LoudounForeclosures.com

Facing Foreclosure or Negotiating a Short-Sale? Watch this Video

If you're facing foreclosure or trying to negotiate a short-sale, this video clip is a "must-see".

(If you don't see the video below, click here)

Hat tip to zsaw.com (aka @zsaw on Twitter)

The Type of Property You Can Buy May Depend On The Time You Have

Many home buyers start seriously looking for a new home about three to six months before their preferred move date. Some give it even less time. But is two, three, even six months enough time? And does it affect what type of property you can try to buy?

Six, three, even two months may give you enough time to search for a new home, write and offer, go through the negotiation process, come to an agreement (ratify the contract) and then proceed to settlement - IF the property is a traditional resale or bank-owned (foreclosure). But it may not be enough time for a short-sale.

Though the time from which the offer is ratified to when settlement occurs is similar regardless of what type of sale it is, the negotiation process varies drastically especially when it comes to short-sales.

Here's the breakdown...

Traditional resales

A traditional resale is a sale in which the property is not bank-owned nor is the seller attempting to do a short-sale (definition of a short-sale later in this post). The owners are selling it directly to a buyer without needing final approval from a bank or other creditors.

Traditional resales typically take anywhere from a day to a week from the time you present an offer to when the negotiation process is complete.

If you've given yourself between 3 and 6 months, you'll be fine even if you don't get the first or even second or third house you've made an offer on.

Bank-owned properties (aka "foreclosures")

Bank-owned properties have been foreclosed on and are now being sold by the bank on the open market.

Bank-owned properties typically take a few days to two weeks to negotiate. The reason for them taking longer than a traditional resale is that you're dealing with the bank's asset manager - they have hundreds of files on their desks at one time and they don't work nights, weekends or holidays.

If you've given yourself between 3 and 6 months, you'll be fine even if you don't get the first or even second or third house you've made an offer on.

Short-sales

Short-sales are situations in which the seller/borrower is attempting to sell the property for less than what is owed on it (they're "short") and the seller/borrower is trying to get the bank/creditor to agree to take the loss. The bank/creditor must give final approval on the offer in order for the deal to take place. (For a more detailed explanation of what a short-sale is, click here)

The average response time from the bank on a short-sale is 3 months though I've seen responses take as long as 6 months. And here's the kicker...only about 20 percent of short-sales are approved.

If you've only given yourself 2 to 3 months before having to move, you're outta luck - short-sales are not for you. Even if you've given yourself 6 months, you may be cutting it close because it may take the full 6 months to hear a response. But...if the bank doesn't approve the short-sale, you're back to square 1 and you've lost an average of 3 months (if not more) of house-hunting time. 

If you'd like to look at short-sale properties, you should give yourself enough time to find a home PLUS another 4 to 7 months (average response time plus time to close).

The home buying process is stressful for many - especially first time home buyers. The last thing you want to do is feel rushed or, even worse, find yourself having to double-move or living out of a hotel. That's why knowing the timing involved with each type of property and planning accordingly is so important.

How to Apply for Loudoun Neighborhood Stabilization Program, List of Designated Areas

Loudoun County just released the name of the neighborhoods that qualify for the Neighborhood Stabilization Program (NSP). This is part of the NSP application process to, which Loudoun will submit to Virginia at the end of this month in hopes of securing at least $2 million to buy foreclosed properties for rehab.

The designated neighborhoods are (Adobe Reader required):

• Crestwood Hamlet
• Heritage Square 
• Hunington Ridge
• Sterling Park South (A)
• Sterling Park South (B)
• Sugarland Run

The application for the Neighborhood Stabilization Program requires Loudoun County to provide a list of qualified buyers that would be interested in purchasing a property in these designated neighborhoods.

If you are interested in purchasing a property in one of these designated neighborhoods through the Neighborhood Stabilization Program, contact me and have the following information ready:

1. Name
2. Address
3. Phone number
4. Pre-qualification letter from a lender (aka "approval letter" or "lender letter")

Important...

• The deadline for these applications is January 27, 2009 (the application from the county is due to Virginia at the end of the month and these applications need to be a part of that)
• Without the above information, the County will not process your application
• The information listed above is required by Loudoun County as well as Virginia - this is not a gimmick to get your information for my own records (I was asked by Loudoun County to be part of the group providing input into the program and application process)

My contact info: danilo.bogdanovic (at) gmail (dot) com - 703.582.6900 (cell)

Where Are All the Foreclosures in Loudoun County?

If you're curious as to where all the foreclosures in Loudoun County are located or which areas of Loudoun are most affected by foreclosures, check out the map below (click on map to enlarge)...

     

As you can see by the where most of the red dots are, the areas of Sterling and SE Leesburg are where most of the foreclosures are located. Incidentally, that's where some of the biggest drops in home values in Loudoun County have occurred.

