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Short Sales Explained

Jeffrey — Wed, 01 Feb 2012 21:58:22 +0000

Take a look at this three minute video. It breaks down how a short sale in Arizona works and goes into some of the basics.

If you have any short sale questions, please don’t hesitate to call or email us. As always you are free to browse all of our Short Sale articles on our blog.

Sincerely,

Jeff Buettner

The Future Of Short Sales In Arizona

Jeffrey — Wed, 12 Oct 2011 16:45:01 +0000

I was at a pretty big real estate event in the valley yesterday. They had some wonderful real estate veterans speaking about the market and their secrets to success. My favorite speaker though happened to be the gentleman that started the Cromford Report.

For those of you who haven’t heard of the Cromford Report, it is a collection of data that us in the real estate industry look at on a regular basis. It comes fully loaded with charts, stats, and diagrams. It helps us determine exactly what’s going on in our market. The most interesting thing about this gentleman’s presentation was his prediction for the future.

Inventory is down. That is great The market seems to be getting better. All signs point to some real upward growth here in the next 12-18 months. The ugly truth is, there are a ton of home in the red where the homeowners can’t pay their mortgage still in the pipeline. The prediction is we are going to see an upswing in 2012 in regard to short sales. I know, this sounds contradictory. How can we be improving and have an upswing in short sales? The guess is because REO properties look to be dwindling in the future. Foreclosure is taking too much time, risking too much, and causing too many hassles for the banks. They seem to be more willing to work with the homeowners that are in trouble.

Thanks for reading. As always, if you have any questions, please don’t hesitate to contact me.

Sincerely,

Jeff Buettner

Scottsdale Short Sales Hit Luxury Market

Jeffrey — Wed, 05 Oct 2011 16:55:10 +0000

If you know what makes a short sale a short sale, you understand that this scenario can pop up in almost any market if the conditions are right. Well, for whatever reason, there is this delusion about the luxury market and not suffering the down turn in the housing market. Well folks, I’m hear to break the bubble. There are luxury properties being sold as short sales. Also, if you have been keeping up with my blog for a while, you know that Luxury Short Sales tend to be easier to get approved! Read The Reason Why Luxury Is Easier!

If you’re looking to eventually by your dream home, now is the time to do it. You won’t find a lot of these deals in a few years.

Thanks For Reading!

Jeff Buettner

Short Sales: The Cash Incentive

Jeffrey — Wed, 07 Sep 2011 16:38:07 +0000

For the longest time, it was a general rule of thumb that the seller was to net nothing, zilch, nada from a their short sale closing. In the short term, it makes sense. I mean, why should someone who hasn’t paid their mortgage get a cash gift, right?

Wrong.

The short sale is a win-win-win situation. The seller wins by not having all of the repercussions of a short sale. The bank wins by netting more from the short sale then they would from a foreclosed property. Finally, the neighborhood wins because statistically a short sale sells for more than a lender owned property.

Unfortunately, there are a few reasons a lot of homeowners don’t pursue a short sale.

* They might not know about the option to pursue short sale.
* Some people are dealing with too much to handle the stress of a short sale.
* More people than you think just don’t want to talk about their financial struggles with a Realtor or lawyer.

My general thought is that if you offer a monetary incentive, more homeowners would be more than willing to look at short sales as an option. The more people we can get on the win-win-win train the better off everyone will be.

Thanks for reading!

Jeffrey Buettner

Arizona Short Sales: The Reason Why Luxury Is Easier

Jeffrey — Thu, 27 Jan 2011 19:41:31 +0000

For the most part, the higher the price point of a short sale, the easier it is to get done.

How can that be with short sales you ask?

I will explain using 2 different short sale examples. The one thing I want everyone to focus on is that all the short sale lender cares about is their bottom line net compared to what they determine to be fair market value. In the following two short sale examples we will say the lender is the same, the hardship is the same, and for each the bank is looking to net %85 of market value. We are going to go through the different expenses displayed on the HUD.

