Hacked By GeNErAL

Question:   My wife and I are looking to purchase a short-sale home.  The seller has a listing price, but from what we understand, the bank has not approved a price yet.  The house needs work, and we would like to offer 20k less for it.  What process do we need to go through, and can we do this if the bank has not agreed to the listing price yet?

Answer:  There is no simple quick answer to this question.  The only sure answer is it takes time and patience to successfully complete a Short Sale.  And in the scenario described above this will be especially true.  If the Short Sale Lender, (the bank), has not yet approved a price, the sellers are still early in the approval process.  It could still be several months, if at all, before the short sale is complete. 
Short Sales present a unique opportunity for buyers; purchase a home at a 20% discount to market values.  But the negatives may just be too great for many buyers; difficulty in obtaining financing, unbearable waiting and inexperienced Real Estate agents. 
If a buyer must take occupancy within six weeks, has little cash and is using a government loan then they should avoid Short Sales.  But if they have flexibility with the move times, some cash to do minor repairs and the temperament to handle negotiations and setbacks, then a Short Sale purchase might be appropriate.  Many investors are buying short sale homes; they understand they may have to bid on several homes before they can close on one.  They have the time, tolerance and dollars to see it through to the end.
To determine if it is right pursue a Short Sale purchase, a buyer should have an in-depth conversation with an experienced Real Estate agent.  That agent must be able to ask the right questions to judge the chances of a successful closing.  Are the sellers cooperating?  What is their hardship?  Have they made Short Sale application?  Has a value been determined? Who is the lender? Who is the Negotiator? Who is the Investor? Who is the Mortgage Insurer?

Question:  Can you help me to understand what a CMA is?   What questions I should ask to make sure we fully understand how this may help as we get ready to put our home on the market?

Answer:  CMA stands for “Comparative Market Analysis”.  All three words are important and must be used in conjunction with each other to be useful in determining the value of your home.

When a homeowner or investor first considers selling their home, the initial question is at what price?  To best determine that, a competent and experience Real Estate Broker will do a CMA.  First the agent must collect data on the subject home, usually from the County records with input from the home owner.  Next the Broker will find “Comparable” homes that are currently for sale or have sold recently using the Multiple Listing Service, (MLS).  This is where the competence issue comes in.  Even though each home is unique, there are comparable homes, sometimes many…sometimes just a few.

There are obvious things about a home that we can compare; age of the home, size, (in Sq. Ft.), beds/baths, size of the land parcel and its utility, neighborhood and its amenities and of course location.  More difficult to determine, but just as critical are; quality of construction, materials used, potential future obsolescence and geological hazards, school districts, views and of other improvements made to the estate like shops & outbuildings, pools, landscaping and estimated costs of deferred maintenance, if any.

Now we come to the “Analysis” part.  The subject property has dollar value is either added to or subtracted from it as it is compared to the select other homes.  This can be a lengthy process, depending on the availability of comparable homes and how closely related they are.  For example, if the subject property has more square footage, dollars are added, if the subject has a poorer view, dollars are subtracted, etc…

Clearly experience and competence are critical to this process.  If you undervalue the home, dollars are left on the table.  If you overvalue, the home will not receive offers and will languish and become stale. 

Question:    How does Windermere contribute to “Green” programs?    

Answer:  Windermere Real Estate in Kitsap County has an Annual “Shred Fest”.   Each year, on the second Saturday of April, we have FREE document shredding and electronic recycling event.  Each of our four offices, (Poulsbo, Kingston, Silverdale and Bainbridge Island) participates. 

We team with local recycling companies to make sure your confidential documents are properly shredded and the electronics appropriately disposed.  So when Spring Cleaning time arrives and it’s time to clean out the garage, bring those items to your local Windermere office.  We also collect gently used clothing and household items for local charities. 

We accept computers, printers, fax machines, monitors, TV’s, (even the big screen ones!), laptops, etc… All the old paper files you have been collecting can now be recycled and no worries about bad people stealing your identity.

And we have a quick lunch, serving hot dogs and chips!  All monetary donations go directly to the Windermere Foundation, helping families in our community with their housing needs.

See you in April!

Question:  When listing your home do you feel it is important to use a professional photographer?  What are they keys to getting the best indoor and outdoor photos? 

Answer:  Since a little more than 99% of buyers now find their new home online, I would not say it is important to hire a photographer.  I would say it is critical!

Professional photographers know their business and for a couple hundred dollars, (most often paid for by the agent), it is arguably the best money spent when selling a home.  Not only do they have the talent to take great pictures, they also have the equipment, including sophisticated software, to take stunning photos.

The Multiple Listing Service, (MLS), used by agents to post new listings, allows up to 25 photos for each home.  A good photographer will showcase the home begin with the exterior, views and landscaping.  Then moving inside, beginning with the entry, they will take you on a tour of the interior of the home,   highlighting selling features and upgrades.  Often the photographer will need to make a couple trips to the home as good lighting is imperative.  

