Here’s some good news to end our week with: In St. Louis the number of homeowners that are underwater on their mortgage (owe more than their home is worth), otherwise known as being in a “negative equity” position, dropped to 90,196 homeowners, or 16.1 percent of all St. Louis homeowners with a mortgage, in the first quarter of this year, down from 101,829 St Louis homeowners, or 18.1 percent during the prior quarter, according to a report just released by Corelogic.
According to the report, in addition to the St. Louis property owners that are already underwater on their mortgages, there are an additional 32,115 St. Louis homeowners in a “near negative-equity” position, meaning they have less than 5 percent equity in their homes which is down 33,482 homeowners in the previous quarter.
While having about 1 of every 6 St. Louis homeowners that have a mortgage being in a negative equity position is bad, it is certainly better than the national average which is, for first quarter of 2012, 23.7 percent, or almost 1 in 4 homeowners with a mortgage.
The flip side of this is short sale bargains for buyers…
Homeowners that find themselves in a negative equity position and do not have the financial means to stay in that situation and wait until the market recovers and their home increases in equity enough to get them out from under it, have another alternative and that is a short-sale. Short-sales are something that, even though I’ve been in the business since 1979 and have seen many ups and downs in the market, were almost non-existent until this current real estate market crash and now have become quite common. What is a short sale? It is when a property is sold to a buyer for a price that is less than the seller owes (and typically at around a 14 percent discount below market value according to recent data with the cooperation, and approval, of the seller’s lender who agrees to release the deed of trust on the property for the “net proceeds” from the sale typically.
Caution to Sellers…
An important thing for seller’s to note is that, just because the lender is releasing the deed of trust and allowing the sale to take place, that does not mean you are being released from your financial obligations and liability for the note and, in addition, you may face tax liability possibly as well. This is why it is important that seller’s seek the advice of an attorney and tax professional when considering a short sale. It is also good to have a professional loan mitigation expert involved with your short sale to assure that proper documentation is presented to the lender and you are afforded every opportunity to have success with your short sale. If you are an underwater seller looking for help on selling your home you can and our firm will be happy to help you. We have extensive experience in this area and a strong working relationship with loan mitigation experts, real estate attorney’s and tax professionals.
Opportunity for Buyers, but Buyer beware!
Short sales present a great opportunity for buyers to buy a home, typically at a discount of around 14 percent, that is normally in better condition than an REO or foreclosure. However, there are several pitfalls and things to watch out for when it comes to short sales! St Louis short sales often sell very quickly so the first challenge is how to find a St Louis short sale bargain. The best place to start is with an experienced St Louis REALTOR, one that not only knows the St Louis real estate market and the St. Louis short sale market, but also has the resources necessary, including to properly handle the short-sale negotiation with the lender. The next thing is to, as the boy scout motto says, Be Prepared! Before trying to buy a short sale, get to a lender and get pre-approved for a home loan. Then, obtain a copy of a bank statement of other proof that you have the cash you will need to satisfy the down payment, closing costs, etc, then, armed with a pre-approval letter and your proof of funds, then go find a St. Louis short sale to buy. Oh yeah, it also helps if your REALTOR utilizes the latest technology to help make the process quick to help enable you to get your offer in faster than others that rely on more traditional methods (such as the electronic contract signing platform our firm uses that enables you to sign your offer quickly from anywhere in the world you may be as long as you have a smart phone, Ipad, laptop, etc and internet access).
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