The housing market is slowing as 2018 comes to an end, but home shoppers looking for a more affordable buying environment in 2019 might be disappointed.
Next year, Zillow expects mortgage rates to continue to rise, putting a pinch on affordability, particularly in already expensive markets. Some buyers may be pushed back toward the rental market, reversing the recent slowdown in rents. Commutes will worsen as the mismatch grows between job creation in urban cores and millennials settling in the suburbs.
Here’s a rundown of Zillow’s Housing Predictions for 2019:
The 30-year fixed mortgage will be at 5.8 percent by the end of the year. After rising by about 100 basis points since January 2018, expect mortgage rates to continue to grow steadily through 2019, ending the year just under 6 percent. This will be the highest rates have been since the last recession, although still below the historic average at times of strong economic growth.
Rent growth will pick back up as potential buyers are turned off by higher mortgage rates. The higher rates will limit what people can afford to pay, and those who are financially stretched but considering buying a home may decide to continue renting. The recent downturn in rent appreciation will reverse course due to the additional demand on the rental market.
Commutes will get worse. Job creation has been largely concentrated in urban cores, but young adults are increasingly nesting and growing families in the suburbs. The disconnect between these urban jobs and suburban residents will contribute to longer, more crowded commutes. In almost all the nation’s largest metros, it costs more to live within a 15-minute commute to downtown.
Cities that courted Amazon for HQ2 but weren’t selected will still see more economic growth. Other companies will recognize the value in the HQ2 proposals, and investments will come, particularly from high-tech jobs, as they are priced out of traditional tech hubs.
A record number of homes will be lost to natural disasters as the frequency and magnitude of damage from them increases. Builders and developers will focus on preventative and/or protected building materials and designs. About 15,000 homes were destroyed by wildfire in California alone in 2018, and many others by storms along the gulf coast.
Home price growth will continue to slow. Home prices will grow 3.79 percent in 2019, according to a survey of more than 100 housing experts and economists. Home values have risen 5.6 percent since January.
“The central storylines in the U.S. housing market didn’t change much over the past few years, but a series of emerging trends are setting up a much different narrative for 2019,” said Zillow Senior Economist Aaron Terrazas. “Going forward, job growth will begin to move beyond the handful of pricey, coastal superstar cities that have driven so much growth to date, and into more affordable communities with room to grow that are eager for the opportunity to shine. 2019 looks to be a pivotal year as the market cools and transitions from one marked by robust recovery into one more in line with historic norms and more balanced between buyers, sellers and renters.”
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
In our latest real estate tech entrepreneur interview, we’re speaking with Luke Glass from RealX.
Who are you and what do you do?
I’m Luke Glass, CEO and Co-founder of RealX. We are an exchange to buy, sell, and lease property rights. Property rights include leasing property for solar, wind, oil & gas, timber, cellular towers, conservation easements, and more. RealX allows landowners and buyers to connect and unlock the potential of every property.
My co-founder is Justin Byers – he’s the fun one!
What problem does your product/service solve?
The process to lease property rights has been opaque with people and paper-driven processes. Companies were forced to send out postcards, knock on doors and cold-call landowners to find the land they need. Landowners didn’t know who to trust; how to best market their properties; or what to negotiate.
RealX is the first aggregated exchange to list, search and transact property rights in a fully automated process. Landowners can list all of the property rights in one place – and be assured that companies across industries (solar, timber, etc..) will have the ability to see it. Companies can now see all available acreage in their target market while sitting in their office – no boots on the ground and no marketing costs. They can make offers directly to landowners in a trusted, transparent exchange.
What are you most excited about right now?
Real estate professionals can now represent their clients in RealX. We have opened up an entirely new asset class for agents to transact. Agents have built trust in their communities and are connected with landowners that have significant acreage. Now agents can assist them in marketing those property rights to interested buyers.
An unexpected part of the process is how many agents and brokers have listed their own land in the exchange. They realize that RealX is the best way to market their properties and gives them the best chance to monetize their land. When companies want to enter a new area, they will always check RealX first (low-cost and fast) before sending out postcards or knocking on doors (high cost and slow). Landowners registered in RealX will get a disproportionate share of the monetization because they will be the easiest for buyers to find.
What’s next for you?
Changing the way property rights are transacted in the U.S. requires changes across a spectrum of companies. One of our core beliefs is, “When a partner succeeds, we succeed.” We are investing in partnerships across brokerages, agents, landowners, natural resource law firms, closing/title/escrow companies, land management firms, buyers, environmental impact specialists, valuation experts, conservation credit companies, land management software, and many more.
It has been exciting to see the adoption curve accelerating. While connecting landowners and buyers is our primary goal, there is an entire ecosystem of supporting products and services that support this endeavor. The goal is to remove friction from the process and increase value for all parties.
What’s a cause you’re passionate about and why?
