Foreclosures in Northern Virginia, Maryland and Washington DC have been fueling price depreciation and a glut of housing inventory over the past several months. Today, the White House announced their policy to freeze subprime interest rates for 5 years in order to help hundreds of thousands of homeowners stay in their homes and avoid foreclosure. The deal with the mortgage industry is “a step in the right direction” after the increasing number of foreclosures have driven home prices down, hurt neighborhoods and threatened the economy.

The plan will not effect everyone facing foreclosure, but only consumers with subprime loans, which account for 47% of recent foreclosures. The plan only applies for people living in their homes and who have not missed any mortgage payments. Officials say they hope to save 300,000 families from falling victim to foreclosure proceedings and help curtail declining homes prices and access inventory over the next few years.

Many home owners unaffected by the plan are voicing their anger as they feel that the government should not step in to ’save’ people who made poor decisions to lock themselves in risky subprime loans…”Why should we have to pay for our high mortgage if subprime borrowers get an easy out?”

I’ll leave this up for discussion. Do you think the government should intervene in a situation like this? Should they specify only certain “subprime” borrowers? Is it fair to other homeowners facing foreclosure with similar adjusting rates that are not “subprime”?

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If you’re as busy as the next person in the DC Metro area, then you probably have not had the time to pick up a newspaper or watch more than 30 minutes of the news. However, I’m sure you have heard from co-workers or friends about the negative press surrounding the mortgage and housing markets. The rancor of this situation has caused some sort of paralysis in the consumers. But where there’s adversity, there’s opportunity. By human nature, we tend to listen to our friends or mentors or should I say go along with what everyone else is doing. We wait for someone to say “It’s OK.” Just call this your little push in the back.

If you have been researching home prices then you have probably seen that the national average is down. This will continue, but remember three things. The first is that the markets that have been hit the hardest drag down the average depreciation (Miami, California, Las Vegas, Phoenix). Secondly, homes that were priced $500,000 and higher were more inflated than the entry level housing. The bigger they are the harder they fall. When those homes depreciate, they will be affected more than the lower priced homes. Finally, because dismay can create an instinctive reaction among sellers and the market perception keeps buyers hesitant, prices may be lower on the way down that at the bottom of the barrel.

What does this all mean? It’s a GREAT time to shop for a moderately priced home in Northern Virginia or Washington DC. When the market has found a solid bottom and the demand returns, there will be a lot less ambiguity about what a home in your area is really worth. Sellers will be less willing to entertain offers, and selection will decrease.

The news might have you thinking that it’s impossible to get a loan these days. This is far from true. Experience has given lenders a clear picture of the kinds of loans that shouldn’t be offered again. But the loans that have performed more consistently are still available, and you might be surprised what you can qualify for.

Banks like to see strength in at least 2 of the 4 areas:

1. Credit score and credit history
2. Sufficient, verifiable income for the payment amount and monthly debt
3. Equity in the property or down payment
4. Liquid assets (money in the bank, stock market, IRA’s, 401k’s, etc…)

The items that will make your loan more difficult to obtain:

1. Non-Owner Occupied (investment property)
2. Stated or No Income (meaning you can’t prove income with W2’s or Tax Returns)

Bottom Line: If you can justifiably afford to make a regular house payment, there’s a great chance that this can be proven to a lender, who will in turn be glad to give you an excellent loan.

There’s even further incentive to act on this information. Even if prices decline another 10%, due to the market hysteria, there are sellers out there right now selling for 20% under current appraised value. So you might find a house for $300,000 today that will end up being worth $330,000 when the market bottoms out. A catch 22, but true. This also means that your value is likely to be at it’s highest as far as refinancing is concerned, and remember that equity is one of the positive factors banks consider.

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You smile every time you walk into your master bedroom as if you were a little kid in a candy store. Your kitchen makes kitchen stadium look childish. And your beautiful new exterior paint has made all the neighbors jealous. Your home looks so good that you are bombarded by real estate agents, letting you know how much they could sell your home for.

Put it on the market! Hell no! Not after all the man hours you put in remodeling. Then again, when the kids are off to college and you have an empty nest, Billy isn’t there to mow the lawn and chores become a hassle for just two people. That two bedroom condo in the city looks pretty inviting. Let’s be honest, at some point in the future whether it’s tomorrow or 10 years from now, you’re going to want to sell your home. With all the upgrades and work that you’ve put in over the years, you should get a nice return on the sale.

All the supplies are ordered and the plans have been reviewed. Remodeling can be tedious and annoying, but also fun. The end result is the most rewarding feeling. Preserving your home can be dull, but it’s one of those things that you have to do to retain the value of your home. Refer to one of my earlier posts about pricing your home. For example: Hardwood floors need to be refinished every 5-10 years depending on wear and tear. If they get too worn down you can do permanent damage to the wood. Exteriors need to be repainted every 5-10 years too, depending on such factors as the weather where you live, or you can damage the exterior wood. Your roof and gutters need annual inspections. A clogged or damaged gutter and drain spout can flood your basement and cause serious damage.

