Don’t Call It a Comeback…Yet!

Over the last couple of years our nation’s economy has experienced turmoil not seen since the Great Depression.  Nationwide unemployment rates have hovered around ten percent or higher.  American workers have lost good jobs and been caught in the never ending cycle of unemployment or taking jobs they are overqualified for.  Savings accounts have been wiped out, while debt levels have been maxed out.  Drive down any street and look at how many “For Lease” signs are in the windows of businesses that are no longer around.  Economists agree that one of the major players in our economy is the residential housing market, which has been battered by short sales and foreclosures.  In order for our economy to turn around the housing market must first improve.  However, in the midst of all of the bad news there is some good news.  That good news is that for the first time in years we are seeing some small, but significant signs of improvement in the housing market!

The first good sign is that the inventory of available homes for sale is decreasing.  According to statistics recently provided by Realtor.com the inventory of available homes has dropped by approximately 23% over the last year.  The importance of this statistic cannot be overstated.  As available inventory shrinks, competition for those homes increases and appreciation makes a welcome return to the housing market.  This theory is proven by new statistics, which show that nationwide over the last year the average list price for a home has increased by three percent.

The second good sign is that the number of home owners who are behind on their mortgage payments has also decreased.  Current statistics just released from the Mortgage Bankers Association show that the number of home owners with delinquent payments are at a three year low.  In early 2010 a whopping 10% of home owners were behind on their house payments.  In the last quarter of 2011 approximately 7.6% of home owners were at least 30 days past due on their payments.  While a 2.4% decrease may not seem significant it equates to hundreds of thousands of home owners who are no longer at risk of losing their homes.  Remember, short sales and foreclosures drag down the real estate market.  As the number of short sales and foreclosures decrease the negative pressure they bring to bear on our market also decreases and appreciation again can make a very welcome appearance!

A third and final positive sign is that interest rates are at historical lows.  In addition the United States government has announced that they are intent are keeping these rates as low as possible for the foreseeable future.  We can already hear you commenting about “promises” made by the government being as solid as quicksand and while we may agree with you, this is very good news.  Interest rates for thirty year fixed rate mortgages are currently running below 4%, which is a modern day gold rush!  Extremely low interest rates for fixed rate loans provide home buyers with more buying power.  In addition it ensures home owners don’t get caught in the trap of a rising adjustable rate mortgage with ever increasing monthly house payments.  Low interest rates also allow for the potential of rising home values as buyers are able to spend more on the homes they purchase.

We firmly believe that as the housing market goes, so goes our economy.  The American dream of owning a home is one that is firmly entrenched in our society and passed down from generation to generation.  We understand that the statistics we provided are national numbers and that there are significant differences depending upon what part of the country you are from and what neighborhood you live in.  However, the current statistics are the most positive we have seen in the last couple of years.  So after suffering through years of negative news, let us take a minute and experience a little bit of happiness about some positive news.  Just don’t call it a comeback…yet!

Chad and Robyn Link

Owners, Designated and Managing Brokers

Link Real Estate Group

www.LinkRealEstateGroup.com

Hedging Your Housing Bet!

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It has been a few days since the biggest single game sporting event in the world has occurred.  For those of you who are not into sports or may have been on a mission trip to Timbuktu we are talking about the Super Bowl!  Leading up to the Super Bowl an estimated $10 billion, yes we said billion, dollars was wagered on the events that might occur during the final game of the NFL season.  Gamblers were able to wager on everything from how long it would take to sing the national anthem to whether the first score of the game would be the New York Giants racking up a safety on the New England Patriots.  Fortunately, for one lucky bettor, for only the second time in Super Bowl history the latter occurred and he went home $50,000 richer.  However, once the Super Bowl was over the final numbers showed it was Las Vegas, not the bettors who came out on top.  The lesson that potential home owners can learn from the Super Bowl…hedge your bets!

One of the most important steps you can take when beginning the home buying process is to get pre-approved.  The pre-approval process involves contacting a loan professional who will ask you questions about and request documentation regarding your income and your debts.  A loan professional will then take that information and combine it with your credit score to determine what type of loan is best suited for you and how much you can afford.  Once this process is complete the loan officer will provide you with a pre-approval letter, which documents the maximum you can spend on your home purchase.  It is very important to note that this pre-approval is good for purchasing a home “up to” the amount they provided you with.  This does not mean that you have to use every last penny of that pre-approval amount when purchasing your home!

