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The following was a post we did in February of 2009. Not much
has changed in 1 year. We are expecting the government to start incentives
to banks and second mortgage lenders to encourage the short sale process
instead of waiting for foreclosure.
Benefits:
- House usually sells for a higher price
- Credit of the seller is not affected for as long
- Neighborhood is not affected as adversely
The term Short Sale has nothing to do with the time it takes to close
this type of transaction. It refers to the money the bank or mortgage holder
will receive from the sale of the property. The closing will be “short” of the
funds that the seller owes on the mortgage. In other words, they are upside
down: they owe more than the home is currently worth.
Since we don’t live in a past world where the home “was” worth more or
a future world where it “may” be worth more, this is the sad financial
situation many reluctant home sellers find themselves in today, selling at
a loss. It doesn’t make for happy campers.
The Short Sale scenario usually doesn’t have anything to do with
greed or mismanaging money. Many of the cases we see are typical families
that bought a home, fixed it up a little, and then got a job transfer, had a job
loss, a divorce, a family death or illness occurred which drastically changed
their financial situation.
What the falling prices on homes does is trap the homeowner.
He can’t sell it for what he paid for it—— he has to take a loss, go bankrupt,
or lose his credit rating. How many people have equity in their home, or
savings, or a 401K they can borrow from to pay their losses? We see that
occasionally, but it is not the rule.
The banks and mortgage companies are in a difficult situation.
They are going to take a loss, no matter what happens. The object is to stall,
wait, and negotiate until they get the best outcome they can for their company’s
bottom line. Okay, companies stay in business by minimizing losses.
But, and this is a big but, stalling, and prolonging these transactions
until the potential buyers walk away is hurting everyone. Delaying a month,
two months, three months on answering a decent real estate offer hurts the
bank, the seller, the buyer, and the real estate agent. This kind of time lag is
typical of short sales. I have heard getting these transactions to close as
compared to ” trying to land a 747 on a blade of grass. ”
Real Estate agents don’t like to get involved in these transactions
because they are prolonged, messy, tons of paperwork, many, many frustrating
phone calls, and at the end of the transaction, the bank or mortgage company
will typically “short” the commission the agent has worked for. This is another
sticky wicket because the contract is with the seller, not the mortgage lender.
So, this has to be negotiated again, if you are fortunate. If not, you take what
they will give you.
Short Sales are becoming a much more common transaction as
banks are deluged with foreclosures and calls from homeowners requesting
help. The recent * Recovery Act may be a relief valve, allowing some people
to reduce their mortgage, save their credit and their home. The first week of
March the US government will tell us what the parameters of their plan are
going to be.
*We have seen little effect from the Recovery Act yet.
Make sure your agent has the experience and knowledge to get you
through the minefield of short sale negotiation, if you are buying
or selling.
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The authors of the this blog write about Grand Rapids Real Estate, the Greater Grand Rapids MI area, and what it is like to live in West Michigan. Grand Rapids Michigan is a vibrant, growing metropolitan area with a diverse business community, great medical research & services, numerous universities, plus lively arts and entertainment of all kinds.
We believe: Grand Rapids is a Great Place to Live!
Westbrook Realty Grand Rapids MI Real Estate
Contact Terry 616-292-7263
Most of us sell only a small number of homes in our lifetimes.
With limited experience in real estate how are we capable of
maximizing the profits from our home sale? Many home sellers
make the critical mistake of thinking all Realtors are the same.
They list with the first agent who comes along. Does it make
good business sense to put the responsibility of selling your
home with someone who has no plan or qualifications?
This report will educate you with valuable information that will
help you make the best decision concerning:
With which real estate agent should you list?
Start by doing a few hours of research. Ask around … talk with
someone who has had a positive experience with a Realtor in your
neighborhood. Find out which agents are highly visible in your
market area. Get to know who has the most web presence, ads
and marketing material in your neighborhood. Who’s the most
active agent? Compile a list of agent names and use these
questions to help you determine which agent is right for you.
