Short Sale Guidelines Are Making A Difference

The theory behind short sales seems simple enough: If a homeowner owes more money on a house than the house can sell for, and the homeowner is struggling to pay the mortgage, the lender will allow the house to be sold for less than is owed.
For obvious reasons, lenders are not big fans of short sales and often make it a complicated process.

In April 2010, The Home Affordable Alternatives Program (HAFA) released new guidelines designed to streamline the short-sale process and allow more delinquent homeowners to sell their homes and move on with their lives.

In its first year, participating servicers initiated 12,266 HAFA agreements and completed 5,447 transactions.

According to the National Association of Realtors, the share of distressed homes—bank-owned properties and pre-foreclosure short sales— in April 2011 dropped to 37% of total sales volume, down from 40% in March and an average of 39% over the first quarter.

HAFA complements the Home Affordable Modification Program (HAMP), a loan modification program designed to reduce delinquent and at-risk borrowers’ monthly mortgage payments by providing alternatives for borrowers who don’t qualify for or don’t complete a trial modification.

“[HAFA short-sale guidelines] are designed to help people who are unable to keep their home under the HAMP loan modification program,” said Jeff Lischer, managing director for regulatory policy for The National Association of Realtors. “Let’s say you can’t keep your property under HAMP, the next step is a short sale, which is better than a foreclosure.”

It’s estimated that lenders lose about 40% of a property’s value on a foreclosure, whereas the figure is reduced to about 19% on a short sale. Moreover, the short sale is a graceful exit from the ownership, which is better for people’s credit scores.

New rules also add incentives for the short-sale process. One incentive helps sellers relocate by providing them with $3,000 for moving expenses. A second incentive is for mortgage servicers, who receive $1,500 from the federal government for each completed short sale. Under new guidelines, homeowners can secure a short sale approval in advance from the bank representing a minimum net amount the bank will accept.

Lenders participating in the HAFA program maintain the following requirements for homeowners considering short sale: The loan must be less than $729,750, made before Jan. 1, 2009, and the home must be the owner’s primary residence. Also, the homeowner must be delinquent and unable to pay the mortgage, and the homeowner’s mortgage payment must be more than 31% of his or her before-tax income.

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635.
Prudential Fox & Roach is an independently owned and operated member of
Prudential Real Estate Affiliates, Inc., a Prudential Financial company.
Equal Housing Opportunity.

ChipPlumley.com

Keeping the Kids at Bay When Selling Your Home

Homeowners with young children face a common challenge when their house is on the market: How do you keep the home clean and ready for prospective buyers while maintaining a kid-friendly and safe environment?

Keeping that “staged look” as the kids create instant messes can be overwhelming. Your primary focus should be the kids’ bedrooms, according to two home stagers.

“Children’s bedrooms are often problematic when getting a home ready to sell,” said Külli Yee, founder and president of Ilus Design Home Staging and Re-design, Port Coquitlam, B.C., Canada. “They tend to have more clutter than most rooms in the form of toys and activities, and out-of-season and hand-me-down clothes and toys are often stored in the child’s bedroom.”

Ye suggests limiting the number of toys and activities that children play with each week and adding and subtracting as the kids get bored.

“Most kids only actively use three or four favorite toys at a time and the rest just sits there collecting dust,” Yee said. “Pack away extra toys, stuffed animals and books. Organize the remaining toys neatly in baskets, boxes and bins and display only a few items on the shelves.”

Alice T. Chan, a Fremont, Calif.-based home stager and author of the book 8 Steps for Creating an Irresistible Market Ready Home that Sells, recommended keeping a child’s bedroom floor and closet free of clutter by lightening the load.

“Reduce the amount of items stored in the closets,” she said. “Pack, store or give away anything that the child doesn’t need for the next two to three months. This is also the perfect time to get rid of unused or broken toys and old clothes.”

For those with infants, a nursery should be kept tidy with all extra diapers, wipes, lotions, baby bottles and clothes hidden away in a dresser. Make sure that the diaper pail is emptied frequently.

Moreover, remove any furniture that doesn’t serve a purpose in the nursery. Anything beyond a crib, dresser, rocking chair, changing table and small accessories should be packed away.

If your kids have their own rooms, consider asking them to share a room for a couple of months until the home sells. This allows you to set up the other bedrooms as a guest room or home office, adding extra value to your home.

Unlike pets, you can’t simply pack up the kids and send them away for weeks at a time. Remind your children that once your current home sells, the new home will bring them exciting new adventures. If that doesn’t make them more cooperative in helping keep the place then there’s always plan B: bribe them with ice cream, outside!

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635.
Prudential Fox & Roach is an independently owned and operated member of
Prudential Real Estate Affiliates, Inc., a Prudential Financial company.
Equal Housing Opportunity.

ChipPlumley.com

May's Tri-State Real Estate Market Snapshot

The main area where I conduct the most business is doing just fine according to the May reports just released from the TrendMLS (Multiple Listing Service). Seems like the media has blown the national numbers way out of proportion again!

The local market is what matters, even though the media reports only at the national level. Remember, the real estate market is like the weather forecast. It doesn't matter if it's raining in Florida or California since it's sunny in Chester County. Keep in mind that there was a Federal Tax Credit last year which inflated the normal May 2010 market. That is the main reason the numbers are slightly down in Chester County.

