Everything You Wanted to Know About Short Sales

It has become a term that has been tossed around a lot in recent years. but what exactly is a short sale? What is involved? How does it differ from a regular sale? Short sales can be a daunting experience but if you have the right people involved and the right information it is not as bad. This week’s blog post is all about short sales.

What Is a Short Sale
Basically, a short sale is a property that sells for less than the balance owed on the mortgage. In other words, if there is a mortgage balance that is greater than the market value of the home, that property is a short sale. It can also be a short sale in the accepted sales price is higher than the mortgage but not high enough to pay all the closing costs and commissions. The term “short sale” comes from the balance needed to pay off the bank being short. It is by no means or terms a quick or short process.

Are You Guaranteed a Short Sale
Not every property qualifies as a potential short sale. Not every person or family qualifies as a candidate for a short sale. The lien holding bank must agree to grant a short sale and are under no obligation to approve a short sale. A bank will grant a short sale if the bank feels it is in the bank’s best interest to approve the short sale. It is in the bank’s best interest to approve the short sale if the bank will make more money through the short sale process than through foreclosure. It is estimated that banks might save 25% to 30% on foreclosure costs to grand a short sale over a foreclosure, but some investor guidelines make it more profitable for the bank to foreclose.

What Is Necessary for a Short Sale

Most short sale transactions are handled by real estate agents who specialize in short sales. Some agents choose to negotiate with the bank holding the mortgage themselves. Other agents will team up with an attorney and let them negotiate the short sale with the bank. There are 4 essential ingredients to a short sale; however, strategic short sales (those without a hardship) are also possible. If initiating a short sale you will need the following:
     • An underwater home
     • A willing short sale bank
     • A seller with a hardship
     • A buyer willing to purchase the home

What Role Do Real Estate Agents Play in a Short Sale

You should always make sure that your real estate agent knows what they are doing and have experience with short sales. Some aspects of the process are very similar to general real estate sales but it can vary drastically in other aspects. If a short sale is not successful you can lose your home to foreclosure. This processes should not be handled by a novice agent.

Some real estate agents throw homes on the market that will never close as a short short sale. That’s because the agents do not always qualify the short sale sellers. Some agents will place unrealistic price tags on the short sale, which the bank will never accept. Also, many agents will take the first offer that comes in whether it will close or not.


The following is what the agent does in the short sale process:
     • Gather the required paperwork and submit the short sale package to the bank. Sometimes agents hire a third party to negotiate the short sale.
     • Help the seller to price the short sale home. The price needs to be attractive enough to entice a buyer to wait for short sale approval but high enough to satisfy the bank’s payoff of the outstanding mortgage.
     • Put the home on the market. The agent must submit all offers received to the seller. Some offers will be lowball offers.
     • Negotiate the short sale. Sometimes sellers/agents will hire a lawyer to do the short sale.
     • Submits the short sale approval letter to the seller. Most sellers want a release of liability and no deficiency to do a short sale.

A short sale is one of the most important task a real estate agent can take on. If the process is not handled properly the seller can lose their home to foreclosure. We at Team Johnson take this responsibility entrusted to us very seriously and work very hard to make this process as easy as possible for our sellers. We have successfully negotiated and closed many short sale transactions in the past year. We have never failed to successfully negotiate this process. If we can be of any help please give us a call at 904-495-0146 or email us at teamjohnson@watsonrealtycorp.com

Team JohnsonWatson Realty Corp
St. Augustine, FL 32086
904-495-0146
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Do You Need a Home Inspection?

When buying a home some people will chose to forgo the cost of a home inspection, especially if they are buying a newer home that appears to be in good condition.  This is not a good idea.  Before you purchase a home you should have it professionally inspected by a licensed inspector.  This blog will explain some of the reasons why this is not an area to cut back and save money when buying a home.

