Short Sales Explained!

I have been asked many times by homeowners œWhat is a Short Sale? and wanted to try and explain what a short sale is, and most importantly; what a short sale is not.   Simply speaking, a short sale is defined as:   A borrower owes an amount on his property that when combined with closing costs and commission is higher than current market value.  A short sale occurs when a negotiation is entered into with the homeowners mortgage company or companies to accept less than the full balance of the loan at closing.   A buyer closes on the property and the property is œSold Short.

This sounds like a simple thing to accomplish but try remembering back to when you purchased your home and the difficult situations that may have arisen during the transaction, then multiply that by a factor of at least 5.   The short sale process takes much patience by everyone involved including the home seller, the home buyer, the listing agent and the buyer™s agent.   It takes a listing agent that is completely familiar with the short sale process and is organized with good communication skills. In my opinion, the listing agent is the most important choice that the homeowner must make when considering selling their home œshort. A listing agent that is experienced, trained, and will aggressively work hard to accomplish the short sale increases the chance of success by about85%.   To give perspective, a listing agent that is untrained or with lack of experience as to what the lender wants has less than 1 in 4 chances to successfully complete the process. An experienced, trained, and organized listing agent will succeed nearly 85% of the time.

The next question that is most often asked is œCan I sell my home in a short sale?. There are some requirements that is needed in order to sell your home œshort. The most important qualifications for the homeowner are:

                There must be a hardship reason for selling the home.      Being upside down on the value of the home vs. the mortgage owed is not considered a hardship.   Hardship reason can include divorce, death in family, and relocation due to job requirements, illness, or other reasonable things that have happened in one™s life making the homeowner unable to pay the mortgage. ·            

              Insolvency.       The homeowner must have a shortfall each month where income is less than monthly expenses.   The homeowner also cannot have money œstashed away somewhere such as in a savings account.  

The above are the two primary things that would be needed to qualify for a short sale, but as with every rule, there can be exceptions.   There may also be other requirements that pertain to your specific situation that has to be considered.   In order to get the more information about your specific situation, you would need to meet with a person who is knowledgeable and experienced in the short sale process.    I would be glad to answer any questions or set up a time to meet in a confidential setting to discuss your situation, you can email me at gnelson@harfordcountyhomes.net or call me at 410-459-6920.

Foreclosure Activity Report

In looking at the overall numbers, Maryland is in a lot better shape in regards to foreclosure activity in comparison with the rest of the country, with the filings of foreclosure trending downward in the last 6 months of the year.   Your average savings for purchasing a foreclosure home in Maryland would be about 37% below fair market price indicating that there could be a substantial benefit to buying an investment property right now.   The question that must be asked is how long with this trend continuing and in what direction will it go.   I will give my opinion but first, let™s look at some data from RealtyTrac.com:

We will start off with Maryland Numbers.

Ø   1 in every 1685 housing units received a foreclosure filing during the month of November 2010.

Ø   The county with the highest amount of foreclosure filings in November 2010 was Prince Georges County with 547 filings.

Ø   In the state, Prince Georges and Caroline County have the highest amount of foreclosure activity in the state.

Ø   The trend in the last 6 months ending in November shows that foreclosure filings are falling.

Ø   Maryland numbers:   17,386 foreclosure homes in Maryland with the average foreclosure sales price at $192,348.00.

Now, let™s look at Harford County, Maryland:

Ø   1 in every 2672 housing units received a foreclosure filing during the month of November 2010.

Ø   Edgewood had the highest amount of filings with 9 followed by Abingdon and Havre de Grace with 5 each.

Ø   The areas with the highest amount of foreclosures in the county were Edgewood and Pylesville.

Ø   The last 6 months show a downward trend in foreclosure filings which matches the state™s trend.

In looking at this data and the economy in general, it is my opinion that we are looking at the bottom and that the standard of living will slowly start to improve throughout 2011 and on into 2012.   Banks want options to foreclosure which is why many of the banks look favorably to short sales.   The most important decision in regards to selling one™s home via short sale is to ensure that you have an agent that is experienced and trained in the short sale process.   One of the biggest mistakes that a homeowner can make when selling their home as a short sale is using an real estate agent that is not familiar or experienced with the short sale process.

