Bart and Patti Reid Broward County, FL real estate | 954.306.7414
2737 Pinewood Court, Davie, FL 33328
My fellow Realtors and I have noticed a change in the real estate market lately and it’s looking good. I’m attributing it to the lower interest rates, a surplus of homes on the market, and realistic sellers. Currently I have multiple offers on two of my listed properties. I have always heard that when the market turns upward it will happen much more quickly than when it declines. My prediction is that while we ride out all the foreclosures and short sales there will be little appreciation, but I do believe that sales prices are hovering at the bottom.
In these times, many homeowners are contemplating how their credit will be affected if they must sell their home as a “Short Sale“.
A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years. This applies to owners of a principal residence and investors, as well. In comparison, a homeowner who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years and an investor who allows a property to go into foreclosure will have to wait 7 years for a Fannie Mae backed mortgage.
A foreclosure will remain as a public record on a person’s credit history for 10 years or more, whereas a short sale is not reported on a credit history. There’s no specific reporting item for “short sale”. The loan is typically reported as Paid In Full. In some successful short sales, it is possible to convince the lender to give up the right to pursue a deficiency judgment against the homeowner.
3138 Peachtree Circle, Davie, FL 33328
This lakefront 4 bedroom, 3 bath home will be open today, March 22, from 1-4 p.m. It features marble floors and a stunning new kitchen designed by Pine Island Interiors.
The home is located in the historic community known as Forest Ridge in the Old Orchard Subdivision in Davie, Florida. Davie is centrally located in the heart of Broward County with easy access to Naples, Orlando and Key West, FL.
The list price is $475,000 and it is being offered for sale by Patti Reid, P.A. with EWM Realtors, (954) 854-6310.
So, you’ve got a fully executed contract on a home. Congratulations. Now you will play the waiting game to find out if the home will appraise at the sales price.
These days it is getting harder and harder to know what value the home will be given. Appraisers are often faced with the problem of not finding enough relevant closed sales within a one mile radius. When this occurs they often consider listing prices, but they are also hit or miss, as many sellers overestimate the value of their homes.
Sometimes appraisers will attempt to secure a contract price from a Pending Sale, however most Realtors will not give up that information and many times the Pending Sales never close.
What happens if a lender rejects an appraisal? They can offer a second appraisal (usually at the buyers expense), the Seller can reduce the price of the home or the Buyer can come up with more cash. Many times none of these remedies takes place and the sale doesn’t go through.
When the comparable sales are too old to use for the appraisal, another method has been used called “negative time adjustment”. If prices are falling at an annualized rate of 12% and there is a relevant sale that occured 4 months ago for $300,000, the comp can be devalued by 4% to indicate market decline.
There is also an option called an Automated Valuation Model, which is known as an AVM. That is what you find on Zillow.com and other real estate websites. It is a mathematical formula which examines the sales prices, square footage and recently sold homes. It is usually not up to date and it doesn’t take into account the homes condition, appearance, upgrades or lot location.
Appraisers are being called upon to use every possible method available to not only help home sales but also those who are also refinancing their home. On February 18th, President Obama announced the Homeowner Affordability and Stability Plan which is suppposed to help reduce foreclosures and stimulate housing demand. Under the plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan. If the the buyer owes more than 105% of the value of the home they won’t qualify.
It is certainly an interesting time for Appraisers and I do not envy their job one bit.
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