south lake tahoe short sales

Why Selling as a Short Sale is Better Than Foreclosure

There has been a lot of questions about how short sales and foreclosure will affect homeowners in the future. Credit Financial Planning Inc., www.creditfixed.com provided some great information for homeowners that are deciding weather to short sale their homes or let them go to foreclosure.

Here are some of the advantages of selling your home as a short sale instead of letting your home be foreclosed on.

Fannie Mae Guidelines for Primary Residence Loans- If you short sale your home, you will be eligible for a Fannie Mae backed mortgage after 2 years with no restrictions. With a foreclosure eligibility would be after 5 years with restrictions, and after 7 years with no restrictions.
Fannie Mae Guidelines for Non Primary Residence Loans- An investor who has done a short sale is eligible for a Fannie Mae backed mortgage after 2 years. An investor who has had a property foreclosed on cannot get a Fannie Mae backed loan for 7 years
Credit Score- With a short sale, late payments will show up as short as 12 to 18 months after the completion of the short sale. Credit scores can be affected negatively 50 to 100 points depending on how the lender reports it. With a foreclosure, the credit score is typically affected for at least 3 years. Credit scores will be negatively affected between 200 and 300 points.
Credit Application Questions (Form 1003)- There are no questions on the credit application regarding a short sale. If you have had a foreclosure you will need to answer “Yes” to question C, section VIII: Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?
Credit History- Short sales may or may not be reported on a credit history depending on how the lender reports it. A foreclosure will remain as a public record for 10 years or more.
Security Clearance- A short sale does not usually raise red flags regarding security clearance. With a foreclosure, security clearance will usually be revoked.
Deficiency Judgement-On a short sale, this is a negotiable issue between the seller and the lending institution. With a foreclosure there are no negotiations between the homeowner and the lending institution. It is up to the lender whether to file a deficiency judgement.
Deficiency Judgement- If there is a deficiency judgment on a short sale, the amount is usually lower. The foreclosure process usually will cost the lender more, hence resulting in a larger deficiency judgment if the judgment is filed.

Selling your home as a short sale can be a good option for homeowners who have a financial hardship instead of foreclosure. If you are considering selling your home as a short sale, the first step is to contact your CPA and attorney to make sure that it is the best option for you. The next step is to call Brent and Jill Johnson for more information on how to short sale your home!

Please contact us for more information regarding short sales in South Lake Tahoe. You can also view a current list of bank owned foreclosures in South Lake Tahoe for sale.

Short Sale Sellers Beware!

According to the National Association of Realtors, an increasing number of lenders are going after borrowers who sell their homes for less than they owe – known as a short sale – in order to recover more of the difference between the amount owed and the sale price.

In order for short sale sellers to protect themselves from lenders trying to recover lost money in the future, it is essential to have a note satisfaction and/or lien release and verbiage that the loan amount is paid in full. This release should be in the short sale approval letter. If there is no such verbiage in the approval letter, it should be requested. If there is more than one loan on the property, there should be a satisfaction and/or lien release from all lenders involved.

Short sales are not for everyone. Lenders say the factors that they consider when they decide to seek more money are:

How large was the unpaid debt? Lenders are more likely to go after a large loss than to bother with a small one.
Was the property an investment or a personal residence? Lenders have less tolerance for short sale sellers of investment properties. They are more likely to forgive a primary residence short sale seller.

How much money does the borrower make and what other assets does he have? If the short sale seller has other assets to go after, the lender will be more inclined to make an effort to recover their lost money. This also brings up the question if the seller could have some how made the payments, or just sold as a short sale to cut their losses?
What is the policy of the mortgage insurer or the holder of the second lien? When there is a second lien involved, the second lien holder usually will only get pennies on the dollar and will take a big loss in a short sale.

A PMI Group Inc. spokesman says the mortgage insurer “primarily target[s] borrowers who are not experiencing hardship – but those who simply elected to walk away from the property due to its decline in value.”

If you are considering selling your home as a short sale in South Lake Tahoe make sure to speak with your accountant first. For more information regarding short sales in South Lake Tahoe, South Lake Tahoe real estate, or foreclosures in South Lake Tahoe, give Brent and Jill Johnson a call today!

Source: The Wall Street Journal, Ruth Simon (04/30/2009)

Short Sale Listing in South Lake Tahoe Just Sold!

It is possible to close escrow on short sale listings in South Lake Tahoe! Here is a recent example: My wife Jill and I just closed escrow on a short sale listing located at 1069 Carson Street. Jill and I represented the buyer on this short sale transaction.

1069 Carson Street is a 3 bedroom, 1.75 bathroom, 1254 square foot home with a garage. This house was remodeled, had a newer 50 year roof, and was in great condition. The asking price was $275,000. Our offer was less than the asking price and was accepted by the seller. After only 3 days the bank gave us a counter offer of full list price, and our buyer agreed to the terms.

From the day that we submitted our offer to the day of closing escrow took 56 days. 56 days is a little longer than the average escrow period of around 45 days, but was rather quick for a short sale.

Here are some pictures of 1069 Carson from the South Lake Tahoe mls

There is currently a lot of competition between buyers looking for deals on foreclosures. In order to avoid getting into a bidding war on a bank owned foreclosure, take a look at some of the short sale listings that are available. Currently there are 36 available single family short sale listings on the South Lake Tahoe mls. There are 18 short sale listings that are currently in escrow in South Lake Tahoe.

So far this year there have been 8 short sales that were reported as sold on the South Lake Tahoe mls. The average sales price for the sold short sales was $451,912, the average price per square foot was $221, and the average days on the market was 143.

If you decide to make an offer on a short sale listing, be prepared that it may take some time for a response from the lender. There have been responses from lenders in as quick as a couple of days to as long as a many months. Some short sales can definitely be worth the wait!

If you would like to see a list of short sale listings in South Lake Tahoe, contact Brent and Jill and we will send you a list. Please let us know if you have any questions regarding Short Sales in South Lake Tahoe, South Lake Tahoe real estate, or homes on the South Lake Tahoe mls, call us today!

South Lake Tahoe Short Sale Listing!

If you are looking to invest in South Lake Tahoe real estate, make sure to take a look at this fantastic short sale opportunity!

913 Lake Tahoe Blvd. Offered at $529,000

Short Sale listing in South Lake Tahoe — Short Sale Listing in South Lake Tahoe!

Fantastic Short Sale opportunity. Bring the whole family to this spectacular 3,224 Square foot newer home with 4 oversized bedrooms, 3.5 baths and a 3 car garage. