Real Estate Information

According to sales data from the Northern Nevada Regional MLS, traditional home sales (sellers with equity) lead the sales data for residential, stick built home sales in October 2010.  Traditional, equity position sales accounted for 38.8% of sales in October.  The median sales price $231,700.  These sellers received on average 95.1% of asking price and had an average of 116 days on the market.  The median sales price is bolstered by 15 sales over the $500,0o0 mark. 

Bank owned or REO sales accounted for 32% of the sales in October.  The median was signifcantly lower at $1390,950.  These properties saw the fewest days on the market with an average of 96 days.  These listing received on average 99% of asking price.  The median sales price wasn't helped much which only 3 homes sold over the $500,000 mark and almost 80% of the sales at the $200,000 or below price point.

Short sales accounted for 27.9% of the sales in October.  They brought in a higher median sales price than the REO properties at $161,000.  They unfortunately average the longest market times of 199 days.  Short sale listings received an average of 99.1% of their asking price.  The short sale median sales price was definitely bolstered by a $1,200,000 sale.  There were 4 sales over the $500,000 mark.  70% of the short sales were under the $200,000 price point.

What does all this mean???  Sellers with equity can successfully sell their homes in a distressed market given that they have realistic expectations of the price.     Bank owned/REO sales net the banks less than short sales, a continued argument that banks seem to be getting finally.  And lastly, short sales aren't just for homes in the lower price points.  You can do a short sale on a $1 million home.  You just have to prove to the bank that you have a hardship and that it's in their best interest to not take the property back onto their books.  It can be done.

New statistics show that 1 in 7 homeowners are facing difficulty paying thier mortgage.  Homeowners facing these issues often wonder how they can afford to get help.    I am here to tell you that you can get the help you need from an experienced short sale real estate agent and most, if not all, of the costs will be deducted from what is recieved from the sale.  There is no need to pay a short sale company or attorney to faciliate a short sale for you.  In most cases your lender will agree to pay all the typical seller closing costs and the comission to the agents as part of the short sale approval.  In most short sales the homeowner is not responsible for these costs and in turn is not allowed to recieve any proceeds from the sale.  The key is making sure you are working with an experienced short sale real estate agent. 

Does this mean that homeowners are completely off the hook and won’t have any costs?  No, in some cases depending on your financial situation the lender may ask the homeowner to contribute to the loss with a cash contribution or promissory note.  An experienced short sale real estate agent can assist you in minimizing these and working on a win-win solution for both the homeowner and the lender.  In some cases the cash contribution or promissory note can be the key to having the lender release the homeowner from any future liability.

How can you afford not to do a short sale?  When the alternative is foreclosure which can be devastaing to your credit, your future ability to purchase a home again, and result in larger tax consequences – how could you afford not to consider a short sale?

If you are a homeowner facing difficulties making your mortgage payment, consult an experienced short sale agent as soon as possible.

Buyers shopping for a home in the Reno-Sparks area are likely to encounter a large number of short sale properties for sale.  Some of these short sales are advertised as "pre-approved" meaning that the seller's lien holder has already approved the short sale.  Buyers should be careful here as the term "pre-approved" is often used loosely and many listings actually should be advertised as "previously approved."  Ask specific questions....

FHA Preforeclosure Sales  if listed correctly will be "pre-approved".  FHA requires homeowners to get approval into their system prior to listing thier property.  FHA sets the price and the net proceeds.  Once an offer is received the seller's lien holder is supposed to respond to the offer within 5 business days.  If the offer meets the FHA requirements as set forth in the "Approval to Participate" that the seller is given when approved into the system then this is truly a "pre-approved" short sale.

HAFA Short Sales - This is a newer short sale program that is set up in a similar fashion to FHA short sales.  Sellers can be approved for a HAFA short sale prior to listing the property, given a sales price and net amount.  In this case the short sale is truly "pre-approved".    The seller is provided with a Short Sale Agreement (SSA) which outlines the terms required for the short sale. 

