Where to find a Short Sale Incentive Program. Some of the larger Banks are now offering Short Sale Incentive programs in a effort to convince underwater homeowners to short sale their home. Short Sale incentive programs were created in an effort to help homeowners who can no longer keep up with paying their mortgage avoid Foreclosure. The U.S. Treasury came up with the Home Affordable Foreclosure Alternative (HAFA) Program. This program will allow the underwater homeowners who qualify to Short Sale their home rather than go into Foreclosure.
Foreclosure can seriously affect the credit of the homeowner for up to seven years. To help homeowners avoid this predicament, the government has developed programs to help homeowners get out of debt with their home and get on with their lives.
With the HAFA programs available qualified homeowners will be able to receive money upon giving up their homes in order to avoid foreclosure.
Short Sales are considered to be the most advantageous and practical solution for homeowners and banks to get out of a financial debilitating situation.
Banks can write off a bad loan and homeowners can avoid a foreclosure.
The homeowner who qualifies for a short sale will receive the Short Sale incentive offered by banks at the closing. Short Sale Incentives could be considered taxable income so it’s best to consult with your accountant or CPA for professional advice. Usually, borrowers are not taxed for any deficiency amount forgiven due to the Mortgage Forgiveness Debt Relief Act.
HAFA: Fannie Mae and Freddie Mac participate in HAFA.
- Borrowers will receive $3,000 at the end of the short sale to help with relocation expenses.
- Servicers will receive $1,500 after a successful short sale.
- Investors will receive a max of $2,000 for overhead to second position lien holders.
- Investors will also receive $1 for every $3 spent to release junior liens up to 6% with a maximum of $6,000.
In order to qualify for HAFA, borrowers must already meet the central eligibility criteria for the HAMP modification program.
- The Property must be the homeowner’s primary residence.
- The loan must be the first mortgage on the premises.
- The homeowner must be delinquent in payments or can anticipate nonpayment in the near future.
- The unsettled balance cannot exceed $729,750.00.
- The borrower’s monthly mortgage payment must be more than 31% of the homeowner’s gross income.
Some other Short Sale Incentive Programs:
Wells Fargo/Wachovia Cash Back Short Sale Incentives-Wachovia’s Fast Track Program introduced in 2008 was the first lender incentive program, offering up to $5,000.00 back! Wells Fargo, after the merger offered $3,000.00 – $5,000.00. Wells Fargo has one of the fastest Short Sale approval ratings.
Bank of America is offering $2,500.00-$30,000.00 Short Sale incentives to qualified homeowner.
Chase Bank is now sending certain borrowers letters offering them the option of participating in a short sale for a significant incentive (often between $20,000 and $40,000 dollars).
While these are not all of the incentives available, they are definitely the most common ones. Now might be as good a time as any to consider a Short Sale.
Nationally we are seeing positive signs of recovery and a turning real estate market across all price points with the exception of a few weak housing markets.
USA Today reported that the number of existing homes for sale (inventory) dropped to 22% from a year ago.
The National Association of Realtorsreported a rise in home prices in 74 of the 146 housing markets they track in the first quarter of 2012 vs. declines in 72 areas.
Let’s look at some encouraging statistics for first quarter 2012:
- In Phoenix the March Inventory was down 64% from a year ago.
- The National Association of Realtors reported that there are a shortage of inventory of homes for sale in Phoenix,Orange County,California,Naples,Florida,Seattle, Suburban Washington, DC andNorth Dakota.
- According to TransUnion mortgage delinquency rates dropped from 6.19% in the last quarter of 2011 to 5.78% in the first quarter of 2012.
- Investors accounted for 22% of buyers.
- Condo prices rose 3.4%.
- All cash transactions made up 31% of all sales.
- Existing home prices were up 5.3% and are the highest level since 2007.
- The hardest hit markets are now among the top recovering markets.
Bargain Home prices will not get much cheaper than they are right now. Several housing experts are predicting that 2012 will be the last chance to cash in on the best deals of the weak housing market. Homes have never been more affordable…. but it won’t stay this way for much longer.
Home prices are down 34% since 2006 and mortgage rates are at historic lows. The mortgage rate reached a record low today.
Housing markets are beginning to stabilize, and in some cities, such as Phoenix we see the turnaround beginning as the once bargain home prices are starting to rise. Phoenix recorded an 8.4% jump in during the three months ended April 30, compared with the three months ended January 31, according to Clear Capital.
Some key indicators:
- Foreclosures are diminishing
- Demand for home is picking up
- Mortgage rates remain low
Foreclosure inventory is shrinking
The percentage of mortgage loans 90 days or more late, a good predictor of future foreclosures, is “falling fast.” That percentage dropped 15% year-over-year to 3.1% through the end of 2011, according to the Mortgage Bankers Association. And the decline is accelerating: More than 70% of the decline came in the last three months of the year.
