The Realties of Today’s Real Estate Market…What You Should Know!

by Patrick Hancock 

According to the Orlando Regional Realtor Association, 2/3 of all homes sold in the Orlando market were distressed properties. These include homes that qualified as Short Sales or REOs (real estate owned by a bank).  The reason these homes make up the majority of the sales figures is simple. They are priced well.  Unfortunately, homeowners that are not forced to sell must compete with these distressed properties.  On the bright side, non-distressed homes are still selling.

Another issue plaguing the market is that 10% of homeowners owe more than their home is worth and many just walk away.  These homeowners can afford to pay their mortgage but choose to face the consequences of foreclosure instead.  This is seen as unethical by some but viewed by others as a smart financial decision.

Despite a sharp decrease in property values, taxes are going up for many homeowners.  Even though property values plummeted last year, at least 150,000 property owners are going to see their homestead’s assessed value go up.  That’s because the same Save Our Homes Amendment that has limited homestead owners’ assessment increases to no more than 3 percent a year since it was passed in 1992, no matter how high their property value shot up, has a down side too.  If a homesteaded property’s market value drops but still remains higher than its assessed value, then the appraiser’s office must increase the assessed value by the lower of either the state’s consumer price index or 3 percent. This year’s increase will be 2.7 percent.

There are an increased number of vacant homes on the rise. According to the most recent statistics, there were 2.09 million homes in the United States without occupants. This number includes both listed properties and properties the banks are holding without listing.

What exactly is a Short Sale? By now, most people are familiar with the term Short Sale. But what exactly does that mean? Did you know that a home can be listed as a Short Sale but might not actually qualify as one? Many interested buyers have been unpleasantly surprised to find out that the house listed in the MLS as a Short Sale hasn’t actually been approved by the bank yet.  The process begins with the homeowner wanting to sell his/her house. It is important to note that just because a homeowner wants to sell their house as a Short Sale does not mean that they are in financial trouble. It simply means that they owe more than the house is worth (a common problem for millions of Americans). The homeowner must get the bank’s approval to sell the home for less than what is owed on the mortgage because it’s the bank that will have to assume the loss. For example: The homeowner borrowed $250K from the bank to buy a house for $375K. Now the house is worth $215K and the homeowners still owe $240K. The banks must give their approval for the homeowners to sell their home for less than the $240K that is still owed on the home. In order to do this, the homeowners must submit paperwork including a “letter of hardship”.  This is why not all homes will qualify as a Short Sale. If a homeowner can pay their mortgage and isn’t in any financial despair, the banks more than likely will not approve the Short Sale request. This is why it is important for real estate agents working with buyers to find out how far along in the process the homeowners (sellers) are with the banks in getting their home approved to sell as a Short Sale.

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