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There seems to be a growing trend among home sellers that a short sale is a marketing technique to sell their homes and not the pre-foreclosure, last resort action that it is. I have a feeling that short sales are becoming so prevalent in the marketplace they are just being accepted as a way to sell your home, no strings attached!

I have been to a few sellers' homes lately and when I explain that they owe more for the home than I can sell it for, their response is "Just short-sell it". I ask "How far behind in your payments are you?" and they are current in their home with no late payments. I am not sure if they are understanding what short sales are all about.

The part that I don't think they understand is very simple: If you borrow $200,000 to buy a home, and the house sells for $150,000, you still owe the other $50,000. Its not like the lender is going to say "Don't worry, we know its a tough market and you don't have to pay the rest!" If you payback only $150,000 on a $200,000 loan, you still owe $50,000 and they will file a deficiency judgment against you. For the true short sale prospect that has lost their job and their ability to pay, this is a way to get out of the home and they don't usually have any other assets anyway or they would have already sold them to make the payments. But this new seller, who uses the short sale technique and owes this $50,000, this judgment can go against other assets you may have. So if you have other homes, a good income, cars, boats, or other assets, this judgment could attach itself to those. I think this is the part they are missing.

Remember, short sales are the way out for people who are forced with losing their home because they lost their income, or their payment went through the roof and they can't make it, or they had a medical or family emergency. It is not a technique for a seller who makes decent money and just wants a different home. Consider the ramifications of a short sale before you embark on that strategy.

So many times there are great classes for investors that turn into a 3 hour class about how to buy the speakers product and make them rich and not you. After a few hours of that, you are thinking "no way, this won't work". But what if there was such a class that would teach you the right way to invest in real estate, put on by a legitimate source, and didn't want you to buy their products? Would that be of interest?

If yes, check out Columbus State Community College ! They have a class there called Real Estate Investments that meets once a week for 3 hours for 11 weeks, and will teach you all the basics. For under $300 you will learn about identifying and selecting properties, financing them, leveraging other peoples money, writing offers, even selecting tenants.

This quarter starts on March 31, and the class is on Wednesday evening from 6-9PM on main campus downtown. Sign up at www.cscc.edu and you will be glad you did!

Sometimes you think that if you call a professional if you have a problem you will get help, right? What if that person was looking out for themselves, and not you? That would not be a good thing for you.

One of the newest games in the real estate market is short sale help. You get behind in your mortgage payments, so you do the right thing and call the lender. The lender tells you to call a real estate agent and try to sell the home, even if you have to sell it for below what you owe on your loan (we call that a short sale). So you find an agent that specializes in short sales for help.

The newest twist on this program is for the agent to become 'partners" with you on the short sale. How does it work? They get you to make them part owners of the home so they can negotiate with your lender as an "owner" and not an agent. Then when they get the lender to take the lower price, they sell it for higher and earn a profit, plus they earn a commission. Doesn't sound quite right. does it? You thought the agent was going to help you out, and they are helping themselves out first and foremost, and if you happen to get out of the deal yourself, that is a happy side effect.

Be careful when you are trying to sell your home on a short sale that you find an agent who is qualified, competent, and looking out for YOUR best interest, not theirs. There are a lot of good, qualified agents out there and sometimes you need to talk to a few before just picking the first one you come across.

What is it about misfortune that brings all the schemers and crooks out of the woodwork? You are already behind in your payments on your home and along comes a person with a great idea to save you. Beware the night in shining armor or the mess they will get you in may be worse than the one you already are in.

There are 2 scenarios making the rounds of short sales right now, praying upon those that are desperate for help.

In the first one, you will be contacted by someone who will make up your back payments, make up your back taxes and insurance, and may even have a little something for you. That's called the hook. The trick? They can't actually finish the purchase of your home for about 2 years because of (you fill in the blank), but if you will sign the home over to them they will make the payments till they close and you will come out smelling like a rose. So, how does it work? They find someone who is desperate for a home, that will pay upfront cash for a lease/purchase opportunity, with the idea that if they can purchase this home in 2 years once they get their credit re-established. So, lets work numbers on this. These people agree to take over your home for your balance of, for example, $150,000 and agree to make your payments of $1200/month. They find someone who will pay $ 175,000 for your home and because their credit is bad they will pay $1600/month rent. The scammer will then negotiate a deal with your lender for $125,000 on the house and the rest is potential profit, Sweet deal for the investor, yes? How might it work? The investor can't get the bank to take less, the renter with bad credit repaints your home blue and their dogs tear up your carpet and they fall behind in their rent, the investor can't make your loan payments because the tenant is not paying rent, the bank comes looking for you since you are on the loan, you can't get in touch with the investor, but it doesn't matter since you signed the home over to the investor anyway and you no longer own the home even though you are still liable for the payments.

Sound like something you are interested in being involved in? Ask my client, LT. Jeff, in the Navy in California, who almost lost his home this way and he was transferred to California and couldn't even be in Ohio to watch this happen. I saved him, but it took months and he had to pay all the back payments and fix the home. It cost him thousands, and almost his career, because Naval officers can't have bad credit if they want to be naval officers.

Listen, if you are behind in your payments, call your lender and work it out with them. Step 1 is to ask for help. If they can't help you, sell the home and clean your slate and start the long road to rebuilding your life. You can do it, just make sure you get real help from someone looking out for you, not for them. Watch out for something that sounds too good to be true, it normally is.

Stay tuned for part 2.

If you have followed my previous advice and exhausted all your options with your lender than it may be time to move to step 2.The hardest thing to do is to admit that you have a problem and need help. However, if you can't save your home and the foreclosure is inevitable, you may need to step up and bite the bullet. It may be time to cut your losses and sell the home.

First thing to do is to find a real estate agent that knows how to do a short sale. How do you find one? It's not easy because every agent you meet is a self-proclaimed expert, even if they have never sold a home. Short sales are a little tricky and you don't want an agent training on your home. Interview a few agents, ask for their resume and a list of short sales they have done. Look at other short sale homes that have actually sold (not just for sale) and find out who sold them. Most of all, get an aggressive agent who is persistent and works for you at a lower fee, because banks need constant pushing and they always cut the fees if they can. There are a lot of good short sale agents out there but beware, there are bad ones too.

Here's a few things you can do to help the agent, at the risk that some of my ideas will make agents mad as they will not agree with me.

1. List your home for 5 to 10% below the market to attract interest. Market priced will only have your home sit too long and each month is another payment you owe.
2. Do not disclose to the public that your home is behind in payments or short sale until you are in contract with a buyer. It is no ones business but yours, and these agents who advertise short sales in the mls are doing the seller a disservice. Once people find out you are losing the home, they low ball you like crazy. If you price the home slightly below market you will get more buyers and better offers. Trust me. Remember, the higher offer you can get the easier it is to negotiate with the lender. This short sale won't work if we can't get the lender to play.
3. Finally, clean the damn thing up! Just because you are behind in your payments doesn't mean you have to live like a pig! Do the things it takes to attract a buyer, have some pride in your home and yourself. Clean the carpets, wash the walls, mulch the yard, throw away the junk. You have to make your home nice enough to attract an offer, and a good offer, or the deal will be off.

So then what? Where will you live and where will you go? In part 3 we will discuss what happens after the short sale. Stay tuned.

East-side Columbus (43227, 43232, 43213 zips), Ohio numbers are in for the month of January 2008. Let’s see how they stack up, and then compare them for 2007 to see the change in the market.

There were 58 sold properties in January 2008, as reported by the Central Ohio Regional Multiple Listing Service. The average home sold was 1,402 square feet and was on the market for 139 days before they found a buyer. The average home was listed at $ 88,505 when it went into contract, which does not take into consideration price changes while it was listed, and the average selling price was $83,176. Some important stats to also keep in mind were that the average home in January 2008 received 94 % of their asking price, and the average home sold for $59.33 per square foot.

The highest price home that sold in January 2008 was at 6075 Whitney Way, in Whitney Woods, for $388,600.

Compared to January 2007, there were some surprising changes. In January 2007, 67 homes were reported sold at an average asking price of $92,549 with an average sold price of $88,291. The average home was sold in 99 days and was 1,341 square feet. This translates into $65.84 per square foot, and the average home seller was receiving 95% of their asking price.

So what does this mean? In addition to the prices coming down a little, it appears that the larger homes are selling, and the average sales price per square foot is declining by about 9.9 %, a decline from 2007.My opinion is this is due to many foreclosures hitting the market in 2008, which is driving down the cost.

