Coni's Corner - A Community Blog: Maryland: Laurel

THINKING OF SELLING??

Are you thinking of selling your home? Even though you and the buyer may come to an agreement on the price, it is not uncommon in today's real estate market for an appraisal to be lower than the agreed upon contract price. When this happens, the buyer may no longer qualify for the loan amount and the deal can fall apart. What exactly does this mean and how does this happen?

Due to many short sales and foreclosures driving down appraisals, the above scenario has become somewhat common. Also, the Home Valuation Code of Conduct or HVCC that went into effect May-2009 has compounded the problem. The HVCC prohibits Fannie Mae and Freddie Mac lenders from having direct contact with appraisers. As a result, most lenders have started to work with appraisal management companies whose appraisers often have limited training or are not familiar with the area. So what is a seller to do?

Get an appraisal before listing your home. Be certain to use a local, qualified appraiser with a residential appraisal certification and is a member of the Appraisal Institute. This can also serve as a way to determine a realistic listing price for your home. This prelisting appraisal can be given to the buyer's appraiser and is often appreciated. A true professional will understand that as a property owner, you are only trying to provide as much data as possible.

Working closely with me, a professional Realtor familiar with your neighborhood can help you avoid many pitfalls before they occur leading to a higher price and faster closing. If you would like any additional information or are looking to buy or sell a home, call me. 

I am now offering the Pre-listing appraisal with all my listings as an added service to my already 21 point marketing plan to sell your home...   So if you are thinking of selling your home, call me today at 240-483-7556, no obligation.

Coni Otto - Long & Foster Real Estate, inc.   Licensed in DC, MD, and VA

Office: 301-384-8700

Cell: 240-483-7556

www.Talk2Coni.com

Coni@Coniotto.com

After 6 years in Real Estate and Listing and selling more than 100 homes for sellers I have made a checklist for the sellers so they know what they can expect once their house goes under contract. With this changing market, this checklist can also change and not all experiences are the same.. But these are the most common questions I get, and emotional hurdles, the seller has to go through when selling their house... For a Free no obligation, "Price your house Right" consultation and my customized sellers packet please call me at 240-483-7556 or email me at Coni@ConiOtto.com I am always available to help....

What to expect when selling your home with me... The latest technology to market your home, updates at least once a week, 21 point Marketing plan, Experience and Knowledge, out of the box ideas to help you sell your home, Monthly Market Trends in your zip code, Internet Exposure, Neighborhood exposure, Print Media exposure, plus more..... Call me today for your FREE Consultation to List and Sell your home...

Key Contingencies to a Buyers offer are:

1.     Home Inspection 7-10 days (Radon, Lead Paint, Septic, Well, Oil Heat)

2.    Requested repairs by buyer

3.    Appraisal ordered by the bank (What is your house Really worth)

4.    Home must be in the same condition it was at the time of contract (A/C must work, appliances must work, toilets must flush, sinks must drain, etc.)

Sellers Checklist and
Hurdles to get to Settlement

Once the contract is Ratified the buyers are going to want to do a home inspection, the bank is going to do an appraisal, and finally the buyers will do a final walk through before settlement...

Sellers MUST:

1. Have all the utilities and water on and remain on until the settlement so all the inspections can be completed and most importantly the final walk through...

2. Give access to the buyers to do inspections and appraisal completed for the bank.

Hurdles to get to closing are:

1. Home inspection - The buyers will have the home inspected, some request Radon, Lead paint, septic, well, fireplace, etc…depending on what they find they will have their agent write-up a request for some items to be repaired. Some items you may want to fix, others you may not.. But until we get the list we won't know what they are going to ask for.... If they ask for something to be fixed they will give you a copy of the home inspection with a detailed list of what they want done.

This all has to be done within the time stated in the contract, if it’s 7 days they have 7 days to have the inspection and give us the request.

