Dane County foreclosure filings reach a new high in September

Although the month of September is not in the books yet, foreclosure filings in Dane County will reach a new high this month. Keep in mind that most foreclosure filings result in either a short sale or a sheriff's sale, many of which do not occur until 6 to 18 months after the filing. Expect distressed property sales to become a large and growing part of the real estate market over the coming year.

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Short sale failure: some reasons why

Short sales have been in the news a lot lately, and by now we've all read and heard stories about many short sales failing. Here are some reasons why many short sales do not succeed:

Improper pricing. First and foremost, a short sale needs a willing buyer and an accepted offer. A short sale property needs to be priced to sell, without giving away the farm.

An incomplete or improperly submitted proposal package. Once an offer is accepted, the seller needs to submit a proposal package to the lender for its review. The proposal package includes multiple documents and dozens of pages. If the package is incomplete or improperly submitted, it can delay the approval process and cause the sale to run out of time before the sheriff's sale. An experienced Realtor is essential to avoid these mistakes.

Inadequate follow-up. Once the proposal package is submitted effective communication with the lender is critical. If the listing team is not proactively communicating with the lender and helping to move the short sale through the approval process, delays can occur, causing the seller to run out of time or the buyer to walk away from the transaction.

Failure to negotiate all liens. A successful short sale requires that all debts that are liens against the property are satisfied. This requires the agreement of each and every creditor/lien holder and usually requires at least partial payment of the debt. Failure to identify which liens to negotiate can derail a short sale at the 11th hour.

Thanks to Peter Zarov from Homestead Title for his contributions to this post.

In a future post we'll share how our real estate team is addressing the pitfalls listed above.

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Prices slashed for west side condos

You may have heard the radio spot. Prices have been drastically cut for many of the Crosswinds Condos at Hawks Landing.

We've posted about the very noticeable and very real trend toward lower condo prices. There are some great values on the market right now. A bitter pill for some. An opportunity for others.

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

First time home buyers, the tax credit window is closing

The closing deadline for buyers seeking to take advantage of the $8,000 first time home buyer tax credit is November 30th. Unless the tax credit gets extended, first time home buyers should plan on getting their offers accepted very soon.

We recommend giving yourself at least 45 days to beat the November 30th deadline. We're expecting lenders and title companies to be very busy over the next two months, which could lengthen the time to close. Also keep in mind the Thanksgiving holiday is November 26th, just before the deadline.

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Why lenders will accept a short sale

Lenders are in the business of finance, not real estate. They're not designed to own a portfolio of properties. There are many good reasons why a bank will accept a short sale over foreclosure. Here are just a few:

Legal fees. Foreclosure requires attorney fees that can be avoided through a short sale.

The declining market. In a declining market, a property loses value for every month it does not sell. A short sale allows a property to be sold more quickly and at a higher market value.

Holding costs. Holding costs for lender-owned properties add up quickly. These costs include taxes, insurance, utilities, maintenance, management, and other costs.

Repairs. In some cases lenders end up owning properties that are in need of significant maintenance and repair. Some owners who are losing their home to foreclosure neglect or intentionally damage their home.

There are many good reasons for lenders to choose a short sale over foreclosure. Despite these reasons, many short sales are not successful and end with the lender owning the property. We'll cover some reasons why in a future post.

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

The market feels warm in September

We don't have the data to back it up, but the market feels like it is heating up for higher priced properties. We're experiencing a lot of buyer and seller activity for properties $250,000 and up.

Time will tell, but the market feels warm in September.

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

August update: Dane County single family home sales up, prices down

Here's our preliminary report on the month of August based on data from the South Central Wisconsin MLS:

Dane County single family home sales rose 6% last month, while the median price of $229,900 decreased by 3.9% from the August 2008 price of $239,300.

Condo sales were lower by 5%, while the median price of $139,100 decreased by 18.2% from last year's price of $170,000. Fifty-four percent of the condos that sold in August sold at a price lower than $150,000, compared to 34% in August of 2008.

For more details, check out our featured articles section at DaneCountyMarket.com .

