Short Sale vs. Foreclosure Home

Earlier in this blog, we discussed short sales. To take that a step further, let's further define the difference between foreclosure and a short sale home.

When a house is sold for less than what is owed on the mortgage, this is known as a short sale. Short sale homes tend to be in better condition than a foreclosure home since someone is usually still living in a short sale home.

One statistic shows that in a short sale, the mortgage value loses around 19 percent. But on a foreclose home the mortgage value loses around 40 percent.

When a home has been foreclosed, the lender will take the home back and the home will be vacant. Many times the home will need some repairs and sometimes has been vandalized. Some lenders will not lend money on a home that is not considered habitable. Buyers of a foreclosure home have to see past the repairs needed to see the potential of the home, however, they also need to know the potential costs of the needed repairs like: new carpet, paint, necessary handyman work, etc.

Bank owned properties is one of the most common form of foreclosure investments. Bank owned homes have already been through the foreclosure auction with no buyers. This real estate then becomes the property of the bank.

All in all, there are great opportunities to make money on a foreclosure home and usually a potential buyer will hear back sooner from the lender than on a short sale.

Short sales, foreclosures and bank owned homes provide an opportunity for a home buyer.

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Difference between buying a Foreclosure and a Short Sale

Earlier in this blog, we discussed short sales. To take that a step further, let's further define the difference between foreclosure and a short sale.

When a house is sold for less than what is owed on the mortgage,

A short sale occurs when a house is worth less than the mortgage, and the seller’s lender accepts less than what is owed on the mortgage.

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Great Home Prices in Aurora

All across the United States homes are hitting rock bottom - For the first time home buyer, this provides a great opportunity.

With all that is going on in the real estate market right now, home prices are hitting rock bottom. Aurora, a suburb of Denver, is one city that has great home prices.

This community has benefitted from President Obama’s tax credit incentive.

The tax credit has been extended to April 30^th, 2010. The tax credit has enabled many 1^st time home buyers to get a home.

Aurora is the 3^rd largest city in Colorado

Current Aurora Facts – 2/19/10

• $173,250 median sold price
• 2023 listings for sale
• 32% currently under contract
• 1922 listings sold - last 6 months

Buckley Air Force Base is located in Aurora. This has helped to keep the unemployment less than nationwide. Currently their unemployment rate is 7.5%.

Foreclosures are starting to slow down in Aurora. If you would like to read more concerning Aurora facts click here http://ow.ly/16ClH7.

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Short Sales

Patience is important for the Short Sale process!

A short sale can prevent a seller’s home from going into foreclosure. For the buyer, it usually means you are getting the home at the current market value.

A short sale is when a lender is willing to accept less than what is owed against real property and helps the homeowner pay the bank off and avoid foreclosure. The owner is usually facing foreclosure and not able to pay their bills. The downside for all parties involved is the time it takes to close a short sale. It can take from two weeks to as long as two months to hear back from the lender concerning the purchase offer.

Short Sale Timeline

• Submission of offer and complete short sale package from the seller.
• 10 to 30 days - Bank confirms receipt
• 30 to 60 days – Bank obtains appraisal
• 30 to 60 days – File is examined
• 30 to 60 days – Negotiator is nominated
• 60 to 120 days - Offer is accepted or rejected

Most short sale homes are sold as is as the banks do not want to invest any more money into the property. Lenders can change the terms at the last minute depending on market prices and any new legislation. A buyer does not know what the lender will take for the property until they submit the offer. If there are other offers on the table, that will be taken into consideration by the lending company. Most bankers will consider an offer at 90% of market value.

More to come on short sales!

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Understanding a Short Sale

A short sale is when a lender is willing to accept less than what is owed against real property and helps the homeowner pay the bank off and avoid foreclosure. The owner is usually facing foreclosure and not able to pay their bills.

Visit our website today @ http://www.real-estate-denver-colorado.com/

Short Sale Guidelines

Here are some guidelines concerning Short Sales.