Fatherlessness is an issue that stirs my heart. Nothing brings out the emotions like seeing a proud father speak about his children or cheer them on as they grow up. It immediately makes me think about children who grow up without a father in their life. For the last year, I have spent 3 hours per week with a young child who doesn’t get to see his Dad. While I can’t be his Dad, I can cheer him on and let him know he has someone who will always be there.
Thanks to Luke for sharing his story. If you’d like to connect, find him on LinkedIn here.
We’re constantly looking for great real estate tech entrepreneurs to feature. If that’s you, please read this post — then drop me a line (drew @ geekestatelabs dot com).
After two weeks of decreases, the Mortgage Bankers Association reported that mortgage applications increased 1.1% during the week ending Dec. 11 amid mortgage rates that hit a new survey low.
In its latest weekly survey the MBA said the 30-year fixed mortgage rate dropped five points to 2.85% – due, partly, to uncertainty over the prospects of additional pandemic-related government stimulus, as well as concerns about the continued rise in COVID-19 cases across the country, according to Joel Kan, MBA associate vice president of economic and industry forecasting.
“Homeowners once again acted on the decline in rates, with refinance activity rising for the second straight week and up 105% from a year ago,” Kan said.
He added that purchase applications rose for the sixth straight week to the highest levels since June.
“This is perhaps a sign that more first-time buyers are entering the market,” Kan said.
The unadjusted purchase index also increased, jumping 0.4% from the previous week. The refinance index, as Kan noted, rose 1% from the previous week, and is up 105% from the previous year.
The refinance share of mortgage activity increased to 72.7% of total applications, up from an even 72% the previous week. The adjustable-rate mortgage share of activity also increased to 1.8% of total applications.
The FHA share of total applications increased to 11% from 9.9% the week prior. The VA share of total applications decreased to 12.1% from 12.7% the week prior.
Here is a more detailed breakdown of this week’s mortgage application data:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 2.85% from 2.9% – a survey low
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.12% from 3.2%, following two consecutive weeks where jumbo loan balances saw an increase
The average contract interest rate for 30-year fixed-rate mortgages fell to 2.96% from 2.97%
The average contract interest rate for 15-year fixed-rate mortgages decreased to a survey-low 2.49% from 2.51% – the second consecutive week where 15-year fixed-rate mortgage rates hit a survey-low
The average contract interest rate for 5/1 ARMs decreased to 2.58% from 2.60%
Several months ago, I thanked Millennials for their faith in real estate, seeing that Gen X isn’t a huge fan at the moment. But looking back, it appears that Generation Z is even more promising.
While there have been recent fears that homeownership is no longer a part of the American Dream, or even an aspiration for the young, a new survey reveals that it is indeed alive and well.
Just ask 13 to 17 year-olds what they think…that’s what Better Homes and Gardens Real Estate did.
Between July 18th and 29th, the company polled 1,000 teenagers to determine what they thought about buying a home in the future. And guess what, 97% of them are totally into the idea.
That’s pretty good, though I am slightly curious about the 30 or so NO responses as well.
Additionally, more than four out of five (82%) indicated that owning a home was the most important factor in achieving the American Dream.
And 89% of respondents said homeownership was part of their interpretation of said dream, followed by going to college, getting married, and having kids.
So yes, even kids that have never heard of Nintendos think a home you actually own yourself is a very necessary piece of the dream.
Willing to Make Sacrifices to Do It
Perhaps even more amazingly, these teens are actually willing to give up the stuff they love to make that dream purchase.
More than half (53%) said they’d be willing to dump social media for an entire year (and do twice the amount of homework) if it meant securing their ideal home.
Another 42% said they’d go to school seven years a week, and 39% even offered to go to prom with their mom or dad.
If you recall, Millennials like the idea of owning a home, but not if it means they have to give up their morning latte or their precious Netflix.
So bravo! teens for being both ambitious and realistic about the whole deal.
As expected, the overwhelming majority (95%) of prospective teen buyers plan to take key steps in the home buying process online, such as browsing listings and taking virtual tours.
But only 19% believe they will purchase a home online, with 81% opting for the more traditional methods such as working with a real estate agent.
That’s probably a good idea. There’s a lot the Internet can do, but sometimes it’s better to take a look in person as well.
Most Expect to Pay About $275K
Gen Z teens also seem to have a grasp on home prices, even if they don’t have their driver’s license yet.
Of those who plan to buy, they expect to pay $274,323 on average to purchase their first home. That compares to the median $273,500 for a home today, per the latest U.S. Census data.
Maybe they know home prices aren’t expected to do much in the next decade either…in the meantime, they can start saving for a down payment because most aim to buy by age 28, which is three years below the median age of first-time home buyers.
As for where they plan to buy, 47% of respondents believe their future home will be located in the burbs, which kind of debunks the recent big city trend.
Meanwhile, just 23% expect to buy near a city, 20% see country/rural areas in their future, and 10% want a destination location.
