Short sales—long dreaded by many Buyers and Sellers alike for taking so long to conclude—may just actually become shorter, after all.
The Federal Housing Finance Agency has just announced new rules designed to speed up the Short Sale process. In the Birmingham area, getting your home sold in a Short Sale can sometimes take 90 days or longer … but that time could wind up dropping in some cases.
Under the new guidelines, which take effect November 1st, if you own a home with a mortgage backed by either Fannie Mae or Freddie Mac, you’ll be able to sell your home in a Short Sale even if you are current on your payments, as long as you can prove a hardship.
The process of getting a Short Sale approved will be further streamlined, since, in some cases, mortgage servicers will no longer be required to gain additional approval from Fannie Mae or Freddie Mac.
Both entities will waive the right to pursue a deficiency judgement against borrowers who have sufficient income or assets if the borrower agrees to make a financial contribution or signs a promissory note.
If you have a second loan, the new rules authorize Fannie Mae and Freddie Mac to offer up to $6,000 to the second lien holder. This may help speed up getting a Short Sale through, too, since—in the past—the process has sometimes been bogged down by second lien holders negotiating for higher settlements.
In addition, borrowers who serve in the U.S. military and who are being relocated will automatically be eligible for Short Sale approval, even if they are current on their mortgages.
The changes, backed by the National Association of Realtors, are expected to make Short Sales a more viable option for many home owners who otherwise might have faced defaulting on their loans and being Foreclosed.
And then, after glancing at the sticker, reality sets in.
Looking was fun, but the sticker reminds that—before you can actually own that new car—you’re going to have to play the “show me the money” game.
Having your funding secured for the purchase of a new home is just as important. After all, if you don’t have the money needed to make buying a home a reality, what’s the point of looking?
Having enough money on hand to pay cash for a home is great, but let’s face it … not everyone can do this.
The alternative, then, is to get a loan.
Unfortunately, a number of people looking to buy a home in the Birmingham area wind up starting the loan process the wrong way, which goes like this:
- Buyer decides to buy a home
- Buyer starts the home search, driving neighborhoods, looking at homes
- Buyer finds the perfect home (“I want it!”)
- Buyer starts envisioning the new home as theirs (“Living here will be great!”)
- Deciding to move ahead with purchase, Buyer asks Lender for a loan
- Lender looks over Buyer’s information and says, “sorry, can’t help”
- Entire process comes to screeching halt
The scenario above is a classic invitation to major Buyer disappointment.
It doesn’t have to happen this way.
Colleen and I feel strongly that the first–and most important–steps in the home buying process are to contact us as your Agents and then speak with a Lender.
By finding out how much money you can borrow before you start looking, your search will be easier, as well as more targeted to properties that fit within your price range. If there are parts of your financial background that need work, a Lender can be a good resource for charting a course for you to follow so you can be approved.
If you’re thinking of buying a home, a good Lender will answer all of your questions and make you feel comfortable with the entire process of obtaining financing. Since buying a home is the biggest purchase many people make, if you don’t have this feeling of comfort, our advice is simple: Find another Lender.
Buyers lacking some time of financial qualification may be in for a surprise, given a reality we see all the time in the Shelby Co. and Birmingham real estate market:
Sellers want some assurance that a prospective
Buyer can actually obtain needed funding.
“Show me the money.”
If you try submitting an Offer without including either a loan pre-qualification or verification of funds (if paying cash), many Sellers simply won’t deal with you.
We know of several good Lenders in the Birmingham area with a thorough knowledge of the mortgage profession, different loans, costs and how they work. These Lenders have a strong commitment to providing good service.
Fortunately, most of our Clients purchased their home the right way, having contacted us first and then following our advice on consulting with Lenders before we started helping them with their search.
As a result, they are now happy homeowners.
As Fisbo, our highly spoiled six pound poodle, and I took our early morning walk a few days ago, I used the time to contemplate how our real estate business has evolved during 2011 and thought about what’s ahead as we kick off 2012.