To wrap up the report, let’s look at the current market. There are currently 188 homes that went on the market in January 2008 in East-side Columbus (43227,43232,43213 zips) at an average price of $112,420 with an average price of $82.66 per square foot, which shows an increase in the price of new listings as optimism is starting to return to the market, a good sign.

Your strategy for 2008 is to make your home as sharp as you can as the market is very competitive, and maybe prepare for a little less price for your home than you might expect. It appears as though the average home that is selling right now is priced in the low $60’s per square foot with the selling price at about $60 per square foot. If you are then going to buy a home, this might be the year that you can get quite a deal on a home in East-side Columbus (43227,43232,43213 zips) as it has been many years since we have seen these prices.

Reynoldsburg, Ohio numbers are in for the month of January 2008. Let’s see how they stack up, and then compare them for 2007 to see the change in the market.

There were 19 sold properties in January 2008, as reported by the Central Ohio Regional Multiple Listing Service. The average home sold was 1,695 square feet and was on the market for 108 days before they found a buyer. The average home was listed at $ 128,590 when it went into contract, which does not take into consideration price changes while it was listed, and the average selling price was $121,663. Some important stats to also keep in mind were that the average home in January 2008 received 94.6 % of their asking price, and the average home sold for $71.78 per square foot.

The highest price home that sold in January 2008 was at 7087 White Butterfly for $172,500.

Compared to January 2007, there were some surprising changes. In January 2006, 25 homes were reported sold at an average asking price of $154,208 with an average sold price of $149,961. The average home was sold in 154 days and was 1,743 square feet. This translates into $86.04 per square foot, and the average home seller was receiving 97% of their asking price.

So what does this mean? In addition to the prices coming down a little, it appears that the smaller homes are selling, and the average sales price per square foot is declining by about 16.5 %, a huge decline from 2007.My opinion is this is due to many foreclosures hitting the market in 2008, which is driving down the cost. Another key indicator is the median (or middle) sold price was $147,000 in January 2007, and this has declined to $126,900 for January 2008.

To wrap up the report, let’s look at the current market. There are currently 50 homes that went on the market in January 2008 in Reynoldsburg at an average price of $170,515 with an average price of $91.97 per square foot, which shows an increase in the price of new listings as optimism is starting to return to the market, a good sign.

Your strategy for 2008 is to make your home as sharp as you can as the market is very competitive, and maybe prepare for a little less price for your home than you might expect. It appears as though the average home that is selling right now is priced in the low $80’s per square foot with the selling price at about $75 per square foot. If you are then going to buy a home, this might be the year that you can get quite a deal on a home in Reynoldsburg as it has been many years since we have seen these prices.

Pickerington, Ohio numbers are in for the month of January 2008. Let’s see how they stack up, and then compare them for 2007 to see the change in the market.

There were 21 sold properties in January 2008, as reported by the Central Ohio Regional Multiple Listing Service. The average home sold was 2,582 square feet and was on the market for 142 days before they found a buyer. The average home was listed at $ 234,921 when it went into contract, which does not take into consideration price changes while it was listed, and the average selling price was $224,391. Some important stats to also keep in mind were that the average home in January 2008 received 95.5% of their asking price, and the average home sold for $86.91 per square foot. The median sold price for January 2008 was $189,000.

The highest price home that sold in January was at 13931 Whispering Court, in the Ravines at Tollgate, for $ 954,000.

Compared to January 2007, there were some surprising changes. In January 2006, 37 homes were reported sold at an average asking price of $226,221 with an average sold price of $219,741. The average home was sold in 124 days and was 2,287 square feet. This translates into $96.08 per square foot, and the average home seller was receiving 97% of their asking price. The median sold price for January 2007 was $193,000.

So what does this mean? It appears on the surface that there was an increase in the prices for 2008, but that is not true. In 2007 the smaller homes were selling, while in 2008 the larger homes were selling, and they were getting less in their asking versus selling prices (97 to 95.5%). But the big difference was in the price per square foot where this was down 9.5% over 2006, meaning that home prices have receded 10.5% when comparing 2006 to 2007. Another true indicator of value, the median price, was down for January 2008 as well.

