Todd & Lisa Sheppard
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Lisa
Sheppard
Mobile:
707-483-9990
Email:
Lisa@TEAMSHEP.com
BRE # 01154225
Todd
Sheppard

Mobile:
707-235-6870
Email:
Todd@TEAMSHEP.com
BRE # 01314350

Archive for August 2011

Short Sales: A Dignified Solution for Many Families

August 31st, 2011   by lisasheppard

I am truly excited that the banks are beginning to see that a short sale in many cases is a good alternative to foreclosing on a property. It makes  more sense to sell the property at a higher price. At the same time, the banks are creating less vacant REOs (foreclosures owned by banks) which have blighted neighborhoods and negatively impacted   surrounding house values for the last several years  It is also satisfying that so many of my fellow real estate professionals are taking the time to get properly trained to facilitate these transactions to a successful closing. It is a good revenue stream for some agents at a time that has proven to be very difficult for many industry professionals to make ends meet.However, today I don™t want to speak to the financial aspects of the surge in short sales. Instead, I want to address the impact it has on the families living in these homes. They have found themselves in over their heads. In many cases, they can™t afford the mortgage and are trapped “ unable to sell because the mortgage exceeds the home™s value. They may believe that they are left with only one alternative “ allow the home to proceed to foreclosure.Let™s realize the consequences of this decision for the family. The day will come  that someone in an official capacity knocks on the door and notifies the family it is being evicted immediately. No matter how well they have prepared, at that moment, spouses look to each other in embarrassment. There is a big difference between imagining how this moment might feel and actually experiencing it.  And, in so many cases, there are children involved. The official stands there as a mother or father gets on a knee and explains to their son or daughter that they must go pack up some of their toys and belongings in a hurry because the family must leave “ now!The short sale process avoids these situations. The family plans around  a set  closing date. The children are made aware of the move months in advance and the parents have time to lessen the pain of that move.  Short sales make good financial sense for all involved.  They also allow families to exit an extremely difficult situation “ WITH DIGNITY.

Short Sales: Has Their Time Finally Arrived?

August 29th, 2011   by lisasheppard

Last week, RealtyTrac released its Q2 2011 U.S. Foreclosure Sales Report. The report confirmed what we are hearing in the marketplace “ banks are beginning to look more favorably on short sales as option to foreclosure.The report dissected the sales of distressed properties in the second quarter of 2011. Here are several of their findings: § Sales of homes that were in some stage of foreclosure or bank owned accounted for 31 percent of all U.S. residential sales in the second quarter of 2011, down from nearly 36 percent of all sales in the first quarter. § A total of 102,407 pre-foreclosure homes (short sales) sold in the second quarter, an increase of 19 percent from the previous quarter. § A total of 162,680 REO homes (foreclosures) sold in the second quarter, virtually unchanged from the first quarter. § Short sales on average sold for a discount of 21 percent below the average sales price of non-foreclosure homes. § REOs on average sold at a discount of nearly 40 percent below the average sales price of non-foreclosure homes.This could be a great sign that banks are finally realizing the advantages of short sales over foreclosures.Bloomberg.com quoted Rick Sharga, senior vice president of RealtyTrac, in an article covering the report:œThis is a glimmer of hope that lenders are getting more realistic. It™s a win for borrowers who avoid foreclosure, buyers who get a house in better condition and banks that lose less money, which is also a win for taxpayers.

Bottom Line

Banks are beginning to do more short sales. It is time for everyone involved to help in this endeavor. Tomorrow, we will have a short sale expert, Christopher Reale, blog on gaining the right mindset to do just that.

Discounted Competition Is About to Enter the Market

August 26th, 2011   by lisasheppard

Discounted Competition Is About to Enter the Market

August 26th, 2011   by lisasheppard

Homeownership: Why Wait?

August 19th, 2011   by lisasheppard

For the More Affluent Home Seller

August 18th, 2011   by lisasheppard

Estate Planning is a boring topic.  However, there are few issues more misunderstood that have such tremendous impact on families and the legacy  they leave behind. Many people don™t  realize that when adding  a home to their assets,  being a œpaper millionaire isn™t as farfetched as it  seems when living paycheck-to-paycheck.The federal estate tax exemption has been extended for  two years (2011 & 2012). The extension also increased the amount to $5 million ($10 million for couples) and the tax rate has been lowered to 35%. This means that you can leave $5 million to your heirs free of federal estate tax and that most married couples can leave up to $10 million free of federal estate tax.For gift tax, the new law changed from the $1 million Lifetime Gift Tax Exclusion in 2010 to a $5 million Unified Gift Tax Credit. The new law creates an important planning opportunity. This means, as of 2011, individuals will be able to make gifts of $5 million ($10 million for a married couple).The value of your estate includes all of your assets (ex: cash, investments, your personal residence, other real estate, etc.) generally determined at the fair market value on the date of death. Since the law may revert back to $1 million, serious tax planning is necessary if your assets exceed the $1 million.As stated earlier, the provisions are temporary. They are assured for this year and next. If the law is not extended or amended, it will sunset and the Federal estate tax exemption will revert back to $1 million with a maximum tax rate of 55%!It is important that you consult an accountant and/or a financial planner to make sure you are minimizing Uncle Sam™s bite from your estate, so that you leave the maximum number of dollars to your loved ones. If you need a referral to a solid advisor, reach out to your loan officer¦they should have one on their team.

