3 Things You Should Know About Buying a Short Sale in the Charlottesville Area
January 20th, 2010 categories: Financing, First Time Buyers, For Buyers, Helpful Tips, Info, STR Market Info Blitz
This post is part of the Strong Team REALTORS Market Info Blitz. We’re heating up the Winter market by giving you three-months worth of the information you need, November through January. Check out the latest posts in the blitz, here.
There are many short sales in the Charlottesville Area
Over the last year, there has been a surge in a type of sale that was previously unknown to most people who were interested in buying a home– the short sale.
Now, if you are looking for a home in the Charlottesville area, it is a good bet that at least one of the homes that you want to consider is a short sale. A few years ago, this would not have been the case. The reality is that short sales are here to stay for the foreseeable future in the Charlottesville real estate market, so it is a good idea to know what to expect when you come across a short sale property.
If you want to buy a short sale property, then there are some things that you need to know so that you can give yourself the best chance for success.
What is a short sale?
Because of the downturn in the real estate market, and falling property values, some people owe more money on their mortgage than their house is currently worth. Sometimes, those people need to sell their homes now, and can’t wait for property values to rebound.
When a person needs to sell their home and the amount that they owe on the mortgage exceeds the value of the home, they are sometimes able to proceed with a short sale. When someone asks their mortgage bank to do a short sale, they are basically saying to the bank, “I can no longer afford to pay my mortgage. I need to sell the house, but I can’t afford the difference between the value of the house and my outstanding loan balance.”
If the homeowners are able to prove to the bank that they cannot afford to continue to pay the mortgage, and prove that the house is worth less than the remaining mortgage balance, the bank might approve a short sale.
So, what should you do when you are looking at homes, and you find out that the one you want to buy is a short sale? What should you expect? What should you know?
3 Things to know about buying a short sale
Navigating through the process of buying a short sale can sometimes be frustrating. There are 3 things that you need to know before you go into the process that can help you avoid some of the frustration that can occur and get you in the right frame of mind for successfully buying a short sale property.
1. Be very patient. The short sale process can take a LONG time. In a typical buying transaction, you would identify the house you want to buy, submit a contract to the owners, negotiate the contract, come to an agreement, and then go through the normal steps before closing. Usually, this might take 30-60 days. The short sale process adds another step that can significantly increase the amount of time it takes to successfully close on the house– the bank.
In a short sale, you will still submit the offer to the sellers, and you will still need to reach an agreement with them. Once that is done, however, the contract will still need to be approved by the bank (or banks) that hold a mortgage on the property. Banks are being flooding with short sale requests, and as of yet, they haven’t committed a lot of resources to processing these requests. That means that simply getting bank approval can sometimes take months, and this is after you have already agreed to a price with the sellers.
There is very little you, or the sellers, can do to speed up the process. Once the bank has all of the required paperwork, they will take however much time they want to either approve or deny the sale. If you are in a situation where you need to close on a house in 30-60 days, you are probably not going to be successful buying a short sale. Short sales routinely take twice that long, or longer. If you are in a short sale, then the best thing you can do for yourself is to remain patient. If it really is the house that you want, and you have the time to wait it out, then all you can do is wait.
2. Don’t expect the sellers to fix any home inspection items. If you are buying a short sale property, you already know that the seller cannot afford their mortgage payments any longer. Obviously, this indicates that the sellers are cash-strapped. If you are going to have a home inspection on the property, and you should, then you need to go into the home inspection assuming that you are going to be responsible for addressing any of the items that are found. Sure, you can ask the sellers to fix items, but don’t be surprised when they tell you that they don’t have the money to fix any of the items.
You should also keep in mind that you probably won’t receive any credits for home inspection items. Doing so is usually frowned upon by the banks involved, and getting approval for such credits merely serves to delay the process even further.
If you are going to have a home inspection on a short sale property, your best approach is to understand that you will be responsible for anything that is discovered, if you choose to go through with the purchase of the house.
3. You are negotiating with a bank, not a person. Sure, the sellers still own the house, and you submitted your offer to the sellers, and they are going to sign it. The reality, though, is that the bank is calling the shots. If the bank denies the short sale, the sellers can’t sell the house, and you can’t buy it from them.
