Q. Tom, I bought a nice home in San Ramon near the top of the market in late 2006; due to the drop in prices and the minimal down payment at the time, I now owe much more money on the mortgage than what the home is worth. Would I be considered a good candidate for a short sale?
It depends. First of all, I’m happy to report that many more short sales are culminating in closed sales than was the case a year ago–that’s good news! However, to qualify the homeowner must still verify to their lender that making the mortgage payment constitutes a financial hardship. Other qualifying considerations are the number of outstanding loans you have (a 1st, a 2nd or more), which specific lenders hold the notes (some are more cooperative than others) and also the dollar difference between what you owe and the market value of the property—all of which factor into the probability of a successful short sale. If you are thinking of going the short sale route, I recommend that you take the time to consult the following three professionals:
- A CPA and/or financial advisor to outline the tax consequences of a short sale.
- A real estate attorney to explain the legal ramifications of a short sale and the other options available including foreclosure, a deed in lieu of foreclosure or loan modification.
- A full-time Realtor® with solid short sale credentials. Keep in mind, you usually only have one shot at a successful short sale, so my best advice is to hire a qualified Realtor who has the resources you will no doubt need every step of the way.
Q. It’s April and the weather is beautiful yet I don’t see the usual number of for-sale signs around town. Isn’t this supposed to be one of the best times of the year to sell and buy a home?
Yes. Typically, here in the Diablo Valley, our springtime market from mid-February to the end of May is the most prolific time to buy and sell (the summer months are a close 2nd). However, this year the available home inventory which usually fuels the market and invigorates the buyer interest level has been lower than normal. What does that mean?
It means that for whatever reasons, sellers are not listing their homes and are not coming to market at the same rate as in previous years and buyers have little from which to choose.
I know personally that if I had 10 more listings of homes in above average condition and location, I could practically guarantee to the sellers multiple offers from qualified buyers on many of them. Does that mean prices may go up? No, it means that buyer demand here locally is steady and that the combination of a value-priced home in a highly regarded community with first-rate schools, parks & amenities coupled with attractive mortgage interest rates is still a winning formula. Going back to your initial question–hopefully, available home inventory will significantly increase soon and April & May will prove to be robust sales months to the delight of sellers, buyers and real estate agents alike!
Note: The Contra Costa Association of Realtors® Scholarship Foundation awards approximately $50,000 annually in college scholarships to eligible college students in the Diablo Valley; the 2011 application deadline is April 15th. For more information, email me at tom@tomhart.com or click on www.ccarscholarship.com.
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