Our walk was made rather intriguing because the neighborhood was shrouded in fog, limiting visibility sometimes to only a few hundred feet.
You can’t see very far ahead, and as you keep moving, what’s behind you grows increasingly vague.
Predicting home sale trends in Birmingham and Shelby County can be a little like walking into the fog: You can see a certain distance in front of you, but after that, knowing what’s ahead gets tricky.
That’s not to say we’re in a fog about what will happen, market-wise, during 2012. In fact, Colleen and I are optimistic that a lot of people will be buying and selling homes during ’12.
We think it’s going to be a busy and successful year.
Our optimism about ’12 is due in part to 2011, a year that was not only productive for us, but outperformed previous years.
For a lot of people in the Birmingham area, 2011 was a very difficult year, with the April 27th tornado affecting so many thousands of people and Jefferson County declaring the largest municipal bankruptcy in history.
I believe the new year will be one of healing and stories of success.
If You’re Buying:
2012 will be a year of excellent opportunity.
You might have to spend a little more time picking and choosing than during previous years, because inventory in some areas has dropped. This doesn’t mean the good deals are gone. It just means you’ll have to do a little more work to find them. An Agent with a good knowledge of the market as well as sharp negotiating skills will be one of your most valuable assets during this time.
Pricing will continue to be very much in your favor, but if you’re in search of a “steal,” you stand a greater chance of a Seller saying, “no deal.” If inventory continues to drop, Sellers have less competition, and therefore less reason for agreeing to a “fire sale” Offer.
The Buyer who understands and accepts this still stands to get a very good deal.
With no sharp rise in mortgage interest rates on the horizon, ’12 is shaping up to be another year of tremendously low borrowing costs.
If You’re Selling:
You will be in a better position to get your home sold than in some previous years. Home values will continue to be a big challenge, but the news isn’t all bad. With the number of homes for sale dropping in some areas, what has been very much a Buyer’s Market shows signs of changing. That’s a good thing, but the change is going to be gradual.
During ’11, we saw many homes sell for the same price they sold for ten years earlier. This was great for the Buyer, but not for the Seller. Seeing both Buyer and Seller bring checks to the closing table was not uncommon last year.
If you plan to sell during ’12, understanding one “fact of life” about the Birmingham and Shelby Co. real estate market will help: The maximum a Buyer thinks your home is worth may wind up being significantly less than you had anticipated.
We do feel optimistic that the slide in values is beginning to ease. This easing, however, is likely to be so slow and so slight that many people selling in 2012 may not feel it’s very noticeable. It’s important to remember, though, that the slide in home values didn’t happen in a few weeks or months, but rather, took years. Any correction won’t happen fast, either.
And then there’s the matter of your home’s condition. Do you want your home to appeal to a majority of possible Buyers or only a few? In the Birmingham and Shelby Co. area, the overwhelming majority of Buyers we work with want homes that are immaculate, need nothing done, and are “move-in” ready. We do get calls from Buyers looking for places to fix up, but they expect to pay “bottom dollar” for the work they know they’ll have to do.
Price wise, this home was nowhere near our biggest sale. But it’s not about the money.
The Seller had tried to sell five times before, starting three years ago, and not had success.
This was a sizable home in extremely nice, clean condition. But the sales price had never been in alignment with what was taking place in the Shelby Co. market, and we didn’t feel that the property had been marketed correctly.
Lowering the price was not easy for the Seller to do. But we worked hard in marketing the property, and our Seller worked hard, too, cooperating closely with us as we moved toward our common goal.
That team work finally paid off with a successful closing.
It pays to be a student of the market. Many of the sales Colleen and I helped with here in the Birmingham area offer lessons to the wise if you’re thinking of selling during ’12.
