I am an eternal optimist, but I also study the market, I talk to people, and I sell houses, so I know a little of what I speak. Plus, I’ve got this really cool crystal ball…
Here’s what to expect:
It’s going to be the year of the short sale – That’s right, banks will be approving short-sales like never before. They just lose too much in risking taking on more foreclosures. It’s better to take a short payoff rather than go through the mountains of details in managing foreclosures only to end up getting less for the property than if they’d approved the short-sale in the first place (remember my earlier post about Bank of America’s failure to approve a $310,000 offer on a home and then later selling it as a foreclosure for $214,000?). Yeah, they’re gettin’ smarter.
That doesn’t mean they are going to approve them all. They still take each case individually, and sometimes they make decisions that don’t make sense, but more and more are getting approved every day.
Housing prices are undervalued – I always say, ‘We don’t know if we’re at the bottom, but we know there are some deals out there.’ Are they the best deals they’ll ever be? Who knows?
To quote move-up home buyer Ken Scoggins of Folsom, “We bought the home for around what it originally sold for in 2002 as a new house. I do think the value will still drop some. Barring some unforeseen event, we plan to raise a family in this house and don’t want to move until retirement so we were ok with the potential short-term losses. We felt that the low rates made it worth it. It’s hard to beat a 30 year at 4.25%!”
Or take the case of Kimm Matchem. She bought a 3 bed 2 bath house for $185,000. Her house payment is slightly above what her rent was, and she gets the tax write-offs, pride of ownership, and her ‘rent’ will never go up.
I’m getting frequent calls and emails from first-timers, or people returning to the market after waiting for things to settle down. They are ready.
With rates remaining low and Fannie Mae and Freddie Mac making it easier to buy and finance their foreclosed homes, we’re going to see lots of inventory sold.
Loan Modifications aren’t dead – Selling isn’t for everybody, and if you don’t have to, please don’t. Try a loan modification first, and try doing it yourself before you pay anyone to do it, and if you do pay someone, pay an attorney, not a negotiation company. I expect more people finding success in modifications as once again, banks are trying to figure out ways of cutting losses and avoiding foreclosures. One client was paying 7% on his sub-prime loan with a balance of $308,000. He just successfully negotiated a modification under which the bank agreed to reduce the balance to $218,000 and his interest rate to 5%. They did this knowing that his condo’s value has dropped severely and that other units in his complex are sitting unsold, so they decided to keep the customer and cut a deal.
These modifications will mean fewer homes going on the market and hopefully, we’ll see some price stabilization.
Lastly, I predict the Steelers will win the Superbowl, the Giants will repeat as World Series Champs, and unfortunately, the Lakers will take the NBA title again.
Don’t quote me on that. Questions or comments? I’d love to hear them. Drop me a line her or call me. Ciao for nao.