, NAR, Feb 2011

If you have any questions or need any real estate assistance in the Boise, Idaho area, please contact me: mary@heritagewifi.com or www.BoiseRealEstateChick.com

Are We There Yet?

Many are wondering if the real estate market has hit bottom (here in Boise anyway…). It seems every time we think that the market was there, it then edged a little lower the next month. But if we look at the statistics from the past few months, the story seems to be changing. So, are we there yet?

The problem with knowing when the market has hit bottom, is when the data shows you that your are already out. And the numbers are indicating that we are not in bottom anymore. Now there will be those that argue that “shadow” inventory has not hit yet so we can expect further decreases in prices and increased inventory. The problem with this theory is that shadow inventory could be considered every house that is not for sale yet! Well if that is the case, then the market is doomed! Kind of silly thinking, so here are some real numbers to consider:

In the ADA County (Boise, ID)  market units sold:

December: 2010- 518  homes sold

                       2009 – 374 homes sold

                       2006 – 614 homes sold

Keep in mind that in 2009 the buyers credit was in place and yet we still sold more in 2010. This means a few things to me: 1. that lenders are doing a better job of closing short sales and bank owned, and 2. that smart buyers are realizing that the prices are definitely in bottom.

Inventory has also had quite a change:

December: 2010 – 2641  active

                       2009 – 3428 active

                       2006 – 3919 active

The difference between Decembers 2010 and 2009 for active listings really highlights how inventory has decreased. With prices staying relatively flat for the past few months and inventory on the decrease, I sense a subtle shift in the market. Now does this mean that we are going back into a seller’s market? Not immediately, because we do have to see how it goes come spring, but it is pretty safe to say that the pendulum is starting to shift out of the buyers side and back in the sellers direction.

One more thing to keep in mind! When we think of getting back to normal, do not think of the market as it was in 2006, when the median sales price was $ 232.9K but closer to the 2004 median sales price of $167K.  2004 was a much “saner” normal!

Selling Your Home in the Winter

I am asked by potential home sellers from time to time for my opinion as to when is the “best time to sell their home”. Many would naturally think that the spring is the ideal time to get their home on the market. But I personally think that while the outside pictures may look better, spring time is not the best time to put your home on the market for a few reasons:

  • Increased Market Inventory – Historically speaking, here in Idaho spring is a very popular time to put a home on the market. Many feel that as the weather warms up and the kids are getting out of school, more potential buyers will be out looking.  Now your home will be up against  not only the existing inventory that did not sell over the past few months but all the new listings as well.
  • Less Serious Buyers – With increased inventory also comes an increase in potential buyers but not all those that are out looking are going to buy. As stated earlier, as the weather warms up more people like to go out and look.  It is almost like a spring time ritual to go around to open houses and see what everyone elses kitchen looks like!
  • Reduced Pricing – Because the inventory picks up, the competition forces prices to go down (supply and demand). Now this may not seem like a huge price decrease but an extra $5k -$10k at the closing table is always welcome!

While some may argue that you have a better chance to sell in the spring, keep in mind that the spring is a short window (mid March to the end of May here in Boise anyway).  Then the potential buyers all seem to go on vacation till August. So why do I think the winter time is a great time to list your property? For the opposite reasons listed above:

  • Decreased Inventory- Many sellers pull their homes off the market to avoid having to have showings during the holidays (November to Mid-January). This is when your property will stand out with fewer homes to compete against.
  • Serious Buyers– The buyers that will brave the Boise  area inversions are serious! They have to find a home and will do so regardless of the weather. Yes, you may get fewer showings but just know that the ones that do look are looking to buy. If selling your home during the holiday season does not appeal to you, putting it on in January will still give you an advantage.
  • Stable or Increased Pricing – Now particularly in this market, I am not saying that pricing is going to be a lot higher but because inventory is lower (supply and demand again), less competition will keep you from having to continually lower your prices (although pricing your home correctly to start with avoids the problem of having to lower it at all!).

