Now we’re getting somewhere…

Almost five months after our patient buyers wrote an offer to the seller of an IOP beach home, the banks have finally signed off on a short sale, insurance has been secured, a new mortgage has been approved and we have a closing date set.

Later this month, a buyer will be getting a fantastic, out of season deal, a seller will be rid of a payment he can’t afford, and life will finally move on!  Everybody wins.

This has been an interesting road to travel.  Everyone made concessions including myself and the list agent.  There were two banks involved in the decision making process because the seller had a first and second mortgage.  The primary mortgage holder approved it quickly and easily but the second bank was a stickler.

This is often the case though.

In a situation where a house is selling for less then what’s owed to the bank, the primary mortgage holder is in a much better position then the second mortgage holder.  It’s up to the primary bank to offer the secondary bank some money.  The other option is to foreclose on the house and send it to auction.  In that situation, the primary bank gets ALL of the auction money until their full loan amount is paid back.  Oftentimes, this scenario leads to the second bank getting $0.

You’d think this would lead to second mortgage banks just accepting whatever offer they might get, right?  Me too but apparently that’s not the case…  Many second mortgage banks will try to call a bluff.  They are going to take a bath one way or another.  If it goes to auction, they’ll probably get nothing.  If it sells in a short sale, they’ll get very little.  So they will often play extreme hardball to get as much money out of the seller as possible.  Sometimes this works.  Sometimes it doesn’t and the house goes to auction.  They must be doing better in the long run by trying to call bluffs..

In the end, we reached a settlement price thanks to a great short sale negotiator, negotiating on the sellers behalf with the banks.

And after Xmas, we’ll meet at a closing table in Mount Pleasant and a new chapters will begin.

Has it been worth it?

Absolutely.

The sellers of this home were very much upside down in a big mortgage on a house whose value has taken a hit in the last year and a half.  They are now out of that and in two years or so, this will be off their credit.

The buyers enter the market by investing in a home that rents extremely well for a cost that would’ve been laughable last year.  Buy low, sell high right?  Well they are doing step one.

Will a short sale work every time?  Definitely not.  But if a seller is truly in a tight spot and foreclosure is a real risk, the banks might go for a solid offer..

Might as well give it a try.

The key is having the right real estate agents involved.  This could easily have been a huge waste of time if we didn’t push the right buttons at the right times.  Feel free to drop me a line anytime if you have questions about short sales.

seth@simplistate.com

You may have heard that the Charleston Trident Association of Realtors was opposing the Charleston Green Plan.

When I read that our local real estate governing body was opposing parts of the plan to make Charleston a greener and more sustainable place to live and work, I was instantly outraged.

My initial thought was to immediately withdraw my membership.  After all, how could I associate myself with an organization that opposed what we as a company strongly stand for?

Coincidentally, I recently got a notice that it was time again to pay membership dues.  Perfect timing…

I picked up the phone and called the board.

It was explained to me that the group had an issue with a few parts of the plan but not the plan as a whole.  Maybe things weren’t as bad as I originally thought…

They were concerned about:

-Transfer fee of all real estate sold to fund the purchase and planting of new trees (on account of the fact that it would raise the end cost of buying a house, is inconsistent since sales range in volume and there was no clear connection between the transfer of real estate and the city’s tree canopy)

-Mandatory disclosure of utility bills on all houses for sale (on account of the fact that bills can vary due to individual usage preferences and many houses are rentals)

-Impact fees for new construction (would drive up prices for construction and new houses)

-Mandatory submission of recycling and waste reduction plans prior to issuance of new business licenses (might deter new businesses)

-Tightening of Urban Growth Boundary (could seriously impact the value of land purchased to eventually build on)

As a result of CTAR’s objections, those provisions have been changed or removed.

While I’m glad that CTAR wasn’t opposing the idea of the Green Plan as a whole, I did personally disagree with some of CTAR’s objections.

-Transfer fees (or Stewardship Fees, as they are described in the plan) are inconsistent since sales do range and they can add cost to homes but what if they were low and just part of the plan?  For instance, what if they were $10 per sale?  Last year that would’ve been over $80,000 for new trees!  Not a total solution but one that would barely be felt by home buyers and a great contribution to a great cause.  No there is not really a connection between houses changing hands but why not step up and help anyway?

-I think it would be fantastic for new home buyers to have access to utility bills from all the houses they are considering.  It would also drive home owners to make their houses more efficient since there would be a direct correlation between their home’s efficiency and it’s value.  What a great way to encourage home owners to invest in efficiency.

-As a new business, who just applied for our business license in March of this year, I can say that I would’ve gladly outlined our recycling and waste reduction plan as part of the process.  Why not??  Every business should be recycling and doing what we can to reduce waste anyway.

-The one thing I can understand is the tightening of the Urban Growth Boundary.  This could really ruin people holding land in an area that would be deemed unbuildable by a tightened boundary.  That being said, couldn’t we look into doing some kind of grandfathering?  Surly something can be done here to begin to protect more land.

So all that being said, I am glad that CTAR withdrew it’s objection from the plan.  They now officially have “no stance” on it since it no longer affects the interests of it’s membership.  (That’s according the CTAR)  There again, I kind of disagree though.  A community with a plan for future sustainability in place is a community with something to offer.  I can’t think of a better reason for property values to rise.

This plan affects all of us.  Real Estate agents included.

As a result of what has unfolded, I have decided that withdrawing my membership wouldn’t be the most constructive thing to do.  I am making a vow to become actively involved in CTAR and will attend the next Legislative Committee Meeting in late January to monitor things and add my two cents.

The article is pretty compelling:  It argues that interest rates, which are at historic lows, are a key driver of your long term cost of owning a home.  By buying a house now and locking in these amazing interest rates, you can save yourself many times the amount you might gain by negotiating another $5,000 off the sale price of a house.

The article by Marc Roth is definitely worth a read.

Forbes says,

Charleston has expanded its port and manufacturing base while preserving its lovely historic core. Once an industrial backwater, Charleston now seems poised to emerge as a major aerospace center, with the location of a new Boeing 787 assembly plant there, which will bring upward of 12,000 well-paying jobs to the region.

Read the full article here and see the pictures here.

Charleston and the surrounding area made Forbes magazine’s list of the cities with the best bang for the buck.  Ranking in the top third, Charleston beat out San Antonio, Texas, Indianapolis, Indiana and Tucson, AZ among others.

Forbes is recognizing what we already know.  Charleston is a great place to live and work, combining a terrific mix of natural beauty, industry, great restaurants, history, and outdoor activities.

With recent announcements by Boeing and Google to locate major factories and data warehouses in Charleston, the rest of the country is recognizing Charleston’s charms.