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Tag Archives: COLORADO REAL ESTATE

Better to Buy Denver Area Bank Owned or Short Sale?

As we have discussed before, Short Sales are on the rise as a better alternative to Foreclosure. Definitely a better deal for the Distressed Homeowner and the lender. What about the Buyer?

Realty Trac’s Foreclosure & Short Sales Report for the fourth quarter of 2012 which covers over 900 metro areas in the United States shows that Denver is not in the list of top metro areas for the best deals in either category. This is good news for our local real estate market on our way to recovery, but maybe not so much for investors looking for the best deals out there.

A recent article by the Realty Trac staff shows the 15 metro areas they found to be the best buys in the two categories. Santa Barbara, CA topped the list of Short Sale Best Buys with an increase in short sales of 52%, an average price of $283,825, and average amount short of ($178,201), and at the bottom was Detroit, MI, with an average price of $97,233. At the top of the 15 Best Markets for Buying Bank Owned Foreclosure properties was Cleveland, OH, with a 141% change in REO sales, average sale price of $57,782, and 56% discount off Non-Distressed sales, while #15 was Sarasota, Fl, with a 19 percent change, and average price of $127,181.

In our own Denver, CO metro area there were 9,072 residential properties sold in the fourth quarter of 2012. Short Sales made up 8% of the total at 724, while 8.3% were Bank Owned foreclosures, 762 of the total properties sold. The average sale price for Bank REO’s was $210,347, a 35.5% discount from Non-Distressed properties, and Short Sales sold for an average of $224,543, a 31.2% savings. The average days on market for a Bank Owned property was 77, while Short Sales were 159. This statistic reveals the additional time it takes for a short sale transaction to be approved by the lender.

Of course there are other factors to be considered in the purchase of a distressed property. Bank owned properties in almost every case have sat empty for some length of time. Some for a year or more. This allows for more chance of pipes bursting from winter freezes, along with a myriad of other potential damage to the property, including vandalism. A much higher percentage of foreclosed properties have been stripped or damaged by the previous homeowners, angry at their circumstances and having to leave their home under duress. Short sales in most cases have been occupied by the homeowner until closing. While there may be some deferred maintenance due to financial constraints, most homeowners have a certain pride of ownership and are grateful for the more dignified approach of selling their own home with the blessing of their lender in a short sale transaction to avoid foreclosure. These homes are likely to be in better shape once acquired at closing, requiring less of an investment for repairs.

No one is to say which is the better choice for a particular buyer, but it is good to consider all that is involved in the acquisition of a distressed property beyond just the price. The good news is there are opportunities for many buyers with different objectives.

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Is The Current Increase in Home Prices Real or Temporary?

There are plenty of opinions speculating about recent changes in the housing market as well as what the future may hold. Radar Logic provides a perspective I tend to agree with most. Radar Logic is a technology-driven data and analytics business that produces a daily “spot” price for residential real estate in major U.S. metropolitan areas. According to Radar Logic the recent gains in the housing market are “unsustainable”.

Radar Logic attributes the current trend of increases in the price of homes to several factors it considers to be temporary in nature, and therefore the trend itself may be temporary. Such factors as abnormally low interest rates and increased investor demand. This is likely to change as the price of homes continues to increase. The firm anticipates that as prices increase investors will lose their enthusiasm for the market as they are not able to find the deals they once could. At the same time both homeowners and financial institutions that have been waiting to sell may be encouraged to put their properties on the market as they see prices on the rise, increasing the supply of housing inventory. Builders are also once again adding to the mix with a 23.6 percent increase in new housing starts from a year ago January. As the scale of supply and demand begins to tip more toward supply side we may see the price of homes on the decline once again. Of the two primary ingredients for a true recovery in home prices, according to Radar Logic, “Neither are much evident at the moment”. A rise in employment and a return of consumer confidence.

It will be interesting to see how this market develops in coming months and years. None of us have that coveted crystal ball to tell what exactly the future may hold. Personally, I think the logic of Radar Logic contains a lot of common sense as well as the analytics to back it up.

 

 
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Posted by on March 5, 2013 in Real Estate Market

 

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It’s a Good Time to Sell!

I found an article at Foleypub.com that I had to share with everyone:

Here’s a riddle: how can it be both a buyer’s market and a seller’s market at the same time? It sounds like a paradox but in fact it perfectly describes our current Denver Metro real estate market. To read more, click here.

