Short Sale vs. Foreclosure

With one in five active Pierce County listings a short sale there are a tremendous amount of people either actively engaged in a short sale or, at least, thinking about one. Ever wonder how a short sale differs from a foreclosure? Here's how each can affect a seller's credit, among other things. Sourced from the Distressed Property Institute, LLC.

Credit Score
Short Sale: Only late payments will show and after sale mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points, if all other payments are being made. A short sale's affect can be as brief as 12-18 months.
Foreclosure: Score may be lowered anywhere from 250 to over 300 points. Typically will affect score for over 3 years.

Credit History
Short Sale: A short sale is not reported on a credit history.
Foreclosure: Will remain as a public record on a person's credit history for 10 years or more.

Security Clearances
Short Sale: Does not challenge most security clearances.
Foreclosure: Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony. If a homeowner has a foreclosure and is in a position that requires a security clearance in almost all cases clearance will be revoked and position will be terminated.

Current Employment
Short Sale: A short sale is not reported on a credit report and is therefore not a challenge to employment.
Foreclosure: Employers have the right and are actively checking the credit regularly of all employees who are in sensitive positions. A foreclosure in many cases is ground for immediate reassignment or termination.

Future Employment
Short Sale: A short sale is not reported on a credit report and is therefore not a challenge to employment.
Foreclosure: Many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have.

Future Fannie Mae Backed Loan
Short Sale: Eligible 2 years after short sale.
Foreclosure: Ineligible for at least 5 years.

Now for the obligatory disclaimer: Neither I (Cathy Hodges) or The Distressed Property Institute assumes responsibility nor guarantees the accuracy of the above information and are not engaged in the practice of law or give legal advice. But do feel free to give me a call if you have any questions about this. I can answer some questions and let you know when it's time to speak with an attorney.

WaMu Goes to Washington

http://www.latimes.com/business/la-fi-wamu-inquiry13-2010apr13,0,324316.story

The US Senate is finally exposing what everyone in the real estate industry already knew.

It's easy to pin this all on the mortgage lenders, but I think everyone (lenders, buyers, real estate agents) all need to take some responsibility for this.

You Heard It Here First

The headline in today's News Tribune is about the surge in Pierce County home sales. Click here for article. If you have been reading my blog (all 5 of you, ha ha) then this headline comes as no surprise. My March 1 blog was all about the spike in the number of homes that have gone pending. Yesterday I ran the numbers for pendings over the last 30 days and I would fully expect strong home sales in April too. In fact, the $250,000 and under market is very competitive now.

Curious to see what happens when the tax credits expire...

Tacoma Narrows Bridge Toll Thankfully Not Going Up

The headline in today's New Tribune states that the Tacoma Narrows Bridge toll will not be raised in the foreseeable future. Whew! The idea of a higher bridge toll had Gig Harbor residents shaking in their boots. I personally feel that the threat of the toll rising has kept the housing recovery from blossoming in Gig Harbor the way it has started to in Tacoma. Here's the part that I find interesting... The bridge toll does not (in most cases) make it more expensive to live in Gig Harbor. On the contrary, Gig Harbor is less expensive. Why? Property taxes. If you take comparable homes tax assessed at $400,000 in Gig Harbor, Tacoma and University Place, Gig Harbor has much lower property taxes. Here is the approximate breakdown:

Gig Harbor $3900 per year
Tacoma $5200 per year
University Place $5700 per year

So, it costs Gig Harbor homeowners $1300 less than Tacoma in taxes and $1800 less than University Place. Now, if you calculate tolls for a commuter with a Good to Go Pass who crosses the bridge 5 times a week for 50 weeks a year (they need 2 weeks off for vacation) the cost is $687.50. Add in a second family member who crosses 3 times a week for 50 weeks (they get a vacation too) and you have a grand total of $1100 per year in tolls. Not bad. A savings of at least $200 per year.

I applaud the Transportation Commission not raising the bridge toll during this recession. I also think that as Realtors we need to counsel our clients who refuse to live in Gig Harbor simply because of the bridge toll that they need to calculate their total cost of living. They may find that it saves them money to live in Gig Harbor. Plus, it's so darn pretty over there...

California Housing Market on Rebound

My father, who was a commercial real estate broker for 25 years, always said that real estate trends start in California. If that's the case then this article from today's LA Times is very promising for Tacoma area home values. Check it out...

California Housing Market on Rebound

Helping Homeowners from Foreclosure

I am very proud to announce that I have just earned the Certified Distressed Property Expert designation. There are so many homeowners in some kind of distress right now that I decided to get additional, extensive training in how to handle short sales. The primary goal is always to keep a homeowner in their home, but unfortunately that is not always possible. When that is the case then saving a home from foreclosure through short sale has a far less negative impact on a seller's credit history and ability to purchase a home again in the future. If you or anyone you know are a distressed property owner (or may become one) please give me a call and we can discuss your options.

Pendings are WAAAAYYYY Up

I was looking at the NWMLS hot sheet this morning and noticed that a lot of houses went "pending inspection" over the last few days, including one of my listings. In fact, I have noticed a definite increase in pendings over the last few weeks. Also, there has been a real increase in open house traffic on Sundays. All the Realtors in my office have been commenting on it. So, I thought I'd take a quick look at how many Pierce County homes went "pending inspection" in December, January and February. By the way, "pending inspection" means that a buyer's offer has been accepted by the seller and the buyer is formally under contract to purchase the home. Here are the results:

December: 27 homes went "pending inspection"

January: 123 homes went "pending inspection"

How many do you think went "pending inspection" in February? How does 386 sound? Holy smoke! That's a huge jump. I had to run my numbers twice to make sure I didn't make a mistake. It's great to know that consumer confidence in the Pierce County real estate market is improving.