Missouri Real Estate News

The Short Version of the Short Sell

Sun, 09 Jun 2013 08:33:40 -0600

Here are the main things to know about short sales:

• If you’re a homeowner who can’t pay the mortgage, negotiating a short sale is probably better than waiting for a foreclosure. Depending on the details, your credit score will take a lesser hit, and you might be able to buy a home again a little sooner.

• If you’re a homebuyer, you can get a cheaper deal on a short sale than on homes where the owner isn’t broke. But expect a long wait — often months — while the bank decides if it will take your offer.

When a homeowner can’t pay the mortgage, the first option is to beg the bank for a break. A mortgage modification may cut the payment to a level that’s affordable.

If the bank shows no mercy, the next best option is to sell the house. The owners can limit the harm to their credit score, and they may walk away with some cash.

But about 16 percent of St. Louis homeowners with mortgages owe more than their homes are worth, according to the analysis firm CoreLogic. They can’t sell unless the bank agrees to take less money than it is owed.

That’s called a short sale — the sale price is less than the mortgage, and the bank eats the difference. Banks went along with 884 short sales in metro St. Louis in the final quarter of last year — up 41 percent from 2011, according to the latest figures from RealtyTrac, the online foreclosed home market. About one out of 11 home sales was a short sale.

They are hard to do — “a real beast,” says Steve LoPiccolo, who handles lots of short sales at American Realty Group in south St. Louis County.

First, the real estate agent has to find a very patient buyer. LoPiccolo was shocked recently when a bank approved a short sale in three weeks. On the other hand, one buyer waited for 14 months for the bank to make up its mind.

Waits of several months are common. “They have too many files and they don’t have enough people to review them,” says LoPiccolo.

In exchange for patience, the buyer gets a cheap property. Short-sale homes went for 35 percent less than comparable homes in the last quarter of 2012, according to RealtyTrac. That’s nearly as great as the 37 percent discount for bank-owned foreclosures.

The real estate market has picked up since last year, and real-estate agents now complain of a shortage of homes for sale. LoPiccolo thinks the discounts for distress sales are narrowing as the market improves.

Banks have noticed. They have become less amenable to offers over the past few months, and more likely to demand higher prices, says Elizabeth Kayser, a St. Louis attorney who negotiates short sales for Realtors.

Short sales “have become a little more difficult to do,” she says.

Bank approval is a long headache. LoPicollo recalls one ongoing case: “The bank tells us we have had a complete file for three-and-a-half months. I called yesterday and they said the short sale is canceled. They said we were missing one document,” he recalled. “I said, ‘Well can we send the document in?’ They said no, we have to start over.”

The bank wants the owners to prove they can’t pay the mortgage, so it demands financial records. Job loss is a big persuader. Divorce also may sway the bank. Banks sometimes play along when employers transfer debtors to other cities.

There are lots of hands in the approval decision. Often the bank is simply servicing a loan owned by an investor, who gets the final say.

Sometimes a private mortgage insurer has to make up the mortgage holder’s loss. Often there’s a second-mortgage holder who stands to lose, too. All have to sign off before the deal goes through.

The U.S. Treasury has a program for expediting short sales. It’s called Home Affordable Foreclosure Alternatives. The government provides money to the second-lien holders to get them to sign on. The bank has to waive deficiency, and homeowners may qualify for up to $3,000 in government relocation assistance.

Fannie Mae and Freddie Mac, the big government-controlled mortgage companies, have a separate program for mortgages they own, says Kayser.

From the buyer’s perspective, there’s a little less risk in buying a short sale instead of a foreclosure. The owner is still present — and able to fill out a disclosure form reporting problems with the property.

On the other hand, the owner is in no position to fix them, so the sale is usually “as is.”

Since the house hasn’t been sitting vacant, it may be in better shape than a foreclosure.

For the homeowners, a short sale is often the lesser evil.

The owner’s goal is to get the bank to waive the “deficiency” — the difference between the loan amount and the sale price.

