Tuesday, April 24, 2012

Short Sales Offer Benefits for Sellers and Buyers – But Not Without Compromises

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Whether you’re on the buying side of the fence or selling, getting involved with a short sale might be the perfect situation for you.  Though they have been around for a long time it wasn’t until the housing market crash of 2007 that more and more distressed sales came up to the surface.  In fact, the influx of short sales that took place in our housing market skyrocketed after millions of homeowners suddenly found they owed much more on their properties than they were worth. 

But if you are careful and mindful of all the benefits and drawbacks of selling (or buying) a short sale, you can enjoy the best of both worlds.  Here are a few reasons to consider before making a decision:

Short Sales For Sellers


Ability To Salvage Credit
When homeowners engage in a short sale as opposed to letting their home go into foreclosure they are causing much less damage to their credit than if they were to walk away from their mortgage commitment.  Not only do short sales harm a credit report less but they also demonstrate commitment, accountability and responsibility to your debt.

Can Purchase A New Home In About 2 Years

Homeowners that opted for a short sale are able to recover financially in far less time than if they had allowed foreclosure.  Where a foreclosure will remain on your credit report for up to 14 years, the negative impact of a short sale only lasts about 24 months, allowing the homeowner to recuperate and get back into a home relatively soon after the short sale.

Little or No Agent Fees

Given that it is a matter of distress, many agents will not charge any fees to process a short sale transaction.  In fact, these types of real estate transactions can only be performed by licensed, certified short sale experts.


It May Take a Long Time To Sell the Home

Since banks are involved in every step of the process it can take many months to turn the sale around.  Even if you receive a good offer on the home, unless your bank processes the offer, accepts it and puts it through several approval procedures, you will not be able to sell the home as quickly as a conventional sale.

Banks May Not Accept Your Chosen Selling Price

Selling a short sale home entails the homeowner deciding on a price to list the home.  Even though most people utilize the services of a Realtor to assist with setting the list price, banks will not always accept the price.  Whether or not it will be accepted will be determined once an offer goes through the pipeline.

Complicated When Multiple Mortgages/Lenders Are Involved

In many cases homeowners facing foreclosure that are contemplating a short sale have taken out more than one mortgage on their property.  Going through a short sale when it involves multiple lenders can become tedious and complicated since moving ahead with the transaction requires the approval of each lender.

Buying Short Sale Properties


Great Deal On A Good Home

The single most compelling reason to buy a short sale property is because it allows buyers to afford the home of their dreams at a very affordable price.  Though sellers of short sales are interested in getting as much money as possible for the property, the selling price is less than standard sales.  Also, since the homeowners still live on site in many cases, chances are the condition of the home will be better than what a buyer might find in a vacant foreclosure property.

Strong Potential For Solid Return On Investment As Value Will Go Up Eventually

Getting the house for a lower price amounts to being able to cash in on a greater return on your investment later on.  As long as the buyer plans to remain in the property for a while the home will appreciate eventually, rewarding them with a good financial return on their purchase.


No Disclosure Statement

One of the first things short sale buyers must come to terms with is that the short sale home they are considering will not have a disclosure statement as is with standard sales.  This can be a difficult thing for buyers since they would have to rely on the home inspection and appraisal rather than the otherwise required by law disclosure sellers must provide to buyers in regular real estate transactions.

Unknown Processing Times

The most commonly asked question Realtors specializing in short sale transactions hear is “how long will the process take?” and the answer is always “it depends”.  If a buyer is in a hurry to get into their new home they should strongly consider whether a short sale property is right for them.  A lot of patience is required since it can take months to follow through with all the processes involved and to obtain approvals from each department involved at the bank.

Lots of Negotiating And Re-Negotiating

Banks may or may not agree or accept the offer made by a buyer so the result is a lot of going back and forth during negotiations.  This can add a significant amount of time to the transaction, end up in frustration possibly leading to the deal completely falling through.
If you are in a tough situation and are considering putting your home up for a short sale to avoid foreclosure – or if you want to take advantage of the great interest rates coupled with lower home values right now, call us today and we will get your questions answered.  We look forward to helping you achieve the best outcome possible!

