Owning a home used to be the same way. We bought a home. We showed it off. We envisioned raising our family in the home. We we’re proud of our purchase and we began living the American dream of being a homeowner. Our home became a part of our total financial portfolio knowing the gain on one long term investment would offset the loss of another. And that’s just the way it was, and so be it!

The current media hype and your family’s expert opinion that owning a home no longer makes “economic sense” probably has instilled fear and stunted your dreams of being a proud homeowner.

I’ve bought a few homes in my time, and I don’t ever remembering buying a home because it made “economic sense”. I do remember that it was only a few short years ago during the greediest housing market in history that owning a home went from the American dream to the new “Get Rich Quick Scheme”. This has caused millions of potential homeowners to lose out on the best buyers market in history because they are confused about the true meaning of homeownership.

It’s time to be done with the Chicken Little stance about homeownership already. Become a contrarian and take a new position opposed to that of the majority. Buy a home, show it off, and envision raising your family there. Step forth and add to your long term, financial portfolio. Take advantage of the great housing prices, low mortgage rates, and the tax breaks that will save you thousands every year. Owning a home is still the American dream, so start living it and re-define “economic sense”.

Sure, there’s probably more pain to come in the housing market, but that’s no reason for capitulation. Don’t wait to make your dream of owning a home your reality. Home prices and interest rates will be on the rise before you know it, and then it may be too late. And then you’ll have to listen to all the experts say, “I told you that you should have bought a home”. C’mon, you know I’m right, so just buy now!

The real estate market has seen better times. 27% of U.S. mortgages are “underwater”; the Phoenix market suffered a 16% rise in foreclosure filings in January; the 2006 5-1 ARMs (Adjustable Rate Mortgage) are starting to hit.

For REALTORS® like Jill Segrove, times have never been busier, “More people are asking about short sales and trying to figure out a strategy. There is a lot of misinformation out there. People are worried and they need reliable information.”

One of the more popular misconceptions is that a short sale is the same as a foreclosure when it comes to the long-term effects. “Absolutely not true,” she argued. “Yes, a short sale will have an impact, but a foreclosure is going to have a longer term effect.”

As a short sale specialist, Segrove works with sellers to help them understand all their options and help them get to where they want to be. “A short sale isn’t always the best option. Understanding the homeowner’s position helps me explain other options available. If someone really wants to stay in their home, then pulling out all the stops is what I will do to help make that happen,” Segrove said.

If a short sale is the only option, then she does her best to bring forth a buyer. “Ultimately, it’s in everyone’s interest for the sale to go through. The seller doesn’t want the long-term ramifications of foreclosure, the lender doesn’t want an empty asset that they now have to market, and the buyer doesn’t want to miss an excellent opportunity.”

When asked the difference between a “Short Sale” and a “Regular” REALTOR®, Segrove sums it up with one word: “Experience.”

“Keeping abreast with the market and knowing a lender’s protocol is key to a successful short sale. An experienced short sale REALTOR® will know what to expect and is always prepared for the next step in the negotiating process.”

Compassion also plays an important role in Segrove’s practice. “Most homeowners feel like they have failed their family. It’s important that your seller understands that short sales aren’t about homes and mortgages. Short sales are about living a better quality of life and moving forward.”

• What is a”Short Sale”?

A short sale is a foreclosure prevention work out program with your lender that allows you to sell your home for less than the total amount owed.

• How is a short sale different from a foreclosure?

Just like a regular sale, the property is transferred from seller to buyer in a short sale. The only difference is that the lender must approve the sale because the net proceeds of the sale will not satisfy their lien against the property.In a foreclosure, the lender takes possession of your home through a legal process, becomes the seller, and then resells the property.

• Who qualifies for a short sale?

Homeowners who are facing a legitimate hardship situation which hinders their ability to make payments on their mortgage may be eligible for a short sale.A few common examples of such hardship situations include:

• • Unemployment
  • Decrease in household income
  • Caring for an elderly parent in your home
  • Long term illness
  • Death of a spouse or child
  • Inability to work due to a health crisis
  • Divorce or separation
  • A relocation connected with employment
  • Major medical bills
  • Adjustable rate mortgages causing payment increases
  • Too much other debt
  • Military Service

For other questions and a wealth of short sale information, please read my “Short Guide to Short Sales” at www.JillSegrove.com.

