Archive for the ‘Sellers’ Category

Put It in the Garage

Autumn / Fall Leaves - yellow lines
Image by Dominic’s pics via Flickr

The observation.  While I was out for a walk this lovely afternoon–63 degrees, no wind, beautiful colored leaves all over the sidewalks–I noticed that a lot of people have a lot of automobiles parked outside their homes. What happens when friends come to visit? Where do visitors park? Perhaps it’s the same in your neighborhood. Sure, in my area, it’s not uncommon to have more than one family unit sharing a home, and sure, we all know that those who can drive, must drive.  

 My point.  Most of these homes have a two car garage. Why aren’t two of the cars in the garage? I know they’re not because oftentimes a few garage doors are open, and many of those garages are stacked to the rafters with boxes and appliances and unused gym stuff and outgrown play things, and yes, even junk. 

The solution.  Set aside time to clear out the garage, and write it on your calendar. Assess what you have in there. Is it worth more than your automobile that’s aging ungracefully in the winter elements? Wouldn’t the car be worth more, when it’s time to sell it, if you keep it in the garage when you’re not using it? (Yes.) What’s that stuff you’re storing worth? And will you really use it later? (No.) Put it in three piles: (1) give it away; (2) donate it; (3) take it to the dump. And if you get it done before the end of the year, you can take a tax deduction for the items you donate! Go for it!

 Trust me. You’ll feel so good when you drive your auto into its garage. No more getting soaked by rain while rushing to the house. No more multiple trips from the street with heavy bags of groceries. And by getting those autos off the street and driveway, you will have added curb appeal to your home! Try it; you’ll like it. 

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How foreclosure impacts your credit score

People have been asking me lately how foreclosure, or short sale,  impacts credit score.  The article that follows, written by Les Christie, a staff writer for CNNMoney.com on 4/22/2010, addresses these issues.  I hope you find it helpful. 

NEW YORK (CNNMoney.com) — If you’re delinquent on your mortgage, your credit score will suffer. Everyone knows that. The question is, by how much?

 Until recently, those answers were hard to come by. Credit bureaus were uncommunicative about expressing, in points, just how much impact different foreclosure types of mortgage delinquencies have on scores.

 To come to these figures, Fair Isaac created two hypothetical consumers, one who starts out with a fair-to-middling score of 680 and the other with a very good one of 780. (FICO scores range from 300 to 850.)

 The hypothetical person with the 780 FICO has 10 credit accounts versus six for the 580, plus a longer credit history, lower utilization of total credit limit and no missed payments on any account. The other consumer has two slightly damaged accounts. Neither have any accounts in collection or adverse public records.

Recently, Fair Isaac, which developed FICO scores, pulled back the curtain a bit, revealing some estimates of point-score declines following mortgage delinquency problems.

 Here are the average hit your credit will take:

 30 days late: 40 – 110 points

 90 days late: 70 – 135 points

 Foreclosure, short sale or deed-in-lieu: 85 – 160

chart_credit_score.gif

See the chart above to see how each scenario affected each borrower. Notice that for both borrowers a single one-time black mark results in steep drops, but it is when they fall further behind that things get really harsh, according to Craig Watts, a spokesman for Fair Isaac.

 “The lending industry tends to regard an account differently when it has become 90 or more days late,” he said, “The likelihood that consumers will resume paying their overdue obligations drops off significantly after the delinquencies have reached 90 days.”

One reason credit companies were so closed-mouthed is that they often can’t definitively state how much each delinquencies will affect scores because there are too many variables.

Some borrowers will fall much more steeply than others for the same payment problem, according to Maxine Sweet, vice president for public education at Experian, one of the nation’s main credit bureaus.

“If you picture someone who has just one mortgage and one other credit account versus a mature credit user like me with 15 accounts, if they miss one payment that would impact their scores a lot more,” she said. “For me, one missed payment would just be a blip.”

The point loss also depends on the borrower’s starting point: People with very high credit scores have more to lose than low-score borrowers; the impact of a single blemish on an 800 score is more than on a 500.

Of course, it just gets worse when you face foreclosure.

Mortgage borrowers can lose their homes three basic ways: a foreclosure; a short sale, where the home is sold for less than than is owed and the bank (generally) forgives the difference; or a deed-in-lieu, in which the borrower gives back the property and the bank again forgives any unpaid balance.

Sweet said credit bureaus generally slash scores equally for those three resolutions to someone losing their home. The important factor, she said, is that “it’s reported that you paid less on a settled account.”

Some borrowers may think that because they never missed a payment, they can “walk away” from their homes with relatively little impact on scores. Not true. “When a deed-in-lieu or short sale is reported as a partial payment, it’s treated as a serious delinquency,” Watts said, “just like a foreclosure.”  Read the rest of this entry »

Property Inspections: How Important Are They…And Who Pays for Them?

As home prices inch their way back, I’m seeing more “regular” listings in our inventory, not just foreclosed homes and short sales.  That’s encouraging news for both sellers and buyers.  Sellers who have been holding out are putting their homes on the market now, and these regular sales are quite appealing to many buyers.  “Why is that, Lexie?” you may ask.  Much of our inventory of homes for sale in the past year has been distressed properties.  When a home is owned by a lender, they are not willing to provide inspection reports—and they want As-Is sales.  That means they are not willing to make any repairs to the home.  What you see is what you get. 

 In contrast, traditionally sold homes generally are, overall, in better condition.  Because sellers don’t want surprises that could affect their bottom line, many are willing to pay up-front for inspection reports.  Having inspections done prior to putting a home on the market makes good sense.  Buyers can go over the provided reports with their agent before they write a contract.  Buyers don’t want surprises either.  They benefit by having a better idea of what they’re bidding on and, once they have the contract, they won’t need to have the provided inspections repeated.  Having inspection reports available benefits the seller also because it not only gives them an opportunity to correct some of the items mentioned on the reports, but it also decreases the chance of the buyer backing out after winning the contract. 

 Sometimes a seller is not willing to pay to have inspection reports done.  In this case once the buyer has won the contract, he has a certain number of days to have inspections done and to review the resulting reports.  In this case of course the buyer pays for them.  “What inspections should I have done on the house I’m buying?”  That depends on the house.  Does it have a fireplace?  Does it have a pool?  Did the seller provide any inspection reports?  Each house is different.  Your agent can assist you in determining which inspections should be done, in ordering those inspections, and being at the house when inspections take place.  Are termites brunching on beams or enjoying sub-floor for supper?  Does the home have clogged arteries with corroded pipes?  Regardless of who pays for the inspections, both parties will have a clearer idea of the condition of the home being sold, resulting in greater peace of mind for all parties involved in the transaction.