The Treasury Department has come out with some new incentives to try to make the process of a short sale palatable to all parties involved. The program will begin April 5, 2010. Under what is called the Home Affordable Foreclosure Alternative Program, the servicer (lender) will receive a $1500 incentive and the homeowner could receive $3000 when a short sale or deed-in-lieu of foreclosure transaction is completed. The $3000 is a ‘carrot’ for the seller to at least attempt to do a short sale instead of just walking away. The Treasury Department has also increased the amount that the second (subordinate) lien holder can receive. The have increased that amount to up to 6% of the loan amount with a cap of $6000. These second mortgages would then be extinguished under this new HAFA program.

I closed a short sale just today so this information is hopeful for other people like my clients. I had the property listed for two years before we were able to get the bank to allow us to complete a short sale. As we were at the signing table I felt the need to make a phone call to my attorney regarding something the client had brought up regarding collection activity by their second lien holder.

The attorney told me that unless the second lien holder pulled the collection activity back from the agency they had placed it with my clients would still be responsible for the amount of the second lien regardless of what our contract stated. Needless to stay I jumped on the phone with the collection agency and verified that the collection activity indeed had been stopped and that the account was back with the original lien holder.

After many emails and lots of questions I was able to find out that the lender indeed could give us a full release of the property as stated in the offer and that my clients would not have any deficiency judgment against them. Had we not done that it was possible that the entire second lien could have been still held against my clients personally even though the property had been released from it.

I am getting ready to take another short sale listing in the next week or so. I am hoping that the April 5th deadline helps me with communication as I begin to try to put together another puzzle.

If you want to know more about short sales and if you and your property qualify for one, please feel free to drop me and email at jan@valleysavvy.com or give me a call at 541.944.6040. I will be happy to sit down with you and discuss all of your options with you. Until then, I love this quote by Christopher Robin when he was talking to Pooh….Promise me you’ll always remember: You’re braver than you believe, and stronger than you seem, and smarter than you think.

To me that is a good motto to live by in this economy!

These are the stats for the year-end of 2009. If you would like me to email me a copy just drop me a line at jan@valleysavvy.com or call me at 541.944.6040 and tell me your mailing address. Here’s to an even better 2010! Just click on the link above to see the stats as provided by the Southern Oregon MLS.

The other driving force behind the increase in sales as I said was the first-time homebuyer tax credit.  It is something that is causing buyers to ‘get off the fence’.  Many of the buyers are hoping that they will extend the credit as it is a dog-eat-dog world out there right now when writing offers.  I have a buyer that saw a foreclosure house the first day on the market, we got her pre-qualified while were standing in the driveway  on the phone with the seller required lender, went back to the office and wrote a great offer.  The bank  countered her in two minor areas, we accepted and got everything signed and back to them.  AFTER we had the acceptance of the offer the lender got other offers in and they pulled the acceptance from us so that they could negotiate with the other buyers too.  They said because they ‘hadn’t signed the offer’ they weren’t bound by it.  That of course doesn’t sit well as I have never had a bank sign any part of an offer until the final day when it closes.  So basically the bank selling properties in foreclosures are setting their own rules and expecting us to ‘play nice’ even when they aren’t.  Anyone other than a bank that requirement for a signature would hold true absolutely but the banks never sign anything ‘because they don’t have to.’

We moved on to another property; yes, another foreclosure, and wrote again.  This time I drove the other agent nuts demanding to know when the bank considered it accepted and making him prove it in writing.  This offer has it’s own quirks. The banks sent papers on legal sized paper. I had the buyer sign them and send them back. They refused to accept them because they were on legal so I had to shrink them down and resend them!!  Flexible…you just have to be flexible…don’t let the small stuff drown you and keep moving forward at all times! 

During this time of crazy offer writing and negotiations and increased sales the bad news is that prices are still dropping. The median price home dropped again last quarter.  The previous median was $190,000 and now it is down to $186,000 as reported by the MLS.  That brings the price of homes over the past year down by 19.7% and over the last five year period they are down by 12.8%.  Of course there are some areas that have a higher median such as Ashland.

Some of the outlying areas seem to have reversed those trends.  Talent over the 5 year trending is actually up 22.6%.  That would be accounted for by the fact that all the folks that wished they could afford to live in Ashland have settled in Talent and are willing to pay a higher price for the proximity to that end of the valley.  The most surprising one to me is that Shady Cove and Trail is up 32.0%.  I am guessing that the reason for this lies with the fact that there have been some new subdivisions created over the past five years that made it possible to have a decent inventory to choose from at more reasonable rates. My guess is that it is driven by a retired and semi-retired population looking for a slower pace of life. 

West Medford has been hardest hit by the decline with it being 23.2% over the five years.  The greatest amount of change over one year is Jacksonville. It’s decline was 51.4% in one year!!!!  Examples of that trend are seen in the properties like the Farms on “G” St in Jacksonville.  Marketed at right around the $300,000 range a few years ago they are being built new and selling in the $170,000 range.  It used to be that ‘affordable housing’ and Jacksonville were not words you spoke in the same sentence.  If you have equity or are interested in investing or are one of those first-time home buyers, it is a really great time to find a buy!