Lastly, the Gen Z respondents indicated that they plan to own just two homes in their lifetime, but we all know plans can change in a hurry.
Reports that Amazon has narrowed down the choice of potential cities to host its second headquarters to just three have led to “property frenzies”, as investors look to cash in what they assume would be skyrocketing real estate prices once the decision is officially announced.
Last week it was reported that Amazon will pick two cities to host its HQ2 out of Crystal City, Va.; Long Island City, N.Y.; and Dallas.
CNN Business reported earlier today that Amazon has settled on Crystal City and Long Island City, although Amazon has yet to make any official confirmation.
As a result of the speculation, property frenzies have been whipped up in both Crystal City and Long Island City amid speculation they’ll be chosen. Redfin, the online real estate brokerage, reports that views of listings in both cities have gone through the roof. In the first seven days of November, Long Island City views jumped by 648 percent compared to the average, while views of listings in Crystal City rose by 371 percent.
Mara Gemmond, an agent with Redfin, said in a blog post that one two-bedroom condo in Crystal City had been listed for weeks with little interest from buyers. However, she’s now had numerous showings with prospective buyers.
“I believe there is a lot of interest from investors who want a property they can rent out to a future Amazon employee or possibly use for corporate housing,” Gemmond said. “Investors are betting that prices will rise quickly, and they’ll be able to rent or sell for a nice profit once Amazon comes to town.”
Obviously it’s still a risk until Amazon announces its chosen cities, but some buyers want to get in ahead of the final announcement, fearing that demand and prices will rise exponentially if they wait.
“At the same time, prospective sellers right now are weighing whether it makes sense to delay putting their home up for sale to see if they can get more for their home after Amazon makes its announcement,” said Leslie White, a Washington D.C.-based real estate agent.
A year ago, Amazon, which is headquartered in Seattle, announced plans to create a second headquarters, setting off a frenzy among 238 cities across the country who were vying to be the chosen location. Originally, Amazon said that whichever city it chose would see 50,000 new jobs, which largely has been predicted to set off an economic and housing boom. If Amazon divides its second headquarters between two sites, each city would add about 25,000 employees.
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
Looking for proven ways to win new real estate business? Today’s guest, Conor Kelly, shares what’s worked for him when it comes to making sales via social media. Tune in and hear how to create engaging content on TikTok, YouTube, and Instagram, content that will generate new real estate leads for years to come. Aaron and Conor also discuss why new builds are great for today’s buyers, how to manage a real estate team, and more.
Listen to today’s show and learn:
Conor Kelly’s start in real estate [3:25]
Why Conor and Aaron love social media [6:30]
Getting real estate leads from TikTok [11:21]
Why TikTok is such a powerful platform for Realtors [15:53]
It’s not too late to get on social media now [18:36]
How to handle inbound real estate leads [20:38]
Why new real estate agents should get on YouTube [23:09]
Tips for creating real estate content on YouTube [26:35]
Opportunities for buyers with new builds [31:08]
Advice on managing a real estate team [35:12]
Where to find and follow Conor Kelly [37:13]
Conor Kelly
Conor is a young and outgoing real estate professional that prides himself on his work ethic. His drive and competitiveness have led him to pursue a career in real estate. Before real estate, Conor was a Red Seal Plumber with over 9 years of plumbing experience. This experience has help shaped Conor’s “can-do” attitude and developed his willingness to do the things others won’t.
Before joining the workforce, Conor immersed himself in playing soccer, lacrosse, and working out. If you don’t find him on the field or at the gym, you will find him tuning into a basketball game as he is an avid Toronto Raptors fan.
Conor is always reading a book or consuming educational content as he is a habitual self-educator and self-improvement addict.
“Be obsessed or be average” –Grant Cardone.
Related Links and Resources:
It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email.
We’re all guilty of being obsession with the seemingly perfect lives of celebrities. From expensive cars to luxurious homes and exotic vacations, we may find ourselves comparing our everyday lives to what these celebs are sharing on social media. It’s no wonder, then, why so many people put them up on a pedestal as though they’re achieving something extraordinary—when really, they were probably just in the right place at the right time.
1. Influencers
One user shared, “Pick an influencer, any influencer.”
Another user replied, “I work in tech support for an influencer marketing platform. I didn’t even know influencer marketing was a thing before this job. The insane amounts of money some of these influencers are paid are unreal. I read an email convo between a brand and an influencer who said she charges $9000 for sponsored posts.
“The brand didn’t end up partnering with her, but I checked her TikTok, and she has sh-tloads of sponsored posts! Like several a day sometimes! Her whole channel was painfully unfunny skits about parenting. It was a mindblowing revelation. Hell, even if you only have a thousand or so followers, you can get free stuff pretty easily as long as you post consistently and focus on a particular demographic.”
One user added, “They think they’re popular in the real world, and literally 99.9% of the world doesn’t know who they are.”
