Category Archives for "For Buyers"

Information for buyers of short sale properties in North Carolina.

June 4, 2010

Mortgage Rates Remain Virtually Unchanged, Linger at Historical Lows

Rates are at a historic low, check out the article that DSNews.com recently published about it!

“After weeks of continuous declines, mortgage rates remained nearly flat for the week ending June 3, 2010, Freddie Mac and Bankrate reported Thursday.

According to Freddie Mac’s Primary Mortgage Market Survey (PMMS), 30-year fixed-rate mortgages averaged 4.79 percent with an average 0.8 point this week, barely inching up from last week’s average of 4.78 percent. However, this week’s average was significantly lower than last year at this time when 30-year fixed-rate mortgages averaged 5.29 percent.

Freddie Mac said 15-year fixed-rate mortgages continued to decline, but only slightly. According to its PMMS, rates averaged 4.2 percent with an average 0.7 point this week, nudging down from 4.21 percent the week prior and considerably lower than this same week last year when 15-year fixed-rate mortgages averaged 4.79 percent. Breaking last week’s record, Freddie Mac said rates have not been lower since it started tracking 15-year fixed-rate mortgages in August of 1991.

“The economy grew at a slower rate than originally reported in the first three months of the year, according to the Bureau of Economic Analysis, which suggests inflation

will remain tame in the near term,” said Frank Nothaft, Freddie Mac VP and chief economist. “As a result, mortgage rates held at historic levels this week. In fact, rates on 15-year fixed-rate mortgages set another record low for the third week in a row.”

Bankrate reported the same trend of rates nearly level with last week’s averages, saying nervous investors and tenuous financial markets kept a lid on mortgage rates this week.

According to its weekly national survey, 30-year fixed-rate mortgages averaged 4.95 percent with an average 0.45 point this week, a minor uptick from 4.92 percent last week. In addition, Bankrate said 15-year fixed-rate mortgages averaged 4.36 percent with an averaged 0.49 point, a slight jump from last week’s average of 4.34 percent.

Bankrate said mortgage shoppers—whether homebuyers that are aiming to close by June 30 and capture the tax credit or current homeowners refinancing—have been direct beneficiaries of the global uncertainty surrounding financial turmoil overseas. And although the Federal Reserve is expected to leave short-term interest rates low for the time being, the tracking company said evidence of continued improvement in the U.S. economy will eventually lead to higher mortgage rates as the year progresses.

Complementing Bankrate’s survey is its weekly Rate Trend Index, in which mortgage experts predict which way rates are headed over the next week. According to the panelists, rates have bottomed, but they may not be headed anywhere right away, as 62 percent expect mortgage rates to remain more or less unchanged over the next seven days. The remaining 38 percent said mortgage rates will likely increase in the coming week.”

2010: The Year of the Short Sale

Charlotte Short Sale makes for a good Charlotte Real Estate InvestmentA Charlotte Short Sale is getting easier to purchase. According to RealtyTrac, 2010 is going to be the year of the short sale due to the large number of pre-foreclosure properties on the market. It is estimated that one in four US homeowners owe more than their home is worth. Now could be a good time to consider purchasing (or selling) a short sale as future home prices are expected to increase 9-12% in 2011. Simply put, this could be a great time to buy a Charlotte Real Estate Investment.

One of the biggest challenges in a short sale has been the time it takes to close a transaction. The challenge in completing a Charlotte short sale has been twofold: 1) getting the buyer and seller to agree and 2) getting the bank on board to agree to sell the home for less than the purchase price (and thus take a loss on its loan). It can be especially hard motivating a bank to sell if you do not have experience negotiating with banks.

But our team is beginning to see turn-around times decrease in a Charlotte short sale transaction.  Communication with banks has improved, and so has the technology involved in processing short sales. A new technology platform called Equator has been rolled out by banks to facilitate processing of paperwork involved in a short sale transaction.

Also, banks are beginning to see that a short sale is in their interest. The bank makes on average 30% more from a short sale when compared to a foreclosure. An added bonus in a short sale is the condition of the property. Charlotte foreclosure homes are often trashed and subject to vandalism since these properties have been abandoned, but a short sale home is often occupied by the owners until the closing.

Banks are responding quickly to offers due to enhanced technology, but banks are also more receptive lately to aggressive offers from buyers as the number of homeowners underwater increases. Also, the implementation of HAFA (Home Affordability Modification Program) has provided incentives to the sellers, buyers, and the banks that will make a Charlotte short sale smoother.

Given that the market is finally moving in the direction of buyers, you may want to consider a short sale, especially in a Top 10 Market like Charlotte.

May 12, 2010

Avoid Short Sale Fraud

Charlotte Short SaleThe California Department of Real Estate issued a consumer alert recently advising homeowners considering a short sale to beware of fraudulent practices.  Specifically, the report notes instances in which homeowners were improperly charges fees or received misguided advice during a short sale.