Missouri and Illinois allow banks to sue borrowers for that deficiency, which occurs in foreclosures, too. Banks rarely sue — they know the borrower is broke. But borrowers worry that the debt will resurface years later.

Sometimes banks ask homeowners to sign promissory notes for part of the deficiency.

FICO, the main credit scoring company, says a short sale will do less damage to a credit score than a foreclosure — but only if the deficiency is waived.

Someone with a good credit score, 720, will see it drop to 570 to 590 after a foreclosure. A short sale, with the deficiency forgiven, will drop it to 605 to 625.

Fannie Mae and Freddie Mac, the government-controlled mortgage giants, set the rules for conventional loans — those with the lowest costs.

They require a seven-year wait after a foreclosure for a new mortgage, although they might cut it to three years if you can show “extenuating circumstances” and jump through other hoops.

For short sales, there’s a sliding scale. They’ll allow financing after two years if you have a 20 percent down payment. They’ll take a 10 percent down payment after four years. Otherwise, you’ll wait seven years.

Those long waits explain why most purchasers go FHA. The FHA requires a three-year purgatory for people with foreclosures or short sales. There’s a limited exception for the rare homeowner who wasn’t behind on his mortgage before a short sale occurred, and who buys a house cheaper than the house he lost.

To find a home in the St. Louis area, click here.

Condo Sales Rise in St. Louis; Will Home Sales Follow?

Sat, 18 May 2013 06:16:11 -0600

David Creswell is a young fellow who likes life lively.

“I wanted to live downtown, where there’s lots going on,” he said.

So, he and his girlfriend Amy are moving into a condo just off Washington Avenue.

People like Creswell provide hope in a condo market that’s been stuck in a slump for five years. Prices for single-family homes are generally rising in St. Louis, but the condo price trend is unclear.

“The unit sales are strong, but the prices are still flat,” said Bob Bax, broker at Prudential Alliance Realtors. “They will inch up,” he predicts.

Creswell, 27, is paying $163,000 for a two-bedroom, two-bath with a “really huge” kitchen and living room, a view of the City Museum. He likes the roof-top deck shared with other residents.

He is typical of one type of condo buyer — young people who want to walk to restaurants and night life. He also travels a lot for work and wouldn’t want to leave a lawn unmowed or a house unguarded.

“The thing that really got to me was considering how St. Louis is reviving,” he said, citing the soon-to-rise Ballpark Village and that downtown finally has a movie theater again. “I want to know that I can come home, hit a movie or go out for dinner with friends.”

He’s moving from a rental apartment in the Central West End.

On the other end of the spectrum is Dan Middleton, a retiree. He bought two downtown condos in the past few months — one to rent and one that he eventually plans to live in. He’s considering buying a third.

He also owns a house that he is renovating in the Creve Coeur area. When his wife retires, they may sell that, and split their time between Florida and their second downtown condo.

“There are some tremendous values here,” he said. “We were taking advantage of the market being down.”

The first condo he bought was a “short-sale” from an owner who owed more on the mortgage than the condo was worth. It had sold for $300,000 in the boom years. Middleton paid $158,000.

Like Creswell, Middleton thinks downtown is coming back. “We’re on the cusp of coming back strong,” he said.

The number of condo sales is on the rise. They were up 27 percent in the first two months of this year, compared to the same period in 2012, in St. Louis and St. Louis, St. Charles and Jefferson counties, according to figures supplied by Prudential Alliance. Those figures include both condos and “villas,” which are attached homes often marketed to retirees and sometimes serviced by maintenance associations.

The trend in prices is unclear. Average sale prices are up 6 percent in St. Louis and St. Louis County and down 3 percent in St. Charles County in January and February. Averages can give a distorted view of price trends because a few very-expensive sales can skew the figures. Zillow, a real estate website that tries to eliminate distortions, says condo prices were flat in January and February compared with a year earlier in the metro area.

But real-estate agents think the trends are in the right direction. Apartment rents have been rising since the Great Recession, largely because fewer people could buy a home, or wanted to. Condo prices fell during most of that period, which altered the economics for people who like apartment living.

Of course, that’s not for everybody.

