There is no bigger news item right now than the economy.  With the upcoming election, voters are fixated on stories about the economy.  Many are hoping to hear good news about unemployment or, if they are a homeowner, news about increasing home values.  Three stories from the Wall Street Journal and Orange County Register will give us an idea of what we can reasonably expect in the coming months and years.

According to the Orange County Register, mortgage rates have nearly matched the lowest rates on record.  From the blog Mortgage Insider, "Thirty-year fixed-rate mortgage[s are at] 4.32% with 0.8 of a point paid up front. That ties the record low set just four weeks ago."  The reason that rates are so low is that consumer confidence in the economy is very low.  This is causing potential buyers to sit on whatever cash reserves they've built up - cash reserves that would otherwise be put into a down payment on a home.  Banks are trying to entice buyers with low rates.

In addition to low mortgage rates, buyers are also looking at a housing market caulk full of distressed homes.  According to Marilyn Kaulfus, "Homes in various stages of foreclosure — including pre-foreclosures and bank-owned properties — accounted for 43% of all home sales in California in the 2nd quarter, an analysis by RealtyTrac shows."  Many of these homes sold at a greatly discounted price compared to their standard sale counterparts.  For example, "California bank-owned homes sold for an average reduction of 46% compared to non-foreclosure sales."

The moral of the story: if you're a buyer, it is now a great time to purchase a home.

If you're a homeowner, there is good news as well.  Nathan Becker at the Wall Street Journal is reporting that, "Fannie Mae said serious delinquencies on single-family mortgages slid in July from June, the fifth-straight month of declines, further signaling that home-loan problems were on the downswing."  Becker's report indicates that the storm is far from over, but the worst of it has likely passed.  Though distressed homes will be on the market for quite some time, the market won't continue to sink lower as a result of an ever increasing amount of distressed properties being put up for sale.  It is not unreasonable to hope to see a slow rise in home prices in the coming year or two.  In fact, some homeowners have already seen as much as a 1/7th return in equity from the equity they lost prior to the housing market meltdown.

For some homeowners, this slow turnaround is too little too late.  If you're a homeowner underwater on your mortgage, it may be time to consider a short sale.

Short sales provide homeowners with an opportunity to sell their house and possibly have their mortgage debt forgiven. Short sales typically sell for less than standard, equity sales. This is not a problem for the seller if theirshort sale negotiator is able to reach an agreement with the bank whereby the bank forgives the homeowner's mortgage debt in exchange for the sum received from the "short sale" of the home. As a result, short sales are a good idea for sellers and a bargain for most buyers! This is likely the reason that distressed properties are outselling standard sales.

If you think a short sale might be right for you, here's what you need to do to get started:

First, find a reputable real estate agent with a track record of success in short sales. Short sales are not the same as standard (equity) sales and they require a knowledgeable person to see them through to the end. Don't rely on tag lines like "short sale expert." Paper certificates from a brief seminar aren't good enough. Ask to see proven results.

Second, make sure you have an attorney reviewing the terms of the sale. A good short sale attorney may be able to eliminate "recourse" language from the sale thereby stopping banks from trying to collect on your mortgage debt in the future.

Third, don't hide anything about the home. When you find an agent, tell them the full story so that nothing surprises either the agent or the bank. When negotiating a short sale, surprises put the success of the sale at risk.

Finally, be ready to wait. Unlike standard sales, short sales require negotiation and negotiations take time.

We recommend you work with Fitzpatrick and Prince Real Estate and Rasmussen Law Firm. They have a proven record of success having closed 95% of their short sales. Nationally, the average short sale closure rate is only 20%. Additionally, these companies have worked together on a number of short sales, they understand how the other operates, and can move quickly, together, to negotiate with the banks to close your short sale. Start the conversation today with Mark, Whitney, or Blake at Fitzpatrick and Prince Real Estate.

Give them a call at: 800.880.9962.