Betty Bondi

Understanding the Foreclosure Process

 Having had my real estate license for over twenty three years, I don’t remember a time when I have seen so many short sales and foreclosed homes on the market. It is very clear that the economy has made a negative impact on the real estate market.

But all is not lost. New buyers have flooded the market due to declining home values and affordability for the first time in many years. This has resulted in an up tick of sales in the spring market which is quite an improvement from last year.

 I have questioned exactly why home owners are losing their homes. Could it be because they have lost their jobs? Have they over extended themselves with debt and can’t hold onto their homes anymore? Do people feel that because they are “under water” with their home and don’t feel that it is worth paying for anymore? I feel that it is a little of all of these reasons. That is what leads me to this month’s topic….understanding the foreclosure process.

 Foreclosures affect all of us. You may have a neighbor who is losing their home through foreclosure. Unfortunately this will also have an affect on your home value too.

 Foreclosure is not the most cheerful thing to think about, but it is an element of reality every homeowner should be aware of and comprehend fully.

We fear what we don’t understand. The concept of foreclosure is frequently misunderstood. Understanding the concept of foreclosure maximizes your ability to take action to improve your situation.

 What is Foreclosure?

 Foreclosure is a legal process which culminates in a mortgage lender selling or repossessing the home of a borrower who stopped making mortgage payments.

It starts with a series of events that begins when a homeowner defaults or stops making his or her payments. This usually happens because of a life crisis which impacts their income or because their loan payments increased beyond their ability to pay them. The series of events ends when the mortgage holder sells the home at auction, or takes the home back from the owner.

 How it affects homeowners

 Foreclosure starts when you are at least 90 days behind on your mortgage payment. Then, the foreclosure process is represented by a series of notices you get in the mail and even posted on your front door over a 4 to 6 month period of time telling you that you have two options ….either make your past due mortgage current or come to some compromise with the lender or your home will be sold and you will have to move out. At the end of these notices the lender could sell your home at an auction or simply takes ownership of it and you our out. Most of the foreclosures are showing up on the multiple listing services as banks are so overwhelmed that they are using local realtors to move the properties. Your options, rights and responsibilities change depending on what phase or stage of the foreclosure process your home is in at any given moment.

 How it affects home buyers

 Foreclosure is a series of phases of distressed property ownership. During your house hunt, there is a very good chance that you may run into properties whose current ownership status is in foreclosure. Once a home has reached this step it presents a different set of considerations, legally, logistically and from a bargaining perspective, impacting how desirable a property may be to you as a buyer. Most foreclosed homes are usually in need of a lot of work. It’s not very often that you will find an updated property.

 Post foreclosure properties – REO

 REO means Real Estate Owned. This is just another name for a bank owned property that has gone to foreclosure.

 The advantage to buying one of these properties is that the bank is motivated to get the property sold and will negotiate price, down payment, escrow and closing costs.

The title will be clear and the buyer will not take on any liens, back taxes of prior owners.

Inspections and mortgage financing are allowed within the normal due diligence period.

The house will be vacant and in the majority of times it will be listed on the local Multiple listing system. Most REO properties close within a normal escrow period time.

 The disadvantages are that the banks will not do any repairs and you will purchase the property as-is. The bank does not provide property condition disclosures. When buying an REO property you will be subject to a large amount of bank paperwork.

 There are REO homes on the market that don’t qualify for a conventional mortgage because they need total rehab. These homes, which are sometimes the best buys, usually require cash to acquire them. Local builders and investors are doing just this and refurbishing the homes to their former splendor.

Please contact me to learn more and recieve foreclosure listings.

 Betty Bondi

www.Bondirealtygroup.com

203-899-9990

The State of the Market Second Quarter 2010 

The home buyer’s credit program has come to an end. It was a good incentive program for new & current homeowners to purchase real estate. The new buyer’s home credit was for up to $8000 and you were eligible if you didn’t own a home for three years. A $6500 tax credit was available if you have owned and occupied your home for at least five consecutive years. The original deadline was, that you had to purchase another home and have a signed contract by April 30th and close by June 30th, 2010. On July 1st the house voted to extend the deadline to September 30th. Currently there is a backlog of homes that haven’t closed because the banks are bogged down with so many sales, however your original contract still had to be signed by April 30th. Based on the numbers of sales that happened this year, I would say that it had a definite impact on the local real estate market as it pushed quite a few buyers to get off the bench and make a decision to purchase a new home.

In today’s market home values have been pretty hard to set. The appraiser plays a very important role in setting the sale price. He or she has to be accountable to the lending institution and the banks are being a lot more cautious. Sometimes your home appraisal can make or break a deal. If the opinion of your home’s fair market value is below what the buyer agreed to pay then the low appraisal will throw a wrench in into the sale.

If you get word that the buyer’s appraisal came in below value, what can you do?
Don’t get discouraged; take a look at the appraisal to see if the correct comparables were used to justify the price. If that is the case then you may need to renegotiate your selling price.

You are not alone as declining values and extremely cautious appraisers are causing this issue to come up more frequently. Appraisers are not the bad guys, they are just under a lot of pressure these days as the inflated appraisals and poor lending decisions from the past are to blame for the record number of foreclosures and short sales on the market today. Nowadays, appraiser’s licenses and livelihoods are on the line when they say what a home is worth. This makes them much more critical of every property than ever before.