A 2011 Low Point:
We had many successful sales last year. But one home we listed in No. Shelby Co. was not destined to be one of them. It stayed on market for five months and never received an Offer. The home was not priced correctly, drew very little interest, and had significant structural issues cited by many of the few Buyers who actually looked inside.
During one phone call, the Seller (who had moved out but was still making monthly payments) says, “I really need to sell this house.” Only seconds later—during the same conversation, as we discuss pricing—he says, “I’m not giving my house away.”
The Seller’s viewpoint could be summed up in five words: Take it or leave it.
Buyers gave their answer.
The experiences from both our High Point and Low Point provide clear support for a prediction we’ll make for the year, though it’s not the boldest call I could make: 2012 will show that price and condition have never been more important in getting your home sold.
Changes To The Dictionary:
As we kick off ’12, I’m also deciding that it’s time to change the definition of some of the terms real estate Agents use (hmmm … am I allowed to do that?).
Agents have long referred to motivated and unmotivated Sellers. These categories don’t exist any longer. A Seller who is determined to do what it takes to get their home sold is, by definition, motivated. They will adjust their price as needed and will make sure their home is immaculate (as so many folks we worked with did last year). These are the people who, in all likelihood, will get to sit at a closing table.
The unmotivated Seller is typically unwilling to price attractively enough to receive an Offer. They also choose not to deal with with the moldy smell in the basement or the rotted wood that needs to be replaced. This person is not a Seller. They are a home owner. If they do happen to receive an Offer, it is likely to be for an extremely low price.
This year will be another time of great opportunity in real estate. If you’re giving thought to buying or selling a home, you no doubt have questions. Whether you’re a veteran or just starting out, Colleen and I hope you will feel welcome to contact us for assistance.
Feel free to call us at 205.356.5412 or 205.677.8686. Or e-mail us at: firstname.lastname@example.org
And we’re on Facebook, if you’d like to join us.
As for walking through the fog, I look forward to it. What might be ahead may not always be known, but if you’re determined to keep moving, the scene gets clearer as you forge onward.
Our optimism and positive thinking have us excited … we know there are lots of opportunities ahead.
We look forward to being part of your 2012 success story…
If you’re thinking of moving to Birmingham from out of town or out of state, you will no doubt hear news that—at best—will seem unsettling about our area.
On November 9th, the county commission for Jefferson county–Birmingham’s home county–voted 4-1 to file for what will be the largest municipal bankruptcy in U.S. history. At $4.2 billion, the scale of this filing is mind blowing, making it more than double the famous Orange Co. California $1.7 billion bankruptcy filing from 1994.
It goes without saying that this is a very unfortunate event, but it’s not exactly a surprise, either; the possibility has been mentioned and warned about for years.
The Chapter 9 bankruptcy filing follows the collapse of an agreement for the county to pay $3.1 billion in sewer debt connected to a series of financial dealings going back three years that cost county taxpayers hundreds of millions of dollars and caused sewer rates to rise sharply.
Complicating the county’s financial picture was the Alabama Supreme Court’s ruling in March 2011 that a controversial occupational tax the county had passed (and depended on for $66 million of its budget) was unconstitutional.
Alabama’s Legislature could have stepped in to try and help the county avoid bankruptcy, but didn’t.
The bankruptcy filing isn’t helped by the tarnished reputation of some of Jefferson county’s elected leaders the past few years. The county’s leadership became a cesspool of corruption that saw at least 21 people—including five county commissioners—convicted of, or agreeing to plead guilty to, corruption charges, some of which were connected to the sewer debts. At least the commissioners and department heads connected with the sewer scandal are out of office.
If you’re thinking of moving to Jefferson county, this filing raises questions about the quality of life you can expect. What impact is bankruptcy likely to have on county services, on rates for sewer service, and even how easy or difficult it will be to renew car tags, given the closing of satellite courthouses? What does it mean for the myriad of county services residents need?