Arizona Short Sale Example 1: Homeowner Has A Balance On His Mortgage Of $100,000 But Property Is Valued At $40,000

We need to hit a Net Of $34,000 for this short sale to be approved.
We deduct $2400 for real estate commission
$500 for an escrow fee
$1200 roughly for a title policy
$300 for HOA Transfer Fee
$1000 For Past Due Taxes
This leaves us a NET TO THE SHORT SALE BANK OF: $34,600

Now, everyone is reading this saying great, we got an approval. This thing can close. Some of the time this is true. More than likely, the homeowner will probably be behind on the HOA which is still hefty with a small property like this. With a small purchase price, the buyer will probably be a first time home buyer purchasing with whats called an FHA loan. If any of the major appliances are broken, those will need to be fixed. Most importantly, lets say the homeowner has A SECOND LOAN on this property. Even if they owe $10,000 that second lien will want at least $1000 to move forward. Lets take all of these things into example.

We deduct another $1000 for past due HOA
A water heater needs to be fixed so there goes another $800
And if there is a second lien we have to deduct another $1000
THIS LEAVES US WITH A NET TO THE SHORT SALE BANK OF: $31,800
SORRY. Do NOT pass go. Do NOT collect $200. This one won’t go through.
We would need a purchase contract of at least $44,000 on a property that’s not worth more than $40,000 to move forward.

Arizona Short Sale Example 1: Homeowner Has A Balance On His Mortgage Of $1,000,000 But Property Is Valued At $400,000

We need to hit a Net Of $340,000 for this short sale to be approved.
We deduct $24,000 for real estate commission
$2500 for an escrow fee (which is extremely high)
$2000 roughly for a title policy (which is extremely high)
$750 for HOA Transfer Fee
$3000 For Past Due Taxes
This leaves us a NET TO THE SHORT SALE BANK OF: $367,750

So with this example, lets take all of the problems we had in the first sale to see where we end up.

We deduct another $4000 for past due HOA
3, yes i repeat, 3 water heater needs to be fixed so there goes another $2400
And if there is a second lien with a balance of $100,000 we have to deduct another $10,000
THIS LEAVES US WITH A NET TO THE SHORT SALE BANK OF: $351,350
This ONE IS A GO!!!! Short Sale Has Been Approved! And most importantly we have $11,350 dollars to play with.
We could easily negotiate this short sale with a lower purchase price or even if 10 water heaters needed to be replaced, it wouldn’t be an issue here.

So in conclusion, you can see the higher the purchase price, the more room the numbers can move. Now I am not saying that the a short sale can’t be negotiated if your property is under $100,000 it just makes it more difficult. Now I realize there are a lot of variables here that I didn’t take into account, (Investor, different payoff requirements from different banks, hardship, homeowner being able to contribute to the sale,) but once again it was just an example.

Have a great day!

When Do Arizona Foreclosure Auctions Actually Get Postponed?

Jeffrey — Thu, 28 Oct 2010 23:57:44 +0000

This is a question that gets asked to me regularly. When will the auction on my Scottsdale short sale get pushed if I am working on a short sale? How long will it take?

Unfortunately, there isn’t a great answer. Yes, if your home is going through a short sale or even a loan modification, the foreclosure auction can be postponed. The bad part is…. all lenders tend to wait until the very last minute to postpone the auction. Some will do it a week before the scheduled auction date but most will slip in the postponement only 48 hours beforehand. This can cause a ton of frustration and a lot of stress, especially in you’re still living in the home.

What do I recommend? Make YOUR decision.

What are your choices if you’re going through a short sale in Scottsdale, AZ?

A. Move out. Find a rental home you plan to live in for the next few years and settle in. Yes, I understand. If you are having trouble paying your bills, this might be difficult right away. It is obviously easier to stay in your home rent free while you wait for the bank’s decision. But sooner you move out, the easier it is to try and find a new place to live. Your credit hasn’t been hit as bad, so on and so forth.

