• 161 days on market – this is 5 days less more in February 2009
• Sellers received, on average, 89.36% of their list price when the home sold
• There is 15.4 months of inventory on the market
• 11 homes sold in February 2010 – this is 1 less than in February 2009
• The most popular price range was $150,000-$199,999 and $250,000-$299,999.   
• The median sold price was $213,900, compared to $208,950 in February 2009
• Financing Terms:  Conventional – 3, FHA – 3, VA – 1, Cash – 4

Orange County

• 203 days on market – this is 8 days more than in February 2009
• Sellers received, on average, 78.80% of their list price when the home sold
• There is 24.3 months of inventory on the market
• 15 homes sold in February 2010 – this is 8 less than February 2009
• The most popular price ranges were $120,000-$139,999 and $300,000-$399,999.
• The median sold price was $180,000, compared to $177,500 in February 2009 
• Financing Terms:  Conventional – 2, FHA – 3, VA – 1, Assumption – 1, Cash – 5, Other – 3

Spotsylvania County

• 66 days on market – this is 52 less than February 2009
• Sellers received, on average, 93.07% of their list price when the home sold
• There is 8.2 months inventory on the market
• 103 homes sold in February 2010 – this is 2 less than in February 2009 
• The most popular price range was $160,000-$179,999
• The median sold price was $175,000, compared to $184,500 in February 2009 
• Financing Terms:  Conventional – 26, FHA – 38, VA – 19, Cash – 15, Assumption – 5

Stafford County

• 62 days on market – this is 58 less than February 2009
• Sellers received, on average, 91.19% of their list price when the home sold
• There is 8.1 months inventory on the market
• 95 homes sold in February 2010 - this is 31 less than in February 2009 
• The most popular price range was $300,000-$399,999
• The median sold price was $235,000, compared to $220,000 in February 2009 
• Financing Terms:  Conventional – 23, FHA – 15, VA – 34, Cash – 18, Assumption – 4, Other – 1

Prince William County

• 44 days on market – this is 49 less than February 2009 
• Sellers received, on average, 96.70% of their list price when the home sold
• There is 6.49 months inventory on the market
• 423 homes sold in February 2010 - this is 292 less than in February 2009
• The most popular price range was $300,000-$399,999
• The median sold price was $215,000, compared to $169,500 in February 2009
• Financing Terms:  Conventional – 126, FHA – 150, VA – 63, Assumption – 7, Cash – 76, Other – 1

All data provided by MRIS.

Assessed value is defined as the dollar value of an asset assigned by a public tax assessor for the purposes of taxation.  For our purposes, and the purposes of this blog, we will only be addressing home assessments.  According to The Code of Virginia (Title 58.1-3201) the assessed value of each home should be 100% of the estimated market value.  The locality in which the home is located hires an appraisal firm to come in and place actual values on parcels of land and their improvements.  It would take forever to assess each individual home, so the appraiser selects of homes in different areas and applies the findings to a mass of similar homes.  This system can account for assessed values that are not 100% of market value.  If the appraiser is not aware of certain nuances that effect price in the subject area the value placed on your home may not be very accurate.  If the appraiser happens to select the smallest home in your area or neighborhood as their representative sample, then the assessed value could come in low.  If they choose the largest home, the value could come in high.  Tax records also has a baring on the accuracy of tax assessments.  If you have finished your basement, but never got a permit, or the locality has never reflected the improvement in their records, then the assessed value will be off.  Appraisals, nor assessments, are an exact science.  Human error and subjectivity are major factors in determining your home’s assessed value.  If you happen to have just purchased your home and you notice that your assessment is lower than your purchase price, I wouldn’t complain.  It doesn’t mean you are losing value.  It just means that your taxes will be lower than if they had actually assessed at 100% of market value.  However, if you just purchased your home and your assessment is high, you may want to appeal your assessment.  A valid appraisal and additional comparables will be needed as evidence in your assessment hearing. 