What to Expect at a Home Inspection
A good inspector will examine certain components of the house and will produce a report explaining and documenting his/her findings.  A typical inspection will last approximately 2 hours and the buyers and the buyer’s agent should be present.  This will be the buyers and the buyer’s agent opportunity for detailed explanation and to ask questions.  Most inspectors will also point out routine maintenance issues that will help the buyers long after the purchase.  The inspector will note the following:
•    whether each problem is a safety issue, major defect, or minor defect
•    which items need replacement and which should be repaired or serviced
•    items that are suitable for now but that should be monitored closely

What the Inspector Will Note During a Home Inspection



It is impossible to list everything an inspector could possibly check for; however; the following list will give you a general idea of what to expect.

Exterior
          •    Exterior walls - The inspector will check for damaged or missing siding, cracks and whether the soil is in excessively close contact with the bottom of the house, which can invite wood-destroying insects. However, the pest inspector, not the home inspector, will check for actual damage from these insects. The inspector will let you know which problems are cosmetic and which could be more serious.
          •    Foundation - If the foundation is not visible, and it usually is not, the inspector will not be able to examine it directly, but they can check for secondary evidence of foundation issues, like cracks or settling.
         •    Grading - The inspector will let you know whether the grading slopes away from the house as it should. If it doesn't, water could get into the house and cause damage, and you will need to either change the slope of the yard or install a drainage system.
        •    Garage or carport - The inspector will test the garage door for proper opening and closing, check the garage framing if it is visible and determine if the garage is properly ventilated (to prevent accidental carbon monoxide poisoning). If the water heater is in the garage, the inspector will make sure it is installed high enough off the ground to minimize the risk of explosion from gasoline fumes mingling with the heater's flame.
       •    Roof - The inspector will check for areas where roof damage or poor installation could allow water to enter the home, such as loose, missing or improperly secured shingles and cracked or damaged mastic around vents. He or she will also check the condition of the gutters.

Interior
         •    Plumbing - The home inspector will check all faucets and showers, look for visible leaks, such as under sinks and test the water pressure. He or she will also identify the kind of pipes the house has, if any pipes are visible. The inspector may recommend a secondary inspection if the pipes are old to determine if or when they might need to be replaced and how much the work would cost. The inspector will also identify the location of the home's main water shutoff valve.
        •    Electrical - The inspector will identify the kind of wiring the home has, test all the outlets and make sure there are functional ground fault circuit interrupters (which can protect you from electrocution, electric shock and electrical burns) installed in areas like the bathrooms, kitchen, garage and outdoors. They will also check your electrical panel for any safety issues and check your electrical outlets to make sure they do not present a fire hazard.
         •    Heating, ventilation and air conditioning (HVAC) - The inspector will look at your HVAC system to estimate the age of the furnace and air conditioner, determine if they function properly and recommend repairs or maintenance. An inspector can also give you an idea of the age of the home's ducting, whether it might have leaks, if your home has sufficient insulation to minimize your energy bills and whether there is any asbestos insulation.
         •    Water heater - The home inspector will identify the age of the heater and determine if it is properly installed and secured. The inspector will also let you know what kind of condition it is in and give you a general idea of how many years it has left.
         •    Kitchen appliances – The inspector will sometimes check kitchen appliances that come with the home to make sure they work, but these are not always part of the inspection. Be sure to ask the inspector which appliances are not included so that you can check them yourself.
        •    Laundry room - The inspector will make sure the laundry room is properly vented. A poorly maintained dryer-exhaust system can be a serious fire hazard.
        •    Fire safety - If the home has an attached garage, the inspector will make sure the wall has the proper fire rating and that it hasn't been damaged in any way that would compromise its fire rating. They will also test the home's smoke detectors.
       •    Bathrooms - The inspector will check for visible leaks, properly secured toilets, adequate ventilation and other issues. If the bathroom does not have a window and/or a ventilation fan, mold and mildew can become problems and moisture can warp wood cabinets over time.