To wrap up the report, let’s look at the current market. There are currently 86 homes that went on the market in January 2008 in Pickerington at an average price of $244,551 at a price of $100.97 per square foot. Those people that have decided to sell in 2008 are asking more for their home this month.

Your strategy for 2008 is to make your home as sharp as you can as the market is very competitive, and maybe prepare for a little less price for your home than you might expect. It appears as though the average home that is selling right now is priced in the mid $80’s per square foot with the selling price at about $86 per square foot. If you are then going to buy a home, this might be the year that you can get quite a deal on a home in Pickerington as it has been many years since we have seen these prices. If January is an indication for 2008 there will be a lot of homes to pick from on the market.

Stay tuned for more reports.

At the risk of annoying some mortgage lenders, here is my advice if you are catching the refinancing bug. I know that a lot of my clients have thought about refinancing since the rates have come way down in the past month. Here is my advice to refinance the smart way, and not to step backwards.

1.) Never go backwards in years! If you have 27 years left on your loan, do not go back to a 30 year loan. If you do, all your savings will be eaten up by the additional time you have added to your loan. If you have a $150,000 loan and you go from 27 years left back to 30 years, you will pay an additional $ 24,750 at 5.5%, which means your payments would have to go down over $ 75 per month just to get back to where you started. That is a sucker bet for the lender, and a bad bet for you. Many lenders are offering 15, 20, and 25 year loans that would be better. Remember, the idea is to save money AND pay off your home sooner.

2.) To see if you should refinance, apply the 3 year test! If the cost of refinancing your home can be made up in savings over the next three years or LESS, then it may be worth it (remember rule 1). For example: Say you have a loan that you owe 150,000 balance at a rate of 7% and you have 25 years left on it. You can get a new 25 year loan at 5.5% interest rate, and the closing costs on the refinance are $2800.00. Your old house payment, not including taxes and insurance were probably around $ 1,035.00. Your new payment will be about $921.00, a savings of $114.00 a month. If it costs you $2800 to refinance but you save $114.00 per month and did not increase the length of the loan, you will pay off your costs of refinancing in about 25 payments, a little over 2 years. This is a good deal and you should do it.

3.) Remember, there is no such thing as a “no-cost” refinance. Everything has a cost, whether they raise your interest rate to cover the cost or add it to how much you owe.

So, do the math and see if you can refinance. Just be careful because there are ways to refinance smart and ways to get in over your head. Use some basic math and you may come out a big winner.

Pickerington, Ohio numbers are in for the month of December 2007. Let’s see how they stack up, and then compare them for 2006 to see the change in the market.

There were 32 sold properties in December 2007, as reported by the Central Ohio Regional Multiple Listing Service. The average home sold was 2,456 square feet and was on the market for 121 days before they found a buyer. The average home was listed at $ 211,104 when it went into contract, which does not take into consideration price changes while it was listed, and the average selling price was $200,696. Some important stats to also keep in mind were that the average home in December 2007 received 95% of their asking price, and the average home sold for $81.72 per square foot.

The highest price home that sold in December was at 7103 Optimara, in Violet Meadows, for $ 515,000.

Compared to December 2006, there were some surprising changes. In December 2006, 43 homes were reported sold at an average asking price of $202,554 with an average sold price of $196,969. The average home was sold in 119 days and was 2,180 square feet. This translates into $90.35 per square foot, and the average home seller was receiving 97% of their asking price.

So what does this mean? It appears on the surface that there was little change in the prices, but that is not true. In 2006 the smaller homes were selling, while in 2007 the larger homes were selling, and they were getting less in their asking versus selling prices (97 to 95%). But the big difference was in the price per square foot where this was down 9.5% over 2006, meaning that home prices have receded 9.5% when comparing 2006 to 2007.

To wrap up the report, let’s look at the current market. There are currently 45 homes that went on the market in December 2007 in Pickerington at an average price of $214,403 at a price of $91.78 per square foot. 4 homes went for sale in December and found a buyer already, at an average price of $85.62 per square foot.

Your strategy for 2008 is to make your home as sharp as you can as the market is very competitive, and maybe prepare for a little less price for your home than you might expect. It appears as though the average home that is selling right now is priced in the mid $80’s per square foot with the selling price at about $82 per square foot. If you are then going to buy a home, this might be the year that you can get quite a deal on a home in Pickerington as it has been many years since we have seen these prices.