B. Stay in the home. This is the riskier decision for a simple reason. The banks are crazy and no short sale is guaranteed. The bank can promise all they want that the auction is going to get postponed and they can still take your home to auction in a blink of an eye. The bank’s are disorganized and are looking out for their bottom line. I have seen foreclosure auctions go through because someone from the bank didn’t process some paperwork correctly or simply because a higher up doesn’t agree with someone else’s hardship. The benefit to staying in your home? You get to live rent free for as long as the bank takes. The downside… There is a lot of stress with the process. If you’ve lived in the home a while, I have seen the emotional weight take it’s toll.

A Little About Trustee Sales

Jeffrey — Wed, 29 Sep 2010 21:25:41 +0000

Investing in real estate has been rated safe compared to other investment options like Stock Markets, Gold or Silver, but after the recent economic slowdown and the quick decline in market price of real estate across United States, investors should better be cautious before putting their money. It is good to make an informed decision as the investment amount in real estate is usually much higher compared to other investment options.

Trustee Sale Foreclosure Auctions are sold under “AS IS, WHERE IS” condition, so, it becomes the obligation of the buyer to get up to date information about the foreclosure.

In most of the cases, the real owner of the property tries to escape foreclosure and this may delay foreclosure sale. While, sometimes, the postponement is caused by lender requiring more time to process the foreclosure.

Tracking of properties under Trustee Sale is important and it is advisable to keep a record of the reason for postponement and the new date for Trustee Foreclosure Auction. Investors track properties by Trustee Sale Number.

Once the property is ready for auction, the bids are available for the prospective buyers. The bid amount published by Trustee may differ from the actual bid amount during the sale. To qualify for bidding, investors should prove the availability of funds. Investors should decide their maximum bid and should carefully bid during the bidding process.

The successful bidder will have to write check to the Trustee. After the sale, the Trustee records the Trustee’s Deed.

Redemption period is allowed to the earlier owners of the house. They get an option to refinance or sell or repay the borrowed amount and escape the foreclosure. Depending on the state laws, redemption period varies from five weeks to six months.

Foreclosure laws vary from State to State in United States, so a better option is to get the complete information before making an investment. If you are not sure, it will be a good idea to consult a reliable real estate agent before making any investment.

Difficult Times Call For Interesting Advertising.

Jeffrey — Sun, 19 Sep 2010 22:54:16 +0000

Use A Short Sale To Escape AZ Foreclosure

Jeffrey — Fri, 25 Jun 2010 22:04:56 +0000

Great Article: http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/UseAShortSaleToEscapeForeclosure.aspx

If you can no longer make your mortgage payments and your home is now worth less than you owe on it, foreclosure may not be your only option.
A short sale, in real-estate terms, is the sale of a house for less than what the owner still owes on the mortgage. If the lender agrees to a short sale, the rest of the homeowner’s debt typically is forgiven. Lenders sometimes agree to the procedure in order to take a small loss and avoid the lengthy and costly foreclosure process.
While there are some significant negative consequences to a short sale, an ever-increasing number of properties are being advertised with that label.
Short sale: Win-win-win situation
The beauty of short sales is that they can be a win-win-win situation for seller, buyer and lender. Here’s how:
The seller gets out of the mortgageliability without facing bankruptcy.
The buyer gets the home at a reduced price.
The lender agrees to a loss it considers minimal without going through a foreclosure and being saddled with an unsalable property.
While it may seem surprising that lenders would agree to accept less than what they are owed, they benefit from the process, too.
“The lender benefits by not having to go through the protracted process of foreclosing on the borrower and then having to put the property on the market and go through the whole marketing process,” says Stuart Wilson, a real-estate agent with Paragon Real Estate in San Francisco.
A market saturated with foreclosures can cost lenders billions — and as much as $50,000 per foreclosure — according to a study by the congressional Joint Economic Committee.

Strategic Default

Jeffrey — Fri, 23 Apr 2010 20:33:03 +0000

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