Carlo Gobba

Recently, I have heard numerous prospective sellers tell me that they decided to hold off on their move because they didn't feel they had much if any equity in their homes.

When you look at your situation, today's real estate market can be slightly depressing to say the least.

When looking at the big picture however, you may have noticed that there are numerous properties on the market that are already priced well below value and previously sold prices. Some are still asking slightly more than what they are worth in today's market and it's unbelievable BUT there are a few that are still way over (by 15% or more) what they would reasonably sell for in today's market.

An experienced full time agent can help you assess your current situation to help you obtain the greatest amount of money for your current home AND, help you acquire a home for a great value.

Here is an example: I just had the honor of working with a client that bought a home in the Royal Oak area 3 1/2 years ago for $232,000. They put 20% down and mortgaged $186,000. They were shocked when reviewing recent comps that showed a value of approx. $185,000 to $195,000. The way they were looking at it, they felt that their down payment was lost. So they made the painful decision to stay put. Luckily (I was referred to them while they were still willing to look at what I had to offer them.) Upon closer look at their situation, we worked through the following scenario. (If they had decided to rent the same home to live in for the past 3 years, rent would have run them $1,350 a month or $48,600 for 3 years of housing.) *And while their home had already been for sale for 5+ months with another agent. I was able to help obtain a buyer in less than 2 months for $194,500. (Please note that this is $11,100) more than if they would have rented for the past 3 years which I believe was a huge win for the seller as so many homes by that point have developed the stigmata of being a problem property. So they were still ahead of the game and were able to use the tax benefits by owning a home for the past three years to their advantage.

They have just purchased a home in Troy that sold 4 years ago for $415,000. While the home was in foreclosure and needed some work, the "as-is" appraisal came in at $348,000 and we were able to acquire it for them for just $260,000 which was a $88,000 to $145,000 swing in their favor. So even if we looked at the conservative side and calculated the $88,000 below value, they still had an almost $53,000 swing in their equity position.

They now own a home that is almost 3 times the size. Long story short... I have been thanked nearly 37 times in the last 60 days for not letting them make a decision to stay put without all the facts. In addition, I have had three referrals already from these grateful clients who have now become friends.

The moral of the story... Looking at the market from only one perspective may hurt you. The big picture is what you need to consider.

A well experienced Realtor can be a major asset to you. Don't select your agent based upon what they charge. Select your agent based upon the value and RESULTS that they bring to the table.

There are many agents that compete based upon the commission that they charge. (I say that this is because they probably don't have anything else to compete on such as experience or even a true marketing plan to get your home sold.) Simply sticking a sign in a sellers front yard today doesn't do the trick.

They key to a successful sale must take into consideration the current neighborhood absorption rate.

In a sellers market, absorption rate may have played a factor into a sale but not as much. What is an absorption rate you ask? Well, it's a tool that your real estate agent SHOULD take into consideration when pricing your home but many do not!

If you were in need of getting your home sold in less than 6 months, it may be less than a 50-50%. With current market conditions telling us that the average time to get a home sold in the Metro-Detroit area is about 7 months, there is more to pricing a home than simply pulling sales that took place in a neighborhood recently. You must consider the fact that on average many neighborhoods have seen a decline anywhere from 1-3% PER MONTH. So pricing your home is especially important. Taking into consideration the neighborhood absorption rate is key. What this means is that if you currently had 12 properties in a neighborhood that were activily for sale and there have only been 6 sales take place over the past 6 months then what you would do is take the 6 sales and divide it into the 12 that are available to get a 12 month supply of homes. If you had 6 sales over the past six months with only 2 homes that were currently available, you would end up with a 2 month supply of homes and could therefore be more agressive in your asking price.

Once you have taken into consideration, the neighborhood absorption rate you can better assess your chances of actually selling and where your pricing needs to be. Another very important step to take is to actually run each of the available homes for sale and find their TRUE, UNAJUSTED HISTORY. (Some homes are marketed by one agent, then taken off the market and re-listed with another agent.) This tends to throw off the true marketing time. By looking at the entire marketing time, you will also prepare yourself with all the available facts. Lastly, in a declining market like what we face locally in Metro-Detroit, you only need to look at the number of available properties in a neighborhood. Base 90% of your pricing strategy on actual sale OR you will find yourself chasing the market and constantly having to adjust your price. This strategy will only hurt you and you will end up having to accept an offer for even less than if you had just priced it aggressivily in the first place.