Now you have the list –Google each one to see how they compare.
Make an appointment and ask the prospective agents the
following questions:
- Could you send me some information about yourself! You can
often get a good idea of which agents are the most professional by
looking at their promotional materials. If their own materials aren’t
professional, how well are they going to market your home? Track
how long each agent takes to respond to your request and how
quickly they follow up. If they don’t respond efficiently to your
Listing requests imagine how they’ll handle potential home buyers.
2. How many homes have you listed and how many homes have
you sold in the last six months? Look for an agent who has experience
with homes similar to yours and is active in your area. If your home
has special features look for an agent with experience in those
areas. Your agent should have a good record of selling homes, not
just listing them. After all, this is your ultimate goal.
Watch for the continuing series: 10 Questions You Should Ask a Realtor
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If you are looking for a home in the Grand Rapids Area, we service the following areas: Metro Grand Rapids, Ada-Cascade, East Grand Rapids, Caledonia, Kentwood, Lowell, and Rockford. We have assisted Grand Rapids buy & sell homes for the last 35+ years. Call 1-616-292-7263 to talk with Terry or email him at: terry@terrywestbrook.com.
For MLS access to the homes for sale in the West Michigan Area,visit: Westbrook Realty ~ Grand Rapids Real Estate for a free search. Your search can be saved and modified as you view homes, with no obligation.
Thinking of selling your home? We offer one of the most extensive marketing campaigns in Grand Rapids with a major online presence for your home. With over 85% of buyers looking for homes online, this is where we concentrate our efforts. Click here to view Terry’s Realtor profile.
Subscribe to our Grand Rapids Michigan Real Estate Blog
Westbrook Realty – Giving You Our Personal Best
In February we received a call on a property that had been foreclosed on
by HUD (Housing & Urban Development). The buyer was looking to
purchase the house and rehab the property. When we met the buyer,
his thoughts were to purchase it and put his daughter in as a tenant.
This sounded like a great idea and after looking as his 401k, he decided
a smart use of what money he still had in his account.
In Michigan the process to buy a HUD-owned home is similar to a
number of states. The offer is presented on line - if you are successful
in your bid you have 24 hours to supply the paperwork to the attorney
firm that is handling the process.
All went quite well and HUD accepted our offer on the property.
Now we wanted to do inspections. As is typical in vacant HUD properties, we
need to turn the utilities on to do the inspections. The local power company
would not turn the power on until an electrical upgrade was completed.
We called the attorney firm and they indicated another department in Arizona
took care of that. It would take a few days to get the quotes in to authorize
the upgrade. As it turns out, they need 3 quotes and the guy in Arizona
only had 2 approved contractors. After a few weeks of waiting we did our
own quote and called the attorney and asked if we could do the upgrade
at no cost to HUD and then do our inspections.
The answer: No, they would not allow anyone in the house that was not
approved.
I went through the layers of management to get to a supervisor that
indicated he "was all over this" and he would make it happen. Another
month of phone calls and frustration finally got the bids in and received
a call from another department.
This department indicated the bids were in but now they had to check
with HUD to see if they would do the work since all properties were
purchased "as is". I asked why they did not mention that we would not
have the opportunity to do our inspections before we had gone through
nearly 3 months of waiting.
He did not have an answer but would get back to us.
Finally approved but the approved contractor could not get to the job
for a while.
The buyer, totally frustrated by now, decided he still wanted the property.
With nearly 3 months of phone calls and lack of action by HUD, he
offered to buy the home without inspections, if they would give a
credit at close for the electrical repairs.
The calls were made and the approval granted. FINALLY!!!
Now we have 3 days to get the home closed before the offer expires.
If not closed in 3 days, we would have to file for an extension of the
agreement which might cost the buyer because he had not closed in
a timely manner.
We did close on the last possible day without too much issue.