Inspection Contingency
Every contract, whether it is as-is or not, has an inspection contingency built in.  On as “as-is” contract, the buyer can walk away within a certain timeframe if they discover something on the home inspection they do not like.  On a standard contract, there are provisions written into the contract stating the seller must fix any structural defects up to the amount specified in the contract.  The buyers can submit a list of requested repairs to the seller.  If the seller does not fix the repairs, the buyer can walk away and cancel the contract.  If the buyer does not make their decision within the time frame stated by the contract, they buyer can still walk away but will be liable for damages to the seller upto and including forfeiting the escrow deposit.

A home inspection is not the be-all, end-all when it comes to determining whether there is something wrong with a house.  It checks for visual clues to problems.  The inspector cannot run the risk of damaging anything in the house to discover problems.  An inspector is not a jack-of-all trades expert.  For example, he or she might tell you that there might be a problem with the plumbing but will recommend you hire a plumber to verify the problem and give an estimate to fix.  To best protect our customers, all of the agents with Team Johnson of Watson Realty Corp highly recommend always performing a home inspection.  We work with great professionals and can provide you with a list of home inspectors.  Give us a call at 904-495-0146 or email us at teamjohnson@watsonrealtycorp.com for more information.


Team Johnson
Watson Realty Corp
St. Augustine, FL 32086
904-495-0146
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Mortgage Options

When it comes time to consider buying a home it is important to have all your ducks in a row.  With such low inventory levels you can lose out on a home while you are getting financing together.  Unless you are paying cash for a house, you will have to look at financing.  Once you decide to finance your home purchase you have to decide which type of mortgage to apply for.  This blog is about the most popular types of loan programs.

Conventional Fixed Rate Mortgages

A conventional fixed rate mortgage has an interest rate that will stay the same over the entire term of the loan.  Usually that means 15, 20, or 30 years.  The drawback of a loan like this is that if interest rates fall, you could be stuck paying a higher rate.

Adjustable-Rate (Variable Rate) Mortgage

An adjustable rate mortgage usually offers a lower initial rate of interest than a fixed-rate loan.  The drawback of this type of loan is that after the initial period is over, the interest rate can fluxuate over the life of the loan.  When interest rates are on the rise you could end up paying more in monthly payments than expected.

FHA (Federal Housing Administration) Loan

An FHA backed loan can make owning a home possible for people that would not qualify for a home loan under other programs.  The biggest difference is in the downpayment.  Whereas, a conventional loan (fixed/variable) might want as much as 20% down plus closing costs, an FHA loan will require as little as 5% down plus closing costs.  The drawback to this type of loan is that the amount you can borrow might be limited and you will have to pay MIP (mortgage insurance protection) which is an insurance that protects the lender in the event of a buyer default.

VA (Veterans Administration) Loan

A VA loan is a guaranteed loan for eligible veterans, active duty personnel and surviving spouses.  Usually you do not have to come up with a down payment.  A VA loan also offers competitive interest rates.  Like a VA loan, the size of the loan could be limited.

Interest Only

An interest only mortgage is when the borrower pays only the interest on the loan in monthly payments for a fixed amount of time.  After the initial period is over the loan is due.  This could cause a problem for some borrowers because at this point your options are to pay a lump sum or refinance.

Reverse Mortgage

A reverse mortgage allows seniors to convert the equity in their homes to cash that does not have to be paid back as long as the borrower is living in the house.  This is a good option for seniors that do not have retirement savings or pensions however it is subject to a lot of false advertising and aggressive lending practices.