Of course none of the above will make any difference whatsoever if you list your home with just any agent. Consider interviewing several agents. NEVER hire an agent based upon a fee that they charge. Rather, sellers should focus on the value that an agent brings to the table which includes actual market knowledge, and sales as well as a unique marketing plan that gives you (the seller) a total marketing plan which will give your home worldwide exposure and increase the demand.

PRICE TO SELL NOW OR HOLD ON FOR THE RIDE!
It still amazes me that even after all the doom and gloom in the last few years that the majority of sellers that contact me and want to sell are still using an old and outdated strategy of pricing their properties to negotiate rather than pricing them ahead of the downward curve and price them to sell! Statistics show that property values in the Metro-Detroit area are declining 1-2% per month. Once a seller has interviewed several agents and selected the agent they fell is best suited for them (generally basing their opinion on LIKE, TRUST, CARE, COMPETENCE & WORTH) they should spend a great deal of time studying the market facts. All the servicing and marketing in the world cannot cure an over priced listing.

I recently had a call from a seller just furious about the fact that his home sale recently fell through. He began blaming his agent and appraisers and (basically everyone in the transaction.) Upon discussing the situation further, I determined that his agent DID review with him the facts (as they were 6 months ago) in the marketplace. I determined that while they were high in price 6 months ago they made only one slight price adjustment to their asking price and that was 4 months ago. When I pointed out the fact that out local studies were showing that our area was declining roughly 1-2% per month, he quickly stated that if he had seen this information at the time of listing, he would have gladly participated in a game plan regarding the pricing on his home to stay in tune with the market. *I want to point out two things here. First, while it is impressive that he says he was willing to listen to market statistics that were never presented to him, their was still one important piece of information that I had to point out to him and that was in order to sell a property in today's market, "You MUST Price your property AHEAD of the market in order to achieve the greatest return." In other words in a declining market most people that need to sell would rather loose just 3 dollars as opposed to loosing 5 or 6! You see, he was understanding the fact that you MUST use hard market statistics to make educated decisions, he was still wanting to price his property WITH the market as opposed to pricing it ahead of the market. While it could be an up hill battle to find a buyer that will pay more in today's market for your property than what it is worth, it is entirely possible. Finding this buyer could still end you with a tremendous amount of wasted time when the appraisal comes back short. In his case the appraisal came in approx 10% short. Using the simple math that I laid out already, if he and his agent had priced the home just 2% a month less at the beginning, they would be at what the market was saying the home was worth and not short. *In addition, homes begin to develop the stigma of a problem property after a certain amount of time spent on the market. Remember that the entire marketing process and then the processing time of the sale could take as many as six to eight months at which time you will only find that values have fallen further than the value the market was telling you like yours were selling for.

The many foreclosures that you have seen enter the market have affected values, yes. Be advised that we are still not even half way through the storm however. In my best but most humble opinon, I see a minimum of 2-3 years left of the market that we are in before it even begins to get better. You see in Michigan, homeowners have a six month redemption period (even after they have been foreclosed on which is normally 120 days after missing their first payment) in order to "redeem their home." So, long story short... What I am trying to communicate here is that IF you have decided to sell your home either NOW or at any time within the next three years... Pricing your home above fair market value and leaving room to negotiate is OUT! (Pricing your home higher than the fair market value in order to come down in your price and make the buyer feel that he/she got a deal.) Price your home ahead of the curve. Price your home to SELL. I am not saying that you must price your home to give it away. Pricing your home just 2-4% BELOW what the current market is bringing *Coupled with a marketing plan that is interactive and gives your property 24 hour exposure, interest will begin to be sparked. It is ONLY Then when there is interest that is sparked that your advocate can go to work for you and defend your equity (or what little is left.) Pricing your home by using market facts and ahead of the downward slide will give you and your agent the best possibilities to choose from. You may still (even in this market) be able to stimulate multiple offers. (I've delivered these to my clients even in this market and we were ended up over our asking price quite a few times latley too! It takes an agent with Zest to be able to create this however.

Not all agents are created equal! Not even close, so select your agent wisely. The little amount of equity that you have left in your home can be freed ONLY if you make educated decisions in your home sale.

For those that are upside down in their homes, there are answers for you out there as well. The most common is something called a "Short-Sale." Not every agent knows how to work them. List your home with an agent "Certified" in handling Short-Sales. http://www.carlogobba.com/

10 REASONS TO AVOID FORECLOSURE

#1 You may be responsible for any defaults after foreclosure. The difference between what you owed plus costs and what the bank was able to sell your home for could result in never ending collections for an indeterminate period of time. A Short Sale gives you the opportunity to negotiate with the bank to forgive the debt.