Previously approved short sales are just that - previously approved under another buyer's name.  Most lien holders provide short sale approval letters with the specifics of the buyer who made the offer.  If the property is being advertised as "pre-approved" but the approval letter has another buyer's name on it, it won't do you much good.  At that point if you make an offer, your offer and all the pertinent documents will need to be re-submitted to the lien holder in order to issue a new approval letter in your name.  This process may be shorter than the timeline the previous buyer waited, but there are no guarantees. 

Key is to work with a buyer's agent that knows the short sale process and can inquire about the specifics of the property you are interested in.

There is a lot of news out there about the recent foreclosure “freezes” or moritoriums.   What does this mean to homeowners in Reno-Sparks area?   Nevada is a non-judicial foreclosure state.  What this means is that in order for a bank to foreclose in Nevada they do not have to go through a judicial process (go before a judge) to foreclose.  When you take out a mortgage in Nevada you sign a Deed of Trust which says you agree to pay and if you fail to pay the lender can foreclose by simply filing a Notice of Default and subsequent Notice of Sale within the State laws.  Many of the banks that instititued these foreclosure freezes have lifted in them in the 23 states that use the judicial process because these foreclosure are reviewed by the courts prior to being approved.

These freezes do not mean that homeowners are going to get off the hook.  It simply means that you may have a bit more time to pursue alternative options, such as a short sale.   Don’t be fooled into thinking that you can hold off until after the holidays to look into your options.  If you are facing difficulty paying your mortgage please seek help of a qualified real estate professional as soon as possible.  The one thing you don’t have is TIME. 

Over the past several years we have seen the lenders institute foreclosure freezes in the 4th quarter simply because it is not good press to foreclose on homeowners during the holiday season.  Although the issues seems to be more focused on “robo-signing” for the current freezes, historically this isn’t uncommon. 

Again, call me today as acting quickly is the key…

On August 6, 2010 The Federal Housing Administration (FHA) announced it will be rolling out a new program on September 7, 2010 that will offer new FHA insured mortgages to underwater homeowners who are current on their mortgages provided the homeowner's lender will agree to write off at least 10% of the unpaid mortgage balance. 

Sound too good to be true?  Well there is a catch.  The homeowner must get their lender (servicer) and the investor who owns the mortgage to take a short payoff of the loan.  Many lenders and investors are reluctent to do this.  So although the program looks great to homeowners it may be easier said than done.

Who qualifies?

1. Homeowner must be in a negative equity position (underwater).
2. Must be current on the existing mortgage.
3. Homeowner must occupy the property.
4. Homeowner must qualify for new FHA loan and have a minimum FICO score of 500.
5. The existing loan cannot be an FHA loan. 
6. The existing lien holder (lender) must agree to write down at least 10% of the unpaid balance.
7. The new re-financed FHA first mortgage cannot have a loan-to-value greater than 97.75%.
8. If there is a second lien it can be re-subordinated to the new loan, but the 2 loans combined cannot be great than 115% loan to value.

Interested homeowners should contact their servicer for more information.  When I looked on Bank of America's website, my servicer, I found mention of the program but that they had not worked out the details and to keep checking back.  With the program scheduled to roll out in early September, you may find this to be the case with many lenders.

If you would like a copy of the FHA Mortgagee Letter that details the program, please feel free to contact me.

If you are struggling making your mortgage payments you need to seek help as early as possible to avoid foreclosure.  Fannie Mae, an insurer of home loans, has released a new interactive tool online to help you determine what your options are.  KnowYourOptions.com  The website is designed to be a virtual one-stop-shop for anyone facing financial hardship and in need of foreclosure prevention solutions. 

The site is available in both English and Spanish and includes tools like educational videos, mortgage calculators, financial forms and checklists.   A virtual assistant will walk you through the site. 

Not all mortgages are insured by Fannie Mae, but this is a great general resource.  The site does provide a Fannie Mae Look-up Tool so you can find out if your mortgage is insured by Fannie Mae so you can take advantage of the Fannie Mae specific programs that are detailed on the site.

Again the key for anyone homeowner who is facing difficulties or anticpates that they may have an issue in the near future is to seek help as early as possible.  This website is a great first step.