Why do we do this?
Because the buyer is so happy! The Buyer’s daughter actually bought
the home and has a mortgage from the parents so she can get the
"First Time Buyer Home Credit".
They are happily cleaning and preparing to move in to the home.
The electric is upgraded and the repairs are being completed.
The moral of the story:
In this housing market, buyers that never would have been able
to buy can own a home ——- if they have patience to go through
the process.
**Having a parent or relative fund the mortgage is another option
to a bank mortgage.
The $ Benefits of the First Time Home Buyers Tax Credit
Buying Foreclosed Homes is NOT FUN
If you have the patience to buy a HUD-owned home or a foreclosure
Home, please contact us at 1-888-240-1968 ext 0 or email us at:
Grand Rapids Ada Real Estate ~ Westbrook Realty
Copyright 2009 All rights reserved
The first attempt to give a credit to buyers last year seemed very limited in
benefits. I looked at it as an interest-free loan that had to be repaid.
The accounting alone would discourage buyers about taking it.
With the new American Recovery and Reinvestment Act of 2009 comes a
new first time home buyer program. The following chart provided by
NAR gives an overview of the changes and benefits.
Let’s do an analysis on buying 3 different homes:
Starting with a home with an $80,000 loan, then $150,000 loan and finally,
a $300,000 loan.
Remember you must be a First Time Buyer [or not owned a home for 3 years]
and make less than $75,000/yr for a single owner and $150,000/yr for a couple.
The examples are estimates based on an estimated 10% down payment with
PMI(Private Mortgage Insurance).
Other loan terms and down payments are available and will cause these
calculations to vary. Call me & we can see how it will impact you specifically.
Hypothetically, you just bought a home for $88,000, with $8000 down.
Loan $80,000
Int Rate 5.5% Payment 454.23
Taxes 1200 Tax / mo 100.00
Insurance 500 Ins / Mo 41.67
PMI 420 PMI/ MO 35.00
Total payment per month $630.90
Now, what is the best way to use your $8,000.00 credit?
Option 1: Increase your Federal Income tax deductions with your employer
paying in $8000.00 less in taxes and use the extra money to make
the payments for a year and live in your new home for free for the first year.
Option 2: Increase your deductions so you pay in $8000.00 less in taxes.
Send the extra money into the principal on your mortgage every month.
With the additional payment to principal you will reduce the term of the loan
by 6 years, saving $26,000 in interest over the term of the loan. Potentially
paying the loan down far enough that you can ask for the PMI insurance
to be removed, since you now have an additional 10% payment to principal.
Option 3: Save the money and get less than 1% interest.
The same comparison of Option 2 for a buyer with a $150,000 loan: it reduces
the loan term by 3.5 years and saves $28,800 in interest over the life of
the loan.
The same comparison of Option 2 for a buyer with a $300,000 loan: you
reduce the loan term by 1.8 years and save $29,700 over the life of the loan.
However you decide to use your $ 8000 tax credit, as long as you stay in the
home for 3 years there is no penalty or payback. At the very least, you are
ahead by $8,000 and you could have an additional $26,000 to $29,700 in
interest savings on the life of your home loan.
If you were hesitating about buying a home, this should encourage you buy
a home soon. I would be delighted to discuss the 2009 Tax Benefits to you.
***This analysis is based on estimates I have made based on real estate taxes,
Interest rates, Insurance premiums will vary based on the home you select.
Grand Rapids Ada Real Estate ~ Westbrook Realty
Copyright 2009 All rights reserved
We have a vacant home listed. It is a nice house, clean, neat, 4 bedroom
two story home that I showed last Saturday. It was a changed house
when I showed it again on Monday. We had record setting low
temperatures here over last weekend and the batteries failed in the
thermostat.
NO HEAT!
Frozen pipes.
