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Short Sales in South Lake Tahoe

Short Sales in South Lake Tahoe

For those of you that have been following the South Lake Tahoe Real Estate market, you know that foreclosures have been accounting for a large percentage of our current escrows and recent sales activities. Currently 12 of the 44 single family homes in escrow are foreclosures. On the other hand, there are only 3 short sales in escrow out of the 33 short sale listings on the South Lake Tahoe mls. With the changes that are happening with lenders and short sales, the number of foreclosures may soon be decreasing, and the number of short sale listings may be on the rise.

A short sale occurs when a homeowner owes more on their property than the property is actually worth, but the bank agrees to accept less than is owed as “payment in full”, in an effort to avoid the foreclosure process. A short sale is a great option to foreclosure for a homeowner because the homeowners credit will not be damaged nearly as much. In most short sale cases, the only damage to the homeowners credit will be the delinquent mortgage payments that will eventually fade off of the credit report. It is important to make sure that the lender reports the loan as “Paid in Full.”

With the recent changes to the Mortgage Forgiveness Debt relief Act, the debt that is forgiven on the first mortgage is no longer taxable as long as the house was your primary residence. If the house is not your primary residence, the IRS considers the amount of the loan discount taxable income.

 Why would a bank want short sale a property and accept less than they are owed?

  • Foreclosure is expensive for the bank and averages about $14,000 to $20,000 dollars.
  • Banks are required to hold 3 to 5 times the amount of any foreclosure properties held as assets in reserves. If a bank forecloses on a $500,000 house, they are required to have an additional $1,500,000 to 2,500,000 in reserves that they cannot lend out and make money on.
  • With the new stimulus package, banks are now getting a bonus from the government for closed short sale transactions.

Banks are now realizing that short sales can be a better option than foreclosure for both themselves and the homeowners, which is why we may be seeing more successful short sale closings in the future.

A bank will not just approve a short sale because the homeowner owes more that the home is worth. In order for a homeowner to qualify for a short sale they must meet certain requirements.

  • In most cases the homeowner must be behind on payments (Countrywide requires that you are 90 days behind on payments).
  • Homeowners must be able to prove that they have a legitimate hardship such as a loss of a job, divorce, illness, decrease in income, or increase in expenses.
  • There must be little or no equity in the home.

The homeowner must provide the following documents to the listing agent, who will provide them to the lender:

  • Authorization to release information
  • Hardship letter
  • Financial worksheet
  • Listing agreement
  • Two years tax returns
  • Two months bank statements for all accounts
  • Two pay period pay stubs

Although lenders are now realizing that short sales may be a better option than foreclosing on the property, short sales are still far from easy. Lenders are overloaded with thousands of short sale packages. It can take up to a couple of months to get a response from the lender.

It is very important that the listing agent is a short sale transaction has knowledge in short sales. Real estate agents who submit a complete short sale package are much more likely to get assigned to a loss mitigator and potentially get approved. There are also cirtian things that a real estate agent can do to help expedite the approval process, such as making sure that the loan number is on the top right and the bottom  of each and every page of the short sale package. Being able to contact the loss mitigator and keeping in communication with them regarding the transaction is another difficult but important job of the listing agent. Ultimately it is the listing agent who the buyer and the seller will be relying on to facilitate the short sale transaction.

Why would a buyer want to purchase in a short sale listing?

Short sales are consistently listed at 5% less than the current market value. Going through the short sale process may take more time, but it may be worth it for the buyer.

When looking at South Lake Tahoe Real Estate, do not avoid looking at short sale listings. There may be less competition over the short sale listings than the foreclosure listings, and you may get a great deal on a house!

If you would like a list of short sale listings in South Lake Tahoe or foreclosure listings in South Lake Tahoe on the South Lake Tahoe mls E-mail Brent and Jill Johnson. If you have any questions about South Lake Tahoe real estate or about South Lake Tahoe mls listings, please contact us today!