Financial and government institutions have put into place limits regarding how much a potential home owner can borrow.  This is done in an attempt to limit the number of home owners that will default on their loans.  However, if the last couple of years have taught us any lessons it is that homebuyers must make educated decisions regarding how much they borrow.  Therefore, we strongly advise homebuyers to not follow the herd and purchase the biggest home their bank will allow them to have.  As we have seen following that herd can send you right off the cliff to your financial death.  While owning your own home is the American dream being house poor can make it feel more like a nightmare!

What is our advice to those who are currently in the market looking for a home or who will be soon?  Whatever you do make sure you hedge your housing bet.  Any loan officer will provide you with a number for how much the bank is willing to loan you.  However, it takes a really good loan officer to talk to you about how much you are actually comfortable with spending.  To make sure you are comfortable make sure you ask your loan officer to provide you with a couple of good faith estimates.  Each good faith estimate should cover a different amount up to the maximum you are approved for.  That way you can compare how much you will be paying each month based upon different purchase prices.  Factors such as interest rates may vary between the time you get your pre-approval letter and when you actually purchase your home.  However, these good faith estimates will give you a very good idea of exactly how much your monthly house payment will be.

Over the last couple of years the housing market has been an unforgiving teacher.  The lessons it has taught have been far reaching and life changing.  However, by examining the past and our past mistakes we are better prepared for the future.  Becoming a homeowner remains one of the most potentially rewarding experiences that one can have.  Having a home to call your own, to raise a family in and to build a future is priceless.  Remember, over the long term home prices have always went up.  Just make sure that when you take that jump you make an educated decision not a reckless gamble!

Chad and Robyn Link

Owners, Designated and Managing Brokers

Link Real Estate Group

www.LinkRealEstateGroup.com

The Arrival of Spring and Empty Promises…Maybe!

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As we sit here writing this article our spirits are lifted by not one, but two days of sunshine. We feel upbeat and energized by the appearance of good weather and the hope of more to come. Partnered with our positive attitude is a burst of sun-fueled energy that is pushing us to get things done! We catch ourselves looking around the house and finding projects to tackle, while planning trips to the local hardware store. However, in the middle of our sudden enthusiasm we are feeling a sense of déjà-vu and our emotion changes from one of hope to one of worry. We realize that last year, the year before that and the five years before that, we have made these same promises to achieve lofty goals. During those years promises were made and goals were planned, but when fall arrived we had failed miserably. Like a habitual smoker promising to quit our words meant absolutely nothing. However, this year our home needs us and we promise things will be different…maybe!

Upon becoming a home owner we inherit the responsibility to take care of our homes. The best way to maintain our homes and increase their value is through routine maintenance. By investing a little time and money into our homes we minimize the chances of much costlier repairs later on down the road. In order to increase your chances of success you must put together a written game plan, which you then follow each year. What follows is a game plan for spring, that if followed will have your home thanking you for years to come.

In the Pacific Northwest fall and winter are characterized by wet and snowy weather with very little sunshine. This type of weather tends to take a toll on your home and by the time spring arrives the exterior is going to need attention. When examining the outside of your house you are going to be looking for several things. First, you need to identify areas of cracked or peeling paint. Paint is your home’s first layer of defense against moisture and rot. If that defense is compromised it is only a matter of time before costlier siding repairs appear. Upon identifying these areas caulk and repaint as needed. Second, you need to check the weather stripping and caulking around windows and doors. Properly sealed windows and doors keep heat in during the winter time, cool air in during the summer time and water from seeping in behind the siding. Inclement weather causes weather stripping to come loose and caulking to expand and contract. After finding areas that need attention it is a quick fix to replace damaged or missing weather stripping, while re-caulking around windows and doors. Next, inspect the roof of your home. Identify and replace any missing shingles that may have blown off and left your roof susceptible to leaks. Last, check the window screens on your home and replace those that have been damaged.

After taking care of the outside of your home it is now time to turn your attention to the inside. First, check the attic for proper ventilation and confirm the vents are open. In order to combat mold your home must be properly ventilated. If your home is not properly ventilated there is no

place for moisture to go and as a result mold begins to accumulate. Second, if you have an air conditioning unit replace the filter and prepare it for the summer. Third, clean the vents and air filters in the furnace, dryer, stove and room fans. Improperly maintained venting systems greatly reduce their effectiveness along with an increase in fire danger. Fourth, check all the faucets in your home and replace the washers as needed. Many metals expand and contract when subjected to heat and cold and therefore need to be monitored. Fifth, if you have a fireplace now is the time to clean it and leave the damper open for improved ventilation. We have attended countless inspections where improperly maintained chimneys have caused large headaches and even larger repair bills. Sixth, if you have a basement now is the time to check the walls, floors and doors for dampness. If you find that moisture has leaked in then call a professional to identify the source of the leak and the best way to fix it. Last, but not least now is the time to change those batteries in your smoke detectors. It is much easier to do it now than at two in the morning when it begins to chirp and you are throwing a shoe trying to get it to stop!

