Boise Real Estate Blog

Fun and Games With Short Sales

We’re seeing more “short sales” these days.

A short sale occurs when a seller has negative equity at the time of sale.

In other words, after commission and closing costs, there isn’t enough money remaining to pay off the financing on the home.

This can easily occur with a seller who bought a home during our hot market a couple of years ago with little or nothing down.

For example, let’s say a seller bought a $300,000 home in 2005 with nothing down.

Typical sales costs, including commission, closing costs, and prorations are usually around 7.5% of the sales price.

That means that the seller would net about $277,500 if their home was still worth $300,000.

But, their home is probably worth more like $275,000 in our current market.

That means our seller’s net would be $254,375 after sales costs vs. owing nearly all of their original $300,000 loan amount.

The only reason a lender will consider taking a loss by agreeing to a short sale is that they want to avoid foreclosing on the property and losing even more money.

Lenders require extensive documentation and proof that a seller can’t make good on their loan before they will agree to take a loss on a short sale, but they will (usually) listen if a seller can prove that they are going to lose the home in foreclosure.

The fun part?

Well, there really isn’t a fun part with a short sale – they’re a pain for all involved because the lender is calling the shots; not the seller.

And lenders aren’t known for their responsiveness or marketing prowess when it comes to short sales. 

They often take 30 days (or more) to respond to a short sale offer, then play interested buyers against offers.

Then, they sometimes ask buyers to resubmit their offers and get a bidding war started instead of counter-offering and negotiating in good faith.

Short sales aren’t much fun, but we’re going to be dealing with them for the forseeable future.

February 18th, 2008 Posted in Buyer Stuff, Inside Real Estate |  Print This Post | No Comments »

Eagle, Idaho Real Estate – Above $1 Million

Homes For Sale Now: 76

• # Vacant: 39 (50% vacant)
• Average Asking Price: $1,607,224
• Median Asking Price: $1,350,000
• Highest Asking Price: $5,698,000
• Lowest Asking Price: $1,050,000

Homes Sold Past 6 Months: 5 

• Average Sales Price: $1,146,000
• Median Sales Price: $1,075,000
• Highest Sales Price: $1,300,000
• Lowest Sales Price: $1,025,000

Interesting stuff I saw in the 76 listings:

• Several listings requiring listing agent to be present for all showings (just what a buyer wants ~ the listing agent leading them through the house, pointing out “this is the kitchen”!)
• Several listings stating no sign or lockbox; appointment required (Let’s keep it a secret and make it hard to show!)
• Several short sales requiring lender approval, including one requiring buyers to be approved by the present lender as a condition of viewing the home (Gee, what if the buyer is already approved by a lender they chose?)
• Several listings were real estate agents selling their own home.
• Several listings were builders selling their own home.
• Several listings offered bonus commissions (largest was 5% commission to selling agent)
• One curiously offering a $40,000 cash bonus paid to the seller? (hmmm  .  .  .  lemme see here, the sellers are going to pay themselves $40,000 to sell their own home?  Maybe the listing agent should proffreed her $1m+ listing to see if there are any misteaks?)
• Several price reductions (largest was $500,000, offered $100,000 below builder’s cost)

Best of all?

The listing offering a $100,000 price reduction IF PURCHASED AND CLOSED BY 12/31/07!  (huh?)

If you are a buyer looking for a home in this price range, give me a call ~ I know where the deals are!

(this post coincides with yesterday’s Idaho Statesman article on Eagle area foreclosures)

February 17th, 2008 Posted in Uncategorized |  Print This Post | No Comments »

Are Foreclosures A Good Deal?

There’s a common misperception that foreclosed homes are great deals.

That’s often not the case and here’s why:

• Sellers losing their homes in foreclosure often trash them to get even with the lender.
• Lenders do not take care of foreclosed properties and sell them “as is”.
• Lenders try to recoup their losses when they sell their foreclosed properties.
• Unknowledgeable buyers often overpay for foreclosed properties.

I have seen many eager buyers overpay for foreclosed homes when they could have bought a similar home in prime condition that was a better value.

You are generally better off finding a motivated seller (divorce, job transfer, job loss, financial challenges, etc.) who MUST sell and negotiating a favorable deal instead of trying to steal a foreclosure.

February 16th, 2008 Posted in About Our Area, Buyer Stuff |  Print This Post | No Comments »

Get Your Flood Insurance Now!

I can’t believe it !!!

I actually managed to “scoop” the Associated Press with my earlier post about flood insurance a few days ago!

The AP article, which appeared in The Idaho Statesman this morning, reiterates the risk of flooding as our record snow pack starts to melt.

With our longer days, warmer weather, and bright blue skies it is only a matter of weeks before all of that beautiful white stuff turns into water gushing through our streams and rivers.

If you live in a flood-prone area (spelled n-e-a-r t-h-e r-i-v-e-r), or even if you are near a creek or irrigation canal, get your flood insurance NOW before it’s too late.

If you live near an irrigation canal and think you aren’t at risk, take a look at this shocking video of flooding in Fernley, Nevada when a canal wall broke.

There’s a waiting period for coverage to begin, meaning that you can’t get coverage when the water is running through your kitchen.

Check out the FEMA website for more information.

Yep, you read it here ~ first!

February 15th, 2008 Posted in Uncategorized |  Print This Post | No Comments »

Boise Real Estate Market Conditions

Is the glass half-full or half-empty?

It’s very difficult to tell where we’re headed in our real estate market at this time.

With only 324 closed single-family home sales in January vs. 4,249 homes for sale in Ada County, things are obviously pretty slow.

But, it’s winter and our weather has been pretty harsh compared to other recent Winter markets.

I think we can expect to see substantially more homes on the market in the next 90 days as we enter our Spring market.

I expect that we will have 5,000+ homes for sale in Ada County again within the coming months, just as we experienced last year.

Only 7.7% of the homes on the market sold during January, which means the other 92.3% of the homes on the market went begging.

That supports my contention that about 90% of what’s on the market is either overpriced or not in prime showing condition.

There’s no denying that the buyers are in charge.

February 14th, 2008 Posted in Uncategorized |  Print This Post | No Comments »