Short Sales in South Lake Tahoe

With more and more short sale listings on the South Lake Tahoe mls, it is very important to work with an agent that is experienced in short sales. There is a lot of information and time required in order to get a short sale escrow closed. With lenders now willing to negotiate short sales and loan modifications more consistently, foreclosure listings should decrease. With the decrease in foreclosure listings in South Lake Tahoe, buyers looking for deals on houses will need to shift their attention to short sales.

I will be attending another class on short sales on March 17th, and I will be sure to write about what I learn from this valuable class. I currently have two short sale escrows, one of which has been accepted by the lender, and one that is still in negotiations. I also have a short sale listing that has been getting a lot of activity. Over half of the current escrows on the South Lake Tahoe mls are either foreclosures or short sales.

There are still a lot of real estate agents out there that have not had any experience in short sales and are not taking the time to become educated about the process. It would be a mistake to list your home with one of those agents. Time is of the essence when it comes to short sales and if the listing agent does not understand the process, there is a chance that the lender will just close the file and foreclose on the home.

Working as a buyers agent on a short sale deal can be very frustrating because you are basically on the sideline and can only hope that the listing agent is doing everything that they should be doing to communicate with the lender. There are a lot of tricks and techniques that a knowledgeable short sale agent can apply in order to get a quicker response from the lender.

I look forward to sharing all of the short sale information that I learn from this short sale class next week. I will be writing a lot about short sales in the future because short sales are turning into a huge market share. All of the  buyers, sellers, and agents who are not educating themselves about short sales are missing the boat!

If you would like to know more about short sales in South Lake Tahoe, South Lake Tahoe real estate, or foreclosures on the South Lake Tahoe mls, please contact Brent and Jill Johnson!

Short Sale Opportunity in South Lake Tahoe!

Here is a great buyer opportunity, a short sale in South Lake Tahoe! This custom Tahoe home was built by a local contractor, and has all of the bells and whistles!

 
Jill Johnson | Chase International South Tahoe Realty | 530-416-2626
770 Algonquin Court, South Lake Tahoe, CA
Short sale opportunity on this like new custom built Tahoe Home.
4BR/3BA Single Family House
offered at $738,500
Year Built 2005
Sq Footage 3,009
Bedrooms 4
Bathrooms 3 full, 0 partial
Floors 2
Parking 4 Car garage
Lot Size 16,000 sqft
HOA/Maint $0 per month
DESCRIPTION
Short sale opportunity!!! A contractors home with many extra special features including a Vantage Home Intergration electrical system, Granite slab counter tops, Stainless Steel GE monogram appliances, Hickory Hardwood Flooring, Knotty Maple Cabinets, Doors and Trim, River rock fire place from floor to ceiling, 16,000 square foot large lot, 3 family rooms, 2 Gas Fireplaces and much more!!!!
see additional photos below
PROPERTY FEATURES
Central heat Fireplace High/Vaulted ceiling
Walk-in closet Hardwood floor Tile floor
Family room Living room Bonus/Rec room
Dining room Breakfast nook Dishwasher
Refrigerator Stove/Oven Microwave
Granite countertop Stainless steel appliances Washer
Dryer Laundry area – inside Balcony, Deck, or Patio
Jacuzzi/Whirlpool    
COMMUNITY FEATURES
Garage parking Guest parking  
OTHER SPECIAL FEATURES
Vantage Home Intergration Wiring System
3 Family rooms
Granite Slab Counter Tops
Formal Dining Room
Stainless steel Appliances
16,000 square foot large lot
Quiet Location
Hickory Hardwood Flooring
Knotty Maple Cabinets, Doors and Trim
ADDITIONAL PHOTOS
Seller contact info:
Jill Johnson
Chase International South Tahoe Realty
530-416-2626
For sale by agent/broker

 
powered by postlets Equal Opportunity Housing
Posted: Feb 3, 2009, 1:20pm PST

A short sale package has already been submitted to the lender, so make your best offer! For a list of short sales in South Lake Tahoe, foreclosures in South Lake Tahoe, or any questions regarding South Lake Tahoe real estate, contact Brent and Jill Johnson today!