What is market value?  Market value is defined as the price at which buyers and sellers trade an item in an open market place.  In real estate it is the contract price for a particular piece of property.  However, because most buyers need a loan from a bank to make a home purchase, the banks want to make sure the purchase is a sound investment.  Therefore, the bank will require an appraisal to ensure that the purchase price is justifiable.  The appraiser will use data from other homes in the area that have sold to calculate what the home is worth.  The fact that the home is on the open market and that a buyer desires the home help determine what a home is worth.  Without these factors, market value cannot be established.  I can list my personal home today for $500,000.  That doesn’t mean it is worth $500,000.  It is worth nothing until a buyer writes an offer for what they are willing to pay for me to sell them my home.  In our current market, buyers want lower market values.  The lower the market value, the more affordable the homes.  Sellers and economists, on the other hand, are anxiously awaiting market values to climb.  We are in year 3 of a down market.  (Some would argue that this is actually year 4). 

The value to take away from this post is that most home owners want to see low assessed values and high market values.  Looking at the most recent sales in your neighborhood or community can help you determine the accuracy of your assessment.

• 76 days on market – this is 121 days less than in January 2009
• Sellers received, on average, 93.32% of their list price when the home sold
• There is 13.1 months of inventory on the market
• 12 homes sold in January 2010 – this is 2 less than in January 2009
• The most popular price range was $250,000-$349,999.   
• The median sold price was $257,500, compared to $217,500 in January 2009
• Financing Terms:  Conventional – 5, FHA – 3, VA – 3, Cash – 1

Orange County

• 127 days on market – this is 26 days less than in January 2009
• Sellers received, on average, 90.00% of their list price when the home sold
• There is 14.83 months of inventory on the market
• 23 homes sold in January 2010 – this is 11 more than January 2009
• The most popular price ranges were $180,000-$199,999.
• The median sold price was $187,500, compared to $182,500 in January 2009 
• Financing Terms:  Conventional – 11, FHA – 7, Assumption – 3, Cash – 1

Spotsylvania County

• 67 days on market – this is 68 less than January 2009
• Sellers received, on average, 90.73% of their list price when the home sold
• There is 8.19 months inventory on the market
• 102 homes sold in January 2010 – this is 17 more than in January 2009 
• The most popular price range was $200,000-$249,999
• The median sold price was $198,000, compared to $207,900 in January 2009 
• Financing Terms:  Conventional – 24, FHA – 36, VA – 14, Cash – 23, Assumption – 2

Stafford County

• 69 days on market – this is 75 less than January 2009
• Sellers received, on average, 93.94% of their list price when the home sold
• There is 9.10 months inventory on the market
• 86 homes sold in January 2010 - this is 5 less than in January 2009 
• The most popular price range was $200,000-$249,999
• The median sold price was $228,000, compared to $232,000 in January 2009 
• Financing Terms:  Conventional – 16, FHA – 33, VA – 21, Cash – 13, Other – 3

Prince William County

• 41 days on market – this is 62 less than January 2009 
• Sellers received, on average, 97.68% of their list price when the home sold
• There is 6.02 months inventory on the market
• 398 homes sold in January 2010 - this is 249 less than in January 2009
• The most popular price range was $300,000-$399,999
• The median sold price was $224,950, compared to $175,900 in January 2009
• Financing Terms:  Conventional – 109, FHA – 148, VA – 57, Assumption – 10, Cash – 65, Seller Financing – 2, Other – 7

All data provided by MRIS.

1.  When shoveling, be sure to wear loose clothes and take breaks.  Don’t wait until the snow is done falling to start shoveling.  The snow is easier to remove if you shovel it every couple of inches that fall.  There is nothing worse than taking a trip to the hospital with chest pains in this weather.  Well, maybe a few things worse, but let’s not think about those.

2.  Be sure to clear snow away from hose bibs, dryer vents, and air condensers.  You will also want to clear the snow away from gas meters and fire hydrants.  If you haven’t unhooked your garden hoses and flushed the water from the pipes, go ahead and do it before the next storm hits. 