Exterior

• Lawn is well manicured and neatly trimmed around the walks and driveway
• Flower garden is free of weeds
• Shrubs trimmed and dead branches eliminated
• Debris is disposed of and toys and lawn equipment are neatly stored
• Fences and gates are repaired and refinished
• The roof, gutters, and downspouts are in good repair
• Driveways and sidewalks are washed down and checked for stains, crumbling, and cracking
• Cracked windows and torn screens are replaced
• Windows, screens, and windowsills are all washed and clean
• Exterior doorknobs are polished and the house has been hosed down
• All outdoor lighting is working
• The front door is refinished and trim brightened up or cleaned
• Doorbell works

Interior

• Home is decluttered by packing or donating items that not used in the last 90 days.  Cabinets, closets, and drawers are to the bare minimums of plates, dishes, linens, etc. to give a spacious feel
• Walls are clean and free of smudges, fingerprints, and damage
• Woodwork is waxed or polished
• Old, outdated wallpaper is removed
• Furniture showing signs of wear and tear is covered nicely, or removed altogether
• Window are washed from the inside and coverings are cleaned
• Rugs and carpets are cleaned
• Wood floors are refinished, tile and grout sparkle
• Loose doorknobs, sticking doors & windows, and warped drawers are all repaired
• Leaky faucets are fixed, and water discoloration is removed from tubs, sinks, and showers
• Stairs are free of objects, and banisters are secure
• All light fixtures and bulbs are in working order; discolored or cracked switch plates are replaced
• Closets, drawer, and shelves are all organized and shout “Spacious”
• Clothing is hung neatly and shoes and other objects are neatly arranged
• Bathrooms sparkle.  Caulking around tubs, sinks, and showers repaired
• All rooms in the home are neat.  Bedspreads and curtains are attractive and clean
• The kitchen sparkles. Appliances are cleaned, and cupboards are organized and tidy. Remove magnets, children’s artwork, and pictures from the refrigerator
• The garage is organized and garage floor has been cleaned of any stains
• Mirrors and picture frames are all clean
• Electrical connections are all plugged in and wires are neat and tidy.

Extra tips:  Strategically place mirrors throughout the home to create an impression of added space.  Use area rugs for added color and brighten up rooms.  Draw back drapes, or open blinds to let in the light. Replace low wattage bulbs with higher wattage to brighten dark rooms. Use white towels and linens to give the impression of bright and clean.

Now the economy has unfurled and the uncertainty has us all tightening our purse strings and getting back to basics. Simplicity of life has replaced feeding the desire for flash. Families are realizing they have more home than they need, and are tired of being “house-poor”. The novelty of having a breakfast bar adjacent to the eat-in-kitchen, which neighbors the formal dining room, has worn thin with most homeowners, and home offices, game rooms, soaring ceilings, and a multitude of sitting rooms have become too expensive to maintain.

Downsizing can be a tough decision to make, but homeowners who have successfully downsized contest they are happier. They are no longer overwhelmed by the demands of a large home. They are realizing less stress, a simpler lifestyle, and increased cash flow. The quality of their social & entertaining lifestyle hasn’t been hindered, and it has brought their family closer together.

Home builders are recognizing this new trend and are beginning to offer smaller, more intelligently designed spaces to accommodate the new realities. Buyers are now putting their money into higher quality materials, better insulation, and energy saving features instead of square footage.

More and more families are finding that reason to downsize their homes: financial, empty nest, or wasted space. If you’ve ever silently thought to yourself that you made a bad decision, can’t afford your home, or you just don’t need that much space, then maybe your time to downsize has come. Once it’s done, a feeling of freedom and of calm will come and you will be happier.  I speak from my own personal experiences.

Oh, and the true definition of Prestige is “The level of respect at which one is regarded by others”. See, it has nothing to do with the size of your home.

