With the passing of the first day of spring on March 21st as well as the completion of Easter Weekend, the spring market is officially here. Things are looking promising with a lot of activity in the early weeks of March so there are a lot of things to be optimistic about. Interest rates are again low (5.6% at one point last week), home values are at a low point, pent up demand is there, economic stimulus checks are in the mail, tax returns are comming and the government seems honestly concerned about the foreclosure rate - to the point of taking action to reduce it. All of these factors point positive and if you haven’t started to hear rumblings in the media about a possible recovery in 2008, you soon will.

If you’re entering the market this year - whether to buy or sell - this next couple weeks you have to start thinking about how to prepare. Sellers - get those homes freshened up and get them on the market to take advantage of the early activity. Buyers - start contacting your local real estate professional (630 - 346 - 1041) for advice on how to start the process. 2008 should be a defining year for the real estate market as well as the economy - you need to be aware of what’s going on at all times and your local real estate professional is the key to helping you understand the market and how to come out ahead.

Many folks have heard the term “Short Sale” used recently amid the housing downturn of the past couple years. However, there is a lot of mystery involved as to what this is, exactly. I’m here to discuss several of the main concepts of these types of sales. If you watch the property market closely and have always wondered what the ins and outs are of these types of sales, hopefully this post will help you make sense of the process.

A short sale in the basic sense occurs when a property owner attempts to sell a property for less than they owe on it. This is usually due to some type of financial hardship on the part of the property owner or the inability to meet scheduled payments on the home. In essence, here is a rundown of the short sale process:

1. Property owner is late on one or more mortgage payments or is able to prove the inability to pay in the near future
2. Property owner or appointed attorney contacts lender and obtains a short sale packet that lists the requirements the lender has in order to approve the short sale
3. Property owner lists the property for sale with a REALTOR at the home’s actual value
4. Property owner agrees to an acceptable offer from an approved and willing buyer
5. Property owner or appointed attorney contacts lender again with the contract and all short sale documents
6. Lender appraises the property and either approves or denies the short sale or makes the buyers a counter-offer

There are many things that are often misunderstood about the short sale process. The first is usually the list price of the home. Many property owners feel that they can price the home for whatever amount they choose and the lender will approve the sale. In actuality, the lender usually will only approve the amount that the property is actually worth - determined by the appraisal. In many cases where the contract is for a price substantially less than the actual appraised value of the property, the lender will counter the contract at its actual value. The lender always has the final say in the value that they will accept for the property - not the seller.

Another aspect of the short sale that is often confusing is the addition of a second mortgage. If there is more than one mortgage on the property, both lenders must approve the short sale to release title to the property. In many cases, a second mortgage holder has a subordinate lien position on the property - this means that if the property goes into foreclosure, the primary lein holder will be paid first and whatever is left over then goes to the second lien holder (and on down the line). Because of this, it is often in the best interests of second mortgage holders to negotiate with the homeowner and allow the property to be sold BEFORE foreclosure - but the situation puts them at a very weak negotiating position. Often, second mortgage holders are offered a $1,000 settlement on a loan for many tens-of-thousands of dollars. However, because the second mortgage holder must write off on the sale of the property, they do have a final say-so in the ability of the short sale to go forward. In several cases, second mortgage holders have forced property owners to sign personal notes of repayment in order to approve the short sale. When a second mortage is involved, often things become many times more complex.

If you are a homeowner and are having trouble making payments, a short sale may be an option to consider. You have to keep the following in mind: you will almost never get any money out of the property, you have to be able to prove some type of current of future financial hardship and depending on your circumstance, the short sale may or not be successful. Perhaps the two most important factors you should look for if you feel a short sale might benefit you are a real estate agent who knows the short sale process and will advise you properly and an attorney to help you get everything the lender needs together and negotiate with your mortgage holders.

On the other hand, if you are a buyer buying a property through short sale, the primary thing you need to have is patience and an open mind. You are buying a property from a seller who likely has no additional money to put into the property. The sale is always subject to lender approval and time from offer to close may be 3-4 months or more, or even never. You might also end up being asked to pay for property liens and other expenses that the seller of the property is unable to pay. The end result is that you usually get a property well under market value but you have to be patient and put up with a lot. Again, the most important thing for you is to be working with a real estate agent experienced in short sales who can advise you throught the process.