And the list goes on. Like taxes and dental checkups, regular home maintenance isn’t fun. But you must do it if you want to take care of what is likely your biggest single asset — your home.

• Kitchen: Check for leaks under and around the sink. Plumbing leaks can damage cabinetry and floors. Check and repair grout and caulking on tile countertops and around the sink. Also check wear and tear on wood floors, which periodically need to be refinished.
• Bathrooms: Check for plumbing leaks and check grout on tiles. If the grout gets worn away water will start getting into the walls behind the bathroom, causing damage.
• Basement: Check for cracks in the foundation and leaks. Buildings settle over time and even after decades of having a dry basement leaks may suddenly occur.
• Attic: Check for signs of water leakage from the roof. Also look for any sign of termites or rodents. Squirrels or rats that nest in your attic can chew electrical wiring, which can lead to fires.
• Smoke alarms: Batteries need to be changed annually.
• Heating system: If yours has a filter, change it annually.
• Air conditioning system: Change all filters monthly or as recommended by the filter manufacturer.
• Roof: Note if any shingles have fallen off or if gutters or downspouts appear clogged or damaged. You can always hire a reliable roofing company to get on the roof and take a look. Reputable roofing companies won’t try to sell you a new one unless you really need it. You can simply pay them for an inspection.
• House exterior: If your house is wood, check that the paint hasn’t worn away so much that the primer paint is showing. If the primer also wears down, you can do damage to the wood. Brick houses should be inspected for damaged bricks or masonry. Check stucco houses and repair any cracks large enough to slide a nickel into.
• Asphalt and concrete driveways: Repair any cracks or buckling.

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Before I started with HomeZill, I had a listing with my previous company for $534,900 in Falls Church, VA. Within three weeks of listing I had my first offer on this house, which by the way was the highest priced home in the neighborhood by $35,000. The offer was for $500,000, which was $25,000 less than the homeowner needed to qualify for their new place. After all the negotiations, we were $10,000 apart. The deal never closed because my clients could not go any lower and the buyers could not go any higher. The seller truly wanted to sell and understood we were in a buyers market and the buyers truly wanted to buy but could not qualify for more. We ended up taking the house off of the market because all of this was too much for the seller to handle.

I recently thought to myself, if the buyers were working with a HomeZill agent, the $10,000 needed to make this deal happen would have been given to the sellers at closing to make the deal go through. The buyers would have been able to get the home they and their children really loved and the seller would have moved into her dream home. It is clear that the credit given back to the buyer at closing really does help out people’s financial situation. In a time where people have to lower their price to get their house sold, this credit can be the difference between buying your dream home and not qualifying for it at all.

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Foreclosures and short sales in Northern Virginia and Washington DC are becoming more prevalent now-a-days as well as in most of the country. As a result of the rise in delinquencies, short sales have become popular as a solution for homeowners who need to get out of homes as trouble-free as possible.

A short sale becomes an option when the homeowner cannot afford to make the payments on their loan due to whatever circumstance. In a nutshell, the lender agrees to accept less than the total amount owed. In reality, the lender agrees to release the home from the lien of the Deed of Trust for less money than stated in the Trust. Not all lenders will consider short sales if it makes more financial sense to foreclose.

Lately, the short sale epidemic has resulted from adjustable rate mortgages (ARM’s) increasing with the combination of depreciating home prices. During the housing craze, many home buyers took out 100% financing, interest-only ARM loans. If a buyer took out an interest only loan without making a down payment, then essentially none of the principle amount owed on the home has been paid.

Now with the decline of home prices, these ARM’s are adjusting (higher), which consequently increases the mortgage payment. The only way to stop the adjusting rate is to refinance the loan into a fixed rate, which typically costs a few thousand dollars.

For example, lets say you bought a home two years ago for $500,000, and now it will appraise for only $420,000. If you need to refinance into a fixed loan, then you will have to put down $80,000 ($500,000-$420,000) + the cost of refinancing. Basically, you will owe the difference between what the home is currently worth, and the total amount still owed on the mortgage. In this case your only options would be:

1) Continue to pay the increased mortgage (in most cases the rate continues to adjust over a certain time period, ie. every month or 6 months, etc)

2) Work out a deal with your bank, ie. defer payments, work-out program, deed-in-lieu

3) Short Sale

4) Foreclosure

When homeowners decide that they can no longer stay in their home, our team comes in to help facilitate a short sale rather than having the home go through foreclosure. These days, lenders, wanting to avoid costly foreclosures, are more inclined to accept a short sale in which the loan balance exceeds the market value of the house. The short sale ends by agreement with the lender to approve the sale of the property to a buyer. This consequently results in an escrow, documentation and then a short sale consummation. 

One of the ultimate benefits is that as long as the home owner makes the mortgage payment up until the consummation of the short sale, their credit will NOT be impacted nearly as much as a foreclosure would on their record.