When your first priority in buying a home is to have a place where you can center your life and raise a family, then that is the right time to buy. Financial gain or investment should be very low on the list of priorities, if on the list at all. It is important to remember that you are not buying a house, but a home. Your home is your retreat from the world, yours to be proud of, raise your family in, and keep for the long haul. Eventually, the investment will be there with steady, long term gain, but the true value will lie within your family and pride.

SALES Year over Year
The November sales figure is 9.4% below the same figure in 2009. The 6,786 total sales for November surpass the 5,180 November sales average for 2001-2009. Total sales from October to November fell every November since 2001, with the exception of November 2010.

NEW INVENTORY
New Listings declined 9% from October to 10,969. November’s new listings is 1,474 below the previous five month average of new listings of 12,443. Every year over the last decade, new listings declined on average 6.8% from October to November. New inventory added each month affects the total supply of inventory and influences the supply and demand balance so critical to our recovery. Thus the decline in new listings in November is positive.

TOTAL INVENTORY
Currently there are 45,353 total residential listings, representing only a .2% increase over October. Total inventory has been on a gradual but steady upward trend since June. Between June and October the increases in total inventory each month averaged 1.82%. November’s increase of only 101 listings is good news.

MONTHS SUPPLY OF INVENTORY (MSI)
For the first time since August the MSI declined, which is a positive sign, albeit a tiny one. November’s MSI is currently at 6.68 months, down slightly from October’s 6.86 months. The MSI between June and July tipped the supply and demand balance from a seller’s market to a buyer’s market. A seller’s market is defined as month’s supply of inventory in the 4-5 month or lower range. A buyer’s market is typically defined as having an MSI of 6 or more months. The Valley has hosted a buyer’s market for the last five months with no significant signs of change in oversupply of homes.

A Valleywide MSI is valuable only as a barometer of overall market health. Smaller niches within the broad market vary widely in their MSI. Only in the context of a specific niche can an MSI have relevance for individual sellers.

LIST PRICES
Median new list price dropped $8,000, or 6.2%, to $121,900 in November. The median list price has followed a steady downward trend since February, losing $18,000 between February and November. The $8,000 decline in median list price from October to November is by far the largest month over month drop all year, well above the average month over month drop of $1,510, and 64% greater than the next highest month over month decline which occurred from January to February.

The average list price fell $5,600, or 2.6%, to $206,400 in November, reversing the positive monthly gains of August, September and October. The average price though has remained true to a downward trend line, which followed a see saw up and down pattern January through March, and saw some positive gains late summer. Since January, the average list price has fallen $33,200. Joining the months of July ($198,700), August ($200,763) and June ($204,581), November’s aver-age new list price is among the four lowest since 2001. Factors driving these declines could be seller realism about pricing, and/or the downward pressure caused by a growing percentage of distressed listings in the total new listing mix. Market reality is that the effect of distressed properties on key market indicators is negative, pervasive and not to be ignored.

SALES PRICES
The trend lines for median and average sales prices are also downward, but not as dramatically as median and average listing prices. The median sales price for November fell $5,000, or 4.2%, to $115,000. Since January when the median sales price was $124,900, the median has fallen $9,900. The average sales price also followed a see saw pattern over 2010, falling from $175,700 in January to $159,000 in November, representing a $16,700 drop. Followed closely by the September 2010 ($159,824), April 2009 ($159,681) and March, 2009 ($159,080), the November aver-age sales price is the lowest of the decade.

THE ARMLS PENDING PRICE INDEX™
The ARMLS Pending Price Index is a predictive tool unique to ARMLS, based on the pending sales data in the MLS system. It predicts the average and median sales prices ninety days into the future. The PPI’s forecast value diminishes the further into the future it goes.

The predicted median sales price for December should remain steady at $115,000, rise in January 2011 to $118,000 and fall dramatically in February to $100,000. The February’s prediction is the least reliable at this point because it is based on lower number of closings scheduled ninety days into the future.