2. Appraisal - ordered by the buyers’ lender...Appraisers and lenders can no longer speak to each other so they will request the appraisal and then I will be contacted to give access to the property. He will ask me for a copy of the contract so he knows how much the house is under contract for and I will send it to him..


Then he will look at the square ft. of the house, the houses that have sold in the past 6 months within a 1 mile radius, or possibly 3 miles depending on what has sold, and the age and condition of the house, usually 10 years up or down...

Should he find that the most recent sales, with the criteria I have outlined are lower than what the contract is for then you may have to reduce the sales price. No bank will give a buyer a loan for more than the house appraises for, and buyers typically will not pay more than the house is worth. If the house appraised for $462,500 then the buyer’s agent will inform me that the appraisal is ok and we have completed another hurdle...

During the appraisal the lender may also ask for repairs, such as, if the air conditioning is not working the day he goes and does his appraisal, he will ask that it be serviced. This is just an example.. Any lender required repairs would have to be done in order for you to sell the house.

Some lender required repairs I have seen, that have to be done are:

1.  Any peeling or chipping paint on or around the house or hand rails

2.Air conditioning not working

3.Stove is not working

4.Closet doors not secured

5.Cement steps that are crumbling and in need of repair

If the buyer is FHA, or VA these items would have to be done before the lending institution would give the buyer the loan. Generally, the buyers FHA addendum will outline the $$$ they expect the Seller to contribute to the lender required repairs. If the estimates are over that amount then the seller can ask the buyer to increase the price of the house to cover the costs, or reduce the amount of the seller credit to help with the additional costs to get the house sold.

Seller Help: If you are giving the buyer $10,000 in closing help you do not have to bring a check to closing “unless” you do not have any equity in your home to cover the costs of closing. So in this case the house is being sold for $462,500, you don’t owe anything on the house, and you are giving $10,000 in closing help. You don’t to bring any money to the table because you will be getting money at closing.

Title Company:  The buyer gets to pick the title company for settlement, they will be contacting you “the seller” to get your payoff information on the house. If you do not owe anything on the house then you would just call them or fill out the documents stating you don’t owe.. If you do have a mortgage, then they will need your bank account number, your social security number, and the phone number to get the payoff info. So look for the packet in the mail asking for the info.

Closing day: Closing day is finally here and you need to bring your Government issued ID card to settlement. And just 1 last hurdle…. If the buyers find something in the house during their walk through, like the refrigerator no longer works, or the A/C unit doesn’t work, a clog in a sink, or anything else that is different from when they put the contract on the house, then they will ask you at the closing table for a credit (money) or for you to fix it. If they ask you to fix it, a dollar amount $ will go into escrow, generally $1000 until the item is fixed, then once the buyer is satisfied then they will sign off on the repair and the money will be returned to you.

Coni Otto

Wow, are we underwater in Laurel, MD and the DC Metro Area.... Take a look at my backyard..

 http://www.youtube.com/watch?v=QfPWogHZQlI   Click on Link
 

Foreclosure and Short Sale

Consumer Resource Guide

Overview

Homeowners and homebuyers in today’s real estate market face unique challenges. Of special concern are issues arising out of the possibility of foreclosure on their homes, and possible alternatives. While foreclosure occurrence is relatively low in Maryland compared to the rest of the country, the rate and number of foreclosures in the state has risen substantially.

The Maryland Association of REALTORS® has created this Resource Guide to assist you in meeting the challenges of potential foreclosure. It includes general information about foreclosure and “short sales,” as well as articles, publications and useful links.

Foreclosure

What is Foreclosure?

