Archive for August, 2009
Sometimes you just get tired of the same old same old listing videos and need to change things around a bit.
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Military Relocation-Options When You are Upside Down on Your VA Loan
August 29th, 2009 Categories: Military Relocation
Currently I’m working with a number of families in Northern Virginia who are qualified for the Department of Defense Homeowners Assistance Program (HAP) but there is another option for military families who have received orders and are upside down on their home value.
If you have a VA Loan you may be eligible for a VA Compromise Sale. In our region of Northern Virginia the VA Regional Office which will provide you with the latest updates is the Roanoke office. The VA Compromise sale does have several factors that are important to remember:
• The property must be sold for fair market value.
• The closing costs must be reasonable and customary
•The compromise sale must be less costly for the Government than foreclosure
• There must be a financial hardship on the part of the seller
• On loans that originated on or before December 31, 1989, the seller must be willing to sign a promissory note
• There must be no second liens or other liens (unless the amount is insignificant).
• The seller must first obtain a sales contract in order to be considered for the program.
To protect the seller’s interest, the seller should make the sales contract contingent and/or subject to the approval of a VA compromise sale.
VA Compromise Sale Information Packet
There is an extensive list of VA approved list of Loss Mitigation Servicers available on the VA site. A VA Compromise sale does require that the VA approve the HUD-1 be reviewed and approved by the VA prior to settlement so making sure the buyers documents are in order at least 48 hours in advance is a must.
If you are stationed at Fort Belvoir, the Pentagon, Quantico or any of the Military District of Washington installations give Cindy Jones a call at 703-346-2213. Let’s see if a VA Compromise Sale or the Department of Defense HAP program might help you with your home sale.
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As I’m driving along the highways of Northern Virginia the radio blares out an ad about a buyer who found a home for pennies on the dollar. They are estatic about the half price home they are now living in. But what does that really mean?
The property originally sold for $500,000 in a terrific Northern Virginia neighborhood. Today after languishing 9 months on the market as a short sale (or sitting empty) the home goes to foreclosure. The values in the neighborhood have declined and now the average sales price is now $250,000. While the home sat empty or perhaps as the previous owners left they stripped out the appliances, made a mess out of the carpets and left holes in the walls.
As a buyer you think this is great I’m buying a home for 50% off the original price. But wait the home isn’t worth $500,000 (previous sales price) now it is only worth $250,000 (current market value), it isn’t 50% off. It is at 100% of today’s market value. This is before you make any of the necessary repairs to make it habitable.
Did you get a home for pennies on the dollar? No you got a home at current market value. Will the home be worth $500,000 in a month after you make the repairs? Highly doubtful, if Northern Virginia returns to normal appreciation of 3-5% annual then the home probably won’t be worth $500,000 for many years to come.
Yes there are some investors with cash who have picked up a home at auction or through foreclosure that are far below market value. These homes are turned over to contractors who put them back in shape and are flipped for a profit. But those are not the buyers these ads are targeting. They are after YOU the everyday buyer who is looking for a deal.
So don’t be lfooled into thinking that you can buy a home today for pennies on the dollar.
You are buying a home at 2009 market value and that is a GREAT deal!
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When the market was sizzling hot in 2003-2005 buyers and their agents worked hard to come up with creative ways to get their offers noticed. Escalation clauses, waiving contingencies and fresh baked chocolate chip cookies arrived with hand delivered offers.
During 2006-2008 the market changed and the buyers had the upper hand. Lowball offers, multiple contingencies and starving agents were the norm. Now here we are three quarters of the way through 2009 and we are back to multiple offers again.
There is a rule of thumb (I have no idea who made the rule) that if the available inventory in an area is below 6 months then we are in a “sellers market” and above that number we are in a “buyers market.” If that true then we have made a dramatic turn and are back in a seller’s market. According the reports for July 09, Northern Virginia currently has a 3.62 month supply of homes.
Add to the dwindling inventory the prices are starting to creep up as well. Investors who snapped up the homes no one else wanted are now flipping those properties back on the market at double what they paid for them. Does this mean that sellers truly have the upper hand again? No but it does mean that buyers need to think twice about trying to play the wait and see on a home they really like. It also means that seller may not be inclined to give away the store when it comes to accepting an offer.
