Real Estate Information

With the first time and move-up buyer tax credit deadline quickly approaching, I think it is important to ask yourself is that the only reason I am buying a home right now?  Yes, who wouldn't want to take advantage of this great $8000 or $6,5000 give-away from the government?  I think there are some other really great reasons to buy right NOW.

Home prices are more affordable than ever.  Interest rates are low.  Homeownership give you a great sense of accomplishment.  You become part of a community and neighborhood.  You get to deduct the interest on your home loan on your taxes (my personal favorite).  You can decorate and personalize the home to make it your own.

The tax credit requires buyers to be in contact for the purchase of home by April 30, 2010.  That is about 45 days away.  Then you have to close your transaction by June 30, 2010.  That's 60 days after the deadline.  At this point it is less than 90 days total.  Unfortunately if you are considering a short sale you may not make the closing deadline as many short sales can take 120 days or more.  I say that if you find a home you love, make the offer.  If you close in time for the tax credit - BONUS!  Don't make the mistake of rushing into a purchase just to get the tax credit and then realize you didn't buy the home you really wanted.

Want to know what's happening in the Sparks-Spanish Springs real estate market.  Here is a recap of what sold in February 2010. (Stick built homes in Sparks-Spanish Springs from MLS data)

There were 45 short sales closed in February with a median list price of $159,900 and median sold price of $156,000.  The average days on market for these closed sales was 190 days.  Short sales accounted for 40.2% of the total sales in February. 

There were 41 REO/foreclosure properties sold in Februrary with a median list price of $150,000 and median sold price of $143,000.  The average days on market for these closed sales was 86 days.  The REO/foreclosure properties accounted for 36.6% of the total sales in February.

There were 26 homes sold that were not distressed sales in February with a median list price of $179,950 and a median sold price of $178,200.  The average days on the market for these closed sales was 106 days.  These sales account for 23.2% of the total sales in February.

Looking forward here is a recap of the Active and Pending Sales in the Sparks-Spanish Springs area.

There are 584 short sales currently on the market.  203 of those are active and 381 are pending short sale approval.  The median price for active/pending short sale listings is $168,250 and the average days on market is 145 days.  Short sale listings account for 62.3% of the active or active pending inventory.

There are 133 REO/foreclosure properties currently on the market.  45 of those are active and 88 are pending sale.  The median price  for active/pending REO/foreclosure properties is $145,000 and the average days on the market is 71.  REO/foreclosure listings account for only 14.2% of the active/pending inventory.

There are 220 non-distressed propertys listed.  137 are active and 83 are pending.  The median price for non-distressed listings is $249,999 with an average of 122 days on the market.  Non-distressed properties account for 23.5% of the active/pending inventory.

So, what does this mean for home buyers and sellers?  Short sales are a large part of the market.  Whether you are buying or selling a home in the Sparks-Spanish Springs area be sure to enlist an "EXPERIENCED" short sale agent to assist you.  These are complicated transactions that require a REALTOR with not only certifications but actual closing experience.

REO/foreclosure sales are becoming more scarce has banks begin to see the value of short sales and slowly release their foreclosed inventory.  These properties require immediate action from buyers as they will typcially go into contract quickly and often with multiple offers.

Non-distressed properties are in demand by buyers, but many sellers continue to over price these properties.  Some buyers are willing to pay for the convience, but not many will over pay just for the convenience.  Sellers for you that means sharpening your price and being realistic about current market conditions.

You are sitting in front of a listing wondering what the price is, how big it is etc.  The flyer box is empty and you can't reach the agent on the phone.  You're frustrated.  Nof if you're sitting in front of a listing that offers information via Text Messaging.  Text messaging is exploding throughout America.  As a buyer you demand the information on the property to educate yourself prior to interacting with the seller.  I am using Goomzee, a technology that allows me to deliver information directly to the buyer while they are sitting in front of my listing.  A simple sign rider directs the buyer where to text.  Instantly the buyer receives the most important details along with pictures of the property.  The buyer is also given my contact information to schedule a showing if they want to see more.  Buyers love it, sellers love it and agents love it.  The information is shared quickly.  Not to mention it's GREEN.  No paper flyers.  A definite win-win.

