The market rebounds: new short sale trends abound
Everywhere you turn, you hear reports that the real estate market is improving. And, unless you have no connection to any media whatsoever, then you’ve probably already heard about the housing market rebound. Just last week, homes.com published their rebound report, which is a useful tool for observing real estate national market growth and especially for housing and short sale trends.
While this is not noted in the rebound report, there are some definite correlations between the rising market values and the short sale market. While property values in many parts of the United States have not come back to anywhere near where they were in 2005, there has still been a significant increase since values bottomed out a few years ago. Right now, there are still many people who are unemployed, underemployed, or who need to sell there home right now and who owe more on their mortgage than the home is worth. However, due to the recovery, there is a new short sale trend that is becoming more and more frequent: the short sale of only the junior lien(s).
Short Sales and Junior Liens
As property values rise, it appears that many of the short sale transactions occurring these days include a full payoff to the first lien holder with the a short sale to the second or junior lien holders only.
How do you recognize this trend in your own short sale listing?
First off, when you take a short sale listing, request a copy of all of the mortgage statements from the property owner. In this way, you can check loan balances for all mortgages. (Note that the totals on the mortgage statements generally need to be verified by ordering an official payoff from the mortgage holder.)
Using the mortgage statements, you can ascertain whether the first lien will be paid in full or whether you will need to work with the first lien holder on a short sale. If the amount owed on the first mortgage is less than the property value, then the first is probably going to be paid in full. If the first lien holder is paid in full, then you do not need to submit a short sale package. The first lien holder will receive the entire loan balance as payment at closing.
Three Tips on Preparing Settlement Statements
In order to figure out how much to pay to each lien holder, it’s a good idea to solicit the assistance of a title officer, attorney, or escrow officer. These professionals can help you to generate an estimated settlement statement for your transaction.
Here are three points to consider when generating an estimated settlement statement for a transaction where the first lien holder is being paid in full:
- Agent Commission. Remember that what the seller owes on the mortgage and what the first mortgage holder will net is not the exact same number. There are certain fees associated with the closing: one of the big ones is agent commission. So make sure to account for commission on your settlement statement.
- Foreclosure Filing Fees. Even if the first lien holder is being paid in full, when the property is in active foreclosure status, then there may be legal fees or other foreclosure fees owed to the first lien holder (above and beyond the loan balance). Allocate money for these unknown fees when making your calculations.
- Be mindful of time. If the seller provides you with a mortgage statement from the current month, remember that the short sale may take some time to complete. So, if the seller is not making payments on the first mortgage, make the appropriate fee estimations in order to assure that you have enough money to pay the first lien holder in full when the deal closes in 4-6 months.
Short sale settlement statements can be tricky to prepare—especially since there are a lot of unknowns or issues that may arise much closer to the closing date of the transaction. So, if you come across a short sale where the first will be paid in full, don’t be shy about touching base with a colleague or settlement professional in order to assure that you’ve got the numbers just right. One call or consultation can save your from a world of hurt down the road.
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
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