About Orlando's Cypress Springs

Here’s something for homebuyers to chew on.

REO Property ... $150,000

Short Sale Property ... $170,000

Traditional Property ... PRICELESS

As a result, it’s the return of the Seller’s Market. At least for traditional home sales here in Orlando.

Homebuyers, listen up. If you want a great house, no uncertainty, and a smooth closing ... you get what you pay for.

Homebuyers have long been fed up with Short Sales. Even after four years of hearing the hue and cry from frustrated Realtors®, homesellers under threat of foreclosure, and impatient homebuyers, the Bad News Banks still haven’t gotten their act together. Ideally, Short Sales should close in two months, which would eliminate the need for most of the foreclosures out there.

Lately, with the glut of foreclosed properties on the market (commonly referred to as REO or Bank-Owned), homebuyers have found a good alternative. Sure, they have to hunt and peck, separating the promising properties from the wrecks. But to them, it’s worth the time and effort to find the gem in the rough at a great price.

Enter the foreclosure scandal. Fraudulent affidavits prepared by robo-signers and foreclosure-mill law firms. Further complicated by skittish title companies. Further complicated by the MERS monster created by the Bad News Banks, originally set up to avoid paying local county and state transfer taxes. Further complicated by too many other problems that have been swept under the rug. And voilà ... a full-blown catastrophe.

According to the hype ... probably most of it from the banks themselves ... the halt to foreclosures will be temporary and short-lived. Not so fast. This may well be the straw that broke the camel’s back. The banks have tried their best to dodge the many bullets engraved with the word ‘scam’, but they may have reached the end of their equity-destroying, robbing- the-US-homeowner-to­-pay-the-billionaires road.

Already, many REO listings have been withdrawn from the market altogether. Other listings with pending contracts are running into trouble at closing. Either because banks stopped the sales or because title companies balked at issuing insurance policies.

Even though plenty of REO/Bank-Owned properties remain on the market, homebuyers have been avoiding them in droves. Instead, they're shopping for traditional home sales.

How do I know?

Traditional listings in certain hard-hit areas like East Orlando and Oviedo are getting showings galore. And it's about time.

For the most part, properties sold as traditional sales ... isn't it a pity to distinguish them as such? ... have been well maintained and are move-in ready.

No, they aren't priced as low as REOs or Short Sales. But most are priced competitively ... about 10 to 15% higher than comparable distressed properties.

The extra price is worth every penny, too. Generally, these homes are in way better condition and offer a helluva lot more value than REOs or Short Sales. Plus buyers can count on closing successfully in a month or two.

Sometimes instant gratification and knowing you’re dealing directly with real homeowners instead of banks is ... well ... priceless.

Don’t lose your home to foreclosure. These smart homeowners didn’t. Instead, they put their home on the market as a Short Sale.

Properties have been listed and sold by various MLS members.

Data drawn from the My Florida Regional Multiple Listing Service.

Because the payoff of a loan will be ‘shorted’ by a significant amount, the mortgage lender must approve a Short Sale. Handled properly, the likelihood of successfully selling your house as a Short Sale is high. Once the Short Sale is behind you, you can often get on with your life with hardly a backward glance.

A Short Sale is nothing more than putting your house up for sale in the usual manner, waiting for a qualified buyer just like any other home seller would, facing a few extra hurdles, filling out additional paperwork, waiting a bit longer for the closing to take place, and finally moving out and moving on.

Real benefits come with selling your house as a Short Sale. Among them are: 1) substantially reducing or completely eliminating financial liability, 2) minimizing damage to your credit rating, 3) emerging from bad credit quicker than you would with a foreclosure, and 4) having a sense of satisfaction that you’re taking care of the problem proactively and responsibly.

Want to know what’s selling in your neighborhood? These statistics should give you a feel for the market value of your house.

Keep in mind that many of these sales are for Short Sales or Foreclosed/Bank-Owned properties. Under these situations, the Sold Price may be considerably below the Original List Price. Sorry to say, ‘distressed’ sales drag down the values of all the other homes in the neighborhood, whether or not they’re Short Sales or Foreclosures.

Properties have been listed and sold by various MLS members.

Data drawn from the My Florida Regional Multiple Listing Service.

If you’re a homeowner who wants to sell your house, the following should give you a better understanding of the Orlando FL marketplace.

