Short Sale Sellers Beware!
May 12, 2009
According to the National Association of Realtors, an increasing number of lenders are going after borrowers who sell their homes for less than they owe - known as a short sale - in order to recover more of the difference between the amount owed and the sale price.
In order for short sale sellers to protect themselves from lenders trying to recover lost money in the future, it is essential to have a note satisfaction and/or lien release and verbiage that the loan amount is paid in full. This release should be in the short sale approval letter. If there is no such verbiage in the approval letter, it should be requested. If there is more than one loan on the property, there should be a satisfaction and/or lien release from all lenders involved.
Short sales are not for everyone. Lenders say the factors that they consider when they decide to seek more money are:
How large was the unpaid debt? Lenders are more likely to go after a large loss than to bother with a small one.
Was the property an investment or a personal residence? Lenders have less tolerance for short sale sellers
How much money does the borrower make and what other assets does he have? If the short sale seller has other assets to go after, the lender will be more inclined to make an effort to recover their lost money. This also brings up the question if the seller could have some how made the payments, or just sold as a short sale to cut their losses?
What is the policy of the mortgage insurer or the holder of the second lien? When there is a second lien involved, the second lien holder usually will only get pennies on the dollar and will take a big loss in a short sale.
A PMI Group Inc. spokesman says the mortgage insurer “primarily target[s] borrowers who are not experiencing hardship - but those who simply elected to walk away from the property due to its decline in value.”
If you are considering selling your home as a short sale in South Lake Tahoe make sure to speak with your accountant first. For more information regarding short sales in South Lake Tahoe, South Lake Tahoe real estate, or foreclosures in South Lake Tahoe, give Brent and Jill Johnson a call today!
Source: The Wall Street Journal, Ruth Simon (04/30/2009)
South Lake Tahoe Foreclosure and Short Sale Listings Search on my Website!!!
May 7, 2009
There is a new search option now available on my website that enables you to search for foreclosures and short sale listings on the South Lake Tahoe MLS! This new search tool will enable buyers to search only for foreclosures and short sales. If you would like to sign up for new listing notifications just click on the link and create a new user. The South Lake Tahoe Foreclosure listing search and the South Lake Tahoe short sale listing search option will look just like this:
| Including the above criteria, only show me properties that: |
are Short Sales |
are REO / Bank Owned (Foreclosures) |
Be aware that if you check the boxes for either foreclosure or short sale listings, you will only receive new foreclosure listings and short sale listings. If you would like to receive all listings including foreclosure and short sale listings, you can either leave the boxes un-checked, or you can set up two separate searches. If you are already signed up for new listing notification, you can still
log into your account and create another home search for foreclosures and short sales only.
With 25 foreclosure listings on the South Lake Tahoe mls and all but 4 in escrow, buyers are finding in important to act quickly when a foreclosure comes onto the market. This new foreclosure and short sale listing search tool on my website will enable you to act quicker and get a good buy on a foreclosure or short sale listing.
If you have any trouble with the new short sale and foreclosure search tool please call Brent Johnson at (530) 416-2625. I hope that you take advantage of this great new feature on my website!
Short Sale Listing in South Lake Tahoe Just Sold!
April 27, 2009
It is possible to close escrow on short sale listings in South Lake Tahoe! Here is a recent example: My wife Jill and I just closed escrow on a short sale listing located at 1069 Carson Street. Jill and I represented the buyer on this short sale transaction.
1069 Carson Street is a 3 bedroom, 1.75 bathroom, 1254 square foot home with a garage. This house was remodeled, had a newer 50 year roof, and was in great condition. The asking price was $275,000. Our offer was less than the asking price and was accepted by the seller. After only 3 days the bank gave us a counter offer of full list price, and our buyer agreed to the terms.
From the day that we submitted our offer to the day of closing escrow took 56 days. 56 days is a little longer than the average escrow period of around 45 days, but was rather quick for a short sale.
Here are some pictures of 1069 Carson from the South Lake Tahoe mls
There is currently a lot of competition between buyers looking for deals on foreclosures. In order to avoid getting into a bidding war on a bank owned foreclosure, take a look at some of the short sale listings that are available. Currently there are 36 available single family short sale listings on the South Lake Tahoe mls. There are 18 short sale listings that are currently in escrow in South Lake Tahoe.
So far this year there have been 8 short sales that were reported as sold on the South Lake Tahoe mls. The average sales price for the sold short sales was $451,912, the average price per square foot was $221, and the average days on the market was 143.
