Archive for Short Sales
Hard Data: How Long Do “Short Sales” Take?
Once a “short sale” finally goes under contract, how long can you expect to wait for a lender’s decision? A recent Deutsche Bank study looked at the short sale aproval process of mortgage servicers. The report found that timeframes vary by loan type.
For prime loans, GMAC completed short sales the fastest – averaging roughly six months per transaction. Citigroup’s CitiMortgage took about seven and a half months. Wells Fargo averaged 8 months. Bank of America took 11 months. Countrywide, acquired by Bank of America, had the slowest timeline averaging over 13 months.
For subprime loans, Wells Fargo had the shortest timeline at just over 15 months, whereas Ocwen and Equicredit took 29 months.
For Option-ARM loans, transactions took anywhere between 8 to 13 months. See article for details.
As a CDPE (Certified Distress Property Expert) who has had over 70 short sales approved in the Tampa Bay area, I have a few comments on the study. When we submit a contract to the bank, we are assuming that the buyer will wait patiently for months without any substantive news along the way, and without any indication that the seller or the price will be approved. Short sale contracts are approved on a case-by-case basis for a specific contract with a specific buyer. Short sale approvals are not assignable to another buyer.
About half of the time, we noticed that the buyer would wait a few months and then cancel the contract because they became impatient or they found another home. When the contract is canceled, we must put the home back on the market and look for another buyer. We do not gain any benefit with the bank, as they will start the process over from the beginning the next time.
Once a home enters the market, it may require a series of price reductions and a couple months to find a buyer. If the buyer cancels after 3 months, then we would have already burned 5 months that we will never get back.
After the cancellation, it may take a month to find a new buyer, then another 5 months for the bank’s decision, and one month to close. At that point we would be 12 months into the game, right up against the foreclosure timeline. And what happens if the 2nd buyer cancels? We have seen up to 4 buyers cancel on the same home, each after waiting 3-6 months. At that point, we are in a race against foreclosure – every day that goes by is precious.
How can we keep the buyer engaged in the process and reduce the number of buyer cancellations? While some cancellations are inevitable, Team Bohannon has developed strategies to speed the process, keep the buyer informed and increase the odds that buyers will remain committed to the transaction for the duration. Call Dale Bohannon today at 813-979-4963 for more information.
Mortgage Modification Programs Not Working
As of July 2010, government programs to reduce mortgage payments for millions of homeowners have helped only about 400,000 households avoid foreclosure, though nearly 530,000 have fallen out of the program. While the bailout set aside up to $50 billion for mortgage modification programs, only $248 million has been spent according to the Government Accountability Office.
See Related Stories:
Yahoo Finance: http://bizy.be/tJEPV
Wall Street Journal: http://bizy.be/LGlYD
19x Easier Than Cutting Hair!
It requires 19 times more education in Florida to cut hair than to sell homes! To cut hair in the State of Florida one must complete 1,200 school hours in a cosmetology program and pass a state exam. To sell homes, all you need is a 63-hour course and an exam.
Once they have a sales license, the National Association of Realtors 2009 Member Profile reveals that the average Florida agent sells just one home every 2 months. The typical Florida REALTOR® has business expenses of only $430 per month and invests only $20 per month on their website. The study finds 40-80% of buyer inquiries “fall through the cracks” because most Realtors do not have a systematic way of handling leads.
The Tampa real estate market is facing a tumultuous time that offers both great opportunity and great peril. Can you afford to go down this road with an average agent?
Here is a quote from a trusted source on the subject:
”I’m always looking for high-octane, high-protein Realtors. About 80% of the sales are made by 20% of the people. You don’t want one of the other 80% to do the work here; you want a top agent. This is your largest asset, and we’re in tough times, so only the top agents can sell. They won’t fool around and list your property for too much, and they won’t under-price it and make you mad. They get stuff done.
When you interview them, ask how many houses they sold last year. If they sold four, get them out of your house. If they sold 44 houses, that’s a different story. Ask them what you need to do to get this house sold. If they can’t give you good pointers and tell you what you need to fix in a diplomatic way, you don’t need them. Find out how much property they’ve moved in your area and within a 5-mile radius. If all the houses they’ve sold are on the other side of town, that worries me.
Don’t hire your aunt Sally or some guy you sit next to in church. Interview them and rake them over the coals. If they don’t show up on time for the appointment with you, they will do the same when showing the house. Get someone who will return your phone calls.”