According to data from the Northern Nevada Regional Multiple Listing Service, short sales posted the highest number of sales for June.  In sales of residential, stick-built homes in the Reno-Sparks area there were 575 sales in June.  Of that 43.2% were short sales, 33.6% traditional sales and 23.3% were REO/bank owned sales. 

The median price of  all sales in June in this category was $170,000.  Median prices for traditional listings topped the charts at $219,950.  Median for short sales was $151,000 and REO's was $148,000.    The average days on market for all lisitng types was 146 days.  REO's were on the market the least amount of time with an average of 85 days on market.  Traditional sales averaged 109 days and short sales averaged 208 days. 

Short sales have become very significant in our market.  In June 2009 only 103 short sales closed, that is a 240% increase in the number of short sales that have closed this June over last June.    Unfortunately the number of days on the market for short sales has not improved year over year - 204 days average last year compared to 208 days average this year.  Although we would all like to see this improve, the complex nature of short sales may continue to keep these market times high. 

Short sales are definitely a major part of our market.  Working with an "experienced" short sale agent is key to the success of a transaction when either buying or selling a home today.  Prospective buyers and sellers should ask their agent to show them how many transactions they have closed on either the buy or sell side of the transaction.

Here is a look at what is happening in the Sparks-Spanish Springs market as of today, May 14, 2010.   This data is from the Northern Nevada Regional MLS and is for residential stick built homes in these areas.

Active Listings  - There are currently 411 active listings.  The median list price for these listings is $194,900.  The average days on market is 105 days.  Of these active lisitngs,  57 are bank/corporate owned (13.86%), 194 are short sales (47.20%) and the balance are traditional sales. 

Pending Listings - There are currently 607 pending listings.  The median list price for these listings is $165,000.  Average days on market for pending sales is 131 days.  Of the pending sales 63 are bank owned (10.37%) and 449 are short sales (73.97%) and the balance are traditional sales.

Sold listings - So far in the second quarter of 2010 there have been 203 sales.  The median list price for sold listings was $165,000 and the actual median sold price was $168,000.  The average days on the market for sold listings was 138 days.  Of the sold listings 60 were bank owned (29.55%) and 70 were short sales (34.48%) with the balance (35.96%) were traditional sales. 

Looking at these statistics, we have a relatively low inventory.  Of the available inventory almost 50% is short sales.  Buyers have to be prepared to deal with long waits if considering this half of the market.  The amount of pending inventory is very high, and with 73.47% of the pending sales being short sales we could see some time before these sales close.  Many buyers that are waiting on these sales are hoping to close by June 30th for the tax credit and it will be interesting to see how many can actually close by that date given the track record banks have closing these.

Short sales are out pacing the bank owned sales so far in the second quarter.  One would think this indicates an improvement in the short sale process, but I think it stems from lower bank owned inventory and over priced traditional sales.  Again, it will be interesting to see how the quarter finishes out at the end of June with buyers rushing to close for the tax credit.

Sellers if your mortgage is FHA insured the process for a short sale is very different.  Make sure you work with an agent who knows the difference and can guide you through the process.

FHA guidelines require a seller to get their home approved into the FHA Pre-Foreclosure Program prior to listing the property.  Sellers should work with thier REALTOR to contact the servicer (the company you pay the mortgage to) and request to be considered for a short sale.  The servicer will provide the necessary documentation and complete an FHA appraisal on the property.

If you would like more informaiton on the HUD Pre-Foreclosure (Short Sale) Program, please contact me for a complete guide.

You can determine if your loan is FHA by looking at the bottom of  your Deed of Trust , or ask your REALTOR to order a property profile from the title company which will have a copy of this document  in it.   

Once the servicer has obtained the initial documents and ordered an FHA appraisal they should be able to issue you the “Approval to Participate”    This clearly defines the FHA Fair Market Value, the deadline to get a contract for sale, minimum net proceeds that FHA will accept and the amount of the seller’s incentive and what date you have to close in order for the seller to get that money.