If you decide to make an offer on a short sale listing, be prepared that it may take some time for a response from the lender. There have been responses from lenders in as quick as a couple of days to as long as a many months. Some short sales can definitely be worth the wait!
If you would like to see a list of short sale listings in South Lake Tahoe, contact Brent and Jill and we will send you a list. Please let us know if you have any questions regarding Short Sales in South Lake Tahoe, South Lake Tahoe real estate, or homes on the South Lake Tahoe mls, call us today!
South Lake Tahoe Short Sale Listing!
April 20, 2009
If you are looking to invest in South Lake Tahoe real estate, make sure to take a look at this fantastic short sale opportunity!
913 Lake Tahoe Blvd. Offered at $529,000
Short Sale Listing in South Lake Tahoe!
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Custom built in 2006
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Sunny 12,342 square foot lot
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Priced at only $185 per square foot!
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Viking stainless steel range
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Custom granite counter tops
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Maintained in mint condition
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Short sale subject to banks approval of a short sale
If you are in the market for South Lake Tahoe real estate and would like to set up an appointment to view this short sale listing in South Lake Tahoe, contact South Lake Tahoe real estate agents Brent and Jill Johnson today!
Short Sales in South Lake Tahoe
March 18, 2009
A short sale occurs when a homeowner owes more on their property than the property is actually worth, but the bank agrees to accept less than is owed as “payment in full”, in an effort to avoid the foreclosure process. A short sale is a great option to foreclosure for a homeowner because the homeowners credit will not be damaged nearly as much. In most short sale cases, the only damage to the homeowners credit will be the delinquent mortgage payments that will eventually fade off of the credit report. It is important to make sure that the lender reports the loan as “Paid in Full.”
With the recent changes to the Mortgage Forgiveness Debt relief Act, the debt that is forgiven on the first mortgage is no longer taxable as long as the house was your primary residence. If the house is not your primary residence, the IRS considers the amount of the loan discount taxable income.
Why would a bank want short sale a property and accept less than they are owed?
- Foreclosure is expensive for the bank and averages about $14,000 to $20,000 dollars.
- Banks are required to hold 3 to 5 times the amount of any foreclosure properties held as assets in reserves. If a bank forecloses on a $500,000 house, they are required to have an additional $1,500,000 to 2,500,000 in reserves that they cannot lend out and make money on.
- With the new stimulus package, banks are now getting a bonus from the government for closed short
sale transactions.
Banks are now realizing that short sales can be a better option than foreclosure for both themselves and the homeowners, which is why we may be seeing more successful short sale closings in the future.
A bank will not just approve a short sale because the homeowner owes more that the home is worth. In order for a homeowner to qualify for a short sale they must meet certain requirements.
- In most cases the homeowner must be behind on payments (Countrywide requires that you are 90 days behind on payments).
- Homeowners must be able to prove that they have a legitimate hardship such as a loss of a job, divorce, illness, decrease in income, or increase in expenses.
- There must be little or no equity in the home.
The homeowner must provide the following documents to the listing agent, who will provide them to the lender:
- Authorization to release information
- Hardship letter
- Financial worksheet
- Listing agreement
- Two years tax returns
- Two months bank statements for all accounts
- Two pay period pay stubs
Although lenders are now realizing that short sales may be a better option than foreclosing on the property, short sales are still far from easy. Lenders are overloaded with thousands of short sale packages. It can take up to a couple of months to get a response from the lender.
It is very important that the listing agent is a short sale transaction has knowledge in short sales. Real estate agents who submit a complete short sale package are much more likely to get assigned to a loss mitigator and potentially get approved. There are also cirtian things that a real estate agent can do to help expedite the approval process, such as making sure that the loan number is on the top right and the bottom of each and every page of the short sale package. Being able to contact the loss mitigator and keeping in communication with them regarding the transaction is another difficult but important job of the listing agent. Ultimately it is the listing agent who the buyer and the seller will be relying on to facilitate the short sale transaction.
Why would a buyer want to purchase in a short sale listing?
Short sales are consistently listed at 5% less than the current market value. Going through the short sale process may take more time, but it may be worth it for the buyer.
When looking at South Lake Tahoe Real Estate, do not avoid looking at short sale listings. There may be less competition over the short sale listings than the foreclosure listings, and you may get a great deal on a house!
If you would like a list of short sale listings in South Lake Tahoe or foreclosure listings in South Lake Tahoe on the South Lake Tahoe mls E-mail Brent and Jill Johnson. If you have any questions about South Lake Tahoe real estate or about South Lake Tahoe mls listings, please contact us today!
