Valuing Your Home for a Quick Sale

In the current market many homeowners are finding themselves in a foreclosure situation. With the hope of catching-up the delinquent payments dwindling the only option left seems to be to sell…quickly.

For a fast sale it’s important to price the home right. How do you value your home? Difficult as it is you need to stop seeing it as your home and look at it like a buyer might. Start with a “market analysis”.

Compare your house to houses in the area with similar characteristics:

• Similar square footage, number of bedrooms/bathrooms
• Similar features (fireplace, pool, etc.)
• Within one mile of your home
• Similar year built
• Sold within the last six to 12 months

Many real estate agents offer a free market analysis of your home. Ask for a list of all the comparable listings in your area. There are many websites that will present a guesstimate.

You’re shooting for a bottom line sales price.

An accurate listing price is a necessity. There probably isn’t a lot of time for negotiations when looking for a prompt sale. Look objectively at any necessary repairs, get estimates to make those repairs and subtract them from the market value.

Consult a real estate agent regarding closing costs in your area (this figure may amount to 3-6% of the sale price of the property). Also subtract this figure from the market value of your home. You now have a listing price.

There may be a gap between the market value and loan balance for your home. In this case you may want to talk to your lender concerning a short sale. If a short sale offer is submitted for your home your lender might be willing to push back any foreclosure proceedings.

Governor Schwarzenegger Signs Foreclosure Bill with Protections for Both Homeowners & Tenants

Homeowners of foreclosed properties are often so desperate to find a way clear of the situation that they can fall victims to the unscrupulous. For renters the only difference being they usually become victims much sooner and are often unaware until they find out they’re homeless.

The current surge of foreclosures has been said to be the worst since the Great Depression. A shockingly increasing number of foreclosed single family homes, at least one fourth according to the California Apartment Association (RealtyTrac.com puts this figure at close to 38% nationwide), are tenant or non-owner occupied. These families often have little or no warning that their home is staggering towards foreclosure.

The protections in SB 1137 signed yesterday by California's governor include

• mortgage lenders must contact California home borrowers to explore loan modifications by phone or in person before starting foreclosure proceedings
• increases the eviction notice period from 30 to 60 days for tenants in foreclosure situations.

Read the legislative text

Renters in Foreclosure Also Scam Targets

In July 2007 Alberta and her husband signed a 2 year lease option agreement for a home in Hesperia, California only to find out 10 months later that the home was in the final stages of the foreclosure process and that it had entered default the previous December. At the same time they found out that the person being represented as the owner (landlord) was neither the property owner nor the owner’s representative. They had paid over $20,000.00 dollars to a scam artist with no hope of getting any of it back.

A lease option or lease-to-own agreement typically asks for a security deposit, first and last month’s rent plus a sum paid as the “option consideration” (a fee to bind the agreement) in order to occupy the property. A portion of the monthly rent is credited toward the purchase price of the home.

The problem comes in when the tenant learns the property is not only being foreclosed on and she has to move out - at least one‑fourth of foreclosed properties are tenant occupied – but it is often discovered at this time that the landlord rent was paid to was not the property’s owner.

How do you make sure who the owner of the property is before you turn over thousands of dollars? Check the public records at the county recorder’s office (you can do this online)…see whose name is on title for that address. Be sure you are paying rent to the correct person.

Another possible precaution to take – while you are looking up ownership for the rental property check to see if a Notice of Default has been filed against the property and just to avoid surprises later you might want to check every couple of months.

© 2008 by Lynnette Phillips

How Soon After a Short Sale Can I Buy Another Home?

This is one of those questions that seems to keep coming up.

You find your self having trouble making the house payments. Then the bank actually files a Notice of Default. It seems there's no way out but to put the house on the market but the Comparative Market Analysis (CMA) performed by you real estate agent tells you that the market value of the house and the balance of the loan are thousands of dollars apart. Your loan is "upside down". There's nothing to do but negotiate a short sale.

The answer to the question depends on whether the sale closes while the house is still in the default phase or after the Notice of Sale date and how much your credit score (FICO) has suffered.

Even if you were fortunate enough to sell the house before you entered foreclosure your credit probably took some hits. For one your house payments were behind & if the mortgage is in default then what else has suffered?

Take some time to boost that credit score. Since interest rates are FICO driven it'll even help lower your payment.

You may want to lease a home for a period of time while you work on improving your credit.

Warrranty Deeds

When title to a property is transferred in CA it is usually by a Grant Deed or Quit Claim Deed. More and more lately though I have noticed the use of Warranty Deeds which have been more commonly used in the Midwestern and Eastern states.

A Quitclaim Deed transfers to the grantee only the interests in real property which the grantor has, the grantee assumes responsibility for any claims against the property. They are routinely used in divorce cases.

Grant Deeds are the most commonly used and carry with them the implication that the property has not been transferred to anyone else and is not otherwise encumbered except as noted in the deed.

The Warranty Deed carries an additional promise. The grantor promises to defend the title against any defects; i.e. if at any time, a defect in the title or any problem in the transaction becomes clear, the grantor will compensate the grantee. This promise applies even if the defect was caused by a prior owner.