If you are concerned about how this will impact your deal then be clear about your numbers. Know what your bottom line is and what purchase price will and won’t work for you. Let that be your guide when you renegotiate with the buyer. If the lower value is justified by the comparables then it’s not likely to change with another buyer or another appraiser. It’s your decision to choose whether to take a price reduction and close the sale or forget about selling and stay in your home. This is a very common event that is happening in the market place at this time.

For example a low appraisal affected one of my sales last month. The seller and buyer renegotiated the price because the appraisal came in lower than the original purchase price. Happily the buyer & seller were able to resolve this quickly which resulted in a closing.

Let’s see what is happening in the market place at this time. The data was pulled from the Consolidated Multiple Listing system.

As of July 1st 2010 Norwalk is showing an increase in inventory and sales compared to last quarter. Currently there are 499 single family homes on the market and 313 condominiums for sale. In 2009 sales from the first quarter were 67 single family and 42 condos. The second quarter 2009 reports 100 single family and 53 condo sales. In the first quarter of 2010 there were 426 single family and 306 condos for sale. The first quarter in 2010 recorded sales of 96 Single family homes and 52 condos. The second quarter from April to June 30th recorded sales of 144 single family home & 62 condos.

Westport is currently showing an inventory of 392 single family homes and 32 condos on the market.
In the first quarter of 2009, 28 single family homes and 2 condos sold. In the first quarter of 2010 there was an increase in sales of single family homes to 51. Condo sales remained flat with only 2 sold in the same time period. Second quarter 2010 sales report 89 single family homes and 12 condos sold.

Wilton is currently showing an inventory of 181 single family homes and 27 condos for sale.
In the first quarter 2009, 14 single family homes and 1 condo sold. In the first quarter 2010, 22 single family homes sold and condo sales were up a bit to a total of 3.
Second quarter 2010 sales report 63 homes & 11condos sold.

April started off pretty slow but at the last minute, tax credit intoxicated buyers flooded the market scrambling to cash in before the deadline. I am happy to report that the tax credit, created momentum within the market place. There has been a pent up demand and the buyers are out right now looking for their new digs. Hopefully this momentum will continue into the rest of the year as mortgage rates and home prices are the lowest they have been in years. If you are in the position to buy a home, now is a great time to take advantage of this marketplace.

Betty Bondi
Owner/ Broker
www.BondiRealtyGroup.com
203-899-9990

 It seems to be the questions that everyone is asking right now.

What is going on with the real estate market? Are homes selling right now?

 I am happy to report that I have good news! After a sluggish winter it seems that the buyers are ready to spring into action. There has been a pent up demand which has driven a late spring market into action.

 Single & multi family homes are the best sellers with condo sales lagging behind. Condo sales are still slow due to bank financing issues. Even though this is good news, home prices are still declining at this time. There is a high property inventory which is keeping home prices down at this time. Another reason for declining home prices is the fact that there are still many foreclosures and short sales affecting our local real estate market.

 Today I am going to talk about short sales. Everyone wants to know what a short sale is.

You probably hear it all of the time, your friends & family telling you that you should buy a short sale or foreclosure, because you will get a great deal. Sometimes you can get a great deal and other times it can be more than you bargained for.

 Short sales, despite the name, have always taken a very long time to process. That is because the short in short sales refers to a shortage of money and not time. Short sales are sales in which the seller’s proceeds will be less than his outstanding mortgage debt.  Buying a home via short sale allows a property owner to sell their home for less than what is owed on the mortgage with the lenders approval.

 Why would the seller want to go through this process? For the homeowner a short sale can be a lifesaver compared to having your home foreclosed on you. This is still a distressing situation as you will end up losing your home with only $1500 to show for it. However this process enables the seller to leave with some dignity, hopefully less stress and taking a lesser hit on your credit scores, than taking the foreclosure route.

 For the home purchaser, short sale homes can be a deal, but aren’t likely to be a steal. It is very common for a seller of short sales to receive offers that are extremely low in relation to asking price. The offers must be approved by the bank that holds the loan. This can take a very long time as many banks only review one bid at a time and can take up to 10 days to respond. At that time you can submit a new offer, but the cycle repeats itself until all parties are in agreement. If the property is not an approved short sale, then it can take up to 6 months or longer to close. Many buyers walk away at this point, due to frustration and not being informed right at the start from their real estate agent. It is vital that you work with an experienced professional realtor especially when working with short sales or foreclosed properties.

 Get your financing in order. The banks are tough customers when it comes to a purchaser submitting a bid on a short sale. Currently the response to any properties that are underpriced in our market place is a bidding war. Yes, a bidding war still happens with properties that priced below market value. There are investors out their right now looking for properties that they can either flip or rent out until the housing market turns around. Make sure that your money is in order and if you have cash to pay for the property then you are in the driver seat. Cash and a quick closing will make it easier for you to negotiate a great price with the bank. If you don’t have cash, then you must have a pre approval in place with a lending institution. Without this in hand, it will be difficult to make the process work for you.

 Our team at Bondi Realty has the experience in the market place working with short sales and foreclosures. If you have any questions regarding today’s article please contact us at 203-899-9990.

 Betty Bondi
Bondi Realty Group LLC