Congress has extended and expanded the homebuyer tax credit.  The updates will become effective when President Obama signs the bill. 

Here are the highlights for the December 1, 2009 to April 30, 2010 Rules:

1. First Time Buyer Credit remains unchanged at $8,000.
2. First Time Buyer still defined as somone who hasn't had an interest in a principal residence in the past 3 years.
3. New - Current homeowners can now take advantage of a $6,500 credit if the sell their home and buy a new one.   These homeowners will have to have lived in the home they are selling for more than 5 consecutive years of the previous 8 years.
4. Credit terminates on April 30, 2009.  Buyers who have written, binding contracts to purchase in effect on April 30, 2010 will be given until July 1, 201o to close.
5. Income limits increased to $125,ooo for single and $225,o0o for married couples. 
6. Purchase price of the home cannot exceed $800,000.

Please contact your REALTOR for more information, as well as your tax preparer to ensure your eligiblity.

REALTORS from across the country and around the world are headed to San Diego November 13-16 for this year's annual National Association of REALTORS convention.  I am excited to be attending.  This is an opportunity for REALTORS to get up-to-date information on the most pressing issues in our industry.  There will be educational opportunities so that we can expand our knowledge base as well as a huge EXPO where I can shop for the latest technology, marketing and business tools.  What's really exciting this year is the use of social media and technology for keeping up to the minute on what is happening at Convention.  There is an app for my IPhone and we can follow the convention happenings on Twitter.  But, the best part of the convention for me is always getting to meet and network with REALTORS from around the country and the world.  The fact that the convention is in beautiful San Diego is a big plus too.

On July 1, 2009 Assembly Bill 149 was passed and signed into law.  This new law requires the foreclosing trustee (company hired by the banks to foreclose) to provide mediation for any owner occupied residential property before they can foreclose.  Sorry investors you won’t get to take advantage of this program.  To get more information on this program you can visit www.nevadajudiciary.us

The purpose of the Foreclosure Mediation Program is to keep Nevada homeowners in their homes.  To qualify it must be an owner occupied, primary residence.   If you have an Notice of Default and Election To Sell filed on your home prior to July 1, 2009 you don’t qualify for this program.

Mediation is an alternative method to help parties resolve disputes by agreement with the help of trained mediators.  Mediating a foreclosure action has its advantages.  It is fast, inexpensive, and offers a flexibility that more formal processes do not.

The new law requires that a foreclosing trustee must include the following when they file the Notice of Default and Election To Sell (NOD) – (1) Contract information on how the homeowner can contact a person of authority to negotiate a loan modification, (2) Contact information for at least one local housing counseling agency approved by HUD, and (3) a form with the homeowner can indicate their election either enter into mediation or waive that option with envelopes addressed to the trustee and Mediation Administrator.

A homeowner must complete the mediation form no later than 30 days after service of the notice and return it by certified mail. 

If the homeowner selects mediation the foreclosing trustee has to notify the beneficiary (the bank) and the Mediation Administrator who then assigns a mediator and schedules the mediation.  At this point the foreclosing trustee can take no further action until the completion of the mediation. 

Proposed Supreme Court rules limit mediations to four hours and require that mediations be conducted within 90 days of a foreclosure notice being filed.   Those same rules also require that all decision makers be present for the mediations.  That means, if an agreement is reached, it can be finalized quickly.  The cost is $400 which is split between the homeowner and the lender, and it has to be paid up front. 

Within 10 days of the mediation, the mediator will prepare the necessary Statement of Agreement or Non-agreement and serve it on the parties.  The original will be filed with the Foreclosure Mediation Program Administrator and the mediation will be closed.  If there is an agreement, the parties will execute the appropriate documents.  If there is no agreement, the parties will be free to pursue other legal remedies.

This new law also gives the homeowner more time to “cure” the default by making back payments and re-instating the loan up to 5 days before the Trustee’s sale date.  This has the effect of giving homeowners and additional 3 to 5 months to reinstate.  The old law only gave 35 days from the date the Notice of Default was filed. 

