I Lost My Job

There are still plenty of people losing their jobs. So, if you lose your job and you are under contract to purchase a home, what happens?

First of all, don't panic. There are several options that may allow you to exit the contract without penalty, if that's what you want or need to do.

But first, consider having your agent talk to the seller's agent and discuss the possibility of delaying closing to give you some time to search for a new job. This doesn't always work, but if the sellers have the ability to be flexible and you believe your prospects of securing new employment are good, it's worth a try.

Now let's look at your options for getting out of the contract if that's what you need to do.

Hopefully, the contract was written with a financing contingency. This allows you an out if the lender will not give you a mortgage to buy the house. The financing contingency, like all contingencies, has a specified number of days in which you can exercise this option to get out of the contract. Hopefully, this contingency has not been removed when you lose your job. If this is still open, a letter from your lender declining your application, along with an explanation of your job situation should be enough to release you from the contract. Because there is no default, hopefully the sellers will sign the release and agree to release your earnest money deposit. But remember that this is never automatic.

As a buyer there are typically several additional "outs" in a contract. One of them is the home and/or radon inspections. If those have not yet been done you can use those as a reason for withdrawing from the contract.

And, if this is in a Homeowners's Association, you may be able to use the three days you have to review the HOA documents as another out.

If it's late in the game and you're close to settlement, it is possible that none of these options may be available. At that point, your agent should immediately talk to the seller's agent and lay out the situation. I'd like to think that people of good will could work something reasonable out. Hopefully, you can even still get your earnest money deposit back.

But better to lose that money than to buy a house you already know you can't afford!

Who's Paying Property Taxes

The problem of banks not taking financial responsibility for the properties they foreclose on continues to grow. In this blog post from NPR's Marketplace (Scott Jagow is the author) he discusses the problem.

Is it happening here? I suspect in Prince William and Rappahannock counties the answer is no. Houses are selling so quickly it seems unlikely the bank wouldn't just go ahead and put it on the market.

There are a few properties I've seen in Culpeper and Fauquier county that I've wondered about. They are mostly rural properties on small lots with small houses in very bad condition. The bank supposedly foreclosed many months ago and there's been no sign of it being sold. So, the answer is....maybe.

Given the state of local county budgets, if this is happening seems like it'd be in the county's interest in getting this money. Legally, however, if the bank never transfers the deed, they don't legally own the property.

So, who does? If the owner paid the delinquent taxes could they move back in? If the bank has written off the loss and walked away what's to stop that from happening?

Tough Love for Lenders

The Obama administration has apparently figured out what those of us trying to work short sales could have told them a long time ago, banks are making it incredibly difficult to deal with them.

So, they're being ordered to appear in person for a trip to the woodshed later this month, according to an article in The New York Times.

I'm thrilled to hear it, and not to suggest piling on, but that's exactly what every homeowner and real estate agent should be doing. In the next few weeks (the meeting is on July 28th) we should all be calling these banks (Office of the President) and letting them know that the administration has it right and they need to shape up. And, as long as you're at it, call the White House and let them know you agree with them on this issue.

Let's face it, none of us has much leverage on our own. But if each of us acted in concert with the White House on this, and if industry groups like NAR got behind it, there's a possibility that the force of our demands could produce some change.

June Market Stabilization

There is nothing dramatic in the numbers for June. This is good news. The market is relatively stable at this moment.

With the exception of Rappahannock County, inventory remains almost unchanged from May. Rappahannock had a huge jump (for Rappahannock) from 89 to 100 homes for sale. But they also had another good month for sales with 6 homes sold.

In Fauquier, Culpeper and Prince William Counties there was a change of a few properties in the overall inventory. But look at year over year and it's amazing how much we've improved. Prince William has roughly half the inventory it had a year ago. No wonder we're seeing things go under contract in days with multiple offers!

While Fauquier and Culpeper haven't seen the dramatic decrease we've seen in Prince William, each of them has at least 30% less inventory now than a year ago.

As you'd expect, the county with the lowest inventory, Prince William at less than 4 months, shows the most stability in prices. Culpeper and Fauquier both have roughly 8.5 months of inventory and prices still appear to be declining there. But the stats are a little misleading there. Year over year stats show a price decline of approximately 25%. And, while June stats show a price decline over May, the month to month numbers are not very reliable in this category. Because the volume of homes sold in any given month is relatively small, the numbers are easily skewed. Still, prices remain at bargain basement levels.

We are bouncing along the bottom in my opinion, maybe moving up a little in Prince William County. The big question here is still, how long will we stay on the bottom.

I'll be working over the next couple of weeks on a look back at my 2009 predictions and how I'm doing so far. Stay tuned for that and your chance to make fun of my skills as a prognosticator!

Freddie Mac Video - Stopping Foreclosure

Freddie Mac has posted a video on YouTube to help homeowners who are facing the possibility of foreclosure. It takes you through what documentation you're going to need to put together for your lender in order for them to help you avoid foreclosure.

This paperwork is, in most cases, the same paperwork needed if you're contemplating a short sale.

I hope this is helpful but even more, I hope none of you need this information!