Another thing the map shows is the total number of foreclosures in Loudoun County for the first, second and third quarters of 2008. Notice the increase in foreclosures as the year has progressed though the rate of increase has decreased.

Source: Presentation by Jack Brown, Economist for Loudoun County - DAAR Economic and Housing Forecast Summit

Foreclosure Freeze "Icing" Loudoun Real Estate Market

President-Elect Obama said he wants to put a 90-day moratorium on foreclosures once he takes office, but Countrywide/BoA, Chase and Citi aren't waiting until January 20 to start "freezing" foreclosures. The effect of this is already being felt in Loudoun County as less new foreclosure/bank-owned properties are coming on the market.

For example...I just did a search for active bank-owned and short-sale town home listings in Ashburn Village and found that over 90 percent of them were short-sales. The ratio has recently been about 60/40 (foreclosures to short-sales)

One effect of this is that buyers will be further frustrated with the purchase of a home. Short-sales take 3, 4 sometimes 6 months for a response and only about 20 percent get approved so they work for only a select few buyers that have that kind of flexibility and patience. With the rising number of short-sales and diminishing number of foreclosure listings and traditional resales on the market, buyers are left with less "real" inventory to choose from than they have in years.

(Short-sales are not "real" listings in my book because the seller doesn't even know if the short-sale will be approved by the bank while listing the property)

What will happen when the "freeze" ends? We'll see more foreclosure properties hitting the market once again. As much as this may sound like a bad thing, it's actually a good thing. We have to get through the bank-owned property inventory one way or another before we can see the market rebound. Plus, it will give buyers more "real" inventory to choose from.

 

How To Buy Freddie Mac-Owned Properties With Closing Costs Paid Plus a 1.5% Rebate

Freddie Mac is following in Fannie Mae's footsteps by selling their foreclosed properties directly on the open market. Freddie Mac's program is called HomeSteps and utilizes a network of real estate agents/brokers throughout the country to sell the properties and represent buyers. (Yes, the brokerage firm I'm with, Market Advantage Real Estate, and I are part of Freddie's network)

Freddie Mac's HomeSteps program is currently two huge incentives for buyers and buyer's agents/brokers:

• Freddie Mac will pay up to 3.5 percent of a buyer's closing costs*
• Freddie Mac is offering selling agents/brokers (aka Buyer's Agents/Brokers) a 1.5 percent bonus on top of the broker commission already being offered (which ranges from 2 to 3 percent of the sales price)*

*Please see Freddie Mac Terms and Conditions for more details.

How do these two incentives benefit you as a buyer?

The first one is a no-brainer. You get your closing costs paid up to 3.5 percent of the sales price. Since closing costs typically run in the 3 percent range, this incentive should cover all of your closing costs leaving only the down payment amount due at settlement.

As for the second one, let me explain...

If you hire me as your Buyer's Agent, I will rebate any amount of commission/bonus paid to my broker above 3 percent of the sales price back to you on any and all Freddie Mac properties you purchase that offer the rebate.

For example...If the commission being offered is 2.5 percent and the bonus is 1.5 percent, you will receive 1 percent back as a rebate. If the commission being offered is 3 percent and the bonus is 1.5 percent, you will received 1.5 percent back as a rebate.

Why "give away" my commission like that? Because I believe that making 3 percent of the sales price as a commission is fair and anything above and beyond that seems like a second-helping when you're already full. 

How do you search for Freddie Mac-owned properties? The brokerage firm I'm with, Market Advantage Real Estate, has made it easy for you. They've added a search feature that allows you to search for Freddie Mac-owned homes only. This will help filter out the "noise" and allow you to only search those properties owned by Freddie Mac. (The search feature may not be pretty, but we were focused on getting a functional resource out to consumers ASAP)

If you'd like more information about any of the Freddie Mac-owned properties you come across in your search or have questions about how the process works, please email or call me - danilo.bogdanovic@gmail.com - 703.582.5900.

How To Buy Fannie Mae-Owned Properties With Zero Money Down, No Mortgage Insurance

   

A little-known fact is that you can buy Fannie Mae-owned foreclosed properties with as little as zero money down with no Mortgage Insurance. Fannie Mae is selling their properties through a program called "HomePath" and they're selling them for 50 to 75 percent of what they were worth just a few years ago.

Fannie Mae also offers a program called "ExpressPath" which is a financing option provided by Fannie through a Fannie-approved lender. ExpressPath financing can provide qualified borrowers up to 100% financing on select Fannie Mae properties. 

How do you search for Fannie-owned properties? The brokerage firm I'm a part of, Market Advantage Real Estate, has made it easy for you. They've added a search feature that allows you to search for Fannie Mae-owned homes only. This will help filter out the "noise" and allow you to only search those properties owned by Fannie Mae. (The search feature may not be pretty, but we were focused on getting a functional resource out to consumers ASAP)

How do you find out more about ExpressPath financing? Just click here.

