Thursday, January 21, 2010
Shadow Inventory--Real?
Dear Sue,
I recently met with our family’s real estate agent. I wanted to know what I should do to get my house ready for sale. I also wanted to know how much I could expect to get out of it.
I was shocked to hear how much he thought it was worth. The price he came up with is not much more than I paid for it six years ago!
I really like this agent but I feel like I should get a second opinion. What are your thoughts?
Baffled Bob
Dear Bob,
I definitely think that you should get a second and maybe even a third.
You can still use your family agent but interviewing others will bring new and fresh marketing ideas to the table. You will also be able to explore different price opinions.
Avoid choosing an agent based on price opinion alone. Agents do not create market value they discover it. What a willing and able buyer is willing to pay and what a ready and able seller is willing to take creates market value. The comparable sales are used as a bench mark in the discovery process.
Keep in mind that California’s median price is the same today as it was in 2001, $285,000.00.
I realize that it's hard to believe especially after reaching a median price of $594,530.00 in may of 2007!
Good luck with your interviewing process!
Dear Sue,
What is shadow inventory? I keep hearing bits and pieces here and there.
I heard that its expected to hit the market this year and we will see home values decline even further.
What do you know about it?
Worried Walt
Dear Walt,
Bank owned properties that have not yet been released for sale to the general public are known as shadow inventory.
It's been said that the lenders are holding on to them as a way of keeping home values up. They don't want to flood the market and cause the values to drop.
Some have speculated that the properties are being held for accounting reasons. The lenders are reluctant to take further write-downs from losses when a home is actually sold in foreclosure.
When a home or asset is held in the banks inventory, the book value is typically the loan value. When the asset is sold it is booked at sale value, which today is likely to be much lower than the loan value.
I don't know how many of these bank-owned properties are held in inventory.
In fact, I don't know if there are any.
Some think that the whole shadow inventory idea is a conspiracy. Others believe that there are as many as seven million properties in shadow inventory.
If we see more property come on the market than the demand can support, we will definitely see a decline in values.
Let's hope shadow inventory is a myth. It would be a matter of good Home $$'s and Sense!
www.seehometown.com
I recently met with our family’s real estate agent. I wanted to know what I should do to get my house ready for sale. I also wanted to know how much I could expect to get out of it.
I was shocked to hear how much he thought it was worth. The price he came up with is not much more than I paid for it six years ago!
I really like this agent but I feel like I should get a second opinion. What are your thoughts?
Baffled Bob
Dear Bob,
I definitely think that you should get a second and maybe even a third.
You can still use your family agent but interviewing others will bring new and fresh marketing ideas to the table. You will also be able to explore different price opinions.
Avoid choosing an agent based on price opinion alone. Agents do not create market value they discover it. What a willing and able buyer is willing to pay and what a ready and able seller is willing to take creates market value. The comparable sales are used as a bench mark in the discovery process.
Keep in mind that California’s median price is the same today as it was in 2001, $285,000.00.
I realize that it's hard to believe especially after reaching a median price of $594,530.00 in may of 2007!
Good luck with your interviewing process!
Dear Sue,
What is shadow inventory? I keep hearing bits and pieces here and there.
I heard that its expected to hit the market this year and we will see home values decline even further.
What do you know about it?
Worried Walt
Dear Walt,
Bank owned properties that have not yet been released for sale to the general public are known as shadow inventory.
It's been said that the lenders are holding on to them as a way of keeping home values up. They don't want to flood the market and cause the values to drop.
Some have speculated that the properties are being held for accounting reasons. The lenders are reluctant to take further write-downs from losses when a home is actually sold in foreclosure.
When a home or asset is held in the banks inventory, the book value is typically the loan value. When the asset is sold it is booked at sale value, which today is likely to be much lower than the loan value.
I don't know how many of these bank-owned properties are held in inventory.
In fact, I don't know if there are any.
Some think that the whole shadow inventory idea is a conspiracy. Others believe that there are as many as seven million properties in shadow inventory.
If we see more property come on the market than the demand can support, we will definitely see a decline in values.
Let's hope shadow inventory is a myth. It would be a matter of good Home $$'s and Sense!
www.seehometown.com
Wednesday, January 13, 2010
Fewer Vacancies When Tenants are Happy!
Dear Sue,
I have several rentals that I manage myself. I have been rather successful at it but lately I have had a couple of vacancies that I just can’t seem to fill.
I have never experienced a vacancy. It’s going on three months.
Any suggestions?
Landlord Lou
Dear Lou
Congratulations!
I too am a landlord. I believe that providing housing is a good service. If maintained and managed properly rentals can also be a landlord’s ticket to financial freedom.
First and foremost a good landlord knows that vacancies are a cost of doing business. No rentals, no vacancies. Vacancies must be factored into the return on investment.
A good property manager’s challenge is to keep the vacancy rate as low as possible by staying in touch and adjusting to market conditions.
