In today’s market, everyone is looking for a deal. No one is interested in overpaying, or even paying the asking price for a home. It does not matter if that asking price is half of what the same home sold for just a few short years ago.
So, you might ask, where can I find the best deals? Obviously not in a conventional sale, when an owner is selling their own home the asking price is higher than in any other kind of sale, right? How about an auction, the advertized prices on auctions look like they are much too good to be true, are they for real? A friend told me that you could get a GREAT deal by buying a foreclosure on the courthouse steps, why doesn’t everybody do that?
In this Blog series, we will address one of these questions at a time so that the reader understands the process more thoroughly.
PART ONE: THE FIRST STEP
Most people who are interested in buying a home love to spend time looking at homes. Many spend hours on the Internet, looking at homes in magazines and visiting open houses. It can be great fun. However, if you do not focus your efforts you can waste months looking and may miss the opportunity to find the perfect home.
Many buyers do not get serious until they find that perfect home and then learn that their failure to prepare creates all kinds of headaches. In fact, it can result in their not being able to buy that home.
Smart buyers take a more organized approach. They watch their expenses and sock away as much cash as they can in preparation for their purchase. They avoid making major purchases (e.g.… new car, boat, large flat screen TV, expensive vacation) so that their credit report shows the most positive picture possible of their buying habits. And they pay their rent or present mortgage payment and at least the minimum payment on every account they have on time!
The days of 100% financing are almost totally gone, so you can bet that you are going to have to make a down payment. Banks like 20% or more down but there are programs still available, like FHA loans, where a 3.5% down payment works for well-qualified borrowers. Less qualified borrowers may qualify for FHA loans with a 5% or 10% down payment, depending on their credit scores.
Smart buyers then contact a loan consultant and get their financial house in order. The goal is pre-approval for a loan. They provide paycheck stubs, bank statements, tax returns and other required documents, depending on their situation. Their loan consultant will let them know the maximum loan amount for which they qualify and what the payments for that loan will be. They may have to discuss their wishes and concerns with their loan consultant to arrive at an amount and a loan program that will work for them. The loan consultant will provide them with pre-approval letter confirming that they are qualified for the agreed upon amount.
Once armed with that letter and that information, and not until then, they contact a Realtor® and start looking for a home in their price range. Then they find that perfect home they can submit an offer and move forward with the purchase, having completed the legwork.
Tune in for PART 2, coming shortly.
Buyers interested in real estate in El Dorado Hills, Folsom, or surrounding areas, including the greater Sacramento area may feel free to contact us for financing assistance or representation in a real estate transaction by calling (916) 337-0658.
BANK OWNED (REO) HOME SALES DATA FOR EL DORADO HILLS, CA – JULY 2011
There were 16 REO homes sold in El Dorado Hills in July, three less than sold the previous month.
The average days on market dropped from 72 in June to 67 in July. Three of the homes had been on the market for over 100 days, one for 270 days. However, 25% of the homes that sold were on the market for two weeks or less. Well-priced homes in good condition are still selling quickly.
The 16 Bank Owned homes that sold represent 25% of ALL homes sold in El Dorado Hills this month.
The available inventory of REO homes in El Dorado Hills increased slightly from a .9-month supply the previous month to a 1.0-month supply in July. The available inventory for ALL homes increased from a 2.9-month supply the previous month to a 3.5-month supply in July. Pundits advise that a 6-month supply is a neutral market, so we are still looking at a seller’s market for ALL homes in El Dorado Hills.
The average cost-per-square-foot for Bank Owned homes was $ 124 in July, down from $ 128 the previous month. The average cost-per-square-foot for ALL homes sold in El Dorado Hills in July dropped to $ 146, down from $ 149 the previous month.
The overall sales price for REO homes was 98.3% of the final asking price and 92.5% of the original asking price. Yet 57% of the buyers paid the full asking price or more for their REO homes in July. Apparently, these homes were well priced and buyers decided to take advantage of low prices and excellent mortgage interest rates.
REO buyers paid 85% of the cost-per-square-foot for their REO home when compared with the cost-per-square-foot for all homes sold in July. That is a $ 22 pre-square-foot savings. When applied to a 2500 square foot home that represents a savings of $ 55,000, a considerable sum. Most buyers would consider that sufficient reason to accept the fact that REO buyers must relinquish some of the rights they have when buying a home in a normal sale.
If you have any questions about purchasing any home in El Dorado Hills, an El Dorado Hills Bank Owned Home, or a Bank Owned Home anywhere in the area, feel free to give us a call (916) 337-0658.
