A Saving 'Grace'?

Q: Are there any laws, in the Commonwealth of Massachusetts that allow for a grace period in mortgage payments (say for example, forgive a couple months payment prior to commencing foreclosure activities, provided the homeowner can prove and actually is pursuing remedies to the situation, e.g., selling the property, etc.)?

A: Today in the immediate wake and occurrence of the mortgage meltdown the last thing a bank wants to do is foreclose on a house. The typical foreclosure will cost a bank around $50,000 when all is said and done. Many banks are negotiating new terms with their clients rather than foreclose. Call your bank and see if there is a way to renegotiate your mortgage. This is very common in today's market.

I am not aware of any laws that grant leniency to homeowners for unsatisfied or late mortgage payments. Again, the best place to start is your bank. The Bush administration is seeking to help homeowners who use a short sale, not to be taxed on the forgiven debt. A short sale is when the house sells for less than the mortgage. Right now, if your bank grants a short sale, one of two things happen: 1. You owe the bank the difference in a separate loan usually with a monthly payment similar to a car payment. 2. The bank forgives the difference however, you will be exposed to a capital gains tax on the difference. Since the bank granted you this amount it is considered a gain.

I would start by calling your bank and asking them about renegotiating your terms. Tell them you are aggressively marketing your home for sale. Also, inquire about a short sale. This may be the remedy you need to lower the price on your house and produce a buyer. Beware though, some banks record short sale balances on your credit.

Fractional Ownership

Q: Can you address the question of fractional ownership? We are attempting to sell a condominium in the west end of Provincetown and our realtor keeps telling us to adjust the price. We’ve recently heard a real estate guru speak about maintaining home value by selling property fractionally? Tell me what this is.

A: This is a very good question and a topic that I’ve been asked to research by one of my clients. One obstacle we keep hitting is the collateral aspect. Each lendor wants to be in the number one spot if the payments are not made and the property needs to be sold. With short sales now happening, t is easy to see how banks fight for every piece of the pie before a foreclosure occurs. With fractional ownership, the financing is difficult if not impossible to do. Each lendor will be vying for the number one spot for receivership. When conveying an entire house with multiple buyers, the best way is to have the buyers set up a corporation or limited liability partnership. This, so far, has proven difficult when most people who would "buy in" to this type of situation are buying one and two bedroom condominiums that are now reasonably priced. In your case, the best hope is to find two or three friends who buy your condominium together.

2008 is projected to be the bottom of the market and the best way to sell your property right now is to price it right. Real estate sells if it is priced correctly and fractional ownership seems to me like a complicated gimmick created to sell over priced real estate that will ultimately fail leaving your property on the market longer making it a stale listing.

Use your realtor and the tools at his or her disposal.

Here are three basic things to check.

1. Have your realtor show you comparable properties that sold. Look at the closed prices.
   
2. Are there any defects that need to be accounted for that will impact the price
   
3. How many days was the property on the market before it sold.

Use a professional, price it right and toss the idea of fractional ownership in the trash.

Mortgage Meltdown

The mortgage meltdown has claimed its largest victim. Countrywide Financial, after being bailed out last year, is the latest to succumb. It will be assumed by Bank of America, and the buyout will be finalized later this year. 

This week The Closing Table is not about Countrywide or the tighter restrictions placed on potential mortgagors when looking to buy property. I thought I’d talk about optimism. Remember what it was like to get a mortgage ten years ago? Well, we’re pretty much there again. When you get approved it actually means you really are qualified to buy a house. One could say, these are a return to normal times. And with normal times comes optimism for a better future.

This year, we are already seeing excitement creeping back into the real estate market. Activity has been up in Truro and Provincetown. Buyers who have been spectator prospects for the past three years, are now putting themselves in the field and making the decision to buy. 

Although it is harder to get a mortgage and even the most seasoned mortgage brokers are sharpening their pencils, qualified buyers are recognizing that we are most likely at the bottom of the market. 