This makes it easier for some buyers to qualify for a loan.  An example would be someone who is self-employed, makes a good living, has a high credit score and a low debt-to-income ratio but can’t qualify for the new tighter loan restrictions.  Or, as a seller you may be willing to lend to someone with less than stellar credit for your own personal reasons.

There may come a time in the life of the note that you want to sell all or part of the note.  Let’s say you had a medical emergency and you needed cash or maybe you want to take a big vacation. You can sell all or part of the note you are holding to another entity.

The second party could purchase a part of the note, say 5 years of the 20 year note for a specific dollar amount from you.  They would then be making interest off the note for that five year period and you would have a specific sum of money that was paid by the purchaser of the note. After the end of the five year period you would then revert to being the holder of the note.

There is definitely risk associated with this type of financial endeavor.  You would have income to report to the IRS on the interest earned on the note. There would also be the risk that the buyer of the property can continue to pay on that note and doesn’t default.

In the case of default for the buyer the property would then revert back to you. You would then be able to resell it again. There could be repairs needed and damage done that you would have to consider when you took the property back in default. This is much the same practice as the banks are doing right now on all the foreclosures.

There are probably a myraid of rules and regulations that apply to this kind of practice. I would recommend you seek competent counsel from an attorney and an accountant before you ever make the decision to do that.

But as you know, investments are risky, the stock market has reminded all of us of that this year!  This is another way to invest your money.  Have fun! Be creative! Maybe you want to buy notes!

There is an 84 unit multi-family development approved for the corner of Crater Lake Avenue and Delta Waters.  This will certainly create a great deal more traffic on an over-burdened corner already.  Hopefully part of the development will be to improve the traffic pattern there.  I will let you know more as I learn more.  To find out more information you may also log on to the City of Medford website.

Recently I have written multiple offers for multiple first-time home buyers on different properties as each property had competing offers at the same time. The standard response from the listing broker is that ‘the seller has countered everyone to come back at their highest and best offer.’ Now while this seems at first blush to be a ‘fair thing’ to do but honestly I sometimes wonder if my clients’ offer wasn’t already the highest and best and the seller is just hoping to get a few thousand more dollars out of a panicked buyer who is afraid that they will loseWeight Exercise out if they don’t come up.

Real estate is very much a game of poker. What do I tell my clients? Raise your price, come down on your closing cost requests, hold at the price you are…? Really it all depends on the client and how they feel about the situation. When teaching first-time homebuyers about the ins-and-outs of a transaction it is important for them to understand every aspect of that transaction.

I will use the example of a property I was working with my clients recently. It was a small house in an outlying area. It was on a cul-de-sac, several other properties on the street looked distressed also and this one was purchased very likely at the courthouse steps by this investor. I know he is an investor based on the name on the listing. I also know that he just recently purchased it because the deed still isn’t showing up in his name on the county records yet.

My first thoughts were…priced well, couple of days on the market, competing offer, investor owned, needs work. My clients wrote an excellent offer and requested closing costs. The counter offer was increased to include the closing costs. This is where we had a long talk about an appraisers role in the selling process. We discussed what kind of a red flag the appraiser would have with that counter offer. I explained to the clients about the fact that they could loseWeight Exercise not only their inspection money but also their appraisal money if the appraiser didn’t like the fact that closing costs were added on top.

I ran comparable properties for my clients to show them that the value was likely there even in the counter offer, but I couldn’t tell them how an appraiser might respond. We talked about the response to that offer being different if the property had been on the market more than 60 days. The listing agent stated they felt it was priced to sell and that they felt confident they could get their price in a short time even though ours was the second offer that they did not come to terms with. My clients decided to stand their ground and leave their offer at what was felt to be a fair price.

The offer died and we moved onto another property. Guess what! The offer we wrote on this one, is one of three offers. The listing agent has said that ‘they are all pretty close in price’ and wants us to come back with our ‘highest and best’. On this offer, we came in high to start hopeing to have a better chance from the beginning.

They know about appraisers, they know about future value, they know about what else is on the market, they know this is one that hasn’t been on the market too long… they are as educated as they can get. This one comes down to whether they ‘love’ the house and have to have it. We will see how this one plays out after I meet with the clients tonight. We can see how they fare in this frenzied market!

The properties that qualify are foreclosed upon single family residences, condominiums, and townhomes and FHA approved manufactured homes. The manufactured home must be detitled and on a permanent foundation. The important item here is that these properties must be foreclosures. The property must have already been taken back by the bank and the title transferred into the banks name to qualify.

There are income guidelines for qualification. The first mortgage must be a fixed rate mortgage and the buyers must attend 8 hours worth of approved education on the ABC’s of Homebuying or Realizing the American Dream in order to qualify.

