A little silver lining to the real estate cloud--our second quarter results show definite improvement over the statistics of the first quarter. It's still bad, but getting better. The whole Northeast is down about 13%, and this area is about the same. If you multiply that times the decrease in the average price, you get a decline of about 23% from last year. That number includes a lot of foreclosure real estate, which usually transfers at lower prices, so the H. Pearce numbers look better. Our second quarter was less than 10% off from the year before. It tells you something about the past couple of years that such a result would make us happy!
When asked what I thought would happen in the last half of the year, I predicted a further narrowing of the decline. Although prices may fall more in some areas, it looks as though activity will not go down further, due to a combination of consumer confidence and government support.
The numbers also seem to show that people who use a Realtor get more for their homes than people who do not. While this can be explained in a number of ways, I have little incentive to argue with it!
Showing posts with label Realtor. Show all posts
Showing posts with label Realtor. Show all posts
Tuesday, July 14, 2009
Tuesday, April 7, 2009
Underwater Mortgages and Short Sales
Recently, I read that 47% of mortgages in the City of New Haven are "underwater", which means that the home is worth less than the amount of the mortgage on it. If you can afford the monthly payments, and you are not planning to move, that may not be an issue. However, for those who cannot pay, it's important to understand that there are ways to handle the situation that are better than others.
A "short sale" is one where the sellers cannot pay off the mortgage or mortgages and liens with the proceeds of the sale. In some cases, they are able to bring money to the closing and settle the difference. In many cases, however, they cannot afford to do so. It's almost always better to tell the bank earlier rather than later. Many banks are currently offering "forbearance periods", where they are suspending foreclosure actions. When those periods expire, they will have to decide whether or not to foreclose on delinquent borrowers.
Generally, if you have the ability to pay in full with other assets, the bank will expect you to do so. If you have no ability to pay, they will usually foreclose. If you fall in the middle, and it will be a short sale, they can work with you (if you can find someone to whom you can speak) to make the process as bearable as possible. You can also give permission for your Realtor or your attorney to speak to the bank about your property. In some cases, you may be offered money to move out. In others, the bank may offer to pay the closing expenses and/or the shortfall. Their position may have more to do with the amount they are carrying on their books for your mortgage repayment (in other words, if you are delinquent they may already have written down the value of the loan on their books) and their particular capital situation than with your circumstances. If you cooperate and are reasonable, you may even be able to negotiate to some extent about how your transaction will appear on your credit record. Like many things in life, it's an art and not a science.
A "short sale" is one where the sellers cannot pay off the mortgage or mortgages and liens with the proceeds of the sale. In some cases, they are able to bring money to the closing and settle the difference. In many cases, however, they cannot afford to do so. It's almost always better to tell the bank earlier rather than later. Many banks are currently offering "forbearance periods", where they are suspending foreclosure actions. When those periods expire, they will have to decide whether or not to foreclose on delinquent borrowers.
Generally, if you have the ability to pay in full with other assets, the bank will expect you to do so. If you have no ability to pay, they will usually foreclose. If you fall in the middle, and it will be a short sale, they can work with you (if you can find someone to whom you can speak) to make the process as bearable as possible. You can also give permission for your Realtor or your attorney to speak to the bank about your property. In some cases, you may be offered money to move out. In others, the bank may offer to pay the closing expenses and/or the shortfall. Their position may have more to do with the amount they are carrying on their books for your mortgage repayment (in other words, if you are delinquent they may already have written down the value of the loan on their books) and their particular capital situation than with your circumstances. If you cooperate and are reasonable, you may even be able to negotiate to some extent about how your transaction will appear on your credit record. Like many things in life, it's an art and not a science.
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