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Tag Archives: Short Sales

Short Sale investors flipping homes – Good or Bad?

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Over the past couple of years since “Short Sales” have been the hot topic in the real estate market I’ve been contacted by several mortgage brokers and investors/firms looking to get access to my clients who need to sell properties and who are upside down in their homes value.

These people offered to help my clients by making an offer on their home. (Banks are only willing to talk about a short sale if we have an offer) They will negotiate the short sale on behalf of the client and purchase the home (if they can get a good deal).

I was quite interested when I heard this the first time, because I know how hard it can be to find a buyer who is willing to wait 3-9 months before they can close on a home (these mortgage brokers who weren’t making money by financing homes now wanted to make a living from people’s hardship) It was pitched to me that I would make the commission on the listing side and on the buying side. After the bank approved the sale I would then market the home below fair market value to find a buyer quickly. (Banks typically give us 30-60 days to close the transaction once they have given us their approval) I would then get the commission on the listing side and maybe the buying side for the investor. WOW that could be as much as 12% commission for one deal! Who wouldn’t be interested in that?! (not me if it’s hurting someone)

After further questioning, I discovered these “white knights” looking to help my sellers get out of their homes make offers at 65% below fair market value minus repairs and tie up the home for several months negotiating with the bank. They had no intention of buying the home unless they can sell the bank on accepting this lowball offer, then finding an end buyer who will pay market value for the home. Once they find an end buyer they use a “Hard Money Lender” to close on the property, then resell the home the same day to the end buyer making a huge profit.

If no end buyer can be found or the bank doesn’t accept the low ball offer the seller could end up in foreclosure, plus during the time the home was under contract with the investor any real buyers miss out on these homes. These investors are not helping the turn around of the real estate market they are just taking advantage of desperate sellers and banks, ultimately you and I as tax payers are fitting the bill for these guys because its our tax paying money that has been bailing out the banks from their losses.

Example: At the end of last year a client of mine made an offer on a home in Crescent Heights, we received a counter offer where the sellers name was scratched out and an investment firms name was in its place. The investor had gotten the seller to sign a contract which allowed the investment firm to control the sale as described above. We did come to terms on a sales price after going back and forth for a couple of days. At the closing the investor walked away with over $13,000. The seller could still be on the hook for any unpaid balance of the mortgage.

I feel the banks and/or the government need to set rules to prevent these investors from taking advantage of our down turned real estate market.

Condo for sale St. Petersburg, The Grande Verandahs on the Bay, Gandy Blvd

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Condo for sale in North East St. Petersburg at 12033 Gandy Blvd #153, St. Petersburg FL 33702.

The Grande Verandahs on the Bay luxury waterfront condominium community on Gandy Blvd. features a fully gated community with controlled entry gates & 2 under building parking spaces right by the lobby. Beautiful 5th floor unit with a split floor plan, huge master suite, with both a soaking tub and large walk-in shower, tray ceilings in the entry and kitchen, huge kitchen featuring granite counter tops, black on black appliances & a walk-in pantry, large inside laundry with additional storage. Panoramic views across the 80 plus acre protected preserve & Old Tampa Bay, you can see water from every window! Owner paid $514k plus in 05 & lived in this unit for 8 months, this is NOT a short sale! The community has a pool/spa and a state of art exercise center in the clubhouse surrounded by lush tropical landscaping. Minutes from Downtown Tampa, Clearwater and St Petersburg HOT Downtown nightlife, restaurants, shops and so much more

To view this home call David Price with Coldwell Banker at 727-851-6189 anytime.

The Waterford town homes in Clearwater FL

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David Price with Coldwell Banker is pleased to announce 2525 Harn Blvd #5, Clearwater, FL 33764. A 2 bedroom 1.5 bath town home listed with Coldwell Banker and The Price Group.

First time home buyer and investors! This like new townhouse built in 2004 is light bright, open and has a very functional floor plan with high ceilings. Huge living and dining room, large kitchen w/island for the gourmet cook, wood cabinets and great storage. Inside laundry room on the 2nd floor. Covered front porch for morning coffee and an open back patio for the BBQ. You are walking distance to the Morningside pool & recreation center & the Trail, the perfect place to bike, roller blade & walk.

