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Investors Taking Advantage of Strong Rental Market
Over the last several months I have written about different signs, see blog links below, that the real estate market is changing. Today’s Miami Herald article, Rents rise as overseas buyers invest, talks about some of the reasons why.
More Proof Miami-Dade’s Housing Market is Turning Around
Investors Are Taking A Bite Out Of Inventory
Miami Real Estate – Commercial Construction Also Picking Up
Miami Real Estate: More Signs the Market is Improving
Miami Real Estate: The Market is Changing
Need To Short Sell Your Home?
Banks Offering Up To $20,000 Incentives
As the economy continues to trudge along, many South Florida homeowners are still struggling with unemployment and mortgage payments. If you are thinking of short selling your home, you should be aware that several banks have incentives for you to short sell versus going through the lengthy, in Florida it can take close to two years, and extremely credit-damaging foreclosure process.
Wells Fargo and Chase offer up to $20,000 in incentives to qualified homeowners and Bank of America just launched a similar pilot program in Florida.
Miami Real Estate – Shadow Inventory
Shadow inventory is basically the number of properties that are projected to hit the market due to distressed owners, those who are behind 90 days or more on their mortgage, or because they will be or already have been taken back by the bank. There has been a lot of speculation lately about how this background inventory will affect the housing recovery, with many experts saying it will significantly delay it.
A CNNMoney.com article on Shadow Inventory states: “Of the 20 separate markets S&P analyzed, Miami was the only market of the 20 that S&P analyzed where shadow inventory did not did expand during the first three quarters of 2010.”
What does this mean for buyers? Record high affordability and a wide selection of properties to choose from.
For sellers, it means a continued suppression of prices, with prices either dropping further or bouncing along the bottom for a while. If you were thinking of selling your home within the next year or two, you may want to put it on the market now. Or, if you have equity in your home and have entertained the idea of owning investment property, turn it into a rental and buy your move-up, downsizing, or retirement home at the lowest prices we have seen in a long time.
Foreclosures in South Florida Are Here For A While
According to RealtyTrac, foreclosure activity in South Florida will continue at high levels through 2010 and there will be a glut of inventory through 2013.
In the current market, 60% of active buyers interested in distressed propertys and 40-50% of sales involve a foreclosure or shortsale.
Short Sales Starting to Pick Due to New Treasury Rules
At the end of November, the United States Treasury Department released new rules attempting to encourage banks to speed up short sales. The rules create a uniform process and documents that all banks must use as well as provide cash incentives to banks willing to participate. The new rules are starting to work…I actually had a previously unapproved short sale close faster and with less problems than a regular sale that went under contract at around the same time.
This is great news for buyers and sellers as it will help us move through the inventory levels that much faster. In order to qualify, a seller must:
- use the home as his/her primary residence
- have taken the loan out prior to January 1, 2009
- must be delinquent on mortgage or likely to default on it
- have a loan that is less than $729,750
- have a monthly mortgage payment that is more than 31% of before-tax income
The Short Sale Process For Sellers
If you are selling your property and you owe more on your mortgage than the property is worth, you will have to do a short sale. The following documents are going to be the minimum required by your lender to determine whether they will approve a short sale.
- Hardship Letter – explain in detail what your hardship is. Include your name and loan number in the letter.
- Tax Returns from the last 2 years
- W-2’s from the last 2 years
- Bank Statements (2 most recent months)
- Payroll Statements/check stubs from employer (2 most recent months)
- Financial Statement listing all of your assets and liabilities.
- Recent mortgage statement or coupon showing balances. Include loan number, monthly payment, and the name/address of all mortgage /lien holders.
- Listing Agreement if you are selling your property through a Realtor
- Sale and Purchase Contract executed by Seller/s and Buyer/s
- Loan Commitment/Approval Letter received from Purchaser
- Preliminary Net Sheet (HUD-1) prepared by Closing Agent)
- A Comparative Market Analysis (to be prepared by Listing Agent
- Any additional documents required by Lender/s to be submitted
The short sale process takes a long time, so in addition to having all of the above-mentioned paperwork you will need to have patience. EWM Title has a lot of experience doing short sales and has created a short sale package to assist you.
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