The Economy: Why All the Panic?

August 17th, 2011   by lisasheppard

For the last couple of weeks, all we have heard is how bad the current economic situation is. The markets are going to crash and interest rates are going to skyrocket. Panic has definitely engulfed the entire country.Consumer confidence, as measured by the University of Michigan™s Consumer Sentiment Survey, has fallen to a number not seen in thirty years. This panic has actually had a negative impact on  the economy.It was said best by Mark Zandi, chief economist at Moody™s Economy:œConfidence normally reflects economic conditions; it doesn™t shape them¦ Yet at times, particularly during economic turning points, cause and effect can shift. Sentiment can be so harmed that businesses, consumers and investors freeze up, turning a gloomy outlook into a self-fulfilling prophecy. This is one of those times

What does the  data actually show?

We decided to look at certain economic indicators and compare them to the numbers from a year ago. Here is what we found:We are not making the argument that the current numbers are worth celebrating. We are only suggesting that the sky is not falling.

Bottom Line

Conditions aren™t as dire as some are professing. Make good sound financial decisions based on your own economic conditions. There is no need to panic.

Homeownership:Still the American Dream

August 16th, 2011   by lisasheppard

Yesterday, Fannie Mae released their National Housing Survey for the second quarter of 2011. They survey the American public on a multitude of questions concerning today™s housing market. Each quarter, we like to pull out some of the findings we deem most interesting. Here they are for the most recent report:

Most  Important Reasons to Buy a Home

When we talk about homeownership today, it seems that the financial aspects always jump to the front of the discussion. However, the study shows that the four major reasons a person buys a home have nothing to do with money. The top four reasons, in order, are: § It means having a good place to raise children and provide them with a good education § You have a physical structure where you and your family feel safe § It allows you to have more space for your family § It gives you control of what you do with your living space (renovations and updates)

The Home as an Investment

Though most people purchase a home for non-financial reasons, everyone realizes there is a money component to homeownership. Here is what they said on this issue: § 65% of the general population (and 67% of homeowners) believe that homeownership is a ˜safe™ investment. § 56% believe that homeownership has more potential as an investment than any other traditional asset class. § 69% think that now is a good time to buy a home (this number has increased in each of the last two quarters)

Rent vs. Buy

We are always interested in the difference people see in renting vs. owning. § 63% of renters have aspirations to someday own their own home § 72% of renters think that owning is superior to renting § 95% of homeowners see homeownership as a positive experience (4% see it as a negative experience) while 82% of renters see renting as a positive experience (17% see it as a negative experience) § 96% of homeowners live in a single family residence while 46% of renters live in a multi-unit building

Bottom Line  

Even in difficult times, Americans still realize the value of homeownership.

Things to Consider Before Renting a Home You Can’t Sell?

August 15th, 2011   by lisasheppard

In this difficult housing market, more and more homeowners are considering renting their house instead of adjusting the price. We strongly believe that residential real estate is a great investment and therefore can understand this thinking. However, if you have no desire to actually become an educated investor in this sector, you may be headed for more trouble than you were looking for.Before renting your home, you should take the following steps to make sure this is the right course of action for you and your family.

Set a consultation appointment with an eviction attorney

People rent out their homes assuming that every tenant will pay the rent every month. We must realize, because of the current economy, there are millions of people not paying their mortgage. There is a chance you may rent to someone who at some point can™t (or simply won™t) pay you the rent. Understand what the legal challenges of eviction could potentially be before deciding to rent your home

Interview property managers

If you are not a full-time investor, hire a professional to handle the property. You need someone to find a qualified tenant, collect the rent and manage the problems. You don™t want to have to make collection calls. What would you say if a tenant told you that they had enough money to either buy food for their children or pay you your rent but not both? You need a person experienced with these situations to help.You also don™t want to receive calls at all hours of the day and night regarding maintenance issues or challenges a neighbor may be creating for your tenant.

Create an honest budget

Sure, you will receive revenue in the form of rent. However, don™t forget you will also have expenses. Some of the expenses you should consider: § Mortgage Payment (unless there is no mortgage on the home you will rent out) § Property Taxes § Maintenance Expenses such as repairing or replacing: roof, heating/air conditioning unit, appliances, etc. § Insurance “ Check with your insurance company who may suggest or demand that you increase your liability coverage.

Bottom Line

Again, renting out residential real estate historically is a great investment. However, it is not without its challenges. Make sure you have decided that you want to rent the house because you want to be an investor, not because it looks like an easier way out than selling the house.

House Prices: Explaining the Recent Uptick

August 10th, 2011   by lisasheppard

Several pricing indices have reported that, on a month-over-month basis, home values have ticked up slightly over the last quarter. This has caused some to call the bottom to the housing market “ at least from a price standpoint. We must realize that prices are determined by supply and demand.Demand has indeed shown improvement in many parts of the country. However, the supply side of the formula is being impacted by legal issues. The number of foreclosures coming to market has been slowed dramatically by the courts as the banks still struggle with improperly filed paperwork. This inventory will eventually find its way to the market and again put downward pressure on values.Here is a chart showing the challenge:    

Bottom Line

If you are selling, there currently is a window of opportunity to get your best price before the distressed properties are released.