Reasons why home sellers want to sell now
It’s a sellers’ market; according to 58% of homeowners, that is. Here’s some reasons why sellers want to sell their homes and move:
- 40% want a larger home
- 20% want a smaller or less expensive home
- 24% are relocating
- 21% want to pull out equity
- 19% have had a family change
- 15% want to move to a better school district for the kids
Why would you want to move?
This infographic is from the CALIFORNIA ASSOCIATION OF REALTORS.
Home is never far away
When renters choose to buy, the overwhelming highest percentage of 41% do so within the same county they were renting. Some do an even closer move, with 14% deciding to buy in the same neighborhood as their current (rented) home. Those who move to another California county (at 11%), are very nearly equal to the 10% who decide to move out of the state.
Are you a renter who’s thinking of buying? What are you choosing to do — is this CAR.org infographic correct for you? If you’re buying in San Diego county, I’d be honored to assist you in your home search; contact me anytime at (619) 890-3648 or online here.
Shoppers, I bet many of you scoured the Sunday ads and bounced to several stores for deals over Thanksgiving weekend.
What if you applied that same effort and vigilance to shopping for a new home loan or refinance? That same attention to detail could translate into hundreds to thousands of dollars in savings over time.
“People think nothing about going to many different stores to buy a toaster or oven or dishwasher,” said Norma Garcia, attorney at Consumers Union, publisher of Consumer Reports magazine. “They just don’t shop for (home) loans the same way they shop for other products, but they ought to.”
Consumers likely are more comfortable comparison-shopping for microwaves than mortgages because the home-loan process can be cumbersome, with reams of paperwork, unfamiliar jargon, and of course, the rush to close and move to a new place.
The U.S. government is working to make the process easier. Since May, officials have been trying to simplify and combine two required forms that show would-be borrowers their final loan terms and costs before closing. The “Know Before You Owe” campaign, spurred by sweeping financial reforms in 2010, has produced two drafts of the merged documents that are still in testing phase…
FORMS TO KNOW
This gives you an approximation of what you may owe at closing. It lists the basics including loan amount, interest rate and potential penalty costs. The form also shows you different loan scenarios to illustrate whether it would make sense, for instance, to buy points upfront to reduce your interest rate. (One point typically equals 1 percent of the loan’s value, or $1,000 for each $100,000 borrowed.) Click here to see the whole form…
FORMS TO KNOW
You get this at the closing table. The form lists every single expense and credit involved in the transaction. Click here to see the whole form…
You also get this at closing. The document breaks down how much you will owe in a different way. Perhaps the most important detail is the annual percentage rate, which rolls in all of your costs and is defined by HUD as the “true cost” of a loan. Click here to see the whole form…
TO-DO LIST BEFORE CLOSING
• If there’s a line item you don’t understand in any of the forms, ask about it.
• Scan for hidden costs. Third parties get proceeds from loans in the form of fees and commissions, said Norma Garcia, attorney at Consumers Union, publisher of Consumer Reports magazine.
• Know who’s going to service your loan. The holder of your loan can sell the loan to anyone, but they have to disclose the percentage of loans that are sold. “If you choose to go with that lender, just know that may not be the person you’re dealing with down the line,” Garcia said.
• If you sense your lender isn’t being upfront or answering your questions, find someone else. It may take interviewing two to three people to find the right lender.
• Get a second opinion on your loan documents from HUD-approved counselors at little or no charge. But be sure to do this before closing. For San Diego, you can call the Housing Opportunities Collaborative at (619) 283-2200 or (800) 462-0503. Someone will direct you to the right agency.
• Don’t sign anything unless you understand it.
Read the whole article by SignOnSanDiego.com here: “How to Bargain Shop for Mortgages“.
If you’re shopping for a home with a bargain-basement price, a short sale could be the answer.
