How does a Short Sale Effect Value
April 20, 2008 | Leave a Comment
One of the requirements of being a licensed agent is to successfully complete various continuing education classes during each year. Last fall I attended a class on “Understanding Appraisals”. The instructor for this class is an Atlanta Appraiser by the name of Scott Murphy. I found Scott to be extremely knowledgeable and he was more than helpful for the agents taking the class. Taking into account Scott’s experience and expertise, I requested his insight on the effects of a short sale on appraised values from an appraiser’s viewpoint. The following is Scott’s reply:
The effect on the market due to short sales is yet to be seen. Short sales are relatively new to the market. Many short sales will go to investors who know how to manage the complex and time consuming process. They will work the system to obtain the property significantly below market. They in turn will relist and sell the house at market value, much the same as the foreclosure process. These sales will hopefully self correct themselves. The sales that will be most damaging to the market are those which sell to owner occupants slightly below market value with full market exposure.
The true test to the validity of the sale and to determine if the sale is a true arms length sale would be its exposure to the market. Foreclosure sales are generally discarded because a lack of exposure to the market or they are significantly inferior in condition to other homes in the neighborhood. Short sales, on the other hand, are typically in similar condition to other homes in the neighborhood. If the home is multiple listed for a reasonable amount of time (IE: 30 days or more) it is then thought to have been adequately exposed to the market and may very well be an arm’s length sale. The effect these sales will have on the market will be determined by the exposure and the number of them in a given neighborhood. Most neighborhoods can support 1-2 short or distressed sales without altering values. When the number of short of distressed sales exceeds the number of arm’s length sales values will significantly decrease.
I want to thank Scott for taking the time to share his insight. His answer has brought up an even more thought provoking question, Are short sales in any way responsible for the declining markets as viewed by the various mortgage lenders? If so would they not be like a double edged sword, they cut the losses of the lender by foregoing a foreclosure but create a more difficult lending environment for purchasers because entire market areas are becoming classified as declining markets.
Short Sale in Atlanta
April 18, 2008 | 1 Comment
If you are having difficulty paying your monthly mortgage payment, you are not alone. Lenders got very creative, even greedy, while inventing mortgage programs that helped families buy their first home or refinance existing mortgages. Many of these programs were for buyers with no money for a down payment or for families with less than perfect credit. These loans were known as subprime loans. One of the most popular of these loan programs were the hybrid adjustable rate mortgage. A hybrid ARM has a low interest rate initially (a teaser rate) which is followed by significant upward adjustments during the remaining years of the loan. Other than lenders, declining or flat markets and tougher economic conditions have contributed to everyone having a more difficult time meeting our monthly obligations.
Recently a new phrase has come into the real estate market, not only in Atlanta, but throughout the nation. That phrase is a short sale.
What is a Short Sale
A short sale is when you have the ability to sell you home, but the proceeds from the sale are less than the actual payoff and expenses involved in selling the home. In a short sale, the mortgage company agrees to accept less than the payoff they are owed. A short sale is an alternative to foreclosure which may benefit both the lender and borrower. Typically a short sale is a better solution for the lender than foreclosure. If the lender had to foreclose on the property, they would be responsible for attorney fees, possible eviction costs, utilities and other various costs associated with a foreclosure. In allowing a short sale the lender may be able to reduce their losses compared to a foreclosure. One important point is that the lenders typically require documentation as to the hardship that has caused the need for a short sale.
What Hardships are Acceptable
Most mortgage companies require a hardship letter prior to discussing a short sale. The hardship letter should present the facts clearly and honestly and must provide the proof regarding the situation that caused the borrower to fall behind on their payments. The following hardships are frequently accepted by mortgage lenders:
- Job Loss or significant loss of income
- Divorce or Separation
- Excessive Medical Bills
- Death of a Spouse
- Military Service
- Adjustment in Mortgage Payment
How Does a Short Sale Affect My Credit
The late payments that lead up to the short sale will, as expected, have a negative impact on your credit. The main advantage to a short sale is avoiding foreclosure. A short sale should be less detrimental on a credit report than either a foreclosure or a deed-in-lieu of foreclosure.
