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Market Insights

With the last days of winter within sight the spring buying season will soon be here! As we all know real estate has been experiencing an “interesting phase”. For those of us who have been in this area for a long time we always thought that there was only one direction housing values could go – UP!  Well we sure learned that wasn’t necessarily the case.

We do live in a great region and the strong presence of the Federal Government and supporting organizations provides us a cushion not found in many areas of the country. As a result housing prices have solidified and some of the more sought after neighborhoods have even experienced increases.

An under-utilized term in the housing market is “Value”. In a traditional business sense “Value” is a function of price and quality – the combination of good price and good quality = a solid value. In the housing market “Value” can be a function of price and interest rates. Even though rates have moved up a tad – the combination of low housing prices along with low interest rates continue to provide a “Value” that may not be seen for another generation – simply stated – now is a great time to buy!

Even with house prices becoming somewhat stable and even inching up there are still great opportunities in the market because of the high amount of foreclosures and short sales. In this edition of “Market Insights” we will examine short sales.

A short sale is a transaction where the purchase price will not provide enough funds for the seller to pay off their mortgage. Often is the case that the seller has no excess funds available so they will ask the bank that holds their mortgage to allow the house to be sold for less than what is currently owed – this is called the “short sale” process.

On the seller’s side it is a lot like applying for a mortgage – only in reverse. The bank will require the seller to provide a significant amount of financial data – just like they would if the seller was applying for a loan – only in this case they are making sure the seller cannot afford the house. In addition they will get their own electronic version of an appraisal to show how much the house is worth. These are rather laborious processes and it can take 4-6 weeks to get approved to start the process.

As a buyer you must be patient! If you are in a hurry ask where the seller’s short sale approval status stands – if they have been approved for a short sale you can figure on average that it will take 30 days to get your contract approved by the seller’s lender and ready for settlement. Why so long? Well the bank is taking less money than they are owed and that isn’t something they do lightly and/or without multiple reviews.  So it can be a frustrating process – however set your expectations going in that it will take a while for short sale approval – your patience may well be rewarded by getting that great housing value you are looking for!

Remember – a down market is the very best time to buy. If you are interested in buying and don’t have a lender or a realtor – give us a call and we can help you find the right people to assist you!

Happy House Hunting!