– Dave Ramsey
Real estate transactions are complicated. Buying or selling a home, organizing the move and relocating your family can be stressful enough already. You should not have to worry about all the details. Rather than leave the process and outcome to chance, Team Bohannon has developed a proven system that saves you time, money and aggravation. Along the way to selling over 4,400 homes, Team Bohannon learned some important lessons that can benefit you today.
New Tampa Real Estate Market Report
Curious about real estate market conditions in New Tampa (33647)? Check out our market dashboard with charts about:
- Listing Prices vs. Sold Prices
- Number of Listings, Contracts, Sales & Expireds
- Days on Market
Click New Tampa Real Estate Report for 5 charts and analysis.
Short Sale, Deed-in-Lieu, Foreclosure, Deed-For-Lease?
A record 23% of US homeowners owe more on their mortgages than their homes are worth according to a study by First American CoreLogic and an article in the Wall Street Journal on 11/24/09. A whopping 45% of Florida residents who have a mortgage are underwater! The article states that: “More than 40% of borrowers who took out a mortgage in 2006 — when home prices peaked — are under water. Prices have dropped so much in some parts of the U.S. that some borrowers who took out loans more than five years ago owe more than their home’s value.” With distressed homeowners unable to refinance due to appraisal issues, and most unable to modify their loans, Tampa residents are wondering where to turn.
The state of the U.S. economy and housing market has brought many homeowners from security to uncertainty. But within this uncertainty, solutions have been created to assist those who need help. If you or someone you know in the Tampa Bay area is struggling to pay the mortgage, it is vital to understand ALL the options available.
The pressures of an upside-down mortgage are not just felt by the homeowner. Lenders are looking to avoid foreclosure and work with homeowners to find solutions to their financial situations. Lenders are not in the real estate business, do not wish to take ownership of a home, and do not want a house to sit idle on the market.
WHAT OPTIONS ARE AVAILABLE?
If you or someone you know is facing foreclosure and the damages it will cause to credit scores, employment or security clearance, you should consider a short sale or a deed-in-lieu of foreclosure (or “deed-in-lieu”). These options could allow you to sell or walk away from your home without incurring liability for deficiency.
WHAT IS A FORECLOSURE?
By definition, foreclosure is the termination of all rights held by the homeowner covered in a mortgage. The process, in which the lender claims ownership of the property, begins when the homeowner fails to make mortgage payments at the appointed time- this is called delinquency. Typically, a formal demand for payment is issued from the lender through a Notice of Default. Although this varies by state, the lender will often issue this notice when the homeowner has been three months delinquent on the mortgage payments.
Foreclosure can:
· Remain permanently as public record on your credit history 10+ years
· Lower credit scores anywhere from 250 to more than 300 points
· Make you ineligible for a Fannie Mae-backed loan for 7 years
· Challenge current and future employment
· Put homeowners at risk of high deficiency judgments
· Become an issue against security clearance if applicable
WHAT’S A SHORT SALE?
In a short sale, a seller works with their mortgage lender to accept a price that’s less than the amount owed on the home. This results in the seller avoiding foreclosure, and allows the lender to avoid taking ownership and selling the property.
WHAT’S A DEED-IN-LIEU OF FORECLOSURE?
A deed-in-lieu is a process in which a property is given fully to the lender because the homeowner can no longer make payments. The lender then sells the property in order to retrieve a part, or whole of the loan balance owed. In most cases, the homeowner must attempt to sell the home at fair market value for at least 90 days before a mortgage company will consider a deed-in-lieu. This may not be an option if there are other liens on the property, such as second mortgages, judgments from creditors, or tax liens.
DEFICIENCY JUDGEMENT?
For both a short sale and a deed-in-lieu, your lender can claim you owe a deficiency judgment on your remaining balance. This means the lender may have the right to pursue the difference of what you owed and the eventual sale price of the home. In a foreclosure, all rights to your property are lost, while the lender retains the right to pursue a deficiency judgment. It will also remain on your credit history for ten years or more. During negotiations for both short sales and deed-in-lieu transactions, it is imperative to understand whether your lender reserves the right to pursue a deficiency.
WHAT ARE THE POSSIBLE TAX CONSEQUENCES?
When it comes to the tax implications of a short sale or deed-in-lieu transaction, you will need to consult a tax professional. As a general rule, any debt forgiven by the lending institution will be considered income. Lenders are required to file a 1099-A with the IRS showing the deficiency, which could have tax implications for you. Once you have received Form 1099-A, you will need to complete IRS Form 982 to report how much of the debt was forgiven by the lender. Again, consulting a tax professional is a vital part of this process, and can save you from future financial difficulties.