The decision of which mortgage option to use should not be made solely by you.  A mortgage professional should be contacted before you begin looking for a home.  That way they can start the ball rolling before you make an offer.  This can give you more bargaining power and help you not lose out on the home you want.  Team Johnson of Watson Realty Corp can help recommend some great professionals in the mortgage lending industry.  Give us a call at 904-495-0146 or email us at teamjohnson@watsonrealtycorp.com

Team Johnson
Watson Realty Corp
St. Augustine, FL 32086
904-495-0146
Click Here to Search the MLS Like an Agent
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You've Just Bought a Home...Now What

Finally!  You’ve gotten through all of those loan documents, closed on your property, and got the keys to your new house… what do you do next?  Everything you own is packed into a moving van.  The old house is empty and awaiting its new residents, and you're on your way to the new place. You've got a copy of the floor plan, which is all marked up with where everything needs to go, and your copy of the mover's inventory list is tucked in the big folder right beside it. You have friends and family meeting you at the new house to help unload the truck and arrange the furniture. But what else do you need to do when you arrive at the new place? 

1. Change Locks & Program Garage Door Openers

You should always change the locks and reset any key code combinations that can be used to gain entry to the house. Garage door opener, garage key pads and alarm combinations should be changed. You never know who has an old set of keys to your new house (a previous baby sitter, construction people, lawn care people, dog sitter, etc.) You want to make sure no one unauthorized can gain entry.

2: Pest-proof Your New Home

If you have access to your new place a day or so before the moving van is scheduled to arrive, take that time to get a few things done around the new home. You could set off a bug bomb or have the exterminator come and spray. Even if you don't see any bugs, that doesn’t mean they are not there.  It will be more difficult to find and evacuate critters after all your stuff arrives. And this way, you won't have to worry about your children or your pets being exposed to harsh chemicals during the bug bombing or spraying.

3: Start Fresh

Another great way to take advantage of your still-empty abode is to give it a deep clean. It could use it, especially if you've followed the pest control advice from the previous page. Cleaning the floors, baseboards and windows will never be this easy again -- you'll have unhindered access to everything. You can wipe down all the countertops, shelves and drawers -- replacing shelf paper if necessary. Run a phantom load in the dishwasher and washing machine, clean out the oven if it needs it, and don't forget the refrigerator and freezer. Check all air filters & water filters since you never know when the last time was that they were changed.  If possible, hire a cleaning service to help you get it all done. If you aren't able to do the cleaning prior to unloading the moving van, hiring a cleaning service will be even more helpful.

4: Check Out the Local Grocery Story

Between you, your family, the movers and any friends who are helping you, someone's bound to get thirsty or hungry during the move. Why not be ready with a refrigerator full of cold beverages, sandwich supplies and other snacks? And don't forget to grab some cups, napkins paper towels and toilet paper while you're at it.

5: Inspect Your Belongings

Once everything's off the truck, check your inventory list against what's actually been delivered. Has everything made it to the new place? This is where it helps to have both the inventory list and a floor plan filled out with what goes where. You can then walk through the house, room by room, and make sure that everything has arrived safe and sound. And speaking of boxes, be sure to open a few cartons of your most breakable items to make certain they survived the move.

6: Find the Essentials and Organize as You Unpack

Unless you've hired the movers to help you unpack, don't try to unpack everything at once. Sort your carefully labeled boxes so that you only have to unpack what is absolutely necessary. This gives you the time to organize your space as you go, instead of being forced to toss things randomly into cupboards and closets. Look for towels, bed linens, toiletries and other essentials. Unpack a few clothes so that you'll have something to wear over the next few days. Find the coffee maker and your favorite mug. And don't forget to find your pet’s food and water dishes as well as a few toys.

7: Install Window Treatments

Ideally, you planned it so that the movers will be finished unloading the truck before lunchtime, leaving you plenty of time to settle in to your new home. One key part to settling in is installing window treatments. While we're not suggesting you tackle all your windows at once, do try to dress the windows in the most essential rooms. When night falls, you don't want you, your family and all of your belongings on display for every passerby to see. Of course, if you've yet to even consider your window covering needs, head for the boxes marked "linens" -- you can always tack up a sheet or two until you have time to decide on tab-tops or Roman shades.

