selling – Page 2 – Parsons Realty

But Wait…There’s More!

March 23, 2010 By 1 Comment

There couldn’t be a better time to walk away from your house! As a refresher, see my blog post from November 5th 2008 regarding the short sale process and the “Cash For Keys” some lenders offer homeowners as an incentive to go away quietly.

I’m posting today about another government program that could put some cash in your hands. That is, if you’re facing the foreclosure of your home. The government program I want to tell you about was created to increase the viability of short sales; here are the rules if you want to play.

In December, the Treasury Department modified the rules of the Home Affordable Foreclosure Alternatives Program (HAFA). The new and improved rules have streamlined the process at the national level. Some of the interesting excerpts of the rules require lenders to answer a request for a short sale within 10 business days (including furlough days). To sweeten the pie, lenders will receive $1,000.00 to help cover the cost and speed up the process of a short sale. Just like in the movies when you tell the cabbie to, “step on it” as you toss a Benjamin at the driver.

Now here’s the good part. You, the former homeowner receive FREE CASH. That’s correct, if you act now you’ll receive $1,500.00 as a “relocation incentive” to cover moving costs or other incidentals. Fine print: to be deducted from the sale price.

Okay, here’s the catch: The new rules don’t kick in until April 2010. So if you can’t afford a loan modification (do you know anyone who has received a loan modification?) or if you don’t qualify for a loan modification, you’ll be stuck searching for other government program(s). Stay tuned as I will be posting more government programs as they become available (subject to taxpayer funding.)

Note: A short sale is the process of selling a house for less that what is owed to the lender (bank). Therefore, the lender(s) must agree to a short payoff. Why would a lender agree to accept less than what is owed? The lender may agree to a short sale if the market conditions would cause a house to sell for a lower amount than the outstanding loan balance. The lender also has other options including foreclosure. Sometimes the lender may profit from a short sale, check out a prior post “How Banks Can Profit When You Lose Your Home” In most cases, it’s the lender’s option to agree to a short sale.

Due to the current financial climate in Shasta County, it’s my experience many lenders agree to participate in short sales. In most cases, the owner of the property fares better in a short sale too. The homeowner can mitigate any legal ramifications and/or further damage to their credit rating by using the short sale process. Short sales offer many other benefits to homeowners too numerous to discuss here. If you’re considering a short sale, you’re welcome to email or call. Often times we can turn your “lemons” into lemonade.

What do you think? I’d like to hear your thoughts, post your comments below.

Redding Home Sales for January

February 9, 2010 By Leave a Comment

Redding homes sales were up when compared to last January, however price per square foot and the median home price continue to decline.

The Shasta County MLS has 63 homes sold in Redding for January 2010 and 55 for January ’09. The average sold price per square foot for Jan ’10 was $127 compared to $137 this time last year.

The median home price also declined from $241,988 last January to $219,131 this month.

Newer homes in Redding continue to hold stronger values with the average sales price being $286,172 and an average price per square foot of $155.90.

Shasta County home sales also saw in increase from 98 homes sold this time last year to 108 this January.

What’s In a Short Sale Package?

February 19, 2009 By

If you are considering a short sale your lender will require a list of documents that will need to be faxed with your offer. This is known as a short sale package.

Here is the typical list of documents required by most lenders.

Hardship letter (explanation of why you need a short sale)
Financial Statement
Last two months bank statements
Last two tax returns
Two most recent pay stubs
Buyer pre approval letter or proof of funds
HUD1 or Net Sheet
Purchase Contract
Listing agreement and authorization letter if listed by a real estate agent

The actual documents that are required vary from lender to lender. It is worth contacting them to find out exactly what they need and where to send it. Keep in mind if you send them an incomplete package it could delay your short sale approval.

Time To Sell, NOW!

November 5, 2008 By

My sister asked my opinion of home values in Redding about three years ago. At that time I suggested, “sell your home now and rent before the financial markets crash”. Needless to say, no one in my family followed my advice. The subject has come up again and I just sent my sister an email with my thoughts, see below.

Hello Sue and Uncle Tom,

Well, actually this is your second chance to sell your home (if you have equity). There will be a window of opportunity between now and when Obama’s plans go into play. We are already headed down a perilous financial path and the election of Obama pretty much guarantees financial suicide. However, his plan could possibly work out, more on that in a minute.

If you have equity in your home, sell now and find a nice rental. If you don’t have much equity in your home and the economy gets worse, as I expect, stay put as I can show you how to stay in your house without paying the mortgage for at least 9 – 10 months. I’m currently averaging 9 – 10 months with my clients now. The time span could be greater in the future. When I do a short sale for my clients we can often times keep them in their home for a year, MORTGAGE FREE.

Now here’s the best part. After my clients have lived in their house mortgage free, the lender offers them cash to move out. When the lender forecloses on the house they typically offer a certain dollar amount to the previous homeowner in exchange for the house keys. In the trade, this is known as “cash for keys” or CFK. If the previous homeowner moves out and hands over the keys, they receive a check from the lender. The dollar amount of the check is typically $3,500.00 or more! There’s your first month’s rent for your new place.

