Short Sale… From a seller’s perspective.

Nowadays its more common than not to see a seller owe more on their home than what it’s worth. It’s an unfortunate place to be in when you’re faced with needing to sell your home.

I was meeting with a seller the other day who owes $625,000 on their home. They wanted me to list the home for $680k to give them room to negotiate down in price and still cover their closing costs. The reality is that the current value of the home is only $575,000. That means that the seller has three choices. a) Stay in the home and try to keep up on the payments. b) Go to closing and pay the difference, not an option as they don’t have the money, or c) Negotiate with their lender and do a short sale.

This seller hadn’t thought about the short sale option but was intriqued by the idea. She called her lender and was told that “yes” in fact, she could do a short sell and if she stayed current on her mortgage payments that it wouldn’t negatively affect their credit…. not sure if that is true for every company.

She received a verbal approval and a short sale package in a couple of hours and we are well on our way to getting her home sold.

What I realized with this seller is that she had a huge sense of duty in needing to repay the full amount of the loan. Unfortunately, that wasn’t going to be an option. The market just isn’t going to bear the price she needed to get and she can’t afford to stay in the home until the market turns around. She’s still current on her mortgage and does not want to fall behind. She has a sense of shame in not being able to repay the entire debt.

We talked about that for a long time and came to the conclusion that the market collapsing was not her fault and she couldn’t control the declining price values. We also concluded that by her being pro active she was going to be helping the lender out. They won’t have a bad debt on their hands because she will stay current on her mortgage, the lender is making that possible by deferring two of her mortgage payments until the home sells. In addition, they do not have to spend money trying to collect a bad dept or foreclose. They win by writing off less and she wins by saving her credit and being able to get into something more affordable.

The majority of people that I’ve seen in this situation are trying to be responsible. They just don’t know the proper steps to take. If you’ve called your lender and they told you you had to be behind on your mortgage before they would consider a short sale, call a reputable professional to help.

Banks are failing! Our financial system in ruins! Should I still buy a house?

No matter what happens, you’ll always need a place to live — the real question is can you buy a house you can afford? If so, then maybe it IS time to buy a house. After all, mortgage rates and house prices are both lower than they have been in years, plus there’s more inventory. This all translates to an optimal buyer’s market. You as the buyer have the control and plenty of homes to choose from.

But what about the much-hyped threat of bank failures? Bank failures, which are very rare, wouldn’t affect your mortgage much. (If the bank that held your mortgage failed, never fear; some other bank would take over the loan and happily accept your payments. Banks love to take your payments!) And the FDIC guarantees the money in your checking and savings accounts in the event that your regular bank should run into trouble. Chances are, it won’t.

Finding the Right Contractor

Sellers and buyers often have one thing in common: there’s something about their house that they want or need to fix.

The first way to find a reliable contractor is to ask for personal recommendations. Your family, friends, neighbors and coworkers all have to fix up their houses from time to time and they’ll probably be happy to share their experiences.

But when you’re working with a real estate agent, another great option is to ask her who she recommends. Like most agents, I have a list of contractors and companies I’ve worked with before, and unlike your neighbor Joe, I’ve usually had more than one experience with each servicer. Chances are, the companies I have relationships with will work hard to make you happy because they know I’ll get your feedback on their services and if they don’t perform well, I’ll remember that next time somebody asks me who I’d recommend.

Another source you might turn to is Angie’s List. If you read the paper you’ve probably seen Angie’s List advertised – it seems like their ad shows up in the Seattle Times nearly every day. Angie’s List is a subscriber service where you can research service companies, read reviews by other people who have used them, and leave your own ratings and reviews. Sort of like word of mouth, on a larger scale. But keep in mind, the largest companies with the best ratings may be more expensive than the smaller contractors, who may not have ratings in the service simple because they don’t do the same volume of business.

It’s a Great Time to Buy — Really

The Economic Stimulus Act passed by congress this spring is best known for the “stimulus checks” which are now being sent out to taxpayers across the country. But the act also did a big favor for local homeowners by allowing government lenders Fannie Mae and Freddie Mac to gaurantee or purchase larger loans than ever before.

Up until April, any loan above $417,000 was considered a “jumbo” loan, and the larger loans usually meant a higher interest rate, among other things.

But thanks to the Economic Stimulus Act, buyers in the Seattle-Bellevue-Everett metro area can now get a regular, conforming loan of up to $567,500 without having to invest in a “jumbo” loan. And that’s great news, because the lower interest rates of non-jumbo loans mean lower payments, and lower payments mean you can get more house for your money.

Thanks to the Economic Stimulus Act, our local market has a good number of homes available, relatively stable prices, and reasonable loan limits. Many sellers are willing to negotiate with buyers, and yet buyers in our area don’t face the enormous worry of falling house prices that are present in other areas of the country. And with houses staying on the market a bit longer than just a couple years ago, buyers have time to look around and really consider their options. All in all, it’s a great time to be a home buyer.

