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Five keys to smooth sales and bargain buys in a slow housing …

(ARA) – Not everyone who relocates has the luxury of doing it when school is out and the yard looks beautiful. If you’re forced to sell your house and/or buy a new one outside peak season, you might have to work a little harder and think creatively.

Anyone who has bought or sold a home has heard the standard advice: find a good agent, be aware of local home values, fix up the house you’re selling and research school districts and crime rates where you’re buying.

“It’s all good advice, but it’s not always enough,” says Rich Novak, assistant vice president of Home Solutions, with USAA, a full-service financial services provider serving military personnel and their families. “Families who need to move quickly during a tough real estate market may need to go the extra mile to close a sale.”

Keep these five themes in mind from the moment you start planning your next move:

1. Dig deeper: you probably already know to use neighboring home values as a comparison point for selling or buying. but in today’s market, some additional homework can pay off. If you need to sell quickly, for example, keep a close eye on what other houses are selling for in your neighborhood and stay ahead of the market by pricing yours lower. In the wake of the bursting real estate bubble, it’s also important to have a heightened awareness of foreclosures, both where you’re selling and buying. as unfair as it seems, any foreclosures on your street can put a dent in your home’s market value. And if foreclosures are still prevalent in the neighborhood you’re moving to, it could be a warning sign that values could continue to drop after you buy.

2. be involved: just because you’re working with a realtor doesn’t mean you can’t do some of your own legwork.

“The first 10 days on the market are the most critical to selling a home because new listings tend to get the most attention from buyers,” says Brenda Wall, relocation director with ERA Colonial Real Estate in San Antonio, Texas. “Anything a seller can do to get their home ready to sell before putting it on the market would be helpful, including de-cluttering, cleaning, painting if needed and making the home look spacious and bright.”

The Internet and social media have opened limitless new strategies to sell your home and find your next one. Try Craigslist, Facebook, Flickr, and YouTube. And don’t be shy, say real estate agents. when you’re selling, post pictures that show your home at its best and upload a narrated video tour – because that’s what you’d want to see as a buyer. at some real estate agencies, a video tour is becoming the new requirement for sellers.

3. Accept a helping hand: take advantage of a wide range of services, beyond your local realtor’s, that could help you streamline the buying and selling process. Some cost money, such as home “staging” services that can help whip your house into selling shape. others are free, such as relocation benefits offered by some employers, or the military’s Homeowners assistance Program. One free service actually helps you while you are out and about looking for a place to live. for example, Home Circle from USAA provides free home search services on the Web and through an iPhone app that gives you access to the same comprehensive listing information real estate agents use, driving directions to the homes you’ve searched and organization of pictures taken to help you keep track of all the homes you’ve seen. Chances are you qualify for some type of assistance through an employer, the government, or an association you belong to – you just have to ask.

4. get creative: Sometimes it takes out-of-the-box ideas to seal a deal. If you know that a potential buyer is wavering on whether to make an offer on your house, buck convention by making a “reverse offer,” where you try to win the sale with an attractive price. Sellers might also sweeten the pot with extra incentives. Money toward closing costs or prepaid homeowner’s dues are common buyer incentives, but why not set yourself apart by offering a free trip to a beach resort?

If you’re the one buying but can’t find the perfect house, ask your agent to look up houses that were recently taken off the market. you might be able to request a “one-time showing” and get a bargain price on a house the owners thought they couldn’t sell.

5. Remain flexible: According to the experts, buyers and sellers should keep their pride in check and be willing to make some concessions, especially in a tough market. That means not haggling over minor repairs or refusing to leave behind the chandelier your potential buyer loves. Factor in the cost of keeping up your home for several more months versus just accepting a lower selling price today.

“Always think in terms of the bigger picture. Don’t lose a deal over $500,” says Jodi Van Wagner, a Coldwell Banker agent in the Pensacola, Fla., area.

Even in the most sluggish real estate market, an early start and an open mind are two of the best strategies to make your next move go smoothly.

Courtesy of ARAcontent

Five keys to smooth sales and bargain buys in a slow housing …

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Progressive Urban Real Estate: How to Navigate Short Sales

How can you get in on a good short-sale deal? It takes a certain amount of fortitude and patience, plus a lot of luck.

What’s a short sale?

Selling a home for less than the amount the current owner owes the mortgage company is called a short sale.

Buying a home that is a short sale is different from buying a property that is actually owned by the bank, known as an REO, or real-estate owned property, or a property that is in foreclosure.

All of this sounds arcane, but it’s lingo that anyone shopping for a home needs to understand to navigate today’s marketplace.

A short sale can be a good deal for a buyer, and it can help the seller avoid having a full foreclosure on his or her credit record. although a short sale and a foreclosure negatively affect the seller’s credit score, in a short sale the damage can be minimized if the homeowner can persuade the lender to report the debt to credit bureaus as “paid in full.”

In a short sale, the proceeds from the transaction are less than the amount the seller needs to pay the mortgage debt and the costs of selling. For this deal to close, everyone who is owed money must agree to take less — or possibly no money at all. That makes short sales complex transactions that move slowly and often fall through.

An extension of the government’s housing rescue plan could make it easier to buy short-sale properties. The new version of the making Home Affordable plan will pay lenders up to $1,000 if they allow a short sale of a property when the owners don’t qualify for loan modification because they owe too much money on the home. The program will spell out a short-sale process and provide standard documents, the U.S. Treasury says.