While every home is different and may require specialized care we have provided you with a great game plan to achieve spring success. Feel free to add to and modify this list as needed, but make sure you stick with it. Remember, we are toiling right along with you, while trying to turn over a new leaf. So as the sun comes out and your spirits rise, maybe just maybe your spring will not be filled with empty promises!

Chad and Robyn Link

Owners, Designated and Managing Brokers

Link Real Estate Group

www.LinkRealEstateGroup.com

The Secrets to Purchasing a HUD Home!

The last couple of years have brought upon significant changes, which have altered the landscape of the real estate market.  Terms such as foreclosure, reo and short sale have entered into our daily vocabulary.  As a homebuyer you are suddenly faced with many choices that just a couple of years ago you may have never heard about.  As you begin your home buying experience it is imperative that you educate yourself about the many different opportunities that currently exist.  Today there is one money saving opportunity that we don’t want you to miss.  This exciting opportunity that beckons to home buyers is called HUD homes.

Unfamiliarity breeds fear so let us remove that fear by starting you on your education in HUD homes!  First, HUD stands for the U.S Department of Housing and Urban Development, which is a very large government entity.  One of the many responsibilities that HUD performs is to provide mortgage insurance for FHA loans.  Once a buyer has found a home they will then apply for a loan from a financial institution, for example Wells Fargo.  Since FHA loans require the buyer to put down only 3.5% of the purchase price of the home versus 20% or more when using a conventional loan they are very popular.  If a buyer qualifies for a FHA loan from a financial institution they then use that loan to purchase their home.  One very important aspect about FHA loans is that while they are issued by the financial institution, they are actually insured by the government.

However, a very important point of distinction is that the mortgage insurance provided by HUD covers the lender, but not the borrower.  As a homeowner you are responsible for making your monthly payments, whether you have a FHA loan or not.  If the homeowner is unable to or stops making their monthly payments then the loan goes into default.  If the homeowner is forced to default on the loan, FHA assumes responsibility for protecting the loan and thus the lender.  When a homeowner has defaulted on their loan the financial institution that holds that loan may then apply to the government for the money that they lost.  Once the government pays the financial institution, the ownership of the home then transfers to HUD.  Due to a variety of economical factors there are a large number of HUD homes currently available for sale, priced significantly below market value.  

Now that you know what a HUD home is let us tell you all about them.  First, you can find a list of all active HUD homes in your area at www.HUDHomeStore.com.  This site is run by HUD and is the most up to date source of information regarding HUD homes throughout the United States.  By searching through this website you will be able to find out what type of properties are available, how much they are being sold for and how long they have been on the market.  In addition, available HUD homes are also listed in the local Multiple Listing Service (MLS) that services your area. 

The amount of time that a property has been on the market is very important.  Since HUD wants to encourage buyers who will actually live in the home there is a set time line that must be followed.  For the first thirty days only owner occupants are allowed to submit an offer.  After the first 30 days have passed investors are then allowed to make an offer on the property.  According to HUD an owner occupant is defined as someone who has not owned a HUD home in the last two years and will live in the property they are purchasing for a minimum of one year.  When your real estate agent submits your offer you will have to declare that you qualify as an owner occupant under penalty of law, which includes a hefty fine and/or jail time.  Make sure you tell the truth on this one as we are pretty sure that being incarcerated for lying to HUD does not give you a lot of street credibility inside the grey bar motel!

Any legally licensed real estate agent can show you HUD homes and represent you during the HUD home buying process.  However, it is important when interviewing potential agents you find out how many HUD contracts they have brought successfully to closing.  The HUD process is unique and your real estate agent’s experience plays a significant role in getting you the house that you have set your sights on.  By choosing the right real estate agent you will lessen the chances of any unwanted problems rear their ugly little heads!

Before a HUD home is placed on the market a HUD certified appraiser has already inspected the property and determined whether the property falls in the categories of insurable, insurable with escrow repairs or uninsurable.  The classification of the property determines what type of loan you may use to purchase the property.  If a property falls under the insurable category you may use a normal FHA or conventional loan.  If the appraiser determines that a property is insurable, only after certain repairs are made to it they will classify it as insurable with escrow repairs and state the amount of those repairs.  Since HUD will not allow you to complete any repairs prior to closing you must use a FHA loan and include the amount of those repairs in your loan.  Once the loan closes the financial institution will hold the required repair amount in escrow to pay the contractor once the repairs are completed.  If a property is classified as uninsurable, because of the condition it is in, you will have to use a conventional loan or most likely pay with cash.