WHAT ABOUT DEED-FOR-LEASE?
You might have read about a new program called Deed-for-Lease™. Fannie Mae created this program as an option for homeowners who are in distress but not eligible for a mortgage modification. Through this program, qualifying homeowners have the option to remain in their homes as renters after voluntarily transferring the property deed back to the lender. The homeowners must prove they are able to afford market rent, and then sign a lease with the lender. A deed-for-Lease provides an additional option for borrowers who do not qualify for, or have not been able to sustain other loan-workout solutions. While this program is unique to Fannie Mae loans, be sure to discover what options your lender offers to homeowners who do not qualify for loan modifications but wish to stay in their homes.
Following are a few of the homeowner qualifications for this program:
· The property is to be used as the occupant’s primary residence
· The occupant’s income is sufficient to cover rental payments
· Inspection shows that the property has been kept in good condition
· The occupant agrees to be responsible for regular maintenance
· The number of occupants is appropriate for the home
· The occupants signing the lease must agree to a credit review
· See http://www.efanniemae.com
WHAT IS YOUR FASTEST WAY OUT?
A deed-in-lieu is the fastest solution for Tampa Bay homeowners out of a foreclosure, compared to the timeline of a short sale. However, very few lenders will negotiate a deed-in-lieu if a lien, or second mortgage has already been taken out on the home. Conversely, a short sale provides the feeling of accomplishment for selling your home.
WHAT SHOULD I LOOK OUT FOR?
If you are considering either a deed-in-lieu or a short sale, it would be wise to review the terms and conditions of your transaction carefully. Make certain your agent can explain whether or not a deficiency balance is forgiven, or how long the lender can pursue this judgment. Both options can save you from the distress that foreclosure will cause on your credit, finances, future employment and, most importantly, your stability. With more than 1 in 8 U.S. homeowners not paying the mortgage, it’s clear that no one is immune to the current economic situation.
We believe every Hillsborough County and Pasco County homeowner deserves the best information and education to protect themselves from losing their home to foreclosure and ruining their credit. For those already struggling to pay their mortgages and unsure of what to do next, understanding short sales and deeds-in-lieu can ease their stress and potentially save them from an impending foreclosure.
Deciding on which route will be best for you and your family’s future is the most important decision you can make. Please use this information to better understand the options available.
As a CDPE, Certified Distressed Property Expert, I have been trained to assist homeowners in these difficult situations. If I can provide you with more information or assistance, please don’t hesitate to contact Dale Bohannon at 813.979-4963 .
Much of this article was written by the Certified Distressed Property Institute (http://www.cdpe.com), with edits by Dale Bohannon.
Think Foreclosure is your only option…Think Again!
Owe more than your home is worth? Struggling with rising payments? Facing unforeseen circumstances? Need to move on to a new chapter? You are not alone.
Thousands of Tampa homeowners are facing the same tough challenges every day. Now more than ever, there are steps you can take to avoid foreclosure. You need guidance, confidentiality and someone who understands the serious choices you are facing about your home, your family, and your life. The wrong decision might make it impossible for you to repair your credit or purchase another home for 5-10 years. Foreclosures, short sales, and mortgage modifications can have vastly different impacts upon your future.
If you would like to speak with a Tampa Realtor who understands these difficult choices, please do not delay. You have options, and you do not need to go through the process alone. As Certified Distressed Property Experts (CDPEs), Realtors at team Bohannon provide FREE information that compares and contrasts ways to avoid foreclosure. Call today at 813-979-4963
Wesley Chapel Estate Report
What is happening with the real estate market in Wesley Chapel? At the moment there are 417 single family homes for sale, with 17 of those being bank owned foreclosures and 189 being short sales. There are 287 homes under contract, with 34 of those being bank owned, and 179 being short sales. Thus far in 2009, 592 homes have sold/closed, or about 65 per month.
If you are curious about the real estate market in Wesley Chapel, see our new 4 page Wesley Chapel Real Estate Market Report that shows statistics on Wesley Chapel Listings, Contracts Pending, and Closed Sales over the past 6 months. The report shows average prices, list-to-sales price ratios and the absorption rate. The Wesley Chapel Real Estate Market Report contains colorful charts contrasting Available Listings – vs- Contracts Pending, Sold Listings -vs- Expired Listings, Days on the Market (DOM), and Average Sale Prices. To see homes for sale in Wesley Chapel, click here and zoom in to see homes or click the search tab to revise the search criteria. For more information, contact the Realtors who have sold over over 300 homes in Wesley Chapel – Team Bohannon of Coldwell Banker at (813) 979-4963.