This listing was added to the South Lake Tahoe real estate blog by South Lake Tahoe real estate agent Brent Johnson.

Short Sales In South Lake Tahoe

Short sales are becoming more and more common across the country. A short sale occurs when a lender agrees to accept less than what is owed on the property as payment in full. Short sales have become common due to the decrease in home values, and the popularity of low and no down loans during the recent real estate boom.

Here is an example of an active short sale on the  South Lake Tahoe MLS:

                                                                                         mohican1.jpg

1835 Mohican

This home was listed previously for $1,199,000. This is a five bedroom, three and one half bath, three car garage, 3300 square foot home.

This home was recently re-listed for $769,000 as a short sale, and soon after sold for $780,000!

One thing to know about making an offer on a short sale is that your offer may take weeks or even months to get a response from the bank. If the seller and the listing agent have done their job, and submitted a complete short sale package to the lender prior to listing the home, this time period should be shortened. If the seller and the listing agent have not contacted the bank and have not submitted a short sale package, I would be wary of wasting your time with an offer.

A short sale can be a beneficial situation for every one involved. The seller will be getting out from under a payment that he or she can no longer afford, the buyer may be purchasing the home below the current value, and the bank will not have to foreclose on the owner.

The down side to a short sale is that the seller will be damaging their credit score and the bank will be loosing money on the loan discount. Another possibility with short sales is that after a long wait for lender approval, your offer may be declined, and you will have wasted valuable time in this buyers market.

 Here is Wikipedias definition of a short sale:

Short sale (real estate)

From Wikipedia, the free encyclopedia

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 This article needs additional citations for verification. Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (September 2008)

In real estate, a short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold.[1] In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank’s Loss mitigation or Workout department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Many Short Sales leave a deficiency balance for which the Mortgagor / Borrower is still liable. In 99% of all cases it is not a settlement-in-full. A deficiency balance will remain while the mortgage broker, real estate agent / broker, loan officers, title and closing agents retain their profit. No regulatory agency governs this hybrid transaction.

Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower’s financial situation.

A short sale typically is executed to prevent a home foreclosure. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Short sales are common in standard business transactions in recognition that creditors are not doing debtors a favor but, rather, engaging in a business transaction when extending credit. When it makes no business sense or is economically not feasible to retain an asset, businesses default on their loans (called bonds). It is not uncommon for business bonds to trade on the after-market for a small fraction of their face value in realization of the likelihood of these future defaults

Short Sales In South Lake Tahoe

Short sales are becoming more and more common on the South Lake Tahoe MLS. A short sale is when a homeowner owes more on their home than the home is worth, but their bank agrees to accept less than what is owed as “payment in full” to avoid the foreclosure process.

A lender may be willing to cut their losses with a short sale to avoid the costly and time-intensive foreclosure process.  Most lenders must to have five to six times the value of their foreclosure properties on their books. This further reduces the amount of money the lender can loan out and earn interest on. Lenders would rather have that money working for them!

In order for a homeowner to qualify for a short sale they must prove that they are having a legitimate hardship. The lender will want to see a letter stating what the  hardship is. The homeowner must have little or no equity in the home, usually less than 8%. Some lenders will require the homeowner to be behind on payments. Other items lenders require are the last two months bank statements on all accounts, pay check stubs, authorization to release information, and the last two years tax returns.

When purchasing a short sale in South Lake Tahoe there are some important things to remember. Once your offer is accepted by the seller, the bank could take weeks to respond. This can be very frustrating for buyers, not knowing if they will be getting the house. In most cases, short sales will be “as is” sales. The sellers probably will not have enough money to make any repairs that the buyers may ask for, and the lenders usually will not do any work. In many cases, the  hassles can be worth it financially!

It is important to be knowledgeable about the short sale process so that when you write an offer on one you know what to expect. There are some great short sales and foreclosures on the South Lake Tahoe MLS. Take a look at my website bjohnson.idxcentral.net/blog to search the South Lake Tahoe MLS for some of these deals!