After finding the property you want to place an offer on it is time for your real estate agent to go to work.  During the initial ten days that a property is on the market HUD will collect all offers that are submitted during that time period.  At the end of the ten days HUD will then examine the offers and choose the best qualified offer.  If a property makes it past the initial ten day time period HUD will then review any offers that come in on a daily basis.  Submit a good enough offer and your offer will be then one HUD accepts.  On a side note another great benefit to purchasing a HUD property is that HUD will pay up to 3% of the purchase price towards your closing costs, which means more money in your pocket!  

Once the contract is mutually accepted HUD does allow the buyer a 15 day time period to perform an inspection of the property.  HOWEVER, IT IS VERY IMPORTANT TO REMEMBER THAT A HUD HOME IS SOLD STRICTLY AS-IS!  That means the inspection period is used to make sure there are not any issues that the buyer is uncomfortable with handling.  Unlike with a normal house sale, this is not time for your real estate agent to negotiate repairs to be paid for by the seller.  One item to note is that the buyer is responsible for paying a deposit to have the utilities to the property turned on.  After the inspection period has been completed and the buyer is comfortable moving ahead the property then proceeds to closing.       

A HUD home provides potential buyers with the opportunity to purchase a home for a price that is often times below market value.  This allows you the buyer to get a higher quality home than you would normally be able to afford or to purchase in a neighborhood that otherwise would have been out of your reach.  By understanding the unique opportunities that HUD presents you too can score an amazing deal!  

www.LinkRealEstateGroup.com

Do You Like MONOPOLY?!

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Monopoly, this one board game from Hasbro has done more to test personal relationships than all the therapists combined.  Each game starts out with smiles and good natured competition only to end with hard feelings as players stomp away from the table in defeat.  Be honest…have you ever seen a game of Monopoly end well?  We would bet there are those amongst you who have not played the game in ten years, because your brother-in-law somehow cheated you out of Boardwalk and Park Place!  Other than breaking up otherwise strong families the game of Monopoly can also serve another important purpose.  Monopoly can also let you know whether or not you are cut out to acquire and manage your own rental properties.

Whether or not to add real estate to your investment portfolio is a question that crosses many of our minds.  Everybody has heard a success story from a family member or friend who purchased rental properties, held on to them for ten or twenty years and then sold them for a significant profit.  The strategies you use and how you feel when playing the game of Monopoly will provide you with valuable insight regarding whether or not you can be a successful landlord.  Basically the game we all hate to love serves as a litmus test to see if we have the right stuff! 

The first question you must ask yourself is whether or not you are comfortable making the initial investment to purchase a property or do you feel safer having that cash sitting in the bank?  This question is easily answered by the strategy you utilize when playing Monopoly.  Do you feel comfortable spending your money to acquire Marvin Gardens or Pacific Place with the possibility of making significantly more money down the road?  Or do you like to save the money you accumulate as you go around and around the board, feeling increasingly more secure as you watch your pile of money grow?  In order to build you real estate investment portfolio you must understand that you will have to invest money well before you will see any significant payback.  As an investor you will have to pay approximately 20% of the property’s purchase price to acquire it.

The next question you must ask yourself is whether or not you are able to identify properties, which will make good solid investments or not?  Again, this question can be answered by evaluating how you play the game of Monopoly.  Do you automatically try to buy into overpriced and overvalued Boardwalk and Park Place or do you recognize the value that is present in acquiring Tennessee Avenue, Illinois Avenue or Marvin Gardens?  When investing in real estate the true value is not in the properties that glisten and gleam, but those that may need a little TLC to achieve their former glory.  These properties will become the foundation of your real estate portfolio, because you can acquire them at a significant discount.  In addition, rental properties will always require upkeep, such as new paint and carpet when renters move out and you must be willing to pay for these out of pocket expenses. 

Another lesson that can be learned through the great game of Monopoly is about how to collect the rent.  Once you are sharp enough to recognize the value of owning properties such as Baltic and Oriental Avenues another revelation comes upon you.  As a landlord when your tenants get paid is also the best time to collect the rent.  In order to make a good landlord you need to make sure you feel no pangs of remorse taking the $200.00 they just received for passing “GO” after they land on Connecticut Avenue, which is developed with homes!  Monopoly also teaches us the value of written contracts as the cost for residing in a particular property are clearly spelled out on each of those lovely square cards.