You can play a major role, with the help of a trained mediator, in deciding the outcome of your individual dilemma.  Mediation is a give-and-take process in which the parties work to reach a mutually acceptable resolution to a mutual problem.  Resolutions reached through foreclosure mediations are compromises that offer advantages to lenders as well as homeowners. 

Yes, that's right we are once again seeing multple offers and bidding wars in the Reno-Sparks market.  It is key that you know some tips to getting your offer accepted prior to getting in the game. 

Those of you considering buying a home in a competitive market know or may have heard how frustrating the process can be. In certain markets a buyer can find himself competing against 3-18 other offers for almost any listing that he writes on with many of the offers being similar in terms of price. However there are steps you can take to position yourself well to win a bidding war. And the discipline and thoroughness to do so is well worth the effort given the weeks and months of extra labor involved for you and your buyer’s agent that would come if you just wrote standard offers on listings you found appealing and continually got beat out for the homes you like.

If you're wondering how you can make your offer shine above all the rest and be the winning offer, here are a few tips to help you select the right price and terms.  Price is probably the biggest factor in trying to compete with a multiple offer situation.  But if there are many offers within the same range, there are definitely things you can do to make your overall offer the best in the mind of the seller.

Price is Most Important - Remember, your offer price is a NET price, which means your offer price less any credits.  So many times buyers don't understand that.  As an example, if you offer $350,000 with $10,000 credit towards closing costs, your are offering $340,000 for the property, NOT $350,000.

A Complete Package - MAKE YOUR OFFER A COMPLETE PACKAGE - include your Purchase Agreement, and addendums that apply .   Also include your Loan Pre-Approval, Proof of Funds for the down payment, a copy of the deposit check, SRPD Waiver and any other documents specifically requested by the seller/listing agent.

Get the Property History - Ask your buyer's agent to find out the bank's purchase price on the Trustee's Deed or Sheriff's Deed. Generally, it is noted on the document itself, which you can get from the tax rolls or a title company. Compare that price to the price the bank is asking.   Look at the amount of loans that were once secured to the property. Somewhere between the original mortgage balance(s) and the foreclosure sale price is the amount the bank will accept, if the home is under-priced.

Determine Comparable Sales - In many cases, the list price has little bearing on the value of the home. The market value carries the most weight. If you are up against competing offers, other buyers will offer more than list price.

·         Look at the last three months of comparable sales, a mini CMA, for that neighborhood to determine how much this REO is worth. Try to use only those homes that most closely match the REO regarding square footage, number of bedrooms, baths, amenities and condition.

·         Look at the pending sales. Ask your agent to call the listing agents of those pending sales to try to find out the accepted offer price. Some will share that information and some will not.

·         Look at the active listings. Those are most likely the listings other buyers will use to formulate a price because they are the only homes those buyers actually tour.

Analyze Listing Agent's REO Solds - Most REO agents work for one or two banks. Some listing agents are exclusive listing agents for REOs, and they do not list any other type of property. Since REO agents deal in volume, they typically apply the same pricing principles to all their REO listings.

·         Ask your buyer's agent to look up the listing agent in MLS.

·         Run a search using that listing agent's name to find the last three to six months of that agent's listings.

·         Pull the history of those listings to determine the list-price to sales-price ratio. If most of those listings are selling for, say, 5% over list price, then you may need to offer 6% over list price, and vice versa.

Ask About Number of Offers - If there are no offers on the REO home, you can probably offer less than list price and get your offer accepted. However, if there are more than two offers, you will most likely need to offer above the asking price.   If there are 20 offers, bear in mind that some of those offers might be all cash. Banks like all cash offers. If you are obtaining financing, then you may need to increase the price on your offer to be considered.

Submit Preapproval Letter - It goes without saying that you do not want a prequalification letter. You want a preapproval letter. Get preapproved from your choice of lender in advance.   Moreover, get preapproved by the lender who owns the property. Do not expect to use this lender for your loan, but submit the preapproval letter from this lender, along with the letter from your own lender. Banks don't trust other lender preapprovals but trust their own departments.

