The decision whether to try to short sell your home or let the bank foreclose is one that should be made only after consultation with an attorney and tax adviser. Any choice you make will have consequences that are too important to leave to chance. Once you have received professional advice, try to work with your lender toward a modification or other consideration.

The bank will ask for lots of documentation, such as a hardship letter, copies of bank statements and pay stubs, and lists of assets and liabilities. Provide everything they ask for in a timely manner, and keep copies of everything you send them. In addition, keep detailed records of all communications with the lender, such as emails and notes of telephone conversations.

While every situation is different, there are a few reasons why a short sale can often be better than foreclosure:

1. Neighborhood property values are usually better preserved when homes are sold in a short sale rather than taken over by the bank.
2. Your credit rating may take less of a hit with a short sale.
3. You may be eligible for another home loan in a shorter period of time with a short sale.
4. You may be eligible for up to $3000 in relocation costs from your lender.

The Department of Housing and Urban Development website explains several available programs that might offer assistance, and provides a list of approved counselors. Stay away from anyone who contacts you and asks for an upfront fee in return for promises of assistance.

I have worked with many, many sellers who are upside down on their mortgages, and I would be happy to answer your questions or help in any way I can.

Posted by:  Deborah Byrne

Selling your home is a decision that will lead to weeks of preparation prior to going on the market. Preparing your home for the market typically includes freshening up interior and exterior paint, enhancing landscaping, cosmetic repairs, carpet cleaning, removing clutter and staging, and general maintenance and cleaning. However, don’t forget to have your home inspected by a licensed professional home inspector and pest inspector.

Your realtor can recommend a reputable licensed professional home inspector and pest inspector. It’s a good idea to hire an inspector that is reputable and respected in the industry. Like any profession, there are inspectors that don’t do a good job, and repairs that may be overlooked can cause problems in the future.

A home inspection depends on the size of the home and prices typically range between $325 – $500 (more if the home is over 5,000 square feet). Prices may vary if the property has a crawl space, or is a farm or ranch with additional buildings and structures.

The cost of a pest inspection typically ranges from $200 – $300 and will also vary if the property has a crawl space or is a farm or ranch with additional buildings and structures.

It’s a good idea to inspect your home prior to selling because you will know what defects need to be repaired. Typically, Section 1 items that are revealed in a pest inspection should be repaired (dry rot, fungus, termites, wood boring beetles, etc.). Section 2 items are informational items (i.e. tile grout is missing or a tub enclosure needs calk, etc.). Various items may be revealed during a home inspection, however, health and safety issues are items that typically should be repaired (electrical, plumbing, trip hazards, water damage, roof leaks, foundation issues, etc.). Repairing these defects makes for a much smoother sale and the buyer will appreciate purchasing a home that does not need expensive repairs. Many sales fall apart because buyers are fearful of purchasing a home that requires a lot of repairs. It makes sense to inspect your home and make necessary repairs prior to selling so that there are no surprises once you receive an offer. Buyers typically have 10-17 days once an offer is accepted to have the home inspected and if your home is given a clean bill of health there is less of a chance of the buyer backing out of the sale.

A home inspection and pest inspection are usually sufficient. However, if your home inspector reveals a problem with your roof, chimney, electrical system, plumbing, HVAC, etc. you may want to hire a specialist to further inspect the particular issue.

Yes, if you hire an inspector or have copies of inspections from a previous transaction you are obligated to disclose the inspections to the buyer (you may be sued if you fail to disclose inspections or known material facts about your home).

Everything is negotiable in a real estate transaction. If the necessary repairs are too expensive you can lower the purchase price of your home to cover the cost of repairs or you can offer to give the buyer a credit from the proceeds of the sale at the close of escrow. You can also sell your property “As Is” and adjust the asking price based on the cost of repairs. Just remember that cool heads in a real estate transaction will prevail. Working with your realtor, the buyer, and the buyer’s realtor to resolve repairs will usually lead to a successful transaction.

Posted by:  Doug Hecker

Even though the government has stated the recession ended two years ago, don’t tell that to new home builders. The new home housing market has been decimated by all the REO (bank-owned) and distressed properties on the market. In fact, new home permits are at the lowest point since they began keeping such records.