**This is not intended as legal advice. I am not an attorney**

Renters Rights if Owner Faces Default

"Recently I was opening the days mail and mistakenly opened a letter addressed to the property owner of my leased home notifying her of a pending notice of default and demanding mortgage payments for the last several months in the total amount of $21,000."

Due to the widespread foreclosures in this country tenants becoming suddenly homeless due to foreclosure has now become rampant. There are few protections for these innocent victims but due diligence on their part may help.

In California AB2586 has passed the assembly and would grant notification rights to tenants of 1-4 unit properties should the owner be facing foreclosure. Until such legislation becomes widespread and addresses other points such as the potential loss of security deposits action by the renters may be their only 'protection'.

Notices of Default or Notices of Sale are a matter of public record. In California they are required to be posted in the newspaper. You also can go online and check the county records.

Check the Property Taxes to see if they are current. Again a matter of public record. If the taxes or homeowners' association dues are delinquent chances are good that the mortgage is also.

Be aware of the foreclosure laws and timelines in your state.

Landlords are not obligated to inform property management companies or tenants when they are slipping towards foreclosure. You could always take legal action but if there isn't money to pay the mortgage what chance is there there will be money to pay damages or return security deposits?

**State & local laws differ by locale. This is not to be considered legal advice. I am not an attorney.**

Quit Claims Deeds and Alienation Clauses

Lately I have received quite a few questions about using a quit claim deed to relinquish titles to property, usually turning title over to a relative, while the current owner continues to make the payments on a mortgage signed by him or her.

While this seems incredibly generous on the part of the mortgagor (the borrower) this could create a problem. The mortgagee (the lender or creditor) holds a note secured by the property that will no longer be held in title by the person who signed the loan agreement. For this reason most mortgages or trust deeds today contain alienation or acceleration clause.

An alienation or acceleration clause is language contained in the loan documentation (mortgage or deed of trust) allowing the loan to become due and payable in the event the owner sells or transfers title to the property. I.E. Title to the property cannot transfer either by sale or quit claim deed without triggering the Acceleration or Alienation Clause thus causing the loan balance to become due and payable.

If you aren’t sure about whether your loan documents contain this clause contact your lender before taking any action that transfers title to your property.

**Posts or comments contained in this blog are not intended as legal advice.**

No Credit History?

Maybe you haven’t developed a credit history yet or you’ve preferred to pay cash instead of using credit. Maybe you needed to reestablish your credit after some sort of disruptive life event like a bankruptcy. Maybe it’s as simple as you didn’t think you would need to have any credit accounts in your own name.

Having not established a traditional credit history does not have to stand in your way of obtaining a home loan. There are many forms of acceptable alternative credit history.

You probably have paid rent, utility bills, telephone and/or cell phone services, cable television, automobile insurance though. These obligations are not typically rated on a credit report but can be verified by a written report obtained directly from the creditor.

Often, being able to show a responsible payment history for the past 12-24 months is the best indicator of willingness to meet future obligations.

How to reduce your mortgage interest: The advantages of bi-weekly payments

How to reduce your mortgage interest: The advantages of bi-weekly payments

Who wouldn't want to save thousands, even tens of thousands, of dollars in mortgage interest on their home loan? To add to the attraction of paying less interest what if you could also reduce the term of your loan? How?

You could pay an annual lump sum amount equal to an extra payment but, let's face it, some of us just can't seem to maintain a savings plan so a lump sum payment doesn't seem practical.

Another common way to save on interest paid has been to divide your monthly payment by 12 (months) and send that extra amount along with your payment every month that way making 13 payments every year instead of 12.

Example: Your monthly payment equals $1700.00 per month, divide that amount by twelve and the extra amount to include in your payment is $141.66 now making your monthly payment $1841.66.

Sometimes budgeting that extra amount to be included with your payment every month is just too much of a stretch though.

Many lenders offer a bi weekly mortgage payment plan making the additional amount easier. Read more...

First Time Home Buyer Financing Option

There are so many purchase and financing options available to First Time Home Buyers the only thing for certain is that there's no reason for them to think they aren't able to have a home of their own.

Why would anyone choose to go the route of a Lease Option? Check out these advantages:

· The up-front cash required to buy a home or other property on a lease option is usually small. This option money is in lieu of a security deposit.

· A portion of the monthly lease payment goes toward building your down payment.

· You are able to profit from the market value appreciation of the property.

· You are already building equity! Remember you agreed to a fixed purchase price not the market price that the property will be worth at the end of the option period.

· If necessary you have time to repair your credit while you have locked-in a purchase price.

· There's time to check out all of the home's features and faults, the neighborhood, schools, shopping, health care facilities, etc.

· You skip paying the closing costs associated with conventional mortgages.

· When you lease a property you are not responsible for the property taxes or homeowners insurance. Those won't be your worry until you become the owner of the property.

While the benefits of a lease option are not one sided they definitely give many first-time buyers or those with past credit problems an ideal way to get started on home ownership.