Posts Tagged ‘home buying tips’

Why do Short Sales take Longer to Close?

After closing a few short sales the Troll wanted to pass along his 2 cents on why the process takes so long. Obviously the lender holding the note is the primary obstacle. They are either inundated with inventory and cannot keep up or they are inexperienced in this arena and have trouble with the decision making process. In either case it can prolong a closing. Something else to consider is the potential unwillingness of the occupant to help facilitate the process. Underwater home owners typically do not have much incentive to contribute their effort to the cause. They have in many cases stopped making their payments and are living “rent free”. The damage has already been done to their credit rating and in some cases they can save up money while the process draws out. The appraisal process can also be an area for delays especially in FHA loan transactions. FHA appraisals are more extensive and if there are repairs called out or required prior to closing, the process can bog down with contractors and scheduling them.

The Troll is not discouraging anyone from attempting to purchase a short sale. He is merely trying to provide some tips to avoid the dreaded nightmare closing. There are some fantastic buying opportunities out there with short sales but you have to choose wisely and finance them appropriately. Sweat equity is and always has been a great ingredient for a successful real estate opportunity. If that is your goal and a large down payment is not an option there are lenders out there that will allow you to finance less than 20% down that contain no mortgage insurance. The rate is typically a little higher (maybe .25%) but you are not throwing away money on mortgage insurance. Depending on your credit, you can put down as little as 5% which is not far from the 3.5% FHA offers. If you are fixing the property to potentially sell in the near term you will not be affected by a slightly higher rate. Additionally, if you choose to stay in the house refinancing may be the best path forward while rates are low and the equity position has improved via sweating.

The Troll

Rates are Great

It appears the steady climb to higher interest rates is waning. We have recently moved through the 200 day moving average for Mortgage Backed Securities. The FNMA 4.00% Coupon stands at 99.72 improving 22 basis points today. The 10 year bond market has continued its rally and stands at 3.25 today as well. Remember that an increase in demand for bonds (lower economic forecasts) translates to lower long term interest rates.  This recent movement has occurred in the past 30-45 days and appears to coincide with the lowering of growth estimates. Let’s face it, much of the growth in the past year or so has to do directly with government stimulus spending. With the technical explanations out of the way let’s look at what it all means.

With interest rates still at all time lows and our local region faring better economically than the nation as a whole has created opportunity. As I have recently posted, there continues to be better employment opportunities in Seattle (see Spring Break Fun and Local News).  Keeping in mind that we have seen a substantial decrease in values since the credit crisis took hold it looks to this Troll that we have the makings of a recovery. If rates are down and rents are up (see Rents on the Rise?) people will start to choose home ownership and its tax benefits rather than staying put and paying someone else’s mortgage.  We are seeing now that houses that are appropriately priced in solid neighborhoods are garnering multiple offers. These conditions should collectively foster additional demand for entry level housing, which of course is our Specialty! For more information feel free to give me a call.

The Troll

Spring Break Fun and Local News

The Troll has been able to keep up his torrid work schedule by enlisting the help of an old ally, Grandpa Troll. With the kids out of school for the week the Troll had the foresight to fly in a ringer. Yes, Grandpa Troll to the rescue. Items on the schedule this week include the Star Wars exhibit at the Pacific Science Center (really cool), the newly released Hop, a Mariners day game and some well timed outdoor activities (is that the sun?). And since the Troll has a quiet office he can relay some news.

I drove by the Bill and Melinda Gates Foundation yesterday and saw that it was nearly completed. It appears that it will be ready for operations this summer. The Gates Foundation is currently hiring for numerous positions in global health and will employ in the neighborhood of 2,000 in its new Seattle Headquarters.

Vulcan Inc. (Paul Allen) is also in the final stages of completing the new Amazon Headquarters. The estimates on that project (11 buildings and 1.6 million SqFt) reveal that approximately 6,000 Amazon employees will be working in South Lake Union.  The new jobs are a welcome sight and should provide a boost in demand for our local housing market.

In other news, Mercer St was closed this past weekend and will be closed an additional 20 weekends.

The Troll

Rents on the Rise?

I have read some recent publications regarding the rental market and have some information to pass along. According to REIS Inc, an impartial source of commercial real estate data, renters could be facing some substantial rent increases in the next year. The firm’s quarterly report shows that the vacancy rates for apartments dropped dramatically during the first quarter and rents have begun to rise in some parts of the country. Reuters also has a story out that shows apartment vacancy has declined in the past quarter from 6.4% to 6.2% nationally. This is the largest percentage drop in any quarter since REIS Inc has tracked this data (1999). In addition, the Census Bureau confirms this trend and includes other types of rentals (SFR’s). According to their data, the rental vacancy rate dropped 1.3% from 4th quarter 2009 through 4th quarter 2010. We shouldn’t ignore an obvious trend.

In an attempt to bring this national information to a local level; I will pass along my most recent rental experience. Our longtime tenant provided notice in February that she was moving to help her elderly parents.   It took the Troll a week get the place ready. He had it professionally cleaned, touched up the paint and completed a landscaping project long overdue (bamboo removal….nasty stuff!).  We listed the property on craigslist on a Saturday evening and to our surprise by Sunday morning we had 14 inquiries. I showed the unit to the first few people and rented it after a credit report and a lease agreement. It Took Less Than A Day!

Now, the Troll is not sharing his story to brag about the one time when the sun actually shined on him. As you will soon find out he has numerous shortcomings which Mrs. Troll is always happy to point out. He just wanted to share with his readers an experience he had and hopefully provide some local feedback.

And with that he will crawl back under his bridge.

The Smiling Troll

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