Considering a Short Sale? Here’s what you need to know.

 

Photo Source: http://www.gainesvilleshortsaleinfo.com/

In Atlanta’s real estate market today, short sales and foreclosures make up about half of all real estate transactions. In fact, short sales represent a significant portion of real estate sales activity in Atlanta and are becoming increasingly more common than foreclosures. Though they require a bit more red tape than a normal real estate sale, short sales can benefit all parties if they are all willing to make some sort of compromise.

First, let me explain what is a short sale anyway. When a homeowner sells a home for less than the amount of money owed on the mortgage of that home, that sale is called a short sale. Sometimes, you might hear people refer to it as pre-foreclosure. In most cases, the homeowner has fallen behind on mortgage payments and cannot afford to continue making mortgage payments on the home. Instead of waiting until the lender decides to repossess the property, the homeowner will petition to sell the house for less than the amount owed on the mortgage. In some cases, the lender will even forgive the portion of the mortgage loan not covered by the selling price. Even though foreclosures and short sales negatively affect seller’s credit score, the damage incurred from a short sale can be mitigated if the seller can convince the lender to report the debt as “paid in full.”

For the lender, short selling a property is a lot less hassle and a lot less paperwork than taking on a foreclosed property. They are just as tired of foreclosures as the rest of the population. A short sale transaction benefits them in that they don’t have to deal with selling a property that has been vacant for a while and most likely needs repairs. The lenders are the shot callers in the short sale process and are the ones who set the selling price.

It’s unfortunate for the sellers and the lenders that these homes are selling at depressed price levels. For buyers, it’s a deal. Even though a real estate short sale can still take months to have a decision made by a lender, buyers still get a deal on a property that will most often require less work than a foreclosure.

If you’re in the market for a home in the Atlanta area and are considering a short sale, here is a list of things you want to consider before you jump in head first.

Understand what you’re getting yourself into. Short sales take a while to close and can involve extra effort on the buyer’s part. Save yourself time and unnecessary stress by getting disclosures up front.

This is not a DIY project. As I mentioned before, short sales come with a lot of red tape. It’s imperative to work with a real estate agent on the Go Getter Team who knows the territory and is able to navigate you to a successful close.

Know the condition of the property. In a rush to get rid of the property, sellers may not always be so forthcoming with unfavorable information about the condition of the property. It’s important to have the property professionally inspected before you commit. The Go Getter Team has a list of knowledgeable real estate inspectors on our Preferred Service Providers List.

Be sure the sale has a prayer of closing. Since lenders generally approve of short sales based on the seller’s financial situation, the sadder the story, the better. Most lenders require a letter of hardship, proof of income and assets, a comparative market analysis and a list of liens to consider approval of a short sale.

Be realistic. If you are in a hurry to purchase a home, do not consider a short sale. It’s definitely a waiting game. If you do decide to go for the short sale home purchase, make a reasonable offer that the lender will actually entertain. Lastly, be realistic about where closing costs are coming from. In these cases, cash is the greatest financing alternative for buying a short sale in Atlanta.

What are the short sale tips you’d like to share?

 

Government Shutdown May Slow Your Atlanta Real Estate Market

We don’t really know if the recent government shutdown will destroy the economic momentum we’ve gained, but we do know the furlough of some 800,000 government employees will undoubtedly slow things down. Another thing we know is that the longer this thing goes on, the worse the effects will be. Some employees of the Pentagon were recalled for work beginning on Monday, and the House passed a bill to approve back pay for furloughed employees. That’s good news for those employees, but what about the millions of Americans who need and/or depend on their services. What about the work that’s not getting done while they are at home?

Imagine being a homebuyer in the middle of a real estate deal and the federal government shuts down. You need your tax transcripts to get your mortgage loan approved and the only department that has the keys to what you need is on furlough.