The forecasted median figures parallel, but fall short of, the predicted figures from the November STAT: last month’s December prediction was $117,000; this month’s December prediction is $115,000. Last month’s January prediction was $120,000; this month’s prediction is $118,000. February’s forecast represents a larger drop from the prediction of an unhealthy $105,000 last month to a predicted $100,000 in this month’s STAT.

The average sales price is expected to rise in December to $162,800, drop slightly in January to $161,500 and take a precipitous $20,400 drop (12.5%) in February to $141,100. If the predictions hold true for February, it will be the lowest average sales price since 2001.

Speculation about the cause of the steep drop in February should consider buyer and seller motivations. Sales made in November and December will close most likely in January and February. Traditionally, normal Sellers, those not in distress, will not elect to place their homes on the market during the holiday period, without a compelling reason to sell, e.g., a relocation. This behavior may be keeping normal listings, and hence normal sales, out of the prediction equation.

The December PPI predictions should be influenced more heavily by the pool of investors, who unlike traditional buyers, would not be motivated to remain out of the market until after the holidays. Lender owners as well have no such reservations about the holiday. Many distressed properties, which tend to have a prolonged close of escrow period, may have already been under contract before the seasonal slowing. We may see those contracts dropping in number moving forward, but not see the effects on pricing until a few months into 2011.

The ARMLS PPI debuted in March 2010 and has no empirical data surrounding predictions which straddle the close of one year and the beginning of the next. If the February forecast is unduly influenced by the fallout from the holiday season, then logically we could predict that the decline in February would right itself in March and April closings. Since January and February sales would be free of natural reluctance to mar holiday family time and festivities, we would expect that a more normal mix of transactions would account for March and April closings.

FORECLOSURES PENDING
Foreclosures pending, which increased slightly by 367 to 41,570, have held relatively steady since July, averaging 41, 603 per month, after following a gentle downward trend between November 2009 and June 2010.

LENDER OWNED SALES
Lender Owned Sales for November was 2,889, only 26 sales greater than October. The average number of lender owned sales has remained steady since July, averaging 2,832 per month. The November lender owner sales figure represents 42.6% of the total sales.

AVERAGE DAYS ON MARKET
Average days on market (based on properties which close during the month) which dropped two days in October, added the two days back in November with an average days on market of 106. Days on market in January (92), increased to 99 in February and has been on an overall upward trend all year. The oversupply of inventory influences the average days on market. This metric is intended in this context to be a barometer of overall market health. Small market niches have their own average days on market which is a more accurate predictor of market behavior in that niche.

DISTRESSED SALES
Distressed Sales are defined as closed Short Sales plus Lender Owned Sales. After peaking in September at 74.1%, the percent of total sales settled back in October to 64.8% and November to 62.6%. These figures are high and exert downward pricing pressures on median and average prices. Yet, the 2.2% drop from October to November, and the 11.5% drop from the high in September, represent a metric moving in the right direction as traditional sales gain back some ground.

Total Distressed Sales of 4,251 for November represent the lowest number since March. In November there were 1,362 short sales (a 3.5% decline from October), representing 20.1% of total sales, compared to lender owned sales which accounted for 42.6% of total sales.

Credit Score:  A short sale effect can be as brief as 12 to 18 months.  Only late payments of the mortgage will reflect on the credit score and can lower your score by as little as 50 points.  Foreclosure can affect your credit score of 3 years or more and your score is generally lowered by 250 points or more.

Credit History: A short sale is currently not explicitly reported on credit history.  A foreclosure will stay on history for 10 years or more.

Deficiency Judgment: In a short sale, it is possible to negotiate with the bank not to pursue any further deficiency action against the homeowner.  Unless your state has an anti-deficiency protection law, and your loan terms meet all the anti-deficiency guidelines, the bank can pursue a deficiency judgment against you.

Employment: A short sale is currently not explicitly reported on credit history, and therefore, should not be a challenge for employment.  Foreclosures are one of the most detrimental impacts on credit and could affect employment.

Fannie Mae Loans: A short sale allows the homeowner to be eligible for a Fannie Mae backed mortgage after only 2 years. Foreclosure will impact the homeowners ability to get a Fannie Mae backed loan for 5 years.