Don't Ask for Repairs / Inspections - Sometimes banks will pay for repairs, but typically will not agree to do so at the offer stage. If there are problems found during a home inspection, renegotiate after your offer has been accepted. Shorten your inspection period to (10) days or less - really, it only takes a few days to book an inspection, and even then maybe a few days after that to assess the situation with the property.  The seller, especially if it is bank-owned, will really like a quick inspection period.  Plan on paying for all of your own inspections.

Offer to Split Fees - Some banks will not pay transfer fees, for example. If the buyer offers to split those fees, the bank will feel more amenable to accepting the offer. Same thing for escrow fees.   Many banks negotiate discount fees for title insurance. If the bank will pay for the owner's policy, the ALTA policy might cost a bit more. But it's still a good idea to let the bank choose title if you want your offer accepted.

Large Earnest Money Deposit - Put as much of your down payment down into your earnest money deposit when you write the offer—very aggressive but it makes a REAL good impression. The earnest money is part of your down payment anyway so there is not much difference in putting it down a month early. The seller knows you’re for real and have money based on your earnest money deposit more than your stated down payment on the contract.  If you break the contract you lose your earnest money deposit so a huge earnest money deposit says to the seller you’re for real and there’s no way you are going to lose your earnest money deposit by breaking the contract.

Short Escrow Period - Write as short an escrow period as possible, with respect to the amount your lender will need to close the loan.  Consult with your lender on the type of loan you are using and get their input as to how many days he/she feels they can comfortably close the loan.

Consider the Appraisal Consequences - If you offer over list price, bear in mind that the appraisal will need to substantiate that price. If you find yourself dealing with a low appraisal, you have options, so don't despair. Remember, the bank will most likely run into this problem with the next buyer who obtains financing.

Escalation Clauses - Working with your buyer’s agent you can add a clause to your contract which says you are willing to pay an amount in excess of the other bidder’s highest offer.   Make a statement with your over bid increment.  Your bid increment should be in relationship to the sales price.  When you escalate  DO NOT JUST STOP AT EVEN CUT-OFF MARKS LIKE MOST AGENTS DO. Always escalate $1700-2700 above where you think the cut-off mark is going to be. You want to predict where your enemy is going to finish and position yourself ahead of them.

Agent relationships - Believe it or not it comes down to this in many instances of where things are so equal that your buyer agent’s previous experience with the listing agent comes into play.

Write your offer to win. 

It is true that both foreclosure and short sales have serious consequences for homeowners faced with the inability to pay thier mortgages.  The following are some of the ways homeowners are affected showing the difference between foreclosure and short sale.  (Source: Distressed Property Institute)

PURCHASING A HOME IN THE FUTURE...

• Fannie Mae Insured Loans for Primary Residences - Foreclosure requires a 5 year wait before purchasing again vs. a 2 year wait if you sold through a short sale.
• Fannie Mae Insured Loand for Non-Primary Residences - Foreclosure requires a 7 year wait and short sale again will only require a 2 year wait.
• Future Loan Applications - On any 1003 application the borrower who has a foreclosure will have to mark "YES" to the questions "Have you had a property foreclosed upon or given title or deed in lieu thereof in the last 7 years?", yet a borrower who has done a short sale will not have to answer yes to this question.

CREDIT HISTORY AND CREDIT SCORE

• Credit scores can be lowered anywhere from 250 to over 300 points with a foreclosure and will typically affect your credit score for over 3 years.  With a short sale only late payments will show and after sale the mortage will be reported as paid or negotiated.  The short sale's affect can be as little as 50 points and can be as brief as 12 to 18 months.
• Credit history for foreclosure will remain as a public record on your credit history for 10 years or more.  A short sale is not reported on a credit history, typicall it shows the mortgage was "paid in full, settled."

EMPLOYMENT

• SECURITY CLEARANCE - If you have a security clearance, a foreclosure can result in a revokation of your clearance, where typcially a short sale on its own does not challenge a security clearance.
• Your current employment can be affected if your employer checks your credit regularly.
• Many employers are requiring credit checks when hiring for new positions.  A foreclosure could challenge future employment opportunities.