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

Here Is the link for this one: http://www.irs.gov/individuals/article/0,,id=179414,00.html

Doing the Right Thing

Many homeowners struggle with the spiritual or moral implications of walking away from their home and allowing the bank to foreclose if it is within their means to pursue another option.  Even though most homeowners are really sick and tired of their banks by this point, they still feel that they created an obligation when they signed the paperwork promising to pay back the loan.  A short sale is a way to meet that obligation in a way they can manage and in a way that is less painful to their creditor than a foreclosure.  In this case, a short sale is an excellent way to provide a win/win situation and prevent a family's financial demise in the process.

Whether it's through a short sale or a foreclosure, losing a house can be a very unsettling and upsetting experience. Still, the blow can be significantly softened by going the short sale route. When the pros and cons of each method are weighed, short sales always come out on top. If you’re serious about wanting to go the short sale route let’s have a conversation do the research so that we can get you approved for this attractive alternative to foreclosure.

Tuesday, April 10, 2012

Is It the Right Time to Sell or Stay Put and Wait For Change?

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These days so many homeowners are wondering if it’s the right time to move on and move up into a better home.  So many questions ensue. How long will it take for the market to be back to normal again?  Will today’s interest rates go on indefinitely?  How can I tell before they begin to climb again? If I wait long enough will my home’s value come back up to what it was just a few years ago?  The answers are not so simple but one thing is for certain.  Property values take time to climb up and rebound after bouts of the situation that we are facing at present.  Here are some pointers that will provide further insight as to why selling sooner may make more sense.

When Incomes Go Up – So Do Property Values

Many industry experts believe the only way for home prices to go back up is for buyers to have higher incomes.  Based on this assumption, a good number of homeowners’ expectations that their property will miraculously gain 20% to 30% of value on the market within the next year or so are sufficiently unrealistic. Keep in mind that the average annual income increase nowadays is anywhere from three to five percent, which translates to a waiting period of until at least 2017 before you will regain housing values from a few years ago.

How Long Will It Take For the Job Market To Improve?

As we find ourselves in yet another double dip recession and the nation is struggling to deal with the economy, the unemployment rates in many states continues to plummet or stay where it’s at; a dismally low level.  No one can say how long it will take for the job market to improve but analysts predict that though process will be slow it will happen.  

Interest Rates Are At “Go Get ‘Em” Levels

Being able to finance a home was much easier just a few short years ago but having said that the fact of the matter is that now, interest rates make up for the otherwise detailed and careful application and approval process.  While in the midst of a 30-year low, interest rates at about 4-4.5% clearly indicate this is a very good time to buy a home.  Of course, for owners of existing homes this can mean a loss on the property they sell but by moving into a home that will most likely increase in value in a few years’ time it offsets the loss.

Keep Living But Live Happier

Why not wait for the market to improve before selling your existing property and moving into another?  The return on investment can be significant when you factor in the changed interest rates regardless of improved property values.  Consider this: Sell an existing home for $200,000 today and buy up into a new home worth $320,000 at the current low interest rates, versus wait for 5-7 years to sell the home, which by then might be worth $220,000.  The interest rates by then to purchase the same new house worth $350,000 will be at least a couple percent higher.  The end result is about $12-$15,000 in savings by selling and buying sooner – and that many more years of happiness.

A few other things to consider are whether or not you are willing or able to maintain your existing home or would you prefer moving into a condominium or relocating to a warmer climate?  Would this be a perfect time to sell your property and invest in a dual home that can also be rented out for some additional income?  Also, how can you be sure your property value will not dip even further as you wait the market out?  Wouldn’t you want the freedom to at least be able to get into a newer home, at a great price because of the current housing prices? 

The best way to really know what steps to take is to contact your Realtor for an in-depth consultation and to learn whether now is the perfect time for YOU to sell.