About  5 months ago I came across an interesting feature that I just had to add to my website; i.e., the Cost of Commuting Calculator.   Five years ago I would never have given this a thought to be used here in Reno.   Los Angeles, sure.   Also San Francisco, Chicago, Dallas, Atlanta, New York, Boston, and a host of other cities across the country.

However, as the price of gas climbs and I see that  the U.S. auto manufacturers are still behind the 8 ball when it comes to creating energy efficient autos for the U.S. market, I feel this is more important than ever.

This calculator will determine your total monthly payment for a home and a commute in two different scenarios.   Scenario A you find a home here in Reno that is 3,000 sq. ft. with multiple bedrooms and baths for under $300k, however it’s a 30-mile drive to work one way.   Scenario B finds a home for $400k, however your commute is 5 miles one way.   You drop in the applicable figures including the amount of the mortgage, the interest rate, what your car is worth, what your mileage is, and what you are paying per gallon for gas, and it comes up with 2 figures.   Surprisingly enough, in many instances, the more expensive home that is closer to work is a far better deal than the one located on the outskirts of town!   Of course, you don’t need to live in Reno to use this calculator.   It is generic and you can compute these figures in any area of the country.

If you are trying to figure out these statistics for yourself as you are moving to Reno, refer to  the Cost of Gas link on the left-hand navigation bar of my website.   This will give you the cost of gas up-to-the-minute from the least expensive on up in Reno/Sparks, and it will give you the name of the station and the address.  

Check it out!  

For the past several days I have been watching all of the news channels and trying to get a handle on the financial  sector of our economy  and the pros and cons of the impending “bailout.”   From a week of intense commentary on the subject the only thing I feel certain is that there is not a general consensus.   As the “experts” are interviewed, each has a totally different view than the next, and no one seems to be able to agree.   Are we being faced with a reality of the 1960s where we lived in a cash society?   I have heard clients tell me the interest rates on their credit cards have doubled because they had larger than 50% loan to value, even though they are current on their payments.   I have seen available credit limits cut in half “just because” even if that credit hasn’t been tapped.   Of course mortgages are getting tougher to obtain as the criteria changes – and I’m all for that;   but,  are we really facing the possibility of no available mortgage money and no available credit?   These uncertain times are causing people to pause.

I believe, like Warren Buffet, that right now is an opportunity for those with money.   The stock market affords opportunities that we haven’t seen in a long time.   The cost of real estate in Reno is, in some neighborhoods, at a 6 or 7 year low.   As we all know real estate is cyclical, and it will rebound; if you have money to invest and invest for the long term,  I feel you will not only get the deal of a lifetime but  the value of that investment will rebound.   It’s a win, win as I like to call it.   I am now checking the number of homes available for sale twice a week, and we are still stable with the number of homes coming on the market being offset by those going under contract.   I heard one analyst say this morning that when the bailout happens it will correct the real estate foreclosure situation more quickly, and he thought there would be a complete correction by late spring of ’09.   So, according to Jim Cramer of “Mad Money” this is your window of opportunity right now!

Many of the people I work with choose to rent before they purchase.   Perhaps they have a home to sell in another market or they don’t feel that they know the area well enough to make a large financial commitment immediately.   For whatever reason, this happens frequently.   I am a licensed realtor in Nevada; however, I do not have a property management license and I do not handle rentals.   But, I am still here to help you with your relocation.

If you are among those who are thinking of renting, you can always call me for availability of properties in the Reno/Sparks area.   I keep a current list of properties offered through my office as well as any properties I find along the way in a great area or where I feel it would be a good rental.   If you have no knowledge of the various areas of Reno, with a 15-minute conversation I can guide you to those areas I feel would suit your needs.    

You  can then  refer to my website www.RenoRelo.com  to find links for renting that will tell you the average price paid for a like type of rental in a specific area.   Also, for up-to-date rental listings always check www.reno.craigslist.com.   If you think you have found that perfect rental, please call me so I can find out who owns the property and how much money is owed on it.   This  is recorded and open to the public, and I have quick access.   The last thing you want to do is place a very large deposit and a month’s rent on a place where the owner is upside down in his mortgage and one step away from foreclosure.   There is nothing to stop the Sheriff from visiting you, changing the locks, and throwing you out of your own home.