THINGS TO CONSIDER

“Buying a condo is a lifestyle decision,” said Chris Grus, an agent who does a lot of condo business at Premier Realty Exclusive. “They’re looking for simplicity, for security.”

In urban areas, they also want to be able to walk to stores and restaurants. “They want to play. They don’t want to grow grass,” said Suzanne Hunn, a real estate agent who specializes in condos at Highrises.com and ReMax Gold.

“Usually I get young people — people that have high-pressure jobs like doctors, nurses, businessmen who are in and out of town a lot,” Fran Cook, an agent with Coldwell Banker Gundaker.

Any buyer has to wonder about what will happen to condo prices.

“If you’re buying at this time, look at a five-year horizon,” said Gregg Sharpe, an agent with Highrises.com. He thinks it will take that long for prices to rise enough to cover the costs of buying and selling. Sharpe sold Creswell his condo.

Condo buyers have to consider things that house-buyers don’t. For instance: The big government-controlled, mortgage agencies, such as Fannie Mae and the FHA, have special rules that can derail condo buyers and sellers. They generally won’t back a mortgage in a building where more than half the units are rentals, or if one landlord owns more than 10 percent of the units.

They also want the homeowners association to be on firm financial footing.

When the Great Recession hit, some developers found themselves with new condos they couldn’t sell. “They ended up renting out half the building,” Grus said. Condo owners who bought when the building first opened found themselves trapped.

Without federal backing, most lenders won’t lend. That can leave would-be condo sellers stuck, unable to sell unless they can find a cash buyer. That drives down prices. So, they may try to rent out their condo, making the problem worse for other owners.

“The overall condo market struggled because of the guidelines for lending,” Grus said.

For that reason, many condo owners associations restrict the number of units that can be rented. To ease owners’ worries, some buildings also arrange pre-approval from the FHA.

Condo owners associations function like mini city councils for the condo development. They collect mandatory fees from the owners and maintain the building outside of the individual units. Just like city councils, most function smoothly but some fall into nasty squabbles

Fees vary widely, as do services. Some provide rooftop pools, clubhouses, doormen and the like, while others barely pick up the trash.

Take a look at the “resale certificate” on an old building or the “building offer material” on a new one, Grus advised. Some bigger developments may have a “reserve study” indicating the association’s ability to cover upcoming costs.

To see homes in the St. Louis area, click here.

Before You Buy . . .

Sun, 17 Feb 2013 02:35:02 -0600

There are few events during the home buying process that are better than walking into a beautiful property and seeing crystal chandeliers, top-of-the-line appliances and updated, energy-efficient fixtures. For buyers who are on the fence about the purchase, these small features may be enough to steer them toward buying a home. However, buyers should be aware of one of the most common misunderstandings that can occur when viewing a home: what they see is not always what they get.

In many cases, certain items that may be on display are not included when they actually buy the home. This can be disappointing for new owners, making it important to clarify what will stay and what will go after they have closed on the property.

Common features that are not included

There are several types of home features that sellers may forget to remove and store before showing a home. These include kitchen and bathroom fixtures, such as faucets, light coverings and even handles and door knobs, according to the Boston Globe. Most wall mounts and materials that are used to bolt other fixtures to a wall are also not included. In addition, most sellers do not plan to leave major appliances than they purchased, such as refrigerators, ovens, washers and dryers. Lastly, buyers should not assume that window coverings will remain in the home after the previous owner has sold the property.

All items should be included in a contract

Most sellers will remove items they don't plan to include in the home sale prior to an open house. However, this is not always the case and if buyers have questions about what will remain in the home after the sale, they should not hesitate to ask their real estate agent. After these points have been clarified, they should also be listed in a contract to avoid confusion or disputes down the line.

Negotiations for items

It's not uncommon for buyers to try to negotiate with sellers to leave certain items in the home. Buyers who are interested in the new kitchen fixtures that match the granite countertops perfectly should not hesitate to at least throw out an offer to the seller. Buyers may also simply ask sellers where they purchased certain items and price them separately to determine if it would be more affordable to negotiate with the owners or purchase the features after the home sale.