3.  Keep walkways and sidewalks clear.  Remember to sprinkle snow salt or kitty litter on slick spots.  There are more pedestrians during this sort of weather and it is safer for them to walk on cleared sidewalks than in the street.  The postal service will also not deliver to your house if they can not easily access your mailbox. 

4.  Make sure that your house numbers are visible from the road.  In case of an emergency you want to make it as easy as possible for emergency personnel to find your home. 

5.  If you must drive in this weather, clean off the top of your car.  It is extremely dangerous to drive around with 20 pounds of snow precariously balancing on your SUV.  If that snow flies off you could blind another driver with your snow.  So, take the extra few minutes and clean off your entire car!

6.  Make sure your animals have plenty of food and water.  During cold weather animals tend to eat and drink a little more than normal.  Give them access to food, water, and warm lodging. 

7.  If you are using gas powered products make sure that you have functioning carbon monoxide detectors.  Also be sure that you have plenty of extra batteries on hand. 

8.  Never leave a lit candle unattended.  Accidental fires are a major problem during weather like this.  If you leave a room, blow out your candles. 

If you have any other safety tips you would like to share please feel free to leave them in the comments section!

Address:  611 Caroline Street Fredericksburg, VA 22401 

Hours of Operation:

Wednesday - Saturday   10am – 7pm

Sunday 12pm – 8pm

Meet Barney!

Barney is a Domestic Long-Hair Black and White kitten.  He is about 6 months old.  He loves to cuddle and is being cardboard scratcher trained while at the shelter.  He is doing very well at this training.  Barney is a social butterfly and really wants to find a new family soon.  He is neutered and up-to-date on his shots.  He is good with adults and children.  If you have room in your heart and extra hugs to give out for a sweet cat like Barney, contact the Fredericksburg SPCA today and set up an appointment to meet the feline adoptees! 

Meet Betty!

Betty is a 3 year old Boxer who wants a family who can spend time with her.  She is a very sweet girl.  She is a little shy, but comes out of her shell pretty quickly.  She loves to be brushed.  She needs a family who will help her adjust to her new surroundings.  Experienced dog owners would be a perfect fit for Betty.  She is good with other dogs when properly introduced.  Betty is spayed and is up-to-date on her shots.  If you think Betty would be a nice addition to your family, call the SPCA and arrange a meeting with sweet Betty! 

The Fredericksburg SPCA is located at 10809 Courthouse Road Fredericksburg, VA  22408.  Their phone number is (540)898-1500.        

1.  This program assumes that the banks are capable of meeting these timelines with the amount of faulty loans on their books.  That, my friends, is just crazy talk.  Some of the little banks may be able to meet the expectations outlined in this document, but the big boys will never be able to hold up their end of the bargain.  First, these banks are horribly under staffed in their loss mitigation departments.  Why?  Well, who wants to work in a loss mitigation department?  You get yelled at all day and get the joy of working with emotional train wrecks.  Employee turn-over is extremely high in these departments.  So, the banks will have to hire more employees to handle the amount of short sales that will be requested and processed.  Where are the banks going to get the money to not only pay these new employees, but train them adequately to do the job effectively?  Oh, that’s right, bail out money… cause we know the CEOs will not be foregoing their bonuses to make the banks work more smoothly.  Another problem in the this arena is that the banks are being asked to hire more people to facilitate this program and the bank’s benefit is $1000 a transaction.  Ummmm… $1000 a transaction does not offset the cost of an employee.  It seems that from this perspective the banks have very little incentive to participate. 

