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As I often do, I spent some time analyzing some data on Plainfield in the MLS today from the last 3 months.  I actually looked at all of the pending and contingent sales for all of Plainfield and what I discovered, while not surprising, confirmed what Ive been preaching for months now.

There are two factors that seem to affect market time in dramatic ways:

1. Price. Price. Price!
2. The condition of the home.

This is what has been happening in real estate in Plainfield over the last 3 months:

Its kind of depressing to be in real estate in such a… well, depressing market.  Well Im tired of being discouraged  and melancholy about this whole situation.  When I was combing through the MLS today, it really all started to make sense.  Over-priced listings wont sell and the only way to get an offer on a home is to “drive it to market value” over a period of 60 days.

I used to say “no thank-you” to over-priced listings, but if Im willing to try it your way… but you have to be willing to try mine.  If you have not had any activity (showings, inquiries, offers) after 2 weeks, its time for a 3% price reduction.  After 2 more weeks if nothing happens its time to re-assess the situation again with another 3% reduction.  “Driving it to market value” is a sure fire way to find out what your house is really worth.  When you finally have interest in the property you know its priced correctly.  I have no interest in hanging a sign up in your yard in this market.  I will however, pour my heart into selling your house… if you are willing to do what it takes to get it to sell.

The market time in Plainfield is about 4 months right now for all closed 3-4 bedroom single family homes in Plainfield.  Thats really great news.  (Surprising huh?  Lol.)  Those homes also closed at 94-95% of their asking price.  That is fantastic news!

Here is the reality of situation right now though; nearly 50% of all the homes in Plainfield that were listed on the MLS over the last 3 months had their listing expire before their home sold.  The other cold hard fact about those homes was that for the Plainfield 3-4 bedroom single family homes, the asking price of the homes that did not sell were approximately $50,000 more than the average list price of similar homes, and approximately $60,000 above the average closed sale price.  Im not surprised at all that they did not sell, especially since todays savvy buyers are out there looking for a deal.

People will always need a place to live.  If you want them to choose your house, you better make it the sweetest deal in the market!

Julie Ferenzi | Realtor
Plainfield Real Estate
630-673-6233

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While I’m not a lawyer or a mortgage broker, I have done a little research on the topic of Illinois foreclosure and short sales for my clients over the last several days.  I must admit that I was a little surprised by the range of answers that I found on the Internet in regard to alternatives to foreclosure.

That being the case I decided to go straight to the source at MyFico.com.  Basically, A Plainfield short sale and a foreclosure will both damage your credit score to nearly the same extent, about 100-200 points. The difference is really in the recovery time; the time in which your credit score actually begins to improve.

That sounds like pretty crappy news, huh?  Yeah, I was pretty surprised by that realization too, but after a little more digging both, a foreclosure and short sale in and of themselves, are much better alternatives to compounding those situations with a bankruptcy. 

Even with a foreclosure or a short sale it will be about 2 years before you start to see your credit score improve and both will appear on your credit for 7 years.  According to MyFico.com a short sale won’t necessarily be any better than an actual foreclosure if you are over 90-120 days before you are able to negotiate a short sale to the closing table.  On the other hand if you can get everything wrapped up before the 120 day mark you can avoid additional hits to your credit.

The bad news?  Both foreclosures and short sales show up as over 120 days late.  The good news? Their impact on your credit begins to diminish after 2 years, and many people can qualify for a reasonable interest rate after 2 years with a short sale; and 3-5 years after a foreclosure.  Depending on your long term game plan, you would need to decide how long you are willing to wait before you were able to purchase another home.

A bankruptcy compounds credit problems because even credit and credit cards that were previously current become affected as non-performing accounts.  I believe it is reasonably safe to say, based on that information, that a bankruptcy compounded with a foreclosure will have a more derogatory affect on your credit than a foreclosure or short sale alone… although I just want to mention again that I am not an attorney. :)

I personally think that a short sale is still better than a foreclosure, and that a foreclosure should be avoided at all costs.  Still, I guess it all depends on your long term plans.

If you are considering a short sale, I do have a team of professional negotiators working through an attorney’s office to assist me in selling your home.  You can reach me at 630-673-6233 or at JT4NZ @ msn.com. 