County staff has gone through severe reductions, as well, and these cuts have affected everything from roads and maintenance to the courts to health to inspections to law enforcement.
All of these are legitimate concerns for people thinking of moving to the Birmingham area, and there are no easy answers.
So, what does the filing mean for real estate sales in Jefferson county? The county has a lot of desirable communities that individuals and families have called home for decades. There are conveniences and benefits that only living relatively close to the metropolitan area can provide.
In deciding where to live, the quality of local government is certainly an important consideration, but so are other factors. The general feeling a community has, the geography, types of housing, price ranges and proximity to important locations are all major considerations. Vestavia and Mountain Brook, two incorporated and very desired cities in Jefferson county, have some of the most expensive homes in Alabama.
No doubt about it: Jefferson county has a black eye that will take years to heal and that could have major economic ramifications. People are still going to buy homes in the county, but the financial implosion is likely to make at least some Buyers take a close look at living across the line in Shelby county; indeed, we have already seen evidence of this.
A Birmingham real estate attorney says he has seen Buyers purchasing homes in Shelby county who say they want no part of Jefferson county’s problems.
Regardless of the bankruptcy filing, the simple fact is that—for decades—a large number of people who work in the general Birmingham area have chosen to live in Shelby county, because of its great quality of life, financial stability, affordability of housing and proximity to the metropolitan area.
Some residents view Shelby county as a breath of fresh air, compared to the financial mess, criminal wrongdoing and political bickering that has plagued their neighboring county to the north.
What’s ahead for Jefferson county? Residents will no doubt experience new belt tightening, and much of it likely won’t be pleasant. It is virtually inevitable that services will be strained further, and costs (whether they be taxes, sewer rates or other fees) will go up more. Real estate sales in the county—both commercial and residential—may well be affected, though no one is sure by how much.
Real estate Agents may find themselves being asked questions from bewildered home Buyers, like, “What’s all this we hear about Jefferson county?”
Can Jefferson county rise from the ashes?
It has to, because it has no choice.
Despite the massive negative nationwide publicity, Jefferson county will have to find a way to continue to provide needed services and facilities. The county is fortunate to have many talented and dedicated people working within its government.
Those people will be needed more than ever in the coming months and years as the county works to restructure its operations.
The Birmingham area business community may find itself being called on in new ways to be an active participant in helping the county get back on its feet. Perhaps the state will finally step in and become involved at some point, too.
With his established track record in the business and legislative community for getting things done, Petelos has drawn praise for his diplomatic skills and ability to bring sides together.
Petelos is well known for his willingness to face daunting challenges, and take them head on.
In Jefferson county, he has found one.
Thinking of selling your home?
You already know there’s plenty of competition here in the Birmingham and Shelby Co. area.
But now, there’s a new force to deal with. Check out our video just below. This all started when we decided to pay a visit to a recently listed Foreclosure in Alabaster’s Lake Forest; you may be interested to see what’s happening inside…
We’re ready to help you with getting your home sold, successfully, and sooner, rather than later.
Give us a call at 205.677.8696…
Ever wished for a crystal ball so you’d know what’s ahead? That might, or might not, be a good thing, depending on what you want to know…!
On the one hand, having a crystal ball to look into the real estate market could sure help ease concerns for some folks here in the Birmingham and Shelby county areas. Or would it?
Suppose you’re thinking of selling your home. Would you be more inclined to sell sooner, if, say, the ball suggested values would continue to slide in 2010? What if the ball suggested you’d get more if you wait?
I don’t think we really need a crystal ball to know that home values will rise. Nearly every expert out there predicts they will, at some point.
It’s those last three words that are the kicker: At some point.
Hmm. Does that mean in the next three months? Ten months? Two years? This is where having a crystal ball would be pretty handy.
However, crystal balls are about as plentiful as bumper stickers in Alabama supporting the Texas Longhorns. People ask us questions frequently that would pretty much need a crystal ball to answer accurately. “What is my home going to be worth in a year?” would be one such question.