All of this means that patience once again becomes paramount. Because the bank is the party that is really in control, there is going to be more paperwork involved. The bank may want you to sign agreements that wouldn’t be included in a normal purchase transaction.
Appeals to humanity probably won’t get you very far, either. Sometimes, you can endear yourself to a seller by telling your story, helping them get to know you so that they know where you are coming from in the process. The bank doesn’t care about you. For the bank, this is purely a financial transaction. It is purely a business decision that must go through the prescribed process. That is it.
Don’t get frustrated because you think the bank is ignoring you, or not considering your point of view. That might be true, but the bank really doesn’t care that you are frustrated. They just don’t.
Buying a short sale can be worth it
We’re not telling you these things to discourage you from buying a short sale property. We just want you to understand that buying a short sale property is different from going through the normal purchase transaction.
We have helped many buyers and sellers, from Lake Monticello to Albemarle, navigate the sometimes turbulent short sale waters. All of them felt that the process was worth the time and effort that it required. It might be worth it for you, too. It is just important to understand what you are going to be going through before it actually happens. That way, you are prepared for the success that you want achieve.
If you have any questions about buying a short sale or what to expect during the process, just let us know. We’re always happy to help people and prepare them for success.
Photo credit: http://www.flickr.com/photos/thetruthabout/ / CC BY-SA 2.0
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10 Things to Know About the Charlottesville Area Real Estate Market in 2010
January 4th, 2010 categories: Albemarle County, Charlottesville, Communities, Financing, First Time Buyers, Fluvanna County, For Buyers, For Sellers, Helpful Tips, Info, Lake Monticello, News, STR Market Info Blitz, Uncategorized
This post is part of the Strong Team REALTORS Market Info Blitz. We’re heating up the Winter market by giving you three-months worth of the information you need, November through January. Check out the latest posts in the blitz, here.
10 Things to Know About the Charlottesville Area Real Estate Market in 2010
We recently came across a very interesting article published a few weeks ago by U.S. News & World Report that was all about the national real estate market. The article was called, “10 Things to Know About Real Estate in 2010.” The article is well done, and definitely worth reading.
We thought that the predictions in the article were spot-on. All 10 of them, in fact. We realized, however, that the article focused on the national real estate market. Since you aren’t buying or selling all over the country, but rather buying or selling real estate right here in the Charlottesville area, we though it might be a good idea to adapt the 10 things from the article to the Charlottesville areal real estate market.
In fact, the article itself mentioned the need for local real estate analysis:
“. . .anyone interested in buying real estate next year can’t just read the national headlines. Instead, find a good blog that covers the local housing market and consider speaking with a real estate agent with experience in the area. “
We’d like to think that we fit squarely into that category. 
So, let’s get started. . .
10 Things to Know About the Charlottesville area Real Estate Market in 2010
1. Prices to bottom: We think this will be true in the Charlottesville area. In a few days, we will be releasing our 2009 Real Estate Year-in-Review Market Report. The data in that report should give us a good idea as to how prices will react in 2010. Given the trends that we saw in the 4th quarter of the year, it appears that prices have stabilized. It is important to note that reaching a bottom is very different from climbing. While we expect prices to stabilize, we certainly don’t expect to see a tremendous appreciation of prices. As we’ve been saying for a long time now, the days of 10% appreciation per year are over for the foreseeable future.
2. Mortgage delinquencies up: This is unfortunate, by probably true. We expect to see more foreclosures and short sales in the market this year than we saw in 2009. The state of the economy is a major factor in the rise in delinquencies, as is the fact that many homeowners owe more than what the home is worth. Those two factors inevitably lead to a rise in delinquencies. That being said, the Charlottesville area has fared much better than many parts of the country. While their may be increased foreclosures and short sales here in 2010, it will be much less than other areas, even in our own region.
3. Foreclosures move upstream: This is a rather interesting prediction that is made in the article. Basically, economists are predicting that foreclosures will increase among “prime” borrowers, and homes in higher price ranges. Remember how everyone was saying that the chief cause behind the mortgage meltdown was the “subprime” borrowers? Well, many of those borrowers are already in foreclosure, or have been through foreclosure. There are a lot of “prime” borrowers out there who might now be in danger. Most economists think this is due in large part to the number of Adjustable Rate Mortgages that are set to have interest rate resets in 2010. It is difficult to predict whether or not this will be true in the Charlottesville area. It stands to reason, however, that if there a high number of ARMs in the area, we might see increased foreclosure numbers in higher price ranges.