Investing in real estate can be an extremely rewarding process, which not only can pay monthly dividends, but also a sizeable payout later on down the road.  However, before jumping in you need to make sure that you like the temperature of the water and can adjust to its ever changing currents.  If you don’t you can end up stomping away from the table, with hard feelings, while vowing never to play again…kind of sounds like a recent game of Monopoly to us!      

www.LinkRealEstateGroup.com

To Loan or Not to Loan…That is the Question!

There is an old joke that goes like this: if you lend your brother-in-law $50 and he never talks to you again, was it worth the investment?  We have a sneaky suspicion that many of you are either answering “yes” out loud or even “hell yes” inside your head so that your significant other cannot hear you.  There are probably some of you who right now are counting up all of your in-laws and multiplying that number by $50.00 to see how much it would cost to make them all disappear!  Throughout our lives the majority of us will be faced with the decision whether or not to loan money to a family member or a friend.  Whether you are loaning $50.00 or $50,000 it is extremely important that you weigh the consequences of your decision…then DO NOT DO IT!

A recent survey revealed that 71% of people have loaned money to family members, relatives or friends.  Unfortunately this type of largess has led to a lot of hardship and heartache that extends far beyond the pocketbook.  This same study revealed that 57% of those surveyed said they have had family relationships or friendships destroyed when the loaned money was never paid back.  When you loan money to someone you are not only putting the amount that you give them at risk, but you are also risking the relationship you have with them.  We often hear that a good friend is priceless, but let’s be honest with each other and admit that an amount as small as $50.00 can ruin a good friendship.

Another study showed that 55% of the time when you loan a family member or a friend $100.00 or more you will never get paid back.  When you loan someone money the real question is no longer about whether or not you will be paid back.  We already know you would have a better chance of flipping a coin and betting that $100.00 on heads or tails.  The real question is whether or not you are going to lose the relationship you have with that person, because you loaned them money.  It is an inescapable fact that we as human beings are extremely possessive over our money and what it brings.  We like to show off the shiny new car, the brand new house and brag about the vacations spent in exotic locations.  It is also an unfortunate truth that the possessiveness we feel about our money is often times transferred to the individual we are loaning it to. 

Let us throw this hypothetical situation out there and see how you answer it.  You were approached by a family member or a friend asking for a loan and you decided to loan them $1000.  It is now three months later and every time you see your brother-in-law and sister at family gatherings your exchanges grow more and more awkward.  You stop answering your friend’s phone calls, because every time they invite you out to dinner you think, “Are they ever going to pay me back?”  When you hear that your nephew is taking a vacation you feel the bitterness gremlin growing inside of you.  The reality is that when we loan money to someone we care about we expect that they care about us enough to pay it back.  When that does not occur we not only lose the money we loaned, but we also lose the relationship.

So you have made it this far through the article and we can hear you thinking, “These guys are really cold-hearted”.  We may be, but we are realistically cold-hearted and ones with a solution to this age old dilemma!  We have a simple easy to follow rule, which will not only save you hard earned money, but also those supposedly priceless relationships you would rather not lose.  The rule goes like this: when a family member or friend asks you for money only give it to them if you can afford to give it to them as a gift.  If you are unable or unwilling to give them the amount of money they are asking for as a gift, then you have no reason to be giving them the money at all.  The key is that when we give someone a gift we don’t expect them to give it back to us and that kills the possessiveness gremlin we each have inside of us.  If you cannot afford to do this or are unwilling to do this then you should never, ever loan a family member or a friend your hard earned money.

By following our one simple rule we guarantee that you will never lose a family relationship or a highly valued friendship over a loan gone bad.  When you give those you care about a gift, instead of a loan you are showing true compassion and an unconditional respect for the relationship you have.  Trust us, Thanksgiving, Christmas and family reunions will become all the more sweet when you are not thinking about sending Guido after one of your family members.  As we wrap up, on a side note, if you care about the relationship we have with you as writers and readers we will be more than happy to accept your generous gifts, but never a loan! 

www.LinkRealEstateGroup.com

A Not So Short Dance with the Devil!

Like an unwelcome visitor who will not leave the term short sale has become embedded into real estate vocabulary.  In some severely depressed markets short sales account for upwards of 50% of the available homes currently for sale.  While we are blessed to live in one of the most stabile real estate markets in the country short sales are alive and well.  Short sales tempt potential buyers with the often false promise of a nice home at and unbelievably low price.  However, before you dance with this devil, it is extremely important you know the rules he is playing by!