To view homes in the area, click here.

Looking to Buy Investment Property

Thu, 31 Jan 2013 03:45:16 -0600

It's hard not to hear the rumblings. Experts and talking heads repeatedly say real estate can be a lucrative investment, especially for home buyers who buy at the right price and secure affordable financing. However, for someone who has never done it before, real estate investment can be a tricky topic. Bankrate.com offers a few tips for

homeowners who think they are ready to become a real estate investor.

Determine goals

The term "real estate investor" covers a wide breadth of roles. There are people who want to be a landlord and dote over their own property's day-to-day care and management. Others simply want to purchase the property and let someone else handle the management. Still others may be interested in fixing up run down properties and re-selling them, or starting from scratch, buying undeveloped land and building something on it. Bankrate.com reports the first-time investor may want to stick with residential investment until they become more comfortable with the

concept.

Don't be short on funds

Home buyers may want to speak to a financial advisor to see if they actually have the capital needed to invest. Whether they're becoming a landlord or commercial investor, a home buyer needs substantial cash reserves to cover periods of time when they won't have tenants or the market is slow, according to Bankrate.com.

As always, location, location, location

Just as they would if they were buying a home to live in, real estate investors need to focus on location. High-population areas are ideal for the home buyer-turned-landlord, since they attract renters looking for easy access to work, retail locations and public services. An ideal investment opportunity would be situated between shopping centers, schools and public transit, Bankrate.com reports. Such a property would

also attract future buyers if an investor decides to sell the property down the line.

Look for an experienced real estate agent

Bankrate.com reports a home buyer considering property investment should partner with a real estate agent who knows the local investment climate and can find them a property that will bear substantial returns over time. Additionally, the investor should plan to keep a strong relationship with that real estate agent, since they could help them re-sell the property and find a new investment opportunity in the future.

To view homes in the area, click here.

How Much Home Can I Afford?

Thu, 17 Jan 2013 04:42:58 -0600

HOW MUCH HOME CAN A FIRST TIME BUYER AFFORD?

Budgeting Your Carrying Costs

Finding the right property at an affordable price can sometimes be a challenge, especially for first time house buyers. When it comes to deciding just how much home you can afford, there are two kinds of expenses you’ll need to consider – the ongoing or ‘carrying’ costs of the home, and your closing costs.

The first step in determining your carrying costs is to get pre-approved for a mortgage. By pre-qualifying for a mortgage, you can find out up front what your maximum mortgage payment might be, even before your home search begins. Your lender will look at your earnings, credit history and any outstanding debt, and help you determine what size loan you qualify for, at what rate, and what your regular mortgage payments would be. Being pre-qualified offers another advantage, since it puts you in a stronger negotiating position when you go into an offer with pre-approved financing.

Once you’re pre-approved, the next step is determining what you actually want to spend on your mortgage payments. Remember, your pre-approved mortgage establishes the maximum amount of loan you’d qualify for, but you may decide that you want to aim at a smaller loan, with a lower payment.

Be realistic and think about your lifestyle. Although it may seem feasible to handle a sizable mortgage payment at first, keeping it up may eventually require cutting back on other expenses, such as clothing, or entertainment. Make sure that if you plan to make any concessions in these areas, you’re prepared to live with your decision until there’s a change in your income. Owning a home can give you a tremendous amount of pleasure and personal satisfaction, as long as you plan for adequate resources to enjoy it with some peace of mind.

With your estimated mortgage payment in mind, the next step is to determine your total carrying costs. Add up all your estimated monthly costs, such as the mortgage payment, property taxes, insurance, heating costs and other utilities. Then add a figure to cover yearly maintenance and upkeep. Consider both the interior and exterior of the house, as well as the garage, driveway, landscaping and all other aspects of the property when you arrive at this figure.

When preparing your budget, be sure that you also make allowance for a “contingency fund” to cover unexpected expenses such as a major repair or the replacement of a large ticket item, such as an appliance. Life sometimes has a way of surprising us, and you don’t want to start out with a budget that’s so tight, there’s no room for the unexpected.