The approval of most mortgage loans, at least 99% of mortgage loans, require tax transcripts. Homebuyers and Real Estate Agents who are in this predicament will surely see a stall in their real estate transaction. In some cases, deals could potentially fall apart because of the inability for homebuyers to get what they need from the government. Plus, these delays could cause some pre-approvals to expire and force homebuyers to purchase at a higher interest rate if interest rates continue to rise. Because interest rates are a major factor in how much house a homebuyer can buy, sellers and real estate agents are affected as well.

Even if you are a homebuyer who was lucky enough to have gotten your transcripts and your pre-approval to buy a home, you could still have some issues if you applied for a mortgage loan from the Federal Housing Administration. FHA mortgage loans aren’t federally funded, but they are guaranteed by the federal government. Some lenders may not be willing to lend without a guarantee already in place. If you happen to be in this situation, go with a larger institution that is in a better position to fund the loan even in the absence of a guarantee. Otherwise, you’ll risk having your loan on hold and your real estate deal falling apart.

In Atlanta, there is already a shortage of real estate on the market relative to the number of Atlanta homebuyers who are looking to buy a home right now. Many of the houses on the Atlanta real estate market are foreclosures and HUD homes, and the Department of Housing and Urban development is working on a skeleton crew during the furlough with 337 out of 8,709 employees on the job. There’s a possibility, but seemingly a slim chance for new HUD homes to come on the market for a while. If this will be the case, Atlanta homebuyers will see even slimmer pickings for housing in the current Atlanta real estate market.

The American people as a whole immediately felt the effects of the shutdown. The gravity of the effects, however, will be determined by the length of the furloughs. The longer the furlough, the dimmer the bright spot of the housing market recovery. We’re all here in the same boat, waiting to see what happens.

In what ways have you felt the effects of the recent government shutdown?

6 Tips To Selling Your Home Faster

If you’ve heard the latest news about real estate, chances are it may have scared you off and held you back on selling your home. Here are a few tips that will help you sell your home faster!

Help Your Agent Market Your Home

Unfortunately in real estate, first-time homebuyers may judge a house based on the lack of photos it has. It’s in your best interest as an individual who wants to sell their home faster to post more pictures of your house and its many features. Studies show that listings with more than six photos increase their chances of their home being viewed by potential homebuyers. We often send professional photographers to our listings to take good photos for the listing.

Become a Video Blogger

Posting a walkthrough of your home on YouTube will help potential homebuyers visualize the many attributes of the home you are selling. Most of our smartphones today have the ability to record videos; this is a cheap but strategic way of opening your home to your community and potential homebuyers. This is helpful if you are a FSBO (for sale by owner). In many cases, agents who are registered with their local MLS, the MLS will also provide a virtual tour of the home based on photos taken.

Leave Good Appliances Behind 

It’s in your best interest to leave some of your valuable appliances behind like your stainless steel fridge, stove and even dishwasher. This gives your home a distinguishing feature that other homes on the market lack. Not only do you have a competitive advantage as an individual selling your home, but you may get the offer you’ve been waiting for. Leaving major appliances can also make good negotiation points once a buyer is interested in your home. In some cases, you might be able to negotiate the sale of your washer and dryer, or even furniture and electronics.

Fix the Eye Sores

There are many investment properties like foreclosures that are sold based on their exact condition. To differentiate your home for potential homebuyers, it’s best to have your home inspected for rodents and fix the scratches and nicks around your home. A prospective homebuyer will appreciate a well-maintained home that they are looking to buy.

Staging Is Beneficial

This could mean painting the outdoor of your home, maintaining the landscape and even adding furniture in your front and backyard that allows prospective homebuyers to visualize their life in this home. Entertaining and spending time outdoors may be a selling feature for many homebuyers so purchasing or renting furniture will benefit you in the long run.

Listen to Your Agent

It’s important to do your research and to find an experienced realtor that has a successful track record. Listen to their recommendations! When it comes to pricing your home, ask your realtor for the sales prices of three homes around your neighborhood. Calculate the average of all the prices and drop your price 10-15% lower than the other homes. This gives your home more viewings and a potential bidding war for your home!

Image Source