Archive for Tampa real estate
Hard Data: How Long Do “Short Sales” Take?
Once a “short sale” finally goes under contract, how long can you expect to wait for a lender’s decision? A recent Deutsche Bank study looked at the short sale aproval process of mortgage servicers. The report found that timeframes vary by loan type.
For prime loans, GMAC completed short sales the fastest – averaging roughly six months per transaction. Citigroup’s CitiMortgage took about seven and a half months. Wells Fargo averaged 8 months. Bank of America took 11 months. Countrywide, acquired by Bank of America, had the slowest timeline averaging over 13 months.
For subprime loans, Wells Fargo had the shortest timeline at just over 15 months, whereas Ocwen and Equicredit took 29 months.
For Option-ARM loans, transactions took anywhere between 8 to 13 months. See article for details.
As a CDPE (Certified Distress Property Expert) who has had over 70 short sales approved in the Tampa Bay area, I have a few comments on the study. When we submit a contract to the bank, we are assuming that the buyer will wait patiently for months without any substantive news along the way, and without any indication that the seller or the price will be approved. Short sale contracts are approved on a case-by-case basis for a specific contract with a specific buyer. Short sale approvals are not assignable to another buyer.
About half of the time, we noticed that the buyer would wait a few months and then cancel the contract because they became impatient or they found another home. When the contract is canceled, we must put the home back on the market and look for another buyer. We do not gain any benefit with the bank, as they will start the process over from the beginning the next time.
Once a home enters the market, it may require a series of price reductions and a couple months to find a buyer. If the buyer cancels after 3 months, then we would have already burned 5 months that we will never get back.
After the cancellation, it may take a month to find a new buyer, then another 5 months for the bank’s decision, and one month to close. At that point we would be 12 months into the game, right up against the foreclosure timeline. And what happens if the 2nd buyer cancels? We have seen up to 4 buyers cancel on the same home, each after waiting 3-6 months. At that point, we are in a race against foreclosure – every day that goes by is precious.
How can we keep the buyer engaged in the process and reduce the number of buyer cancellations? While some cancellations are inevitable, Team Bohannon has developed strategies to speed the process, keep the buyer informed and increase the odds that buyers will remain committed to the transaction for the duration. Call Dale Bohannon today at 813-979-4963 for more information.
Mortgage Modification Programs Not Working
As of July 2010, government programs to reduce mortgage payments for millions of homeowners have helped only about 400,000 households avoid foreclosure, though nearly 530,000 have fallen out of the program. While the bailout set aside up to $50 billion for mortgage modification programs, only $248 million has been spent according to the Government Accountability Office.
See Related Stories:
Yahoo Finance: http://bizy.be/tJEPV
Wall Street Journal: http://bizy.be/LGlYD
Home Seller Goals: Prevent Loss
Worry does not empty tomorrow of its sorrow; it empties today of its strength. – Corrie Ten Boom
A record 48% of Florida mortgage holders are underwater according to a Wall Street Journal article. The Tampa Bay economy and housing market have brought many homeowners from security to uncertainty. Many of us who bought or re-financed during the boom years have seen our equity, hopes and options fade. When faced with a 30% – 50% loss of equity, many homeowners are working the seven stages of grief: denial, bargaining, regret, anger, depression, resignation and acceptance. We at Team Bohannon understand the real stress this has caused and are here to help you obtain the highest possible price in today’s marketplace.
If you are straddling the line between profit and loss, then you need real answers and real results. No homeowner wants to bring a check to the closing table or take out a loan to pay off the loss. If you could sell your Tampa home for 10% more, what would that mean for your financial future? If you can sell for 10% more today, then you have an opportunity through the time value of money to dramatically increase your long-term wealth. One dollar today could me worth 11 dollars when you retire.
While forces such as the local economy, interest rates and foreclosures are beyond our control, there are factors we can control such as: the pricing strategy, the condition of the home, staging, marketing and negotiating. You can directly impact the final selling price with the right expertise and proactive planning. You deserve to sell at the high end of the price range.
Don’t settle for an agent or vague promises. For an experienced team with a proven business system, contact Annette, Doug or Dale Bohannon at Coldwell Banker today.
Home Seller Goals – The Big Picture
If you don’t know where you are going, you might wind up someplace else. – Yogi Berra
What motivates you to start a new chapter in your life? The first step in our Home Selling System asks the right questions to understand your specific objectives. Asking and listening are the foundation of a successful relationship. The result should be a set of clear and measurable goals to improve your circumstances and reduce uncertainty. Your goals will drive the home preparation plan, the marketing strategy and the negotiation platform.