There are many realtors who may not agree with my assessment but in todays current market I think the winter market has even more merit. More than half the homes on the market are short sales or bank-owned. Many buyers are becoming weary of this market and appreciate a “normal” seller. Short sales and bank owned properties do not come off the market till they are foreclosed or sell (note: bank owned have already been foreclosed). So with a good chunk of the “normal” market getting out until spring, your chances are even better! 

I hope you will look at the winter market in a whole new light! The winter is not as gloomy as you think! And as always if you have any questions or need help finding real estate in the Boise, Idaho area please feel free to contact me!  mary@heritagewifi.com or www.BoiseRealEstateChick.com

Why You Should Google an Address

With instant information available at our fingertips via “google” magic, it is extremely easy to find out pretty much anything we want. But have you ever googled your address? or your neighbors? or maybe one of your children’s friends? While this may seem like spying, it is actually a very handy tool to have available for a few reasons.

  • 1.-To keep you and your loved ones safe – Local sex offenders have to register with their local county Sheriff’s department. By typing in an address you can see if a sex offender lives there. If you want to see if there are in your neighborhood or in a neighborhood that you are considering purchasing a home, you can type in the address, the town, or the zip code followed by “Megan’s law” and the registered offenders should appear.
  • 2. To protect against scams – By doing a search on an address you can see if it is being advertised by scammers as being for rent or sale.  If you are doing the search on a property that you plan on buying you will be able to see if someone other than the owner or realtor are advertising the property.
  • 3.To check on Home Sold Prices – This is especially helpful if you think your taxes are too high. By checking on the local sold prices you will be able to see the sold pricing  trend in your area. If the you see a downward trend (which you most likely will right now) you will be able to petition the local tax assessor to adjust the tax assessment. (If you go to Trulia.com you will be able to get this information also)
  • 4. To see street views – This is really a great idea especially if you are getting ready to list your home. Many potential buyers go to the internet first before they physically view a home. Google Maps lets them see a street view, not just of your property but of those around it too.  There may be a shot of your house maybe when you were cleaning out your garage or having a garage sale (you get the idea). Was your former neighbor a pig? Now they have moved and their yard looks great but usually the google street view is a few months (sometimes years) old. If you think that the view is not a good one make sure that it is mentioned by your realtor in the listing so potential buyers are not scared off before they even get to see the inside!

Whether you are buying, selling or just trying to stay safe, it is an excellent idea to google an address!

If you have any questions regarding the real estate market in the Boise area please feel free to contact me: mary@heritagewifi.com or www.BoiseRealEstateChick.com

source site: Trulia.com and WalletPop.com

10 tips for First Time Buyers

First time buyers are in a great position right now! You will probably hear it repeatedly that “it has never been a better time to be a first time buyer”.  Surprise, surprise, it is actually true. Interest rates are still at historic lows,  prices are lower than they have been in almost a decade, and inventory is still pretty good (although that is starting to change but that will be for another post!).

So, what should a first time home buyer do to get the ball rolling? Well on msnbc.com there was an article by Michele Lerner of Investopedia with some excellent tips that I will now share with you.