Before things slow down, however, buyers should prepare for a temporary spike in the number of foreclosures as banks start expediting the processing of their shadow inventory. That backlog should move more quickly now.
Investors have been key in the clearing out the foreclosure inventory in Phoenix, and many are still out there snapping up foreclosures and turning them into rental properties.
Home buying is now much cheaper than renting.
The demand for rentals escalated when hundreds of thousands of homeowners lost their homes and needed to find rentals for their families. This demand has caused the rental rates to rise over the last couple of years.
Mortgage Rates are at record lows.
Mortgage rates have been at or near historic lows for much of the past six months. The average interest rate for a 30-year, fixed-rate mortgage has not topped 4.5% since July 2011 and this week, it hit 3.84%, a new low. But rates aren’t expected to remain at these record-low levels much longer. This may be the last chance you have to get a 3.8% mortgage.
The Mortgage Bankers Association is forecasting that the 30-year fixed will hit 4.5% by the end of the year.
As housing markets stabilize and bargain home prices start to evaporate and jobs continue to grow, home buyers will be even more confident about buying….homes have never been more affordable and may never be this affordable again.
You want to sell your home, but you are not sure what it is really worth in today’s market? Using the right comparable sales will help you to find the perfect price.
The value of your home is much more difficult to predict and the information available to home sellers can be untrustworthy. Online home valuation sites are fun to play with, but they are based on past sales, not current market factors. Newspaper listings give you some information, but houses are usually so different that it’s hard to compare.
The best method available to home sellers to learn their home’s current value so they can select the best sale price is a CMA, or Comparative Market Analysis. CMA is the term real estate agents use when they conduct an in-depth analysis of a home’s worth in today’s market.
The best part about a CMA is that it’s usually free!
Your Realtor will prepare a CMA for you before you list your home. Setting the price too low means you’ll get less money for your home; setting it too high means it might not sell at all. Every real estate agent in the country will want to complete a CMA on your home before helping you sell it. Sellers who haven’t yet chosen a real estate agent often ask several agents to complete CMAs so there is opportunity to meet different agents and to see how they work.
How much can you sell your home for? Probably about as much as the neighbors got, as long as the neighbors sold their house in recent memory and their home was just like your home.
Knowing how much homes similar to yours sold for gives you the best idea of the current estimated value of your home. The trick is finding sales that closely match yours.
What makes a good comparable sale?
Your best comparable sale is the same model as your house in the same subdivision—and it closed escrow last week. If you can’t find that, here are other factors that count:
Location: The closer to your house the better, but don’t just use any comparable sale within a mile radius. A good comparable sale is a house in your neighborhood, your subdivision, on the same type of street as your house, and in your school district.
Home type: Try to find comparable sales that are like your home in style, construction material, square footage, number of bedrooms and baths, basement (having one and whether it’s finished), finishes, and yard size.
Amenities and upgrades: Is the kitchen new? Is there a pool? Does your community have the same amenities (pool, workout room, walking trails, etc.) and homeowner’s association fees?
Date of sale: You may want to use a comparable sale from two years ago when the market was high, but that won’t fly. Most buyers use government-guaranteed mortgages, and those lending programs say comparable sales can be no older than 90 days.
Sales sweeteners: Did the comparable-sale sellers give the buyers down payment assistance, closing costs, or a free television? You have to reduce the value of any comparable sale to account for any deal sweeteners.
Agents can help adjust price based on insider insights
Even if you live in a subdivision, your home will always be different from your neighbors’. Evaluating those differences—like the fact that your home has one more bedroom than the comparables or an office—is one of the ways real estate agents add value.
An active agent has been inside a lot of homes in your neighborhood and knows all sorts of details about comparable sales. She/he has read the comments the selling agent put into the MLS, seen the ugly wallpaper, and heard what other REALTORS®, lenders, closing agents, and appraisers said about the comparable sale.
More ways to pick a home listing price
If you’re still having trouble picking out a listing price for your home, look at the current competition. Ask your real estate agent to be honest about your home and the other homes on the market (and then listen to her/him without taking the criticism personally).
Are foreclosures and short sales comparables?
If one or more of your comparable sales was a foreclosed home or a short sale (a home that sold for less money than the owners owed on the mortgage), ask your real estate agent how to treat those comps.
A foreclosed home is usually in poor condition because owners who can’t pay their mortgage can’t afford to pay for upkeep. Your home is in great shape, so the foreclosure should be priced lower than your home.
Short sales are typically in good condition, although they are still distressed sales. The owners usually have to sell because they’re divorcing, or their employer is moving them out of state.
How much short sales are discounted from their market value varies among local markets.
So you have to rely on your REALTOR’s® knowledge of the local market to use a short sale as a comparable sale.
Call us today at (480) 421-8116 for Your Personalized Market Analysis.