What is a Shortsale? Should I shortsell my house?

Here is the definition of a short sale - It is when the homeowner has to sell there home for less then what they owe. For example, lets say you owe $350,000 on your home today. If you listed it your home would only sell for what you owe $350,000. After closing expenses (taxes, title, real estate fees etc.) you would only net somewhere around $320,000 and would be short $30,000. Chances are for most people they don’t have $30,000 sitting around to pay the difference in the loss. So the lender must take the loss in order to make the sale happen.

That’s right, the bank, your lender has to take the hit. The lender obviously has to approve a loss on the sale. To do this, there are steps and information that the lender will require. They will need to know your income, a letter of hardship explaining why you have to sell, why you are behind, copies of bank statements, your check stubs, and a breakdown of your expenses.

Recently in places around the nation we have heard of people bailing on their homes just because there home is worth less then what they bought it for. Yet they are able to make the payments and stay in their home. Lenders will not permit a shortsale in this specific situation. They will come back and tell you that you make too much.

If you find yourself asking this question, then ask yourself this next question. Can you make the payments and continue to afford your home? If the answer is yes, a lender will most likely deny any shortsale unless there is another reason such as a job transfer.

Second, most lenders today require you to be a minimum of 2 or 3 months delinquent before they would even consider a short sale...again this is a general rule. So not only do you ding your credit for selling under what you owe but you also ding your credit for three 30 day lates, two 60 day lates, and one 90 day late. Then you take on the short sale itself which will hit your credit almost as bad as a foreclosure.

Simply put, your credit will suffer tremendously for up to 7 years. It will negatively impact your ability to not just purchase a home, but get auto loans, credit cards, and other lines of credit. Now those who have no options this will always be better then foreclosure but only should be used as a last resort.

If you have great credit and are wondering what to do, consider alternate options. One option is to rent your home. I know in many places rent has climbed significantly the past couple years. You may be able to rent the home for close to your monthly payment (and you may not). But you may also be able to offset your monthly expenses.

Also consider buying homes as an investment. If prices have come down that low you may be able to pick up a couple of good rentals to offset the losses on the home you are in. Eventually prices will bounce back and if you do end up owning more homes you will increase your total value as well.

All I can recommend is don't do a short sale on your home unless you need to. Second, if the opportunities are that good, and you are able to purchase another home, consider doing just that and pick up a couple of investment properties. Look for those who are selling their homes and need to get out.

What to do first when looking for a home

It always amazes me the responses agents will give to anyone who wants to sell or buy a home. New buyers have been asking what to do next when first preparing to make their first purchase. I have seen it several times in online blogs all over the web. "Let me show you a home" or "You need to meet with me because I am cool" as if this really is the answer to your question. Simply put, it seems there is a feeding frenzy to get that buyer in their door, yet no one seems to really be interested in answering your questions.

Here are some steps to get you started:
First off, get approved for financing:
Before taking any time to look at any homes you should know what you really can afford to purchase. Unless you are paying 100% cash then I highly recommend you contact at least 2 or 3 lenders and get an idea of what their current rates and programs are. Know how much you will need to put down, and how much you will pay each month. Without lender approval, you likely will waste your time looking at several homes you could never even close on.

Second, understand the process:
One thing that seems to make it most difficult for buyers is the unexpected fees that come through the process of buying a home. Here are serious questions you should ask yourself.
- How much Earnest Money can I put down? (Usually a minimum of 1% is what I recommend)
- Do I have enough to pay for the closing costs or will I need help? How much this will be depends on the price of the home. While there is no exact amount it is often times around 3% of the sales price.
- Do I have money to complete an inspection? Usually around $400 This is a start, once you know these answers you should be ready to start looking.

If you are wondering what any of this means then you really will want to sit down with a real estate agent and get to know the process more in depth.

There will be other questions you likely will have in the process but this will give you a good opportunity to be prepared ahead of time. Now if you have done all the above then you need to sit down with an agent and start looking at the homes.

Q: Is this a good time to buy?

I have had this question asked several times over the past couple months. With all the negative media that has hit the airwaves it seems to have spurred a lot of concern on what will happen in the future to our housing prices. While no one person, company or government has a crystal ball to tell the future, here are some things to take into serious consideration in a market like we are seeing today.