Options for renters are greater than ever. Tenants are being lured away with promises of better amenities, lower and sometimes free rent and other benefits.
Landlords like you and I can operate just as efficiently and often times more effectively than the larger professional property managers. Our tenant relationships are often times better and our response time can be quicker when issues arise! The net result is happier tenants.
I view it as the difference between navigating a slow cumbersome ocean liner compared with a quick little power-boat.
There will always be vacancies. People get married, divorced, change jobs, buy homes and everything else that one can think of. You don’t want to lose a tenant because the rents aren’t in line with the market or the property is in shambles. Face it, happy tenants mean fewer vacancies. Here are some tips!
Maintenance is important. Preventative maintenance is best. Quick responses and fixes to leaks, broken dishwashers, inoperable thermostats, plumbing problems, sticky doors and other tenant issues shows respect for your tenants. It also shows pride in the condition of your property.
Weekly laundry room cleaning and yard maintenance is essential. Again, it lets your tenants know you are on top of things. It gives them a sense of security.
Regularly scheduled maintenance such as gutter and roof cleaning and HVAC servicing will not only save you money it will cut down on tenant complaints.
Why not make the improvements that you would normally make with a “move-out” before your tenant gives notice? Make periodic visits. If the tenants carpet is stained or worn, replace it. Paint is one of the best and least expensive ways to spruce a place up. New light fixtures come in at a close second. How about upgrading the appliances? Your tenant will be thrilled. Who wouldn’t like a new refrigerator? Don’t forget, the cost is deductible!
Keep your rent in line and maybe just a little under market. Offer discounts for longer leases. I know a landlord that offers one month’s free rent for signing a two-year lease. His tenants love it and he only gives up two weeks worth of rent per year. It’s makes financial sense to receive a lower rent than to have a vacancy. You can never make up a vacancy.
Add value. Do you have room for an outdoor bar-b-q or picnic area? If so, it could be an inexpensive addition and fun for the tenant. Is it possible to install a horseshoe or bocce ball game? Think about it. I am sure that you can come up with ideas that will add value to the rent that your tenants pay.
Keeping your tenants happy helps to minimize vacancies and is a matter of good home $$s and Sense!
I have several rentals that I manage myself. I have been rather successful at it but lately I have had a couple of vacancies that I just can’t seem to fill.
I have never experienced a vacancy. It’s going on three months.
Any suggestions?
Landlord Lou
Dear Lou
Congratulations!
I too am a landlord. I believe that providing housing is a good service. If maintained and managed properly rentals can also be a landlord’s ticket to financial freedom.
First and foremost a good landlord knows that vacancies are a cost of doing business. No rentals, no vacancies. Vacancies must be factored into the return on investment.
A good property manager’s challenge is to keep the vacancy rate as low as possible by staying in touch and adjusting to market conditions.
Options for renters are greater than ever. Tenants are being lured away with promises of better amenities, lower and sometimes free rent and other benefits.
Landlords like you and I can operate just as efficiently and often times more effectively than the larger professional property managers. Our tenant relationships are often times better and our response time can be quicker when issues arise! The net result is happier tenants.
I view it as the difference between navigating a slow cumbersome ocean liner compared with a quick little power-boat.
There will always be vacancies. People get married, divorced, change jobs, buy homes and everything else that one can think of. You don’t want to lose a tenant because the rents aren’t in line with the market or the property is in shambles. Face it, happy tenants mean fewer vacancies. Here are some tips!
Maintenance is important. Preventative maintenance is best. Quick responses and fixes to leaks, broken dishwashers, inoperable thermostats, plumbing problems, sticky doors and other tenant issues shows respect for your tenants. It also shows pride in the condition of your property.
Weekly laundry room cleaning and yard maintenance is essential. Again, it lets your tenants know you are on top of things. It gives them a sense of security.
Regularly scheduled maintenance such as gutter and roof cleaning and HVAC servicing will not only save you money it will cut down on tenant complaints.
Why not make the improvements that you would normally make with a “move-out” before your tenant gives notice? Make periodic visits. If the tenants carpet is stained or worn, replace it. Paint is one of the best and least expensive ways to spruce a place up. New light fixtures come in at a close second. How about upgrading the appliances? Your tenant will be thrilled. Who wouldn’t like a new refrigerator? Don’t forget, the cost is deductible!
Keep your rent in line and maybe just a little under market. Offer discounts for longer leases. I know a landlord that offers one month’s free rent for signing a two-year lease. His tenants love it and he only gives up two weeks worth of rent per year. It’s makes financial sense to receive a lower rent than to have a vacancy. You can never make up a vacancy.
Add value. Do you have room for an outdoor bar-b-q or picnic area? If so, it could be an inexpensive addition and fun for the tenant. Is it possible to install a horseshoe or bocce ball game? Think about it. I am sure that you can come up with ideas that will add value to the rent that your tenants pay.