Since it is common for buyers to confuse a “short sale” property with a “foreclosed” property it is imperative we define exactly what a short sale is.  To put it simply a short sale property is one that is being sold by the seller for less than what is actually owed to the bank in order to satisfy the existing mortgage.  For example, a home owner may owe $250,000 on a home they purchased three years ago.  However, due to the declining real estate market that we have all been so fortunate to witness the property currently has a fair market value of only $200,000.  While this fact alone would be depressing it really does not come into play unless the owner of a home is being forced to sell their property.  If the current owner is stuck in a situation where they must sell their home, but selling the home will not satisfy the outstanding loan and they don’t have the assets to make up the difference they are backed into a corner.  One of the solutions to their predicament is to approach the financial institution for approval to sell the home for less than the amount that is owed on it.

So far the short sale process has appeared straight forward and logical.  However, remember we are dancing with the devil and his promises are rarely what they seem.  First, most financial institutions will not assign a negotiator and effectively begin the short sale process until an offer on the property has been received.  Pay close attention, because this is where the catch to that great deal occurs.  Since the short sale process does not start until an offer has been received the seller will simply accept the first offer that they receive for the property.  Since the seller does not have the money to make up the difference between the offered price and what is still owed on mortgage they no longer care about the shortfall.  However, the price that the seller has accepted from the buyer has not been accepted by the financial institution that actually holds the mortgage on the property.  You see it is the financial institution that has the final say about what price they are willing to accept for a property, not the indebted beleaguered home owner.  Thus, regarding the actual purchase price for the home the seller is giving the buyer what actually amounts to a false promise.  The home owner is merely a puppet with very little actual power to follow through with the deal that they are agreeing to.

Next, financial institutions process short sales as quickly as a turtle crosses the Mojave Desert.  The average short sale takes approximately four to six months to come to a conclusion.  Think that is long, one major financial institution currently takes upwards of a year to decide whether or not they will accept the terms of a short sale.  Again pay close attention, because this is where the devil is able to make that short sale look like a great deal.  Since most buyers are unable to wait six months to a year to hear a yes or a no the pool of potential buyers for a short sale greatly shrinks.  In order to attract a buyer who has that kind of flexibility a seller often has to drop the price of their home well below market value…a price that has not been approved by the bank. Since most financial institutions won’t even start the short sale process until an offer has been received the price that the seller is accepting for their property is not worth the paper that it is written on.

Once an offer has been accepted by the seller and received by their financial institution the long journey begins.  If you remember any part of this article remember this…there is nothing short about a short sale!  Using the term short sale is false advertising.  It is akin to taking in your wedding ring and finding out it is cubic zirconium.  To be honest a short sale should be called a “marathon sale”, a “I would rather have a root canal sale” or a “let’s go to the opera sale”.  Over the next six or so months the financial institution will request everything from letters of hardship, to tax returns, to bank statements from the seller, lose all those documents and then request them all over again in order to determine if the seller truly qualifies for short sale status.  The financial institution will then send out appraisers to determine the fair market value of the property.

Once the financial institution has gathered all the information that is needed they will make a determination whether or not they will accept the buyer’s offer.  If the bank does not accept the buyer’s initial offer they may counter offer back to the buyer in an effort to come to a mutual agreement.  The problem with a short sale is the majority of time the buyer has already decided they are not cut out for it and have moved on.  So if the buyer has decided to rescind their offer the seller most likely will find themselves back at step one.  If a seller is fortunate the buyer will have stuck around, while also being willing to reach an agreement with the bank regarding the purchase price for the property.     

However, just because the bank has agreed to a purchase price for the property the journey is still not over.  No, no my friend this journey is long, not short!  Next, the bank will negotiate with the owner of the property.  Remember the bank not only has to agree to a purchase price with the buyer they also have to come to an agreement with the seller.  Home owners attempt a short sale versus a foreclosure, because the short sale does not affect their credit as severely or for as long.  In addition the homeowner is hoping the bank will forgive the difference between what their property is selling for and what is owed on the mortgage.  Thus, the success all comes down to whether or not the financial institution and the distressed home owner are able to come to an agreement regarding how the short sale will be settled.  If they cannot reach an agreement the short sale will fall through.

Once the bank and the buyer have come to terms and the bank and the homeowner have come to terms the short sale finally reaches a successful conclusion.  Months and months of frustration and pitfalls have led to the buyer purchasing their home at a great price and the distressed home seller getting themselves out of a bad situation, while minimizing their liability.  However, before embarking on the not so short short sale make sure you are prepared to dance with the devil!

www.LinkRealEstateGroup.com

Can We Get a Witness?!