4. Mortgage rates to rise: Since mortgage rates are not geographically dependent, any national prediction about mortgage rates will be just as true here in the Charlottesville area. Mortgage rates have remained at historic lows, thanks primarily to programs put in place by the Federal Reserve. As those programs expire throughout the course of the year. Expect rates to rise. Their is a very good chance that rates could be at or near 6% for 30-year mortgages by the end of 2010.
5. Buyer’s market remains: With prices at the bottom, and mortgage rates at historic lows, this is obviously a buyer’s market. That most certainly will continue throughout 2010. As previously mentioned, however, mortgage rates are sure to rise, and prices probably won’t continue to fall in the Charlottesville area. This means that the leverage buyers currently have will probably decrease as the year goes on. One factor that will play a big part in the market shift will be inventory. If inventory numbers remain high, buyers will have continued leverage just because they will have a greater selection, and more competition among sellers. If inventory numbers start to fall, that will erode that leverage more quickly. By the end of 2010, the market should still favor buyers, but things will be much more even than they are now.
6. Modification plan could be modified: The Federal loan modification program is a mess. It simply hasn’t done what it was intended to do– keep borrowers in their homes. The program doesn’t address two of the key factors that lead to loan delinquencies– negative equity, and job loss. While job loss hasn’t been as big a problem in the Charlottesville area as it has in other regions, negative equity is certainly a concern. Only a relative handful of people have been helped by the program. If the government really wants to do something, the program is going to have to be modified. If that does happen, it could stem the tide of foreclosures and delinquencies predicted by numbers 2 & 3.
7. FHA lending standards may increase: This one is pretty much guaranteed. Loans backed by the Federal Housing Administration have been very popular. Unfortunately, that popularity has meant that FHA loans have also been hit hard by foreclosures. This has lead the FHA to push for increased standards. Increase the standards might have the effect of eliminating potential buyers from the marketplace. While such an increase should help stabilize the market in the long-term, it could have a short-term chilling effect.
8. Tax credit available through June: We’ve talked about what extending and expanding the tax credit might mean for the Charlottesville area before. November certainly saw an increase in closings due to the originally proposed expiration date for the tax credit. It is difficult to determine if the extension and expansion will have the same effect of bringing more buyers into the marketplace. Overall, we feel that the impact made by extending and expanding the tax credit program will have only a slight positive effect on the Charlottesville area real estate market.
9. Markets will vary a great deal by region: This is true every time, all the time. It is true on a macro level, and also on a micro level right here in the Charlottesville area. The different localities have been effected differently by the market changes. Albemarle has been effective differently than real estate in Lake Monticello or Fluvanna. Even different neighborhoods have been effected differently. As the article suggests, it is extremely important to find an agent who is knowledgeable about the market conditions in the area and/or neighborhoods in which you are interested.
10. Mobile maps can help: This one was a bit of a stretch by the author of the article, but it is still applicable in the Charlottesville area. Both Trulia and Zillow have iPhone apps that will allow you to search for homes by your current location. It is a neat feature, to be sure. We have found that our clients appreciate the visual feedback that map-based searching can provide, which is why our Charlottesville area real estate search engine has a map-based element to it. Since all three of us are dedicated iPhone users, never hesitate to ask when you have questions about mobile real estate applications. Between the thee of us, we’ve tried just about all of them.
Photo Credit: http://www.flickr.com/photos/23727257@N00/ / CC BY 2.0
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7 Ways to Grow Your Bank Account for 2010
December 11th, 2009 categories: Financing, First Time Buyers, For Buyers, For Sellers, Helpful Tips, STR Market Info Blitz
This post is part of the Strong Team REALTORS Market Info Blitz. We’re heating up the Winter market by giving you three-months worth of the information you need, November through January. Check out the latest posts in the blitz, here.
Fatten your piggy bank for 2010
2009 is almost over.
With the coming of the new year, most folks look forward to a fresh start. That is probably just as true for your bank account. 2009 was a tough year, economically; but that doesn’t mean that you can’t get things together so that you can start the year off on the right foot for 2010.