The reason is simple: today, homes are being sold below replacement costs. In fact, they are being sold below the cost of labor and improvements with no value being given for land, which is the only thing we can’t replace! The result is that builders cannot sell homes at what it costs to build them, so they are not building them. This condition will not change until the banks stop flooding the market with distressed properties – which could take two to three years to unwind.

The silver lining is in the tremendous values being offered on existing inventory. Any serious buyer should consider a purchase before interest rates rise, as it is inevitable.

Posted by:  The Duran Group

As we approach spring, and all its glory – warm and sunny weather, flora and fauna, outdoor activities, an occasional rain shower, weddings, graduations, baseball, and traditionally a good time for the real estate market – is our real estate market poised to spring forward?

Over the past year, generally speaking, the real estate market in Petaluma has stabilized (certain market segments have decreased, i.e. distressed sales, while other market segments have gained some slight appreciation, i.e. those who purchased short sales or foreclosures at discounted prices). A question that I am often asked is “when is the market going to get better?” The answer to that question depends on your situation – if you’re a buyer, the market is definitely better because home prices have decreased significantly since the peak of the market in August 2005, thus making homes more affordable: lower property taxes, which are based on the purchase price, so the lower the home price, the lower the property taxes, and interest rates have been at record lows.

Many first-time buyers became disappointed when the Home Buyer Tax Credit expired in 2010, however, it’s a better time to buy now because home prices are a bit lower, interest rates are lower, and if you compare the cost of purchasing a home now versus last year when the Home Buyer Tax Credit was available, it is financially better to buy now.

Move-up buyers are also taking advantage of lower home prices. Yes, a home in today’s market is quite a bit lower than in 2005, but so is the replacement home that a move-up buyer will purchase once they sell their existing home (if a current homeowner is in a position to hold their real estate and rent it out, hopefully the property will cash flow or break even, then they may reap the rewards in the future if the property appreciates).

Another factor that may help the stability of the real estate market is the potential for a housing shortage. According to Mike Castleman, founder and CEO of Metrostudy, which tracks real-time data of the country’s inventory of new homes, a housing shortage is looming that may soon create a demand for new homes. As explained in this CNN Money article, our nation is facing a historic drop in new construction (new home inventory is currently at less than 25% of what it was during the 2006 boom). He predicts that lower prices will soon drive buyers back to the market, however, there will be fewer new homes for them to buy and it will take builders time to ramp up their construction efforts. During that lull, homebuyers will bid the prices up due to the lack of available inventory.  

Posted by:  Doug Hecker

Last time we discussed tips for buying real estate during the holiday and winter months. While inventory is down during these times, it can nonetheless be a great time to sell! There is less competition from other sellers, and the buyers out there are motivated. Here are a few more tips:

1. With leaves falling from the trees, and the landscape not in bloom, make sure you keep leaves raked, the front porch tidy, and the front walk swept. Keep that first impression positive.

2. Keep the entry inviting by putting a wreath on the front door and potted plants on the porch. Anything that sets the tone for a warm and inviting entrance into the home will be noticed by prospective buyers.

3. When the days are dreary and overcast, make sure your home shows bright and warm. Consider turning more lights on during the day, keeping window coverings opened, and turning up the furnace a bit. There only needs to be a few degrees difference from the outside temperature to make a big impact.

4. Holiday decorations can be welcoming and charming if not overdone.

5. If your landscape is particularly nice, consider putting out a small book of pictures showing the garden in full bloom. That will help prospective buyers envision the springtime panorama.

No matter what time of year, a good Realtor is an essential part of your strategy when buying or selling real estate. For more tips, or to answer any of your questions, please give me a call.

Posted by:  Deborah Byrne

I am often asked “what’s it going to take to sell my home in this market?” My answer: take the advice of your local realtor and live by the rule of the three P’s: preparation, price and patience.

Preparation: Much like any profession, i.e. an auto body, paint shop, tax preparer, or a professional athlete, being prepared for the main event is crucial to a successful outcome. An auto body paint shop will not just paint your car the way you bring it to them off the street – they need to perform hours of preparation prior to your car entering the paint boot. The same rule should apply to your home prior to going on the market for sale. Curb appeal is often overlooked because sellers focus most of their attention on the interior of their home.