8: Make the Beds

While you're rooting around in the linen-filled boxes, unpack enough bedding to set up beds for everyone who is actually going to be sleeping at your house. If your friends aren't staying over, don't bother with the guest rooms -- you can take time later in the week or next week to get to that. For now, concentrate on the kids' rooms and your master suite.

9: Meet the Neighbors

After a few hours of unpacking, you'll need some fresh air. Grab the kids, put the dog on a leash, and hit the street for a stroll. If you can, try to meet some neighbors while you're out for your walk around the neighborhood. The sooner you get to know the folks around you, the quicker your new place will start to feel like home

10: Enjoy a Family Meal

Moving can be tiring and stressful. So, after a long day of work, take time to unwind together. There's no need to worry about a fancy, homemade meal -- especially if you haven't managed to unpack the kitchen yet. You can drive to the nearest restaurant for takeout or order something for delivery. During dinner, you can relax and make a plan for what you want to tackle next. You might want to start unpacking the kitchen, or maybe you just want to settle down in the den with some tasty sundaes and your favorite DVD. 

11: Get Some Sleep

Not to be too redundant but … moving can be tiring and stressful. So, after you've spent the day schlepping furniture and unpacking boxes, you need a good night's rest. There's no need to stay up until 2 or 3 a.m. Those boxes aren't going anywhere, and by now, you've already unpacked the essentials. By getting an adequate amount of sleep, you'll be ready and able to get started on whatever you need to do the next day, whether it be unpacking the library, hanging all the paintings or taking the day off to explore your new town.

Good luck in your new home.  Team Johnson of Watson Realty Corp strives not just to be your REALTOR® for the sale, but your REALTOR® for life.  No matter how successful and how busy we are, we are never too busy to help our customers, both past and present.  If at any time you have any questions do not hesitate to give us a call at 904-495-0146 or email us at teamjohnson@watsonrealtycorp.com


Team JohnsonWatson Realty Corp
St. Augustine, FL 32086
904-495-0146
Click Here to Search the MLS Like an Agent
View My Website
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After Your Offer Is Accepted

Congratulations!  If you’ve gotten this far you have placed an offer on a house and the seller has accepted it.  Now what?  This is actually the most crucial part of the home buying process.  If something could go wrong on either the buyer or seller’s end, it will be here.  With a good, experienced agent, some organization, and some planning it will be easy to get through this process and you will be moving into your new home soon.

Immediately After Approval

If you have not already done so, you need to make your escrow deposit.  Some agents will not collect an escrow deposit until you have an accepted contract.  Once you have an accepted, fully executed contract it is vital you make the necessary deposit according to your contract.

Within the First 3 to 5 Days

Contact Your Mortgage Person.  You should already have a working relationship with a mortgage person as he or she would have given you a pre-approval or pre-qualification letter to send with your offer.  Now that you have a contract you need to go see your mortgage person so they can begin the financial process.  This will include ordering an appraisal.  A bank will only loan up to the appraised value of the home.  If the home does not appraise you will have three options:  1) come out of pocket to make up the difference; 2) petition the seller to meet the appraised price; 3) walk away from the deal with no penalty.

Order Your Home Inspection.  A home inspection is not required, but is highly recommended.  Your home is no doubt the largest purchase you will make.  Spending a couple hundred dollars to have a qualified person thououghly inspect your future home may prevent thousands of dollars of unexpected repairs later on.  Contact a licensed home inspector of your choice.  If you are working with a real estate agent he/she should be able to recommend one.  The inspection must take place during your inspection period, usually 10 to 15 days from acceptance of your offer.