#2 While it may not seem like it now, there will come a time where your current financial troubles will pass. You will feel much better knowing that you did everything possible to avoid the feeling of hopelessness and devastating financial consequence a foreclosure can bring. There is a light on the other side of the tunnel. Reclaim your life.

#3 Foreclosures can haunt you forever. If asked you will have to disclose that you have had a foreclosure on future mortgage applications and job applications from this day forward.

#4 A foreclosure is the most difficult credit item to repair.

#5 Security clearances and government positions including but not limited to the military and law enforcement can be jeopardized by a foreclosure.

#6 It is hard to determine how much a foreclosure will lower your credit score versus a short sale; however they are shown differently on your report. A foreclosure will show as a "foreclosure". A short sale may be shown in a variety of ways such as "discharged", "settled for less than owed", or "pre-foreclosure in redemption".

#7 A foreclosure will remain on public records for an indefinite amount of time.

#8 The time frame needed to qualify for the purchase of another home on a short sale is normally 2 years. The time frame for a foreclosure is 3-4 years.

#9 Many banks are accepting Short Sales. By hiring the right Realtor you can possibly avoid foreclosure at no cost to you, with the bank paying all commission and closing costs.

#10 Avoiding foreclosure may be as easy as calling our Short Sale Team of Consultants for an analysis and possible solutions.

COMMONLY ASKED QUESTIONS:

How can I avoid foreclosure?
Your bank may be willing to work out an alternative to foreclosure that may help you save your home or at least prevent a foreclosure.

Repayment Plan - Your bank may give you a fixed amount of time to repay the amount you are behind, plus late fees, by adding a portion to your regular monthly payment. This is a good option if you only missed a few payments.
Loan Modification - Your bank may agree to reduce your interest rate, extend the term of the loan, reduce the balance or add missed payments to the loan balance.

Forbearance - Your bank may agree to suspend your payments for a period of time. At the end of this time, you will resume your regular monthly payments, and you may be required to either make one lump sum payment or additional partial payments. This may be a good option if you have a temporary reduction in income.

Deed in Lieu of Foreclosure - You voluntarily transfer title to the bank. You must negotiate with the bank to cancel your debt. You may have to pay taxes on the debt forgiven.

Selling your Home - Selling may provide funds needed to pay the mortgage debt in full. If the value of your home is less than what you owe, your bank may agree to allow a Short Sale.

What is a Short Sale?
A Short Sale is an arrangement with the bank where they allow the homeowner to sell the property for less than the amount owed on the current mortgage.

Can I still use the Short Sale option if I have more than one
mortgage?
Yes the Short Sale option is still available. It is a more complicated process - however it can be done.

Will I owe any money?
In most cases the only cost to you is $350.00 for the preliminary title search & specialized processing of the paperwork. Unless you agree in writing to pay a portion of the unpaid debt back to the bank, the Short Sale includes all costs. The bank's approval of a Short Sale normally includes closing costs, commission, outstanding liens on the property and the balance remaining used as a short payoff of your mortgage.

Why would a bank agree to a Short Sale?
If a property is taken back in a foreclosure, the banks know they can only sell the property for market value. Yet, they have incurred attorney fees, court costs, holding time & maintenance. If they are able to sell on a Short Sale they avoid these additional costs and still can get market value for the home.

How do I know if I qualify for a Short Sale?
Your Short Sale Consultant will help you to determine this. Of course, the final decision is up to the bank; however the basic criteria include three things.
Financial Hardship - A short definition of financial hardship is a material change in between the day the mortgage was signed and today that has affected your ability to pay. This must be a verifiable issue that has caused you to miss payments or have financial difficulties. This could include mortgage payment adjustment, job loss, reduction in earnings, too much debt, or business failure.

Monthly Shortfall - The bank wants to see that the homeowner cannot afford to pay their mortgage. They will look to see what your monthly shortfall or shortage is when you subtract all your monthly debts from your monthly income. If you do not have a monthly shortfall now but will have one soon due to a payment increase or pending layoff, etc, the banks will still consider this as long as it can be verified.
Insolvency - This does not mean you have to be completely broke. The bank will want to see that you owe more than you have in cash and that over time you will not be able to pay their obligation.

What must I do to request a Short Sale?
You must gather your financial information and fill out our Short Sale Package. With this information we can determine if you are a candidate for a Short Sale. Your bank will make the final approval; however our experience with Short Sales has given us a solid knowledge of what is required. Your Short Sale Consultant will place your home on the market at a price that is attractive to a buyer and generate activity. They will advise you on the best possible value. Traditionally the listing price should be lower than its competition and only slightly higher than the sales price of the most recent, lowest sold comparable property.

