“This year is going to be an exhilarating year for real estate!” according to many real estate professionals, investors, and other real property stakeholders but are potential home sellers and buyers universally aware of this? If you fall into one of these categories, you may be thinking this is impossible with everything going on during these challenging and unchartered times. Most likely, from everything you are seeing in the news – you are receiving a different message. The upcoming presidential election, possible recession, and political tensions are all factors leading to confusion and hesitancy. Here are some of the main questions of concern you may have and how to tackle them with the most recent insights.

1. Will the Presidential Election Impact Real Estate?

Election years can result in unstable and difficult times for the real estate market, even more so with the COVID-19 health pandemic still prevalent. Normally during this time leading into an election, both sides of the political spectrum would be addressing varying points of view about the economy with goals of addressing uncertainty among potential home buyers and sellers. Because of this, both buyers and sellers have typically taken a “wait and see” approach, waiting until the election is over before making any major real estate decisions. This is not something new and has been a trend for decades. Fortunately, this election year, the real estate market is taking a turn. With large buyer interest, low inventory, strong market strength and mortgage rates at historic lows – there is no better time than now to take advantage of opportunities within the real estate market. 

2. Is a Recession Around the Corner?

The economic impact of COVID-19 is continuing to affect all of us. There are still millions of Americans unemployed, and millions of Americans who received a back to work offer at reduced hours – potentially creating economic distress for many families.  In comparison to the Great Recession, fortunately our current economic conditions differ greatly. The previous recession created a large increase in negative equity due to an oversaturated housing market, risky mortgages, and the collapse of home prices – whereas our current economic situation is a product of vastly different events. Economists are now predicting that if a recession occurs, it may not be until 2021 or even 2022. On top of that, the real estate market is likely not a driving factor for an economic downturn, and the four recessions before 2008 saw little to no effect on the housing market.

3. Should I Worry About Depreciating Home Values?

No homebuyer wants to buy a home and have to worry about the value depreciating due to external factors out of their control. Even though it may be true there are some buyers holding off on their home search due to the current economic activity, it’s evident that there are still many traditional buyers and cash buyers that are actively pursuing real estate. This alone should be an indicator that future home values will be increasing. But there are heavy hitters in the real estate market like Freddie Mac, Fannie Mae, and the National Association of Realtors that have affirmed that this is a great time to buy and predict home values will continue to appreciate through 2021. 

4. Should I Take Advantage of the Low Interest Rates Now?

If you are a potential homebuyer and you’re asking yourself this question, the next question you might be asking yourself is – why take the chance? Answer: Interest rates have been at historic lows since March – so why not take advantage of the opportunity?! According to Freddie Mac, this the first time in over 50 years our current mortgage rates have reached a low of 3.29%. If you are an interested buyer, this gives you great leverage and buying power. Even if mortgage rates slightly increase, as they are projected to increase to approximately 3.8%, you’d still be able to save a large amount of money on interest payments that could go towards your principal balance – ultimately saving you money on the lifetime of your loan.

The COVID-19 health pandemic has not only altered our global economy, it’s altered our everyday lifestyle as well. The new social distancing guidelines continue to change the way we conduct our daily activities such as work, school, travel, fitness, how we socialize, and more. We are learning how to adapt to spending more time at home and getting to know what home features are the most beneficial for our family.

Potential homebuyers are taking these newly adopted lifestyle situations into account as well. Many buyers will have a whole new set of priorities in their home search. They are thinking far into the future and contemplating the “what if,” in case they experience lengthy stay at home orders.  If you’re considering selling your home in the coming months, here are five ways the current health crisis could change what buyers want in their homes.

1. Entryways are Essential  

Prior to the pandemic, many homeowners didn’t put much thought into the functionality of their homes’ entranceway.  But as more people are working from home, they are examining ways to further reduce the possibility of transmitting the virus into the home. Having a dedicated entryway can be a solution to this concern. An entryway is the perfect place to hang jackets, change out of work clothes, store hand sanitizer, and allocate a safe place for your mask and other belongings that need to be disinfected. You can also transform the area into a decontamination station for groceries, packages and other materials that have been exposed to the public.