The government’s plan probably still won’t help if there are multiple liens on the property, but it should encourage lenders holding the first mortgage to move the process along.

Keep your eyes wide open

If you’re house hunting and spot what seems like a great deal, chances are good that you are considering a short-sale property.

Most of the time, the seller has already fallen behind on the mortgage, but occasionally the seller is current but unable to continue to pay because of ill health or job change. This is particularly true in parts of the country where home prices have fallen significantly.

Before you rush in, consider the issues. The advice below comes from Scott Thompson, senior vice president of Mortgage Resolution Services, a distressed sales consulting company, and Vicki Vidal, associate vice president of government affairs for the Mortgage Bankers Association.

Know what you are getting into. Under the best circumstances, short sales take a long time to close and may require extra effort on the part of the buyer. Walking blindly into a short sale can be a losing and distressing proposition, so push for disclosure before you get involved, Thompson says.

This is not a do-it-yourself project. find a real estate professional who understands the territory. having a real estate agent on your side who knows how short sales work and who has negotiated others will increase the chances of closing the deal.

“I would ask the agent to provide references, specifically on an REO or a property that was in short sale,” Thompson says. “You certainly don’t want someone who is a shrinking violet.”

Thompson and Vidal advise staying away from “short-sale counselors,” those who say they can jump in and expedite the deal. Their game often involves negotiating a low price with the lender, charging the buyer more money — often significantly more money — and pocketing the difference. This “counselor” probably won’t make the deal go any more smoothly for you and certainly won’t do you any favors pricewise.

Be wary of the condition of the property. if the seller is in financial distress, chances are the home may not be well-preserved. The seller also may be reluctant to reveal serious maintenance issues. Proceed cautiously and get the property inspected by a knowledgeable person before you commit.

Make sure the deal has a prayer of closing

If you’ve decided to go for it, the first step is to have your real estate agent talk to the real estate agent representing the seller and determine the status of the short sale. below are items that most lenders require from a short seller. if the seller is unable or unwilling to provide this information, the short sale won’t close and any buyer is wasting his or her time. Your real estate agent should push for candor from the seller’s agent.

A hardship letter. The seller must explain why he or she cannot continue making payments. The sadder the story, the better. a seller who is simply tired of struggling probably won’t be approved, but a seller with cancer, no job and an empty bank account may.

Proof of income and assets. if the seller has money in the bank, including retirement funds, it is unlikely that the lender will let the debt slide. This package of information must include income tax and bank statements, going back at least two years. Sometimes sellers are unwilling to produce these documents because they conflict with information on the original loan application, which may have been fudged. if that’s the case, this deal is unlikely to close.

Comparative market analysis. This document shows that the price of the property has declined and that the property won’t sell anytime soon for the amount owed. This packet of information should include a list of comparable properties on the market and a list of properties that have sold in the past six months or have been on the market in that time frame and are about to close. This packet of information is similar to what’s known as a Broker Price Opinion, which is less formal but often more informative than a property appraisal. The prices should support the seller’s contention that the property is worth no more than the short-sale price.

A list of liens. There may be more than one, so determine how many liens are on the property. The good news is that since late 2008, the IRS has been willing to release a federal tax lien. The IRS is not forgiving the back taxes that homeowners owe; it is just no longer requiring that the lien be paid off before the property can be sold. And a single mortgage lien is an easy problem to solve.

If there are first and second mortgage liens, the question becomes: What’s the plan to satisfy these lien holders? The seller and the real estate agent should have a plan that is more sophisticated than crossing their fingers, Thompson says. In the best of all possible worlds, the seller will be willing to contribute to paying off the second lien, so the first lien holder gets the full amount from the sale.

If there is a third mortgage lien, reaching any deal is very iffy. Deal killers include child support liens, state tax liens and homeowners association liens. if they exist and there are no obvious solutions, walk away, Thompson says.

Here’s one more deal killer, something that can be difficult to sleuth out, says Thompson. Because a short sale generally doesn’t cover the whole amount owed or other liens, it can trigger mortgage insurance. if the property is covered by a mortgage insurance policy that doesn’t have to pay off until the home has been in foreclosure for 150 days or some similar length of time, chances are the insurer will hold up the sale because it won’t want to pay any earlier than necessary and hopes the foreclosure will just disappear. often the mortgage insurer will simply go silent. Thompson says: No response, no approval.

Be realistic

The bottom line: Don’t choose a short sale if you’re in a hurry.

“It’s a waiting game,” says Vidal.

Part of what slows down short sales is buyers’ insistence on making really lowball offers, she says. “You get really crazy, ridiculously low offers — and they are rejected.”

Another factor is the increasing number of government programs aimed at keeping people in their homes — about 50 percent of defaults never go as far as foreclosure, according to the Mortgage Bankers Association. so lenders see short sales as potentially the least attractive option and aren’t willing to expedite them.

How can a potential short-sale buyer be protected from getting involved in an extended negotiation that doesn’t go anywhere in the end? Thompson says you should negotiate an agreement with the seller and the seller’s real estate agent that your offer will be the only one presented to the lender. if the lender isn’t flooded with offers, it will be more motivated to move forward. if the lender turns down the offer without countering, then the restriction disappears.

Once you’ve crafted a deal, you better know where the money is coming from to close. if you’re getting a loan, you need bank approval in advance.

As is true with any of these deals — REOs, short sales, foreclosure auctions — make sure you have money lined up. Cash is the best financing alternative in these cases.

Progressive Urban Real Estate: How to Navigate Short Sales

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