For more information on what short sales are and how the process works, I invite you to visit our website at www.HarfordCountyHomes.net, click on œDistressed Properties tab at the top of the site, then click œShort Sale Info also located at the top of the page.

Thanks to our veterans

This past weekend was the traditional Memorial Day weekend where we take a moment to remember all those veterans that made the ultimate sacrifice so that we Americans can live free.   Memorial Day was originally called œDeclaration Day that remembered those who died during the Civil War in May 5^th, 1868.   It really become a tradition until the early 1900™s when the country went through two World Wars.

Today, many Americans celebrate the holiday with cook out™s and visits to the beach for a family outing.   This weekend, we had   a cookout with the neighbors and had a great time but we also took time out to thank our veterans and to remember those who died to allow us to be free and enjoy our way of life.

Hope you all had a wonderful Memorial Day!

Gary Nelson, REALTOR

Long and Foster Real Estate, Inc

410-459-6920

Short Sales-What Price Should I Offer?

As a Short Sale Specialists, I have been through the process of the hated short sale many different times mostly as a listing agent, but also as a buyer™s agent.   I get many questions from agents and clients concerning what they should offer for the property so I want to dedicate this article to discuss my experiences with the process and what banks are willing to accept.

I want to first define a short sale.   A short sale is where the bank is willing to accept a payoff for less than what the homeowner actually owes on the property.   Lets say that a person bought a home for $300,000 dollars, and when the market crashed, the home depreciated to where it now is worth $225,000 dollars.   The homeowner has a hardship that prevents them from continuing to pay their mortgage so they go into default.   A real estate professional places the home on the market for $225,000 and gets an offer for the full list price.   The offer is signed by the owner, then sent to the bank for approval that the bank will accept less than what is owed in order to transfer the property free and clear to the new buyers.   The bank accepted what is called a short fall in what was owed on the home.

Let™s address a very popular myth!   Short sales are great buys because you can get them at a bargain basement price and way below market value.  This is not exactly true.   Before the bank will accept a short sale, they will first do their due diligence by ordering an appraisal on the property. This can be done by a œDrive By or a full appraisal, but the bank will not make a move until this is received from their source.   When they receive this appraisal, they will calculate the net that they will be receiving and will accept somewhere around 85% of what the property is worth.   They may sometimes go slightly lower, but not by much.

So the question that begs to be asked is œWhy would a bank accept something less than what is owed?   The answer is simple, first; the homeowner is in a hardship situation and foreclosure is most likely imminent.   If the bank has to foreclose, they are most likely to lose much more than if the property is sold as a short sale.   Second, when a bank does have to foreclose, the process takes a long period of time which the bank is not receiving any money and the holding costs will add up.

Short sales are great purchases, but what the buyer is getting is a property at market price that takes into consideration the value and the condition of the home.   We invite anyone to ask any questions or contact us for more information about the short sale process or how the process works.

Gary Nelson, REALTOR, CDPE, GRI

Long and Foster Real Estate

Direct: 410-459-6920

Office: 800-474-7778 Ext. 6026

www.HarfordCountyHomes.net

Life is a risk  

This week, I just want to give my philosophy on life in general and how I cope with the everyday ordeals that we all have to toil through in order to succeed at what we are trying to accomplish.   Let™s see, what am I trying to accomplish?   My view of a perfect life is to have family and friends who care about me, make enough money to be comfortable, and enjoy my life with those who have like desires.   That sounds like what most people desire, but have a real hard time accomplishing it.

There are no owner manuals that can guide us through our view of what the œperfect life would be this is something each of us has to figure out on our own.   This blog is not meant to give you direction, but to give a little bit of information on how I am traveling down this long road to a happy life.   I hope that giving this insight might help you in deciding some things that will help you navigate this risky road.

I divide my life into five major categories and work to improve each of those categories each and every day.   I posted the goals I set for myself on my wall at work so that I can see them and make plans to eventually accomplish the goals I set out for myself.   Brian Buffini once compared goals to a slice of cheese.   If you take the cheese and have to eat the whole slice, you don™t do it all at once; you drill holes and tackle the cheese in small bites.   Goals can be set up the same way; I have 10 day, 10 month, and 10 year goals for each of my major categories.   Here is how I am taking a œbite out of my goals:

Spiritual:   This is one that I have improved on immensely in the last few years.   I have reacquainted myself with my god, and have strived to live by the directions that were handed down in the bible.   If life ever did have an owner™s manual, it would be called the Holy Bible.