At the time of settlement, you signed paper work agreeing that the mortgage company has a right to take ownership of the property through a process called foreclosure if you stop paying your monthly mortgage payments. When you miss mortgage payments, in some cases for as short a period as 60 days, you are considered in default on your mortgage. Mortgage lenders can move your loan into collections, which can be the start of the foreclosure process. If you are having trouble keeping up with your mortgage payments, or if you have received a notice from your lender asking you to contact them, don't ignore it. Contact your lender immediately to try to work out your options. Foreclosure Law 1 General information about the types of foreclosure sales and the foreclosure process in Maryland can be found at http://www.foreclosures.com/www/pages/state_laws2.asp?state=md

 Local Foreclosure Help for Homeowners Maryland resources for those who may face foreclosure: • The NeighborWorks® Center for Foreclosure Solutions, an initiative of NeighborWorks America, was created to preserve homeownership in the face of rising foreclosure rates. In conjunction with national nonprofit, mortgage and insurance partners, the Center is building a network among foreclosure counselors around the nation. It conducts public outreach campaigns to reach struggling homeowners with information about how to keep their homes, and researches local and national trends to develop strategic solutions. In cities and states with high rates of foreclosure, the Center works with local leaders to create sustainable foreclosure intervention programs. Anyone in Maryland who calls 1-888-HOPE will be automatically connected to the staff at St. Ambrose Outreach Center, the official Maryland foreclosure counselors for the NeighborWorks® Center. Homeowners who live in Baltimore may dial 311 to be connected automatically to qualified housing counselors who can advise them about foreclosure issues. For more information go to www.nw.org 

The Baltimore Homeownership Preservation Coalition, created by public and private funders, lenders and nonprofit practitioners, develops and implements key programs and policies to reduce the incidence of foreclosure and high cost lending in Baltimore. The aim is to preserve and increase the assets of families, thereby supporting the revitalization of the neighborhoods in which they live and the city as a whole. Trained professional housing counselors give consumers sound advice, contact their lender and connect consumers with local housing counselors at various Baltimore Homeownership Preservation Coalition member sites. The service is free, confidential and available 24 hours a day, seven days a week. To get more information call 1-888-995-HOPE or go to www.preservehomeownershp.org

• Consumer Credit Counseling Service of MD & DE, Inc., an accredited non-profit community service organization, has been serving the community since 1966. CCCS is dedicated to helping individuals and families resolve financial problems by promoting the wise use of credit through confidential budget counseling, debt management repayment program, and community education. CCCS helps more than 30,000 individuals through counseling sessions, and reaches more than 150,000 individuals through education programs.

For more information, call 1-800-642-2227 or go to http://www.cccs-inc.org. 2 • The Maryland Department of Housing and Community Development’s (DHCD) HOPE Initiative offers the Lifeline Refinance Mortgage program, which provides a refinancing option to Marylanders who are currently facing problems with an adjustable rate or other unfavorable mortgage.

Contact 1-877-HOA-P555 or http://www.dhcd.state.md.us/Hope/Index.aspx.  

• The U.S. Department of Housing and Urban Development (HUD) has created “Tips for Avoiding Foreclosure,” which provides information on housing counselors and legal assistance in Maryland, and information on its FHA Secure program, which helps homeowners refinance their adjustable rate mortgages.

For more information go to http://www.hud.gov/foreclosure/index.cfm  . • HUD also has a list of qualified housing counselors. Contact a HUD-approved Housing Counseling Agency or call 1-800-569-4287 or TTY (800) 877-8339. For more information go to http://www.hud.gov/foreclosure/index.cfm

 Short Sale Options for Avoiding Foreclosure—Short Sale Many homeowners facing rising interest rates on their sub prime adjustable rate mortgages and flat or falling home prices, are being advised to use a short sale to help them out of the difficult situation of mortgage delinquency or foreclosure.