We’re always on the lookout for information we can share with our clients and customers that can help them improve their financial situation and help them reach their goals.
Technology website, Lifehacker, recently published a great list of things you can do that will help put you on sound financial footing in 2010. Here is a summary of their list of “Essential Year-End Money Moves:”
- Set up or review your automatic savings plans.
- Max out your retirement savings.
- Get your last tax deductions in.
- Get your 2009 free credit report.
- Jot down your accomplishments at the office this year.
- Calculate your net worth and get a 2010 budget set up.
- Get your will and insurance ducks in a row.
All seven of these items are very important for your financial future. We also know first-hand that one of the best ways to achieve success in your real estate goals is to have a firm financial foundation. We think these 7 things will help you establish a foundation that will help you reach your personal and real estate goals. To read the entire article and all the tips on the list, click here.
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What Lake Monticello owners should know about homeowners associations
November 20th, 2009 categories: Communities, FAQ, First Time Buyers, For Buyers, For Sellers, Helpful Tips, Info, Lake Monticello, STR Market Info Blitz
This post is part of the Strong Team REALTORS Market Info Blitz. We’re heating up the Winter market by giving you three-months worth of the information you need, November through January. Check out the latest posts in the blitz, here.
A Lake Monticello home at sunset
The Lake Monticello Owners Association is one of the largest homeowners associations in Virginia, and certainly the largest in the Charlottesville area.
Not to long ago, we shared with you how you can get information about the LMOA directly from their website.
But what if you want more general information about how homeowners associations work? Or what if you live in a homeowners association other than the Lake Monticello Owners Association? Then what?
Don’t worry– we’ve got just what your looking for.
HouseLogic.com has a very informative article about what to expect when you live in a homeowners association.
The information in the article applies to homeowners associations in general. Sure, every homeowners association is going to be different, but the article is a great starting point for general information that will prepare you to live in a homeowners association.
One piece of advice that is particularly useful is the what to do when you don’t like the rules of your HOA, or you think things need to change– get involved. The article offers the following ways to do something in order to get the results you want:
Become the rule-maker
If you don’t like the rules, the best way to change them is to become part of the process.1. Know your CC&Rs, annual budget, and employee contracts. Do you see areas where expenses can be cut? Are service providers doing their jobs?
2. Volunteer for a committee or task. If the board needs to enforce parking rules, for instance, you can volunteer to gather license plate numbers of residents’ vehicles. In addition, put your professional expertise to work: Assist the board with data entry, accounting, or website design.
3. Stand for election to the board. When a position becomes open, the board notifies the members, and you can put your name forward. New board members are elected at the annual meeting by member majority vote. Many boards are three to nine members large, with terms of one to two years.
Living in a homeowners association can be very different from neighborhood to neighborhood. With the knowledge that the article provides, however, you’ll be more prepared as to what you should expect from your homeowners association.
If you have a question about any of the homeowners associations in the Charlottesville area, don’t hesitate to ask us! We’ve helped hundreds of buyers and sellers in the Charlottesville area who lived in or moved into homeowners associations. We’re always happy to offer our knowledge and experience, or put you in touch with the right people to answer your questions.
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How Charlottesville area homeowners can save money with tax credits and incentives
November 19th, 2009 categories: Financing, First Time Buyers, For Buyers, For Sellers, Helpful Tips, Info, STR Market Info Blitz
This post is part of the Strong Team REALTORS Market Info Blitz. We’re heating up the Winter market by giving you three-months worth of the information you need, November through January. Check out the latest posts in the blitz, here.
Everyone wants to save money at tax time
We can’t speak for you, but we sure do like saving money.
One of the great things about being a homeowner, is that the Federal Government has all kinds of incentives and deductions that homeowners can use to save money when tax time rolls around.
The best thing about these credits is that it doesn’t matter whether you own a home in Charlottesville, Albemarle, Lake Monticello, or New York City, you can take advantage of these credits and incentives, too.
HouseLogic has an entire section of their site devoted to sharing tax incentives and deductions with homeowners.
The site lists all kinds of interesting deductions and incentives that you can take advantage of, so be sure to check it out!
Photo Credit: http://www.flickr.com/photos/jacreative/ / CC BY 2.0
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