Be an informed consumer!   An apartment complex should be safe; however, a privately owned property may have some issues of which you want to be aware BEFORE you sign on the dotted line!

As you may have heard, the financial markets have been in a tailspin with the demise of Lehman Brothers and the buyout of Merrill Lynch.   Although the Feds are being pressured to lower interest rates even more, they are protecting the exchange rate of the dollar by holding inflation at bay.  

What usually happens is that the change is anticipated and the rates drop before the fed actually makes any change.   Today the FHA 30-year loan was 5.375% and a conventional 30 year  loan was around 5.8%.   Wow!   I haven’t seen rates this low in years.  

The front page of the local newspaper was not about Wall Street but sensationalizing the foreclosure rate in our local market which was up 46% in August.     I know this sounds frightening, and I’m sure it’s meant to sell newspapers; however, the untold piece of the story is that there are 124,616 residences in Washoe County and there were 1105 foreclosure filings.   This is just under 1% of the total number of homes.

Now I do concede that this country is in a crisis and yes there are many short sales and foreclosures, but the picture painted is so grim.   When I ran my numbers this morning there were 15 fewer active listings than last week and 43 more homes under contract than last week.   As the lower priced properties come on the market, whether they are foreclosures, short sales or regular listings, smart buyers/investors are gobbling up the good deals, and this is keeping our inventory steady.   We certainly aren’t out of the woods yet; slowly but surely.

So don’t  take everything you read as gospel.   There is always another side to the coin.  

As the years pass I find that the way I have moved across the country is disappearing.   My husband has always accepted positions with companies who agreed to move the family, pack and load the house, store the furniture for 3 months, pay for our living expenses in a hotel for 3 months, and more.   We were also referred to an exceptional realtor in the new city who would tend to our needs and make sure we found just the right house in the right area.

That was then; this is now.   There are still those companies who offer relocation packages, but they are diminishing.   Company cutbacks due to rising costs of everything are apparent, and only those select few who are vital to a companies existence are those who reap these types of benefits.   Some will offer a moving allowance and other perks, but by and large you are on your own.   More than likely that means that whoever is taking the new position moves quickly to begin the new job and the other is left behind with the family and all of the responsibilities of selling house A and finding the perfect house B in the new city.

This is where I come in.   As a representative of Relocation Marketing, I am of a select group of highly qualified realtors around the country who are assisting families with their moves.   Of course our business is to sell real estate; but more importantly it is our goal to assist all of the aspects of those relocating.   If you have to sell your current home and don’t know a realtor, I can find a great one for you; if you have never been to Reno and don’t know where to start I offer everyone through Relocation Marketing a free 2-hour orientation of our city so you can hit the ground running.   I have links on my relocation website www.RenoRelo.com for a relocation guide, a cost of living comparison, a cost of commuting calculator, the cost of gas in Reno up to the minute, and you can even get an insurance quote from another link on my website.   We will soon be linked with a  State Farm Agent in our respective cities who will also be their to assist you.

So, if you are moving to Reno  I am  willing and qualified to help you, even if you intend to rent before you buy.   Do not pass up this free opportunity to make your move cost effective, efficient, and hassle free.  

Just when we really need those interest rates to drop, that’s just what they do!   Today’s rate for Conforming under $417,000 is 5.875% for a 30-year fixed and 6.375% for a 40-year fixed.   (Yes, in case you didn’t realize, they will now do a 40-year loan).   Even better, FHA/VA Government Loans are at 5.625%!   Of course all of these loans come with an origination fee, but the main point is that the rates are dropping!

My advice to anyone out there looking to purchase a home is don’t try to time the market at the bottom.   Most of the time when you figure out that it might be the bottom of the market the rates have already begun to creep up.   Buy now while the prices are low and the interest rates are also low.   It’s a win win for everyone.

Perhaps you are finding yourself in the situation that you need to sell your home but it’s not worth as much as the current mortgage.   What do you do?   This is a fairly new circumstance for homeowners, and  many Realtors have either avoided short sales or have not educated themselves properly to handle the challenges they present.

