What is a short sale?  First and foremost, it may be a viable way to avoid a foreclosure.  More specifically, for the homeowner who can no longer make their mortgage payment because of a real hardship, i.e. job loss, job transfer, divorce, or an adjustable rate mortgage (ARM) that is resetting at a higher interest rate, a Short Sale may be an option for the homeowner worried about foreclosure.  A Short Sale is a detailed but fairly straightforward process that can work to benefit Buyer, Seller and even the Lender. The Buyer gets a home for a good price, the Seller gets to avoid the disruption of a foreclosure and a serious “hit” on their credit rating, and the Lender avoids the delay and expense of foreclosing on a property they don't want to own.  (A REALTOR® may be able to help you decide if a short sale is a viable option.)

Even though Short Sales have been a staple for investors for some time, until recently, most homeowners probably thought the only option was letting the Lender foreclose.  However, a foreclosure may stay on your credit record for 7 to 10 years, which is why some experts are now advocating a Short Sale.  If your Lender agrees to a Short Sale, you may then hire a REALTOR® to find a Buyer for the house; you may accept an offer for less than is owed to the Lender, the Lender may then agree to absorb some or all of the loss (the Lender may still demand the homeowner share in the loss.)

Before submitting an offer, the REALTOR® will first perform a Comparative Market Analysis (CMA) to determine the price at which similar properties are being marketed, and the average price of those that have sold recently.  This information is submitted to the Lender along with a hardship letter from the Seller explaining why they cannot continue to pay the mortgage, plus supporting documentation such as tax returns, bank statements, and information and photos of the home.  The way mortgages are sold, the Lender can be anywhere in the country and certainly not aware of local real estate conditions.  (This is when the REALTOR® can become your local market expert and your staunchest advocate.)

The Lender may then order an appraisal or a Broker Price Opinion (BPO) from an independent party.  This appraisal or BPO is the key to the whole process. If the property is valued too high, the Lender may not accept a low offer.  Often Lenders will accept an offer lower than the BPO, but usually not much more than 10% lower, though that may vary depending on the company and perhaps the circumstances.  The sales contract should specifically disclose to all parties that the offer is contingent on the Lender accepting the net proceeds of a Short Sale offer.  In fact, if the property is listed for sale by a REALTOR®, the listing must disclose that the property may become a Short Sale and that the offer is subject to Third Party Approval. 

 The homeowner should display a genuine desire to get a grip on spending and finances when attempting to negotiate a Short Sale.  One way to show good faith is to scale back spending.  Charging expensive jewelry on a credit card for example, may cause a Lender to be less inclined to do a homeowner any favors on the sale of a home.

On the down side, this process does take time, and a response from the Lender may take months. Expect at least 2-3 months or longer before a Short Sale can be finalized, even if the Lender accepts the first offer.  If they do not accept the first offer, the Lender may wait to see if other offers are forthcoming.  Often, the Lenders are not communicative during this waiting period as the decision-making process goes behind closed doors with anonymous number-crunchers.  (The homeowner should contact the Lender at the beginning of the process and introduce his/her REALTOR® to open the lines of communication.)

If the property is an investment and not the Seller’s primary residence, the IRS may treat the amount of the mortgage that is forgiven by the Lender as taxable income and the Seller may need to come up with the cash to cover the taxes.  (The homeowner should contact an accountant for any tax information or assistance.)

While the Short Sale may be a viable option for homeowners facing hardship, the better option of course, is to find some way to stay in the home and to get caught up on mortgage payments.  One of the first steps is to determine if the Lender is willing to restructure the loan, or forego a couple of monthly payments to help a homeowner get back in good standing. Apparently, more and more Lenders are willing to make accommodations to avoid taking the property back.  Lenders hate to take over homes, especially in a declining market, so if a Short Sale seems to be in your future, you shouldn’t under-estimate the willingness of your Lender to make concessions.