Even the so-called experts are saying that the first half of 2008 is the absolute bottom of the real estate crash. With mortgage rates recently decreasing, now under 6% for a 30 year fixed, qualified consumers are taking advantage of low listing prices and low interest rates. In 2009, this optimistic and toe testing consumer behavior, will turn into an all out feeding frenzy on low priced property, fueling buyer activity which will make the market come back with a vengeance.

This is an interesting prediction and one that I hope, proves to be true, for my clients’ sake, both buyers and sellers.

Energy-saving Tips

The price of heating oil these days could be worth more than its weight in gold.

With this in mind, there are some energy saving measures you can take to hopefully save money this winter.

If you were able to prepay for your oil, that was the best measure with the per gallon cost at $2.79 according to the local oil companies. However, this is a large amount to pay at once and many of us don't have that kind of change hanging around.

If you locked into a pre-pay rate and could not pay ahead of time, price per gallon could be as much as $2.89. If you had the misfortune of not being able to take advantage of either of these, oil is now over $3.00 per gallon.

In this new oil crisis, here are some simple steps you may want to take:

Turn your thermostats to 65 degrees. Wear sweaters and housecoats along with slippers. The days of wearing shorts around the house in the winter should be over.

If you do not have new windows or storm windows, wrap your windows with a plastic thermal covering that prevents cold drafts and air from entering your home.

Get small rugs or draft stops to put by exterior doors. This will help. Also, for sliding glass doors, you may want to hang draperies.

Limit the amount of fires you have in an open fireplace as that sucks hot air out of a room. Always remember to shut the damper once the fire is completely out the next day.

With these helpful tips, you may be able to tip the scales on your home heating expense this winter.

Until It's A Deal

Overconfidence and complacency are two sister evils that can ruin any real estate transaction.

The old saying that a deal is not a deal until it’s a deal is true today stronger than ever before. Most real estate transactions are only as strong as the ink on the deposit receipt the teller hands the seller at the bank.

In all seriousness, today’s climate is making for stressful real estate transactions. Banks are no longer handing out money like they used to and financing guidelines are making it more difficult to obtain a home mortgage.

If that hurdle is crossed then there is the home inspection. Most buyers today are aware that they are getting a deal, however, some have decided to upgrade to a property a little higher in their budget than what they originally wanted. This is due to the fact prices are low. But, due to this, the buyer’s sense of caution is heightened and the home inspection becomes an all new important measure that is no longer just another step toward closing. Small issues now become major problems. Large items can ruin a deal. A skilled realtor, compromising seller and patient buyer are all need to make a deal happen today.

If all obstacles are overcome and the purchase and sale agreement is signed, there can still be problems that can sideline a transaction. The point here is to be very cautious on both sides and truly listen to what is being communicated. Only then, with diligence and intellect can both parties walk away from the closing table with smiles.

Otherwise, to use a sports analogy, with one minute left in the big game, don’t think you have a deal because you’ve gone undefeated all season. Otherwise you could end up being upset. Buyers and seller should now be keeping their eyes on the ball for the entire game until it’s officially over.

2007: The Year in Real Estate Activity

This is a review of the single family and condominium sold activity in the outer cape towns of Eastham, Wellfleet, Truro and Provincetown for 2007.

In Eastham, 101 Single family homes and 17 condominiums sold in 2007 for a total of about $59 million dollars. In 2006 118 Single family and 13 condominiums sold for a total of about $64 million dollars. This is a difference of about $5 million dollars more being sold in 2006.

In Wellfleet, 64 single family homes and 16 condominiums sold in 2007 for a total of about $52 million dollars. In 2006 52 single family homes and 13 condominiums were sold for a total of about 38 million dollars. This is a difference of about $14 million dollars more real estate sold this year in Wellfleet.

In Truro, 33 single family homes and 20 condominiums sold in 2007 for a total of about $29 million dollars. In 2006, 30 single family homes and 19 condominiums sold for a total of about $31 million dollars. This is a decrease in the dollar volume of real estate sold in truro by $2 million dollars.

In Provincetown, 26 single family homes and 121 condominiums sold in 2007 for a total of $72, million dollars. In 2006 16 single family homes and 123 condominiums sold with a total dollar volume of $64 million dollars. Provincetown saw $8 million dollars more real estate sold this year than last.