November Newsletter

I am finally writing the most overdue blog post EVER, the long winded answer to the question I probably get asked most often: What is a short sale?  Quite simply, a short sale is when the owner of a property owes more than the house is worth and they ask the bank to accept an offer less than this amount in lieu of going to foreclosure.  For example, a seller has a houses listed for $100,000 and they owe $125,000 on the mortgage.  They receive an offer from a prospective buyer for $90,000 and ask the bank to take a loss of $35,000 instead of taking the home to foreclosure, re-listing it, and selling it themselves.  Sometimes it works and sometimes it does not.  

Now, the gory details.  If you are the buyer or potential buyer of a short sale you MUST know what you are getting into or you are setting yourself up for a very frustrating experience.  I usually tell people, depending on any number of variables it can take anywhere from 2 – 10 months to close on a short sale from the time you make your original offer.  Why so long and why such a huge difference?  Every deal, bank, and asset manager is annoyingly unique and each has their own idiosyncrasies that can greatly affect the amount of time it takes to close a deal.  Here are just a few variables that can affect the time frame of the short sale:

-    Is there one mortgage or are there two?
-    If two, are they with the same bank?
-    Is there a PMI company involved?
-    Is this a FHA loan or conventional loan?
-    Are you the first offer to be submitted?
-    Do you have a negotiator?
-    Who is the bank?
-    Is the listing agent experienced with short sales?
-    Is the asset manager in a bad mood?

The list goes on and on and on.   As you see, the amount of variables that affect the short sale process are mind boggling.  One of the most frustrating parts of dealing with the short sale is the absolute uncertainty and lack of answers.  Once you submit your offer, it could take weeks or even months for the bank to respond to you.  All the while you have no idea what is happening or even if they will consider your offer.   Assuming you get through this process and agree upon a price, the next process of getting from contract to the closing table can be and usually is excruciatingly s-l-o-w with little or no updates along the way.  Eventually you can close on the short sale, but you must know what you are getting yourself into and be very flexible with your timeline in order to make a short sale purchase a success.  

The importance of having an agent on your side that has experience with and understands how to best navigate through this sea of red tape cannot be underestimated.  We at Red Door, unfortunately:), work with tons of buyers and sellers in short sale situations and can help you through the process.   Contact us at 317-733-3667 or submit or contact form to discuss short sales in Indianapolis further.  

Tuesday’s election outcome will almost certainly have an impact on the real estate industry and the issues that most seriously affect it. Here are two of the initial results.

Ten of the 12 state attorneys general on the executive committee heading the foreclosure probe lost their re-election bids and won’t be returning to office. Ohio’s Richard Cordray, one of the most outspoken AGs, says the change of watch won’t matter very much.

“The issue is still there. The elections don’t change that. It’s going to need to be addressed, from the industry’s standpoint,” he said. “The 50-state investigation will continue to go forward.”

Also, in Florida, voters rejected a proposal to change the state’s constitution to allow voters to decide changes to local master plans. The proposal was rejected by two-thirds of voters.

Source: The Wall Street Journal, Robbie Whelan (11/03/2010)

Most school referenda in several Indiana communities were soundly defeated in Tuesday's election. However, two Hamilton County referendums passed.

The anti-tax "small government" message that ushered in Republican victories all over the country was also reflected in the results to fund struggling school systems. The referenda sought tax increases to pay for repairs or improvements.

School systems like Zionsville have seen huge budget cuts over the past several years. In the last two years, school administrators there say local and state funding has been cut nearly $6 million. They expect even more severe budget cuts next year totaling another $5.6 million. The referendum was a way of making up the shortfall.
Westfield-Washington and Hamilton Southeastern in Hamilton County passed, as did Lebanon and Brown County's school referenda.

All others failed to pass, including Zionsville, Southern Hancock County, Mt. Vernon Schools, Center Grove Schools, Anderson, Elwood, Randolph Central and Northwestern Schools.

Late Tuesday, the Herald-Times in Bloomington reported the Monroe County school referendum passed by a 61-39 percent margin.

The public is invited to a meeting Oct. 21 to discuss the future of IndyGo’s north-suburban commuter routes, which are in danger of being discontinued.

The meeting is at the Fishers train station, 11601 Municipal Drive, at 7 p.m.

The luxury coach routes from downtown to Fishers and Carmel were launched three years ago and have been popular among suburban commuters. There were more than 81,000 passenger trips on the Fishers route and 54,000 on the Carmel route last year.

But the heavily subsidized service at year-end will have expended its biggest source of funding, a federal Congestion Mitigation and Air Quality grant. Although Fishers and Carmel were to pick up the other 20 percent, fairbox revenue has been strong enough to avoid local government match.

The Central Indiana Regional Transportation Authority has been looking for money to replace the expiring federal grant but so far, at least, hasn’t the cash.

Carmel has been on a tear this year posting double digit gains in number of homes sold and average selling price. While the tax credit expiring has had an effect on the market, we still saw a 15% increase in the average sales price for July. The number of units was expectedly down by 16% this month over the same time last year but YTD we are still up 19% over last year’s numbers.

A little more detail about the Carmel real estate market for July:

And a nice graph showing the YTD 2009 vs. 2010 average selling price:

 

Considering all factors at play in this market, Carmel is doing extraordinarily well. A 16% decrease in the number of homes sold is really nothing to be concerned about in light of the tax credit this year. It remains to be seen what will happen, but Carmel is poised to have a dramatically better year in 2010 than in 2009.

If you are wondering about Carmel foreclosures or Carmel short sales, they represented 10% of the sold homes in July and account for 8% of the sales YTD.

Feel free to call me or email anytime with any questions about the Carmel real estate market or anything related to real estate.  I stay on top of these numbers to better serve my clients.