Struggling Homeowners Still Have Options

Wall Street Journal - November 12, 2008   By:June Fletcher

What if You Don’t Qualify for a Loan Modification?On Tuesday the Federal Housing Finance Agency — noting that foreclosures have increased 150% over the last two years — announced a new streamlined plan to try to staunch the “downward spiral” of foreclosures by modifying loan payments for millions of borrowers. (”Fannie, Freddie Unveil Plan to Modify Loans“)

The program, is an extension of the Hope Now alliance, and follows similar efforts by large lenders such as Citigroup Inc., Bank of America Corp., and J.P. Morgan Chase & Co., to stem foreclosures. It will be implemented in mid-December, the agency says.

But not everyone who is feeling the pinch will get help. (See “Who’s Eligible“) Just because your house may have dropped in value since you bought it, lenders aren’t going to give you a break — the latest terms apply only to those who can’t pay due to hardship and are at imminent risk for losing their homes to foreclosure.

But if you’re in financial trouble and don’t qualify under the rules — for instance, if you can’t pay the mortgage on your vacation home rather than your primary residence — you still have options.

Who’s Eligible for Help?

Under the FHA plan, lenders will modify interest rates or forgive a portion of the principal, to bring the ratio of mortgage payments, including homeowners’ association dues, to 38% of income. Among the requirements for borrowers:

• Must have a loan on a primary residence that was made before Jan. 1, 2008.
• Must contact loan servicers and cooperate on supplying need information.
• Must be at least 90 days behind on payments.
• Must not have filed for bankruptcy protection.
• Must certify that a hardship, such as job loss or illness, has affected their ability to repay, and that they did not purposely default to get a loan modification.

Here are some suggestions:

• Contact a reputable credit counseling agency to see what your options are besides foreclosure. The Department of Housing and Urban Development links to free or low-cost counselors. The non-profit National Foundation for Credit Counseling has an online tool for locating members nearest your home.
• Call your loan servicer to see who owns your loan; then call the lender to try to work out a deal. FHFA says that borrowers who don’t meet the requirements for the new streamlined process can still be considered for loan modifications customized to their personal circumstances.
• Sell a family car, take a second job, ask relatives for help or do whatever else you can to raise enough cash to pay the mortgage until the housing market improves. If zoning laws allow it, think about renting out rooms or a finished basement.
• Consider a short sale, where a lender agrees to take less than the balance of the loan. You avoid foreclosure, though you may have to pay taxes on the shortfall. While short sales have become common in places where home prices have fallen precipitously, bear in mind that you must find a patient buyer, since many lenders are overwhelmed by short sales and are slow to respond to offers.
• If you cannot come to an agreement with your lender, ask about transferring title in return for the cancellation of your debt, known as “deed in lieu of foreclosure.” (This may not be possible if your property secures other debts.) Although you’ll lose whatever equity you might have in the home, your credit won’t be as damaged as it would be if you go into foreclosure.
• If all else fails, look into filing for bankruptcy. While it will be a black mark on your credit for as long as a decade, under certain circumstances, you may be able to work out a payment plan that allows you to keep the house. For more information, visit the Department of Justice’s Web site

Selling Your Home in a Buyer’s Market

You Don’t Want to Chase the Market…

Things change, kids grow up, jobs transfer us to new places and all of a sudden there’s a house that needs to be sold. In our current market, sellers are often asking us what they need to do to get their homes successfully sold. [Illustration: If sellers fall behind a market with falling home values, they can end up chasing the market down, because home values are always falling faster than their price reductions].

The first thing a seller must do if he wants to sell his house is to price it correctly for the market we are in. Many of the homes that aren’t selling are priced too high. According to MLS data, the median sales price for single family homes sold in Tahoe Donner during the 2nd QTR,  dropped 13.8% from 2005 to 2008.

If you need to sell your property now, it is important to price “on the money” right from the start. Chasing the market is not the position you want to be in when you are trying to sell your house. In other words, you don’t want to be two steps behind the market. You want to be slightly ahead and if you want your house to sell it should be priced better than your competition.

Pricing a home for sale is not an easy task for anyone. It’s tough to be objective because a house represents so many things to each person. It is often said that sellers are the last to know when it comes to the value of their home and buyers, on the other hand, are often ahead of the game. Buyers know the market better than most sellers and they are aware of the risks involved in today’s market and they gauge the price they’ll pay accordingly.

When it comes to pricing your home for sale, we give you individualized and objective information so that you can make an informed decision. In addition to determining the right price for your property, based on an in-depth analysis of comparable active and sold listings, we will also create a marketing program for your home. We utilize Internet resources, print advertising, open houses, virtual tours and more. We work hard at creating a win-win opportunity for everyone.

The state of our current real estate market has provided some excellent opportunities for new buyers to invest in the Truckee real estate market and it can also be a good time for others, who already own, to sell and buy a bigger or different place while the prices are so good.

Our goal is to help you sell your home for the most amount of money in the shortest amount of time and to help find good investments for those who are ready to make purchases.

Which Tahoe Donner Price Range is Hottest?

