The Spring Market is on its way!

The real estate “Spring Market” of March and April is just around the corner. Yet, true to form, the housing market in our area is seeing its early jump. Typically, our “Spring Market” hits mid February and this year appears to be no different. Activity at listings has picked up substantially over the last few weeks. The result, more contracts. Most of last year, the active properties in Northern Virginia averaged around 18,300 per week. Since mid December, we have averaged 15,700 per week. The month’s supply of homes was typically around 11.3 months last year. This year it is an astonishing 6.6 months supply! We are selling more houses - some with multiple contracts. What is the reason for our good fortune? We believe that prices have bottomed out in many areas, there are still motivated sellers, interest rates continue to stay low and the most recent news of the recently passed stimulus package are proving to be the catalyst for change for our real estate market. We are confident that the market will be great in ’08!

We also believe that now is the time for investors to get in the game. Foreclosures, REO, or bank owned properties as well as vacant properties are excellent opportunities – depending upon the number one acronym in real estate – location. We can assist you in determining the right opportunities available. We are cautioning our buyers, including investors to stay away from Short Sales. What is a Short Sale you may be asking yourself?

SHORT SALE: WHAT IS IT?
This is a sale where the owner can no longer make the mortgage payments & the sales price is not sufficient to cover the cost of fully paying off all the liens on the property. The lender will agree to accept a payoff for less than is owed and forgive the rest of what is owed on the mortgage. Simply stated, when the seller owes more than the property is worth.

BUYING A SHORT SALE PROPERTY
A. Make sure your Buyer understands what they are getting into!!
1. Property usually sold “AS-IS”
2. There is usually no closing cost assistance.
3. There is usually no money for home inspection repairs.
4. There is usually no money for walk-thru items.

**Just because the Seller agrees to these items does not mean the lender will! In addition, even if Seller has agreed in a written addendum to an item, if it is not done by settlement, the buyer will have very few palatable remedies.

B. If You Are Making an Offer:
1. Make sure you make the offer contingent on the short sale being approved by the lender and set a time frame for the approval (but be aware it could take a couple of weeks)
2. For the third party lender approval contingency, it is advisable to use a separate addendum to outline the specific contingency terms and conditions.
3. You may want to ask for documentation from the Seller showing that they have made application to the lender for the short sale.
4. Understand there is a good chance that there will be more than one offer.
5. It is prudent to conduct a home inspection even though the property will be sold “As-Is”.

C. Contract Must Be Approved by Seller’s Lender
1. Make sure your Buyer understands the Contract MUST be APPROVED by the Seller’s Lender.
2. Be aware that the seller will need to be in default and will have stopped making mortgage payments before a lender will even consider a short sale. Just because the property is listed in MRIS with the short sale terms DOES NOT MEAN the lender will accept your offer, even if the Seller accepts it.

D. Expect Settlement Delays
1. Many hands must approve a short sale, therefore, you will be on the bank’s timeframe, not your own.

A buyer must understand that completing a “short sale” real estate transaction is often a very tough & lengthy process. Often lenders won’t approve a short sale if it is “too early” in the process.

It can be a jungle out there so be sure you are equipped with the right tools to get you successfully through the process! Call us, we are here for you!