After you’ve determined what your carrying costs will be, you’re almost there. The other expenses you’ll need to take into consideration are the one-time-only costs, such as your closing costs and moving expenses.

Closing Costs and Moving Expenses

After you’ve estimated your mortgage payment and other ongoing costs for carrying your first home, you’ll also need to consider the one-time expenses associated with the purchase of a property. This includes your closing costs, as well as your moving expenses.

Be aware that there is no set rule for what’s included in closing costs, or how they’re calculated. Closing costs can vary significantly from property to property, but may include home inspection fees, appraisal fees, title search, survey costs, home insurance and lawyer’s fees. Some of these costs may be shared with the seller, while others are payable by the buyer only. Your Coldwell Banker agent can give you helpful advice about specifying a cost-sharing agreement for some of these related costs within your offer to purchase.

You will also be required to reimburse the seller for a proportionate share of specific housing expenses that have been pre-paid by the seller and continue after your closing date. These pre-paid expenses usually include property taxes and utilities, and the amount is typically equivalent to only a few months service. Your real estate lawyer will give you an exact accounting of these expenses upon closing, so be sure to discuss this with your lawyer in advance, so you will have sufficient funds available to cover these costs at that time. After these one-time adjustments are made, and the transfer of ownership is completed, you will pay for such expenses directly in future.

In addition, you’ll also have to budget for your relocation costs when moving. This could include such costs as a moving company truck and labor, packing charges, boxes and wrapping materials, or rental of a vehicle or trailer if you’re doing all or part of the move on your own. There can be a wide variation of costs for these types of services, so you should start planning well in advance, and obtain comparative quotes from more than one mover. Get the quotes in writing and ensure that all the required equipment, staffing and materials are documented. Ask the provider to specify what charges may apply if your move does not proceed on schedule. Be sure to read all the fine print carefully, so you understand upfront what other charges, such as waiting time, or a late return charge you might incur that are not planned for in the initial quote.

Your Coldwell Banker agent can be a valuable resource here too. Not only can they help you estimate carrying and closing costs, they can also recommend experienced and trusted service providers to help you keep the cost of moving and home ownership affordable and keep your move hassle free.

To view homes in the area, click here.

Is Home Ownership Right for You?

Sun, 06 Jan 2013 12:37:06 -0600

DECIDING TO BUY A HOME IN TODAY’S MARKET

COLDWELL BANKER PROVIDES TIPS TO HELP FIRST-TIME HOME BUYERS DECIDE IF NOW IS THE TIME TO BUY

For those with the financial wherewithal and lifestyle need, today’s market provides a potentially great opportunity to buy a home. Homeownership can provide many financial, lifestyle and social benefits. In today’s market, buyers also benefit from plenty of homes to choose from, low mortgage rates, home ownership tax advantages and home prices that are still relatively low in many markets, yet showing signs of stability.

However, many potential buyers may be hesitant because of unemployment concerns and other economic concerns. “Confusing” is an adjective that fairly describes the housing market right now. With the latest headlines warning against homeownership, and then others declaring it’s a great time to buy; it can be difficult to decide what to believe.

The professionals at Coldwell Banker offer the following advice to help potential first-time home buyers decide if home ownership is right for them right now.

Consider personal finances and lifestyle: First-time home buyers should carefully examine their financial and employment situation, lifestyle needs, wants and long term goals. Free tools are available on coldwellbanker.com that can help, such as themortgage calculator that estimates monthly payments, rent vs. buy calculator that shows if buying or renting will cost less, and the affordability calculator, which helps determine how much buyers can realistically spend.

Find a trusted real estate professional: Real estate is local; what is happening in one town may be very different from what is happening in national headlines. A local real estate agent can explain what’s occurring in the housing market in a specific town or city to help buyers make the right decision for where they live or want to live.

