Short or Stay Atlanta Calculator

We are pleased to announce our new “short or stay calculator” (www.ShortorStayAtlanta.com) for the Atlanta Metro Area. This powerful tool will help you evaluate your current situation in regards to how much you owe versus the estimated current value of your home. This tool should just be used as a guide and should never replace the assessment given by a professional. For a free/no-risk consultation, please call 678-250-4500 to schedule an appointment.

With such a high percentage of homes underwater, homeowners who find themselves needing to sell are left with only a few options. In many cases the dollar amounts needed to sell far exceed what most homeowners have available. This very fact is what I feel is actually going to help stabilize our market. Many are just opting not to sell at these price levels which is greatly reducing inventory in many local areas. The problem arises when a homeowner does not have this option available to them. Perhaps they are forced to relocate due to a job change, family change, or some other reason that leaves them no choice. One solution which many opt for are to lease their homes. While this may work for some, it may not for others. Many HOAs in our market place limitations on rental properties. That forces a seller/homeowner to find an alternative that will allow them to move on. The solution: “short sale”.

Since short sales have become so popular in the Atlanta market in recent years, most homeowners are aware of what they are. What they are not aware of are the many details that one involves. I just want to address one detail or issue that might have an impact on the number of short sales in our market in 2012.

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation was passed in 2007 and it generally allows taxpayers to exclude income from the discharge of debt on their principal residence. For full details on the Act please visit the IRS web page. Since we are not tax professionals, you must contact your CPA to find out more information and how it may apply to your specific situation. The point I would like to highlight is that without an extension on this act, short selling a primary residence after 2012 might have additional tax consequences that will have to be factored into a homeowners decision.

What this means for our market is that unless there is a move to extend this act by our government officials, we might see a flood of new short sale listings hit the market before the end of the year. If you find yourself in this position and would like more information, call us today at 678-250-4500.

CitiMortgage

This is great news if you are a homeowner who is facing a hardship and has their mortgages through CitiBank or CitiMortgage. Any agent listed on the CitiMortgage letter will have completed a minimum of 3 short sales.

If you are someone you know is facing financial hardship, owes more than their home is worth, and needs to sell, please have them call us today at 678-250-4500. We have experience and success working with almost EVERY lender including Bank of America, Chase, CitiMortgage, SunTrust, BB&T, Regions, RBC, Wells Fargo, GMAC, and more.

In fact, we saw the MLSs (both FMLS and GAMLS) that serve the Atlanta market update their systems to include descriptions specifically for short sales during the first quarter of 2010. Two new special circumstance categories were added that now include “potential short sale” or “approved short sale”. In addition, a new listing status category called “pending lender review” was also added. The Georgia Association of Realtors added a special stipulation to be included in short sale purchase and sale agreements. MLS sold data now includes a notation that the sale was “lender mitigated” to indicate that the mortgage holders were involved in approving the sale and terms.

2011 is just a few days old and signs that short sales will remain popular, if not expand, are all around us. The 2011 Georgia Association of Realtors has now swollen the short sale stipulation from a paragraph to an entirely separate form called a “short sale exhibit”. It also seems that every real estate agent remaining active in the business has also become a so-called “short-sale expert”.

The reasons 2011 will be big for the short sale is plain and simple. For most areas, real estate values have not started to appreciate which is leaving many homeowners still upside down on their homes. Predictions are that part of the Atlanta market may even continue to see some decline in values. Interests while still historical low, are expected to increase in 2011 and that may impact those with Home Equity Lines of Credit and Adjustable Rate Mortgages. We also have the looming expiration at the end of 2012 of the “The Mortgage Forgiveness Debt Relief Act and Debt Cancellation” that was passed in 2007. All of these factors will continue to result in a high number of short sale transactions.

The bottom line is this, if you are facing a situation where a short sale might be the only option to avoid foreclosure, be sure to contact an experienced short sale agent.

Short sales are very tricky but if handled correctly, they can be very beneficial to both the seller and the buyer. Even the neighborhood can benefit by avoiding having vacant foreclosed homes plague their neighborhood. While it is impossible to cover all the tips on purchasing a short sale in this post, the first and foremost important key to success is working with an agent who has a solid track record on closing short sales. Experienced agents will understand the process and understand how each bank operates since no two institutions handle short sales in the same way.

Common Tips:

1.) Find a full-time agent who has listed and sold a minimum of 5 short sales in 2010. Sign an exclusive buyer brokerage agency agreement to legally have this agent represent your interests in your home purchase. Ask this agent to print out the MLS/FMLS report showing the properties they have actually sold and closed on. Don’t take their word for it. Bottom line, many agents will not be honest. Ask to see the proof.