2.  Yes, I said participate.  This is an OPTIONAL program.  Banks had until the end of December to alert the Treasury Department that they would be participating.  I’m surprised we all didn’t get trampled in the mad rush to sign up.  (sarcasm)  Many of the larger banks are working on streamlining their own short sale process that is advantageous to their bank.  Why on earth would they participate in a program that limited their ability to recuperate funds?  Now, I’m not a business major, but I don’t think banks are in business to lose money.  And at this point in history, they are trying to mitigate their losses.  The $1000 participation bonus just isn’t enough incentive to take bigger losses by not being able to go after the defaulting borrower civilly.  The guidelines state the the lien holders must fully release the borrower from future liability for the debt.  At some point consumers need to held responsible for taking out risky loans.  Houses are one of the few products that people purchase and expect to be able to sell it at a profit.  When we buy a car, we expect to sell it at a loss.  When we buy a tv, we expect to sell it at a loss.  Investments are risky and there are no guarantees.  Again, it just doesn’t make sense.

3.  The banks are all expected to have the same standard process, the same documentation, and the same timeframes.  We might as well all take jobs herding cats.  Banks don’t even understand their own paperwork, much less buearocratic paperwork.  And, what happens to all of the short sales that are currently in the system?  Do we have to start all over? 

4.  One of my favorite guidelines is that REALTORS(R) will be expected to pay the cost of any contractors the banks hire to help facilitate the process.  Well, thank you Treasury Department for telling the banks that they can no longer cut reasonable commissions, but allowing them to charge me to do THEIR job.  Loss mitigation departments are already under staffed so we can safely assume that banks will need to hire contractors to facilitate these deals.  And, Yay!  I get to pay for that.  Well, I’m here to tell you, I WON’T pay for a bank to hire someone else to do the job they should be doing.  I didn’t give out the bad loan, I didn’t default on the mortgage, and I’m not responsible for the economy tanking. 

5.  The guidelines also state that transferring all of the documents through electronic means could be a problem.  They haven’t quite worked this detail out, but I’m sure they will before the program really takes effect in April.  (sarcasm)

6.  One of the biggest problems I have is that banks will be establishing the minimum net they are willing to take on the property BEFORE the property is under contract.  This can cause huge problems.  I recently had a short sale where the bank insisted on a net.  The purchase price had to be $410,000 to meet that net.  The house appraised at $400,000.  The bank demanded the purchaser pay more for the house than what it was worth by bringing $10,000 in cash to the table to make up for the difference.  Isn’t this type of behavior what got us into this mess?  The market bears what the market bears.  I don’t see banks brushing up on market data and conditions for every area that they have loaned in.  They are doing short sales to mitigate loss.  That’s what they will do, regardless of how it effects the consumer. 

7.  One of the funnier guidelines in the document is that properties that can qualify for the HAFA program should have also applied for the HAMP program.  The HAMP program is the loan modification program.  What a successful program.  (sarcasm)  How many loans have been successfully remodified?  How many homes have been saved from loan remodification?  Maybe a handful.  Loan remodification only allows to the banks to adjust their numbers and the borrower to postpone a short sale or foreclosure.  It is not the end all, be all answer to our problems.  It is band-aid. 

These are the points that I see wrong with this document.  I know that NAR and many designation and certifications for REALTORS(R) are touting this document as the glue that will bring the real estate market back together, but I can’t agree with them.  I think this document gives false hope to consumers and REALTORS(R).  I think it is pretty poorly thought out by individuals who aren’t dealing with the consumer side of short sales.  I think the document means well, but all in all, it’s a waste of paper.  I wanted to explain the document so that everyone would start thinking about what changes, if any, this will bring to the real estate market.  Let me know your thoughts.  I’d love to hear them!

Imposed Guidelines on Banks for Approving a Short Sale Transaction

1.  Loan servicers must determine, with their investors, the minimum net proceeds that will be acceptable .  They must determine this before the Short Sale is started.  This amount is what the bank wants to walk away from the deal with. 

2.  The loan servicer and investors must also determine the amount of transaction costs they will allow.  This includes paying for buyer closing costs, paying for HOA documents, and the cost to the seller for closing the transaction. 