Dan Peck, REALTOR® Manager

GRI, CRS, ABR

The Jeanne & Dan Team

RE/MAX In Action

Martinsburg, Shepherdstown, Harpers Ferry

If you have been waiting for interest rates to reach their lowest, you may have already seen it. 

 Last week a leading gauge of US home sales showed unexpected strength. April Pending Homes Sales rose 6.3%, way over expectations of a 1.0% drop! This measure of signed sales contracts registered a level of 88.2; it’s highest in six months. A 100 reading equals the average sales activity in 2001. Experts are saying the April figure suggests the pace of home sales has clearly stopped its free fall and might soon rebound. The index measures existing home sales, currently about 85% of the market.

The other economic news that was positive for housing came from Fed Chairman Ben Bernanke. In a speech Monday, he said he believes the economy is out of danger and the Fed would now pay "close attention" to inflation. Experts immediately interpreted this to mean rate cuts are officially over. Some feel a hike may come as soon as August and many consider a 0.25% increase likely for October. This is good news because while the Fed was in rate trimming mode, many potential homebuyers stayed on the sidelines, waiting for rates to fall more. Now they need to get back in the game and make sure they don't wait and get caught with rates climbing back up! 

As Broker and Owner of three RE/MAX franchises Jeanne Kozak has established herself as one of the top real estate professionals in the area.  Jeanne’s designations and awards are numerous, providing proof of her commitment to excellence.  Last Thursday evening, at the Eastern Panhandle Board of Realtors’ annual Awards Banquet held at the Clarion Hotel and Conference Center, Shepherdstown, Ms. Kozak was awarded Top Producer status for the 16^th consecutive year.  In addition, she was sited for her work as Chairperson of the building committee and a four-year project which resulted in EPBR’s new, modern office facility on Randolph Street in Martinsburg.

Perhaps the honor Ms. Kozak is proudest of, however, is the Carol Snyder Memorial Good Neighbor Award which was presented to Jeanne for outstanding service to clients, the community (both locally and nationally) and her profession.  A few of the many good deeds mentioned are her semi-annual trips to the Mississippi Delta region to build houses for Habitat For Humanity, a fund raiser for The Family Readiness Group in support of the local Air National Guard and Army National Guard bases, and her many acts of kindness to those in need.

Jeanne. Kozak places a great priority on results and getting things done.  Highly recognized for this by her peers, Jeanne is currently serving as President Elect of The Eastern Panhandle Board of Realtors where she participates on several committees.  She also serves on the Board of Directors of the West Virginia Association of Realtors.

Originally from Kansas, Jeanne relocated to West Virginia and entered the banking industry in the early 80’s.  Later she and her husband started a new homes construction company for which Jeanne still holds a West Virginia Contractor License.  This was the perfect blend of careers and experiences to prepare Jeanne for her third and present career in real estate.  Her will to succeed was apparent from the start, with Rookie of the Year honors bestowed upon her in 1991.

Jeanne admits she struggles to find personal time, but whenever possible she enjoys relaxing at home with her Jack Russell Terriers, attracting bluebirds and purple martins to her feeders and nest boxes, and working in her gardens.

What Not to Eat for a Good Night's Sleep 

Tired of hearing negative news about real estate, and market bashing by the media? Well, it is up to us to refuse to be brought down by all of the negativity.  Come, join me in taking a new perspective and let's focus on some positive news. The markets in many areas of our country are bottoming out. Buyers are perceiving that the time to get off the fence is now and they ARE buying. Being realistic, we know that prices are not going to turn completely around in one year. However, I believe we will slowly start seeing the end of price depreciation and, most of our down markets will slowly start turning around. Within the next five years, I predict we will again see activity return to the baby boomer retirement markets, and to the warmer climates. The demand is out there still!  Sales of existing housing rose 3% in January.  See the following article I took from MarketWatch.

