Joseph Whitley Real Estate

Short Sale

I’m not calling anyone old, but this is still a good saying that illustrates as markets change, we all have to adapt and change our way of thinking.  The current reality is that the market is full of foreclosures, short sales, and “distressed properties.” Buyers sometimes have a bad taste in their mouths when they hear the term distressed properties.  But the truth is that there are plenty of opportunities for investment out there.  Yes, short sales may take longer, and, yes, many foreign investors are swooping in on properties with all cash offers, but if you are willing to be persistent, a distressed property can be a very smart choice.  Just remember when working with a realtor, find out if they are familiar with the short sale process.  Many realtors in the market are either not yet experienced with the process or are refusing those types of transactions out of fear, misconception, or laziness. As I’ve always said, the right real estate agent makes all the difference in the world.

What a glorious feeling! When I do open houses, it’s come rain or shine. And there is no hard and fast rule that the rain will slow down your open house attendance. I’ve had sunny, warm days be busy and rainy, cold days be busy. So always be prepared for those rushes, and keep your spirits up. The weekends are usually when customers have the time to do open houses, and if they are serious, then they will come no matter what the weather.

No, not Blackjack.

Property inspections!

For a standard 3 bedroom, 2 bath home, a property inspection can range from $325 to $450 and a pest inspection can range from $125 to $200.

How is this going to make you thousands of dollars?

For Sellers, it’s simple, with the property inspections, we can more accurately price your property, make any minor repairs that a buyer my see as big problems, and take the liability off of you as the seller.

For Buyers, if the seller has not completed any inspections, it is always wise for you to have your own inspections done.  This may save you several thousands of dollars if there is a lot of damage under the surface.  You can not judge a book by it’s cover.

Whether you are the Buyer or Seller, the property inspections will give you more negotiating power, and with that, you get more money in YOUR pocket, either saved or made.

*All inspections should be completed by a Licensed and Insured Professional.

This topic came up yesterday during a meeting with colleagues.  From a Realtor’s perspective, these so called “pre-approvals” that perspective buyers are receiving from lenders are what we call a pre-qualification.  Pre-qual’s do not mean squat to a real estate professional that is sifting through offers.

A pre-qualification is merely the maximum loan amount one could receive based on the information provided on their loan application.

A pre-approval is where a loan officer has receive all documentation from the applicant and have verified all income requirements, FICO scores, debt to credit ratios, etc.

When one receives an actual pre-approval letter, it should only have 3 contingencies:

1. Ratified purchase contract for real property.


2. A satisfactory appraisal of said property.


3. Preliminary title report.

I have some links to my Preferred Lenders on the front page of this website.

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• How to Pick the Best Neighborhood (homeloans.org)

Image via Wikipedia

NOTHING!!!

It is a common misconception that FHA requires that any residential property being financed with a FHA backed mortgage to come with a working stove/oven.  That is simply not true.  The following excerpt is from HUD’s FAQ:

FAQ : Must a new or existing home have a stove in order to be eligible for FHA financing?

 Solution Details : Neither a new home nor an existing home has to have a stove in order to be eligible for FHA financing.

Handbook 4905.1 REV1, Section 2-5

Here’s the link Handbook 4905.1 REV1, Section 2-5:

http://nhl.gov/offices/adm/hudclips/handbooks/hsgh/4905.1/49051c2HSGH.pdf

Depending on the lender and/or the appraiser, they may require a working stove at the time of appraisal and FHA inspection.

Note to Consumers:  If you wish to negotiate the freestanding appliances, be sure that your agent includes that in the contract.  The CAR contracts default only includes attached appliances, unless they are excluded in the purchase agreement.  i.e. Disposal, Built-in Stove Tops and Ovens…

Source of heat is required per FHA/HUD, so don’t go removing the new central heating unit you just installed for your next home.

Note to All:  DO NOT ASSUME that custom refrigerators that match the kitchen cabinets come with the property, put it in the contract.

I get this question a lot, and the simple answer is “No”.

Photo belongs to it's prospective owner

The Short Sale and Foreclosure processes run concurrently.  So if you, as the Seller, recieve a default letter states that you must cure your default to reinstate your loan and to bring it current by a curtain date, that is the date in which they will start the foreclosure process.

Basic Foreclosure Timeline:  (Most lenders take longer.  This is worst case senario.)

Day 1:  File NOD with the county.

Within 15 Days of filing:  NOD is mailed.

90 Days:  Trustee may give notice of Sale Date and Location.

20 Days Prior to the Sale Date:  Trustee must publish Sale Date, Location, and other information for a minimum of 3 consectutive calendar weeks to the public.

In conclusion, the foreclosure process is a minimum of 110 days after the filing of the NOD with the county, from start to Trustees Sale.

Time is of the essence, so if you are have trouble making your mortgage payments, don’t wait.  Call a real estate professional today.

Follow this link to the announcement from FHA/HUD:

http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

Short Sale

• Credit is effected for 2-4 years.
• Currently, the IRS does not charge taxes on the short fall.
• You are in control of the sale.
• Free rent until the property is sold.

Foreclosure

• Credit is effected for 7-10 years.
• You will be taxed on the short fall and receive a 1099.

Example: If you owe $450,000 and the house sells for $250,000, the short fall is $200,000.  The $200,000 is considered income by the IRS, so therefore, you will be taxed on that income.

There are guidelines that must be met to qualify for a short sale.

Please consult both your Real Estate Professional and Tax Professional.

If you decide to go the short sale route, be sure your Real Estate Professional has short sale experience.  That agent can make or brake a deal.

This is great information.  Please read.

“The Federal Housing Administration will raise the minimum down payment for its least credit-worthy borrowers, agency announced Tuesday.

Borrowers with credit-rating scores below 580 will be required to put down at least 10 percent. Those with a credit score above 580 will be able to continue to put down only 3.5 percent. The changes are intended to shore up the agency’s finances.

The FHA also will increase its upfront mortgage insurance premium from 1.75 percent to 2.25 percent. The agency is expected to seek congressional approval to raise annual mortgage insurance premiums, paid by borrowers over the life of the loan, above the current 0.55 percent maximum. The amount it will seek has yet been announced.”

Source: Reuters News, Corbett B. Daly (01/19/2010)