“How’s real estate?” This is a question we hear often. Since the beginning of the year, 161 single family homes have sold in Tahoe Donner. 81% of these homes sold for under $1 million dollars and more specifically, 46% of the single family homes, in Tahoe Donner, sold in the price range of $500K to $750K. See chart above (click for larger view).

While some buyers seek opportunity in our changing times, others have decided to wait it out to see what becomes of our economy. Some sources say “Ignore the headlines.” An excerpt from TIME magazine continues, “That’s no easy thing. How do you tune out all the chatter and ink on recession, housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $100 oil and nukes in Iran? It’s enough to make you sit on your thumbs and wait before making any big moves. But what exactly are you waiting for?” As John D. Rockefeller famously said, “The way to make money is to buy when blood is running in the streets.”

We have seen many Sellers take advantage of the current market and have sold homes they have ”grown out of” and have been successful at “buying up” into larger properties or better locations. In order to sell, sellers have had to do all the right things to lure buyers. The successful Sellers are those who were priced appropriately for today’s market, kept their homes well-maintained, had properties in desirable locations with easy access and snow friendly designs. This will not change for a while to come. Buyers can be particular right now.

Today there are 159 Active single family home listings in Tahoe Donner. Prices have dropped and there are good opportunities. Whether you want to buy or sell, you should give us a call. We can help you buy with discrimination and if you want/need to sell we can price your property correctly and provide a marketing program that will get your property exposed and sold. Call us!

Buyers: You Can’t Time the Market

Hindsight is 20/20 Vision…

In a soft housing market, like we are experiencing now in our Truckee real estate market, buyers often wait on the sidelines for a clear sign that the market has reached rock bottom before they make an offer on the property they’ve been eyeing. There are two problems with this strategy. Too many times, the “other guy” that was eyeing the same property makes his move and purchases the property before you. The other problem is that too often we don’t know that the market has hit the bottom until it has turned the corner and starts going back up. You can only know for sure that a market has turned through hindsight. In other words, you can’t time the market

A risk of buying in a slow market is that the value of what you buy might drop before it rises. Or, prices could stay flat for some time, which means that you won’t build equity unless you pay down principal on your mortgage. If you should have to move during a time when prices are soft, you might not be able to sell for the amount you paid. To decrease this risk factor, don’t buy for the short term.

Give careful consideration to how you finance your purchase. Stay away from mortgages that have short due dates and balloon payments. If the market in your area stays soft for longer than anticipated, you don’t want to be caught having to refinance at a time when your home might not appraise for the price you need to complete the transaction.

A benefit of buying in a soft market is that you have the opportunity to buy at a reasonable price. But the key is to buy the “right property” at the “right price”. As professional Realtors, we can help you determine if a property is a “good buy”. We will give you solid advice about the home you may want to purchase and we will help you throughout the entire process.

Truckee Home Buying Tips Revealed

Avoid Common Buying Mistakes When You Purchase Truckee Real Estate…

Most buyers want to make sure they get a good deal on the new home they buy and this is especially true if they’re buying in a soft market like we are experiencing right now. For a property to be a “good deal”, a buyer has to take a look at its condition, the location and the price they’ll wind up paying when the negotiations are all said and done! 

The first rule of thumb for buying a new home is to get very involved in the inspection process and to leave no stone unturned. The Home Inspection is very important. There are several home inspection companies in Truckee and Robbie and Karen Huntoon can make recommendations. The home inspector will spend several hours inspecting the home to make sure that all systems are in working order and that there aren’t any serious defects that might affect your decision to buy. Home inspections range in price depending on the size and condition of the home. We usually see price tags between $375 and $450. Most of the reports are easy to read and even go so far as to give estimates of how much it will cost to fix items deemed as defective. 

In addition to the home inspection, most buyers also hire a Termite or Pest Company to perform a pest inspection. The findings on a termite report are typically described as Section 1 and Section 2. Section 1 items are current and ongoing problems and, depending on your contract negotiations, the seller is usually responsible for taking care of Section 1 problems. Section 2 items are those that are not active but “could” become problems down the road. The Buyer is typically responsible for Section 2 items.

A recommendation that is often overlooked is to research the permit history. A quick call to the Town of Truckee building department can reveal if there are any pending or expired permits. If you don’t check the permit history, you could find out later, when you want to take out a permit for a renovation, that there are expired permits for work that never received a final approval from the town’s building department. You might then be required to reinstate the expired permits and finish the job to the building department’s satisfaction before you can take out a permit for a new project. This could be expensive, take time and at the very least be a hassle.

Another item buyers ignore is the cost of routine maintenance. Some homes cost more to maintain than others. Well-maintained homes will be easier to maintain because you’ll have little deferred maintenance to repair. Ask the sellers for information about how much they pay per year for tree trimming, painting and servicing house systems such as the roof, furnace, and drainage systems. Also ask about utility bills in an average winter. All of these things will factor into the cost of owning the home.

The area that your home is located in is also an important, yet often overlooked, component to wise home buying. The home is not a good value if you find out a year later that the neighborhood is declining. Check out the neighborhood. Look at the other houses. If you are in a planned development with amenities, look at the amenities. You’ll get a pretty good idea and feel for the new place you are thinking about calling home!

A little homework in the beginning will have great pay-offs down the road. Take the inspection process seriously.