Remember the old adage that ‘real estate is always local’. Your neighborhood may be different from the neighborhood just down the road.

Homes in Orlando are selling. In fact, they’re selling so well that thousands of homeowners just like you are moving out and moving on. Last year, 1,000 homes in Orange & Seminole counties sold every month on average. In 2009, monthly sales are averaging 1,600 homes. This represents a 60% increase! If the house down the street can sell in this difficult environment, so can yours.

What’s the long-term outlook for the Orlando FL real estate market? Prices have leveled off in recent months. Even so, due to rising unemployment and foreclosure/short sale saturation, it will probably take several years — perhaps as long as a decade or more — for home prices to completely recover.

What about homeowners who are having difficulty keeping up with mortgage payments but can’t sell because their house is worth less than the amount owed on their loan? There are several solutions, but the way a Realtor^® can help is by selling the house as a Short Sale.

These smart homeowners didn’t have to lose their house to foreclosure. Instead, they hired a real estate agent to help them sell their house as a Short Sale.

By finding a ready, willing, and able buyer, they were able to stop foreclosure proceedings in their tracks and walk away with a clean ‘financial’ bill of health. In some cases, they may have had to sign a promissory note for a percentage of their total obligation. The important thing, however, is that they were able to salvage the ruinous credit rating they would have incurred with a foreclosure. Better yet, in as little as two years — or even less — they’ll be able to purchase a new home with a conventional mortgage.

Properties have been listed and sold by various MLS members.

Data drawn from the My Florida Regional Multiple Listing Service.

What is a Short Sale?

A Short Sale occurs when market conditions make it impossible to sell a house at a price that allows the borrower to pay off the mortgage loan and associated closing costs in full. In these cases, the mortgage lender must agree to Short Sale terms before a house can be sold. Why? Because the payback of the loan will be ‘shorted’ a significant amount and the lender will be forced to take a loss.

Understanding How a Short Sale Can Often Help

Mortgage lenders must cooperate with borrowers in order to facilitate a Short Sale. Doing so helps them avoid the even higher costs associated with foreclosure proceedings.

Selling a house as a Short Sale can be complicated and time-consuming. The same proof of financial condition submitted when the homeowners first took out their home loan must be submitted anew in order to successfully settle the loan under Short Sale conditions. Lenders must evaluate each Short Sale on a case-by-case basis, and the approval process can often be long and frustrating ... or sometimes short and sweet.

Once a purchase contract is being considered for a Short Sale, foreclosure proceedings, if there are any, can usually be put on hold.

In order to approve a Short Sale, lenders take into account several factors, among them the borrowers’ personal and financial situation, local real estate conditions, the market value of the house, and the strength of the purchase contract. Borrowers must also make a convincing argument that they —

• Cannot keep up with loan payments due to unemployment, job relocation, divorce, medical expenses, or other long-term financial crisis
• Have no choice but to sell their house
• Can’t repay the loan in full given current market values

The Process of a Short Sale

Homeowners must jump through a few extra hoops, but these extra tasks are no more difficult than the process they originally went through to purchase their house.

• Put House on the Market - Because the borrower’s lender must validate that the house was marketed and contracted at arm’s length, a homeowner cannot sell the house on his own but must list it with a real estate broker.
• Short Sale Package - Once a Sale & Purchase Contract is finalized, homeowners must assemble personal financial information that will be submitted to their lender in support of making their Short Sale claim.
• Selling & Marketing Package - Your real estate agent should put together a Market Report reflecting the selling circumstances of the house as well as the real estate conditions of the neighborhood and town.
• Lender Approval - After the lender has received everything, they will order an Appraisal or Broker’s Price Opinion, which is an independent determination of the house’s market value. Then, after evaluating everything, the bank will make a decision.

As difficult as a Short Sale may be, it’s important for homeowners to be prepared for anything and to proactively deal with any problems that come along. It’s also important for them to also contact an attorney and/or tax accountant.

House sales in the Orlando FL market for full year 2009 is on track for outpacing the 2008 sales rate by 53.8%.

Data drawn from the My Florida Regional Multiple Listing Service.

While August 2009 sales were down slightly from the prior month, even if sales remain flat for the rest of the year, full-year sales will still outpace last year by an even higher margin than shown here.

If the forecast holds true, sales will surpass 2002 levels and approach 2003 levels, outstanding by any measure.