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918 E Whitten St in Chandler

$205,000

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Why Are Short Sales So Troublesome?

Short sales seem like a win-win for everyone involved, but as real estate professionals know, short sales can be hard to pull off. It can take months for the mortgage company to respond to an offer, and the lender or lenders often balk at the price.

Why doesn’t the process go more smoothly when it seems like a much better deal for everyone than foreclosure?

* Paperwork. Gathering all the information needed to evaluate a short-sale offer can take time, says Patrick Carey, an executive vice president with Wells Fargo. The loan servicer must first determine whether the homeowner really can't continue meeting the loan payments, then get an appraisal or broker's opinion of the home's value.

* Many steps, approvals. Mortgage servicers also try to ensure that the proposed sale is an "arm's length" transaction between two parties rather than something like a sale to a relative on sweet terms. They must also determine whether the buyer has sufficient funds or the ability to get a loan. If all those hurdles are cleared, the servicer may still need to get approval from the investor that owns the loan and provide an analysis showing that the investor will be better off with a short sale than with another solution.

* Complications often arise. There are additional complications if the borrower has a mortgage and a home-equity loan. In that case, both parties must approve the deal – which is a challenge when the sales price may not even be enough to cover the mortgage balance.

* Minimize delays. Carey suggests that home owners contemplating a short sale immediately call the loan servicer to get the approval process started, rather than wait for an offer.

Source: The Wall Street Journal, Ruth Simon and James R. Hagerty (04/17/2008)

Bargain Home Prices Boost Sales

In cities where housing prices have fallen dramatically, bargain hunters are swooping in and pushing sales upward.

Boston, Cleveland, Detroit, Sacramento, and San Diego have all seen sales increases recently after a period of price declines, according to a March report by Radar Logic, a real estate data and analytics firm. In Detroit, sales of homes and condos rose 12.8 percent in February compared with a year ago, according to Realcomp.

The most aggressive shoppers include investors, particularly nationally based ones who are cherry-picking single-family homes in good neighborhoods all over the country.

International buyers also see U.S. home prices as a bargain. With the dollar down against the Euro, European buyers get particularly good deals, but buyers from Asia and Canada also are active, according to international real estate practitioners.

First-time homebuyers are finding this a good time to dip toes in the water. In November 2007, 39 percent of purchasers were first-time homebuyers, according to the NATIONAL ASSOCIATION OF REALTORS®.

Source: USA Today, Stephanie Armour (04/17/2008)

Why Selling Now Makes Sense!

Home owners who are reluctant to sell because prices have fallen, should do the math, and realize that the market downturn could work in their favor, say practitioners in hard-hit, but still pricey Boston.

Their reasoning may work in many other parts of the country as well.

"People are finding houses at prices they thought they'd never see again," says David W. O'Neil of Century 21 Spindler & O'Neil Associates in suburban Boston.

O’Neil points out to potential sellers that if the house a buyer covets used to be $500,000 but its price has fallen 20 percent to $400,000, it is a deal, even if the buyer’s own home also has lost 20 percent of its value.

In general, the toughest sell is people who bought about four years ago at the height of the market, says Zur Attias of The Attias Group at Barrett & Co. in Concord, Mass. But even for these home owners, selling now may make sense as long as they can at least break even.

He argues that almost everyone forgoes something, and probably several things, that he or she wanted when buying a house. For instance, the home may be in the right school district, but on a busy street. Or it may in a great neighborhood, but it's a Cape, not a Colonial. These are things Attias calls "unchangeables."

He says it’s a good time to sell if a seller can get rid of the most negative unchangeables in his current home, and replace them with better unchangeables in a new home. Once the market really turns around, the growth will be bigger in the better house, he predicts.

Source: The Boston Globe, Vanessa Parks and Jonathan Wiggs (04/13/2008)

Consequences for "Walk-Away" Borrowers

The government and the lending industry are taking aim at “walk-away” home owners who stop making payments and months later send the house keys back to their lender.

Such borrowers will not be able to get another mortgage through Fannie Mae for five years, unless there are “documented extenuating circumstances.” In that case, the prohibition is three years. Even after the prescribed time has elapsed, a borrower with a foreclosure in his file will have to make at least a 10 percent down payment and have a FICO credit score of at least 680 to qualify for a Fannie Mae loan.

Freddie Mac, which counts foreclosures as major credit black mark for seven years, is now aggressively pursuing walk-away borrowers where permitted under state law, a senior official said.

Federal legislation enacted last year allows home owners who negotiate loan modifications with lenders and have portions of their principal debt eliminated to escape income tax liability for the amount forgiven.

Walk-away borrowers, by contrast, have nothing forgiven, and the Internal Revenue Service may demand taxes on the balance they never paid, the IRS says.

Source: Washington Post Writers Group, Kenneth R. Harney (04/12/2008)

Housing Permits Signal Market Is Bottoming Out

Home-building permits in metro Phoenix were flat again in March as the housing market continued to search for a bottom.
Last month, 1,278 new-home permits were issued Valley-wide, RL Brown's Phoenix Housing Market Letter reports. That compares with 1,297 building permits in February and 1,370 in January.
"We think that the evidence is building that we are seeing the bottom of the new-home market in the metro Phoenix area," Brown said.
If the pace of permits stays in this range, metro Phoenix could have an annual tally of 12,000 for 2008 - the Valley's lowest level for home-building since the real-estate recession of 1990.

(source: AZCentral.com)