If you are looking for a lender to help you learn more call Linae Simpson at Rogue Federal Credit Union. Her number is 541.941.3926.  She will walk you through all the steps of the process.

Step 1 Selecting a REALTOR®

No single decision you make will be more important than the REALTOR® you choose to help you. It will be their knowledge of the market that can guide you to the perfect home for you and your budget. Choose carefully. Often a referral is the best way to find one. Ask around to see who has one that they have used and really like. Find out what they liked about them and what they felt made them stand out. The brokers in our area all have access to the MLS with all the listings excluding For Sale By Owners (FSBO). Your broker is able to work with FSBO owners also so don’t hesitate to ask us if you see a FSBO you like to find out more about it! Interview the REALTOR®. Be sure that you feel you can communicate well with them and that they have your best interest in mind.

Step 2 Selecting a Lender

Your lender is the next business partner that you must choose. It is very important that your lender and your REALTOR® can communicate well with each as they will be working hand-in-hand to make your dream of home ownership come true. A good lender will listen carefully to you, they will ask lots of questions and they will also give you ideas and options that will work for you. A lender you want to stay away from is one that you feel is trying to force you into a loan product that makes you feel uncomfortable. It is always a good idea to talk to your REALTOR® if you have questions. If your REALTOR® is on top of their game they will be able to trouble shoot problems with you and help you find the very best fit with a lender.

Step 3 Selecting Properties to See

In our Southern Oregon Region most REALTOR® belong to the local MLS (Multiple Listing Service). This affiliation allows you to work with your REALTOR® and look through all the properties listed on the MLS to find the perfect property for you. Your Realtor will sit down with you and create a search criteria for homes based on what your lender says you can afford and what you are comfortable paying. These criteria will range from the number of bedrooms and bathrooms, to whether you want a specific school district and of course, price. The MLS gives your REALTOR® access to all the listings currently posted on the MLS.

Step 4 Viewing Properties

Now that you have a list of properties selected it will be time to go and look at some of them. You and your REALTOR® will be able to pick some of the more appropriate properties for you and schedule showings to look at them. Many properties are what a REALTOR® might call a ‘call, show, keybox’. This property is one in which the seller has said that you just need to call and let them know you are coming and then use the keybox. There are other properties that will be ‘by appointment only.’ Some reasons for an appointment only listing might be due to pets who might need to be removed during the showing or small children who might be napping. Your REALTOR® will work with the seller to find a time that suites both of your needs. And finally there will be ones that require ‘24 hour notice’. These are tenant occupied properties. The State of Oregon landlord tenant laws protect the tenants’ rights by requiring that someone wishing to enter the property must give them a 24 hour notice. That notice doesn’t mean the tenant will agree to show it at that time. These are the most difficult properties to show. Your REALTOR® will be working with the other agent and the tenant to set a good time for the showing.

Step 5  Selecting the Right Property

When you head out to look at all these properties you might want to think about taking notes. Your REALTOR® can give you a printout of the property and its features. On that print out you can make brief notes about what you liked or didn’t like about the property. Honestly, if you see too many properties they all begin to run together in your mind and you will be glad you wrote things down! If you see more than 5 or so properties in an outing with your REALTOR® it becomes very difficult to remember what you saw. Looking at property is a hard business as you are trying to make a major financial decision based on what you are looking at so your mind is hard at work doing this! It can be very tiring!

Step 6 Negotiating the Offer

Writing and negotiating the offer is what your REALTOR® does best! We have extensive tools and knowledge of the market that will help you write an offer that represents what you would like to pay and is one that the seller will look at as a viable offer and one that is worth negotiating on. Your Realtor will guide you as to what an appropriate price might be and what sort of sellers concessions, such as closing costs, might get the seller to see things in a positive light. Remember, very often the seller has an emotional tie to the property and you need to negotiate around both their emotions AND their financial position. This can take several days and is a very nerve-wracking time for most buyers. Everything that is done during this time is very time-sensitive so be sure that you stay in constant contact and are readily available to meet with your REALTOR® if need be during this time.

Step 7 Closing the Deal

Closing on the deal is a hectic time. It usually takes between 30-45 days to close on a property. The first two weeks are spent finishing the paperwork, having an inspection of the property and the under structure, negotiating any repairs that might be needed, having an appraisal, talking to your insurance agent to secure insurance, addressing paperwork sent by the title company and meeting with your lender. After that whirlwind of activity it is generally a ’sit and wait’ time for the next couple of weeks as everyone completes their jobs from the insurance and escrow person right down to your REALTOR® and lender. As you can see it takes a team to make all of this happen. Once everything is complete your REALTOR® will schedule a signing appointment to meet with at the title company to sign your papers. This appointment will be over an hour long usually and you will be signing LOTS of paperwork related to your loan and to the escrow. your Realtor should be at the signing with you to answer any questions that might come up and to troubleshoot last minute issues that sometimes arise. A couple of days after that depending on the lender, you should get a call from the title company saying they ‘recorded on the property’ and that means that YOUR name is now on the deed as the owner! Congratulations!