2. The Kardashians
“Kardashian-Jenner crew,” shared one user.
Another user commented, “At least Bruce was an athlete. Edit: Why the f- am I being downvoted? Was he, not Bruce Jenner when he was an athlete? Yes. Is there an athlete called Caitlyn Jenner? No. Is any of them an athlete, or at least talented at something other than being cancerous polyps on the rectum of humanity? No. So my original statement holds true: At least Bruce was an athlete.”
One user replied, “Caitlyn herself has said that she doesn’t mind when people refer to her as Bruce when talking about her before her transition.”
3. DJ Khalid
One user commented, “So he’s definitely not overrated on Reddit. In fact, everyone on Reddit seems to (understandably) hate him, but outside of Reddit, DJ Khalid.”
Another user replied, “I got news for you; everyone outside of Reddit thinks DJ Khaled is a talentless doofus, too; it’s not just us.”
One Redditor commented, “It breaks my heart,… man, it f-ing breaks my heart, that there are people out there who don’t believe in us, man.”
4. James Corden
“James Corden. I scrolled through every reply to upvote it. Surprised no one mentioned him,” one user shared.
Aother user replied, “The only funny thing about him is how much England doesn’t want his entitled [self] back.”
Another Redditor replied, “England also has quite a niche sense of humour. His comedy is too Americanised, and he simply can’t compete with the excellent British comedians who’ve always been in touch with what Brits like. So not only do we not want him back for his entitled, arrogant behaviour, we just don’t find him funny either.”
5. Logan Paul
One user asked, “Is he still big? I keep thinking he isn’t, and then someone else mentions him. I swear, I had never even heard of the guy until the story of him mocking a guy who committed suicide… became big, and that was all I needed to know the guy was a jerk… no, something worse because ordinary jerks wouldn’t laugh and mock someone after finding their corpse and knowing they killed themselves… [Even] edgy trolls or comedy lovers to be like, ‘Holy crap, that’s too much for me!’ but nope, the guy keeps on going.”
“Apparently was redeeming himself until his cryptogams and now the Prime garbage,” another user responded.
6. Tik-Tok Influencers
“Anyone who got famous from TikTok. Being pretty isn’t a talent,” one commenter replied.
Another user commented, “Addison Rae and the D’amelio sisters.”
One Redditor added, “I’ve forgotten of their existence for a year until now.”
7. Jack Harlow
One Redditor shared, “Pretty sure Jack Harlow is an industry plant, and it’s giving me a headache trying to figure out how he got popular.”
One user replied, “He’s an industry baby.”
Another added, “Ripping off Fergie and being a generic-looking white dude will get all the gen z girls rolling for you, it seems.”
8. Young People With Famous Parents
“99.9999% of nepo babies, there are some talented ones for sure. Like Lily Rose Depp gotta be one of the [most terrible] actresses I’ve seen,” one user posted.
Another commenter reacted, “The only [nepo] baby that’s actually legit is Jamie Lee Curtis—she is very talented and classy. But yea, Lily-Rose Depp is terrible.”
One user shared, “Laura Dern may be the most talented of the [nepo] babies.”
Another Redditor inserted, “Jeff Bridges. Son of the late and great Lloyd Bridges.”
One user exclaimed, “Nice catch! Fantastic actor.”
9. Jared Leto
One user shared, “Jared Leto. Shitty actor, shittier musician, and a s-xual predator to boot.”
Another user added, “Keep your children away from Jared Leto.”
One user shared, “When I watched Dallas Buyers Club years ago, I couldn’t tell who that one character Rayon was played by until the credits. I was blown away by it, Jared Leto. Other than that, he has pooped out some stinkers of performances. Possibly the only guy that could turn in a terrible Joker performance. Kind of unbelievable that studios keep banking on him.”
10. Drake
One Redditor said, “Drake.”
Another user replied, “He makes me cringe.”
One user added, “Agree. His music has no seasoning. It just has this boring passive-aggressive vibe to it.”
11. Lily-Rose Depp
“Lily-Rose Depp. She is just awful,” one user posted.
Another Redditor added, “I haven’t seen her in anything, so I don’t know whether or not she has talent, but I know her new show with The Weeknd, The Idol, is getting critically backlash reviews with no mention on whether or not her acting saves the show.”
Another user replied, “You haven’t seen such gems as… Tusk? Yoga Hosers? Or heard of her fame for somehow being the only 5′ 3″ runway model? All of which are based purely on her blinding talent and have nothing to do with nepotism in Hollywood.”
12. Jojo Siwa
One user shared, “Jojo Siwa. God, she drives me f-ing nuts. She can’t sing or act… And the fact that she has to mention that she’s a lesbian every time she’s on tv is cringe.”
The user added, “I don’t personally care about her content. It’s when she goes on shows like That’s My Jam and has to bring up that she’s a lesbian. Maybe if she came across and more genuine, then she wouldn’t be so annoying.”