If you have questions regarding the process, don't hesitate to contact me directly or check out the FAQ section on Fannie's web site. Here's an excerpt:

How is buying a home owned or managed by Fannie Mae different from other home purchases?

Usually, when you buy a home, you deal with a seller who lives in the home. However, the homes sold by Fannie Mae are unoccupied. Fannie Mae has acquired these properties through foreclosure, deed in lieu of foreclosure, or forfeiture.

Can I buy a house directly from Fannie Mae without going through a real estate sales professional?

No. Fannie Mae depends on the expertise of local real estate sales professionals and accepts offers only through our real estate listing agents. You may work with any real estate sales professional to submit an offer to the real estate agent who has listed the property.

If you'd like more information about any of the Fannie Mae-owned properties you come across in your search or have questions about how the process works, please email or call me - danilo.bogdanovic@gmail.com - 703.582.5900.

Related Posts

How To Buy Freddie Mac-Owned Properties With Closing Costs Paid Plus a 1.5% Rebate

U.S. Foreclosure Statistics Show Mixed Signals

The most recent U.S. foreclosure statistics just released by RealtyTrac and CNN show mixed signals. September 2008 saw a 12 percent decline in foreclosure filings over August 2008, which is good. But it also was a 21 percent increase over September 2007, which is not so good.

Though the increase over last year is an important statistic to consider, the decline over last month is even more important because it's more relevant to how the current market is doing and where it's headed. If we see a continued decline in foreclosure filings as 2008 comes to an end, this will bode well for market in 2009. If not, the 2009 U.S. real estate market may not get off to such a great start.

What's interesting is that there's a quote in the CNN article that says,

The bad news: The housing market will be flooded with bank-owned homes. "We are estimating that by the end of this year, between one quarter and one third of all homes for sale will be bank owned properties," he said.

That could push down prices even more, perpetuating a vicious cycle, but it might also start to attract bargain hunters who may absorb some of the massive housing inventory.

Well, Loudoun County bank-owned and short-sale properties have made up one quarter to almost half of all homes for sale for almost 2 years now. And the bargain hunters and investors started coming out in packs to buy up that inventory well over a year ago and they're continuing to do so.

This just goes to show that Loudoun County and the DC metro area are ahead of the rest of the U.S. (as we usually are). Our boom market started before most of the country. The peak of our boom market (Summer of 2005) was ahead of most of the country. And the bottom of our bad market usually comes before the rest of the country's does. If they're calling for that "bad news" to happen just prior to the bottom for the U.S. housing market....well, it's already been happening here in Loudoun.

Loudoun Foreclosure Property Auctions Not a Hit With Buyers

Though Loudoun foreclosure/bank-owned properties are selling like hot cakes on the open market, foreclosure auctions are like ghost-towns. Few attend foreclosure auctions and the ones that do attend rarely make a bid.

Why? For the same reason regular properties that are up for sale just sit on the market...they're overpriced. And even if the price seems right, people are skeptical about bidding because they can't always inspect the property in person prior to bidding.

There's a great article in the Washington Business Journal that helps explain the situation in more detail. Here's an excerpt:

Many investors, who make up the bulk of active bidders at auctions, say the banks are asking too much for the homes. So far this year, 748,381 homes—or 46% of the foreclosures—have gone into the possession of the banks as real-estate owned, or REOs, because no bidders were interested in them at auction.

Individual buyers looking for deals at auctions will likely not find one, says Foreclosures.com President Alexis McGee. Making it harder for individuals: it is generally not possible to examine the properties in person before buying them and buyers must have money with them to make a down payment on the home.

Back in April, ABC7 News (WJLA) interviewed me for a story on this very subject. Funny thing is, the same is true now as it was then.

The only good thing is that banks are starting to "get it" when it comes to how they price their bank-owned properties on the open market, which is evident by the increasingly high number of bank-owned property sales in Loudoun County and the DC metro area in general.

See What Properties Are In Foreclosure For Free

If you're curious about which properties in Loudoun County (or other parts of Northern VA) are in the foreclosure process, check out ForeclosurePoint. The site offers a database of about 1.2 million properties with foreclosure filings in 35 states including Virginia. Registered users (free) can check out street addresses and dates of foreclosure filings of properties in Loudoun County and the rest of the area as well.

If you'd like more detailed information, you can upgrade to a "Premium Membership" which runs $79.95 per month. That's quite a chunk of change, but the upgrade provides all foreclosure details and access to their VeriTrack™ feature that monitors and updates changes to property status, auction schedules, and opening bids.

Though ForeclosurePoint offers information on properties going through the foreclosure process, it does not list properties that are now bank-owned and for sale. If you'd like to receive a list of bank-owned properties currently for sale, email or call me and I'll get that over to you.