Personally I’m hoping we end this roller coaster soon and find some balance. We need a market where deals can be made without a winner or loser.
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Homeowners Assistance Progam (HAP) More Funding Proposed
August 18th, 2009 Categories: Military Relocation
As families currently eligible for the Department of Defense HAP program await updated guidelines to be published, additional funding is being proposed in the US Senate by Virginia Senator Jim Webb for Fiscal Year 2010.
Senate bill (S 1309) proposes an additional $350 million dollars to enhance the funding provided by the American Recovery and Reinvestment Act passed last fall. With over 2000 applications for assistance for wounded warriors, surviving spouses, families with PCS orders and BRAC transferees in the south east district waiting to be processed, it is apparent that the current funding could easily be depleted before the deadline for the program expires.
The financial burden military families who are required to move with PCS orders in a sagging housing market can be significant. Currently I’m working with three Northern Virginia families stationed either at Fort Belvoir or the Pentagon eligible for HAP assistance and our weekly conversations with HAP counselors suggests that the required guidelines are making their way through the appropriate channels. With HAP benefits most of that burden of negative equity can be lifted with HAP funds provided at settlement.
If you are a military family stationed at Fort Belvoir, Quantico, the Pentagon or any of the Military District of Washington installations who qualifies for the HAP program give me a call. I’m currently working with families in your situation and understand the process, application requirements and have successfully negotiated sales contracts to help you sell your home in our current market.
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Northern Virginia Short Sales-Not a Short Term Issue
August 16th, 2009 Categories: Real Estate Ramblings
It is a thought that has been rattling around in my head for awhile. How many years into the future will homeonwers and Realtors ® be dealing with short sales in Northern Virginia?
We hear officials (lenders, economists, etc) speak as if they think the short sale phenomena will run its course in the near future. Yet when you look at the number of homes sold in the last 5 years and calculate the number of homeowners who cashed out their home equity for the finer things in life, do you really think that short sales will go away anytime soon?
Even in Northern Virginia some neighborhoods have seen price drops in the double digits and appreciation is going to be slow and hopefully steady in the years ahead. It will take far longer to recover the negative between the mortgage and market value than some homeowners have to wait it out.
What happens in 2 years, 3 years or even 5 years down the road when a job transfer, divorce or retirement requires them to sell their home? A percentage of homeowners who are waiting it out today won’t have that option in the future. Certainly it won’t be the mind boggling numbers that lenders are trying to deal with today but no one should close down their short sale departments at the end of 2009 or 2010 and think they will never see another short sale again.
Anyone remember the Northern Virginia real estate market in the 1990’s?
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NVAR has released the mid-year housing report for Northern Virginia. For anyone who is considering buying a home in Northern Virginia you have discovered that inventory is down and multiple offers are back in vogue. Take a look at the numbers as reported by Delta Associates and MRIS.
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Should a Distressed Homeowner Get to Rent Their Home Back from the Lender?
August 5th, 2009 Categories: NOVA Foreclosures
A proposal being discussed in lender financial circles is whether an owner who has lost their home to foreclosure should be allowed to stay in the home, for up to 5 years at market rent. This proposal is a significant change from the current Freddie Mac REO Rental Initiative that allows current owners to stay as tenants on a month to month basis while the home is being marketed to potential buyers.
Part of the reason behind the proposal is the number of vacant homes sitting empty in neighborhoods across the country is rising. The vacant properties are becoming run down, lowering property values in entire neighborhoods. But is allowing the owner who couldn’t pay their loan the right way to solve the problem?
When we look around and see teachers, police officers, fire fighters and other deserving public employees who are still priced out of some markets I wonder why wouldn’t we offer them a chance at the property first? A lease to own program that gives them credit for their years of service and a reasonable market rent with a percentage going towards their down payment. There are some programs in place offering assistance to our public employees but certainly there are more who deserve the opportunity to become homeowners. Why not more government programs to support putting them in one of these foreclosed properties?
Perhaps I’m missing something in this new proposal that answers the question as to why a foreclosed homeowner will get a chance to stay in a home that has cost their lender thousands in missed payments and their neighbors even more in lost property value.
What is the rest of the story here?
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