If you do not have an entryway, you can allocate some space on your front porch, breezeway, in your garage or other dedicated pre-entry space to complete these tasks. You can even add a bench and/or cubby to increase comfortability and separate belongings of different family members. By dedicating an area to decontaminate and disinfect your hands, clothing, and other objects you will be able to decrease dirt and viruses entering your living quarters – sparking a buyers’ interest for sure. 

2.    Another Bathroom Can Decrease Cross-Contamination

No matter how prevalent the virus is in your area, future homeowners will always keep the conditions and inevitable spread of COVID-19 in the back of their mind. Having an additional bathroom, or a bathroom per bedroom is ideal but can also be critical for at risk family members to keep germs in one place. Let’s say a family member has caught the virus, sharing a bathroom with other family members, especially if they are high risk may be highly detrimental to their health and safety. If this is not plausible, even having a half bathroom is particularly useful in this situation. A half bath is also useful for when you have company over. Having a place where you can direct guests and visitors to wash their hands and use the bathroom will greatly decrease possible contamination instead of having them use the family bathroom.

3.    A Home Gym Contributes to Your Mental & Physical Health 

If you are one of the many Americans that has a fitness schedule included as a part of your everyday schedule, you may have been very negatively affected by our new lifestyle conditions. Many people turn to exercise to relieve stress, produce endorphins, take a break from work, or contribute to their mental health/clarity. Having access to your own home gym or dedicated fitness space, would give you the ability to continue with your fitness goals and contribute to your overall wellness.  Even if you’re somebody that doesn’t have a rigid workout schedule but still enjoys working out from time to time, having a home gym provides you with an incentive to work out and an alternative space for staying active.

4.    A Home Office Increases Productivity 

If you were either laid off from your primary employer or had to transition into working from home, you had to embrace working remotely to help curb the spread of the virus. Many workers are now realizing it be may be safer and more beneficial to their personal and/or families new lifestyle continue working from home. What better way to do so than working from your own home office? According to realtor.com, listings featuring an office sell 3% higher and 9 days faster than listings without the feature. Having a comfortable and functional space dedicated for work not only promotes high productivity but is also a hot commodity amongst potential buyers.

5.    Outdoor Living Space Enhances Your Home

Due to current living conditions imposed by COVID-19, we are becoming more accustomed and appreciative of spending more time at home. For those in smaller living spaces or those who are renting property, they’ve come to realize just how desirable outdoor living spaces can be. In a recent survey done by realtor.com, 9% of homeowners said they wanted additional outdoor space to enhance their home. Whether you have a cozy, decorated patio with comfortable furniture, or a large backyard where the kids and family pet can play; you will be able to enjoy the endless benefits of your own outdoor space. Regardless of the property size, potential buyers want outdoor space where they can take a much-needed mental break, take in nature, or enjoy time with their family.

There is no doubt that the current economic conditions imposed on us via the COVID-19 health pandemic have caused hardships for millions of Americans. We have all had to alter our way of life to accommodate living and working conditions throughout this difficult time. Fortunately, things are beginning to turn around within some industries. Slowly but surely, businesses are beginning to adapt to a new normal to ensure the health and safety of everyone.

There is still, however, one large group of people that are still playing catch up: the homeowners that wanted to list their home in March 2020, but held off due to the fear of the unknown when it came to the real estate market. But we have good news! The good news is that the summer market is heating up, buyer traffic is increasing, and mortgage rates are at historic lows. If you want to sell your home fast, here are some points that can help provide you with some assurance and confidence to sell your home this summer.

1. According to the National Association of Realtors, 56% of homes sold in April 2020 were on the market for a month or less.

Even during these difficult times, buyers are still on the hunt for their next purchase. Many buyers have seen this time as a great time to buy as many state and individual companies have been implementing stay at home guidelines and social distancing orders, giving buyers more time than ever to research new homes on the market. This is also an excellent indicator for homeowners interested in selling their home as they’re able to see that even though some businesses remain frozen and in stand-still, the real estate industry is not one of them, and that the pandemic and previous economic downfall has not slowed eager buyers from acting.