Will I receive any funds from the closing of my home?
There will be no surplus funds available to pay you. The amount of the mortgage on a Short Sale is higher than the price it sold for. The bank will have a loss for the unpaid amount of your mortgage plus closing costs.

Are there any tax ramifications?
A bill was passed to help homeowners in distress. This is called the Mortgage Forgiveness Debt Relief Act of 2007. Prior to its passage, a homeowner would be responsible to pay income tax on any amount of the mortgage loan that was not fully paid. So if you owed $200,000 and only $150,000 was applied to the loan, you would pay income tax on the $50,000 that was left unpaid. With this Act you would NOT have to pay income tax on the unpaid debt as long as certain conditions are met. This is an area that you should consult with your accountant. You can also review the Act on the IRS website (www.irs.gov/individuals). Once on that homepage, scroll down and click on link "Mortgage workouts, now tax free for many homeowners, claim relief on newly revised IRS form". Next scroll down to "Frequently asked questions on the Mortgage Forgiveness Debt Relief Act." We can provide you with the basic criteria from the Act for qualification. That criteria includes:

· Applies to debt forgiven in calendar years 2007 through 2012.

· Must be your principle residence.

· Debt forgiven must have been to buy, build or improve your principle residence.

· Debt that was used for above could have been refinanced and still qualify.

· Up to 2 million dollars for a married couple can be forgiven.

THERE IS HOPE! IF YOU OR SOMEONE THAT YOU KNOW IS IN THIS SITUATION, WHERE THEY CANNOT PAY THEIR MORTGAGE PAYMENT, NEED TO SELL THEIR HOME AND FEEL THAT THE BALANCE DUE ON THEIR MORTGAGE PLUS FEES ASSOCIATED WITH SELLING THEIR HOME WOULD BE MORE THAN WHAT THEY OWE THEIR LENDER, PLEASE DON'T LET THE HOME BE LOST TO FORECLOSURE! WE HAVE BEEN ABLE TO HELP MANY FAMILIES MOVE ON WITH THEIR LIVES. DON'T WAIT, TIME IS OF THE ESSENCE. ASK ABOUT MY SHORT-SALE SOLUTIONS PROGRAM TODAY.

Once you have decided to put your home up for sale you may begin to look at it differently. At least, you should. The best way is to look at it through the eyes of a prospective buyer.

I have invested in and offer a special video that not only helps you visualize your home and prepare it successfully for showings. The video, "Dress Your Home For Success" is available free of charge (on loan from me to prospective sellers.)

There are six key steps to giving your home a winning look! 1.) KEEP IT UNCLUTTERED: It will look neater and larger. You want to convey a more spacious feeling. 2.) KEEP IT CLEAN: This creates an impression that you have given your home loving care. Fresh Paint and a good clean scrubbing give surfaces a good fresh look. 3.) KEEP IT REPAIRED: Fix it BEFORE a buyer inquires about it. The need for repairs could break a sale. 4.) KEEP IT NEUTRAL: Get rid of distracting colors and personal accessories. Neutral colors and simple decor help buyers to visualize themselves and their own belongings in the home. 5.) KEEP IT DYNAMIC: Make your home memorable! From Fresh flowers to fresh clean smells, your home should be inviting. 6.) SHOWTIME: Make a final check of every room. Put away and toys, clothes, food, or other left out items.

THE SMALL DETAILS: With the key steps in mind, take an inventory of your home beginning with teh outside. Trim, Weed and neaten up the garden. Clean up pet areas. Resod or reseed. Repair screens, windows and doors. Add fresh bark under shrubs. Add potted or hanging flowers to decks and porches.

IN THE KITCHEN: Clear away extra small appliances, Remove stains from sinks, Straighten memo areas and papers. Clean and deodorize vent or exhaust hood.

IN THE BATHROOM: Clean counters of extra toiletries. Store them out of sight. Remove stains or mold from tub, sink and shower. Patch, caulk and grout as needed. Put out attractive "For show only" towels.

IN THE LIVING AND FAMILY ROOMS: Rearrange furniture for openness. Remove any extra pieces and store. Spot clean carpets or rugs. Have neutral paint or wall paper. Use flowers or potpourri. Open the shades to let in light.

IN THE BEDROOMS: Straighten up closets, box and store extras clothing and or shoes. Arrange toys to look appealing. Add curtains or valances to rooms without them. Remove attention getting posters.

IN THE BASEMENT OR GARAGE: Thoroughly clean and deodorize areas where pets sleep or spend time. Straighten tools, shop and laundry. Sweep floors and clean up grease spots.