It is that time of the year again when children head back to school and parents breathe a sigh of relief.  Gone is worrying about how to entertain the kids, where to go for summer vacation and how to keep lil’ Johnny off of the X-box 360.  As parents we understand that the end of our kids’ three month summer is often the beginning of our nine month summer.  However, as we looked over our high school son’s course schedule we were struck by one simple fact.  Courses such as Spanish, Geometry, Wood Shop, Physical Education, English and Drama were all present.  However, nowhere in the course catalogue was there a class teaching our kids the basics of how to handle their financial lives.           

Over and over, like a broken record we as parents are told that the sooner we expose our children to things such as reading, music and mathematics the greater their chances are at success in school.  While this may definitely be true it raises the question of about why we are not taking the same approach to our children’s financial lives.  Don’t get us wrong, we are great proponents of education and hold several college degrees.  However, we are also smart enough to know that 90% of what we learned in high school and college has been long forgotten and are of no use in our daily lives.  Let’s get real, when was the last time you were thankful for that good old Trigonometry class or relied upon the three years of French you took?  It is time to place a focus on the elements that our children will utilize most throughout their lives.

Foreclosures are at an all time high, short sales abound, unemployment is hovering near 10% or higher and our great nation is known for its excessive spending, not it’s excessive saving.  Turn on the news and you are sure to hear a commentator remarking about the high level of credit card debt that most Americans carry or the woeful lack of savings.  Financial gurus such as Dave Ramsey, Clark Howard and Suze Orman regularly counsel grown adults on how to fix the financial messes they have found themselves in.  The problem is that shutting the barn door after the horses have escaped is about a futile as trying to unring a bell or trying not to use clichés!  During our first time home buyer’s classes we routinely hear from participants how thankful they are that they now have the knowledge to confidently start the home buying process.  Guess what?  The big bad home buying process is no longer so scary when you know the way and the same can be accomplished with our financial lives.     

Financial education must begin in middle school so our kids learn how to manage their allowances and then the paychecks they make from their high school jobs.  It is so very important that we tell our money where to go rather than letting it walk away on its own.  A financial class should be taught every year from sixth grade on, with each year bringing increased knowledge.  We teach subjects such as math, English, and social studies this way, yet neglect something that carries much more importance.  As adults we make financial decisions every day, but our education system pushes us out into the world ill prepared.  Unfortunately, our financial education is left up to the school of hard knocks.

One of the main contributing factors to the collapse of our real estate market and the current recession we are all suffering through was a basic lack of financial knowledge.  Ill informed Americans were racking up too much credit card debt, buying homes that cost too much and using risky loan products in order to make it work.  With just a little financial knowledge we believe that the current economic woes could have been avoided.  We become extremely powerful once we learn how to balance a checkbook, how to put away savings each month, how to invest in mutual funds and bonds and how to take care of our financial future.  Credit cards would not have been maxed out, homes that could not be afforded would not have been purchased and home buyers would not have been taken in by risky loan products, which sacrificed their future.

Please, let us not fail to learn the lessons from our downtrodden economy and depressed real estate market.  Eventually, things will improve, but will we be no better off than we were before?  By the way, we hear those of you who are saying these skills that should be taught at home.  However, it is impossible for an adult who never learned the basics steps to financial success to then turn around and teach their children the same. Our education system can no longer afford to ignore teaching the skills that are so important to the success of our future and our children’s’ futures.  Can we get a witness?!     

www.LinkRealEstateGroup.com

Is Your House Falling Apart?!

As real estate agents we often lecture our clients about keeping their homes in good condition.  We relentlessly talk about routine maintenance such as cleaning the gutters, painting and annual furnace check-ups.  Next, we tell our clients about planning for the future and to have a plan for replacing the roof, remodeling that rust orange kitchen or ripping up the lime green shag carpet that was so cool back in grandma’s day.  However, before our clients ever purchase a home they first need to make sure their financial house has been built upon a good foundation.  When attempting to build your financial house one of the biggest obstacles that must be overcome are the differing viewpoints between significant others. 

While it is tempting to summarize this issue by saying, “Let the battle of the sexes begin!” that would simply be an injustice.  It would be way too easy to fall into the stereotypes of women as uncontrolled spenders, while men are hardworking savers.    However, the truth is that men and women are just as likely to be savers are they to be spenders.  For every man who gripes about how much his wife spends on clothes there is a wife who gripes about how much her husband spends on power tools!  So instead let’s put it this way, “Let the battle between the savers and the spenders begin!” 

Talking about finances with your significant other can be as mine strewn as debating differing political views.  However, it is important to remember that a house divided cannot stand and trust us your financial house will fall if the two of you are not on the same page.  The first step to building a great financial foundation is communication.  You would be extremely worried if you saw blindfolded construction workers building your new dream home.  However, equally as mystifying couples will go decades without ever talking about their financial views, plans and goals. 