“What will my home sell for if I list it right now?”
Ahh. There’s a question that doesn’t need a crystal ball as badly to answer. We have good resources we can draw upon to come up with a figure that—more times than not—winds up being very close to actual selling price.
The fact is that if your home ‘shows nicely’ as Agents like to say, and is priced where we know Buyers will bite, your odds of selling are promising. And, yes, that’s true even in the tough market affecting so many neighborhoods in the Birmingham and Shelby Co. areas as we plow into 2010.
This might sound ridiculously obvious to some, but the ‘shows nicely, priced right’ concept is one we’ve seen trip up a lot of people trying to sell their homes. So, not everyone really understands how important this really is. Or put another way, not everyone really ‘gets it.’
During 2009, we represented Sellers who agreed to price their homes where we suggested. Granted, they weren’t always thrilled with the price we recommended. But they swallowed hard and said, ‘okay.’ Why? Because they needed to sell. Helping ease this frustration was their knowledge that—when they turned around to buy another home—they’d be enjoying the opposite side of the tough selling market, getting a very good deal on the home they’re buying.
We also dealt with Sellers in 2009 who disagreed with us. They felt they had a better idea than we did of what their home would would sell for. And guess what happened with their efforts to sell? Nothing. Zilch. Their homes didn’t sell, despite being on the market plenty long enough to sell. I remember several cases where other homes in the same neighborhood as our Clients’ house sold, and in the general price range we had recommended.
There were some cases where our Client’s home never even got an Offer. We always talk about how important it is to listen to what the market is telling us. Let me assure you of one thing: If a home for sale doesn’t even get an Offer, that’s the market talking. It may even be shouting.
I know one thing for sure about trying to get a home sold in this market. You either have to ‘get it,’ or you have to trust your Agent’s advice. Otherwise, your home is probably not destined to sell.
I think the real question that emerges is: How badly do you want, or need, to sell?
Clearly, there are many situations for folks where—regardless of how the market may be performing at the moment—it’s important to sell sooner, rather than later. Some Sellers who contact us tell us they need to sell as fast as possible, and are waiting for us to tell them what to do to make it so.
These are the people we feel confident we can help.
And no, we don’t have a crystal ball to predict the outcome.
But listening to the market and to your Agent go a long way right now, and will most likely mean you can start packing sooner, rather than later.
I asked a group of Realtors who sell homes in the Birmingham and Shelby Co. area recently what their thoughts are of 2009, now that it’s ‘in the rear view mirror.’
While a few Agents reported a strong year last year, most told me they weren’t sad to see ’09 become history.
We hear conflicting information in the media a lot these days about home sales, and this can even happen when you’re looking at sales in a small, targeted area.
Here are a few statistics from the Birmingham MLS that show trends in 2009, compared to 2007 and 2008. Clearly, the local market was a difficult one for many:
Here’s a look at average sold prices for homes in the area:
And, finally, how long did it take to get a home sold? Here’s a look at that:
While these numbers show a challenging market, people with a lot of years in the real estate business under their belt continue to believe that the market will undergo a gradual change, back to more balanced conditions.
No one knows exactly when that will happen, or how quickly it will occur, but most are confident it will. Some think it’s already starting.
Perhaps 2010 will be the year…
Here are a few news tidbits involving home sales:
…Sales in the Birmingham area shot up 46% in November, marking the second straight month of increases over the previous year, according to the Birmingham Association of Realtors. In November, 879 homes sold, compared to 603 in November, 2008;
…November sales of previously occupied homes surged to their highest point nationwide in nearly three years, according to the National Association of Realtors;
…Lawrence Yun, NAR’s Chief economist, sees continued progress in 2010, even as some of the government’s efforts to stimulate the housing market ease. “We expect a temporary sales drop [before] another surge in the spring when buyers take advantage of the expanded tax credit,” Yun said. That “hopefully will take us into a self-sustaining market in the second half of 2010.”