Keeping your tenants happy helps to minimize vacancies and is a matter of good home $$s and Sense!
Short Sale Questions!
Dear Sue,
I owe $300,000.00 on my house. Based on what my neighbor’s house just sold for, I think that my house is worth $225,000.00.
Because of all of the good deals, I would like to sell and buy a nicer house for less money.
Would I qualify for a short sale?
Excited Ed
Dear Ed,
Just because you owe more than your house is worth doesn’t mean that you have to sell it.
If you can make the payments and have no extenuating circumstances such as divorce, death of a spouse or job transfer just stay put.
Dear Sue,
Our adjustable loan just went up. The payment is now more than we can possibly make. When we got the loan we were both working and figured that we could easily make a higher payment.
Things have changed. My wife is the only one working at this time. I get unemployment but it’s just not nearly enough.
Should we consider a short sale?
Scared Silly
Dear Scared,
Try a loan modification first. Call your lender immediately.
It can be a trying but rewarding process. The Obama Administration is determined to get as many loans modified as possible under the making homes affordable program.
Dear Sue,
I am thinking about a short sale.
I have heard that I will have to pay tax on the difference between what I owe and what my home sells for. I heard that the amount would be viewed as income.
Is this true?
Inquiring Ida
Dear Ida,
Borrowers that qualify Under the Mortgage Forgiveness Debt Relief Act of 2007, no longer have to report their debt relief as income.
To qualify under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven or cancelled debt had to be used to buy, build or substantially improve ones principal residence or to refinance debt incurred for those purposes.
Before continuing with a short sale seek legal and tax advice!
Dear Sue,
My son was just turned down for a loan modification. Apparently his lender doesn’t think that he has enough income to make adequate payments.
I have read that he would be better off short selling his house than going through a foreclosure.
Who chooses the real estate agent? Does the bank?
Helping Dad
Dear helping
Many people are confused about short sales.
It helps to look at the banks approval as a contingency. It’s much like when a buyer makes an offer to purchase a home. One of the contingencies in the offer could be the lenders approval of financing.
When your son receives an offer on his home there will be a short sale addendum clarifying that the sale is subject to lenders approval of the short sale.
Your son gets to choose the listing agent.
A short sale definitely has less impact on a credit report. A foreclosure can prevent a buyer from qualifying for a new loan for up to five years. With a short sale a new purchase can be made the next day.
In any case I strongly urge your son to seek legal and tax advice. It can be a matter of good home dollars and sense.
I owe $300,000.00 on my house. Based on what my neighbor’s house just sold for, I think that my house is worth $225,000.00.
Because of all of the good deals, I would like to sell and buy a nicer house for less money.
Would I qualify for a short sale?
Excited Ed
Dear Ed,
Just because you owe more than your house is worth doesn’t mean that you have to sell it.
If you can make the payments and have no extenuating circumstances such as divorce, death of a spouse or job transfer just stay put.
Dear Sue,
Our adjustable loan just went up. The payment is now more than we can possibly make. When we got the loan we were both working and figured that we could easily make a higher payment.
Things have changed. My wife is the only one working at this time. I get unemployment but it’s just not nearly enough.
Should we consider a short sale?
Scared Silly
Dear Scared,
Try a loan modification first. Call your lender immediately.
It can be a trying but rewarding process. The Obama Administration is determined to get as many loans modified as possible under the making homes affordable program.
Dear Sue,
I am thinking about a short sale.
I have heard that I will have to pay tax on the difference between what I owe and what my home sells for. I heard that the amount would be viewed as income.
Is this true?
Inquiring Ida
Dear Ida,
Borrowers that qualify Under the Mortgage Forgiveness Debt Relief Act of 2007, no longer have to report their debt relief as income.
To qualify under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven or cancelled debt had to be used to buy, build or substantially improve ones principal residence or to refinance debt incurred for those purposes.
Before continuing with a short sale seek legal and tax advice!
Dear Sue,
My son was just turned down for a loan modification. Apparently his lender doesn’t think that he has enough income to make adequate payments.
I have read that he would be better off short selling his house than going through a foreclosure.
Who chooses the real estate agent? Does the bank?
Helping Dad
Dear helping
Many people are confused about short sales.
It helps to look at the banks approval as a contingency. It’s much like when a buyer makes an offer to purchase a home. One of the contingencies in the offer could be the lenders approval of financing.
When your son receives an offer on his home there will be a short sale addendum clarifying that the sale is subject to lenders approval of the short sale.
Your son gets to choose the listing agent.
A short sale definitely has less impact on a credit report. A foreclosure can prevent a buyer from qualifying for a new loan for up to five years. With a short sale a new purchase can be made the next day.
In any case I strongly urge your son to seek legal and tax advice. It can be a matter of good home dollars and sense.
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