For lenders, there are several benefits for the short sale. The homeowner less likely to become disgruntled and tear apart the house. The lender doesn’t have to spend additional money on holding costs and wasted time tying up funds that could be lent out. If market conditions have deteriorated, then recapturing the debt at a foreclosure sale is unlikely. Lenders aren’t in the business of selling real estate, they are in the business of lending money… the last thing they want is to go through foreclosure proceedings if it doesn’t make sense financially.

If the property does go into foreclosure, additional fees will be accumulated and later reported by the lender to the IRS as losses. The foreclosure usually stays on your credit report for 7 years and you most likely won’t be able to get another mortgage with a foreclosure on your credit. The lender may also pursue the homeowner for a “deficiency judgment” (the difference between the highest bid at sale and the amount owed).

If the homeowner is proactive and contacts the lender before becoming delinquent, they have a much better chance of a successful short sale. Only after the homeowner has missed a few payments may it be too late for a short sale.

When it comes time to negotiate for a short sale, getting the necessary paperwork and tracking down the right people to negotiate with can be a very difficult task. Whether intentionally or unintentionally, getting to the right people to discuss the possibility of a short sale, seems to be a challenge in which there is no easy answer.

Unless you have a lot of free time to dedicate, having a designated short sale agent (usually a Realtor® or attorney) to assist you in selling your home and consult directly with your lender is typically the best bet. Especially when time is of the essence, you must be available to quickly respond to, and provide the lender with all of their requests along with showing, marketing and selling your home. From beginning to end, short sales are many times a 2-4 month process and can be a very stressful time for the homeowner.

It’s also important to understand that you may face a 1099 in the future, meaning you could be taxed as income on the amount of the lender’s loss. However, once an agreement is reached, the short sale can be the best opportunity to get out of a very bad situation with the least amount of harm for all parties.

HomeZill agents work closely with homeowners in Northern Virginia and Washington DC throughout the short sale process. We provide the homeowner with our expertise in negotiating, identifying the lender contact to negotiate with, and compelling the lender to agree to the short sale. Most of the time, lenders will not disclose the minimum acceptable price for the short sale until an offer is submitted and reviewed. Our real estate professionals have extensive knowledge of the short sale process and will use high-impact marketing strategies in order to generate an offer as quickly as possible.

If your mortgage interest rate is due to adjust in the near future and you’re not going to be able to afford the payments, be PROACTIVE and contact your lender ASAP to see what your options are. Your credit alone is way too important to ignore the situation at hand. If the lender mentions the short sale option, don’t delay for too long (time is of the essence!). When you’re ready to get the ball rolling, simply fill out the HomeZill Express Seller questionnaire. You must register first (it’s free) before getting started if you haven’t already. A short sale agent in VA or DC will contact you soon to begin the short sale process.

Feel free to contact David at 1-888-998-9455 x801 or david@homezill.com to speak with a ReMax short sale Realtor in Northern Virginia or Washington DC. To receive a weekly foreclosure list of homes as properties come on the market, enter your email address at the top of the page.

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As I was looking for homes the other day I came across a picture in the MLS that blew me away. It was the main picture of the home. I had not seen anything like this before and was flabbergasted by it. I mean, the Realtor that is selling this house must have no idea what gossip must be going on about this peculiar photo. If the owner of the house has not seen this photo yet, they are going to be thrilled.

This is the perfect example of what NOT to do. This is not your ideal featured picture for your home. First of all, a big yellow Penske truck blocking half of the house is a big no no! At least make it a U-Haul.

“A picture is worth a thousand words,” especially, when you’re trying to sell your home. You have the opportunity for thousands of homebuyers to see your home. You want it to look spectacular. The aforementioned photo is like wearing jeans and a t-shirt to Prom, you look awkward and everyone is going to laugh at you, unless of course you’re Jesse Katsopolis (Full House).

Curb appeal makes the difference between a prospective buyer stopping for a look, or moving on. Clear the front and back yard of toys, bikes, sports equipment and anything else that could be a distraction. Also be sure that shrubs are trimmed, weeds and past-their-prime annuals are removed, and the lawn mowed. If your car is usually parked in the driveway, park it along the street, away from your home, while photographing. Vehicles parked in the driveway block part of the view and detract from your homes overall visual impact.

A slightly overcast day provides optimum shooting conditions for exterior photography, as bright sunlight causes high-contrast light and shadowed areas on portions of your home and yard, and creates glare off of windows and metal trim. Should the weather not cooperate, stand within photo-taking distance of your home at different times of day to establish the best light conditions.

When photographing the exterior, position yourself to take the shot on a slight angle. You can also get down on one knee to take the picture at a slightly upward angle. Photographing from these positions will make the home appear larger and better show its character than a straight-on photo taken from a standing position, which tends to produce an image that looks “flat” and uninteresting.

“Say Cheese!”

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