With the real estate inventory lower and buyer demand more competitive than before the pandemic took place, houses that come to the market can stand out and sell fast. Sellers can anticipate a higher demand, shorter list time, multiple offers, and offers above the listing price. But most importantly, they will be able to experience a quick and painless home selling experience, especially in the mid-level price point.

2. Zillow recently reported a 5.9% week-over-week rise in homes being listed for sale.

At the peak of the pandemic, many sellers decided to pump the brakes when it came to selling their home. Fear began to rise after seeing the immense downfall of the stock market, mutual funds, and other investment vehicles in March 2020. Many sellers were fearful they would not be able to get offers within their price range, home values were depreciating, or that they would not be able to sell their home at all. Since many homeowners decided to wait until other markets showed a strong increase in value, many real estate markets across the country saw little increase in homes being listed on a week by week basis. But now, with economies beginning to open, many sellers are resuming their home selling plans.

3. The National Association of Realtors reported that the buyer demand is strong and/or stable in all 50 states.

Before the pandemic, the 2020 real estate market was supposed to be one of the biggest millennial homebuying years, including both investment and traditional homebuying. According to the National Association of Realtors, the buyer demand is increasing now faster than ever as more of the newer and recently hesitant homebuyers are seeing a movement toward stabilizing the economy. They are officially ready to take advantage of the homebuying experience, strengthening the demand across the nation. Taking this into consideration, with an even stronger buying demand and wider spectrum of buyers, this allows sellers to be in control.

Sometimes, homeowners find themselves in situations where they can no longer afford their home, they are delinquent in their mortgage payments, or are in pre-foreclosure. In this situation, cutting your losses, walking away, and moving on is often the best way to go. If you are a distressed homeowner and the current market value of your home is less then what you currently owe to your lender, a short sale is typically your best foreclosure alternative. Below we will discuss the five major things that distressed homeowners should know when considering a short sale.

1. What Does a Short Sale Really Mean?

A short sale is a legal term used to describe the fact that a property’s current market value is lower than what the homeowner owes the lender. This can happen for various reasons beyond the homeowner’s control, and in general, this typically becomes a financial hardship that is unsustainable for an extended amount of time.

For homeowners who are delinquent or at risk of being delinquent, and they do not want to go through a bankruptcy or the embarrassing process of foreclosure, short sales are often the best foreclosure alternatives.

2. You Will Need Your Lender’s Approval

The main thing that homeowners should understand about a short sale is that you will need your lender to agree to it. Essentially if a bank or lender agrees to a short sale, this means that they are accepting an amount that is less than what you owe on your current mortgage. This is not done frequently or freely as essentially, the lender is losing money. Therefore, not all lenders accept short sales. Furthermore, not every property is eligible for a short sale. The lender will weigh its options to determine if it is more beneficial for them to commence a foreclosure proceeding. In the event that a short sale is not approved by the lender, distressed homeowners should look into a possible loan modification.

Overall, lenders have the final say-so when it comes to approving a short sale. Another point to remember is that lenders will not suggest a short sale to a distressed homeowner. It is up to the homeowner to know his or her options and to contact the lender directly. In reality, most lenders hope that you can find a way to sell the property at a price high enough to satisfy your current loan balance. However, when is it is apparent that a homeowner has no other choice and the market value of the home is substantially below the loan balance, lenders may be more motivated to cooperate with a homeowner for a short sale. Most foreclosures do not end well. Often times the lender is forced to proceed with unruly and costly eviction proceedings because the homeowner will not voluntarily move from the property. As such, it’s usually in the lender’s best interest to work with the homeowner if a short sale is the best financial option.

3. Your Credit Will Still Be Damaged

Don’t be fooled into thinking that a short sale will not damage your credit, because it will. However, the damage is not as bad as it would be should you allow your home to go into foreclosure. Additionally, in the event that your lender forgives your debt, the amount forgiven must be reported to the IRS and may give rise to additional federal and state tax obligations.

4. A Short Sale is Very Different from a Traditional Home Sell

Under normal circumstances, when you are selling your home, your lender typically does not find out until your lawyer request a payoff for your current mortgage. On the other hand, as detailed above, your lender must be involved in the short sale process from the very beginning. Likewise, there is usually more paperwork involved in a short sale than would be if you were selling your home under normal market conditions.