Click Here to see the full report from TrendMLS for Single-Family Homes. Carefully compare your county's real estate market compared to the national stats. You'll be amazed at what you see!

Interested in Condo Sales? Click Here to see what's going on in the condo market. It isn't as pretty as the single-family homes and is generally what happens during market corrections.

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635.
Prudential Fox & Roach is an independently owned and operated member of
Prudential Real Estate Affiliates, Inc., a Prudential Financial company.
Equal Housing Opportunity.

ChipPlumley.com

Complying With Lead Laws

Back in the days before anyone knew better—we’re talking pre-1980—much of the paint used in homes contained lead. Over time, the paint would chip or crumble and the resulting dust caused serious health issues, especially for children and pregnant women.

Lead-based paint was used both inside and outside of homes, most notably on windows, baseboards, trim and doors. Many layers of lead-based paint have been disturbed through the years during remodeling or home repair and it’s necessary for anyone selling a home to be aware of this.

The Environmental Protection Agency issued a report revealing that lead can affect children’s brains and developing nervous systems, resulting in reduced intelligence, learning disabilities and behavioral problems.

In a study released by the Department of Health, the agency reported that about 75% of all homes built before 1978 contain some lead-based paint. Furthermore, it’s estimated that more than 38 million homes in the U.S. still contain lead paint.

So, a chief concern of anyone buying or selling a house should be to address the possibility of any lead paint in the home and it’s vital that anyone dealing with paint in older homes treat it as if it is hazardous material.

Real estate agents and their sellers are required to disclose any presence of known lead paint and lead hazards during the sale or rental of housing. The same holds true for renovation and remodeling contractors, who are required to warn customers of the hazards of lead paint.

Last year, the first federal regulation on the remodeling industry was enacted concerning this important hazard.

To ensure that all lead paint is removed safely and effectively, the U.S. Environmental Protection Agency’s “Lead: Renovation, Repair and Painting” rule governing the work of professional remodelers in homes where there is lead-based paint was published in the Federal Register on Earth Day, April 22, 2010.

The law requires that anyone who is paid to renovate a home that was built before 1978 be trained and/or certified to follow lead paint safety practices. The new rule lists prohibited work practices, including open-torch burning and using high-heat guns and high-speed equipment such as grinders and sanders unless equipped with a HEPA filter. It also requires a cleaning inspection after the work is completed.

For homeowners who are unsure about their homes, sometimes it's easier to replace windows, doors, or woodwork than it is to remove the lead-based paint. This way, all traces of any paint will have been removed from the home.

Agents know that there’s no question that a home is worth more if they can say for certain that it contains no lead paint, so for the peace of mind of everyone involved, deal with all lead paint issues as soon as possible.

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635.
Prudential Fox & Roach is an independently owned and operated member of
Prudential Real Estate Affiliates, Inc., a Prudential Financial company.
Equal Housing Opportunity.

ChipPlumley.com

Seeing The Light!

Most homeowners claim to be eco-friendly and want to help the environment, yet they worry that making changes in their home will be costly or inconsequential. This is especially true for someone who is in the process of selling their home and doesn’t want to make any substantial changes to a place they hope to be leaving soon.

However, making-energy efficient home improvements doesn’t have to mean sweeping changes and, by creating a better carbon footprint for your house, you will attract green-conscious homebuyers.

Recent studies have reported that 80% of homebuyers identify energy savings and comfortable surroundings as key factors when deciding between listings, so more agents today are working with home sellers on innovative energy, environmental and ecological approaches and opportunities for selling the home.

One simple and easy change concerns the lighting in your house. Today’s green lighting isn’t limited to the fluorescent light bulbs to which most people have quickly adapted. There are plenty of other options including LED gaining in popularity as a viable and affordable home-lighting source.

LED is an energy-efficient, semi-conducting light source that started growing in popularity in 2007. In the past, LED lighting appeared as unattractive blue hues but today’s LED lighting offers the same bright white output as incandescent lighting. Plus there is an affordable price tag to go with it and people understand the value of it.

LED lighting can also be used in some areas of the home that will better showcase features when one looks around. From track lighting over the fireplace to under-counter cabinet lighting to can lighting in the hall, LED fixtures can cast dramatic light on your home’s best features.

There are plenty of other benefits as well. LED lighting uses 75% less electricity than the standard incandescent light bulbs, and LED bulbs last 50 times longer than standard bulbs, saving you money.

Energy-efficient lighting should also be used in exterior locals of the home, such as around any deck, pool, patio or garden. These low-energy emitting lights are perfect complements to any outdoor features you want to show off.

Of course, once someone buys a home, they can just make the changes themselves, but a savvy real estate agent will tell you that a homebuyer will judge your eco-friendly actions in a positive light and may be more inclined to deal with you.

Taking advantage of these modern lights will not only let you help the environment, but it may benefit your pocketbook as well.

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635.
Prudential Fox & Roach is an independently owned and operated member of
Prudential Real Estate Affiliates, Inc., a Prudential Financial company.
Equal Housing Opportunity.

ChipPlumley.com