The data follows:
This is the latest monthly report of a nearly four-year study of bank owned (REO) home sales in Folsom, CA. This report covers July 2011.
There were 23 REO homes sold in Folsom in July, The same number that sold the previous month.
The average days on market dropped from 49 in June to 41 in July. Two of the homes had been on the market for over one hundred days; however, 26% of these homes that sold were on the market for two weeks or less. Well-priced homes in good condition are still selling quickly.
The 23 REO homes that sold represent only 24% of all homes sold this month, on the lower end of the normal range. REO inventory is very low.
The available inventory of REO homes in Folsom dropped to a 1-month supply, the lowest inventory level in the past fourteen months. The available inventory for ALL homes available increased slightly from a 1.8-month supply the previous month to a 2-month supply in July, the two months with the lowest inventory level in the past 14 months. Pundits advise that a 6-month supply is a neutral market, so we are still looking at a strong seller’s market in Folsom.
The average cost-per-square-foot for REO homes was $ 156 in July, up markedly from $ 142 the previous month. The average cost-per-square-foot for all homes sold in Folsom in July increased to $ 162, up from $ 154 the previous month.
The overall sales price for REO homes was 103.36 % of the final asking price. In addition, a full 61% of the buyers paid the asking price, or more, for their REO homes in July.
REO buyers paid 96% (of seven dollars per square foot) of the cost-per-square-foot for their REO home when compared with the cost-per-square-foot for ALL homes sold in July. When applied to a 2500 square foot home, that represents a savings of $ 17,500: a considerable savings.
If you have any questions about purchasing a home in Folsom, a Folsom REO, or an REO anywhere in the area, feel free to give us a call (916) 337-0658.
The data follows:
HomeSteps is the real estate sales division of Freddie Mac, one of the two giant government sponsored enterprises charged with enhancing the flow of credit to targeted sectors of the economy. They recently announced a special limited time “Condo Cash” program that will provide eligible condominium buyers with up to $ 1500 for standard condominium association dues.
As with any incentive program, there are narrowly defined qualifications. This program only applies to HomeSteps condominiums, Condos that have gone through the foreclosure process and that Freddie Mac is charged with selling.
To qualify, buyers must submit offers between August 15, 2011, and November 15, 2011 and the escrow must close by December 30, 2011. The Condo unit must have been on the market for a minimum of 120 days and the buyer must occupy the unit—no incentive for investors.
Homesteps homes frequently come with a two-year home protection warranty covering electrical, plumbing, air conditioning, heating and other major systems. The home protection program also includes up to a 30% discount on the purchase of appliances. To see who may qualify go to http://www.HomeSteps.com/Smartbuy .
“Condo Cash” is not available on Homesteps Condos purchased through auctions, sealed bids, bulk sales or in areas where such offers are prohibited by law.
For terms and conditions, visit: http://www.Homesteps.com
There are a number of Homesteps homes available in the local area, several that may qualify for the “Condo Cash” program. If you are considering the purchase of a Condo, feel free to contact us so that we can set up a tour of properties. This incentive will only be available for a short time. Take advantage of it while you can.
On July 11, 2011, BofA settled with the Department of Housing and Urban Development, releasing BofA from further liability for failure to adequately provide foreclosure alternatives to 57,000 distressed homeowners delinquent on government-insured mortgages. The agreement requires BofA to waive a minimum of $10 million in unpaid mortgage payments and vet each of the 57,000 homeowners for possible loan modification, short sale or other foreclosure alternative. A BofA spokesman indicated that the total costs of this process will likely be many times the $10 million dollar figure.
The goal set by HUD for government-insured mortgages is to “ensure that these customers have every opportunity to stay in their homes” according to a BofA spokesman. Apparently BofA did not meet the loan servicer requirements set forth by HUD, failing to offer loss mitigation.
Loan modification, the best possible result for the borrower, permits the change of the terms of the defaulted loan, usually lowering the monthly payment and in some instances reducing the principal balance. This process allows the borrower to remain in their home if they make the modified payments on time.
Another alternative to foreclosure not properly offered to these homeowners is a short sale. A short sale is when the delinquent homeowner sells the home for less than they owe with lien holder approval. A short sale has less of a detrimental affect on the borrower’s long term credit.
Another foreclosure alternative not offered is a deed-in-lieu, where the delinquent homeowner exchanges the deed to the property in exchange for a release of liability for payment of the mortgage.
Apparently large banks hold billions of dollars of delinquent FHA loans and are very slow in dealing with them, fearing that they may violate stringent HUD servicer agreements. One wonder why they did not study the requirements before they accepted the business in the first place.
Select this link to view the entire American Banker story: