Upside Down – Turned Around

This, my friends, is an upside down house in Austria. I don’t want to talk to you about this house – although you should check out the article, it’s pretty cool. What I want to tell you is a story about my friends Sue and Derek (*not their real names), and what happened not too long ago when their house in the Metro Denver area was upside down.

Sue and Derek live on the South end of Metro Denver, like many of my friends and clients do, and a little over a year ago they found themselves in a pickle. Money was tight, bills were mounting and their mortgage felt like a burden they weren’t sure they could afford. They considered selling their home, but much to their dismay, they owed about what the home was worth at the time, and after the costs of selling the home they would have to bring money to the closing table. This couple had no equity in their home, and they were concerned they might lose the home to foreclosure if they weren’t able to successfully enter into a loan modification with the bank.

This, friends, is what it means to be upside down in one’s home. This is a mild case – in some markets that have fallen on tough times, homeowners have found themselves much further underwater than Sue and Derek with a home worth much less than they paid for it. This is not a good situation to be in, particularly if your income changes or you want or need to sell your home.

The reason I’m telling you about Sue and Derek’s situation is to shed some light on what is happening in the Denver Real Estate market. For some, the economic downturn does not feel far enough away in the rear view mirror to truly move forward with confidence. Changes to your job, your spouse’s job, the value of your property, etc. might have been too challenging for you to be able to move past emotionally despite the upswing in the economy, and I don’t blame you for wanting to be cautious after whatever damage the economy might have done to your wallet, retirement fund or home value. I get it.

Sue and Derek were ultimately able to achieve a reasonable loan modification plan that saved them a few hundred dollars a month and let them keep their home. Even better, they recently sold the home with a net profit to them (tax free, by the way – consult your accountant about how that works) of $50,000. After all fees, commissions and buyer concessions were covered, these folks walked away with $50k in their pockets and an opportunity to start fresh in a home that is more affordable for them. Beats foreclosure, doesn’t it?

So what about you? Have you been wondering how the shifting market has affected the value of your Denver-area home? I encourage you to take courage, be bold, and FIND OUT YOUR HOME’S VALUE instead of worrying about it. We’ve faced challenging times in the job market and Real Estate market over the past few years, but wonderful things are happening in Denver and all over the country. People who were clinging to the shirt on their back are finding that the market is now in their favor and they can make the move they’ve been putting off.

Drop a line and let me know what Real Estate questions are topmost in your mind. I’m happy to help you make informed decision about the home you own, or the one you want to.

Jack Meyers
jackestate@aol.com
303.263.3050
Twitter: @jackestate

Foreclosure in Your Neighborhood?

So everything is going swimmingly in your world – job is working out, bills are paid on time and the mortgage is manageable. The whole Foreclosure vs. Short Sale debate is nothing for you to be concerned about, so why bother yourself with the details of this issue, right?

WRONG.

Whether or not this issue is happening to you, almost everyone knows someone – a friend, family member or neighbor, who is struggling to make ends meet and considering their options. In the Real Estate industry, this type of situation is known as a Distressed Property – a homeowner under water on the mortgage and considering listing their home as a Short Sale or letting the property go altogether as a Foreclosure. The bottom line – a Foreclosure does not have to be happening under your roof to affect the value of your home, the perceived value of your neighborhood or the mix of neighbors you share it with.

Knowledge is power,

and it pays to understand how Distressed Property sales can affect the value of your biggest investment, your home.

1. Appraisers can and do consider the sales of Distressed Properties in the valuation of your home for refinance (for yourself) or a new mortgage (for the buyer of your home if you sell.) 
2. Numerous Foreclosures within the same property (such as condos or town homes) or within the same neighborhood can weaken the Home Owner’s Association; Struggling homeowners are unlikely to keep up with HOA fees, and not all associations are able to afford the steps necessary to collect on unpaid fees.
3. Foreclosures – particularly multiple Foreclosures within the same neighborhood – can weaken home prices. This downturn in prices can be due to changing appraisal values as Distressed Properties sell for lower values, but the situation can be due even more to buyer perceptions in a neighborhood with Foreclosures. Un-mowed lawns, weeds, peeling paint – none of these characteristics boost a home’s curb appeal, and multiple homes in a state of disrepair can drag other homes in the neighborhood down as well.

You can’t control whether your neighbors choose to head down the road to Foreclosure, but you can arm yourself with good advice to share if your friends & acquaintances mention mortgage struggles. A Short Sale is always a better long term strategy for a struggling home owner than Foreclosure: better for the family, better for the neighborhood and better for personal credit ratings in the long run. Encourage anyone in this situation to consult a licensed Realtor. A good professional will listen without judgement and offer sound recommendations based on the market and their unique situation.

Happy to be at your service,

Jack Meyers

jackestate@aol.com

303.263.3050

Twitter: @jackestate