The Mortgage Debt Relief Act of 2007
By signing H.R. 3648, The Mortgage Debt Relief Act of 2007, President Bush changed the tax ramification for anyone selling their home via short sale or owners who are renegotiating their mortgage. Prior to this legislation signed into law any shortage on a full payoff to a lender was considered taxable income.
Work With a Professional
If you are thinking about a short sale on you home, it is recommended that you meet with a professional and discuss you exact circumstances so that you can be given the best guidance for your situation. Working with a REALTOR® who knows how to talk with the Loss Mitigation Departments at the lender as well as being able to guide you on all the proper documentation required for a short sale will make this process easier for you. The actual documentation required by each lender can vary dramatically. To successfully complete a short sale transaction it is necessary for you to have all the elements documented and in place along with having an effective short sale strategy.
I will be happy to meet with you to evaluate your situation and discuss the options that are available to you. Feel free to contact me via email or phone.
Top Middle School In Gwinnett County
March 28, 2008 | Leave a Comment
The Results Are In
The Iowa Test of Basic Skills results are in and Crews Middle School is the highest achieving middle school in Gwinnett County in every major area; math, language arts, reading, science, and social studies! The Iowa Test of Basic Skills is the standard used by Gwinnett County Public Schools to measure student achievement in elementary and middle schools. Crews went up in every category compared to last year.
Crews Staff Deserves an Ataboy
Crews Middle School achieves at a high level every year. A part of the Gwinnett County Public School Results Based Evaluation System has been to award the highest achieving schools. The school has received this award for the past two years and hopes it will again this year. The money, in large part, has been used to finance professional learning and new technology in the school.
Congratulation Crews Middle School
The teachers couldn’t’t do it without the students and vice versa. So congratulations to your combined effort towards excellence go out to the teachers, students and the parents who support the school. I guess there is nothing left to say except “Ya’ll Done Good”.
Hail Damage in Atlanta
March 17, 2008 | 9 Comments
Tornado Hits Atlanta
This past weekend was one of the most interesting weekends the Metro Atlanta area has ever experienced weather wise. Friday evening about 10:00 a tornado touched down in downtown Atlanta. Extensive damage was done to the Georgia Dome, the Georgia World Congress Center and various additional buildings throughout the area. Airborne debris and high winds broke windows and lifted the roofs off of several structures. The SEC Basketball Tournament was suspended Friday Night and then relocated to Alexander Memorial Coliseum on the Georgia Tech Campus when it resumed on Saturday.
Saturday Was Even Worse
While Friday evening was exciting, Saturday was even more eventful. Starting about noon storm after storm seemed to be like freight trains running through North Central Georgia. Even though it could have been much worse, there were two fatalities. My thoughts and prayers go out to the families effected
Have Your Roof Checked
The news broadcasts have shown much of the visible destruction. What cannot be seen is the damage that hail can cause to a roof. If your home was in one of the area that received hail, do yourself a favor and have a qualified roofer examine your roof for any hail damage. It is much better to catch it now before you have water damage to your roof and attic.
Atlanta FHA Loan Limits Raised
March 6, 2008 | 2 Comments
So what exactly does the FHA do? The FHA provides mortgage insurance on loans made by FHA approved lenders throughout the United States. Since it inception in 1934 FHA has insured more that 34 million loans. Generally FHA loans are easier for buyers to qualify for as they do not have the more strict underwriting guidelines of conventional loans.
We have known that it was coming, we just didn’t know how high the limits would be raised. Well we got the answer today. The Federal Housing Administration, FHA, has increased the loan limits on a FHA insured home loan in Metro Atlanta to $346,250 up from $252,890, an increase of 27%.
This action by FHA should help spur the housing industry in the Atlanta market. Any home priced below $346,250 just became easier for more buyers to qualify for.
Atlanta Real Estate Conditions
February 27, 2008 | Leave a Comment
The Atlanta Real Estate Market has escaped from many of the problems that have affected other major markets. It has been pointed out that the resiliency of the Atlanta market is due to our sector being fueled by jobs and relocation rather than speculative buying as has happened in some of the condominium resort areas. Just how lucky are we? Below you can see one of the policies lenders have adopted that affect buyers in other areas of the county.