About Wesley Chapel
Located in Pasco County just North of New Tampa, near the intersection I75 & I-275, Wesley Chapel is home to master-planned neighborhoods, top schools, new shopping, golf courses and amenities galore. Recent estimates peg the population around 45,000 residents. Newcomers have helped found burgeoning communities in Meadow Point, Seven Oaks, Lexington Oaks, Watergrass, Countrywalk, Saddlebrook, Villages of Wesley Chapel, Chapel Pines, Northwood, Brookside, New River Lakes, and other neighborhoods.
Lenders Are Reining In Short Sales
Short sales have been an important lifeline for many Tampa Bay homeowners unable to sell their homes at market prices. In fact, 30% of the single family homes for sale in New Tampa are short sales, while 46% of homes for sale in Wesley Chapel are short sales. Over half of the homes under contract in Hillsborough County are short sales. Many Tampa Bay homeowners have been willing to face uncertainties about time frames, deficiency judgments, and promissory notes in order to avoid foreclosure. For their part, banks have reluctantly and belatedly accepted short sales as a fact of life.
Economic calculations have historically made short sales a cheaper option for banks than foreclosure until recent government interventions. The FDIC has a program whereby your tax dollars will reimburse the banks after the first 20% of any future losses (FDIC Loss Sharing Agreements). These “losses” include all penalties and fees tacked on by lenders. As a result, delays in short sales and foreclosures can result in additional fees and higher FDIC reimbursements. The FDIC has entered into 53 loss share agreements with acquirers of failed banks. For single family mortgages, the FDIC reimburses the banks for: modifications, short sales, foreclosures, and charge-offs for some second liens. Many banks are beginning to view foreclosure as a more attractive option since government intervention has distorted market forces. While it is hard to fault business people for following the rules to earn a profit, the result of these government programs seems to be at cross purposes with the intended goals of helping the average homeowner.
Though the effort to re-capitalize banks may have been defensible, the effects of the stimulus are not working for many Tampa Bay homeowners. As Certified Disttressed Property Experts (CDPEs) who work to help homeowners avoid foreclosure everyday, we at Team Bohannon encourage you to be fully informed seek the advice of competent legal, tax and real estate professionals before contemplating a foreclosure or short sale. Here is a related Business Week story.
Are Distressed Homes Worth It?
Looking to buy a short sale or foreclosure? Wondering how to avoid the pitfalls, or what strategies to employ? The National Association of Realtors is reporting that nearly a third of overall housing sales were distress sales, but the impact in Tampa has far exceeded national averages. Short sales can be fraught with uncertainties and extended delays that cause real headships if a buyer is on a fixed time schedule. Bank owned foreclosures (REOs) often see bidding wars and multiple offers from cash buyers looking to capitalize on below market asking prices. And all distressed properties require extensive inspections and potential repairs. An article in today’s Wall Street Journal examines these questions and offers some guidance that applies to Tampa home buyers. Read full WSJ article.
As Certified Distressed property Experts (CDPEs), Team Bohannon has special training, systems and strategies to help you through this process. For more info on short sales, see: http://intampaflorida.com/short-sale-basics/
Fed Says 1 in 3 Loan Applications Denied
Pre-approval is more important than ever for Tampa home buyers. According to a Federal Reserve study, nearly one in three borrowers applying for a loan in 2008 was denied as lenders enforced tight standards to respond to the mortgage crisis. Read the AP article.
Many buyers are denied even though they have a pre-qualification letter, which can lead to expensive last minute surprises before closing. To avoid the wrong loan, or the wrong lender, consult with a Team Bohannon Value-Added Real Estate Consultant. Our goal is to provide you with a systematic process and better information that will lead to selecting the right loan for your personal circumstances.
Many consumers make the mistake of selecting a loan and lender based solely on the interest rate, or by calling an acquaintance in the mortgage business. To make a better decision, we employ a Quantitative Cost Analysis®, a Lender Comparison Worksheet®, and a Qualitative Service Analysis® to evaluate the optimum scenarios. By going way beyond what a traditional Tampa Realtor® would offer, Team Bohannon consultants help navigate a tumultuous sea of choices and deliver a highly differentiated value proposition.