This is where a lender allows borrowers who can’t keep up with the mortgage payments to sell their home
for less than they owe on the property. The bank or mortgage company takes whatever you pay to purchase
the home and forgives the remaining debt.
How low can you go and still expect a lender to approve the deal?
Lenders usually will accept offers that net at least 82% (after expenses) of the home’s current fair market value, regardless of what the borrower owes, says Tim Harris, co-founder of Harris Real Estate University in Las Vegas.
Why would a lender do that?
Because it will lose less by allowing a short sale than by going through a foreclosure.
Taking advantage of a short sale is less risky than buying a foreclosure, because so many repossessed homes need tens of thousands of dollars’ worth of repairs. The worst of the bunch have been deliberately vandalized by angry owners just before they were evicted.
Here are 4 smart moves for buying a short sale property:
Smart move 1. Make sure you’re a good candidate for a short sale.
Short sales are all about presenting the lender with a deal it can’t refuse. Banks and mortgage servicing
companies are most likely to approve buyers that:
• Have a substantial down payment.
• Have been preapproved for a mortgage.
• Place no contingencies on their contract, such as having to sell their current home before
proceeding with the purchase.
Smart move 2. Hire a real estate agent who’s experienced in short sales.
You need someone who can steer you away from short sales that aren’t likely to succeed.
Vincent Bindi, a real estate broker for ShortSalesASAP in Orange County, Calif., says your real estate agent should interview the listing agent to determine whether the seller has done everything that’s needed to win lender approval.
You need to know whether the home has been aggressively marketed — the bank won’t like it if the seller hasn’t made a good-faith effort to get a reasonable bid — and whether the bank has received a broker’s price opinion, which it will use to determine the home’s market value.
Smart move 3. Offer the right price.
Short sales aren’t the time or place to do a lot of dickering.
Lenders don’t have the time or staff to evaluate an endless bunch of bids, each a little higher than the last. If you deliberately lowball a bank or mortgage company, it will just write you off as a waste of time.
You need to come up with a cheap but reasonable offer, which the bank or mortgage company will accept, in one try.
Start by estimating the fair market value of the home for yourself, using comps (values of comparable properties that have sold near the home in the past few months).
Take the condition of the home into account and reduce your estimate if the home needs repairs. It’s a buyer’s market, and you don’t have to treat a fixer-upper like it’s in pristine condition.
Calculate 82% of the home’s value, throw in a few thousand dollars to cover the lender’s cost of doing a short sale (ask your agent what that typically is for your area), and you have a good starting point.
Now look at the quality of your comps.
If they’re straightforward deals, and the homes spent at least three or four months on the market, then you’re good to go.
But if all of the comps are foreclosures that sold within a few weeks of hitting the market, you’ve got to assume those were damaged homes being dumped at fire sale prices.
You’ll have to adjust your offer upward, perhaps all the way to the full fair market value calculated with those comps.
Check how close your offer is to the asking price on the home. Remember, the sellers won’t get any of the money, so they have no incentive to demand an unreasonable price.
They’re just trying to find a price you’ll pay, and the bank will accept, to relieve them of their debt.
If you’re close, then you’ve probably come to the same conclusions as the sellers and their real estate
If not, then your agent needs to have another talk with their agent to find out why.
Smart move 4. Be patient.
It almost always takes longer to close a short sale, because it takes so long for lenders to review and accept
We’ve heard of deals closing in as little as five weeks when the lender has preapproved the short sale and asking price and you agree to meet that price.
But that rarely happens.
Most sellers don’t seek the lender’s approval for a short sale until they have a signed purchase contract in hand. (Here’s a step-by-step look at what sellers must do to complete a short sale.)
More often than not, it takes two to four months to get a “yes” or “no” from the bank or mortgage servicing company.
Although lenders say they’re trying to process these requests more quickly, there still aren’t enough loss mitigation specialists to deal with the rising demand for short sales, and we’re not seeing a big improvement.
By Bonnie Biafore | Interest.com Contributing Editor