Regardless if you are trying to maximize profit, avoid loss, or reduce a short sale deficiency, you deserve to sell for top dollar. Fancy tools and training would be useless without a real understanding of our client’s expectations. Focusing on a core set of clients at any given time allows us to have a deeper understanding of what really matters to you.
We need to know about your financial goals. How important is the timing of the sale? Do you plan to improve the condition of the home prior to selling? What significance would this sale have in your life? What expectations do you have of your Tampa Realtor? What would you have changed about your past home-selling experiences?
Once your priorities are understood, a marketing plan and advertising tactics can be implemented to meet your goals. Once your motivations are clear, a negotiating strategy can be executed to put you in the best possible position.
This is all about you. Our role is to help achieve your goals. We rely on listening, experience and systems to anticipate your needs. All the details matter! We seek to become your trusted advocate by proving what we can do for you and your family. By achieving your desired results, we can build a relationship based on a solid foundation. As management guru Peter Drucker said “The purpose of business is not to make a sale, the purpose of business is to make and keep a customer.”
Price to Market – Anchoring
If only we did not buy at the peak, or if we sold a few years ago! While many of us understand that local real estate values have declined 30% – 50% in abstract terms, doing the math on our own home often results in shock and disbelief.
Homeowners have a tendency anchor their estimate of their home’s worth to the price they paid. While the price you paid maybe very vivid in your mind, you may be better off disregarding that number. As Dan Ariely, author of Predictably Irrational notes, “the danger of anchoring is that it can cause regret, which usually isn’t very useful in decision-making…With investing, focusing on what’s already happened is generally a bad strategy. The decision at any point should be only about looking forward.”
When discussing the “High Price of Ownership”, Ariely’s experiments on behavioral economics show that ownership changes our perspective on the value of an asset. “The more work you put into something, the more ownership you begin to feel for it (think of assembling a piece of Ikea furniture). Once we take ownership of an idea, we probably fall in love with the idea more than we should. We value it for more than it’s worth. And quite often, we have trouble letting go of it because we can’t stand the idea of a loss.”
It is only natural to regret the loss of equity and unfortunate timing of the current market, but taking action today can protect your financial security and prevent the additional losses that are expected over the next few years. The main question should be: given the current state of the market, how can we maximize your outcome?
How can we improve the odds of selling your home for top dollar? To learn about our repeatable plan and home selling system, contact Team Bohannon at Coldwell Banker today (813) 979-4963.
Closing Costs Clarified
How much closing costs should a home buyer expect to pay? Closing costs average 5% of a home’s purchase price.
Closing Cost Estimates
Looking for the exact amount? Lenders are required to disclose all closing costs within three days of when a buyer applies for a mortgage. The forms used to list closing costs have been standardized and simplified. The new Good Faith Estimate (GFE), circa January 2010, helps buyers shop and compare costs from different lenders. Lenders are held accountable to ensure that all costs, even title fees, on the Good Faith Estate match the final numbers on the Settlement Statement (HUD-1).
Who Pays What
While Tampa area home sellers pay for the owner’s title policy, commissions and state doc stamps on the deed, buyers are responsible for: lender fees, the lender’s title policy, doc stamps on the note, home insurance, pre-paid taxes, and prorated CDD / HOA fees. See this RIS Media report on new HUD & RESPA regulations.
Buyer Costs Will Increase
If the amount of cash required to close is an issue, potential home buyers may want to act now. Tampa home sellers can still pay up to 6% of a buyer’s closing costs, but those days are numbered. New FHA guidelines will be phased in over the coming months that will reduce seller contributions to 3% most likely, and will increase the financed Mortgage Insurance Premium (MIP) by a half percent. We expect to see loan costs increase in the coming months as: lenders require larger down-payments (6% up from 3.5%), tax credits expire, credit requirements tighten, and interest rates increase from historic lows.
To take advantage of this historic buying opportunity, contact Team Bohannon at Coldwell Banker today at (813) 979-4963.
Social Media Presentation
We are witnessing the birth of social media. Why do we care? Team Bohannon’s goal is to maintain and strengthen our client relationships by delivering high-value, relevant content more quickly. Most people buy a home once every seven years, but most Realtors do not stay in touch with past clients for seven years. We use social media to meet clients where they are online. We want to understand our clients online behavior, what and whom they value, and how they might use social media in the context of real estate.
In researching the use of social media in real estate, I came upon this general presentation that offers a helpful look at “Understanding You Customer’s Social Behavior” posted by the Altimiter Group from the other bay area:
Why Buy Now? 2010 May Bring Higher Overall Costs
Should you wait and see if home values in the Tampa Bay area drop further before buying? Everyone wants to pay the lowest possible price. The sales price, however, is not the only factor that determines monthly payment if you will be financing the purchase. A 1% increase in mortgage interest rates would result in a higher monthly payment than an additional 10% drop in value.