If you read yesterday’s blog you understand what the buyer faces when attempting to purchase a short sale.   Today I will get into specifics of the seller.

Before you even attempt to call a Realtor I suggest you weigh the options heavily.   There may be another alternative for you, such as staying in the property or selling as a short sale but bringing cash to the table so that it doesn’t affect your credit.   Another alternative is to contact your lender to try to work out a mutually-satisfactory solution such as lowering your interest rate or  delaying payments for a period of time.   If none of these seem to work, then maybe a short sale is your next best bet.

A short sale cannot happen unless the lender approves, and you must be able to prove hardship in order for this to happen.   A lender is not going to approve a short sale just because you are going to lose money.

When you meet with your Realtor to sign the listing agreement he/she will advise you on the consequences of a short sale, such as possibly having to bring money to the table or being taxed as income on the amount between what is realized for the property and what is still owed, even though you will receive no funds at the closing.   IN A SHORT SALE THE SELLER RELINQUESHES ALL PROCEEDS TO THE BANK.   It is always advisable to refer to an attorney or tax professional or both in these matters.

Your Realtor will bring you a  list of documents which need to be collected as soon as possible and submitted to the bank along with a letter of hardship.   These documents will tell the story of why you are requesting a short sale.   Some of the allowable circumstances may include medical, death, divorce, mandatory job relocation, or even extended military leave.   Whatever the reason, you must explain in a letter and provide backup documentation that will include 2 years of tax returns, 2 years of W-2s, the last 2 months of bank statements, 2 months of pay stubs, last 2 months of mortgage statements, any other liens on the property such as IRS liens, child support or alimony documents, and an authorization for  the bank  to release information to your agent as your representative.   This packet must be put together quickly.   I can’t stress enough that a seller’s cooperation and candor are   imperative to the success of this transaction.

The time line here is not predictable.   If the packet is put together properly, as the bank mandates, and sent in quickly, you may have a better chance of communicating with them.   If the packet isn’t in the correct “stack order” (the order in which the bank wants the documents presented) then they may put it aside or not look at it at all.   The most difficult part in a short sale is getting the bank to agree to it No. 1 but also getting them to look at the paperwork.   Both buyers and sellers need to understand that lender approval may take several weeks  or even months to obtain.   Once that approval is obtained, however, the bank gives the buyer 30 days with which to close the deal.

I am asked constantly why the banks don’t move more quickly in these circumstances so that they can sell a property.   If you put yourself in the bank employee’s position, perhaps it’s easier to understand.   Even if you are a top employee of a bank and had been there for years, if they placed 700 files on your desk for you to manage, how quickly could you get through the stack?  

You will have the greatest chance of success in a short sale  by dealing with a Realtor who is knowledgeable of the process, articulate in their communications and willing to go the extra mile to get the job done.   Bank protocol always needs to be followed, a net sheet needs to be submitted with every offer, and every conversation needs to be documented.    It’s a race to the finish.   If you are still paying your mortgage, then you have more time.   If you are delinquent in your payments, then the clock is ticking and you either need to sell quickly or it will foreclose.

Once a contract is accepted (yeah!!) your next challenge is dealing with title and escrow.   In our Reno market, many banks have contracted with title companies in other areas, such as Las Vegas.   It becomes more difficult to deal with a company who is not familiar with Reno and how we normally do business.   Also, as we are not close to Las Vegas, signings are done locally through a notary.   The problem I see with this is that the notary can verify that you are who you say you are, but they can’t answer questions or deal with problems that invariably come up at the closing table.   I have made it a practice to employ an experienced title officer in our market to go over the documents with the buyers/sellers so that any problems can be caught before going to closing.   An experienced title officer will make the process much less painful.

A buyer may choose not to consider a short sale because of its complications; a seller may have no choice.   Select a Realtor who can see you through to the end with a successful close.

This morning I attended a seminar on short sales, and it occurred to me that if we as agents need more information about the subject,  that surely the public is in an even greater need to know.   Herein I will attempt to explain the short sale and the pros and cons of such a transaction.