For more information on short sales please call me directly at (630) 346-1041

In today’s tough seller’s market, homeowners are looking for as many ways as they can to make homes stand out of the crowd. During the winter months, many sellers focus on the interior of a home to make it stand out. While the ground is blanketed in a thick layer of snow, improving the exterior of the home doesn’t make a lot of sense. Many buyers don’t linger outside and other features like a patio or deck are difficult to sell as important features when they’re unusable. However, as spring arrives, sellers must shift gears and the exterior of the home often becomes its biggest seller.

As the weather starts to warm here in Aurora and surrounding Fox Valley communities and the snow starts to disappear, homes that have particularly nice exteriors begin to shine. If your home features a big yard, beautiful garden, nice patio or deck and other fun summer features such as a three-season room, you are now entering the best time to show off these important assets. Perhaps one of the best ways to do this is through landscaping.

Landscaping, when done properly, is one of the easiest, most cost-effective way to get your home to stand out and also perhaps one of the biggest factors in creating buyer interest. It’s no secret that “curb appeal” can make or break a sale right from the beginning. As spring approaches, sellers should be carefully planning out how to use landscaping to help generate potential buyers.

The biggest dividends in helping a home look “homey” can often be some of the cheapest - flowers. Almost everyone loves the look of a nice bed of growing flowers around the home, even if they don’t particularly like to garden. If your home doesn’t have any ready places to plant flowers around the outside of the home, a good investment would be several hanging or free-standing pots full of nice bright spring flowers spaced strategically around the entrance. If you have flower beds, now is the time to make sure the leaves are cleaned out and a fresh bed of mulch is laid.

If you have a patio or deck, consider bringing out the patio furniture even if it’s still a bit too cold to enjoy. These spots are also great locations for plants - either potted or planted around. Make sure they are kept clean and neat at all times. A patio or deck can be a huge asset when selling a home.

As our spring market gets into gear, I’m noticing a trend with some homes that have been on the market through the winter. Some homes in Aurora and the surrounding Fox Valley area are being cancelled as home owners decide that staying put is a better option than reducing price beyond a certain threshold. However, an alarming number of these homes are also turning into Short Sales, Pre-foreclosure or Foreclosures. Usually this status change is accompanied by a massive drop in list price - often $30,000 or more. While we remain optimistic about the market in 2008 returning to a more balanced state, the continuing number of pre-foreclosures and foreclosures entering the market isn’t a good sign.

For homeowners trying to sell homes, pre-foreclosure “short sales” and traditional foreclosures represent two of the biggest obstacles to selling homes. As soon as even one of these properties hits the market in a certain area, it impacts all of the other homes in the area dramatically. Suddenly, buyers see the same home that you’re trying to sell down the street priced $30,000 less. Even if the condition is worse than yours, buyers feel that that’s what the home should be selling for. For many sellers, reducing price to compete with foreclosures and short sales is impossible. Worse, often these foreclosures are in decent shape - not like the nightmare properties we sometimes imagine when we think foreclosure. If you can’t compete with the other homes in the market on price, and the conditions are fairly comparable - cosmetics aside - the only thing left is to count on your REALTOR to bring in a buyer directly and hope that that buyer doesn’t notice the other home down the street priced significantly less than yours. In today’s world of informaiton availablility, this isn’t a very realistic hope.

What results is a situation where you just have to wait and hope the foreclosures in your area sell quickly. However, in places where there are 3 or 4 of these properties and not that much market activity, this could realistically extend market times by months, assuming of course that no other foreclosures enter the market during that time frame.

It’s an ongoing cycle that many subdivisions are facing in this market. The question is: will spring bring enough activity to clear the foreclosures and allow homeowners to sell also? Another big question is: how will government intervention help forestall some of the foreclosures entering the market? These are serious questions that we need to pay attention to as we head deeper into spring and issues that I will be keeping an eye on in order to best advise my clients.