…Roughly 2 million homebuyers have taken advantage of the $8,000 First Time Buyer’s Tax Credit, according to NAR estimates;
…Sales of new homes, however, dropped 11% in November, their lowest level since April (new home sales represent a dwindling share of the market). Bottom line: If you’re looking for a new home, chances are you’ll find builders extremely anxious to work a deal;
Overall, analysts feel the housing market continues to recover from its recent downturn, with the government’s assistance programs getting much of the credit.
If you’re thinking of buying a home in the Birmingham and Shelby Co. area, the market remains very much in your favor, thanks to a large selection of homes to choose from, motivated Sellers, and a continuation of some of the lowest ever interest rates on loans.
Last, but certainly not least, keep in mind that the First Time Buyer’s Tax Credit, originally set to expire November 30, 2009, has been extended to April 30, 2010. The government has also expanded the program to provide incentives for current homeowners who relocate — click here for details.
Congress has taken a step many people were watching for, and has extended the $8,000 tax credit for people buying a home for the first time. But the extension also carries a big change that could affect you if you own a home right now and want to buy again.
The credit, which was originally set to expire November 30th, now applies to Sales Contracts in place by April 30th, 2010. Homeowners have an additional 60 days beyond then to actually close the sale.
If you currently own your home and have lived in it for five consecutive years, the extension provides for a $6,500 credit if you buy another property by the new deadline. In the current market where so many homes have lost value, this may help Sellers frustrated over not being able to get an Offer for as much as they’ve wanted.
So … either way, the extension is intended to make buying a home more enticing to a larger group of people. That’s exactly why Congress passed the bill, in a continuing desire to stimulate the housing market.
Another point many buyers are not aware of is the fact that you can still qualify for the credit even if you owned a home previously. The government defines a first time buyer as someone who has not owned a home during the previous three years. So, if you owned a home in, say, 2004, but have not owned your residence since then, you would qualify for the first time buyer’s credit.
The tax credit’s extension and expansion, coupled with such affordable deals and financing on homes in the Birmingham and Shelby Co. area really do suggest that—unless you plan to move again soon—you’re much better off owning, rather than renting, and—if you qualify as an existing owner and have been wanting to move—now’s the time.
Getting your home sold in Shelby County is taking longer in some communities and less time in others, while prices have dropped, according to October statistics from the Birmingham Multiple Listing System.
The average number of days on market increased in Alabaster and Chelsea, but fell in Helena, Pelham and Calera:
Prices continued a downward trend in October, and substantially so, compared to September:
How many homes are selling?
Except for Calera, the number of homes sold in October dropped from September. Chelsea saw the sharpest one month drop, while more homes sold in Calera during October than in September:
Why the uptick in Calera?
Perhaps it’s the large inventory of low cost housing (both new and resale), making for some very attractive deals for first time home buyers, along with the fact that Calera qualifies for USDA financing (which means loans with no down payment required).
I think these statistics are giving us some important messages.
If you’re planning on buying a home, the market is continuing to work very much in your favor in the Birmingham and Shelby County area. Prices have dropped, inventory is in plentiful supply, and loans continue to be very affordable.
If you’re trying to sell, the message these numbers present is that it’s going to take a lot more than just putting a For Sale sign in the yard.
Marketing plays a more critical role than ever, and must be done in innovative ways if your home is to stand out among all the other properties for sale.
Pricing is no less important and will be a huge deciding factor in how quickly you sell, or if you sell, at all (believe me, we have seen examples of both!).
You may also benefit from an informed assessment of your property’s appearance and condition. With so many homes for sale right now, if your property doesn’t sparkle, Buyers will simply move on to another.
These are some very good reasons for trusting the sale of your home to an Agent who’s knowledgeable about the market here in the Shelby Co./Birmingham area and who knows how to achieve success in spite of challenging economic conditions.