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Will County and DuPage County area homeowners who are interested in resolving their foreclosure situationthrough a short sale now have a better option when they chose me to represent them in the sale of their home.  I work with an attorney who has a team of 25 foreclosure specialists ready to assist you with the process of selling your home for less than what is owed by your lender at no out of pocket costs to you.

I have come across a lot of pre-foreclosure listings on the MLS recently that will require a short sale with their lender in order to avoid a foreclosure. I’ve talked to a lot of agents in the process of showing many of these listings, and there is a pretty wide range of how Plainfield real estate agents are handling these short sales.

While I have performed short sales for some of my own listings in the past, I have to say that it is a tedious and time consuming process that I never care to do again.  But that’s not the only reason I don’t like performing short sales.  I don’t do them anymore because I’m a Realtor, not a loss mitigator or a debt negotiator.

Will and DuPage homeowners in foreclosure now have a better option and more hope of sucessfully having their short sale approved by their lender. 

Why Lenders Would Rather Negotiate With a Short Sale Specialist/Attorney Instead of a Realtor:

• Many short sale specialists/attorney’s have established relationships with many of the lenders and can quickly and effectively supply all required documentation and information required to proceed with negotiations. 

• Since the real estate market is so pre-foreclosure and bank owned driven in the Will and DuPage County area, many Realtors are performing short sales out of sheer necessity, but since many Realtors were never trained to perform short sales, the lives of the loss mitigators who are handling these files are overwhelmed with packages that are incomplete or missing information.  Loss mitigators work on files that they know they can close, if your short sale package is missing any information it will sit on the “dead” pile for weeks or months before it is even looked at, if ever.

• Due to the level of inexperience with short sales by so many Realtors, loss mitigators have come to dread files in which they know they will be negotiating with a Realtor, to the point of being difficult and uncooperative in some situations.  If an attorney is handling the documentation, the loss mitigator knows that all of the documentation will be thorough and complete.

I’m not saying that there aren’t agents out there who sucessfully perform short sales, but if they are trying to manage more than 2 or 3 short sales at once, they won’t be left with much time to actually market your home for sale, or be available to answer your questions or phone calls.   Each short sale involves anywhere from 40-55 hours of work to complete depending on the lender.

What will you get when you list your home in foreclosure with me?

• A professionally negotiated short sale with experienced short sale specialists at no cost to you.

• Legal advice from a real estate attorney.

• Convenient option of Power of Attorney to avoid having to attend the closing.

• Experienced negotiators that are familiar with special circumstances such as 2nd mortgages, liens, and IRS situations.

• A professionally marketed property complete with a full MLS description, photos, advertising, virtual tour, and Internet presence.

Below is a list of FAQ’s regarding short sales provided by the law firms

foreclosure specialists:

Q:     The benefits of a short sale?
A:     You can sell the house and walk away.  Credit typically indicates “settled debt".  The foreclosure gets dismissed.  No deficiency judgment.  No bankruptcy. 

Q:     Will I owe the bank any money?
A:     The bank releases and typically writes off the deficiency.

Q:     Will I owe any income taxes on the deficiency?
A:     No, on December 20, 2007 President Bush signed into law the Mortgage Forgiveness Debt Relief Act of 2007 ensuring that any deficiency   written off as part of a short sale will not be taxed.

Q:     What about my closing costs?  Will I need to bring any money to closing?
A:     No.  All of your closing costs, the real estate commission, any back taxes owed, attorney fees, title company charges, etc., will be allowed by the lender and subtracted from the sale price.

Q:     What if I sign a contract to sell my house and the bank doesn’t approve the sale?  Will the buyer be mad?
A:     The buyer has been informed and understands that that this is a short sale and that your obligations are contingent upon your bank’s approval.  It is the real estate agent’s job to price the property to sell and then meet the banks appraiser at the property.

Q:     I owe $600,000 to the bank the but the house will probably sell for $300,000.  Will the bank accept such a huge loss?
A:     It typically has nothing to do with the loan payoff.  It is based on the value of the real estate based upon a bank appraisal of the property.