The financing cost associated with buying a home should increase as the federal government begins easing off stopgap measures to boost the housing market over the next few months. What factors will cause the increase?
- Tax Credits for First-Time Home-buyers & Move-Up Buyers are set to expire
- Upfront Mortgage Insurance Premiums for FHA Loans will go up a 1/2 point
- Credit Requirements for FHA Loans have been tightened
- Down Payment requirements for FHA Loans might increase to 6% (up from 3.5%)
- Interest Rates are expected to increase from historic lows
- Seller closing cost contribution limits may decrease from 6% to 3%.
Government sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac have been the primary buyers of mortgage backed securities. The $11 trillion U.S. residential mortgage market has been dominated by GSEs since private investors exited the market in 2007. The Federal Reserve is set end its program of purchasing mortgage-backed securities by March 31. Such a move would likely cause mortgage rates to climb from record lows because private investors would demand higher returns to purchase residential mortgages. When combined with the above factors, we see cash-to-close and loan costs going up.
Consolidation in the credit markets may also be a factor. The concentration of power in the mega-banks, backed the Federal government guarantees, is limiting consumer choice. The remaining mega-banks can afford to enforce tighter requirements and charge higher rates since since much of their competition has been eliminated. Disintermediation has not been our friend.
To learn more about the Tampa real estate market and factors impacting home buying, contact Dale Bohannon at (813) 979-4963.
Don’t Get Soaked By Flood Insurance
We almost had a 300K short sale transaction fall apart at the last moment over flood insurance. The current owner was paying $1600 per year and the quote for the buyer’s insurance was $6000 per year because this older home was located in a Pinellas County flood zone that had recently changed. The high cost would have impacted the buyer’s loan ratios and willingness to buy. Flood insurance is not assumable if less than 6 months remain on the policy. The heroic efforts of everyone involved resolved the situation when we discovered the home was grandfathered into a different classification because the building permit was issued before the flood zones changed.
Why You Need Flood Insurance
Anywhere it rains, it can flood. While coastal areas have a higher risk of flooding, inland areas may also have a topography that is prone to flooding. Lenders insist on flood insurance if a property is located within certain flood zones to protect their collateral – the home. Most newer subdivision must be built at elevations above sea level and do not require flood insurance policies.
Elevation Certificates
If your lender and/or insurance agent claim that your home is in a flood zone, we may be able to obtain a Federal Emergency Management Agency (FEMA) elevation certificate, or flood certification, to verify that a home is above sea level and therefore may not need flood insurance. FEMA Flood Elevation Certificates are done by licensed Florida engineers in order to determine how much Flood Insurance a homeowner will have need. Sometimes flood zone classifications are incorrect. Even if a home in located within a flood zone, it may be grandfathered into a different classification. You might also perform a flood risk analysis to see how your home compares to FEMA’s risk assessment.
Flood Zone Maps
Flood-hazard maps have been created to show different degrees of risk for each area. FEMA updates digital flood maps and revises flood zones to offer up-to-date risk assessments. Click these links for Hillsborough County Flood Hazard Maps, Pasco County Flood Zones or general information from the Southwest Florida Water Management District about the watershed and the floodplain. See Flood Insurance Guide and consult flood insurance providers for more information.
If you are looking for an agent who has been in the trenches dealing with these issues for years, look no further. We have an experienced team, a repeatable contract-to-close process and an automated transaction management system to provide the peace of mind you deserve. Contact Doug or Dale Bohannon at (813) 979-4963.
Low Down Payment & First Time Homebuyer Loans
Looking to buy Tampa real estate with little or no money down? There are affordable home loans available for first-time home buyers looking to realize the dream of homeownership. If you are concerned about employment history, income qualifications, credit score or down payment assistance (gifts or grants), there are programs available today.
Government Sponsored Loan Programs
The obvious candidates are U.S. Government sponsored loan programs from FHA, VA and USDA. Some of these programs allow purchasing a home with no money down, while others allow seller credits toward closing costs.
Down Payment Assistance
Federal, state, city and county grant programs can also offer down payment assistance that makes the critical difference. The Florida Homebuyer Opportunity Program (FL HOP), Hillsborough County’s First Time Home Buyer Program and Pasco County’s Hombuyer Assistance Program are other places we can turn. See How to Buy a Home With a Low Down Payment. Not every lender has up-to-date information about the ever changing range of options that may help you move in to the perfect home.
Team Bohannon uses a systematic Lender Evaluation System to help you make better decisions and avoid costly mortgage surprises. To find the best loan, contact Doug & Dale Bohannon at Coldwell Banker today (813) 979-4963..
