Help Coming On Short Sale Woes?

The US Department of the Treasury announced yesterday new details about its "Foreclosure Alternatives Program", which is part of the "Making Homes Affortable" program. Short Sales make up about one-third of the homes currently listed for sale in Orange County, and have been a source of frustration for lenders, sellers and buyers because of the lack of any standardized process for handling a short sale transaction. A typical Short Sale can take up to 3 months or more to complete once an offer has been made on the home, and this can often be a problem when the foreclosure is happening at the same time.

The purpose of the Foreclosure Alternatives Program is to streamline the Short Sale process by providing a standardized process flow, establishing minimum performance time frames and standard documentation, and offering incentives to both sellers and lenders to persue a Short Sale as an alternative to foreclosure. Other issues tackled by the program will include standards for establishing the value of the home to be sold, minimum time allowed to market the home for sale before a foreclosure can be completed, standards for fees and commissions, and more. There's more in the fact sheet here.

It's too early to tell whether this program will help provide needed standardization to a long and complex process. There is always a danger with government intervention that the program will have unintended consequences and do more harm than good, but most of the stated goals of the program would be a much needed improvement over the status quo.

(Cross posted at www.leslieeskildsen.com)

Has the OC Housing Market Bottomed Out?

The Orange County Register reported that the median price of a home in OC climbed for the second consecutive month. The March median was $385,000, up from $375,000 in February and $370,000 in January. Another bullish sign is the continued climb in the number of homes sold. March was the ninth consecutive month of year-over-year sales increases, with 2,433 homes sold - a 46% jump from March of 2008.

There are still plenty of concerns in the market, with homes priced over $500,000 selling slowly, and short sales accounting for about 30% of the homes on the market. One interesting wrinkle is that bank owned homes have become a scarce commodity. Just a few months ago bank owned properties also made up about a third of the transactions, but today only represent 5% of the homes for sale. REOs, especially in the lower price ranges, are in huge demand because of the relative simplicity of the transaction compared to a short sale, and the market is hot. Most bank owned homes are selling within a few days or weeks, and often at full price or higher. The Wall Street Journal has even dared to use the term "bidding war"!

There has been talk for months about a so-called moratorium on foreclosures related to the Federal financial bailout, TARP, and consolidation of banks, with speculation that it would soon end. This, of course, could lead to a new round of foreclosures and another influx of REO inventory on the market. That might lead to more downward price pressure, but it also might signal the final phase of a long and painful process.

Leslie Eskildsen Selected as Top Orange County Realtor by Home Inspector

Leslie is honored to have been select as one of the Top 100 Realtors in Orange County by JLC Inspections. You can read Leslie's comments here.

Straight Talk on Short Sales

Short Sales are a big part of today's Real Estate market in Orange County, but what exactly are they, and what does it mean to me? Here's a little Q&A.

What is a short sale?

A short sale is a sales of Real Estate in which proceeds of the sale are less than the amount the seller owes, and the lender agrees to accept a payoff of less than the balance due on the loan. The lender may also agree to pay other costs associated with the sale. There may be more than one lender on a property - if any of them agrees to accept less than the full amount owed it is called a "shor sale" or "short pay".

How long does a short sale take?

It can take anywhere from one to six months, or even more. Short sale transactions have to go through several phases that may normal sales don't, and they take time. Any normal sale of a home can happen quickly, or take up to 180 days or more. Once those normal negotiations are complete, the short sale process starts in earnest. The homeowner must establish eligibility for the short sale by showing hardship and providing a comprehensive picture of financial condition to the bank. The "package" with the negotiated offer is sent to the lender who will evaluate it from a financial perspective. If they agree to the sale in principle, the real negotiations then begin.

Should I try to sell my home in a short sale?

If you are struggling with house payments and considering a short sale, you need to know you have other options - and get professional advice. Some alternatives to short sale include:

• loan modification / refinance
• deed in lieu of foreclosure
• foreclosure
• bankruptcy

These are serious decisions and have serious, long-lasting implications. There are non-profit counselors available to advise homeowners about these options - check out the directory at www.hud.gov. In addition, you should always consult your attorney and tax professional before (and during the process) choosing any of these options.

Why would a lender agree to a short sale?

For the lender, it is purely a financial decision. Foreclosures are expensive and take a long time to complete. Once the foreclosure is complete, the house may be worth less than what they could sell it for now. If the homeowner is in a true hardship situation, a short sale may be the best financial outcome for the lender.

I would like to buy a short sale. Where do I start?

Choose a REALTOR® who has the ability to identify a short sale property that is likely to result in a successful transaction. There are many homes listed on the market as short sales that are not likely to sell before forclosure. We can help you find the ones that will work, and we can work through any difficulties that may arise during the buying process. Take a look at some of these, then let us help you find the gems. It's not a simple process, but the potential reward is high.

Cross-posted from www.leslieeskildsen.com