13. The Rock
One Redditor commented, “The Rock. I love him because I’m a long-time pro wrestling fan, but he’s insanely mediocre as an actor. He basically has the success he has because he’s marketed himself so well, though, and to some degree, I admire the hell out of it, but he was 100x the pro wrestler than he was an actor. Dude was legitimately so charismatic and hilarious on the mic and fun to watch in the ring.”
Another user replied, “Very mediocre actor, but a great guy.”
One replied, “I say this all the time. The Rock plays as The Rock in every role. He’s had a range of different roles, too but still just The Rock. I can never see him as the character he’s trying to portray because he is a mediocre actor.”
14. J Lo
One user pointed out, “J Lo. If I missed it, I apologize, but I scrolled and could not believe she wasn’t at the top: a horrible singer, an average professional dancer, a terrible actress, and messy personal issues. I don’t get it. That damn dress made her whole career. It was a great look; I’ll give her that but not a career’s worth.”
Another user added, “Her Spanish is pathetic for someone who claims to be Puerto Rican.”
15. Pete Davidson
One user commented, “Pete Davidson.”
Another user asked, “How are women attracted to him? A sense of humour only goes so far.”
One Redditor answered, “He’s got that, ‘I just need the right woman to fix me’ vibe.”
16. Joe Rogan
“Joe Rogan. I mean, how?!?!?!” exclaimed one user.
Another user added, “My brother is an English professor, and politically conservative, I might add, and he often uses Joe Rogan clips in his critical thinking class to show how deceptive semi-plausible logical fallacies can be when they are presented calmly and are not too flagrant or over-the-top.
“I forget which famous example he references most, but there’s one where he used 15 fallacies in less than two minutes. But once you’ve seen it, yeah, he just does the same thing over and over—chips away at something he doesn’t want to believe in that is backed by science/facts by presenting selective, bad-faith representations of the topic and then doesn’t actually make a strong case at all for his side.
“He just unethically casts doubt but makes it seem reasonable because he appears ‘skeptical.’ He’s not actually informed most of the time to raise legitimate objections. It’s the whole ‘prove to me ___________,’ like the burden of proof is on experts to refute his specific BS objections or else his uninformed opinion is just as valid as their knowledge. I’m amazed people don’t see through this.”
Another user added, “He legitimizes stupid positions for stupid people. The stupid people eat that sh-t up.”
17. Chris Pratt
One user added, “Chris Pratt. Not only did he voice the MC in the Lego movie, he then did Mario. Now he’s doing Garfield. There’s a reason voice acting is a separate profession from acting.”
One replied, “Very true, but we should also acknowledge that there are actors that can do both. Jack Black brings probably the penultimate example of that.”
18. Taylor Swift
“Taylor Swift. The amount of die-hard fans I know that have some kind of parasocial relationship with the idea of her is crazy,” one user posted.
Another user replied, “There is a Taylor Swift concert coming here soon. It’s been sold out for a while, and people are paying scalpers thousands of dollars just for bad seats. Linkin Park is my favourite band, and I’ve paid to see them in concert. But even if Chester Bennington rose from the dead and went on tour with LP again, I still wouldn’t pay that much for a freaking concert. That’s insanity.”
19. Timothée Chalamet
One user shared, “Timothée Chalamet.”
Another user replied, “The meme that he looks like an old medieval shoe always makes me crack up.”
One user commented, “Eh, I’m not attracted to him physically, but he’s a fantastic actor and seems to truly have a passion for his craft, at least to me, that’s the appeal, a love for his work.”
20. Harry Styles
One Redditor said, “Harry Styles. I can’t comment on him as a singer since I don’t know that I would recognize any of his songs, but people talk like he’s the next great actor, and I just don’t see it. He’s okay, I guess, but he’s no Deniro, Pacino, Nicholson, etc.”
Another user agreed, “Big time agree.”
One responded,” His music, at least the popular stuff, is pretty generic imo. I’ve heard some of his less known stuff is better, but most of his big songs sound like they’re specifically designed to play in the background of a big box retail store or annoying car commercial.”
Do you agree with the names listed above? Share your thoughts below!
Source: Reddit.
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Short sales have a reputation for being, well, kind of a pain in the keister.
It’s not uncommon to run across horror stories of the short sale process and timeline stretching out over seven months or more. With that kind of timeline, many buyers shy away from short sales, in spite of the great deals out there.
If you’ve got your heart set on buying one anyway, strap in. We’ll go over everything you need to know about how a short sale works.
What’s a short sale? Why buy one?
First, let’s go over the difference between a short sale and a standard sale.
If a homeowner is having financial difficulties, or if the home is underwater, the bank that owns their loan might allow them to sell the property for less than the outstanding mortgage in order to avoid foreclosure. This is a short sale. Though it doesn’t sound very complicated on its face, there is a pretty significant amount of red tape involved, courtesy of the bank.