Consider the pros and cons of renting and buying: It is OK to ask whether renting is a suitable alternative. For those with projected short-term (less than 2-3 years) stays in a town, unclear job or relationship status or someone who likes the idea of a transient lifestyle, the prospect of renting may be a wise consideration. And for those who do not yet have the financial means, steady income or have other fiscal restraints, renting may be the best choice for now.

Home buying is a personal decision: After taking personal financial and lifestyle situations into consideration, the decision to buy a home should be based on what works best for the individual buyer. There are people with strong credentials who will argue the case for either renting or buying, but no real estate professional, economist, professor, or anyone else with an opinion should try to determine what is ultimately, emotionally and overall best for the buyer. Working with a trusted agent, who has done good research and the has the right tools, will allow potential buyers to make their own smart decision.

To view homes in the area, click here.

The Role of A Real Estate Agent

Fri, 14 Dec 2012 05:20:39 -0600

Home buyers and sellers alike may want to begin a real estate transaction by contacting a real estate agent. Professional help with every step of the home buying and selling processes can be invaluable, since these transactions are not only financially large but can leave a mark on an individual or family for years by impacting where they lives.

According to US News and World Report, agents can provide a layer of protection for their clients by helping through their negotiating experience. This expertise can be a resource for those selling a home and looking for a new one.

Sellers, buyers and agents

Home sellers will generally want real estate agents to help them estimate the value of their property. This is commonly the first step in preparing a home for sale, since advertisement and other steps proceed more smoothly when the parties involved have good information.

The role of an agent in helping to market a home through online listings, open houses and other methods is an important one. They may also be able to provide advice on how to properly stage the home to attract and hold interest from prospective buyers, among other things.

Agent relationships

Agents may work exclusively for the seller or exclusively for the buyer. They may also, through dual agency, represent both. This can depend on state and local laws. If the buyer and seller are both working with the same company, they may also have designated buyer's and seller's agents, who will act on behalf of one party to minimize potential problems.

Agents can provide a great deal of help, so buyers and sellers should be certain they understand the business relationships involved in any real estate transaction to avoid miscommunication. This allows home sales and purchases to proceed smoothly to the satisfaction of all involved. Some agents will only work with buyers, some only with sellers and some with both.

In the last case, a single agent may assist an individual or family with selling their current and buying a new one. Alternatively, two agents from the same firm could work with a client as a buyer and seller, respectively.

Check the Rules About the Home Owners Association Before Buying a Home

Tue, 24 Jul 2012 05:46:59 -0600

There are several factors consumers take into account when buying a home, including property features, proximity to their work and the surrounding community. The neighborhood they are moving into can play a large role on a new homeowner’s experience, so it’s important to research the particulars of each community thoroughly.

One of the first questions potential buyers should ask is whether the community is governed by a homeowners association. These associations are typically run by real estate developers in suburban areas who want to give neighborhoods a certain appearance to make homes easier to sell.

Determine the rules homeowners associations impose

Homeowners associations can provide a number of benefits for buyers, such as keeping a property management company on retainer to keep the community immaculate. In addition, rules can help owners avoid property disputes with neighbors. However, membership is typically a condition of purchase and buyers in these types of communities are usually not given the option to decline joining. In addition, homeowners associations can place certain restrictions on owners, regarding the appearance of their homes to the pets they may own and whether they can rent out their properties, according to MSN Real Estate.

For example, standard homeowners association rules allow them to govern the color of the house, the size of an owner’s pets and how they can decorate their homes for the holidays, the news source reports. Each association is built differently, so the rules may vary.

Homeowners association disputes

Because new owners may be required to become members of a homeowners association if they purchase certain homes, it’s important to fully understand the rules of the association and determine beforehand if they are reasonable. This is largely because homeowners have few other avenues for disputing restrictions once they have purchased the home. Violating the terms of a contract can result in fines and lawsuits for homeowners.

Homeowners associations can be beneficial for buyers who want structure and will enjoy the protections afforded by the association. In addition, most associations are flexible with owners and simply want to keep a neighborhood uniform and marketable, so that values will stay intact - which can benefit both the association and homeowners. However, associations are not for everyone, so buyers should make sure all the terms of a contract are reasonable before signing.