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

How one Madison condo development is selling its units

Two-and-a-half years ago a very nice west-side condo development put its 42 units on the market. But sales were sluggish. Only half of the units sold after two years of marketing.

Then the development slashed the prices for all of its remaining units.

Take a look at the price history for all of the 1,236 square foot units in this development. Prices were cut by about $20,000 earlier this spring, and now all of the remaining units have either sold or will be closing soon.

We are seeing more and more cases of condo developments cutting their prices, and in some cases, buyers are responding. A good product at a good price can sell very quickly, even in this market.

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Dane County housing starts remain sluggish

Dane County housing starts decreased from 68 in August of 2008 to 55 last month, a drop of 18%.

The graph below shows monthly housing starts dating back to January of 2005. Each red dot represents a decrease from the same month of the prior year. Each green dot represents an increase.

The market for new construction has fallen a long way. The August total of 55 housing starts is the lowest total for any month of August since 1999, when the housing start statistic was started. The peak year for the month of August was 2005, when 219 housing starts were initiated.

With declining new construction and a growing number of foreclosures, it's clear distressed property sales will continue to play a growing role in the market for the foreseeable future.

Thanks to Dominic Collar from MTD Marketing Services of Wisconsin for sharing his data. For more information, you can contact Dominic directly at 920/993-8435. You can also check out our full housing start report on the economic trends page at DaneCountyMarket.com .

Have a good Sunday,

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Mortgage rates now available for under 5%

Mortgage rates have been slowly decreasing over the last two months, and some local lenders are now offering 30 year fixed rate mortgages for under 5%.

For the latest rates from local lenders, check out the mortgage update page, under buying real estate at DaneCountyMarket.com .

Have a great day,

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Upcoming first-time home buyer seminars in Madison

Two first-time home buyer seminars are scheduled for this month as the November 30th deadline for the $8,000 tax credit is now just 70 days away. Both seminars are straight-forward and information-based, without any sales pressure whatsoever.

The UW Credit Union is offering a seminar on Tuesday, September 15th from 6:30 to 8:00 PM. For more information about this seminar, click here.

The Dane County Housing Authority is sponsoring a two-part series with seminars on both Tuesday, September 22nd and Tuesday, September 29th. Both sessions run from 6:00 to 9:00 PM. Shawn Kriewaldt and I from the Dane County Market real estate team will be volunteering for these sessions. For course details and registration info, click here.

Have a great Friday,

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Dane County foreclosures up 42% in August

Dane County foreclosures jumped from 106 in August of 2008 to 151 last month - an increase of 42%. You'll find our full report on economic trends page at DaneCountyMarket.com.

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Resources for home owners facing foreclosure

Many people who lose their home to foreclosure do so without knowing and reviewing other alternatives. If you are at risk of losing your home, here are some things you can do to learn more about your options:

First and foremost, talk to your lender. You and your lender may be able to work out an alternative to foreclosure.

Educate yourself. The Dane County Housing Authority provides some useful online materials, including:

• How to avoid foreclosure on your home
• The foreclosure timeline in Wisconsin
• Responding to a foreclosure lawsuit

The Wisconsin Realtors Association also provides a useful web site, http://www.wisconsinforeclosurekit.org/, that offers a number of useful articles and resources covering the foreclosure process.

Talk to an attorney. The Lawyer Referral and Information Service (608/257-4666) can put you in touch with an attorney who handles cases like yours.

Consult with a Realtor who specializes in short sales. Your Realtor can help you determine whether or not your home will qualify for a short sale. If it does qualify, he'll outline a plan that will help to get your home sold prior to the sheriff's auction.

Have a good day,

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Dane County: two encouraging trends in August

Trend #1: Although we aren't ready to publish our August numbers yet, Dane County single family home sales rose for the second straight month. Once again, much of the activity was in the more affordable price categories as buyers sought to take advantage of the first-time home buyer tax credit.

Trend #2: Dane County inventories on August 31st were lower than the levels from August 31st of 2008. Single family home inventory was lower by 223 units compared to last year. Condo inventory was lower by 208 units.