 
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Posted by on June 6, 2012 in Uncategorized

 

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Assessed value of Colorado property declines

According to the Denver Post http://www.denverpost.com/legislature/ci_16908034?source=rss
assessed value of Colorado Properties declined in 2010 for the first time since real estate troubles in the 1980’s, and residential properties are expected to plummet another 10.4% in 2011. In the 80’s the oil bust and the savings-and-loan collapse were blamed for the decline in real estate values. As we enter the second decade in the 21st century, the culprits are “The sustained high level of foreclosures, economic downturn and tight mortgage financing market have put downward pressure on home prices throughout Colorado” the Report said. As we work our way through the difficulties associated with high unemployment, lethargic economy, and declines in real estate values, more and more families are finding themselves in trouble on their mortgages. Many distressed homeowners find that they are not able to make the mortgage payment which they once qualified for, either because of job loss, curtailment of income, high debt, or medical issues. To boot, their property is no longer worth as much as they owe, making it difficult to even sell just to get out from under it. In some of these situations, depending on their particular scenario, the homeowner may be able to qualify for a loan modification we all continue to hear so much about. Unfortunately, according to most of the professionals who are attempting to help people obtain a modification or workout program so they can stay in their home, it is a very small percentage of borrowers who are getting the permanent solution they are looking for approved by their lenders. For the rest, a Short Sale is a much better alternative to at least avoid Foreclosure and the aftermath of life after Foreclosure. That is where we come in. As a Certified Distressed Property Expert, my first consultation with a Distressed Homeowner is designed to help them determine if their situation may qualify them for a loan modification or one of the other alternatives to stay in their home. If we agree they should try to keep their home, I have experienced professionals who will give them the best possibility of keeping their home, by assisting the homeowner in compiling all of the critical information and documentation necessary, as well as negotiating on their behalf with the lender(s). In the event that they are not able to keep the property, my team and I have a proven system and track record to successfully sell the property for what it is worth in today’s real estate market, and negotiate the short pay with their lender. A Short Pay involves the mortgage lender(s) on the property agreeing to accept less than the full principal balance of the loan, the net proceeds from the Short sale, and release the lien on the property so it can be sold to avoid foreclosure.

Read more: Assessed value of Colorado property declines – The Denver Posthttp://www.denverpost.com/legislature/ci_16908034?source=rss#ixzz199DACYoA
Read The Denver Post’s Terms of Use of its content: http://www.denverpost.com/termsofuse

 
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Posted by on December 26, 2010 in Short Sales

 

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Short Sales may become an even better alternative on April 5th

There has been a great deal of variety and unknowns in the Short Sale process as each Servicer, Investor, Mortgage Insurance company, etc. involved in the process has a different way of processing, reviewing, and approving the transaction. The timeframes and results vary from one transaction to the next,  many times even with the same lender or Servicing company.

On April 5, 2010 a new program takes effect under the Home Affordable Modification Program (HAMP), the Home Affordable Foreclosure Alternatives program (HAFA). The intent is to provide incentives to the parties involved in the process to more effectively and efficiently implement options to avoid Foreclosure,  such as Short Sales. One of the intended effects is to bring uniformity to the process so there are less unknowns, hence a more attractive option to be considered by Homeowners in Distress, Buyers, and Realtors. If they meet their objectives, the process which has taken weeks or months in the past will be accomplished within 10 days.

So what are the rules? The rules are set by the new Home Affordable Foreclosure Alternatives (HAFA) Program, which seeks to find alternatives when a borrower cannot qualify for a modification under HAMP rules, because they don’t have enough income. Both short sales and deed-in-lieu of foreclosure will be options. In a deed-in-lieu of foreclosure the homeowner turns the keys over to the bank without the need for a foreclosure and the bank agrees to accept them without seeking any funds for a short fall when the home finally sells.

If a borrower is not eligible for a HAMP modification, then the bank will use the information gathered during the HAMP process so they don’t need to do additional eligibility analysis. The borrower will get a pre-approved set of terms for the short sale before the property is listed, which means the potential buyers won’t have to wait weeks or months for an answer from the bank. The bank is also required to fully release the borrower from any future liability for the debt.

For short sale offers where there isn’t a pre-approved set of terms, banks must respond to an offer in 10 days. However, I have not been able to find anyone who is sure when that 10-day count begins. Is it when the contract is offered or when all paperwork required by the bank has been submitted? We suspect banks will find ways to stall their answers. “It’s a cumbersome process. It will take a couple of months at least, to see what the lenders will actually do with this program.
To be eligible for help under HAFA rules:

  • The property must be the borrower’s principal residence;
  • The mortgage loan must be a first lien mortgage originated on or before January 1, 2009;
  • The mortgage is delinquent or default is reasonably foreseeable;
  • The current unpaid principal balance is equal to or less than $729,7501; and
  • The borrower’s total monthly mortgage payment exceeds 31 percent of the borrower’s gross income.

 

The HAFA program simplifies and streamlines the use of

short sales and DIL options by incorporating the following unique features:

 Complements HAMP by providing viable alternatives for borrowers who are HAMPeligible.

 Utilizes borrower financial and hardship information collected in conjunction with

HAMP, eliminating the need for additional eligibility analysis.

 Allows the borrower to receive pre-approved short sale terms prior to the property listing.

 Prohibits the servicer from requiring, as a condition of approving the short sale, a

reduction in the real estate commission agreed upon in the listing agreement.

 Requires that borrowers be fully released from future liability for the debt.

 Uses standard processes, documents and timeframes.

 Provides financial incentives to borrowers, servicers and investors.

If you are in the middle of the HAMP process or have been told you don’t qualify, be sure to ask about HAFA alternatives for help in getting out of your loan obligations.

 
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Posted by on April 4, 2010 in Short Sales

 

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