If this is starting to sound kind of ominous, don’t worry. There are plenty of reasons why buying a short sale works.
Though this isn’t a hard and fast rule, short sales are more likely to be on sale for below market prices, and with a keen eye and some careful research, you can save a pretty penny. The one caveat? Since the owners have been strapped for cash, short sales are also more likely to need a little TLC. This makes them a great choice for real estate investors and weekend warriors.
Of course, there’s another reason a buyer might choose a short sale: sometimes, they just really like the property.
Why does the short sale process take so long?
When you purchase a house through a normal sale, there are just three main players: you, the seller, and your lender. A short sale, however, throws another party into the mix to gum things up—the seller’s bank, who is now trying to recover as much of their money as possible.
As to the specifics of the delays you might face, they could be caused by any number of things. Your most likely suspects include:
The original bank is dragging its feet
When you, the buyer, enter the picture, the bank holding the loan has already gone through the seller’s financials and determined that, yes, a short sale is their best shot at getting the most money back.
However, that doesn’t mean they’re as eager to get the whole thing over with as you (or the seller). Their main goal is to get as much of their money back as they can, and they’re not above drawing the process out if they think they’ll have better options later down the line.
Total Mortgage Processing Coordinator Jake Healy has seen his share of short sales and experienced this first hand.
In one instance, “the short sale approval process took so long that the real estate market improved and the bank increased the price they were willing to accept for the house, even though the borrower’s offer had already been accepted.”
There’s not much you can do to speed this part of the process up, so either stick it out or decide on a time limit in advance so you know when to walk away.
The original mortgage gets sold to another servicer
Most of the time, the bank or lender who originally finances a mortgage doesn’t hold on to it. Instead, they package it with other loans and sell it to another company, who will then service the loan and collect payments and interest. This can happen at any point in the term of the loan.
Of course, that also means it can happen during your negotiations, forcing you and the seller to start from scratch with the new bank.
Jake has run into this issue, too. “The debt was sold from one bank to another bank during short sale process on an unoccupied home,” he told us, “which delayed closing because the buyer needed to make repairs prior to closing to meet FHA guidelines, but no one could get in contact with the new bank to get permission to have the work done.”
The short seller has more than one mortgage on the property
If the seller has run into money troubles, they might have taken out a second mortgage on the property via a home equity line of credit or home equity loan. To complicate things even further, it’s likely that the second loan is held is now held by a different servicer than the original loan.
If that sounds like the recipe for a headache, you’d be right. Both will need to approve the seller for a short sale and then consider and approve buyer’s offer. They’ll have different timelines and processes for each step, and may not be great at communicating with each other.
There are title issues
Every lien or unpaid debt that shows up on the title must be negotiated and settled before the sale can proceed. This can, understandably, take some time.
Marc Laudicina, a managing loan officer here at Total Mortgage, has plenty of experience with short sales. In addition to dealing with them at work, he’s also just closed on one himself. He wasn’t immune to title troubles, though.
“The seller had an old mortgage from 1987 by a defunct lender that was never cleared off the title,” he said, “so my attorney and the seller’s attorney had to work with the FDIC (since the bank didn’t exist anymore) to confirm it was paid. This took a while.”
The loan you chose is complicating things
Since short sales tend to be distressed properties, they’re usually good candidates for renovation loan programs like an FHA 203k or Fannie Mae’s HomeStyle. These allow you to finance the renovation of your new property along with the original loan. Since they require so much documentation in terms of contractor quotes and plans, though, they can take a lot longer to close.
The property itself is causing delays
In order to qualify for certain government loans, you’ll need to pass an inspection. Given that some short sale properties are in less than optimal condition, though, what you have is a chicken-egg scenario—the bank won’t pay for renovations and the buyer can’t renovate until they own it. In this situation, the only option is generally to switch loan types or pay cash.
In northern parts of the country, you might also run into a special variation on this problem. If the house has been vacant and winterized, some lenders will need it to be de-winterized before the inspection can be completed. In this situation, the buyer typically has to cough up the cash.
Your own lender is holding things up
Mortgages are complex processes that involve a lot of paperwork. Sometimes even a standard mortgage can take a while. This can be thanks to the lender’s mistakes or your own, but the end result is still the same: your wait is longer.
The short sale timeline
The basic shape of the short sale process and timeline isn’t very different from your typical sale. However, there are some quirks along the way that you might want to keep in mind.
Quick note before we get started: the timeline laid out here is very general. Your timeline—and even the order in which you hit these milestones—could be very different.
Find the listing and visit the property: 1 week
While on the hunt, keep in mind that the list price may not reflect what the seller’s bank will accept. Generally, the seller sets the list price with the help of their realtor—the bank doesn’t get much input. The only exceptions? Listings that have been pre-approved by the bank. These are less common, but they are out there and are typically quicker to close.
