The Better Bargain: Foreclosure or Short Sale?

The Better Bargain: Foreclosure or Short Sale?
Short sales and foreclosures have flooded the housing market in recent years, and buyers are often drawn to the bargain prices but may be hesitant to jump into what usually is a difficult transaction and a long process.

Bankrate.com recently tackled the question of “Which to Buy: Short Sale or Foreclosure?” in an article that helps buyers weigh the pros and cons of a distressed property. Experts note that the question largely depends on buyers' situations, how quickly they need a home, and their tolerance for fixer-uppers.

Foreclosure Pros and Cons
Buying a foreclosure is often faster than purchasing a short sale. Plus, buyers often can negotiate closing costs and price in foreclosure sales, Elaine Zimmermann, a real estate investor in Memphis, Tenn., told Bankrate.com.

However, abandoned homes in foreclosure can deteriorate very quickly so the buyer may need to weigh the condition of the home and whether they want a fixer upper. Scarred walls and carpets and appliances that were damaged by the former owner are not uncommon in a foreclosure, says David Richardson, an inspector in the Detroit area who's certified by the American Society of Home Inspectors.

Short Sales Pros and Cons
A short-sale home is still owned by the occupant, so it tends to be in better condition than a foreclosure, experts say.

"The short sale is, in my opinion, far better than buying a foreclosure because the home is generally in better condition because it's been occupied," says Gwen Daubenmeyer, a certified distressed property expert with RE/MAX in Detroit. "The utilities have been maintained, usually the lawn is maintained, those kinds of things."

But short sales often can take a longer time than a foreclosure to close. However, the federal Home Affordable Foreclosure Alternatives program, or HAFA, may be able to help speed up the short-sale process since it has created a timeline to hold mortgage lenders accountable, but still “it’s not perfect by any means,” Daubenmeyer says.

Source: “Which to Buy: Short Sale or Foreclosure?” Bankrate.com (June 2011)

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Arkansas Home Sales Drop 20% in May

Summary of May 2011 Housing Market Report from Arkansas Realtors® Association
Most Units Sold for the Month					Most Units Sold for the Year
County	May '11	May '10	% Change		County	YTD 2011	YTD 2010	% Change
Pulaski	348	458	-24.02%		Pulaski	1,489	1,822	-18.28%
Benton	324	343	-5.54%		Benton	1,331	1,336	-0.37%
Washington	193	249	-22.49%		Washington	856	874	-2.06%
Craighead	135	196	-31.12%		Craighead	707	754	-6.23%
Garland	47	30	56.67%		Saline	486	640	-24.06%
Top Five Markets Totals	1,047	1,276	-17.95%		Top Five Markets Totals	4,869	5,426	-10.27%
Statewide Totals	2,172	2,715	-20.00%		Statewide Totals	9,441	10,684	-11.63%
Percentages of State Totals	48.20%	47.00%			Percentages of State Totals	51.57%	50.79%
Provided by Top Five Markets					Provided by Top Five Markets
Highest Valuations for the Month					Highest Valuations for the Year
County	May '11	May '10	% Change		County	YTD 2011	YTD 2010	% Change
Pulaski	$58,956,072

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A Window of Opportunity for House Sellers

by The KCM Crew on June 21, 2011

There has been much confusion as to where housing prices are headed. We have actually blogged on the issue recently. Today, we want to give our opinion on this subject for the short term. We believe sellers have a window of opportunity for the next 90-120 days in which to sell their homes for maximum price. We believe there will be increased downward pressure on home prices later this year and the first half of 2012.

Why renewed downward pressure?

Any item’s price is determined by ‘supply and demand’. In many parts of the country existing housing inventory is already high and actually increasing. In addition, an inventory of distressed properties (foreclosures and short sales) will be coming to market later this year. This inventory has been delayed for the last several months because of faulty paperwork by the banks when they originally attempted foreclosure proceedings on these homes.

Celia Chen, of Moody’s Analytics explains:

“Foreclosures are weighing on the outlook for U.S. house prices, and the slow resolution of issues surrounding the so-called robo-signing scandal is keeping distressed homes off the market”.

The New York Times also recently reported on this issue. They looked at the delays in certain states. As an example, this is what they found in New York:

“Last September, before the documentation crisis, nearly 1,500 New Yorkers lost their houses as a result of foreclosure, according to LPS. The average over the last six months: 286. That is far lower than at any point since the recession began.”

Banks are now correcting these errors.

There is evidence that the banks are getting their documentation in order and about to again increase their foreclosure repossessions. Housing Wire reported:

“Since major lenders delayed foreclosures to fix a broken process late last year, the amount of filings declined, but in May signs emerged the effect might be wearing off.”

They went on to quote RealtyTrac CEO James Saccacio:

“…lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory… Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask.”

What will this mean to home prices?

As this inventory comes to market, it will impact prices in two ways:

1. It will provide discounted competition for buyers
2. It will impact the appraisal values of all homes in the area

Again, we quote Celia Chen:

“It is quite possible that house prices will pick up slightly in the second or third quarter of this year, as foreclosure sales remain depressed while nondistress sales pick up…By the fourth quarter of this year, however, the distress share will rise, sending the house price index back down…

House prices will founder until early next year and start rising in earnest at the end of 2012.”

Bottom Line

There is a window of opportunity currently which sellers should take advantage of. Waiting until later this year or until next year will not guarantee a higher sales price. If anything, it probably guarantees the exact opposite.

Posted via email from Scott Deaton's Blog

What Today's Home Buyers Desire

What Today's Home Buyers Desire
Home buyers have high expectations for their purchases this year, the most critical of which may be a really great deal. In addition to more bang for the buck — and the bragging rights that go along with a superior bargain — today's house hunters also are looking for incentives, such as gift cards that they can use to decorate their new home or financial assistance at the settlement table.

Another important desire of buyers is that the property be well-maintained. "I'm not working with too many people who want a fixer-upper," says Pat Vredevoogd Combs, vice president of Coldwell Banker AJS Schmidt in Grand Rapids, Mich., and past president of the National Association of REALTORS®.

Current NAR President Ron Phipps agrees. More often than not, he explains, "buyers have limited amounts of cash. Even if they want to do a fixer-upper, they don't have the money to do it."

That is true even for buyers of bank-owned properties, says real estate broker Joan Pratt of RE/MAX Professionals in Castle Pines, Colo. "They want the short sales and the foreclosures, and they want them to look like they're owner-occupied," she says. "They don't want to paint. They don't want to put carpet in. They don't want to clean."

Modern buyers also favor open kitchens; open floor plans; and outdoor living components, such as screened porches, exterior kitchens, and two-way fireplaces. Additionally, the environment is increasingly important, with today's prospects seeking out elements such as triple-glazed windows and energy-efficient appliances.

Repurposed materials matter, too. "We're seeing lots of different materials and lots of reusable materials, which is interesting," Phipps notes. "Also a lot of unusual uses of hardwood — like pine flooring (reclaimed and) reused for counters," or terra cotta slabs for countertops. Buyers in 2011 are indicating a preference for smaller homes, but they like them nicely appointed. Luxurious elements such as coffee bars in the master bedroom are gaining popularity, as are expensive finishes in not-so-expensive homes.

Source: "Nine Items Homebuyers Desire in 2011," Bankrate.com, Dana Dratch (June 16, 2011)

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Sold! Congratulations to Mark Mitchell

Sold!  Congratulations to Mark Mitchell and family on their new home!

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Avoiding Real Estate Blunders

Avoiding Real Estate Blunders

Don’t get caught in these pitfalls.  Know what to do and not only find the perfect home for your family, but save money as well.  Check out the video.

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