Needless to say, I rushed to the store, bought batteries, and got the
furnace going again. I also turned off the water to try and eliminate
as much damage as possible. When the house warmed up, sure enough,
a water pipe broke between the kitchen ceiling and the upstairs bathroom,
according to the plumber.
So, the morale of the story is: If you have a vacant home,
change the batteries in that thermostat—don’t take chances!
This home had a 2 year old furnace and thermostat, so I
didn’t have a thought that the batteries in the thermostat
could fail. Remember this tip is you are planning on an extended
vacation or going south for a month or longer. Replace
those batteries before you go. It doesn’t take long in below zero
weather for your home to incur substantial damage.
Grand Rapids Ada Real Estate ~ Five Star Real Estate
Copyright 2009 All rights reserved
The Question of the Day: Do we Remodel or Move??
Dreaming of a back yard deck addition? Should you spend the money to
add it on or should you sell and look for a home with a deck already added?
Maybe you could get that extra bath since your teenager is in the bathroom
most of time.
The Wall Street Journal advises in this article: Questions you should
ask yourself before you hire a contractor or call a realtor.
So many things enter into the decision.
Sometimes it just gets down to:
Do you like the home you are in well enough to invest money into it?
Even knowing you may never get the investment back. You will enjoy the
improvements (a new deck) and you really don’t want to move. Your kids
like the school system, you are close to your elderly parents, so many
reasons to consider before you decide to remodel or move.
In this economy many contractors are more than anxious to talk to you
about improvements and the cost to complete your dream project may
never be lower. With the combination of lower interest rates, contractors
that are willing to complete projects for bargain prices, and the current
market in your area, it may be your best option to stay and invest in your
current home.
If you are contemplating a remodel, I would be happy to give you my
opinion on the return of investment for your home. This is just another
option to consider in your decision. Please contact me directly.
Grand Rapids -Ada Real Estate – Five Star Real Estate
Copyright 2008 All rights reserved
When we sit down with potential clients to list their home, there are so many issues
and hot buttons to discuss. Inevitably we come to the one where we really have to
agree to get the home sold quickly and for the most money.
P-R-I-C-E
Most homeowners want to start high and then come down – if they have to – to sell.
Of course, they are hoping their home is an exception, it will sell for more than the
market value of all the other homes in the area. We see this over and over again.
If you don’t price your home within the price bracket it will eventually sell for, you
are hurting your chances of selling it for top dollar. If you price your home correctly,
You are not giving away money!!
I repeat, YOU ARE NOT GIVING AWAY MONEY.
This phantom money that you think you might get if the one person comes along
who will do anything, pay anything to own your “special” home does not exist.
Let me repeat that –
The uneducated buyer with money falling out of their pockets, sprinkled in fairy dust,
so you can make the money you would like to out of your home sale —–
DOES NOT EXIST!!!
You are not letting go of money, you are letting go of the dream scenario where you
get the price that is 25-30% over market value. We have seen literally thousands of
home sales and it just isn’t going to happen.
What will happen, is your home will be posted on the MLS, online, many places where
buyers can look at it. Buyers then compare your price to others, and say, why would
I buy this house?? There are 10-15 others I can look at that are competitively priced
and look great.
Then…. they are gone.
They don’t come back and revisit your home as an option. Other homes are new on
the market to consider. Your home has been rejected as: too expensive, too
much work, not what they are looking for.
Buyer Activity on Listed Homes
The charts above illustrate the buyer trends we tell our sellers about. These
charts of buyer activity are on actual listings that are currently listed by us.
You can see that the first month is usually the only month that gets
high traffic.
Some of our sellers will listen, most don’t.
Sadly, two, six, eight months later, we are still trying to get them to agree to
the price they should be listed at, if they want their home to sell. Chasing this
downward price spiral is not the best way to get top dollar from your home.
When it first hits the market it has the most exposure and best chance of getting
the best price!
Have questions about pricing your Grand Rapids home?