Make an offer and sign sales contract: 1-2 weeks
Assuming you’ve made a reasonable offer and have minimal competetion, the seller has little reason to turn you down, since they make nothing on the transaction regardless of the sale price. This part of the process will go fairly quickly, but remember that a sales agreement with the seller doesn’t guarantee a deal with their bank.
Get approved for a mortgage: 1-2 months
Unless you’re buying cash, you’ll need to get your own lender involved. Depending on your loan type, you might be able to close in as little as 30 days, though renovation loans and some government loans will take longer.
Send your short sale packet to the lender and wait for approval: 1 week–12 months
While you’re getting your mortgage in order, you should also be filling out the right paperwork and making your offer to the seller’s bank. Then you negotiate with them and wait on approval. As we’ve already mentioned, this is the part of the process that can really hold things up. Though the seller might be willing to accept lowball offers, the bank probably won’t.
Get the property inspected: 1 day
Depending on your loan type, an inspection may be required for approval. Even if it isn’t, it’s still a good idea to know exactly what you’re buying. If an inspection isn’t required, though, you might want to wait until after you have bank approval to spend money on an inspection.
Debbie Drummond, an experienced realtor who runs her own real estate agency in Las Vegas says that this isn’t realistic for everyone.
“Many sellers require buyers to complete their inspections within a traditional due diligence period,” she says. “The buyer risks losing the money spent on inspections if the bank doesn’t approve. Doing the inspection will let the buyer know if there are any issues.”
Get the property appraised: 1 week
Your lender will require an appraisal, though it could do you some good, too. If it comes in lower than your offer, you stand a decent chance of negotiating the bank down. If it comes in higher than your offer, don’t worry about the results affecting their approval. The seller’s bank won’t get a copy. Because there’s research involved, expect to wait around a week for your results.
Get approval and close: 1 week–1 month
Once you have approval, the rest of the process is downhill. Depending on your situation, your may have extra steps like a survey or additional paperwork. Expect to have a fairly normal closing process.
Tips for making a short sale offer
Ultimately, there’s not a whole lot you can do to speed up a short sale. However, you can be smart about how you make your offer. The more the bank likes it, the quicker they’ll approve it.
Keep your offer as fair as possible. Since you have no way of knowing exactly what price the bank is willing to accept, lowballing for the heck of it may not get you very far. Instead, take into account the market and state of the property when choosing your offering price.
Be wary of making an offer soon after a large price drop. Most sellers will drop the price by smaller increments to make sure that they get the maximum potential offer. Occasionally though, you’ll run across a very large reduction intended to generate interest. Hold off on offering right away. Because the bank has no proof that the home could not have sold for a smaller increment, they’ll try to counter with a higher approval price, increasing your wait.
Don’t count on using the inspection results to haggle. Most short sales are as-is. Though there are some situations where the bank is willing to make repairs, it’s best to assume you won’t have that option going in.
Don’t expect the bank’s decisions to always make sense. Because there are so many factors at play for the bank approving the short sale, from an outsider’s point of view their actions can look a little, well, stupid. If nothing else, keeping this in mind can save you some sanity.
Is the short sale process worth it?
The answer to this question is entirely dependent on the specifics of your situation. “Short sales can be a great deal, but they’re only for a buyer with time and patience,” Debbie told us.
Broadly, it’s a safe bet to say that a short sale isn’t going to work for you if:
You’re relocating for a job
You’re not willing to take on a fixer-upper
You need to get into a home quickly
You can’t separate yourself emotionally from the house
You’re generally impatient
You’re a first-time buyer and unfamiliar with the basics of homeownership
For those who can afford to wait, can power through the uncertainty, and don’t mind dealing with a project when they finally get the keys, a short sale might be worth it. There’s a reason they’re popular targets for real estate investors, after all—the prices can be great.
Flagstar Bank revealed the fintech graduates of its latest MortgageTech Accelerator program, which is designed to assist startups whose work aims at driving innovation in home lending technology.
Hailing from the East and West Coasts, the four companies going through the accelerator specialize in processes related to facilitating the renter-to-homeownership pipeline, audit review and compliance, renovation lending and income verification.
The latest class includes two New York-based firms: Housetable, who offers tools to help issue equity-backed second liens for renovations; and Landis, whose platform provides a rent-to-own model to assist aspiring buyers achieve homeownership.
Also among the latest group is Certo/ai, an artificial-intelligence powered data-review system used across lending operations, including underwriting, audit and compliance, with offices in Washington, D.C.; and Greenline, a San Francisco startup similarly employing AI with income verification tools to streamline lending to self-employed borrowers and small-business owners.
Through the program, Flagstar allows the chosen fintechs to test their models and software in situations involving existing banking clients and loan portfolios, while providing potential opportunities to continue the relationship with the lender post graduation.
“Thanks to the collaboration of Flagstar’s leadership team, we were able to apply our data and automated technology to real-world cases Flagstar experiences today,” said Gene Swanzey, co-founder of Certo/ai.