DEFICIENCY JUDGEMENTS

• In 100% of foreclosures in Nevada the bank has the right to pursue a deficiency judgement.  With a short sale the lender often agrees in writing to give up the right to pursue a deficiency judgement.
• With foreclosure the price the home sells for after the bank gets it back through the foreclosure process is often significantly less then the proceeds they would receive in a short sale.  Thus the deficiency balance is typically much higher with a foreclosure than with a short sale.   

There is a common misconception that foreclosure and shortsale are equal, but as you can see the truth is that the consequences of a short sale can be more favorable for homeowners.

If you or someone you know if facing foreclosure please contact me and I can help you understand the options available to you and give you referrals to others who can help.

The good news first.  Sales of single family residences in the Sparks-Spanish Springs area were up 22% this May over May 2008.  This shows that the buyers are out there and making purchases. 

Now the not so good news.  The median sold price for May 2009 was $166,500.  This is down significantly from May 2008 when the median sold price was $245,000.  As we often hear, "real estate is regional" and the Sparks-Spanish Springs area is no exception.  So here is the figures by area.

Sparks (MLS Area 180) - Median sales price $108,000 with an average days on market of 121 days.  61.11% were bank owned, 27.77% were traditional sellers, and 11.11% were short sales.  66.66% of buyers purchased using FHA financing, 16.66% used conventional financing and 16.66% used cash.

East Sparks (MLS Area 181) - Median sales price $154,000 with an average days on market of 119 days.  69.56% were bank owned, 21.73% were traditional sellers, and 8.69% were short sales.  34.78% of buyers purchased using FHA financing, 16.66% used conventional financing,34.78% used cash and 13.04% used VA financing.

Sparks Suburban (MLS Area 182) - Median sales price $209,000 with an average days on market of 129 days.  48% were bank owned, 40% were traditional sellers, and 12% were short sales.  32% of buyers purchased using FHA financing, 56% used conventional financing, 8% used cash and 4% used VA financing.

South Spanish Springs/Wingfield(MLS Area 183) - Median sales price $210,500 with an average days on market of 158 days.  53.33% were bank owned, 20% were traditional sellers, and 23.33% were short sales.  43.33% of buyers purchased using FHA financing, 33.33% used conventional financing, 20% used cash and 3.33% used VA financing.

West Spanish Springs (MLS Area 184) - Median sales price $165,7500 with an average days on market of 97 days.  57.14% were bank owned, 28.57% were traditional sellers, and 14.28% were short sales.  71.42% of buyers purchased using FHA financing, 21.42% used conventional financing,  and 7.14% used cash.

East Spanish Springs (MLS Area 185) - Median sales price $307,500 with an average days on market of 108 days.  80% were bank owned and 20% were short sales.  20% of buyers purchased using FHA financing, 20% used conventional financing,  and 60% used cash.

Sparks Foothills (MLS Area 188) - Median sales price $215,000 with an average days on market of 130 days.  50% were bank owned, 33.33% were traditional sellers, and 16.66% were short sales.  33.33% of buyers purchased using FHA financing, 16.66% used conventional financing,  and 50% used cash.

If you would like specific valuation for your home, please contact me.

Many homeowners in the Reno-Sparks area are facing issues with mortgage delinquency and possibly foreclosure.  This can be a very stressful time and knowing the process and where to go for help can be very beneficial.  As a member of the Nevada Association of REALTORS Foreclosure Prevention Task Force, I have come across a very valuable tool for homeowners - "Nevada Foreclosure Information Workbook".  This booklet was compiled by the Nevda Statewide Foreclosure Prevention Taskforce.  You can download this booklet from Nevada Department of Business and Industry's website.  Here is a link http://foreclosurehelp.nv.gov/Brochures/ForeclosureWorkbook.pdf. 

The booklet covers topics like - Understanding Delinquency, Understanding Your Financial Situation, Know Your Mortgage, Know Your Options, Beware of Scams, Tools for the Homeowner, and Document Checklist for Dealing With Your Lender.  There are also definitions for many of the terms you may need to know.  There is also a list of resources. 

If you are facing issues with delinquency the best thing you can do is take a pro-active approach and educate yourself on the process.  This will enable you to have more successful results when dealing with your lender.