This property qualifies for FHA financing with a low 3.5% down payment. First time buyers may be eligible for the $8,000 tax credit. You would need to be under contract before 4/30/10 and close by June 30th 2010. Close to Clearwater beach just 8 miles away, malls, medical facilities, Starbucks and local restaurants. 20 minutes to downtown St. Pete. Not a short sale! So no waiting for 3-6 months to close, you could be living in this home in just 3 weeks.

For a private showing call David Price 727-851-6189 anytime.

December 2009 MLS Stats for Pinellas County FL

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Lot’s of great info here! Take a look at the number of active homes on the market today compared to the past couple of years. The median home price is also on the rise. If we see the unemployment rate go down we could see a much faster recovery in Pinellas County. The number of bank owned homes is also on the way down! Does this mean the end of the great deals? I don’t think so. I’ve seen some great deals in the past few weeks! Like mutiple 3 & 4 bed, pool homes in Clearwater for under $130,000!

Click on the links below and view the pdf. files.

Pinellas December 2009 All Reports: “Condo’s & Single Family”

November 09 monthly foreclosure &short sales report

You still have time to negotiate and buy a “Short Sale” property before the $8,000 first time home buyer tax credit and the $6,500 move up credit runs out! But don’t delay because what I experienced last year was at about 60 days before the end of the tax credit sellers of non “short sale” homes got a higher sold price to list price percentage because they negotiated harder with buyers because they knew that they had the only homes buyers could close on and still get the credit! The morale of the story here is if you want negotiating power, start early.

Have questions? Call or Email me

Foreclosure filings fall 8% in November

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WASHINGTON (AP) – Dec. 10, 2009 – The number of homeowners on the brink of foreclosure fell in November, the fourth straight monthly decline, as mortgage companies evaluated whether borrowers were eligible for help.

Nearly 307,000 households, or one in every 417 homes, received a foreclosure-related notice in November, down 8 percent from a month earlier, RealtyTrac Inc. said Thursday. Banks repossessed about 77,000 homes last month, down slightly from October.

Millions of borrowers are still being evaluated for the Obama administration’s foreclosure prevention effort. States are also trying to delay the foreclosure process, temporarily lowering foreclosure numbers.

But the foreclosure crisis is likely to get worse before it gets better.

“We don’t really believe the underlying problems have been resolved,” said Rick Sharga, senior vice president at the Irvine, Calif.-based foreclosure listing service. Many borrowers, he said, “simply aren’t going to qualify” for help.

Foreclosure filings were still up 18 percent from a year ago, and a new wave is expected next year as unemployment remains high and borrowers fall out of loan modification programs.

Nevada posted the nation’s highest foreclosure rate, followed by Florida, California, Arizona and Idaho. Rounding out the top 10 were Michigan, Illinois, Utah, Maryland and New Jersey.

Among cities, Merced, Calif. had the highest rate, with one in 83 homes receiving a foreclosure filing. It was followed by fellow California cities Stockton and Modesto, and Cape-Coral-Fort Myers, Fla.

Las Vegas, which had been No. 1 on that list for four-straight months, fell to No. 5. Nevada recently adopted a program that requires mediation before banks can seize a property.

Nationwide, a report Wednesday showed only about 10,000 homeowners received permanent loan modifications this fall under the Obama administration’s mortgage relief plan, more evidence of serious failings in the government’s effort.

Elizabeth Warren, chair of a watchdog panel, told reporters that the program is “not working” and that it had failed to make a dent in the record level of foreclosures. More than 14 percent of homeowners with a mortgage are either late on their payments or in foreclosure, and that number is expected to keep rising as unemployment remains stubbornly high.

The Treasury Department is expected to release updated figures Thursday, but data through October showed that fewer than 5 percent of homeowners who completed the trial periods had their mortgage payments permanently lowered to more affordable levels.

Under the program, eligible borrowers who are behind or at risk of default can have their mortgage interest rate reduced to as low as 2 percent for five years. They are given temporary modifications, which are supposed to become permanent after borrowers make three payments on time and complete the required paperwork, including proof of income and a hardship letter.

Short Sale process overview

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This video is my personal experience of selling homes that need to go through the short sale process. Some banks have made the process easy while others have (bank of America) are making this so hard. I’ve tried to give you an overview of what I’ve see and what my clients have experienced over the past 2 years. If you have any additional questions about the process or maybe you need help selling your home call or email me. visit me at www.DavidPriceRealtor.com

Banks start to embrace short sales

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WASHINGTON – Dec. 7, 2009 – Even before the government put pressure on them to embrace short sales, more banks were starting to take their lumps, do the short-sale deals and move on.