The latest round of participants represents the fourth accelerator class supported by Flagstar and the first since its merger with New York Community Bank was approved late last year. With its headquarters now in Hicksville, New York, company officials retained the Flagstar name and pledged to continue offering the tech accelerator program.
“The mortgage accelerator has been tremendously successful for Flagstar, helping us stay at the forefront of innovations in the mortgage industry and deliver a better experience to our customers,” said Lee Smith, president of mortgage for Flagstar, in a press release. “It’s a win-win all around,” he said.
The bank offers graduates one-on-one access to senior leaders on Flagstar’s mortgage team, along with other mentorship, networking and coaching opportunities. Flagstar also advises each company on topics concerning technology integration, pricing strategy and product roadmaps.
“Through hands-on experience, we were able to enhance our suite of products and gain insights into the dynamics of a leading mortgage originator and large-scale bank, all of which helped us better tailor our services as a strategic vendor,” said Housetable Co-Founder and CEO David Benizri.
While several financial institutions, including Barclay’s, BMO Financial Group and Bank of America, offer similar tech programs to support new startups, Flagstar’s accelerator is the only one geared specifically toward serving home lending and adjacent segments.
The unveiling of the latest fintechs to emerge from the accelerator coincides with a recent merger announcement coming from two alums of the program. Stavvy, who completed the program in 2020, reached a deal to acquire servicing startup Brace, one of the inaugural 2019 participants. The acquisition is expected to bolster Stavvy’s servicing capabilities alongside its existing technology-based lending and closing solutions.
Flagstar expects to launch its fifth accelerator program in early 2024, it said. In reviewing fintech applicants, the bank looks for innovators working in all facets of the mortgage industry, from origination and servicing to compliance and secondary markets, while considering their strategies in addressing goals spelled out in the Community Reinvestment Act. Flagstar measures progress of startups’ product development, their potential for growth and likely CRA impact in making its selections.
While interest rates continue to hover near record lows, many of today’s first-time home buyers may find it difficult to come up with the money required to purchase a property.
At the end of the day, a low interest rate can only provide so much access to homeownership.
The prospective buyer still needs a down payment in most cases, and with home prices on the rise, it’s becoming more difficult each and every day.
Sadly, it is the lowest priced homes that have seen the biggest jump in median down payment, per new data from Redfin.
The company reported that the median down payment for the cheapest 25% of homes was 7.5% in 2013, up from a 4.2% average seen during 2001 to 2007. That’s nearly a 79% increase.
Last year, the median down payment for these homes was $9,480, compared to just $6,037 in 2007.
During the crazy years, 2006 for example, the median down payment on that subset of homes was just 3.1%. And many put nothing down at all.
Conversely, the median down payment for the middle 50% of homes rose from 8.2% in 2001-2007 to just 8.8% last year, a mere 7.3% increase.
For the highest 25% of homes, the trend was similar, just a 10% rise from 19% to 20.9%.
Why Are the Low Priced Homes Bearing the Brunt of It?
Well, it’s simple really. Many of the cheaper homes that aren’t paid for with cash tend to be financed with small down payments.
Prior to the housing collapse, zero down was the way to go, even for more expensive homes. But once lenders got serious about underwriting again, borrowers were putting down 3.5% via FHA loans.
Unfortunately, the FHA has become a very expensive option for today’s homeowner thanks to ever-rising mortgage insurance premiums, meaning some of these home buyers are instead forced to go the conventional route.
Most conventional loans now require at least five percent down (there are exceptions), which partially explains why the median down payment has jumped so much.
For more expensive homes, well-to-do buyers often put down 20% or more to avoid paying PMI and to get a more favorable interest rate.
So the impact of the FHA’s recent changes hasn’t deterred these buyers much if at all because they were never going to use the FHA to begin with.
How Higher Home Prices Can Hurt Even If Rates Are Low
Let’s assume today’s home buyer has to bring in 5% instead of 3.5%, and deal with a higher home price to boot.
A couple years ago our hypothetical home sold for $200,000. Today, the price tag is closer to $250,000.
In the past, only $7,000 was needed to buy the $200,000 home with an FHA loan. And the borrower didn’t have to worry about paying MIP for life!
Today, they’d need to come up with $12,500 for the same home, nearly double the amount previously required.
At the same time, their monthly mortgage payment might only be a $100 or so higher thanks to the low rates available.
Many people can probably afford to pay another $100-200 a month on their mortgage, but not everyone has another $5,000+ lying around to put down on a home purchase.
Making matters even worse is the fact that bidding wars often favor those who can come up with a larger down payment, meaning today’s prospective buyer with little set aside might have to continue renting.
The good news is that today’s homeowner actually has skin in the game, meaning home prices will have more of a buffer than they did prior to the most recent crisis when walking away was a lot easier to do.