A fresh or recently painted exterior is very helpful (please consult your local painter on color choices and remember that your selection should be chosen to please the masses – no cotton candy pink, lime green, baby blue or neon yellow, please!). Nicely manicured landscaping with colorful vegetation is very helpful too. Be sure to keep walkways leading to the front door trimmed – it doesn’t help when potential buyers have to fight their way through overgrown landscaping just to make it to the front door. Have your windows cleaned (both interior and exterior sides).

Now that you have curb appeal, you’ll want to keep the momentum going once the buyer steps foot into your home. A clean home free of clutter and personal paraphernalia is the key to your success. Having freshly painted interior walls (or touched-up walls if your paint is in good condition) is very helpful. If you’re going to add color, please consult an interior designer or professional painter (I often see interior paint jobs that “glow” or completely clash causing the buyers to run out of the house like they’ve seen a ghost). Flooring is also important – if your carpet is dated, stained or worn out it needs to be replaced (or at least professionally cleaned). Hardwood is very appealing so even if it needs to be refinished you’ll get a good return on your investment.

Repairs are also important to consider. A pest inspection should be performed and Section 1 items need to be repaired (i.e. dry rot, fungus damage, termites, etc.). A home inspection is not a bad idea either. If you can repair the defects it will make the escrow process a lot smoother (buyers prefer to move into a home that does not have a bunch of repairs that need to be made).

Price: Far too many times I hear the same story from my colleagues – “I spent hours researching the market and providing comparable data to my client and they insist that their home is worth more than the price I have suggested!” Your Realtor should have physically previewed your competition – not just data from the MLS (Multiple Listing Service). Often times family members, co-workers, friends and neighbors influence sellers regarding pricing strategy, which leads to an overpriced listing. An overpriced home usually ends up selling for less than a home that was priced by your Realtor because you end up chasing the market down. Pricing your home to sell quickly is key because the longer your home sits on the market the lower it’s going to end up selling. (If you don’t receive an offer in the first few weeks you should consider adjusting the price). Keep in mind that after three or four weeks on the market your home will begin to lose attraction.

Patience: The average sales cycle is about 100 days (from the time your home goes on the market to the time escrow closes). Please be patient and remember that your home will eventually sell. Gone are the days of buyers following the “For Sale” sign installers around and writing offers on the trunk of Realtor’s cars. If your home has curb appeal, is well-maintained and free of repairs, and is priced to sell, it will eventually sell. 

Posted by:  Doug Hecker

Is seller financing right for me?

7220 Hayden, Sebastopol

Seller financing can be complicated, so I recently asked my favorite lender, Megan Sovel, of Blue Oak Mortgage about the benefits of seller financing. In her usual gracious style, Megan explained seller financing for me and truthfully, there’s no reason to change up her explanation.

Seller financing IS currently permitted on Conventional Financing, given the terms and borrower qualifications conform to all of the lender’s guidelines. In short, the benefit of seller financing in today’s market is that it allows the buyer/borrower to maximize their purchasing power by minimizing their down payment.

In the past, conventional second mortgages (Home Equity Line of Credit and Closed End Loans) were a popular and smart option for buyers who wanted to take advantage of a low down payment but still avoid the added expense and qualifying restrictions that come with Mortgage Insurance. As the market has turned, however, these purchase money seconds from conventional lenders have all but disappeared as the risk has far outweighed the lender’s returns on their investment. There are currently no banks giving second mortgages above 80% of the appraised value of the property (and in most cases they cap at 70% or 75%). That’s where seller financing can comes in as a huge buyer incentive.

Assuming the seller has the available equity and is willing to carry the Promissory Note for the borrower, Fannie Mae & Freddie Mac currently allow for a combined loan to value of up to 95% of the property’s appraised value. This means that the buyer could get an 80% loan to value first mortgage through a conventional lender, a 15% seller second mortgage, and contribute as little as 5% of their own funds toward down payment. This would allow the buyer to avoid Mortgage Insurance and, in some cases, possibly qualify for a Conventional loan (versus FHA) when they otherwise wouldn’t have (due to some pretty strict current Mortgage Insurance restrictions on credit score, debt to income ratios, reserves, etc).

Additionally, the seller financing can also help make up the difference between purchase price/appraised value, and a conforming loan amount ($417,000), which carry slightly lower rates and monthly payments than High Balance Conforming or Jumbo loans.

