Real Estate Information Archive

  ?          Weekly Market Update – 19 December 2008

1.         And an increasing number of consumers taking NFCC's Mortgage Reality Check are falling into the red danger zone, indicating they are in imminent risk of foreclosure. The self-assessment test, which determines one's risk of foreclosure, is located at http://www.HousingHelpNow.org.

2          This areas market is neither better nor worse than any other; however, homes continue to sell in our area when the listing agent has been direct and candid with the seller regarding price and condition. By passing along market statistics, including showing a declining market, sellers can be prepared for what are "realistic" offers in today's market which include discounted prices plus closing assistance and higher commissions. This upfront approach prepares sellers in the beginning so there are fewer surprises when offers come in.

3          According to HUD, 4.3 percent of all Prince William mortgages are in foreclosure, compared with the statewide rate of 3.1 percent. The Fairfax County rate is 2.3 percent.

4.         Eight of the largest 15 metropolitan areas were losing jobs as of August.  The data from the Bureau of Labor Statistics showed Washington as gaining 44,600 jobs since August of 2007.

5.         Programs such as “Hope for Homeowners” that were passed by Congress have done little to help homeowners soon to be foreclosed on.  The lenders holding the notes are unwilling to re-negotiate the terms of the loans in most cases.  The projected 400,000 who were to be helped will actually be about 13,000 by year end.

6.         In Greater Northern Virginia the number of homes sold in October this year showed a 29% increase over home sales in October a year ago. The absorption rate for October 2008 is higher than last year’s with a 6.04-month supply of homes.

7.         A major portion of the total inventory on the market continues to be “Short Sales”.  These homes are taking on average 4-6 months to close, if ever, after a contract has been received by the sellers.  Most agents are reluctant to show these homes to their buyers actively looking to purchase because of the uncertainty of ever being able to get the banks decision to accept the sale.

8.         FHA loans will require a minimum of 3.5% down at settlement after January 1, 2009. 

9.         Average conforming loan rate 5.25 with 0 points.

10.        Average Days on Market in N. Virginia for October ‘08 = 94

11.        Light, sweet crude went down to settle at $42.59 a barrel on the New York Mercantile Exchange

Here is an update that George Flood, one of our most experienced agents compiled:

  ?          Weekly Market Update – 23 October 2008

1.         The real estate market is doing better in some areas over the same time last year according to the Northern Virginia Association of Realtors latest report.

2          RealtyTrac reported that U.S. foreclosure filings increased 71 percent in the third quarter from a year earlier, reaching the highest on record. A total of 765,558 U.S. properties got a default notice, were warned of a pending auction or were foreclosed on in the quarter, the most since records began in January 2005.

3          According to HUD, 4.3 percent of all Prince William mortgages are in foreclosure, compared with the statewide rate of 3.1 percent. The Fairfax County rate is 2.3 percent.

4.         Even as prices have moderated on homes in our area, buyers may have difficulty obtaining financing at attractive terms due to the problems in the national credit market.

5.         The FDIC chairman has argued that the extensive set of financial rescue strategies deployed in recent weeks needs to do more to get at what she called the "root cause" of the crisis -- millions of households heading for default on their mortgages and potentially foreclosure on their homes.

6.         In Greater Northern Virginia the number of homes sold in September this year showed a 53% increase over home sales in September a year ago. The absorption rate for September 2008 is slightly higher than last year’s with a 5.52-month supply of homes.

7.         A major portion of the total inventory on the market continues to be “Short Sales”.  These homes are taking on average 4-6 months to close, if ever, after a contract has been received by the sellers.  Most agents are reluctant to show these homes to their buyers actively looking to purchase because of the uncertainty of ever being able to get the banks decision to accept the sale.

8.         Average conforming loan rate 6.125 with 0 points.

9.         Average Days on Market in N. Virginia for September ‘08 = 93

10.       Light, sweet crude went down to settle at $65.90 a barrel on the New York Mercantile Exchange

As many of you know, a short sale is where a person owes more on their home than it is worth on the open market. They are attempting to sell because they are having trouble making payments because of either a personal adversity (job loss, sickness,etc,) or an adjustable rate mortgage has reset at a higher interest rate, making their payment more than they can afford.

The idea is to get an offer for the home that the bank can live with. They agree to accept less than what's owed, in order to avoid having to go to bankruptcy, and then have the property in their inventory to sell at the same or a lower price.

The bank will want W2s, bank statements, tax returns, a hardship letter, a financial statement, and paystubs from the seller. The bank will also require a copy of the listing agreement, sales contract, and a preliminary HUD-1 settlement statement reflecting all the fees to the seller.

Generally, there are few if any contingencies in the accepted contracts. Certainly no "sale of home" contingencies. The bank will send an appraiser or BPO agent to do an appraisal to make sure they are getting fair value.

Some banks are getting better with response time. We have seen some take well over 2 months to give an answer to a purchase offer. This of course can be very frustrating to the buyer, but patience is required if one chooses to bid on short sales.

There is another factor that often people don't hear too much about. That is when there is a second trust on the property. When the first trust is not getting all the money that is owed to them, then the second trust surely doesn't get theirs. But, if the second doesn't get anything, then many times they just let the property go into bankruptcy. The first trust tries to negotiate with the second trust to get them some money so that they will agree to the short sale. So, as a buyer, it is important to know if there is a second trust on the home you are bidding on. The process is usually more lengthy if there is.

In the meantime, buyers shouldn't forget the great deals they can get on "regular" sales happening in the area. These homes also often times have one big thing going for them: if an owner of a short sale or foreclosure can't make the payments, then they surely can't afford to make big improvements to the property. A purchaser may get a home that needs work on a short sale for $500,000 but  overlook the same model one street over going for $530,000 but with $50,000 in upgrades/improvements. With the upgrades rolled into the mortgage, it would cost much less out of pocket money than for the new owner to make those improvements by coming up with the cash out of their own pockets.

At Tom & Cindy and Associates at Long & Foster, we are constantly trying to give our clients all the options, so that they can decide which is the best one for their family and situation. We're knowledgeable and available and never make you feel pressured. We don't like to be pressured and we treat our clients the way we would want to be treated. Give us a call or e-mail if you ever need anything.