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.

The thing to remember is that no two short sales are exactly alike. There are many moving parts to a short sale and understanding how each piece impacts the deal is crucial to success. Here are some things to keep in mind when it comes to short sales.

1.) If you live in a condo or town home community, you must continue to pay your HOA dues. More and more lenders and investors are not willing to pay these expenses as part of the short sale. Further more, many HOAs have language that allows them to personally pursue you legally for back HOA dues. While some HOAs might take a settlement, getting a lender to pay them as part of the short sale might a huge roadblock in trying to navigate the short sale process.

2.) Have your financial documents in order and ready for your agent/attorney to submit to the lender. Many short sales drag out because these required documents are not submitted in a timely fashion or are not complete. All lenders have what are called gatekeepers that screen short sale requests for all required documents before the file actually moves along to the phase where someone that has authority to approve a short is actually assigned to your file. When lenders ask for 2 years of tax returns, make sure you have signed the signature pages. With most homeowners filing electronic tax returns, they never had to sign the signature pages. Every lender wants to see your signature on these documents. Also, when they ask for 2 months of back statements, be sure to include the most recent two months and include EVERY page even the blank ones. These statements are numbered and if page 8 of 8 is not included, that could delay moving along in the process.

3.) If you do not have one of the lender required documents for some reason, like a paystub because you are unemployed, provide a letter of explanation in place of why the requested document is missing.

These are just a few of the tips to follow when attempting a short sale. To learn more about the process of short sales, contact one of our short sale specialists 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.

What is not clear is whether this will apply in all 50-states or not. What is clear is that home values continue to fall according to the most recent Case Shiller Index (read report). Metro Atlanta home values have fallen back to 1999 levels which increases the chances that any homeowner who purchased in the last decade or took out some equity is probably under water.

If you or anyone you know is facing a financial hardship and owes more than their home is currently worth, please call us today at 678-250-4500 ext. 101.

I just came across this post by another Realtor and it also highlights this exact point very well:

Be the Winning Bidder in a Multi-Offer Short Sale
via REALTOR.com® Blogs by Lisa Lyons on 3/2/11

Short sale homes can be great bargains for home buyers – but what happens if the home you love has multiple offers? How can you make sure your offer is the one accepted? Connecticut Realtor® Minna Reid, a short sale specialist, advises how you can come out the winner in a bidding war.
“Short sellers often have different needs than sellers in a regular sale. Some buyers mistakenly believe that all that matters is how much they offer. While the amount of your offer is important, it is not the single most important determining factor, nor do the sellers have any obligation to accept any offer simply based on its dollar amount. Here are a few tips to make your offer the strongest if you end up against competing buyers for the same short sale home:
• Have patience. Short sales take time. The more flexible you are willing to be, the better your offer looks to the seller. It will usually take a minimum of 30 days to get a short sale approved, sometimes longer. As a short sale listing agent, I frequently recommend the most patient buyer over the highest paying buyer.
• Be ready to move quickly. This may sound like a contradiction to the previous point, but after all the waiting is done and the approval arrives, everyone will need to hustle. Short selling lenders don’t give long for the parties to close. 30 days from approval is expected. Being able to close quickly gives you an advantage.
• Have the most desirable method of financing. Cash is always king, but certain financing is preferable to others. Given two identical offers on a short sale – one with conventional financing and one with FHA, the conventional will trump almost every time especially when the condition of the property is questionable and the sellers lack the funds to make repairs. Level of pre-approval also weighs heavily here. The further you’ve gotten with your financing, the better your offer looks.
• Have the right buyer’s agent. When my short sellers receive multiple offers on their properties, I always measure the level of the buyer agents short sale expertise when making my recommendation. Its easy for me to tell with a few choice question whether your buyers agent is experienced in short sales. I will frequently also pull the MLS statistics of your agent to see how many short sales they have been involved in. Why? Because I know this person will be advising you through the process. If they don’t know what they’re doing, I know the sale will likely fall apart at some point and I don’t want my sellers to end up having to start all over. Choose your agent carefully if you plan to pursue buying short sales.”