Now, that said, the terms of the seller financing will be have to be reviewed and approved by the first mortgage lender and pass all Fannie Mae & Freddie Mac guidelines for second mortgages. For instance, the seller’s financing cannot amortize (have a term) less than 5 years from the Note date, cannot have a Pre-Payment Penalty (“early termination fees are allowed permitting they don’t exceed $500), cannot allow for any negative amortization (the borrower must make at least Interest Only payments), and cannot exceed certain limitations on rates & fees. Furthermore, in addition to qualifying for the Conventional first mortgage, the borrower WILL have to qualify for the entire principal and interest payment on the seller’s note, and the lender may require an additional review of the appraisal in order to verify that the property value meets their minimum criteria.

All in all, seller financing has some huge benefits for potential buyers. While not many sellers have the luxury of offering that option to buyers in today’s market, it can be an extremely beneficial option for buyers looking to “think outside the box” of conventional mortgage financing.

Posted by:  Martha O’Hayer

1721 Spur Ridge, Healdsburg

As you may have found, this is a testy Real Estate Market. There are no guarantees that the lenders will provide enough to cover the sale of the home. Often, buyers don’t have enough cash for a 20% or even 10% down payment. Therefore, sellers of homes in certain price ranges and regions may need to come to the table with inventive ways to attract potential buyers. I’ve seen sellers offer exotic vacations, appliances, even boats and cars to sweeten the deal.

Gifts are nice, but the most attractive incentive to a potential home buyer is a lower price. However, sometimes even that isn’t enough if comparable properties are also reduced or there is an excess of inventory. In this case, one creative option to consider is seller financing.

Here are two properties currently for sale in Sonoma County that feature seller financing. Both are lovely with fresh remodeling and seller financing may just be the ticket to make them available to a buyer who may not have the opportunity or the cash in their account to make the purchase work otherwise.

1721 Spur Ridge, Healdsburg 

7220 Hayden, Sebastopol  

Posted by:  Martha O’Hayer

As a Realtor, I am aware that short sales are here to stay for the next few years. It’s a fact that I prefer to ignore. I’m invited to attend short sale seminars by the dozens. I’m asked to embrace them as a way of life in the Real Estate World. I have yet to represent a short sale seller, by my own choice. I refer the business to someone who has the patience to deal with the lenders, the seller, the calls, the faxes, the lost paperwork, etc.

I have, however, represented many buyers in short sale transactions. Until recently, these transactions were a waiting and wondering nightmare that cause buyers to say “Why won’t anyone take my money?! All I want to do is buy a house. I have a 30% down payment and I can get a loan, why won’t anyone [seller’s lender] talk to me?” When the buyer has been complaining this way for 8 or more months, it’s hard to offer an adequate explanation. There really is no good answer. That is, until recently.

This week, my buyers received lender approval on a short sale offer we made only six weeks ago! Yes, that seems like lightening speed compared to four, five, six months with no response. Additionally, this lender is providing the seller with a $5000 move out credit. That’s right, real money to move for a seller that has been hit hard with financial woes. Amazing.

So, who is this magical lender with the power to respond to offers in 7-10 business days or less? Who can close a real estate transaction in an average of 37 business days, start to finish? Who is this lender that provides local contacts who understand our market conditions? Who is it?

It’s Wells Fargo Home Mortgage – formerly Wachovia. Wells Fargo Home Mortgage has developed a field short sale program where field managers are assigned areas where they will provide outreach to sellers about their options regarding short sales. These same managers provide a point of contact to the Realtor Community as well. In fact, the very person who approved our short sale in six weeks spoke to our local Chapter of Realtors this week in Petaluma. I was so impressed that I went up, introduced myself and shook his hand. Thanks, Sam Bedros!! You may make a short sale believer out of this Realtor after all.

Posted by:Martha O’Hayer

Traditionally, fall brings about a change in activity in the real estate market since many homebuyers plan their transactions around the school year. With school in session, sales can tend to slow. Additionally, many sellers take their homes off the market for the holidays and wait for the more favorable spring selling climate. Pair the cyclical trend with reduced consumer spending, an increasing unemployment rate and decreasing cash flow, and this would appear to be an unfavorable time to list your home.