Three years into the housing meltdown, short sales have tripled to 40,000 in the first six months of 2009 compared to the same time period a year ago, according to data from the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

Wells Fargo, Bank of America Corp. and JPMorgan Chase & Co. this year have hired and trained more staff to handle short sales and also developed software for expediting them.

“It’s really finally dawning on banks that they’re better off with a short sale,” says Richard Green, director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles. “I think banks were in denial.”

Source: Bloomberg, John Gittelsohn and Margaret Collins (12/4/2009)

Deficiency Judgments: The Real Risk

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There are numerous websites showing the legal and theoretical possibilities of being sued after foreclosure. Many so-called “foreclosure experts” threaten homeowners with the possibility of being sued after foreclosure, and having their wages garnished, cars repossessed, or given enormous tax bills from the IRS. Since so many state foreclosure laws do allow deficiency judgments, there is always the danger of being sued after foreclosure. However, most of the foreclosure advice being given to homeowners is wildly inaccurate. In almost every single case, what usually “actually” happens is…
Nothing.

The bank, after the foreclosure, would have to sue the former foreclosure victims for the deficiency judgment if one even exists. This means the bank would have to hire lawyers, pay attorney fees and court costs, and would simply have a judgment against them. There is no expectation that they would ever be able to collect on that judgment, and banks are aware that homeowners go into foreclosure because they run out of money. So, if they know homeowners have experienced a financial hardship and do not have any money, and the mortgage company has already lost money on the loan due to the foreclosure, there is little reason for them to sue again. They just move on with attempting to sell the property on the open market and recoup some of their losses.

When a homeowner sells the property before the foreclosure and sells it at a lower amount than what is owed on the loan, this is called a short sale, and is one of the most common ways that homeowners can stop foreclosure on their homes. In this case, the homeowners would get a 1099 at the end of the year, since the bank is forgiving the difference in the loan amount. Forgiven debt is counted as income. But this is only a possibility when a homeowner has worked out a short sale with the bank and a buyer, and the home has actually transferred ownership through the short sale.

When the house is sold at sheriff sale for a loss, this is not forgiven debt. It is merely a sale of the house, and homeowners do not get a 1099 if they do not receive any profit from the sheriff sale and if no debt is forgiven. The house is just taken from them to pay the bank and the bank gets the property back because that was pledged as collateral on the original loan. The legal mechanism of foreclosure allows for the sale of the property at a public auction, but has nothing to do with forgiving any portion of the actual debt represented by the foreclosure judgment.

So that is what actually happens in the vast, vast majority of foreclosure situations. Banks rarely pursue deficiency judgments unless they know the homeowners have a lot of cash and other assets that would make it worth suing them. This is not the case in most foreclosures, though. While literally hundreds of online resources and charlatans will threaten homeowners with the possibility of a deficiency judgment and all of its ill effects after foreclosure, the banks themselves are wise enough to recognize that suing their former clients is not in their best interests in all but the most extreme cases. In fact, most lenders would gladly give former foreclosure victims another loan, if they met the qualifications; so there is no reason to turn away future business due to an unfortunate financial hardship that led to the foreclosure.

www.foreclosurefish.com

Foreclosure bargains are disappearing

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ATLANTA – Aug. 10, 2009 – Buyers of foreclosure have to be quick these days. Some houses go under contract fewer than 90 minutes after they are put on the market, says Brad Geisen, founder of Foreclosure.com.

“For every listing that comes out, we have 10 buyers,” says Cesar Dias, an associate with Approved Real Estate Group in Stockton, Calif. Dias had 15 minutes of fame after introducing foreclosure sales tours last year. Now the tours are defunct because there are not enough homes to show.

“We had a lot of inventory last summer. Now we’re down to 1,500 listings – from more than 5,000,” Dias says.

In Florida, real-estate investment companies, buying in bulk and paying cash, face competition.

Even in the hard-hit Detroit area, bargains are disappearing.

“For a good house that’s not too beat up in a good neighborhood, there’s no lack of buyers in this market,” says Andy Sakmar, founder of Century 21 Sakmar in Rochester, 20 miles north of the city. “There are a lot fewer of these properties than a year ago, and the super buys get multiple offers.”

Source: CNNMoney.com, Les Christie (08/06/2009)

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