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My client submitted an offer for a home based on the recent comps in the neighborhood. The seller’s agent responded with a counter-offer for full price, based on a comp that is 15 months old.  The agent copied and pasted the comp information into her email reply, and I was almost convinced, until I saw the date. That gave me a good, loud laugh!

In case you don’t understand agent-speak, comp is short for “comparable”, which is a property similar to the subject property, that has sold in the last three months. I only use comps for the most recent three months because that’s what an appraiser would use. I check comps to make sure my clients know what the going price for a property is, and also so that they don’t pay too much. It also helps to avoid any potential problems with the appraisal.

With the first-time homebuyer tax credit deadline having come and gone, you may be asking yourself, “What now?” Fortunately, the door is now open to a new wave of savings: distressed properties.

For many buyers, the term foreclosure brings up images of run-down homes with no heat and rotting wood. While this is still the case for some homes, it’s no longer the standard. In fact, first time buyers are snatching up distressed deals in decent condition for great prices.

According to a November 2009 Keller Williams Research Buying Distressed Properties Survey, 40 percent of all buyers for bank-owned foreclosures (REOs) were first-time buyers in 2009. 50 percent of all short sale buyers were first-time buyers.

By definition, a distressed property is one that was purchased with a loan and the homeowner is no longer able to make their mortgage payment resulting in foreclosure – or if they’re lucky a short sale – meaning they owe more on the home than it’s currently worth. With a 20 percent increase in foreclosures from 2009, distressed properties still remain a large portion of home sales and are going to continue well into 2010 as homeowners continue to feel the effects of an economy on the mend.

If you’re in the market for a home and are prepared for a unique transaction, a distressed property can be a great option. Here’s why:

Prices are low – Buying a foreclosed property is an excellent way to get a home for less. Research shows you can save 10-40 percent over the price of similar properties in a traditional sale.

Mortgage costs are low – With rates hovering near historic lows, financing costs to are favorable. Keep in mind, rates are always changing. It’s important to begin the pre-approval process so that you know how much you can realistically afford.

You have options – The number of homes in some stage of the foreclosure process still remains high. RealtyTrac, a site dedicated to tracking foreclosures across the country, estimates that there are approximately 2.1 million homes in some stage of foreclosure in the United States.

Sellers and lenders are motivated – According to data from RealtyTrac, in April, one in every 387 households in the country has received a foreclosure filing. The bottom line is that many sellers are still feeling the pain of a down economy and are anxious to out get from under a home that is putting stress on their current financial frustrations. While it is still an emotional transaction, these sellers are willing to come down on price or even consider concessions such as helping out on closing costs. Banks holding on to large portfolios of Real Estate Owned (REO) properties want to unload quickly – and price these home to sell.

Your best ally when purchasing a distressed property is an expert. Always have a professional agent by your side to help you make informative decisions. If you’re interested in learning more about purchasing a distressed property, call me now at 215-961-3603, or send me an email.

“Raquel is a fabulous agent. It was a pleasure working with her, and I was fully satisfied with her time and dedication that she put into with the process of purchasing my first new home. All my questions were answered and working with Raquel I had no worries. I recommend her to all those in the process of purchasing a home.” Nancy C., 3/5/2010 happy homebuyer

Somayra just closed on her first home yesterday, and she was gracious enough to film a short video about her experience. Check it out!

If you’re planning on buying a shortsale property, there are a few things you should keep in mind:

• The property is owned by the seller, not by the bank. Many shortsale property listings will state that the offer is contingent upon third party or bank approval. This means that if the seller accepts your offer, then the bank still has to approve it. You cannot make an offer directly to the bank holding the mortgage on the property.
• The seller decides whether or not they will accept your offer to proceed with a shortsale, not the bank. One element of a good shortsale offer is that it allows the bank to net as much money as possible. The seller is obligated to accept the best offer they can, so they won’t always sell at a lowball price.
• Shortsales take time to process. The shortsale process involves more than just considering your offer. It also requires that the seller provide financial information to their bank, and often times multiple inspections of the property by another party are required. You should expect at least two months waiting/processing time until the bank makes a decision on your shortsale offer.

There are some to deals to be found with shortsale properties, but they require time and patience. Keep these tips in mind and you should have a smooth transaction.

Are you looking to sell your property via shortsale? Click here to get started.

Are you interested in buying a shortsale property? Contact me to schedule your consultation.

The key to qualifying for a mortgage is having good credit, low debt, and predictable income. For people who are self-employed, proving that they have predictable  income may be difficult. I’ve consulted many clients with this challenge, and these are the issues they usually need to address:

1. Documenting income. A mortgage company wants to know how much money you actually earn. Make sure you document all income and expenses. Use accounting software to hire an accountant/bookkeeper to keep your records for you.
2. Separate personal and business expenses. Open a separate bank account for your business. Using the same bank account for both will make it difficult to separate business from personal income.
3. File taxes. Mortgage companies want to know what your annual income numbers are, and will request tax returns for the most recent two years.

If you’ve been self-employed for less than two years, your best option is to wait until you have at least two years of tax returns to be able to qualify for a mortgage as someone who is self-employed. You should also save for a larger downpayment, since most self-employed borrowers need to pay at least 10% towards the purchase of a home.

Finally got a “clear to close” for a deal that is closing tomorrow afternoon. Those are the words every real estate agent loves to hear. I’ll be posting details and pictures of the happy new homeowner tomorrow.

I have a new client that just got approved for a mortgage, even though he didn’t think he qualified. He and his wife are on a fixed-income, and were looking into a rent-to-own property. It turns out that he has great credit, and steady income to boot. So he and his wife are very happy. We’ll be meeting tonight to go over their closing costs and grant options so they can start shopping for their new home right away. They have plenty of time to get an offer accepted by the April 30th deadline to take advantage of the homebuyer tax credit.

If you’re on a fixed income and want to buy a home, you may qualify and not even know it. Call or email me today for an application. You have nothing to lose except all the money you’re wasting on rent.

Philadelphia has been ranked by Forbes as being a top 10 city for renters to become homeowners. Read the article here.

The time is right for renters to become homeowners. Banks are offering mortgages with rates as low as 4.75%, and Philadelphia residents can get up to $3,000 in grants. This is in addition to the tax credit of up to $8,000. So stop wasting your money on rent. Become a homeowner, take advantage of the credits and tax breaks, and live the American dream.

Call me now at 215-961-3603, and be in your new home in less than a month!