Northern Virginia Weekend Bits Bucket 7/30-31, 2011

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Northern Virginia Bits Bucket 7/29/2011

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PulteGroup, D.R. Horton expect profitable turn. One thing that has kind of surprised me is that so many builders have hung on so far.

D.R. Horton is putting up some townhouses in Warrenton from the low 300's. Building seems to have resumed in other parts of the exurbs, too, but quietly. Northern Virginia's overall housing inventory is unchanged from last year.

Still, this area's economy does partially hinge on the ability of the federal government to keep spending, as discussed in a conversation in the Bits Bucket here yesterday. As we await our fate, the unflappable CR assures us that "paying the bills" will go on as usual.

Northern Virginia Bits Bucket 7/28/2011

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From a telephone survey by Rasmussen: 62% believe it's better for homeowners who can’t afford to make increased mortgage payments to sell their homes and find less expensive ones. Twenty-five percent (25%) think it’s better for the government to assist those homeowners in making their payments. Thirteen percent (13%) are undecided.

Northern Virginia Bits Bucket 7/27/2011

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Unexpectedly. (They keep using that word). "(Reuters)-New single-family home sales unexpectedly fell in June, but a sharp rise in prices and declining supply suggested the market for new houses was starting to stabilize, a government report showed on Tuesday."

Weakening? (H/T Pat)

S&P/Case-Shiller® May Home-Price Index

The S&P/Case Shiller® composite index for the month of May was released yesterday.

"'We see some seasonal improvements with May’s data,' says David M. Blitzer, Chairman of the Index Committee at S&P Indices. 'This is a seasonal period of stronger demand for houses, so monthly price increases are to be expected and were seen in 16 of the 20 cities. The exceptions where prices fell were Detroit, Las Vegas and Tampa. However, 19 of 20 cities saw prices drop over the last 12 months. The concern is that much of the monthly gains are only seasonal.

'May’s report showed unusually large revisions [emphasis mine] across some of the MSAs. In particular, Detroit, New York, Tampa and Washington DC all saw above normal revisions. Our sales pairs data indicate that these markets reported a lot more sales from prior months, which caused the revisions. The lag in reporting home sales in these markets has increased over the past few months. Also, when sales volumes are relatively low, as is the case right now, revisions are more noticeable.'"

You can see the prior data we had in the post for April on this blog. The price gains have been adjusted downward.

Northern Virginia Weekend Bits Bucket 7/23-24, 2011

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Northern Virginia Bits Bucket 7/22/2011

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From Rasmussen: "For the second month in a row, less than half of America’s homeowners believe the value of their home is worth more than the amount they still owe on their mortgage."

Hot summer greetings! There's not not much excitement in the Northern Virginia housing market now, just a stable amount of homes on the market, a smaller percentage of distressed sales than in the last few years, and, on days like today, people mostly hiding inside. The million+ market in the outer regions is super slow, if you want to jump on the "invest in farmland" bandwagon. Here's a 127-acre property in Orange County, assessed for tax purposes for $1.5 million, going for under $1 million.

I've decided to add some guest posts, and perhaps change the title of the blog to something reflecting what's happening now. Guest articles here will originate from DLP Realty in Sterling, whose owners and agents have a long background in handling distressed properties, as well as tax law and finance. I think they are the best fit for this kind of blog, since their articles will be of an educational nature. If you have any questions for them, they can be answered through the blog comments.

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Pitfalls of the Short Sale Process

by Jose A. Barreto

7-11-2011

 

Short sales can be stressful and time consuming.  Already faced with an interest rate hike, a frustrating loan modification process, divorce or loss of employment, the borrower is now faced with a new challenge, completing a short sale before the bank forecloses on the property.  It is a race against time that seems endless, but the repercussions of not following through far exceed the sacrifice that it takes to see the short sale to the end.

Being familiar with what lies ahead can make a short sale more tolerable.  The process will still be frustrating, but having a basic understanding of the major steps should help alleviate some of that frustration.

 

The Paperwork

Being prepared for the amount of paperwork needed is key.  Gather your last two years tax returns, the last two or three months’ paystubs, your last two or three bank statements, HOA information (if applicable), condo association information (if applicable) your latest mortgage statement and any other communication between you and your bank.  Prepare a statement explaining your financial hardship (hardship letter) and be as detailed as possible.  Please understand that the bank will ask for these documents again, so every time you receive a paystub or a bank statement, forward it to your Realtor along with every piece of communication that the bank mails you.  The process can take months, so understanding that the bank will continue to ask for updated financials will keep you on your toes and help the process go as smoothly.  You will also be asked to fill out a Financial Statement, sign a listing agreement, etc.  Be prompt in responding to these requests and take them seriously.