Q:     I have a second mortgage on the this house for $50,000.  How is this going to be handled?
A:     The property is in foreclosure.  The second mortgage holder knows that the first mortgage is in foreclosure because they were served summons and complaint.  Therefore, the second mortgage holder will release their lien, but they will need to be paid something.  Therefore, when an offer comes in, the Buyers agent will be called and notified that the buyer will need to bring money to closing to release the second mortgage.  This will be addressed in the contract addendum.

Q:     I owe the IRS money and I think they put a lien on my real estate.  How is this handled?
A:     Our foreclosure specialists usually get these released without paying the IRS any money.  They will do a preliminary title search on the property to determine what is present and what needs to be dealt with prior to the Contract for Purchase and Sale, or what needs to be dealt with during the contract phase.

Q:     Does the attorney handling the short sale represent me or the bank?
A:     The attorney’s office represents the seller, and they welcome your questions.  They can be contacted at the office or by cell phone.

Q:     Where will the closing take place?
A:     There are closing locations throughout the state of Illinois.

Q:     I am not going to sell this house for under $300,000!
A:     The Realtor will obtain authority to reduce the price each week in order to tell the property quickly.  No matter what the property sells for, the seller will not be receiving any proceeds from the sale.

Q:     What do you need from me?
A:     Financials I.E. last years tax returns, bank statements, check/pay stubs, W-2’s and a hardship letter.

If you have any additional questions regarding a short sale, or listing your home in foreclosure for sale, please contact me directly at 630-673-6233 or e-mail me at JT4NZ@msn.com.   I look forward to working with you.

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The market has been a little off recently with the amount of foreclosures and pre-foreclosure short sales taking over the real estate market in Plainfield and Naperville, but not all properties in both Plainfield and Naperville are being sold a deep discounts.  Buyers always ask me how much they should offer if they want to have their offer accepted by the seller.  Sellers likewise ask how much they can expect to be offered for their Plainfield and Naperville properties.

On average over the last 6 months, sellers in Plainfield got about 96% of their asking price for both town homes and single family properties, with the exception of single family homes with 5 or more bedrooms, which got about 94% of their asking price. One reason that the sellers with 5+ bedroom houses may have gotten less than asking price is because it was over priced to begin with.  Bedrooms typically add between $7-10K to the value of a house, but not often more than that.  Another reason is that there is not as great of a market for homes with more than 4 bedrooms, lessening the interest that buyers would have in a home that may be more than what they need.

In Naperville, it’s a similar story but the numbers are down just a bit. For all single family homes available in Naperville that closed in the first 6 months of 2008, the single family home sellers are are closing at about 95% of their asking price with the exception again being the 5+bedroom market.  Those homes are fetching about 94% on average.  Attached single family homes are fairing a little better with a sale to list price ratio of about 96%.  The exception is one 4 bedroom attached single family home that closed at 98% of the asking price, which strangely enough, is converse to the situation with 5+ single family homes in Naperville.

Plainfield Market Statistics for the last 6 months:

Naperville Market Statistics for the last 6 months:

A few things to remember about how much you should offer on a properties in Plainfield and Naperville are:

• Is the house you are interested in over-priced?  Any good Realtor would, and should, pull the neighborhood comps and do a market analysis on the property you are interested in BEFORE you make an offer.  Find the true market value before you start negotiating and then go from there.
  

• Owners of exceptionally well kept homes in Plainfield or Naperville that are already priced well may be less willing to negotiate.  They know they will sell their home to the next person if you make an offer that is too low.  Often these sellers are often willing to wait for a higher priced offer.
  

• Ask about their motivation.  Do they need to move? Are they just testing the market? Have they been transferred?  Experiencing a life change due to birth, death, marriage, divorce or illness? 
  

• Does the property need repairs or have deferred maintenance that needs to be addressed?  If so, how much do you think it will cost to repair?  Is the house priced accordingly?

• Does the property have some kind of functional obsolesce that will make it difficult for you to sell in the future?  Power-lines or freight train tracks cutting through the back yard?

• How much have similar properties sold for in the neighborhood?

• And finally….How much do you really want that house?!
  

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I don’t even know where to start with this one simply because for my Plainfield neighborhood it’s not just one or two homes in foreclosure, there is at least 10 that are bank owned already with at least another 10 that are well on their way.

