Sell Or Die!

More Time to Close – The First-Time Home Buyers Tax Credit is Being Extended!

Looks like Uncle Sam is about to do us all another big (and timely) favor!

Senators voted recently to amend the Bill covering the First-Time Home Buyer Tax Credit and give sellers and buyers more time to close.  

If you have a contract to close on the sale of your house to a Buyer eligible for the First-Time Home Buyer Tax Credit, the Amendment would extend the deadline to close from June 30 until September 30.

You must have already executed your Purchase Agreement by the original deadline of April 30, 2010.

Why the extension? Banks need the extra time to work through the surge of mortgage applications that nearly swamped the banking industry in the weeks leading up to April 30.  

For Buyers getting a loan from a bank, this extension of time is a helping hand to salvage your sale if your Buyer needs another month or two to address something on their credit, for instance.

For Buyers getting financing from you as the Seller, the extension through September gives you and your Buyer extra time you might need to finalize terms or for your Buyer to accumulate the down payment needed to close the deal.

Senate Amendment 4344 is one of several approved Amendments that would go into effect once the overall amended bill is reconciled in both chambers of Congress and voted into law.

Note to Congress:  Let's get this done!

Wow!

Really, how often does a business make you say “WOW! I can’t believe you did that for me!”

Exactly! It doesn't happen to us very often, either.  But it did today.

And we were so impressed that we felt compelled to toot the horn of INPAX, Inc. courier delivery services.

Here’s what happened: We had a time-critical delivery and a courier pickup scheduled with INPAX. The courier would be carrying a check from us to deliver to the recipient, a local business. Unfortunately, the recipient of our package had just changed their processing fees, so our payment was short $15.

Let's be clear: It was definitely our fault.  We should have verified the fee before scheduling the delivery. INPAX tried to reach us while the driver was still at the recipient’s office. They called twice, but had to leave a voicemail message. When we returned the INPAX calls, we fully expected to learn that we missed our delivery deadline and that the package was on its way back to our office.

Instead, we got insane unexpected service:

1. INPAX authorized the driver to pay the $15 difference out of his pocket.
2. INPAX reimbursed the driver when he returned to their office.
3. INPAX simply added the $15 to our next invoice.

They knew the delivery was urgent. They knew we would have missed the deadline otherwise. And they instinctively knew what action they could take to make our world so much better.

We were shocked!  We were in awe. We wanted to tell the whole world about it.  Our hats are off to our INPAX customer service representative extraordinaire and to that amazing INPAX driver. They've raised the bar for customer delight to an almost unbeatable level -- a level which we'll strive to reach as well.

INPAX, you’ve now got a customer for life.  Bravo!

Walking Away from Your Mortgage??

In this wacky real estate market, new things pop up all the time.  One of the recent trends catching on is for homeowners to literally walk away from their mortgage.  These are homeowners who decide to stop paying their mortgage and remain in their home until their lender forecloses.

We will say right up front: We don’t condone this.

In fact, if you don’t have to move and you are not in financial difficulty, the best thing to do is sit tight and wait until the market is more on your side.

Still, we’ve seen our fair share of frustrated homeowners ready to give up because they are severely upside-down on their mortgage or because they have tried to sell with no serious offers for months (in some cases, years!).

For you homeowners who have entertained the thought of walking away from your mortgage (even for just a fleeting moment), an attorney who is also a real estate broker has written a white paper worth reviewing on the pros and cons of walking away from your mortgage.  It also lists some options to walking away.

Got Tenants? Let Uncle Sam Pay You $8000 for Them!

If you rented your house recently instead of selling it, you might be one of many homeowners thinking this …

“Yeah, yeah … I heard about the First-Time Home Buyer Tax Credit (FTHBTC) deadline on April 30, 2010.  But I already have my house rented out.  What does any of this have to do with me?”

What if you could wave a magic wand and turn your good-paying tenant into a buyer – before the FTHBTC deadline?  Imagine this: A buyer who already loves the house, who agrees to your asking purchase price, and you don’t have to pay a Realtor’s commission to get it sold.  And, what if your buyer, with some help from good ol’ Uncle Sam, paid you $8000 in just a few weeks? 

Then, what does any of that have to you do with you?  A LOT!  About $8000 worth!

Meet Tammy: She Tells Her Bank “No!”

The loan payments were killing Tammy (not her real name) on her trendy, upscale home.  So she found a more affordable home and planned to move into it before her current place became a tightening noose around her neck.

To get a quick sale, Tammy and her Realtor carefully reviewed the recent sales in her neighborhood to set her asking price.  She priced her home attractively and was fortunate enough to find a serious buyer in less than 90 days.

Like many sellers, Tammy was upside-down: She owed more on her mortgage than what her home was currently worth.  So, Tammy submitted a short sale request package to her lender.  After months of waiting for an answer, the lender agreed to accept less than what she owed … with one big catch.

Defend Yourself: Even Lenders Make Mistakes ... Sometimes WHOPPERS!

Every major mortgage lender has a plan for dealing with the public.  They have processes for handling customer inquiries.  They have computer systems to ensure accuracy.  They even record your calls for “quality assurance purposes.” 

But here’s the thing: Mortgage lenders also have humans.  And humans -- even well-intentioned ones -- can make mistakes and provide incorrect information to homeowners and borrowers.

These are just some of the errors we’ve seen lenders make:

• One bank told a borrower that a payment was coded as late due to a returned check when it was not.  They later admitted that the representative misread their computer screen.
• Another advised a borrower that they were eligible for a loan modification program when they were not.  The representative didn’t verify all the requirements for the particular program.

What's a Loan Modification?