Another strategy involves skipping a few house payments and then have us contact your lender to do a “loan modification”. Right now we are negotiating loan modifications with APR rates between 2-4%. Don’t try to obtain these rates if you are a customer in good standing, it won’t happen. The lowest mortgage rates are strictly reserved for only the worst customers!

You will get the best loan modification if I do the negotiating for you. Most homeowners don’t stand a chance dealing with ruthless loss mitigators. I guarantee they’ll trick you into singing unsecured notes or modify your loan from bad to toxic. When they are done with you, bankruptcy will begin to look attractive (providing you qualify). They will take advantage of you in a heartbeat! But wait, there’s more! For a limited time if you act fast (within the next 10 months or so) we’ll throw in a principal reduction too. Really, I’m not kidding. With some good negotiating, I have been very successful in getting the lender to lop off an additional $30-$50 thousand dollars or more. This is a principal reduction, you never have to pay it back, it’ yours to keep just for trying my services.

Your credit rating will suffer using these techniques but we are finding credit card companies and even lenders are becoming understanding of these unfortunate circumstances. They’re already explaining the situation away by saying “oh, that was late 2007 or early ’08 when the mortgage meltdown occurred, it’s really not your fault.”

By now I suspect you think I am being facetious. Well, I’m not. I’m dead serious. This is how I have earned my living the last three years. I’m having my best year ever at the expense of the lenders and the tax payers bailout money! Oh, thank you GOD!

Now here’s why Obama’s plan could work. Things are already pretty bad and we could be facing a full-on depression, even without Obama’s help. If Obama is successful in crashing the economy (and I think he will be) the destruction will happen very fast. Just like tearing a bandage off a wound. It’s very painful but it’s over fast.

By crashing the economy, everything will become more affordable. As an example, I’m already able to sell homes to first time homebuyers again. Prices will fall across the board including health care. Thus, the burden on Social Security and Medicare etc. could actually become affordable again. And, if you sold your house, you’ll have cash to pick-up most anything you want for pennies on the dollar. Remember, cash is king during recessions or even survival in a great depression.

By collapsing the economy we will effectively “spread the wealth” by making affordable the things that only the middle class and wealthy could afford in the past. And…the economic cycle starts over again. Typically, the biggest hoarders of wealth are older individuals and they will be too old to do anything about it and will be dead in 15 years or less anyway. Problem solved!

Well, maybe. There are many things I can’t foresee and the plan could definitely backfire. Such as; the biggest contributors to today’s society, the top 3 percent of the population are rich enough to take a financial hit and still continue their comfortable lifestyle. However, when you do this to the top producers of the economy you also take away their incentive to do anything more. Therefore, since they are typically older individuals anyway, they could simply take their bat and ball and go home. And…enjoy the rest of their life while the masses fight over the diminishing handouts. If this scenario actually happens, you and I have little to worry about because it won’t get real bad until you and I are pushing up daisies.

In my opinion, the real losers will be the people that are currently under 48 years old while the young people, those under 23 years old will possibly end up with the best deal. That is…if the plan works. Unfortunately, it’s my opinion the plan will experience a wholesale failure for at least a generation or more. To guess what this scenario would look like you have to look no further than any third world country of your choice.

-Bill

Why the Appraisal Is So Important In Short Sales

November 3, 2008 By

At some point in your short sale process the bank will want to know what the property is worth. They do this by ordering an appraisal, Broker Price Opinion (BPO) or both.

Whether the bank sends out an appraiser or a broker to do a BPO the result of their evaluation will make or break your short sales success. Most banks won’t consider selling the property for less than 85% of the appraised value, some will ask for 90% or above. With that said, it’s critical that the appraisal or BPO comes in at a price that a buyer is willing to pay.

There are a few things that you can do to make sure the appraiser does not give an inflated opinion of value. First meet the appraiser at the property, and walk through the property. This gives you an opportunity to talk to the appraiser and point out any defects of the property. It is also a good idea to bring a few comparable properties they can use for their appraisal. This will save them work and will make sure that they are using realistic comparable properties.

You should also provide the appraiser with a copy of the purchase agreement. Appraisers are used to working backwards. Most appraisals are done for purchases or refinancing, in both of these instances the appraiser will have a target number, they then try and prove that the property is worth that amount. This is why most appraisals come in at the purchase price or very close to it, even if the property is worth more. With that said, the appraiser is more likely to value the property close to the short sale offer if they are aware of the offer.

The most important thing is communicate with whoever is doing the evaluation. Your short sale is almost sure to fail if the bank gets an appraisal much higher than your offer.

Taxation Of Short Sales And Foreclosures

September 17, 2008 By

We receive lots of questions about tax liability of short sales and foreclosures. As real estate brokers we are not licensed to give advice on this topic however we can lead you to the information that may answer your questions.

On December 20, 2007 the Mortgage Forgiveness Debt Relief Act of 2007 was enacted. Usually, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. The Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude certain cancelled debt on your principal residence from income. More information regarding the Mortgage Debt Relief Act can be found on the IRS website:

https://www.irs.gov/individuals/article/0,,id=179414,00.html

Or the California Association of Realtors has put together an FAQ regarding the taxation of Foreclosures, Deeds in Lieu of Foreclosure, and Short Sales. This is more detailed information and specific to California.

https://www.parsonsrealty.com/parsons_realty/taxes/car_faq.pdf