FHA and VA Loans: The homeowner will be eligible in 3 years from the date that the FHA insurance claim is paid to the lender.  Foreclosure will impact the homeowners ability to get a Fannie Mae backed loan for 5 years.

Conventional Loans: The homeowner will be eligible in 2 years for Fannie Mae backed loans. Foreclosure will impact the homeowners ability to get a Fannie Mae backed loan for 5 years.

To learn more about foreclosure, short sales, and other options available to homeowners struggling to meet their mortgage payments, please feel free to contact me.

It is strongly recommended that you consult with an experienced real estate attorney or visit Making Home Affordable to help you determine the best course of action for your circumstances.

1) You and your agent will prepare the Purchase Contract outlining your terms to purchase the property. You will sign the contract along with any other forms relevant to the purchase offer.
2) Your agent will then contact the seller’s agent for instructions on how to present the offer. Although a rare practice, it is permissible in Arizona for the buyer’s agent to personally present the offer directly to the seller in the presence of the seller’s agent.
3) The seller is then permitted a short period of time to evaluate and discuss the information, and decide if they want to accept, reject, or counter offer the buyer’s purchase contract.
4) If the seller accepts your offer, you will begin the closing process. If the seller responds with a counter offer, you will be permitted a short period of time to evaluate and discuss the information and decide if you want to accept, reject, or counter the seller’s counter offer. If the buyer or seller rejects the contract or counter offer at any time, then the offer process ends.

(Note: There is no limit to counter offers to a Purchase Contract and they can go back and forth several times before a Purchase Contract is accepted or rejected by either party. Since the goal is to gain right to buy the home before other offers are presented, the process often moves along quickly. It is important to be readily available to your agent.)

When your offer has been accepted by the seller (yippee!!), here is what you can expect next:

1) You will be required to immediately open escrow with the earnest deposit as outlined in the Purchase Contract.
2) The transaction enters into the inspection period as outlined in the Purchase Contract. This is the time to do your best investigative work on the property by hiring home and termite inspectors, researching the HOA Conditions, Covenants and Restrictions (CC&R’s), reviewing the Seller’s Property Disclosure Statement (SPDS), reviewing the Comprehensive Loss Underwriting Exchange (CLUE) and investigating any facts that are important to you.
3) As the inspection period comes to an end, you will be required to serve a Buyer’s Inspection Notice to the seller. This form allows the buyer to request repairs, maintenance, or replacements, and specifies the consequences for non-compliance by the seller. The buyer also has the option to accept the property in its current condition.
4) If the seller rejects your demand for repairs on the home, the ball is back in your court to make a decision to either cancel the contract or accept the sellers response and take the property as-is.
5) Assuming both parties come to a final agreement and a fully executed contract is in place, you can now relax (somewhat) and wait for further information, tasks to be completed, and the closing of the sale.

Congratulations on the purchase of your new home!

Foreclosures and short sales may have different guidelines, requirements, and other terms.  Check with your real estate agent for more information.

Here are some additional tips to follow once you have established your moving date.

1) Contact all utility service providers and request that the service to your current home be shut off the day after your departure. This eliminates the early morning disconnects leaving you stranded without power and running water.
2) Arrange for the utilities to be turned on at your new home the day before you arrive. This will ensure that you will not be arriving after dark with no power and no running water.
3) Stop by the post office and fill out a change of address form. The sooner you do this the better it is for you to avoid delays in receiving mail on the other side.
4) Start collecting empty boxes. You can never have too many.
5) Buy the following packing supplies:
*boxes
*tape and dispensers,
*jumbo black markers
*colored stickers to group certain boxes together from each room
*bubble wrap (and save all your newspapers for wrapping, too)
*garbage bags
6) Contact your favorite charity to schedule the pick up of items you are donating.
7) Finally, don’t forget about those friends and family who have helped so far, or who are planning to help. Have one final gathering the night before you leave, even if it’s just sitting on the bare floor eating pizza off paper towels.