14 percent of all mortgages are not being paid. When someone is not paying their mortgage it is known as a default. 42 percent of subprime mortgages are in default, 10 percent of prime mortgages are in default and 18 percent of FHA mortgages are in default. Roughly 10 percent of all mortgages are not being paid. Option arms (pickup payment loans) start missing loan paymetns before the arms inflate. Most of these owners will not keep their homes.

Many arms are resetting in July 2010. Sitting at a 10 percent of an unemployment rate.

70 percent of homeowners do nothing to sell their home and walk away from their homes.

Bank Shadow Inventory: 10 million homes will fall under bank control, known as REO listings. these are millions of homes that the bank need to sell. There are only 4 million on the entire market nationwide.

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Clear the Clutter and Sell Your House | Sellers | Real Estate News | Home Finance

Quoted from http://www.realtor.com/home-finance/real-estate/sellers/clear-the-clutter-and-sell-your-house.aspx:

Here are some particular areas you should pay attention to as you declutter.

• Keep furniture to a minimum in your living areas so that your rooms look bigger.
• Clear out shoes, coats, umbrellas and other outdoor items from your foyer or mudroom.
• Move out big pieces of equipment, such as guitars, amps, drum sets, or exercise equipment.
• Take down your personal photos and store them for yourself. Let the buyer imagine putting pictures of their own family on the walls, tables and shelves.
• Get rid of old newspapers, books and magazines, recycling if you can.
• Organize your wires in computers, printers, televisions and other electronic equipment so that it doesn’t look sloppy and overwhelming.
• Take away those boxes of tissue, medicines, magazines and other items you might have on your nightstand and keep just lamps, clocks and maybe a book or two on them.
• Edit your bookshelves so that you have a neat, orderly space with books and perhaps a few decorative items, like a vase, globe or other art object.
• Remove everything from your kitchen countertops, keeping only essentials like a toaster. Add decorating items sparingly (bowls of unblemished fruit look nice). And clear off all those magnetized coupons and your child’s artwork from the refrigerator.
• Arrange the shelves in your pantry nicely. Have everything point in the same direction so that it looks neat and organized.
• Get rid of sickly plants and only keep a few healthy looking ones on display.
• Make sure your beds are made and all extraneous items, like clothes, toys or shoes, are off the floor.
• Clear out the bathrooms and spruce them up with some fresh soaps, towels or maybe flowers. Hide your razors, toothbrushes and shampoos out of sight in a cabinet while your house is being shown.
• Clean out your closets so they aren’t packed to the rafters.

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Building permits issued during December jumped 10.9%

The number of building permits issued during December jumped 10.9%. This was the largest jump in permits since June 2008.

Housing construction fell in December, but analysts feel it was weather related.

Housing starts were up almost 9% in November.

The market being good for buyers but very bad for sellers will continue in 2010.

To read more of this on CNN, http://money.cnn.com/2010/01/20/real_estate/housing_starts_building_permits/?postversion=2010012012

Visit our website today @ http://www.real-estate-denver-colorado.com/

Pending Homes Sales Have Leveled Out

According to the NATIONAL ASSOCIATION OF REALTORS®, December pending home sales have leveled out. The Pending Home Sales Index for December 2009 was 10.9% higher than the Pending Home Sales Index for December 2008.

They estimate that 2.4 million households will take advantage of the tax credit in 2010. If you are thinking of taking advantage of this credit, you can look at homes in the Denver area at http://www.real-estate-denver-colorado.com/. The tax credit gives 1st time home buys an $8,000 tax credit and a $6,500 tax credit for those who have owned a home before.

This rise in home sales should help stabilize home prices. As the inventory of houses lowers, it helps the existing home values.

FLIPS policy change

According to Realty times there are some potential issues with Obama's change of rules concerning property flips. Investors can now resell houses they've fixed up within 90 days to buyers using FHA financing (low down payment), however there is a twenty percent cap on the difference between the price paid by the buyer and what the investor paid for the property, This will be a challenge for investors for unknown costs such as insurance charges, vandalism repair, etc.

Overall this will open up foreclosures to FHA buyers and help move more homes in the real estate market.

http://bit.ly/anVtKM

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