Once the listing and photos are entered into the MLS, then the numerous third party real estate web sites, i.e. Zillow, Trulia, Windermere.com, etc…”sweep” the MLS and take all the photos and post them on their web sites.  This way a new listing is within an hour or so in front of literally millions of potential buyers.  I do believe the internet is the best thing invented since moveable type. 

That is why if I have an attractive home to list, I always hire a pro.  Just as a marginal home can be made more appealing with great pics; a stunning home can look average when an agent uses their smart phone to take pictures.  And one more thing; if there are no interior pics posted, it is because the home is a distressed sale and you DO NOT want to see the inside!         

Question:  I have heard that many people do a pre-inspection prior to putting their home on the market.  Can you explain what this is and if you feel it is a benefit? 

Answer:  Many sellers do preform a complete “Home Inspection”, but not a majority.  There are benefits…and consequences involved.  The decision to do a “pre-marketing” home inspection should not be taken lightly.  There are clear financial and legal arguments for and against. 

The primary objective of doing a pre-marketing home inspection is to eliminate surprises.  Nothing is more frustrating than long negotiations with buyers who really love your home, then finding a deal breaking problem.  If the problem had been found earlier and addressed, you proceed to closing and everyone is happy.  The inspection will cost about $400 and the repair was going to need to be fixed eventually anyway, so in this scenario all’s well.

But what if a problem is found that you were unaware of?  Do you fix it if you have the money?  Or ignore it and see if the buyer calls it out? That is a debate you can have with your agent and decide.  What you must do, per Washington State Law, is disclose what you know.  If a seller, or their agent, has knowledge of a “material defect” with the property, they must disclose it.  If you don’t, you are exposing yourself to a lawsuit.  An agent must tell buyers what they know about the condition of the property, regardless of whether the seller wants them to or not. 

Most unknown problems are found where the normal homeowner does not go.  Under the home into the “crawlspace” or in the roof/attic area are the two places most surprises occur.  If you don’t want to disclose a potential problem, don’t find it!  Home owners and agents are not required to uncover problems, just disclose what, if anything they know.   

Question: Is there a checklist for sellers to help them prepare their home for sale? i.e. yard work and exterior maintenance, kitchen & bath repairs and upgrades, de-cluttering, etc…?

Answer:  You bet there is!  Windermere just happens to have its own, and it is really well done.

A clean, neat home in need of few repairs will sell faster and at a higher price than one showing “wear and tear”.  Also, many of the items addressed will make it on to a buyer’s inspection request so you may as well deal with them prior, eliminating objections.

The attached, “Guide to Selling a Home” is an excellent tool for anyone preparing a home for sale and the subsequent transaction and move.  This 16 page information guide should be read and followed by all sellers.  It covers the process from beginning, (home preparation & working with an agent), to the end, (packing and moving). 

The section “Preparing Your House for Sale” details an exhaustive “Repair and Cleaning Checklist”.  This three page section covers both exterior and interior items.  From removing moss on the roof and pruning overgrown shrubs; to deep cleaning the kitchen and clearing out the basement.  Many of the suggestions are inexpensive and simply required effort and diligence.  Any issue that involves writing a substantial check should be discussed with your agent.  Not all repairs/upgrades are cost effective.  No sense in spending $500 to make $300.  And if you are hiring a contractor to help, be sure they are well known in the community, (for integrity & good work) and properly vetted.  Your agent should help with this also.   

Guide to Selling a Home

Question:  We have 2 dogs and a cat that live most of the time indoors, I am nervous that we may be use to the pet smell (to our family it is not noticeable).   What do you suggest we do to make sure that prospective buyers do not smell any traces of our pets?  Any tips and tools you suggest we try to eliminate odor?  

Answer:  This is a serious issue with many sellers and can be quite costly if not addressed.  Fortunately there are good solutions and your home can be made odor free and inviting to prospective buyers.

But don’t blame all stenches on Fido & Kitty!  Other malodorous odors come from us: smoking, cooking, fouled food, garbage, mildew & mold and of course plain old body odor (yes, the human kind!).  All these smells can be a turnoffs and cause buyers to just turn around and walk out of the home (been there…believe me).

The answer to foul smells is a varied as they themselves.  Most are self-evident, if the seller is cognizant.  Stop smoking inside (or better yet, altogether), thoroughly clean the home (a couple cleaning ladies can do wonders in one day), stop the source of water if you have a mold problem and most all of us now have indoor plumbing and soap. 

In many occasions, depending on the severity and cause of the problem, more costly solutions are required.  If we have a urine problem with the carpet, pull it out.  Heavy smoking & cooking may call for priming and repainting the entire interior of the home. In both these scenarios the cost/benefit analysis strongly favors doing the work.