(With the number of short sales on the rise, it is critical to fully understand a Charlotte short sale transaction.  We have several posts related to working with a Charlotte realtor on a short sale on our website which can help you better understand a short sale transaction.)

The DRE alert identifies several items that homeowners should consider when engaging in a short sale negotiation.  Although the report applies to homeowners in California, several of the key take-aways in the alert apply to homeowners regardless of the state they reside in.

The DRE stressed that homeowners must make sure that their short sale negotiator is a licensed real estate broker (or a licensed real estate salesperson working under the supervision of licensed broker).  If you have any questions about why you should work with a realtor, please see our post on working with a Charlotte realtor.  It is also important to confirm that all processors and negotiators involved in the short sale transaction are licensed.  Don’t hesitate to ask for someone’s license.

Also, the DRE report noted that payments should be fully disclosed, and payments should be part of escrow documents.  If you work with anyone who suggests fees should be paid outside of escrow, this is likely illegal and should be a red flag.

Lastly, the DRE alert warned that if the buyer is a fictitious person or LLC, it is possible that fraud is involved in your transaction.

While the alert from the DRE may make you hesitant to get involved in a Charlotte short sale transaction, the risk can be significantly mitigated if you work with licensed real estate professionals.  By working with professionals that have a record of success in short sale transaction, you will ensure a successful and legitimate transaction.  If you are considering a short sale in North Carolina and have any questions, please feel free to contact us.

Short Sale NC: Getting the Perfect Home Part 2 – Negotiation

In the second part of our series on getting the perfect home in a short sale transaction, we will discuss the negotiation process.  Based on your solid preparation, you are ready to make an offer on the home of your choice. Remember, though, that a true negotiation is a give and take process. Here’s what we mean.

The goal of this whole negotiation, from your point of view, is to get the best price possible. Preferably, your goal will be to get the short sale property below its “fair market value.”  On the other side of this negotiation sits the seller who has to move a piece of property in order to pay back the lender.  Typically, short sale sellers realize they will be taking a price that is less than what is owed on the property, as overall devaluation of property has caused this reality.  So, the new goal is to try to get at least the new fair market value of the property.

So, as you can see, getting the perfect short sale home will involve some give and take. Typically, your first offer will be very low. The seller’s counter offer will be too high.  From here, the winner of the negotiation will be the one who makes the best case for establishing what the “true fair market value” of the property really is.

This is where your Realtor will come into play.   By using tools like comparison sales, independent appraisals, and Broker Price Opinions, your Realtor will help you make the case that your particular property is not “typical” of similar homes that have sold in the area. They can help you establish a case for the need of repairs for the property, especially if those repairs help to bring a property up to code for the area.  The bank will always assume the position that the house is fit for sale “as is,” and that the property is worth the fair market value they have established.  The proverbial “burden of proof” will be on you and your Realtor.  Realistically, though, you should be able to make a good case, in most circumstances, for a 15 percent discount on the fair market value.  You might even be able to negotiate even more of a discount if the property has set for a while.  Patience may work on your side.

Getting the perfect short sale home will involve being able to show a case for the devaluation of the home’s price. It will also involve taking control of the real moving target in this deal: the fair market value.  Getting a good Charlotte Realtor that has a winning record in this type of short sale negotiation could pay off handsomely.

Short Sale NC: Getting the Perfect Home Part 1 – Preparation

With the current economy still looking rough for the real estate market, it may be time for you to buy a bank owned property via a short sale. But getting the perfect short sale home is going to take some planning.  In this first of a two part series on buying a short sale home, we will discuss the preparation needed to complete a short sale transaction.  In the second part of the series, we will discuss the negotiation process.

The best possible outcome will almost always happen when you work with a licensed Realtor. Many people understand the mechanics of the short sale, but lack the negotiating experience necessary to get the best deal. Now is not a time for inexperience.  Get yourself a Realtor that has some experience in the ebb and flow of negotiating with banks on short sales.

With this key person aboard your team, you can then work together to figure out the price range that will work for you.  Don’t get in over your head.  Make sure you also understand the commission structure, closing fees, appraisal fees, etc.  Being realistic on what you can afford will make the house hunting process easier for all concerned.

You will be looking for property that is in a neighborhood you like.  The greatest deal in town will not feel that way if you hate the neighborhood.  One good tip is to look for listings that require the price to be agreed upon by the bank.  Those are usually homes in pre-foreclosure or foreclosure.

Get a list of “comps” for homes that have recently sold in the area.  This may really help to make your case. You will also need to have an estimate done as to any repairs that will be needed on the home. You don’t have to go to the point of an appraisal yet, your Realtor can help you figure this part out.  Lastly, try to determine how long a property has been available for sale, and how many price reductions have taken place.

Getting the perfect short sale home starts with having all the details in order.  It not only helps you to speed along the sale, but it helps you to look serious during the negotiation process as well.