5. You Increase Your Chances of Selling your Home in a Short Sale by Hiring a Real Estate Agent.

When going through the short sale process, homeowners are best served by hiring an experienced real estate agent who has 2 to 3 years of short sale experience. If you hire a real estate agent, he or she will be the person to submit your short sale application to the lender as well as negotiate the terms of the deal. Before you hire a real estate agent, confirm that the agent has experience in short sales in your local market. If your agent has substantial experience, this increases the likelihood that they have already dealt with your lender and are familiar with your lender’s requirements for approving a short sale. Likewise, an experienced agent will be able to see potential problems with your short purchase immediately and will be able to advise you on the necessary changes to make to increase the likelihood of approval.

Lastly, your agent may be able to find you a cash buyer who would be willing to purchase your home. This is often the easiest option, as you don’t have to deal with the buyer’s lender approving the transaction.

The application process for selling your home in a short sale typically goes like this:

1. Submit Your Letter of Authorization

Immediately when you hire a real estate/listing agent, you should submit a letter of authorization to your bank so that your agent can communicate with them directly. In general, your letter should include your information, your loan number/reference number, and your agent’s name and contact information.

2. Contact Your Lender

You or your agent will need to contact your lender and discuss your short sale with the specific department that is responsible for this process. Keep in mind you do not want to talk to the workout department or loss mitigation department. You want to specifically discuss your foreclosure with the short sale department or the department who will be responsible for the approval. The primary goal of this initial contact is to get a copy of the lender’s current short sale application and the contact information of the person who will be responsible for approving your sale.

3. Preliminary Net Sheet

Your lender will require that you fill out what’s called a “Preliminary Net Sheet.” This is the estimated closing statement that will indicate the sales price that you expect to receive, together with the cost of the sale, the unpaid loan balance, real estate commission, and late fees. Your lawyer can help prepare this for you if you do not know how to calculate any of these fees. In the unlikely event that the final number shows cash to the seller, this suggests that a short sale is not appropriate for your situation. In that event, a short sale may not be appropriate for your situation.

4. Draft a Hardship Letter

Your hardship letter is probably one of the most crucial points of your short sale application. This is the time to put everything about your financial situation in the letter for the lender to evaluate. The letter should notably have a statement of facts explaining how you ended up in your current situation. In closing out your letter, you will make a plea asking the lender to accept less than full payment for your mortgage loan.

5. Submit Proof of Income and Assets

When trying to entice your lender to approve a short sale, you must be 100% honest and work with them. Be prepared to disclose all of your financial information to your lender. Specifically, you will need to show your lender your bank accounts including checking and savings, any stocks or bonds you have, any other property you own, cash on hand, and ownership of anything else of tangible value., Likewise you should attach copies of your W-2s, credit card bills, student loan bills, and anything that shows your inability to pay your home loan. For the most part, banks are pretty objective; if your financial details show that you clearly cannot afford your loan, they usually will understand the situation. However, lenders, in general, are not sympathetic if you are dishonest, or your inability to pay is a result of criminal activity.

6. Your Agent will Prepare an Accurate Comparative Market Analysis

An experienced real estate agent will prepare a comparative market analysis (CMA) to prove to the bank that the market values of properties in your neighborhood have substantially fallen to the point that it will be nearly impossible for you to sell your property at a price high enough to cover your current mortgage.

7. Have Your Agent Prepare the Sales Contract

Once you locate a buyer to purchase your home, your lender will typically require a copy of the buyer’s bona fide offer together with your listing agreement and the sales contract signed by both parties. It’s not uncommon for the lender to renegotiate your agent commission as well as payment for other certain items (e.g., termite inspection.)

An experienced real estate agent will ensure that your sales contract is contingent upon the lender’s approval for the short sale. Lastly, most lenders will require you to submit what is called an arms-length affidavit, which basically says that there is no pre-existing relationship between the parties. This is done to ensure that the buyer is making a fair market value offer for your property and that the short sale is not a sham.

8. Wait for an Approval

Waiting for approval from your mortgage lender can be a frustrating experience. Typically, most lenders will drag their feet when it comes to processing a short sale. However, an experienced real estate agent will be persistent by following up with your lender to get approval (or rejection) in a timely manner