From the issue date on the Approval To Participate you are given a specific date to get the home under contract.  If you get the sale into contract within the first 30 days FHA will require the sale to net 88% of the FHA appraised value.   If the sale contract comes between day 31 and 60 FHA requires a 86% net.  Day 61 to the expiration of the Approval To Participate FHA will allow the offer to be 84% of the appraised value.

Once you list the property you basically have an approved short sale if the offer will provide the appropriate net to FHA.  There is one other major thing that needs to be remembered.  FHA will only allow up to 1% of the new buyer's loan amount as a closing cost credit if the buyer of your home is doing a new FHA loan.  Many buyers in our market are needing 3% closing cost assistance from the seller.  That will not work on this type of sale.

Once an offer is received that meets the required net, it is submitted to the servicer and an Approval is issued.  This is what is need to close the short sale.  

Sellers are offered an incentive on FHA short sales.  If you successfully close the sale within 90 days of the Approval to Participate you can recieve up to $1000 incentive which can be applied to paying off a second lien or other closing costs that FHA doesn't allow, or if there is neither of these you get the money for relocation assistance.  If it does not close in that 90 day window the amount drops to $750. 

Here is where things get tricky.  You may have a servicer (who you pay your mortgage to) that is not up to speed on FHA guidelines or has a large back log of files.  They are still required as an FHA servicer to follow FHA guidelines.  You and your REALTOR can contact FHA directly at their national servicing deparment and file a complaint.  The number is 888-297-8685.  They take your information and create a "work ticket" which is then assigned to a local field officer who contacts the servicer and resolves the issue.

Contact me today for a complete guide to FHA Pre-Foreclosure (short sales.)

Sales data just released from the Reno-Sparks Association for March 2010 was a real eye opener.  Here are a couple of intrepreations of the data...

1. For homes in price points under $400,000 it is a seller's market.   Overal in the Reno-Sparks market we have 2.8 months of inventory.  The National Association of REALTORS categorizes a "sellers market" as any market where there is less than 6 months inventory.   In price ranges under $200,000 there is less than 2 months of available inventory.  In the $200,000 to $400,000 there is 2.3 to 4.8 months of inventory -  signaling a seller's market.
2. The median sales price was $175,500 for March 2010 up from $170,o000 in February and $167,000 in January.  This is the 3rd straight month we have seen an increase in prices.  (Unfortunately the median is still down from March 2009 when it was at $200,000).
3. The number of distressed listings (bank owned, corporate owned or short sales) coming onto the market in March (new listings) was at August 2008. 

BUYERS - WHAT DOES THIS MEAN FOR YOU?

1. You need to be working with an experienced REALTOR that can help you locate inventory, and make a strong offer against the competition that is out there.  Believe the media or not, it is a seller's market.  Your offer will need to be strong in order to get the property
2. Median prices have been increasing for the past 3 months.   If you are inclined to "low ball" you may miss out on the property you want and if you are still waiting for the "bottom" of the market you may have missed it.  NOW is still a great time to buy.
3. Distressed properties accounted for 55% of the new listings that came on the market.  Again, make sure you are working with a REALTOR that has experience both listing and selling distressed properties in order to avoid possible pitfalls.

SELLERS - WHAT DOES THIS MEAN FOR YOU?

1. Equity position sellers you are in the driver seat.  The shortage of inventory and the challenges in purchasing distressed inventory puts you in a great position to attract buyers quickly and get top market prices.  (That doesn't mean you can over price your home, but if you want to sell and you price your home at fair market value it will sell.)
2. Prices are improving.  For sellers that are underwater or teetering, if this trend continues we will all be happy.  I caution sellers to keep in mind that we won't see 2005 prices again for quite some time.  If you are waiting for another boom you may be old and gray before it gets here.  If you have considered moving up and you have equity now is the time.  The move up home you want is available at a great price as well.  You may lose your "imaginary gains", but you can move up to a bigger or new home at much more affordable prices.
3. With less distressed inventory, you have less "low market" competition and more opportunities to attract buyers. 

Time will tell.