What is a Short Sale? A short sale is an "arrangement" between the current owner of a home and the current mortgage lender holding the mortgage to accept an offer for less than the total amount owed to pay off the home loan which also includes other obligations such as closing costs, property taxes, transfer tax, and/or commission. In some cases, sellers may be in default on their mortgage and are potentially facing foreclosure. Life changes such as a divorce or job transfer may force a sale of their property, but some sellers 3 find themselves in an “upside down” situation, meaning that they owe more than they can potentially realize from the sale of their property. Short Sale Basics The buyer of a property being sold in a short sale should be aware of several key issues. The contract is usually contingent upon the agreement of the seller’s mortgage lender to accept the net proceeds of the sale as full payment for the underlying debt. This is often a long process, which can delay an anticipated settlement date, and buyers and agents should be prepared for this possibility. Indeed, the fact that the property is a short sale should be disclosed in the comments section of the Multiple Listing Service listing. The sales contract should also include a third party addendum, outlining that the contract is contingent upon the agreement of the seller’s mortgagee to accept the net proceeds of the sale as full payment of the underlying outstanding debt. Help with Short Sales As always, if you are considering a short sale, or any real estate transaction, whether you are a seller or a buyer, it is important to seek competent legal and financial professional advice. Be sure you deal with a real estate professional with experience with short sale transactions.

Homeowners Beware: Foreclosure Rescue Scams Distressed homeowners who face foreclosure are understandably frightened and looking for relief. They are prime targets for advertisements that promise help and rescue from their financial woes. Unfortunately for many homeowners in this already precarious position, they can unwittingly make their situation even worse, sometimes signing over the deeds to their most valuable asset as part of a foreclosure “rescue.” In an article published in the June 25, 2007 edition of Business Week Online, “The Foreclosure Rescue Racket,” reporters Dean Foust and Brian Burnsed outline the general mechanics of these schemes. An individual or group contacts desperate homeowners from an online list compiled when mortgage lenders file a notice of trustee sale with the courts, the first step in the foreclosure process. Under the guise of helping the homeowner, the individual or group contacts these homeowners and convinces them that they can avoid losing their home by “refinancing” it.

The 4 “rescuer” then arranges a deed of transfer with a “rent to own” plan, which will allegedly allow homeowners to buy back their home at some point. However, buried deep within the stacks of paper work is some form of quitclaim or gift deed, in which the homeowner has actually signed away his home to the investor. The rescuers then charge the former owner astronomically high rents which the homeowner cannot pay, making it impossible for him to stay in the home. Eviction follows, and the investor may then sell the home. Not all programs to help homeowners keep their homes are scams; there are some legitimate services. To avoid the scams, consumers should follow certain best practices. First, call your mortgage company to see if it is willing to work with you to bring your payments current. Many established mortgage companies have created workout programs in response to rising foreclosure rates and are willing to work with homeowners. Consider reaching out for help from reliable sources, including trusted counseling national nonprofits such as Neighborworks (1-888-HOPE), or local groups, including St. Ambrose Resource Center in Baltimore. Finally, seek expert and independent advice from a lawyer before signing any documents. Articles and Publications for Consumers

• The National Association of REALTORS® has created several brochures to help consumers deal with issues concerning foreclosure and protecting their homes:

• “Concerned About Your Existing Mortgage?” is available at http://www.realtor.org/home_buyers_and_sellers/protect_your_home.html. It includes links to counseling services and foreclosure prevention programs.

• “Smart Home Financing,” available at http://www.realtor.org/home_buyers_and_sellers/smart_home_financing.html provides consumers information about basic home finance and how to avoid predatory lending.

• The U.S. Department of Housing and Urban Development has prepared “Foreclosure Frequently Asked Questions” for Maryland consumers, available at http://www.hud.gov/local/index.cfm?state=md

• Freddie Mac has created a useful guide, “How to Avoid Foreclosure” Go to http://www.freddiemac.com/corporate/buyown/english/avoiding_foreclosure/

• Fannie Mae also has some useful tips for avoiding foreclosure and working with your lender. Go to http://www.fanniemae.com/aboutfm/borrower_resource.jhtml

The paper was published by the Maryland Association of Realtors and can be downloaded at their website at www.mdrealtor.org or you can download the .pdf from my website by clicking on the Help Homeowner icon at my website at www.ConiOtto.com