Submit Your List of Repairs.  Before the inspection period ends you need to submit a list of items you want repaired by the seller before closing.  It is important to remember not all items will be necessary in order to close.  A scratch in the paint on the wall is not something that has to be repaired in order for a bank to loan on the property.  A roof at the end of its life and leaking into one of the bedrooms is a repair that could impact financing and would be within reason to ask for repairs.  The only exception would be if you were buying a home “as-is.”  Most bank owned properties and short sales would fall into this category.  The bank gives you your inspection period and your options are to take it, or leave it as it stands.  With any contract, you can walk away penalty free, as long as it is done within the inspection period.

Inform Your Landlord.  If you are renting you need to inform your landlord.  Most landlords require at least 30 days notice that you are moving out.  Failure to do so could result in forfeiture of your security deposit.  You will also want to work out a move out date that allows for extra time should your closing get delayed.

Within 30 Days of Acceptance

 
Contact Your Insurance Provider.  You do not want a lapse in coverage between the sellers and yourself.  If you are financing your home, most lenders will not lend if you do not have insurance in place.  They also usually require you to pay one year’s insurance premium up front.  Your insurance broker can let you know how much this will be, and will provide a binder for you to bring to closing.

Stay In Contact With Your Mortgage Person.  You must obtain a mortgage commitment letter before your financing period ends.  This date can vary depending on the type of financing you are attempting to get.  You want to make sure you do not “fall through the cracks.”

Arrange For a Mover.  This should be done 30-45 days ahead of the closing date.  Make sure not to make firm arrangement until you have a confirmed closing date and you have received your financial commitment letter from your mortgage person.  Many people make preparations and sometimes fully move out, just to find their closing delayed a week.  This can cost hundreds of dollars in storage fees.

1 to 2 Weeks Before Closing

Arrange Utilities.  Contact the utility company and have the utilities transferred into your name.  This includes (if applicable) gas, electric, water, sewer, telephone, cable television, and internet service.  Be sure the effective date is when you take possession of the house.  You do not want to be paying for the seller’s usage.  Also, don't forget to have your current utility services disconnected

Make Sure You Have the Funds Available for Closing.  If you are paying cash you will want to be sure the funds are available and in a guaranteed form.  If you are financing, Your mortgage person should have given you a good faith estimate of the amount that you will need. If not, contact him/her as soon as possible.

Make Final Arrangements With Movers.  At this point you should have a clear to close date.  Once you have that, you can make final arrangements with movers.

1 to 2 Days Before Closing

Arrange For a Final Walk Through.  Your agent will arrange a final inspection of the home you are about to purchase. Most likely everything will be fine, but check to make sure everything is in the same condition as when you first put your offer in.

Verify the Time and Place of Closing.  Call the closing agent or title company for the time and place that the closing will occur. Your agent may do this for you.

Get the Final Amount You Need to Bring to Closing.  Call your mortgage person for the amount of the certified or cashier's check you need to bring to the closing.

For the Closing

You will need the following at closing:
1)    Picture I.D. (drivers license, passport, etc.) The closer will need to make a copy of it for the registry of deeds.
2)    Personal checkbook. In case you have to pay for any incidental charges such as taxes that have already been paid by the seller.
3)    Certified Check in the amount given to you by your lender.
4)    Insurance Policy or binder.
5)    Your personal attorney, if any.

Congratulations!  At this point, you can move into your new home.  This entire process can seem lengthy and troublesome but this is where a good agent comes into play.  A good agent will specifically guide you through this process.  They will handle some of the items above for you (submitting repair issues to the seller) or at the very least remind you to complete tasks that you will have to do (obtain insurance).  Team Johnson of Watson Realty Corp treats each buyer as if they are our only customers.  We do not believe in passing you off to a closing coordinator.  This is the most crucial period and we believe you deserve our full attention in this final but most important phase.  If you have any question please feel free to contact us at 904-495-0146 or email us at teamjohnson@watsonrealtycorp.com



Team Johnson
Watson Realty Corp
St. Augustine, FL 32086
904-495-0146
Click Here to Search the MLS Like an Agent
View My Website
Click Here to Email Me

 

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