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.

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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.

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.)

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.

Of course it is.  Homes in the Reno-Sparks market are more affordable than they have been in years.  Interest rates which are predicted to rise in the coming year are still in the low 5% range.  Homeownership still give you the  things that your parents looked for when they bought houses - shelter, pride of ownership, sense of community, freedom to make it your own and an a great tax write-off.  In many cases rent in our area is easily equilient to what you would pay for a home mortgage. 

Buyers may continue to face some challenges in our market as inventory levels remain low in the super competitive price ranges under $300,000.  Also with the high number of short sales in our market buyer will need a skilled agent to help them navigate listings that may have a better chance of closing sucessfully.  Buyers will also continue to face mulitiple offers on bank owned and traditional sales as these properties types will continue to close more easily than short sales. 

Without a crystal ball we can't see into the future, but for now the signs all point to a thumbs up for purchasing a home. 

Buyers looking for a home in today's market are forced to consider short sales as they account for 57.9% of the active listings.  What is not surprising is the number of buyers waiting for short sale approval.  There are currently 1,591 pending sales that are classified as short sales in the Reno-Sparks area, while only 764 are other sale types.  So, in the pending category the number of short sales is 67.5% of pending sales.

Short sales still remain a long and sometimes frustrating process for both buyers and sellers.  Many loan servicers are overwhelmed by the volume of offers they are processing which leads to long wait times for approvals or even for a response.  Be sure that your agent is knowledgeable about the short sale process.

Homeowners should come prepared with the following documents:

1. Monthly mortgage statements.
2. Information about other mortgages on your home if applicable.
3. Two most recent pay stubs or other income documentation for all borrowers, if self-employed a profit and loss statement.
4. Two most recent bank statements.
5. Account balances and monthly payments for credit cards and debts.
6. Estimates of monthly expenditures (medical, utitilies, insurance etc.)

To all parties in a short sale the agent must act in a manner which is not deceitful, fraudulent or dishonest, while exercising reasonable skill and care.  The agent must also disclose to each party in the transaction all material and relevant facts. 

Reasonable skill and care would require the agent to seek training on short sales as they are much more complex transactions than a regular purchase or sale.  The agent should be familiar with marketing strategies for short sales, the short sale process, bank requirements, and diligently follow up through the transaction.  The agent must disclose to each party material facts – what lien holders are involved, has a Notice of Default or Sale been filed against the property, what is the homeowner’s hardship.   In addition to any other facts that might be pertinent – are their other liens, is the agent using an 3^rd party negotiator, is the seller current or delinquent, is this the seller’s primary residence, does the seller qualify for HAFA?  These are all material and relevant facts in a short sale.

In addition, the agent is charged with additional duties to their client – the buyer or the seller.

1.  Exercise reasonable skill and care – again the agent should seek education on short sales. 
2. Not disclose confidential information without written consent of the client – in a short sale transaction the seller authorizes the agent to discuss confidential information with the seller’s lien holder.
3. Seek a sale, purchase…at the price and terms stated in the brokerage agreement or price acceptable to the client.  This is done through agents listing the property in MLS, marketing the property etc. 
4. Present all offers made to, or by the client as soon as practicable, unless waived by client.  The listing agent has the obligation to present all offers made to the seller.  If the seller accepts an offer then subsequent offers should be presented for back up position.  Only one offer should be forwarded to the seller’s lien holder.
5. Disclose to the client material facts of which the licensee has knowledge concerning the real estate transaction.  The licensee should inform the seller of the legal and tax implications of a short sale, how the short sale process works etc.
6. Advise the client to obtain advice from experts relating to matters which are beyond the expertise of the licensee –  it cannot be stressed enough that agents should not be giving legal, tax or credit counseling advice to clients.  These are all areas where clients should be referred to a licensed professional.
7. Account to the client for all money and property the licensee receives in which the client has an interest.  When representing a buyer on a short sale, if the earnest money is not going to be deposited until short sale approval is procured, the agent should clearly identify who has these funds. 

The key to the new HAFA program is that the homeowner must meet the HAMP guidelines to be considered, which are as follows:

1. Property must be the homeowner's primary residence.
2. The first mortgage must have originated before 2009.
3. Mortgage payments must be delinquent OR default is reasonably foreseeable.
4. Unpaid balance is not more than $729,750.
5. Homeowner's TOTAL monthly payment (principle, interest, taxes, insurance and HOA dues) MUST EXCEED 31% of thier GROSS MONTHLY INCOME.

Timelines for this program are set at much shorter periods than traditional short sales. 

1. Within 30 days of the request to be considered the servicer must respond to the homeowner.
2. 14 calendar days from the servicer's response the homeowner must sign the "short sale agreement" and return it to the servicer.
3. At this point the homeowner then lists the property.
4. Once an offer is recieved the homeowner must submit it to the servicer within 3 business days.
5. The servicer then has 10 business days to accept or reject the offer.

If the servicers can meet these deadlines it will greatly improve the market for these short sale properties.  (I for one am currently in the watch and see mode.) 

Here are some other key points that must be considered....

1. Homeowner gets a $1500 incentive for relocation assistance at the conclusion of the sale.
2. Homeowner must negotiate separately with any second mortgages etc.
3. If there is mortgage insurance the insurer must waive their rights to recieve additional payment.
4. Must be an arms-lenght transaction.
5. Servicer/Investor must agree not to pursue a deficiency balance against the homeowner (this is huge!)

Contact me for more detailed information and to see if you might qualify for this program. 

Come prepared!  To make the most of the event you will want to bring the following: (1) your monthly mortgage statement, (2) information about additonal mortgages on your home, (3) 2 most recent pay stubs, income documents from all sources and a profit & loss if you are self-employed, (4) 2 most recent bank statements, (5) account balances for all monthly payments for all debts, and (6) estimates for other monthly expenditures (utilities, medical bills etc.).  Bring copies not orginials. 

In addition you can  go to http://www.makinghomeaffordable.gov  to download and complete the Request for Modification and Affidavit and the IRS 4506T-EZ.  If you do not have a computer the forms will be provided. 

Parking is free or you can take RTC Rapid and use the Convention Center stop.  For more information you can visit http://www.makinghomeaffordable.gov or call 1-888-995-HOPE(4673).

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.

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.

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