An easy and less costly solution is to use an “ozone generator” to remove the odors.  Ozone, (O3), contains three atoms of oxygen rather than the two atoms we normally breathe.  Ozone is the second most powerful sterilizer in the world and can be used to destroy bacteria, viruses and odors.  The third oxygen atom of ozone makes it extremely reactive.  The atom readily attaches itself to other odor molecules and changes their chemical structure.  This process is called oxidation and makes for a very environmentally friendly solution.     

So yes, if you have pet odors, you have a problem.  But like most problems it can be solved, you just need to know where to turn for the answers.   

Question:  My 70 year old mother is moving from her home located in a great area with fabulous schools and amenities. The problem is that her home is dated and that includes furniture.  

What are your thoughts on staging a home in a marketplace that is hot and may sell quickly?  We have been told to at the very least to have a stager in and remove my mother’s personal items to help garner a larger profit.  Do you feel that staging is necessary in this case and what criteria should I use to make a decision to invest in staging?

Answer:  The short answer is yes:  Bringing in a professional to help prepare the home for sale, (and photography) is critical to maximize your mother’s “Net Proceeds” from the sale.  Sellers wish to receive the biggest check possible at closing and there are small things that can be done to make for a good return on the investment.  Professional staging is an easy answer to clutter.  Remodeling a “dated” home can be costly and stressful.

The scenario outlined above is very common and is as much about family and feeling as it is real estate.  Elderly folks are going through a tremendous change in their lives.  Care and compassion are as important as advertising and contracts for a successful transaction.  A professional stager whom understands memories and cherished possessions as well as resale values and matching colors will make the whole experience less stressful.

99% of buyers now find their new home on the internet.  They are looking at the pictures, (the Multiple Listing Services now allows 25 photos for each listing).  Clutter and personal items spoil the pictures and if the buyers do visit the home, they will be looking at the family photos on the wall, not the home.  Nor do we want a vacant home with no furnishings or context.  We want a warm, livable home where buyers can envision the own furnishings and family enjoying life.

Even though we are entering a seller’s market, doing the small things right will pay a huge dividend.  Other, more costly investments need to pass a cost/benefit analysis prior to commitment.  There is no sense spending several thousand dollars upgrading something in the home and then not getting a much better price.  Spending $500 and getting a $5,000 return is very good.  Spending $5,000 and getting and additional $6,000 in sales price is not.

A quick easy rule; new carpet and paint usually are the best investments, after staging and photos.  Don’t remodel your bathrooms or kitchens, or build a deck unless you have done a thorough financial analysis.  Chances are you will not be happy with the results. 

Question: My spouse recently lost his job and although we are fine for the next 60 days in terms of covering our mortgage our fear is that he will not be employed quickly and we will not be able to sustain our mortgage payments.  What are your suggestions to help avoid foreclosure?

Answer:  Sorry to hear of your spouse’s misfortune.  Even though the job market continues to show gradual improvement, there is still substantial labor turnover as businesses evolve and compete.  Hopefully a comparable job will become available and hardship can be avoided.

But, in the meantime action is required to mitigate damage to your family finances and your mortgage holder.  DO NOT go “ostrich”.  Sticking your head in the sand and ignoring the problem will only make things worse.  Your bank does not want to foreclose…they want to get paid.  If you work with them on a solution to the problem, they will work with you.  And there are many solutions; we just need decide what is right for you and your family.   

One solution is to sell your home.  But if you purchased your home with a small down payment in the last eight years or so, you may very well be “underwater” on your mortgage.  Meaning if you sold your home today there would not be enough funds to pay closing costs, (approximately 10% of the sales price) and the entire balance on the mortgage.  So selling your home without significant consequences is not an option.

So you lost your job and you cannot sell your home to pay off the loan to avoid foreclosure.  So what do you do?  You call your lender and tell them of your plight and future prospects.  They will want to work something out, if at all possible.  But you must be honest with them and be prepared to go through a lengthy process proving your hardship.

If you spouse is able to find similar employment again a “Forbearance Agreement” is an excellent solution.  The lender allows the borrower to miss a few payments.  No debt is waived; there will be a repayment plan or the balance added on the end of the loan.  But it does buy the homeowner some time to get finances in order and does not significantly affect your credit.

Another possible solution is a “Loan Modification” program.  If your monthly income is reduced because of the new job, (or expenses increased due to unforeseen events), modifying our current loan by lowering your interest rate is great solution.  If your current interest rate is 6% on a $200,000 note, you are paying $12,000 annually in interest.  Reduce you interest rate to 3% and your interest payment is cut in half to $6,000.  That is a $500 a month is savings.  Lenders rarely reduce principal to make payment affordable.

The two examples above are “short or medium term hardships” solutions.  If your hardship is long-term, i.e. medical issues, marital problems, long term unemployment, job transfer, etc…then you may need to relinquish ownership of your home.  If this is the case, there are solutions also. Some good, and some not so good, but you certainly can avoid foreclosure…if you do not go “ostrich”!