A loan modification is when a lender agrees to lower the interest rate or the monthly payment (and sometimes both) on an existing mortgage.  When a borrower is behind on their payments, a lender will consider doing a loan modification as an alternative to foreclosure.

Some quick facts:

• A loan modification can be requested by the borrower, but must be approved by the mortgage lender.
• Approval is based on the borrower’s current income and monthly obligations and not on the borrower’s credit score.
• Though more difficult, when a borrower is current on their payments, a lender may consider a loan modification because of a documented hardship, such as job loss or large unexpected medical bills.

The Shocking (!) Truth About Sales Price

Purchase price is the #1 obsession for home sellers.  Set the sales price too high and your house sits for months (years?) with no offers.  Too low and you leave money on the table.  Sellers often wonder, "What's a reasonable price for my house?"

Let's start with the bad news.  No matter how hard we all wish it were so, here's what a fair price is not:

1. It's not your appraised value from two years ago
2. It's not your mortgage balance plus $20K of "profit"
3. It's not what your new neighbor paid for the house next door

Even as sellers with hundreds of sales, we've made the mistake of mis-pricing a house more than once.  And every time, we suffered the agony of a long and expensive vacancy.  Finally, we learned to accept the harsh truth: Sellers don't get to determine the fair price for a house. 

The good news?  Buyers don't either.

The Home Appraiser: One Ugly BFF Breakup!

In real estate, the appraiser is supposed to be the fair and impartial judge of property value.  Banks use the appraiser's valuation to avoid making a loan for more than a house is worth.

But during the Bubble, banks (and mortgage brokers) mostly just wanted to make lots of loans. And, real estate agents wanted to sell lots of homes.  And, buyers wanted to buy everything in sight.

So back then, appraisers were strongly encouraged to be "generous" with their valuations so that more (and larger) sales could close. Which was pretty easy, since prices were soaring.  And everyone was pretty happy.  Best Friends Forever!

Then came the Meltdown.  Homeowners started defaulting on loans, banks started foreclosing on owners, and home prices started plunging.  Some blame fell on the appraisers and their cozy relationship with the agents and mortgage brokers they worked with.

And that's when our government jumped in to save the day.  So you know things were about to get worse.

Meet Bill: "Underwater" Seller Searches for a Lifesaver

The Situation

Bill (not his real name) has owned his home for nearly two decades.  He and his wife Amanda have made many memories, raised a family, and built a life in that home.  Like many homeowners, he refinanced his mortgage to cover a few major expenses, including college costs for their daughter Lydia.

Now his monthly payment is too high for him to handle.  Even worse, Bill owes $170,000 on a home that wouldn’t appraise for more than $100,000. That's $70K in negative equity (yikes!).

Bill contacted his mortgage company about accepting a short sale, but was denied because his payments are “too current.”  Bill played by the rules and paid his mortgage and bills on time – even during the lean years when Lori lost her job.  To Bill, it doesn’t seem quite fair that loan modification help and short sale approvals are going most often to those who didn’t pay when promised.

Why the %#*@! Hasn't My House Sold?

So your listing just expired and your house is still unsold.  When asked why, your agent simply says “It’s the market.”  But what they really want to say is "Your sales price is too %#*@! high."

Right this minute -- somewhere in your neighborhood -- houses are selling.  Sure, this is not the seller’s market of two or three years ago.  But houses are still selling because people will always value a nice place to call their own.

Don't believe us?  Then ask your agent to go into MLS and pull a sales report for the last 6 months.  Were there any sales within 5 miles in your price range? You bet there were.  So, why wasn’t your house one of them?

What is a Short Sale?

Imagine you have a $230,000 mortgage on your house.  You need to sell, but the best offer you've received has been for $210,000.  If you wanted to sell at this price, you'd need to bring $20K to the closing, which you can't do.  But...

If you could convince your lender to accept $210,000 instead of $230,000 to pay off your mortgage, you could then sell your home for $210K without having to bring money to the closing.  That’s called a short sale: When a lender accepts less than what is owed as a mortgage payoff so that you can sell your house for today’s value.

Lenders are approving short sales every day.  Why? It’s not benevolence.  It’s because banks have determined it’s in their best interest – it just so happens that you benefit when they do. 

Here’s how the lender sees it: Taking a relatively small loss now is better than the real possibility of taking a huge loss later.  If you gave up on selling your house and let it go to foreclosure, for instance, the lender could lose far more.

What is Negative Equity?

When a homeowner owes more on their mortgage than what the home is worth, the home is referred to as “upside down.”  The amount of the mortgage over and above the value of the home is called negative equity.

Why is negative equity so important these days?

Let's say you are selling a home that is worth $175,000 with a mortgage balance of $200,000.  You owe more than the home is worth, to the tune of $25,000 of negative equity.  If you were able to sell this home, you'd have to bring at least $25K to the closing in order to sell your home.  That's right: You'd have to pay money to sell your own home!  And that's not counting any commissions you might owe to a real estate agent.

The Best Sales Strategy You'll NEVER Hear from an Agent

Can we all agree that the Number One Challenge in getting a house sold is finding a qualified buyer and getting them approved for a mortgage?

With all the homes out there on the market, buyers don't need to look hard to find homes with a great kitchen, gorgeous hardwood floors, or whatever other feature most sellers think is important.  The real struggle these days is getting a buyer financed so they can purchase your home.  And for buyers, every penny saved is a penny that can be used to buy your home.

So while many real estate agents focus on making your house "pretty-as-a-picture," consider these suggestions for making it financially attractive as well:

• "Seller will pay closing costs up to $4K (or whatever you decide)" — You know all buyers will ask and you know you'll end up paying them anyway, so why not make it clear from the start that you'll cover closing costs up to a reasonable, yet generous, maximum?