A short sale  happens when a  seller owes more on the property than the property is worth, and the sale must be approved by the lender(s) before it can proceed.   In the Reno market approximately 50% of our listings are short sales.

As a buyer considering a short sale, you must be aware of the following information.

First we’re going to consider the various types of sales and time-lines.  

In a normal sale where the seller has equity in the property, the seller will respond to a offer to purchase somewhere between 24 and 48 hours, and when accepted that contract can close quickly; i.e., 30 days or less.   So, the entire process can be approximately 32 days.    

In a foreclosure, where a bank owns the property, it may take the bank (seller) a little more time to respond to an offer (5 to 10 days) but once the offer is accepted the contract can close in 30 days, making the entire escrow about 40 days or so.  

In a short sale the offer is first presented to the owner of the property.    The  owner may agree to the  terms of the sale within 2 days;  next that  agreement must be forwarded to the lender(s) for approval, along with a “package” that the listing agent compiles, which could take another 3 days.   Once the bank approves the sale agreement, they will request  an appraisal to verify the  value of the property,  and this  could take another 2 weeks.   Once all of that information is received, it can take the bank up to 90 days or more to review the deal.   If the lender then agrees, you have 30 days in  which to close the transaction.   All totalled this amounts to 140 days or more.  This is not a transaction for the faint of heart, the inpatient, or anyone who needs to close quickly.   I have had occasion to close a short sale in 60 days, but this is not the norm.   Each lender has their own rules and way of doing business, and the agent must adapt to their protocol.

Next we will look at what needs to be included.  

Now, in order for the listing agent to present an offer to a lender, they must first produce a seller’s “package” which I mentioned above,  and a complete net sheet showing how much money the lender is going to forfeit because of this sale.  

The seller’s package includes but is not limited to:  

Financial Hardship Letter, financial statements, mortgage statements for all loans, 2 months of most recent pay stubs, 2 months of most recent bank statements, 2 years of tax returns, 2 years of W-2s or 1099s, all liens on the property, and  alimony and child support documents.  

A seller cannot claim a short sale just because he is losing money on his/her sale.   He must prove hardship.   Types of hardship include a mandatory job relocation, extended military leave, loss of job, divorce, medical emergencies or death to name a few.   If the seller cannot substantiate a hardship, then the short sale will be denied and the home will more than likely go to foreclosure.   It is the listing agent’s job to determine hardship and have that approved by the bank as quickly as possible so that the home has a chance of being sold as a short sale before it is marked for foreclosure.

Why would a buyer consider a short sale?   You have a great potential to purchase below market value while still having a chance at seller concessions; i.e., where seller will pay closing costs, etc.   There is less competition than bank foreclosures because of the timeline.   Probably the most important factor is that the perfect home was found and time was not of the essence.

I would counsel buyers not to consider a  short sale if they have timing restrictions, they have a contingency (they have a home to sell before they can purchase this one) they have an inability to handle stress or they haven’t met strict financial requirements.   When making an offer on a short sale you MUST have an approval letter from a lending institution and be able to write an earnest money deposit check for 1% of the purchase price.

After you clear the hurdles of the timeline and restrictions of a short sale, you need to deal with the listing agent.   The success rate of short sales in our market is very low.   As I said, 50% of our listings are short sales, 34% of those are under contract, but last month only 12% of those under contract actually closed.   The statistics aren’t very good, and the Board of Realtors has only been tracking these numbers since April.   So, what can you do as a buyer?

Look to your agent for lots of help.   When you go to write an offer on a property your agent should be  asking the listing agent many specific questions about the property, the liens, how long in arrears the owners are, and if a sale date has been set.   He/she can also inquire as to how many short sales this agent has been involved with and how many have closed successfully.  

If the answers to some of these questions seem shaky, you may want to consider hiring a third party negotiator to handle the deal.   If the listing agent agrees, there are many competent third party negotiators that can take over the transaction to give it a fighting chance of coming to closing successfully.   The cost of this negotiation can be paid by the bank as a closing cost.