Family:   In this area, I have been very disappointed in how things have turned out.   For the most part, I think that many of the problems that I have here is of my own making.   The choices that I have made have all led up to where I am at today, but I once heard a saying that goes something like this, there are winners and there are losers, in life you™re not a loser until you die one.   You may lose in some of your goals, but as long as you recalibrate and work toward a better solution, you can become a winner again.   Losers quit, winners continue striving for their goals.   I have made new plans to turn this aspect of my life around and will hope that my future decisions will help make me a winner.

Business:   As a business person, I can say that I have moderate success, but now want more.   I work in Real Estate, so things are always up and down, and the recent economic climate has made things particularly tough.   Foreclosures are running rampant, many of the homes on the market are going short sale, but there is a bright light up ahead.   What goes up must come down, and what comes down will usually go back up again.   This market is looking better, and hopefully we can do our part in helping people realize their real estate goals.   We are always here to help.

Financial:   This is directly connected with business for obvious reasons, we had some bumps in the road but have made the plans that will be putting us back on the right track.   Good business planning will help make this are of your life a success.

Personal:   In this area, I have seen the most improvement, but as with most things, there are always things that can improve it even more.   I have made headway with my weight, been eating more healthy, and was exercising on a regular basis though I have slacked here some.   It is time to recapture the goal and start this back up. My greatest improvement is my mental state, I have worked very hard to have a positive attitude toward life, and to make small changes in my personal actions that improves not only my life, but those around me.   Leave the ego at the door, keep a positive attitude at all times, and don™t be judgmental toward others is some great advice that I have started following.

In life, you take risks everyday whether you believe it or not.   Every decision you make has a reaction that will happen after implementing that decision.   The key in my opinion is to make your goals, continue to review those goals, and most importantly; take the actions that will help you achieve those goals.

Gary Nelson, REALTOR, Associate Broker

Long and Foster Real Estate

Direct: 410-459-6920 Office: 800-474-7778 Ext. 6026

www.HarfordCountyHomes.net

It seems to me that of late, there is a ton of work being done to our roads in Harford County Maryland.   I leave my home and have not driven a mile before the first road block is approached.   There are the road workers, repaving the road and there is only one lane getting by.   I get by that jam, and go for a couple of more miles and there is another area where there is one lane getting by.   Getting past this one, I go a few hundred yards and yet another lane closure and more time watching cars and trucks go by.   I am hoping that sometime in the future, there will be wonderful new roads and no road work being done, but for now; there is going to be a slight delay getting to work.   Maybe I should say a big delay but who is worried about semantics.

 Fortunately for me, I have been reading some motivational books that have helped me keep the “road rage” to a minimum.   I think about all those people who are working and making a living in an economy that is difficult at best.   I think about good thoughts as I am sitting waiting my turn to get thru the road blocks and it gives me time to contemplate the things I need to get done.   And for the most part, it works well.   I did say most part!

What does aggrevate me is those who are not working, but those who are driving.   When you see a sign that says “Left Lane Closed”, how about getting in line instead of creating a clog at the point where the lane ends.   I for the most part get in line and try patiently waiting but it aggravates me and the motivation books don’t help at all when I see drivers being inconsiderate and trying to go to the front of the line.   Don’t blame me when I don’t let   you over.

Lets hope for the best, lets hope the road work gets done soon and the workers go to another part of the county to repave roads.   After all is said and done, Harford County will be a better place to drive. (We can only hope)

Gary Nelson, REALTOR

Hi all,

I just wanted to take a moment from shoveling to say that this has been a tough week.   On Friday and Saturday, we recieved about 28 inches of snow and spent most of Sunday shoveling ourselves out. Lots of sore muscles and some very cold conditions, we finally had a semblence of cleared driveways and streets that were passable.   Then comes Tuesday when the second wave came and we get another 20 or so inches.   We again shoveled ourselves out and now the back is starting to get used to all the work.   Right now, we are again with clean driveways and the street is actually somewhat cleaned, at least in the middle.