So here is the challenge.  Within in the next seven days set aside a time to talk to your spouse about your financial future.  Put the kids to bed early, turn off the cell phones and dvr your favorite television shows.  Next, choose a comfortable couch or the kitchen table to sit down so you can have a honest and open discussing regarding your financial future.  Start small and find out how they view your spending habits and just as importantly view their spending habits.  On a side note, check your insecurities at the door and listen with an open heart and an open mind.  Find out what is important to your spouse…do they want to buy a home, start a small business, or put the kids through college?  Before you end the conversation ask your significant other what they see retirement as being like, where they would like to live, what they would like to do and where they would like to travel.  Before wrapping up your discussion for the night make sure you schedule another meeting for a week later to pick up where you left off.           

Outside of Extreme Makeover: Home Edition a good solid house is built one piece at a time, one day at a time, month after month.  The same is also true when building your financial house.  This first conversation should just be one of many ongoing conversations regarding building your financial “dream” home.  You must follow a life-long financial blueprint in order to achieve financial independence.   Make no mistake about it, this blueprint will require sacrifice and dedication.  To quote one of our favorite financial advisors by the name of Dave Ramsey, “Live like no one else now so you can live like no one else later!”

www.LinkRealEstateGroup.com

I Am Not Going To Get a Home Inspection!

Every time we hear these words the voice inside our head screams, “You have got to be kidding me!” As a home buyer you will invest months of time and effort to find the perfect home. Factors such as granite countertops, stainless steel appliances, hardwood floors and a good sized man cave all make the necessity list. As your real estate agent we will scour the face of the earth showing you countless homes in order to satisfy all your wants and desires. Once the right home has been found a buyer is ready to spend hundreds of thousands of dollars on what is most likely the largest purchase of their lives. Yet inconceivably they are unwilling to put forth hundreds of dollars to ensure they are making the right choice. If you ever listen to a real estate agent, please listen to one now and ALWAYS get a home inspection!

The reasons we hear for not getting an inspection are as varied as the homes that are not being inspected. “The home is brand new and the city or county approved it”, “My brother-in-law used to work in construction and will take a look at it”, and our favorite, “I don’t want to spend money on something I don’t even own yet”. While we hate to disrupt your world of lollipops, cotton candy and rainbows the simple truth is there is no excuse for this type of behavior. The government has been known to be wrong every once in awhile, your brother-in-law is not a trained home inspector and does not know what he is doing and if you are not willing to spend a few hundred dollars to protect an investment costing hundreds of thousands of dollars you probably should not be purchasing a home.

In the State of Washington you are not required to purchase a home inspection. However, before purchasing a property you need to make sure you know as much about that property as possible. As a home owner you are going to be paying the man for the next thirty years of your life so it is best to be educated. Think of purchasing a home inspection as a type of insurance. Most likely you have health insurance to take care of your body, life insurance to take care of your family and car insurance to replace your vehicle if there is an accident. It only makes sense to have a trained home inspector check out the property you are about to purchase and raise your family in.

A good home inspector is worth their weight in gold. First, a home inspection will take several hours to complete. During that time the inspector will use their training and years of experience to cast a critical eye throughout the house. The inspector will examine major items such as the roof, plumbing and electrical along with a host of smaller issues. In addition the inspector will check out the crawl space to examine the foundation, footings and any number of issues underneath the house. Talk to any inspector and they are sure to have at least one interesting story about what they have encountered in a cramped dark crawl space. As the inspection occurs an inspector will also walk the home buyer through the property pointing out any issues and offering home maintenance tips.

Once the inspection is completed the inspector will provide the buyer with a written report. It is not uncommon for the report to detail numerous items, which initially might shock the home purchaser. However, it is important to remember that buying a used home is like buying a used car, there will be scratches and dings. The purpose of a home inspection is to reassure the buyer and their agent that the “bones” of the property, such as the foundation, plumbing, roof, etc… are all in good shape. If there are issues, which the inspection brings to light then the potential buyer has the option of terminating the purchase contract or coming to an acceptable agreement with the seller to get those issues fixed.

Be a smart home buyer. When it comes time to hire a home inspector you can look in the phone book, ask your family or friends or rely on a referral from your real estate agent. Remember, your real estate agent buys and sells homes for a living so they are in the best position to recommend a good inspector. However, if you’d rather choose your own, be aware that only about half the states have licensing or certification requirements for home inspectors. In either case, you want an inspector with plenty of experience. Check out the American Society of Home Inspectors at www.ashi.org for more information on selecting an inspector.

www.LinkRealEstateGroup.com