  • 1. Meet with a lender – Before you even go out and look at homes this is probably the most important thing you can do to get started. There is no sense in getting your hopes up about a particular home and then finding out that you can not afford or qualify for it. Visit with several lenders to find the one that you are most comfortable with and that offers you the best rates. Not all lenders are the same. Some work directly for a bank and others are brokers. Each one has different borrowing options available, so shop around! 
  • 2. Check your credit score– Lenders base a few different variables when qualifying you for a mortgage and the most important piece is (right now anyway) your credit score. Scores of between 720-740 and higher will get the best rates. If the score is 620 or lower it may be more difficult to qualify. Always talk with your lender, they may have suggestions on how to improve your score in a short period of time.
  • 3. Set your housing budget-While you may qualify for a particular amount to borrow this may not necessarily be the amount that you want to borrow. Get a budget together that goes over all your expenses to see what you can really afford each month. The recommended amount to borrow for your mortgage is around 30% of your gross monthly income.
  • 4. Start saving and stop spending – Once you know what you can afford in mortgage payments each month, start saving the difference between what your current rent is and what your mortgage payment will be. In today’s market you may actually have a lower mortgage payment than what your rent is.  Save the difference anyway!!!
  • 5. Find a reputable realtor– That would be me so look no more!!! Ok, so if you are buying outside of Idaho, interview several realtors to see which one will work best for you. Even though you do not pay them a commission fee, they still work for you. So treat this as if you were hiring them for a job and you are the employer. In today’s market many realtors have a second job to make ends meet. This is understandable but you need a full-time realtor. Make sure that real estate is all they do and that they answer their phone when you need them, not when they are on lunch break or home for the evening!
  • 6. Narrow it down- What you want and what you need are two different things, sometimes you can get both but be realistic. If you plan on living in the home for more than seven years than you will want to get as close to you wants and needs list as possible. If the home is just a stepping stone to the next one (less than 6 years) than your needs list is what you should focus on.
  • 7. Choose a neighborhood– This is more important than you think! The value of your home in the future is determined quite a bit by the values of other homes in your neighborhood. Look for neighborhoods that do not have a large percentage of Short Sales and Bank Owned properties. These may become a flip in the future, continuing to keep the values flat.
  • 8. Make a reasonable offer–  I can not stress this enough! Most properties are so undervalued that to make an offer that is even lower is just silly. While you will always want to feel like you are getting the best deal, I can assure you that with prices the way they are, you are getting a good deal. Also, if you do not want your offer rejected by either the lender (since most properties on the market are lender owned or subject to a lenders approval through a short sale) you are better off offering full price and asking for closing costs to be covered.
  • 9. Get a home inspection- Many of the homes on the market have not been maintained properly either because the owner could not afford to or the home has been vacant for a long period of time. An inspection does not cost much (usually between $200-400 depending on square footage) and can save you major headaches after the sale. Better to know up front what you are dealing with and a bad inspection gives you the opportunity to ask the owner to fix the issues or if they will not fix items, then you can void the contract. Please note that most short sales and bank owned properties are sold “as is”. Get the inspection anyway for peace of mind.
  • 10. Finalize the details- Now that the contract is signed around and the inspection is done, stay in touch with your lender and realtor to make sure everything is on track. Your realtor should be doing this anyway to ensure that the closing takes place on time and that any items that needed to be addressed before closing are dealt with. Your lender will probably get with you several days before closing to update you on any additional papers that need to be signed or are needed.

Buying a home for the first time can be very exciting. If you do your homework before you even go out the door then the buying process should be relatively smooth. Remember, buying a home is one of the largest financial purchases you will ever make so do so as an informed buyer!

And if you have any questions always feel free to contact me!  mary@heritagewifi.com or http://www.BoiseRealEstateChick.com

Hello world!

So here it goes! This will be the first of what I plan on being a daily real estate blog (except for Sunday’s).  Today I will keep it short and sweet (okay, maybe just short).

There is a lot of negative news out there and even more misinformation regarding the real estate market. I hope to clarify some of the misinformation by addressing different news items that might need clarification. Real estate news is usually told from a national perspective but  real estate is not national, it is local. Boise, Idaho real estate is not similar to Florida or California markets. Idaho may be affected by them but they are not the same. Mainly I will address the real estate market in the Treasure Valley area. This is the area that I work in and know the best. Who better to tell you what is going on here than me, the realtor who works here, not the reporter who looked at statistics and came to their own uneducated conclusions. I will also discuss the national market news as it affects the Boise area.

I will post in the beginning of the month, (within the first full week) statistics showing how the market did the previous month and year over year, along with commentary to explain those numbers.

Please feel free comment or to share any of the posts (as long as you cite me as the author). And please go to my real estate website for some very informative info regarding the Treasure Valley area, as well your guide to listings on available homes here!  http://www.BoiseRealEstateChick.com

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