I took a ride out today and want to say that the main roads are clear.   I have to give the state and Harford County credit to going a good job getting the roads cleared.   They are saying that we might get another snow day on Monday, lets keep our fingers crossed that things will not be as bad as it has been this week.

Happy shoveling all,

Gary Nelson

Welcome to the year 2010, after the previous two years with all the problems that this country has had; it seems that things are looking up for both the country and the State of Maryland.   Yes, there are still many issue’s that we need to address, but the general feeling that I see is that things are picking up again.   The home-buyer’s credit was extended until the end of April and there is an additional benefit for sellers who qualify to also get a tax incentive.   Total homes on market in Harford County is dropping to a more normal amount and both buyers and sellers are starting to make a move.   With that said, there are still many homeowners who have the problem of selling a home that is upside down with their current mortgage.   My advice is to remain in the home if possible until the market catches back up to the price where you can sell without hurting your credit.

Unfortunately, there are some that must sell even though they are unable to obtain a price that will allow them to be clear of what they owe on the property.   Job loss, job relocation, sickness, and other calamity’s that life throws at you may dictate that you need to sell now.   Mary and I have worked with those people in trouble for awhile now, and have taken the extra step in becoming certified in working with short sales and distressed properties.   We have learned that there are many options other than foreclosure that can assist a home-seller in time of need.   We first look at the situation that the homeowner is in and recommend a plan of action that will be least harmful to that person’s credit and future ability to buy.   We don’t necessarily look at short sales, but all the options.

With that said, if you find yourself in need of help, give us a call.   We will give you your options so that you can make an informed decision.

Have a great 2010!

Gary and Mary Nelson, REALTOR, CDPE, GRI   410-459-6920

I am sitting here today thinking about our upcoming holiday where there are many who will be sitting down to a great meal and quality time with their family and friends.   I reminisce past holiday seasons when our family would get together and have some great times eating and talking about all sorts of things.   When I was a child, it was always a time that I looked forward to, there was not the stress that we have in todays world.   There was only one TV and it was great because there was color which was new in that time frame.   My cousins would come and we would have great times playing outdoors and seeing what kind of trouble we could get into.   I joined the Navy when I was 17 and there was many holiday seasons that I spent overseas, and in it’s own way; I had some wonderful experiences with my fellow service men eating shipboard food that just wasn’t up to Grandmas but was tasty just the same.

Today, it seems that we don’t have that family get togethers anymore.   With all that, there are still many things for me to be thankful for.   I just wanted to take this time to hope that everyone who reads this will have a great Thanksgiving and remember that there are those who may not be as fortunate as you.   Keep those who are unfortunate in your prayers and help when you can.

Gary

Each month, Mary and I send out a item of value with information that educate our clients on subjects that deal not only with the real estate market, but also about life in general.   This months item of value was a timely newsletter about scams and what to look out for.   The holiday season is the time of year for joy and happiness, but is also a time when those with shady characters try to part good people from their money.   According to the FBI, mortgage related scams are up 173% from the same time period in 2008.   This is nothing new, scammers have always been out there but with new technology appearing almost daily, scammers are finding new inovative way to take things to the next level.   If you wish to get this newsletter by email or US postal, just send me an email and I will be happy to place you on our mailing list.

The top six scams are:

• Mortgage Fraud – Foreclosure rescue, loan modifications, and lots of other schemes.   Read the fine print carefully.
• Unauthorized Credit Card Charges – Do you review your credit card statements each month? Some company’s will chrage you small amounts in the hope that you won’t notice them.
• Overpayment scams – How often do you get an email or phone call where someone wants to send you a payment, but will send more than what they claim to owe you. Please send the overage back to them and keep the rest. If it is too good to be true, it probably is.
• Identity Theft – One of the fastest growing crime in our country today.
• Insurance Fraud – Filing false insurance claims in the hopes of collecting a payout.   This increase the insurance of all the rest of us.
• Computer Intrusion Scams – I am sure you have received the Nigerian email scam or something like it.

I hope that this reminds you that it is imporant who you work with or give your information out to.   Gary and Mary Nelson is committed to providing professional honest service to all our clients.   We are never too busy for a referral or to help you through the real estate process.

Until next time, have a great week.