However, we’ve seen from experience that if priced right from the start, some homes do sell in a short time frame, no matter the season. Indeed, there are buyers out there who recognize that now is a great time to purchase a home. Fueled by low mortgage rates and government incentives, savvy buyers are looking to make a purchase. Case in point: The Duran Group’s listing at 3650 Rutherford Way in Santa Rosa. Priced at $789,900, this five bedroom, three bath home with over 3,356 sq. ft and built in 2000 drew five offers and went into contract after only nine days on the market.

Plagued by the economic crisis, the spending and saving habits of Americans are being looked at now more than ever as indicators of economic recovery.

However, maybe this is a more accurate sign of what’s to come.

Are you interested in buying in this off-peak season? Click here for some tips.

Posted by:Raina Duran

The minute you decide to sell your house, it is no longer your home, your castle, or your sanctuary. Shift your mindset toward thinking of your home as a product to be merchandised. Develop a critical “buyer’s eye” and try to look dispassionately at every aspect of the property, both inside and out.

After you have made all your repairs, scrupulously cleaned and scrubbed every nook and cranny, and cleared out the clutter, you’re ready for your first showing. Here are a few tips:

• Where possible, keep blinds and drapes open. The first impression should be light and bright. Keep as many lights on as necessary to make the rooms bright, especially rooms that are naturally darker.
• Where practical, leave a few windows open to keep the airflow up. On especially hot days, keep the air conditioning or fans on. On especially cold days keep the heat on. There only needs to be a few degrees difference from the outside in order to make the home feel welcoming.
• This is a time when your hidden domestic goddess really needs to come out. Before leaving the house make sure things are picked up and tidy.
• Fresh flowers and plants are a welcoming sight. Stay away from artificial air fresheners and scented candles. Many buyers are sensitive to the perfume they use, and feel they are a sign of trying to mask something unpleasant.
• Leave the house when prospective buyers arrive with their agent. Buyers will feel freer when the seller is not there, and will linger to get a feel for the home.
• Leave the negotiating to your agent! Let your Realtor^® discuss price, terms and other factors. Don’t volunteer unnecessary information such as your motivation to sell or your eagerness to get a quick offer.
  
  

While it’s a little extra work keeping your house in “showing condition,” the big payoff will be a quicker sale for top dollar!

Posted by:Deborah Byrne

When preparing their homes for sale, most people get it that when exposing their homes to potential buyers, everything has to be clean and presentable. That, however, is sometimes easier said than done. I now include the following advice in all my listing presentations, and I hope you will find some of these ideas useful and profitable.

Rules #1, 2 and 3 are CLEAN, CLEAN, CLEAN. Baseboards, corners, ceilings, and everything in between should sparkle. Don’t forget closets and cupboards – people will look! Don’t forget carpets and windows … clean, clean, clean!

Curb appeal is crucial. Many buyers will not even go inside if the yard is unkempt, overgrown or otherwise unappealing. Many more buyers will go inside but will start mentally deducting dollars from their offer.

Clutter can kill. You don’t want buyers distracted by your “stuff.” The overall impression should be that of lots of space. Avoid putting extra belongings in closets and garages – get it out of the house if at all possible. Now’s the time to have that garage sale, call the kids to pick up their college mementos, or make the trip to Goodwill. Anything that is distracting to the eye – or the mind – should be cleared out, such as collectibles, children’s toys, pet paraphernalia, etc. Check with your local garbage company for debris boxes to save some trips to the dumps. Many people have extra computers, monitors, printers, cell phones, etc., which can’t be put in the landfill but can be recycled at Computer Recycling Center, www.crc.org. Check with them for operating hours and any restrictions.

Each room must have a purpose (singular). Buyers get confused with dual purpose rooms, leading them to fear there isn’t enough space for all their activities and “stuff.”

Make all minor repairs and touch ups. Leaky faucets, loose knobs, sticking doors and windows, and other minor flaws detract from a home’s perceived value. Have them fixed. Many buyers believe that for every problem they notice, there are 10 more hidden problems.

I don’t feel you need to remove all personalization from your home. That’s neither practical nor necessary. Remove EXCESS personalization; in other words, one or two vacation pictures are charming, but an entire wall of vacation pictures is distracting. To share your favorite selling tips, drop me a note at dbyrne@sonic.net. I’ll share your favorites on a future blog!

Posted by:Deborah Byrne