2.) If you are successful in tip #1, the remaining tips should be irrelevant because these will be items that your agent will take care of for you and recommended throughout the process.

3.) Find out how many mortgages there are outstanding on the home. Has the homeowner already missed payments? If not, you might want to think about moving on to another property since the success rate of short sales are significantly lower when the homeowner is not behind on payments.

4.) Find out if there are previous offers that have already been submitted to the bank? Is the listing agent just collecting offers? Ideally, you want to go under contract as the only contract with the seller and the only contract that will be submitted to the bank. Ultimately if other offers are received by the seller and they come in higher, the bank can reject your offer in order to take the higher one. You and your agent can protect your position by including a “right of first refusal” or including an “escalation clause” in the contract.

5.) Try and find out what the seller’s hardship really is and if they are cooperating with listing agent and bank in providing full financial disclosure. If not, your short sale purchase will likely be dead in the water as almost ALL banks and lenders will not process a short sale without all required financial information from the homeowner/borrower.

6.) Have your agent research the market, is the list price/contract price in line with area comps? Some listing agents will dump the price just to obtain a contract and stop a looming foreclosure. Banks and lenders will evaluate the market and base their decision on approval by taking into account the comparable sales. If your offer is too far below, either expect a counter offer from the bank or a total rejection.

7.) Has a foreclosure sale date been set for the property? If so, some banks have policies that do not allow the foreclosure process to stop. However, many will postpone to give the short sale or loss mitigation department time to evaluate an offer.

8.) Find out of any of the loans have private mortgage insurance. If so, you now have another party that must approve the short sale contingency. Most mortgage insurance companies are not as willing to allow a short sale without some contribution or future liability to the homeowner. This can kill a short sale transaction.

9.) Be prepared to risk some upfront money on items such as a home inspection. You need to be prepared to stick to your offer once submitted to the bank. Many buyer’s agents are too worried about having their clients spend the money upfront on inspections when in reality they should be preparing their clients that this is the cost of attempting to purchase a short sale. Most banks will not renegotiate the price after the offer/contract is submitted. It is better to go in with an appropriate price for the condition and how can you know the condition without having had an inspection???

10.) For Tip #10, I again go back to Tip #1 and reinforce the fact that it is crucial to your success to work with an experienced short sale specialist. Many agents are now attempting to work the short sale market for the very first time. I see it every day on the listing side when buyers have no idea that the reason they don’t stand a chance at purchasing that short sale home is because of the lack of short experience their agent possesses.

For more information, contact a North Atlanta short sale specialist now at: 678-250-4500.

Many homeowners have exhausted all possibilities such as depleting savings, IRAs, 401ks, and even possibly attempted loan modifications. In many cases, this only delays the inevitable. That is where a short sale enters the picture.

A short sale is a complicated process that results in a homeowner negotiating with their lenders in order to sell a home for less than what is owed or outstanding on their mortgage or other liens.

Homeowners often have many of the same questions when inquiring about short sales. I will attempt to answer a few of the more frequently asked questions that come up when we meet with sellers facing the reality that they need to avoid foreclosure and attempt a short sale.

Q.) What will a short sale cost me?

A.) The goal of the short sale is to have all the costs involved with the sale paid as part of the process. Basically, the lenders will reduce what they take to account for all the fees that need to be paid, including the real estate commission. I have personally successfully closed a short sale where the bank has taken more than a $600,000 loss and not held the owner liable for any deficiency.

Q.)What do the lenders require from a seller before agreeing to consider a short sale?

A.) Most lenders/banks will require that the seller/owner submit a full financial disclosure which includes tax returns, bank statements, paychecks, expense worksheets and hardship explanation. Almost all lenders will refuse to open a file for consideration until all documentation has been received.

Q.)How does a listing agent determine what the list price of the home should be?

A.)While there is no right answer to this question, our approach is to price a home by using all available comparable market data to price the home at a fair market price. Under pricing a short sale listing can backfire when the bank reviews the value and offer received.

Many factors will dictate the outcome of a potential short sale.  We are actively seeking new clients to assist through this process.  If you are facing a financial hardship and owe more than the current value of your home, a short sale might be an option.  Every call is completely confidential and totally free.

To make the best use of your initial consultation, you will want to have the following information readily available:

• Current lenders/mortgage holders.  The bank/institution who you make your payments to every month.
• Total amount owed on each loan.
• Type of loan/loans (Conventional, FHA, VA, Interest-Only, Home Equity Line of Credit, and so on)
• Were these loans taken out when you first purchased the property? Or are they refinanced loans?
• Investor on the loan if available.  (Fannie Mae, Freddie Mac, and so on.)
• Is there Mortgage Insurance on the loan?  If so, who is the mortgage insurance company?
• Are you current with your payments?
• If you are not current, have you received a notice of foreclosure?
• Type of hardship?  (Loss of job, illness, divorce, and so on)

Don’t worry if you are not able to answer all of these questions up front.  We will be able to assist you in locating any required additional information.