The new loan limits are available through the end of December, 2008, and it’s possible they may revert to the old, lower limits at the start of 2009. Many economic experts have suggested housing prices may start rising again in 2009, so if you’re thinking of buying, now might be the best time in years.

Saving Money (and Energy) in your Home: 4 Quick & Easy Tips

I’m sure you realize that it costs you money every time you turn on the furnace, run the air conditioner, or use the hot water faucet. But you might not realize how much a few quick, easy, and relatively inexpensive changes to your house can save you over time.

1. Insulate your hot water heater. Most electric water heaters can be insulated with an insulating blanket for around $20. Check with your manufacturer or manual before you buy one, and don’t try to insulate a gas heater — but insulating your electric heater can reduce the amount of heat that leaks out of your hot water, thus reducing the amount of energy you need to keep it warm.

2. While you’re working on your water heater, turn down the temperature. Many experts recommend lowering your water heater temperature from the standard 140 degrees F down to 120 degrees F. You’ll save around 3-5% for each 10 degrees you lower the temperature, and 120 F is high enough for most household uses. As a bonus, using a lower temperature will help prevent hot water from scalding young children, and can help prevent mineral buildup and corrosion of your water pipes as well, which will also extend the life of your water heater.

3. Fix leaky ducts. Use duct tape to tape around the seams in the heating and cooling pipes in the basement, crawl space, and attic. Sealing the seams will prevent air from leaking out while the system operates, meaning more warm (or cool) air will get where it’s going, and your heater or air conditioner won’t have to work as hard getting it there

4. Automate your thermostat. If you don’t have a programmable thermostat, consider installing one. Automating your heating system will help you keep temperatures level, which and it takes less energy to maintain a temperature than to heat or cool a house. And with a programmable thermostat, you don’t need to worry about forgetting to turn down the head at bedtime or when you leave for the day. While you’re at it, be sure to lower the nighttime temperature in your home during cold months — reducing temperatures by 10% overnight during cool months can save as much as 10% off your heating bill. Raise your temperature during warm months so your a/c can take a break.

Seattle Gas Prices

Have you seen the price of gas lately?! As prices continue to soar, you may notice that prices vary widely among different gas stations in the same city. Before you fill up, check out http://www.seattlegasprices.com and enter your ZIP code to find the very best (and worst) gas prices in and around Seattle.

Yesterday, the CDC reported measles outbreaks in 9 states

Maybe it’s more contagious than anyone realized! But don’t panic – this case of the homepox isn’t local, so you don’t need to run out and vaccinate just yet…

Home buying starts with your credit score (and so does this blog)

Most home-buying guides agree: the first thing you should do when you’re thinking about buying a house is check your credit. For a few years during the housing boom, you could get around bad credit by taking out a subprime mortgage loan – but you only need to look at the foreclosure rate to see why it’s a bad idea to try to buy a house without getting your financial situation together first.

Your credit score rates how trustworthy you are, based on your financial history. Bad credit scores are strongly correlated to late payments and loan defaults, while good scores tell a lender that you’re probably the type of person who can be trusted to handle money, so your score is an easy way for banks to answer the pressing question of how likely you are to pay back any money they loan to you.

Several services create credit scores, but the most popular credit score system is the FICO. The FICO score ranges from 300 (very, very bad credit) to 850 (very, very good credit). The 3-digit number attached to your name can shape your future by determining how much money you’ll pay in interest. The lower your score, the more it’ll cost you to borrow money – if you can find anyone to lend it to you in the first place.

If your credit score is under 600, you’ll have a hard time borrowing money, especially for a mortgage in the current economy. You’re a subprime sort of customer and skittish banks may not want to deal with you – or if they do deal with you, you’ll only be able to borrow at the highest rates of interest. Over the life of a 30-year mortgage, that means someone with poor credit will up paying tens of thousands of dollars more than someone with good credit. The best interest rates are usually reserved for customers with a score of 720 or better, while customers who fall between 600 and 720 are middle-of-the-road.

A couple years ago congress passed legislation that requires the three big credit bureaus, Experian, Trans-Union and Equifax, to give each consumer one free credit report every 12 months. You can opt to purchase your credit score along with the free copy of your report – after all, what’s a free service if it doesn’t have an upgrade option? You can visit http://www.annualcreditreport.com to get one free report form each of the three big credit bureaus every 12 months. Be sure to check all three versions of your credit report – they could be different.

Welcome to my Issaquah blog

The Pacific Northwest is known for its natural beauty, countless work and play opportunities and distinctive neighborhoods. You need someone who understands what makes the Eastside unique… from Bellevue to Issaquah to Renton. Donita and the entire Dickinson team does more than just work in the area… they live in the community. That means you’re working with a real estate professional who understands and can communicate the real benefits of Eastside living.