Feeds:
Posts
Comments

Posts Tagged ‘los angeles real estate’

This issue is common in many market places today.  Mortgage lenders will only close/fund up to a specific percentage of the appraised value for refinance and for purchase.  When properties don’t appraise for the value necessary to refinance or the agreed upon purchase price most transactions fall out or cancel.  In the case of a purchase a home buyer could increase their cash down payment or the buyer and seller could renegotiate the purchase price AND your agent could take the five steps listed below.

1. Read the appraisal and look for errors.  Sometimes appraisers undervalue properties because they mistakenly use comps that are not neighborhood comps, sometimes the bedroom or bathroom count is wrong, sometimes the square footage is wrong.  On occasion, other neighborhood information is wrong, such as schools.  All of this data impacts the final appraised value.  If you find errors then dispute the appraisal immediately.
2. If the lender or appraiser refuse to correct the appraisal then ask for a second opinion.  Request that the lender consider a second appraisal.
3.  Once a true appraised value is decided and the value is still lower than the previously negotiated price then renegotiate.  In today’s market your Buyer pool may be primarily FHA buyers who lack cash to make up the difference or the buyer simply does not want to make up the difference.  Work with your agent to renegotiate the purchase price.  While most Sellers want to avoid this tactic the reality is that once you start over again you may face the same appraisal results with a new buyer and by then you may have lost considerable time.
4. Buyers should consider splitting the difference with the seller.  How long have you been shopping for your home?  What will you lose by waiting?  If you have been looking for a year and think the solution is to wait think again – when interest rates that are so begin to increase a waiting buyer could experience a payment increase of up to $200/month on a purchase price of $300,000.  Buyers making a home purchase where they will raise their children will reside in their homes for upwards of ten years which equates to a possible savings of $24,000 in monthly mortgage payments based on today’s lower rates.  So if your appraisal came in $20,000 below your negotiated price work on splitting the difference with the seller.
5. If all else fails, extend contingencies and change lenders.  A new lender, mortgage banker or broker will have their own appraisal process and approved appraisers that could have very different results.
Stay tuned for more tips on completing successful closings in today’s market!
Advertisements

Read Full Post »

3 considerations before abandoning underwater home

REThink Real Estate

By Tara-Nicholle Nelson Inman News®

Editor’s note: This is  the second of a two-part series. Read Part 1: “When it makes sense to keep an underwater home.”

Q: At the top of the  market, I owned three properties: my first home (in a marginal neighborhood, now  about 100 percent upside down), my own residence (a big fixer in a great  neighborhood), and a triplex I bought as an investment (an OK neighborhood,  needed some work, fully rented, but now upside down by about 30 percent).

When the market  turned, I had a couple of bad tenants in my first home and the triplex that set  me way back financially, and I was unable to borrow the money I needed to fix  the house I lived in. I did a short sale on the fixer and got temporary loan  mods on the other two, and moved back into my first home.

The problem is, they’re  both so upside-down and don’t seem likely to come back up anything soon … should  I just sell everything and start over?

A: Last week, we covered the preliminary step I want you to  take with respect to your personal residence, of examining whether the home  still works for you, for the most part, as a personal residence,  notwithstanding the fact that it’s upside-down.

Many a homeowner makes the wise decision of staying put in  an underwater home on the grounds that the home is functioning well as a home  for their family, is affordable and looks like it will remain functional on  those counts for the foreseeable future.

I’m aware, though, that your situation is complicated by  your perception of both of the properties at issue, at least in part, as  investments that now seem likely to have outlived the purpose for which you  bought them.

I can’t give you a black or white answer in terms of whether  you should sell or hold either or both of your properties. But I can give you a  set of considerations to factor into your decision. After you evaluate the  life-property fit of the home you currently live in, consider these three  things:

1. Your options.  One of the biggest, most stressful mistakes we make, as humans, is to agonize  over decisions without a complete understanding of the full spectrum of options  that are available to us. So, educate yourself!

Get online and do your reading,  talk with your own lenders to see what options they might have available, and  then also talk with local professionals you trust — at the very least, include  a real estate broker, a mortgage pro, an attorney and a tax expert on this  list. They might know of options you don’t, and they might be able to help you  understand the timelines and feasibility associated with each option.

For example, banks seem to be granting short sales at higher  rates than before, but they still take a long time, and the exemption from  federal income taxation on the debt forgiven via a short sale is currently set to  expire at the end of 2012. That might suggest you should list your properties  for sale and apply for short-sale approval, stat.

On the other hand, there have been a number of governmental  foreclosure relief program developments that might offer help for you, some of  which are available only in the hardest-hit states.

The pros can also help you get a deep understanding for all  of the tax, credit, financial and even legal implications of all the options  available to you. Get the information and professional input you need to fuel a  clear, complete understanding of your options before you move forward with your  decision-making process.

2. Your values. The  decision whether to hold or sell your properties is a hybrid business/personal  decision that will impact the overall “after” picture of your life.  While you can and should factor in input from professionals and even personal  advisers whom you trust are knowledgeable and have your best interests at  heart, only you can decide what’s really important to you in a way that drives  the ultimate decisions you make.

(And decision really should be decisions, plural, because you could  very well create an action plan that involves putting the place on the market  as a short-sale listing while you apply for a loan modification, or some other  set or sequence of actions.)

So, when I say to factor in your values, I’m simply  encouraging you to get clear on what is important to you. Owning the place you  live? Tax advantages? Reducing your expenses? Saving up to secure your  retirement?

This phase of the process will help you get out of the very  common real estate decision trap of doing things for their own sake: owning  because ownership is good, or getting out of the market because that’s the  supposedly smart thing to do.

Whether you decide to hold, sell, or try to make  some other changes to your situation then sell as a backup plan, it’s important  that each action step you build into your plan be set in service of some higher  life aim, goal or value.

3. Your priorities.  Once you do a deep dive into your values and even list them out in writing, one  essential truth will quickly become very evident: You can’t (likely) have them  all. Early on in this decision process, you’ll need to rank your values and  objectives in order of importance, and communicate that to the professionals  you look to for advice.

There are trade-offs involved in virtually every real estate  decision. For example, you might have to give up some tax benefits of property  ownership to cut your costs and save your financial acorns for the winter of  retirement.

You might have to sacrifice free time and get a side job to  make your real estate obligations if you decide to keep the triplex after the  mortgage adjusts (if you’re currently paying only interest, a mortgage  adjustment that happens in January might involve a decrease in interest rate but still increase the overall payment if you have to begin paying toward  principal).

Only you can know what’s important to you, in your finances  and your life, to make the critical decisions you now face. So get clear on  your full range of options and the implications thereof, build out a strong  sense of your own values and life vision, then prioritize and rank the  things that are important to you. Once you have these inputs, your action plan  should soon become clear.

Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

Read Full Post »