As you'll see from the red line in the graph above, inventory is still quite high. We'll need more months of increased sales, for both homes and condos and across all price categories, to move inventories to more normal levels.

Also keep in mind there are a number of people who want to sell, but who are sitting on the sidelines until they have more confidence in the market. This "shadow inventory", along with future inventory coming from the growing foreclosure market, will most likely keep supply levels high well into 2010.

For more on the latest inventory trends, check out our monthly reports that show how inventory varies by price range and location, for both homes and condos.

Have a good weekend,

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Reasons for choosing a short sale over foreclosure

For many home owners the short sale is the preferred solution over the foreclosure. Here are some reasons why:

(A quick note before we proceed with the list below: Our real estate team recommends you pursue all of your options, including working proactively with your lender, to discuss solutions other than a short sale or foreclosure. If you do pursue a short sale we highly recommend you work with an attorney who will work to protect your best interests and work to minimize a short sale's impact on your credit score. Our real estate team includes the services of an attorney for our short sale clients.)


Future Fannie Mae loan for a primary residence

Foreclosure: A home owner who loses a home to foreclosure is ineligible for a Fannie Mae-backed loan for a period of 5 years.

Short sale: A seller who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed mortgage after only 2 years.


Credit score

Foreclosure: Credit score may be lowered by 250, 300, or more points. Credit will typically be affected for 3 or more years.

Short sale: Late mortgage payments are recorded, which does negatively impact credit score. After the sale the mortgage is reported as "paid in full", "paid as agreed", "paid as negotiated", etc. A short sale typically decreases a credit score by a lesser amount than a foreclosure, and credit can be repaired in as little as 12 to 18 months. As we mention in the note above, we recommend you use the services of an attorney during the short sales process, so you a have a qualified legal expert who is protecting your interests and working to minimize the impact of the short sale on your credit score.

Credit history

Foreclosure: Will remain on a person's credit history for 10 or more years.

Short sale: A short sale is not reported on a person's credit history. There is no explicit recording item for a short sale.

Future employment

Foreclosure: Many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have, and in many cases will challenge employment.

Short sale: A short sale is not reported on a credit report and is therefore not a challenge to employment.

Current employment

Foreclosure: Employers have the right and are actively checking the credit of employees who are in sensitive positions. In some cases, foreclosure is reason for reassignment or termination.

Short sale: A short sale is not reported on a credit report and is therefore not a challenge to employment.

Security clearance

Foreclosure: Foreclosure is the most challenging issue against a security clearance outside a serious misdemeanor or felony conviction. If a client has a foreclosure and is a police officer, in the military, in the CIA, or in any other position that requires a security clearance, in many cases clearance will be revoked and the position will be terminated.

Short sale: On its own, a short sale does not challenge most security clearances.

Deficiency judgment

Foreclosure: In 100% of foreclosure cases (except in those states where no deficiency is recorded), the bank has the right to pursue a deficiency judgment.

Short sale: In some successful short sales, it is possible to negotiate with the lender to give up the right to pursue a deficiency judgment against the home owner. We recommend you use the services of an attorney when it comes to negotiate the recording of the deficiency.

Deficiency judgment (amount)

Foreclosure: In a foreclosure, the property will end up being owned by the lender if it does not sell at auction. In most cases this will result in a lower sales price and longer time to sale in a declining market. This will result in a higher possible deficiency judgment.

Short sale: In a well-managed short sale, the home is sold at a price that is close to market value. In almost all cases the short sale price will be higher than an REO price, resulting in a lower deficiency.

This information comes courtesy of the Distressed Property Institute. We'll continue to cover the short sale market in more detail over the next few weeks.

Have a good day,

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Dane County commercial inventory is up to 127 months

As of August 31st, the inventory of Dane County commercial real estate listed on the South Central Wisconsin MLS rose to 127 months.

Commercial sales have been light during the last 12 months, while expired listings have gone up.

For more on the latest commercial real estate trends, visit our commercial real estate update on the economic trends page at DaneCountyMarket.com .

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com