What are you waiting for?  Call 678-250-4500 now to get started.  To learn more, visit: Short Sales

While over the course of 2009 there were signs of hope that the market had bottomed and a recovery was underway, it will take years of sustained significant appreciation to reach price levels where most homeowners are no longer underwater.  While I am not all doom and gloom on the housing market, I do want to be realistic that short sales will continue to comprise a large percentage of sales for 2010 and most likely many years beyond.

The Mortgage Forgiveness Debt Relief Act covers short sales of primary residences through 2012.  Unless the federal government extends this act, any forgiven debt after 2012 will be subject to income tax.  My point is not to give tax advice (see your tax adviser for that) but to highlight the benefits of short selling your home now as opposed to waiting for the market to recover.   The price levels of 2004-2006 in the Atlanta market are not likely to be seen again for many years.

As a Realtor/Agent and short sale specialist who represents many sellers who are facing financial hardship,  my obligations are to represent my client and will always remain with my client throughout the process.   My goal is to LEGALLY sell a home for as much as possible and often this means requesting that lenders/banks accept a lower payoff on a mortgage balance in addition to relieving that seller of any additional liability if the market value falls short of what is outstanding on the home.  This legitimate practice is called a “Short Sale”.

The fraudster often enters the picture as an “investor” who is looking to flip the short sale and profit on the “spread”.  This person is most interested in making a large profit and will gladly commit fraud in order to do so.   Often these investors are in the form of other agents or have partnered with ignorant agents as a “team”.  What they do is approach the listing agent with the opportunity to double profit by selling the already listed home twice. I guess they feel this offer of a double commission will seduce a listing agent into forgetting his/her obligation to the seller and forget right from wrong.

The fraud enters the picture when this investor submits a low-ball offer to the bank/lenders (often called the A-B  transaction) while at the same time lining up a so-called “retail buyer” (often called the B-C transaction).  The investor then hopes to find an attorney who will “double-close” or “same-day” close the AB and BC deals.  The fraud enters when this second contract is not disclosed to the short selling lender.  These investors feel that just placing their intention to resell the property for a profit in the AB contract is full disclosure when it is clearly not.  This second contract (B to C) must be disclosed to the short sale lender prior to closing or you are committing fraud by withholding material facts to this lender. Secondly, the retail buyer’s lender (C-party) often is not made aware of the flip which is another undisclosed sale and fraud.  Most lenders in today’s tight lending environment will not approve a loan for a retail buyer without full disclosure of this “same-day” sale. This sale is an undisclosed sale if not listed on the appraisal used to underwrite this new loan.  In addition, many title insurance companies will not insure these “same-day” or “double-close” transactions.  Further more, most lenders have instituted title seasoning policies in an attempt to slow down the process of flipping because these fast flips are what led us into the real estate mess to begin with.

Lastly, if the spread or profit does not materialize for this so-called investor then what do you think happens to the deal? Well, they walk with no consequences and the short sale seller  is left with nothing and most likely goes into foreclosure.  What happened to looking out for their interests? Was bringing in this investor really looking out for them?

The final roadblock that these criminals now face are the short sale  lenders/banks who are starting to include language that approved short sales are not allowed to be resold for 30-days or the short sale can be voided. These dead restrictions are nothing new.  Fannie Mae owned homes have had them in their for years.

Bottom line, I am not saying all investors are bad or are out to commit fraud. In fact, I believe that investors have a key role in our real estate recovery but they MUST play by the rules.  Money can still be made but it will take added risk and cut down a bit on the profits to just do it the legitimate way.

If you are looking for short sale specialists who are honest, straightforward and play by the rules, contact us today.  If we determine that short sale is the best option for you after our consultation, you have our commitment that  it will be done by the book and with full disclosure to all parties involved.

Short sales have notoriously taken on a bad rap due to the long time frames and uncertain demands from the lenders.  Buyers often don’t wait around long enough for the bank to respond to the request or even worse, the market continues to slide and the contracted price no longer represents a fair value by the time the approval comes around.  Well, recent government changes are geared toward changing the way short sales work.  The goal is to streamline the process and force banks/lenders to respond in a more timely fashion.  Details on the program can be found here: Short Sale Guidelines.

The verdict is still out on what impact the new government guidelines will  have on the process.  Either way, if you are facing a hardship and possible foreclosure a short sale may be right for you.  You want to ensure that you work with an agent that is experienced in the process to ensure the highest likelihood of success.