In certain areas of the country lenders have implemented what is called a “Declining Markets Policy”. In essence what this policy calls for is for buyers, purchasing property in what the lender has identified as a declining market, to increase their stake in the property. Most lenders are requiring the loan-to-value (LTV) ratio if one loan is being utilized or the combined-loan-to value (CLTV) ratio if multiple loans are being utilized to be reduced by five (5) percent. An example would be rather than being able to obtain 100% financing in a declining market, a buyer could only obtain 95% financing. The exception to this policy would apply for FHA and VA loans. For these government backed loans a second level underwriter review is called for, thus making qualifying more difficult.
Lenders are identifying the declining markets by both city and county in the various effected states. Several sources are being used to determine which areas are included. Standard and Poors Case-Schiller Home Price Indices, The Federal National Mortgage Association, The Federal Home Loan Mortgage Corporation, The Office of Federal Housing Enterprise Oversight Index along with statistics from The National Association of REALTORS are the most common sources used in identifying these areas.
Not only are there declining markets, but several of the lenders are also looking more closely at what have been identified as “Soft Markets”. While these areas are not as drastically affected, the lenders are requiring a second level underwriting review for soft market identified locations.
In the latest report I have been able to obtain, the Atlanta Market has not been identified as either a declining or soft market as defined by these lender guidelines. This doesn’t mean that the buyers market is gone. It just suggests that the Atlanta Market has not been as decimated as some of the other major metropolitan markets. Conditions remain favorable toward buyers with sellers making considerable concessions and interest rates remaining low. To find more information about Homes for Sale, just let me know what your requirements are. I am here to help.
Terrasol - New Homes in Gwinnett
January 31, 2008 | Leave a Comment
The name Terrasol is derived from the Latin terms for "Earth" and "Sun". How fitting for this earth friendly new community in the highly acclaimed Brookwood High School district of Gwinnett County. The community when complete will be comprised of 128 upscale single family homes, a community center, a free-form pool, play area, four ALTA approved tennis courts and an outdoor fire pit. As if that wasn’t enough, in keeping with the earth friendly theme of the community, more than 40% of the land will remain in its natural state and there will be a natural walking trail over a mile and a half long. The wooded home sites in Terrasol will be generous in size and many will border either the Yellow River or the over 30 acres of preserved woodlands.
Great Gwinnett County Schools
Children living in Terrasol are fortunate to be included in some of Gwinnett Counties finest schools. They will attend Gwin Oaks Elementary, Five Forks Middle and Brookwood High schools.
Developed By Vesmont
Terrasol is being developed by Vesmont, LC. In keeping with their commitment to environmentally friendly building practices, Vesmont will construct the amenity area and the community center utilizing EarthCraft building methods and design principles, much as they accomplished with their Oak Grove Preserve community inside the perimeter near Lakeside High School. Vesmont, LC is a real estate investment and development company that specializes in developing residential and mixed use communities for quality builders as well as today’s home buyer who is looking for a community-based lifestyle in an upscale home.
For more information about Terrasol and lot or home availability contact Mack.
John Wieland Homes Sale of a Lifetime
January 17, 2008 | Leave a Comment
Recognized as one of the leading builders in the southeast, John Wieland Homes will be offering buyers in Atlanta, Charlotte and Raleigh N.C., Charleston S.C., and Nashville, TN. what corporate President Eric Price is calling the value of a lifetime and one-of-a-kind in the home building industry.
Save Up To $100,000!
John Wieland Homes is offering up to $100,000 in savings along with a lifetime structural warranty on every new home whether it is existing inventory or being contracted to be built. So what’s the kicker? Well just like every good retailer all sales, especially one titled "The Sale of a Lifetime", doesn’t last forever. Buyers must take advantage of this sale from January 25th through February 3rd 2008.
About John Wieland Homes
John Wieland Homes was founded by John Wieland in 1970 and currently is building in 60 neighborhoods in the southeast. In 2005 the company won the building industries top award when named "America’s Best Builder". Today they offer a wide variety of floor plans in both single family residences and townhomes ranging in price from the $200,000s to over $1 million.
