Archive for February, 2012
The recent decline in home values left a lot of home owners owing more on their homes than they were worth and many were unable to keep up their payments. Others needed to sell for various reasons such as divorce or job transfers. This left only two alternatives for many, a Foreclosure or a Short Sale.
Many sellers are unsure as to which is the better way to go and my advice is always to consult with your financial advisor and/or a real estate attorney. The observations here should also help.
The questions people first ask when considering giving up their home are (a) what future liability could they have for the debt and (b) what will be the effect on their credit rating. In fact there are other factors that should also be considered.
A Foreclosure can effect your ability to get a job (or sometimes to keep your job). It will show up on a background check by a potential employer and is a serious challenge if you need security clearance. With a Foreclosure on your record, you are unlikely to be able to finance another home purchase for five years, while those home owners who have sold with a Short Sale may be able to finance a home in two years or even less in some circumstances.
But what about the effect on your credit? It is interesting that the major hit on your credit score is likely to come from late mortgage payments rather than anything else. If you can keep making payments while going through the Short Sale process, the effect on your credit score will be minimized.
You will inevitable have late payments with a Foreclosure of course. Without late payments, the Foreclosure process can’t even get started.
Now as to the question of future liability for remaining debt after Foreclosure or a Short Sale, this is a fairly complex issue and much depends on the type of financing you have.
As a result of recent legislation, when you sell a home via the Short Sale process, all your liabilities should be wiped out. That is regardless of the existence of a second lien on the home. When the first lien holder forecloses on your home, they also lose the right to chase you for any outstanding debt, but if there is a second lien holder, they will almost certainly pursue you and they have a legal right to do so, if they are not a party to the Foreclosure.
The biggest issue may be the uncertainty associated with a Short Sale. You just don’t know if your lender will agree to it. But the good news is that many banks really are getting their act together at last. And the government is also helping in this regard. More Short Sales are being approved these days and we are increasingly seeing pre-approved Short Sales that really do take away a lot of the stress.
If, as a seller, you want to have the best chance of completing a Short Sale, you absolutely have to have a listing agent who has experience in these transactions. More Short Sales fail to close because of the agent’s lack of experience than for any other reason.
Buying a Short Sale
Now let’s look at Short Sales from the buyer’s perspective. How does this differ from a regular home purchase?
The first thing you have to remember that the home owner is still the seller, not the bank, although the bank (sometimes more than one bank) has to approve the sale. But the homeowner should have little concern for the sale price. They will just get to walk away from the home free and clear when escrow closes. Their debts have been wiped out.
The price will be what the bank will accept after an appraisal has been done by them. So at least in theory, you should pay no more than true market value. This should take into consideration that it is an “as is” sale. No repairs will be carried out regardless of condition.
The transaction will take some time. From agreement to the sale by the seller to approval from the bank will typically be between one and four months, sometimes longer. But there are some good buys to be had in Short Sales. A lot of buyers don’t have the patience so you have less competition and that is a big consideration in today’s market where we are so short of inventory.
If you are thinking about buying or selling anywhere in the San Ramon Valley or Lamorinda and you need advice on any aspect of the process, give me a call and I’ll arrange to meet with you and evaluate your situation.
It seems that Indian Restaurants come and go with alarming regularity in San Ramon. Some seem to only last a matter of weeks, while others close down after a year or so but it all comes down to quality and consistency at the end of the day.
As my regular readers know, I am a major enthusiast when it comes to Indian Food (what else would you expect from a Brit? – our national dish is now Chicken Tikka Masala!). So when I learned that another new Indian restaurant had opened in San Ramon, I was eager to check it out. It didn’t take me very long!
Within 5 days of it opening, Sylvia and I went there for dinner with our daughter Michelle and two friends, all of us being Indian food fans. The first thing we observed was the high standard of décor – very stylish and quite understated. The location is good too, being virtually next door to Max’s Café on Camino Ramon where there is ample parking. Available.
We anticipated that they would not have a wine license yet, so we took our own wine with us. What we hadn’t anticipated was that they would have no wine glasses but this did not phase them at all. They immediately sent somebody off to nearby Marshall’s to get some. Now that is what I call service.
The menu has many familiar selections on it but also quite a few less familiar ones. For appetizers, we shared a variety of dishes – Coriander Mari (Calamari), Chicken Pakoras and Vegetable Samosas. All were really good but the Calamari was outstanding. Very fresh and tender in a light batter. Some of the best Calamari I have tasted.
We all had curries of one kind or another as a main course. I chose the Chicken Coconut Curry, a very mild dish but with outstanding depth of flavor (I prefer subtle curries). The others went for Chicken Vindaloo, Chicken Tikka Masala and Lamb Tikka Masala. Everybody was impressed.
If your taste for Indian food runs to the super hot, blow your head off kind, this may not be the best place for you, but if, like me, you prefer the flavorful dishes that are spicy without having an excess of heat, I can promise you will not be disappointed.
I mentioned that the menu had some less familiar dishes on it. These include Fish Pakoras, Seafood Biryani, Lamb Shank Masala and Fish Tikka Masala among others. They also have a wide selection of vegetarian dishes.
Prices were fairly typical of most Indian restaurants in the area and service was excellent. They are very friendly and helpful with an obvious desire to make sure you enjoy your meal.
Really, I can’t speak highly enough of Divan. It really is the best Indian restaurant food I have tasted in California and I have visited a lot of Indian Restaurants. They have another, well-established, location in Seattle plus another newer one in Fremont. I’m sure that with this kind of service and food, they are here to stay in San Ramon. That isn’t just my opinion either. Check out the reviews on Yelp. They are getting a lot of fans.
People often ask me when is the best time to sell their home because sometimes it’s hard to know whether it’s best to wait for a peak period, or until the market improves, or is it better to just get on with it?
In most cases, right now is the best time.
If you are considering selling your home soon you probably have good reason. So the benefits of selling now almost always outweigh the extra cost, inconvenience and stress of waiting. It’s not worth putting your whole life on hold to avoid losing an amount of money which can be a lot less than you fear it will be.
There’s a general perception that the annual real estate calendar has consistent low points, such as the week before Christmas, school holidays or throughout winter. The truth is that while there are a few quiet spots to avoid, they can change from year to year and in different markets. The quality of the marketing your home receives normally has a far greater impact on the final sale price than any fluctuations in the market.
You will get the best price for your home by showing it to the maximum possible number
of quality potential buyers, and following up strongly with them. So if your real estate agent just ‘does the usual stuff’ to market your home, the sale price will suffer no matter what time of year you sell.
But when you have an agent who really knows how to market your home to the hilt, using the latest technology, you will normally overcome any seasonal fluctuations and get a better price as well.
With a well planned marketing campaign, you will have the right mix of advertising to get your home in front of the greatest number of quality potential buyers. When I market a home for sale, I use a number of different methods to increase the demand for your property, including a high quality full color buyer brochure.
Let me know if you haven’t seen one of my buyer brochures and I’ll send you a copy.
Think about your reasons for selling your home – they are clearly important. What impact would it have on your lifestyle if you put everything on hold for 2, 3, 6 months or even longer while you wait for the ‘perfect time’ to sell your home? How much cost, inconvenience and stress would this create for you?
Weigh that up against the amount of money you expect to lose by selling now. And remember that if your home is marketed well, you may not lose anything. You may be very pleasantly surprised.
I hope that helps and please feel free to contact me if you have any questions related to getting your home sold.