Contact me directly at 1-888-240-1968 ext 0
Grand Rapids Ada Real Estate ~ Five Star Real Estate
Copyright 2008 All rights reserved
Mr/Ms 2008 Seller, I would like to have a
heart-to-heart talk about selling your home.
I know you think real estate sales people are just out for a quick buck.
We want to put a bargain price on your home so it sells quickly which means
we get our commission check. Cha-ching!
This might be the scenario in some cases. Heck, there are bad apples in any
profession. I have been selling and listing homes for over 35 years and I have
seen a lot of sold homes and a lot of real estate professionals working in this
field. Most of them are nice people who make their living by listing homes
and trying to find homes for people to buy. We offer a service. It might not be
for everyone – not much is. We have a unique perspective. We work with lots
of people to sell their home and buyers buying homes.
We know your home is special to you – you live there!
Home Sweet Home
We are here to give you the market conditions for TODAY, whether either
of us likes it or not. We don’t decide the market conditions – wish we could.
We would be happy to have houses selling for close to what they are worth
and in 30-60 days. We would take that market any day.
BUT THAT ISN’T THE CASE TODAY!!
Seriously, I WOULD LIKE YOUR HOUSE TO SELL BUT I NEED YOUR HELP!
You need to listen to what I am telling you about the market in your area
and what homes are selling for. The home buyers today are able to get
more information than ever before. They know what the house down the
block sold for, they know that a foreclosure home sold in your area for
much less than the true value, and if you are desperate to sell, they can
take advantage of you. The average buyer would like nothing better than
for you to be in a desperate financial situation so they can get your home
at a bargain price.
The bottom line is: If you price your home correctly
AND have it in very good condition, it will sell.
Terry Westbrook – Five Star Real Estate – Copyright 2008 All rights reserved
Photo of Victorian Home Front Door Entrance by Bonnie Westbrook
You know the saying about good guys finishing last, well, I’m not so sure.
This recent scenario is pretty typical of a dilemma the real estate
agent faces every day.
I recently went on a listing appointment. It was a referral from a very happy
past client, the home was about 6 years old, professionally decorated and
had many extras. A very nice house to have listed.
EXCEPT…the seller didn’t want to move right away, they wanted to
list this spring and move in November.
I did my CMA and told them their price would be around $300K as the BEST
possible outcome. The house next door just sold for $270K and
they included a $10K item of furniture to seal the deal!
I was firm about my price, but I conceded we could start at 310K or 315K,
if they wanted to test the market for a few months.
They interviewed two other agents who had also been recommended.
They went with the agent who told them it would sell for $330K. That is what it
is listed for on our MLS now.
Real estate agents have to make a decision at the presentation.
Do we want to buy the listing at the higher price and deal with a disappointed
seller for 6-15 months?
The other option is to be firm and if the business comes your way it will be
salable and you will get paid for your efforts.
I recently listed a home for the correct price and it sold in three
weeks for full price.
If I had been the Good Guy wearing the White Hat and agreed to
their $330K price, I know I could have gotten the listing. Then during
the 5-6 months when they weregetting really serious about selling, we
could have lowered the price and it would eventually sell, maybe by
spring 2009.
What is the right thing to do?
Telling the seller the truth cost me a listing?? Yes.
My Deduction:
Listening to the client —+— Motivation —+ — Price
All of these go hand in hand to come to an understanding
with the seller. I wasn’t patient enough to offer the option of setting
a higher price and waiting with them to realize their price was unrealistic.
This has been the case with so many listings over the last year and a half.
So I suppose I’m wearing the Black Hat in this Situation.
Or will I be wearing the Black Hat when I list at their price and
it still hasn’t sold in 11 to 12 months? You betcha.
I will be the one who has failed to sell the house even though
the sellers set the price.
Copyright by Terry Westbrook 2008
Contact me: 1-888-240-1968 x 0 toll free
Grand Rapids Real Estate ~ Westbrook Realty
Email: terry@TerryWestbrook.com
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