Atlanta Real Estate Advocate
January 13, 2008 | Leave a Comment
When thinking of the term advocate and applying it to the real estate market you would think that it would probably have something to do with being a consumer advocate. I would tend to think so also. There can be two different types of real estate advocates. There would be the buyer’s advocate whose sole intent is to protect the buyer’s interest and a seller’s advocate whose purpose would be to protect the seller. Let’s examine each type.
Purchasing a home is typically the most expensive purchase any of us will ever make. Not only should a buyer enlist the services of a qualified Atlanta Buyer’s Agent but also an individual that would be considered an Atlanta Real Estate Advocate. To be a good buyer’s advocate an agent should have a complete understanding of not only the legal requirements in representing a buyer as called for by Georgia law but also have a good working knowledge of construction techniques, current mortgage information, school information (both public and private) and most of all put the buyer’s interest above all others. For Atlanta First Time Buyers make certain that you get a complete understanding of the process of buying a home. Attending a buyer seminar or workshop is an excellent way to increase you knowledge and after all, knowledge is power especially in a real estate transaction.
Selling a home is also an enormous financial transaction. Rarely would any of us be involved in transactions for hundreds of thousands of dollars except with our homes. Doesn’t it make sense to put your trust someone who understands what is required in Selling a Home in Atlanta. The days of just putting a sign in the yard and answering the calls are gone. Having a solid marketing plan detailing the steps to be taken to properly market a home is the foundation for a successful transaction. To get a home sold in today’s market it is of utmost importance to have the home on multiple websites in order to obtain maximum exposure. One way to accomplish this is through an Internet Data Exchange (IDX) that makes your home available on every agent and broker website in the entire Atlanta Market and really helps when a buyer is searching for Atlanta Homes for Sale.
Having experience in assisting both buyers and sellers has helped me be able to understand the needs and wants of both buyers and sellers. Understanding what each wants pays off when a contract is being negotiated.
The nice part of all of this is that working with a real estate expert in Atlanta who will protect your interest doesn’t cost any more than working with a less experienced agent who may not be as qualified. It is impossible for one agent to be able to cover the entire Greater Atlanta Market effectively. Feel free to contact me for assistance with finding qualified REALTORS throughout Metro Atlanta to help with your real estate needs.
Bank of America Buying Countrywide
January 11, 2008 | Leave a Comment
It has been rumored for some time, however yesterday it seemed to gather increased reporting by some of the financial publications. Both Bloomberg and Reuters had extensive articles about Bank of America puchasing Countrywide.
As I was doing some research for this article I received an email from a Countrywide Loan Officer whom I have known for several years. The email was forwarded and the original is from Angelo Mozilo, Chairman and CEO of Countrywide to all Countywide employees so I would say that this pretty much takes this purchase out of the rumor category. Here is an exerp from the email:
"The highlights are the Bank of America has agreed to buy Countrywide but are going to run Countrywide under the Countrywide brand. This is what many of us wanted to happen – although many of our competitors did not want this to happen. This makes us by far the biggest mortgage company in the country!"
Last August when local lender Homebanc went out of business Countrywide took over their loan origination. Now with Bank of America buying Countrywide the largest mortgage company in the country has been created.
Last fall Bank of America elected to shut down their mortgage wholesale division and originate all loans in house. Now with this aquisition, perhaps the question that should be asked is does this in any way resemble a monopoly? You would have to guess that the Security and Exchange Commission will address this possible issue.
Here is the primary question that I have about this purchase and Bank of America becoming so large in the mortgage business, If the mortgage business in this country is in such bad shape why would Bank of America elect to buy Countrywide and increase their exposure? Sure they are getting Countrywide at a reduced price as Countrywide stock has tanked recently but what about loans that default in the future? Some of the articles that I read indicated that there is a chance that Countrywide was going to be filing for bankruptcy protection. Bank of America could have possibly bought Countrywide for less then.
We will all have to wait and see what the future holds with this purchase. My recommendation to anyone who is refinancing or purchasing a home would be to shop around for the best terms and conditions for your mortgage. Make sure to get a "Good Faith Estimate" and compare the costs from each of the lenders you have selected.