3.  The servicer must provide the borrower with a Short Sale Agreement.  The Short Sale Agreement outlines the roles of everyone in the transaction and key marketing terms.  Some terms of the Short Sale Agreement include:

• Price
• Proceeds
• Duration of Listing – not to be less than 120 days
• Listing Agent must be regularly doing business in the community the property is located in
• Either the bank approved list price or the acceptable amount the bank is willing to net from the sale
• Closing Cost amount that will be allowed by the bank
• Commission to be paid to REALTORS(R) - not to exceed 6%.  The REALTOR(R) may have to pay the bank contractor hired to facilitate the transaction for the bank out of their commission. 
• Any cancellation or contingency clauses
• That the transaction must be arm’s-length.  The property can also not be resold within 90 days
• The borrower is released from all liability of repayment of the 1st mortgage lien
• Borrower is entitled to a relocation incentive of $1500 – this is deducted from the gross sales proceeds
• Whether a portion of the gross sales proceeds are to be paid to subordinate lien holders in exchange for a release and full satisfaction on those liens
• Any income, tax, and credit consequences of the Short Sale
• Monthly mortgage payments during the short sale process will not exceed 31% of borrower’s gross monthly income
• Clause that if the borrower participates in the program, the bank will not foreclose during the duration of the program
• Any terms of termination

4.  The borrower must submit a request for Short Sale approval within 3 days of ratifying a contract.  The request must include:  contract/ addenda, purchaser’s financial documentation, and status of subordinate liens and or negotiations with subordinate lien holders.

5.  The loan servicer must indicate approval or disapproval of Short Sale within 10 business days.

6.  The loan servicer can not require closing earlier than 45 days from date of sales contract without borrower consent.

If the Short Sale is successful the following financial incentives are granted:

• Borrower – $1500 relocation incentive
• Loan Servicer – $1000 short sale incentive
• Subordinate Lien Holder – up to $1000 for approving to take up to $3000 as payment in full and satisfaction of debt

In Part 3 of this series, I will point out the flaws of this document and it’s implementation, as I see it. 

So, let’s disect the document so that a layman can understand what it says.  This will be a 3 part blog post.  I’ll be sure to link back to each section at the bottom of each post.  This post will concentrate on which properties qualify for the proposed program and how the bank handling the short sale will determine if the borrower (seller) is eligible for the program.  Part 2 will focus on the process of approving the short sale once a contract is received.  Part 3 will address the problems in implementing this document across the lending and real estate industries.  (Yes, Part 3 is when I deflate all the balloons and tell you that you do in fact look awful in those jeans.  In other words, I will be realistic about the effectiveness of this document and the changes it can create). 

Qualifying Properties

1.  The property requesting the short sale must be a principle residence.

2.  The first lien must have originated on or before January 1, 2009.

3.  The borrower must be delinquent or default is reasonably foreseeable. 

4.  The unpaid balance on the first lien is less than or equal to $729,750. 

5.  The total monthly mortgage payment must be more than 31% of the borrower’s gross monthly income. 

Process of Approving the Borrower (Seller) for a Short Sale

1.  Bank will notify borrower in writing of the HomeAffordable Foreclosure Alternatives (HAFA) option and allow the borrower 14 days to contact the loan servicer to request consideration for the program. 

2.  The loan servicer should perform a financial analysis to determine if a Short Sale is in the best interest of the investor. 

3.  The loan servicer may request updated borrower financial information.  The loan servicer must also obtain a signed Hardship Affidavit and verify the borrower’s financial information prior to approving the borrower for the program.

4.  The loan servicer must assess the current value of the property in accordance with investor guidelines that are applied to all of the investor’s assets.  The borrower can be charged for this assessment if the Short Sale is not completed. 

5.  The property’s title is reviewed to verify all liens on the property and the ability to transfer clear title to a purchaser.  The borrower can be charged for this if the Short Sale is not completed. 

6.  The borrower is served notice of approval or disapproval.  The servicer must communicate in writing to the borrower why the Short Sale can not be offered and provide a toll free phone number to call and discuss the decision. 

If you’ve been reading any of my posts on Short Sales, you should be able to pinpoint some problems with the document already.  Again, I’ll address my issues with the document in Part 3.  Want to read the entire document?  Home Affordable Foreclosure Alternative