Real Estate News

When considering the acquisition of a property that will be a short sale, make sure that you understand the process and set expectations accordingly. One big difference between a short sale and a conventional sale is the approval process. Although many lenders are streamlining their procedures, it can still take 45 days or more from contract acceptance to receive lender approval. Here are some tips to help things go smoothly:

Make as clean an offer as possible, but be sure to include contingencies for inspections, and for appraisal and loan approval. Your contract should also include a short-sale addendum that includes provisions that are uniquely applicable to short sale transactions.

Listing agents often want the buyers’ contingencies to begin when the offer is accepted by the seller. However, buyers usually prefer to pay for inspections and the appraisal after lender approval. These items are negotiable.

Your short-sale offer will stand a better chance of lender approval if your client is pre-approved for financing. Include verification of the funds needed for your client’s down payment and closing costs and a preapproval letter from his lender with the offer. In some cases, advise well heeled buyers to eliminate the mortgage contingency altogether to make their offer stand out among other competing offers.

Advise your buyers not to look at a short-sale listing until you have talked with the listing agent to find how much ground work has been done. Does the listing agent have the sellers’ written authorization to negotiate on their behalf with the lender? Has the listing agent been in touch with a representative of the lender’s loss mitigation department? Have the sellers provided all the documents that will need to be submitted to the lender when an offer is accepted, such as a financial statement, hardship letter, bank statements, pay stubs, etc.

Some listing agents may lack short sale experience. In these cases the you, as selling agent, should tactfully help the listing agent as necessary to ensure that a complete short sale package is submitted to the lender.

As we have said before, short sale properties are not for everyone, but they do represent a large segment of the current listing inventory. With skilled representation on both sides, the process can be made much more palatable.

Chase Bank has recently adopted a new practice under which it will not approve a short sale containing any kind of document containing language requiring that the seller’s deficiency be forgiven. This has come about as a result of changes in banking accounting practices allowing banks to include short sale losses as assets on their balance sheets, as long as the deficiency has not been forgiven.

We have always attempted to protect our sellers’ interest by negotiating forgiveness of the deficiency. However, this approach appears now to be futile, at least with regard to Chase Bank. Other banks may follow. Short sale sellers should be advised accordingly.

Several local real estate brokerages continue to insist on such an addendum. Short sale buyers and buyer’s agents should be aware that short sale approval will not be forthcoming in those instances.

Coldwell Banker Weir Manuel, your trusted advisor in all things real estate, will be hosting complimentary property tax seminars to educate tax payers about the appeal process. Homeowners will learn how to read and interpret their assessment notices. We will also explain the difference between State Equalized Value, Capped Value and Taxable Value – and the uncapping process. In short, our seminars will cover virtually everything you want to know about property taxes, including how to reduce them!

Join us at a seminar near you:

7:00pm Tuesday, February 23
The Community House
380 South Bates, Birmingham 48009

7:00pm Wednesday, February 24
VisTaTech Center at Schoolcraft College
18600 Haggerty Road, Livonia 48152

7:00pm Thursday, February 25
University Center 1
Center for Executive & Professional Development
Macomb Community College
44575 Garfield Road, Clinton Township 48038

The affordability of home ownership is affected by many factors including housing prices, interest rates, short term tax incentives and long term tax deductions. Besides housing prices, the single most important factor impacting the out-of-pocket monthly cost of home ownership is interest rates. Where are interest rates headed in 2010?
Here is what some experts are predicting:

HSH & Associates: rates will nudge closer to 6% than 5%
Moody’s Economy.com: 6 percent sounds about right
Washington Post: 6 percent by the end of 2010
Barry Habib of Mortgage Market Guide: It could be as high as 6.5%
Morgan Stanley: 7.5 percent to 8 percent

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said on Friday that the government-backed mortgage finance giants Fannie Mae and Freddie Mac are likely to be abolished and replaced with a new system for housing finance.
“The committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance,” said Frank, once a big proponent of the firms. “That’s the approach, rather than a piecemeal one.”
Fannie Mae and Freddie Mac are two vital cogs in the nation’s mortgage market, buying loans from lenders, insuring them against default and supplying fresh cash to make more loans.
The two companies are behind most home loans. Because of mounting losses on those loans that threatened their collapse, District-based Fannie Mae and McLean-based Freddie Mac were seized by the federal government in September 2008 and are now run by regulators.
Frank said no decision has been made about what future model he will propose, and aides said no action is imminent. He has said it’s important for the government to continue to play a role in fostering housing affordability.
Treasury Secretary Timothy F. Geithner said Thursday that Congress likely won’t be able to take up housing finance reform this year. The administration will release principles for reform next month.
“We are committed to propose a set of detailed reforms beginning this year,” Geithner said in an interview on “PBS NewsHour.” “I don’t think we’re going to be able to legislate that until next year, because it’s just a complicated thing to get right.”
Source: Zachary A. Goldfarb, Washington Post