1 - Inventory: Today, in Western Washington, we are seeing approximately a 9 month inventory. What does that mean? It means that with the amount of homes on the market today, it would take 9 months to sell them all off with the number of sales we have been seeing each month.

As a buyer this means two things; First, prices have come down over the past 12 months providing some of the best deals in over 3 years. Second, you have options. As of today, it is very likely that you could find almost everything you would like in that home and not just that but get a good price for it as well.

2 - Cost: As just mentioned prices have come down. But more then that, there are opportunities for buyers to buy a home and get the Seller to cover some of the costs for that home. So, good price with little cost for closing = great opportunity

3 - Competition: Buyers, when there are less buyers seriously looking it means you as a buyer are not competing for that home. 2 years ago, if you made an offer on a home and didn't have someone else making an offer the same day, then that was a rarity. Today, while it sometimes happens, it is rare that more then one offer comes in on a home. If in the off chance another offer does come in, then you know it is a good opportunity just because you were not the only one who had interest in it.

4 - Interest Rates: Interest rates are at some of the lowest rates ever. Every day the rates go up and down ever so slightly. Traditionally after a presidential election we see those interest rates begin to increase.

I know people who 5 years ago said they were going to wait till the "bubble bursts". 5 years later the prices had gone up nearly 45%. In the past year they have come down between 10% and 14%. Had they bought back then, they would have purchased a home 30% - 35% less then today.

To wrap it all up, this is a great time to buy. There are few opportunitys that come when people get in when they should just to be followed with people saying "I should have...I should have" or "if only I had listened." Bottom line, as a future home owner one should always ask themselves if they are planning to live in this home for more than 3 years. If the answer is yes, it is most likely that no matter the changes in real estate, you will most likely come out on top.

Should you have a question please feel free to contact any of our agents at Century 21 North Homes Realty, Inc. We are here to serve you in any of your real estate needs.

Use your Local Knowlege: Search using Keywords

"Search" is the reason that Google is, well, Google. More specifically, fast, accurate keyword search is what propelled Google to the top of the Web because Google was the first company to introduce a Search tool that was better than the 1st generation search engines like Yahoo, and the rest is history.

You might think that the Real Estate industry would look at the success of Search as a technology and implement a robust keyword search of its own. To borrow a phrase from Jon Stewart -- Not so much -- the most popular Real Estate site on the Web, Realtor.com, is still using a form-driven, stove-piped database search technology that pre-dates Yahoo.

Well, that has changed: We are proud to offer the only Real Estate Search engine that is powered by Google Search Technology. Now, if you live in WA, you can "google (v.)" Real Estate the same way you google anything else.

So what? What's the big deal?

Well for one thing, Google itself cannot get the MLS data feed our site has b/c Google is not a broker. So ours is the only WA Real Estate site where you can google the complete MLS.

So why is that a big deal?

Because Search technology, and only Search technology, lets you tap into the local knowledge that you likely have when you are searching for Real Estate. Something like 85% of moves are local( according to the NAR), so most people move within the region where they already live.

That means you are driving around, spotting yard signs, you know the neighborhood names, you know what a "Territorial View" is, the list goes on and on...

Try going to Realtor.com and searching for a house you know is for sale in your neighborhood. That site, like most Real Estate sites, will force you to pick a bunch of filters for state, town, property type, price, etc. Or worse, force you to use an overly complicated map interface that takes 10 minutes to figure out.

Some of the criteria you will have to guess at. Then you hit "Search" and you get a list of all the houses that match the criteria you just entered, even though you are looking for the one house you already knew you wanted when you started.

What happened to just typing in what you want, hitting a button, and getting it?

That's how our search engine works: You know where the listing you want is, so all you have to do you type in the address, or street name and town, hit Search and get the listing you want. It also works with MLS numbers, which are often in print ads.

Beyond that practical application, its fun to search for the things you subjectively want in a listing, or to mix objective and subjective criteria, like "Seattle condo Space Needle View" or "Lynnwood Territorial views" or "single family in Everett waterfront".

Try it, but be forewarned: It's addictive.