March 19, 2010

Calculating and Analyzing Absorption Rate

Posted to Brad & Liz Sears, Buyers, Sellers

Have you ever wondered how fast homes are selling in your neighborhood right now? There is a way to measure it that will tell you which way the market is heading. Absorption rate is the measurement of the rate of sales in any neighborhood. For example, if 50 homes are sold in a month’s period, and there are 100 homes for sale in the market place, the absorption rate is 2; meaning that there are two months of inventory currently in the marketplace.

A balanced market of buyers and sellers is defined at 5-6 months of inventory. A “2” absorption rate means that the sellers have the advantage. A “9” means that the market favors the buyers and sellers can expect to discount their property values in order to sell their home. Included is a chart that show how the absorption rate can also indicate if the market is appreciating or depreciating.

For specific information on your neighborhood please contact me for a free absorption report.

Posted By: Brad & Liz Sears





March 16, 2010

Short Sales and Foreclosures --- A Trend or Tidal Wave

Posted to Buyers, Sellers, Short Sales / Foreclosures, Steve Randall

Short sales are not new to real estate practitioners but the number of foreclosures and short sales on the Northern Utah market currently is higher than we have experienced in many years. The economic conditions have resulted in job loss and pay reduction for many causing a rise in delinquencies and stress on homeowners. In 2009, nationally, there were 1.9 million properties where foreclosure actions were started. This year the number is anticipated to increase. We certainly are seeing our share of short sale and foreclosures in Utah.

What is a foreclosure? Some may think of a foreclosure as a greedy lender taking over an owner’s home. Others may think of abandoned properties that cause a loss of value to the neighborhood and community. Still others may see this as a way for buyer’s to pick up properties on the courthouse steps for pennies on the dollar.

A simple definition of a foreclosure is a legal process whereby the borrower is deprived of their ownership interest in a property because of nonpayment.

The reality of the situation is that lenders really do not want these properties back on their books and with some exceptions, most buyers pay close to market price for homes that are in good condition. Short sales, by definition mean that the borrower owes more on the home than the home is currently worth in the marketplace. As property values decline, more and more northern Utah homeowners are facing this possibility.

Many borrowers work with their lenders to negotiate a short sale rather than letting the property go into foreclosure. A short sale allows the borrower a way out of the mortgage with less impact on the borrower’s credit and allows the borrower to re-enter the marketplace in 2-3 years.

A foreclosure will be on the borrower’s record for at least seven years and can have a negative impact on the borrower’s credit of 200 points or more. As of April 5, 2010, the Federal Government is encouraging lenders to pursue the short sale remedy first before taking the foreclosure option.

There are many websites that give information on how to proceed with a short sales or foreclosure. For information on foreclosures in Utah click here.

For more information or assistance with a short sale or foreclosure action please contact me at your earliest convenience.

Posted By: Steve Randall