The increase in sales is encouraging although it's uncertain whether the positive growth rate can be maintained with the return to more-normal winter temperatures as we move into 2007," wrote Paul Ferley, an economist for BMO Nesbitt Burns. "As well, some caution is still warranted on the possibility of housing spilling over into other areas of the economy given the return to declining home prices."

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Some time in your life you are going to hire a contractor. Probably more than you think. It is very important that you understand the ins and outs of hiring a reputable contractor because it can be very complicated. If you do not have the knowledge or know how to deal you may wind up paying for something that is not done correctly or not completed. Remember, not every contractor is honest, nor are they all licensed. By following these pinciples you can ensure that your contractor is licensed, honest and most important you can protect yourself. Knowledge is very important when it comes to dealing with a contractor.

To find a local quality contractor click here! click here

Pre-Hiring The following information can be used as an outline for choosing a reputable contractor. By utilizing this information, you can potentially eliminate problems by choosing the right contractor the first time. Before committing to a construction project of any kind you should know the following.............

Questions to ask Yourself.
What work needs to be done? Will the work add value to the property? How much do you have budgeted for the work? What inconveniences will be experienced while work is being done?

Getting Bids
You should get at least three competitive bids for your project. Bids will vary from contractor to contractor. Sometimes these bids will vary dramatically. Going for the lowest bid is the basic idea but, beware of the "low ball" bid. This can result in unsatisfactory work that will cost you more in the long run. Make sure that the bids include quality materials that are guaranteed by the supplier or manufacturer. Competitive bids are free of charge and will ensure you pay a competitive price for your project.

Contractors License?
Ask to see their current license. Most states require that contractors be licensed. You should also verify licensing with your Local State License Board. Licensing Info "Click Here"

Contractors Insurance?
Ask for proof of insurance. Take the information and call the insurance company to verify that it is currently up to date. Also, if they have other employees, ask if they have workman's compensation. This is required by law. If the contractor is not insured you could be liable for any accidents. Don't put yourself in this situation.

References
Ask for references!! This can be one of your most valuable resources. You can ask specific questions about the contractor such as " Was the job done in a timely manor ?, Was the work satisfactory ?, Would you refer the contractor to friends or family ?" Also, contact local consumer agency such as the Better Business Bureau or the state registrar to see if any complaints have been filed. Numbers are listed above with the link Local State License Board.

Signing a Contract
Make sure that you understand every detail of the contract before signing. The contract should include complete information on the contractor (ex. name, address, phone numbers, license numbers, etc...) and description of the job (ex. materials, time schedule, clean up after completion, total price, payment terms, etc...). NEVER pay everything up front. The best way to pay for your project is in two separate payments called "draws". One draw in the beginning of the job and the other after the job is completed. This is a happy medium that gives you protection and at the same time allows the contractor to have enough money for needed business supplies and payroll. Sometimes in larger commercial jobs two draws would not make much sense. In this situation several draws should be made as the work progresses. The goal is to find a balance that does not put either the contractor or the client at risk. Also, any warranties need to be in writing. Don't take anything for granted. Get a copy of the contract for your records.

During and Completion
Get involved with the contractor and his crew. Tell them exactly what you want. When the job is done do a final walk through and make a punchlist. Have the contractor touch up or fix anything that is unsatisfactory. Follow Up Upon completion the job should be done up to your standards. The contract and labor warranty are very important things to remember, the contractor should guarantee the labor side of the warranty against certain defects. A one to three year warranty is not uncommon. So, You should be covered by labor (contractor warranty) and there will be a manufacturer warranty that covers the material side of the contract. Another thing to remember: if problems arise during or after the job is completed you can call the state registrar of contractors. If there is no state registrar then call the agency of the level of government that is in charge of that division. They will be able to give you numbers to assist you with your problem. The BBB. is a good number to call also but, they are generally there only to take and keep records of complaints. We want to give you numbers to call for agencies that can take action and help you directly with your problem.