If the lisitng agent is lax in putting together the financial package for the lender your chances of success diminish substantially.   Specific documents are required by lenders and they need to be presented in the order in which the bank demands or they may not look at them at all.   They have far too many deals to review to deal with incompetence.  

If you feel that the listing agent is competent, is communicating regularly with the negotiator and is making progress, then you are on your way to successfully closing what could be the deal of a lifetime.  

One more important point or tip I will add for buyers.   When making an offer on a short sale or a foreclosure, make sure you opt for the additional title insurance coverage.   This will cost you approximately 10% more than the average policy, but it will cover you for many mistakes which may and can happen along the way, such as liens not being released, etc.   For example, a mechanics lien may not be filed for 180 days and may not show up until after the closing.  

Not every agent works with short sales or even wants to, so make sure you and your agent are comfortable before proceeding.   Keller Williams has been working hand in hand with our local Association of Realtors to produce an Addendum for every short sale contract which will protect the buyer and spell out various conditions which need to be openly addressed.   Hopefully in the next few months these measures won’t be necessary, but until then I am armed and ready.   Let’s hope you are too!

I had occasion this last week to show a property in Old South Suburban Reno.   For those of you who aren’t familiar, it’s the area directly west of the Meadowood Mall, behind the old Harrah’s Ranch, which is very close in and zoned for horses.   Needless to say the prices in the area are high.

This particular property finds itself in an unfortunate circumstance and must be sold.   One year ago it was listed for 1.5 million.   Now we find that it too is in a short sale situation, priced at $999.   So, we have a 3500 sq. ft. home on 2.5 pristine acres with full views in its secluded hideaway for under 1.0 million!   Remember what I blogged yesterday about chasing down the market?   This is a prime example.

If you are in the market to purchase that home of a lifetime in Reno, with a little updating this home would be magnificent!   I always want to pass along deals and solid information, so there you have it!

Today was an unusual day in that I had an early morning appointment half way across town (approximately 13 miles ).   As always it was a mad scramble to get not only myself going but also my 17-year old who is a senior at Galena High School.   With my planned trek I had to drop him off at school early.   As I work from my home I am usually sitting at my computer at 6 am, but I don’t have to be on the road.   My husband gladly helps out with making lunch and more times than not drops my son off on his way to the office.  

Now to most of you this is more than routine; you not only have to get your kids to school and yourself to work on a daily basis but you also have to bare the brunt of bumper to bumper traffic along the way.   Having lived in Boston, Atlanta, Chicago, Ft. Lauderdale and Los Angeles, I am more than familiar with traffic!

So, I take the 2 minute ride to Galena High School, drop off  Cody, and then make my way down Mt. Rose Highway to 395N toward Plumb Lane (the Airport Exit).   By this time it is 7:35 am.   I reach my stride on the  highway and place the car on auto pilot at 65mph to enjoy the beautiful morning.   I notice a few cars around me, but I do not have to slow down  until I reach my exit about 6 minutes later.   Five minutes after that I arrive at the dentist’s office with 10 minutes to spare.

As many times as I have made a similar drive, I never forget to thank my lucky stars that Reno is so easy to navigate and that our traffic is still managable!    I sometimes arrive at my office to overhear someone complaining that the traffic today was awful!   My only response is, WHERE?    Unless you’ve been in a 4-hour sig alert on the 405 Freeway you have no idea what traffic is!   Yes, we have our slowdowns and even our “rush hour,” but it doesn’t compare to any number of cities across this nation that deal with gridlock on a daily basis.   Our average commute is about 20 minutes.  

Now for those of you who disagree, I do concede that if you live on the north side of town your traffic is a bit heavier because of the  growing number of people living in those areas and only having a 2-lane highway.   Also, the University of Nevada, Reno Campus, is located on the  north side of Reno between N. McCarran Blvd. and  9th Street which creates it’s own traffic.   We also, I will acknowledge, have accidents from time to time that will slow down or even stop traffic.   However, I have first hand knowledge that if you are in a traffic slowdown you can exit at your next opportunity and take surface streets and still arrive at your destination within 10 minutes or so.

Even after 10 years, I still love this town!