Valuation and Listing Price

Once the decision has been made to place the house on the market as a short sale, it is extremely important to list the property for the correct price.  Too high, and the listing will go without an offer for an extended period of time, jeopardizing the process.  Too low, and the bank will not accept the offers for the property.  The house must reflect a discount against regular sales, but not too deep a discount.  A good rule of thumb is to list the property for around 10% below what other similar properties are being sold for in the area.  This will ensure interest without it being too low and ultimately you should receive an offer that will encourage the bank to negotiate.

The Offers

As stated earlier, the short sale process is a long one.  Many things can happen between the time a prospective buyer places an offer and the transaction finally settles.  It is important for an agent to accept backup offers in case the original one falls through.  Having a backup plan will allow the Realtor to continue the process without much trouble.  If there isn’t a backup in place, it could take a while before getting another offer and this could seriously jeopardize the transaction, especially if the short sale has already been approved.

Liens

There is nothing more frustrating than having the short sale approved, having a willing buyer and have all conditions meet only to have everything fall apart due to an IRS lien on the property.  The minute the decision is made to place the home for sale, the borrower should disclose any issues regarding credit they may have.  Credit card companies, IRS & HOA are among the most common liens that appear on title during short sale transactions.  The IRS is very likely to release a lien against the property with a copy of the short sale approval letter, a copy of the deed, a copy of the Settlement Statement (HUD-1) and a copy of the appraisal.  These items will prove that the property has no value to the IRS and they will agree to release the lien pending the final Settlement Statement.  Credit card balances and HOA dues can also be negotiated down during this process as they often will take what they can, knowing that the borrower is financial trouble.  All of this should be done well in advance in order to avoid delays in the short sale process.

The Short Sale Approval Letter….read the fine print

Many borrowers are surprised at the end of this process when they get a sudden call from a lender (most often from a second mortgage) advising that they are trying to collect a debt.  If not negotiated correctly, the short sale approval from a second lien holder will state that the borrower is responsible for the balance of the debt after the short sale is completed.  This can be negotiated with a little effort from the borrower’s representative.  Second lien holders are almost always in a bad position since once the property is foreclosed on, they end up with nothing.  Negotiating this early on will help get the best end result for the borrower.  It is very important to understand what is being signed at the closing table; simply signing the short sale approval without reading the conditions first is ill-advised.  Be sure to read the fine print.

 

As you can see, deciding who handles this process for you is crucial. Do your due diligence and consult with a professional.  Choosing the right one will save you headaches, and might end up being the difference between foreclosure and short sale. 

For more information, visit us on our web at www.dlprealty.net or contact us directly at 703-444-9268.

© 2011 DLP Realty. All rights reserved. Permission is granted to copy this document in print or electronic form with the provisions that the article is not altered, and is copied in its entirety including this copyright notice.

DLP Realty, LLC
100 Pidgeon Hill Drive, Suite 100
Sterling, VA 20165
Phone: (703) 444-9268
Fax: (703) 444-1206

Northern Virginia Bits Bucket 7/19/2011

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Does anyone else think this is an ugly house?

Northern Virginia Bits Bucket 7/15/2011

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Northern Virginia Bits Bucket 7/12/2011

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Northern Virginia June Housing Sales

Northern Virginia's June 2011 housing sales were down 18% YoY, and median prices were up 8%. The average days on the market increased by 24% to 51 days.

(The above statistics include Alexandria City, Arlington County, Fairfax City, Fairfax County, Falls Church City, Fauquier County, Loudoun County, Manassas City, Manassas Park City, and Prince William County).

Northern Virginia Bits Bucket 7/5/2011

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Northern Virginia Weekend Bits Bucket - Independence Day

Wow.

Rula Giosmas is one of the beneficiaries. Last year she received a letter from Chase saying it was cutting in half the amount she owed on her condominium.

From the comments:

"This will generate taxable income under 26 USC section 108. A 1099 will be issued to the debtor with acopy to the IRS. The IRC Section 108 is entitled; Discharge of Indebtedness Income."

What do you think? Will the IRS pay attention?