There is no doubt that foreclosures will bring down the property values in Plainfield and Naperville neighborhoods, but what about the eye sores they become within the neighborhood?

The weeds are covering the walk to the front door, and the lawn hasn’t been cut all summer.  There is significant amounts of debris from long gone Spring storms that swept through the area…

Contacting a Homeowners Association or the village about a problem with unkempt properties in your Naperville or Plainfield subdivision may seem like the answer, but until the bank actually regains possession of the property, there isn’t much that can be done about the disheveled condition of the exterior until the property is sold either back to the bank or to new owners.
 

Are Plainfield and Naperville foreclosures starting to affect your neighborhood?

As a responsible person, the whole idea of not paying the mortgage seems crazy to you.  Perhaps you have faced tough times too, BUT… you didn’t get through it by using our credit cards, or the equity in our home. You’re not only angry that your neighbors left you with a vacant eyesore in the lot next to yours, they made it your business by trashing the property and bringing down the value of your home.

There is a difference between luxury and necessity.  Cable is a luxury. Cell phones are luxury. Internet is a luxury. Air conditioning is a luxury. Eating out is a luxury. New clothes are a luxury. New cars are a luxury. Entertainment is a luxury… food, water, and shelter are necessity.

For people who have fallen on hard times, you would expect to see some refraining going on, but what happens when homeowners in foreclosure haven’t scaled back and haven’t done without to make ends meet?

For those sellers in default, trying to sell their house through a short sale before the auction will probably cause the bank to not very open to negotiating the sellers debt.  Part of the process of a short sale includes close and careful scrutiny of a seller in default’s bank statements.  They have to prove they haven’t been able to afford their payments due to a hardship from the time they stopped making their payments.  If there is an $2,000 purchase at Best Buy for a new flat screen t.v. on their bank statement, you can probably bet that the bank won’t be letting them off the hook too easily.

Buy many of the homeowners in default aren’t even trying to work with the banks.  These are the homes with the unkempt lawns, broken windows, and run down exteriors. These are the abandoned homes that were never listed for sale.  Does this make you angry? 

Here is why everyone isn’t willing to swallow the sub prime excuse anymore:

Adults who have the privledge of due diligence, have the opportunity in America to be EDUCATED in the home buying process.

I’m a Realtor, and yes we’ve taken our lumps for the situation too.  The thing is though, my fiducuary responsibility as a Realtor is to be the procuring cause of the sale, not determine and decide what my customer can afford to pay each month.  I think that many buyers even today would benefit from pre-purchase counseling or homebuying seminars.

Why do Plainfield and Naperville families lose their homes to foreclosure?

Death, divorce, disease, devastation, and debt. 

I have worked with some unfortunate sellers who have faced hard times, and on the flip side of that I have worked with some sellers who by their own admission made very bad financial decisions.

There are sellers out there who have done the right thing by trying to sell the house to avoid a foreclosure… but there are many more homeowners in foreclosure who leave behind a damaged property, sticking it to the lender, and in the end… ultimately you. 

Everyone pays the price for the surge in foreclosures one way or another, whether it’s through depreciation on the value of your home, or through a reduction in the amount of money banks are willing to lend customers with good credit.  Both of these situations affect the economy in big ways.

Is there an end in sight to the amount of foreclosures in Plainfield and Naperville, IL?

The only end to the current state of the real estate economy that I see is a call for more proactive measures from homeowners in default who need to try to sell their homes before they become bank owned properties.

Instead of walking away from the house, I would suggest to anyone facing foreclosure to put any money that they can save into a bank account to cover the difference between what the house can be sold for quickly against depreciation, and what the bank will accept as a short sale. It could also be use it to build up a cash reserve that can will cover your first months rent and security deposit when the time comes to move and get back on your feet.

Even after the auction, the lender can file a judgement against you for the difference between what the house sells for at the auction and what you currently owe your lender.  You are always better off trying to sell your house instead of walking away. If you are facing foreclosure and need an agent that is experienced with performing short sales, call me at 630-673-6233.

If you are looking to find a property below market value or want to invest in the Plainfield or Naperville area, I can help you find a house that meets your needs.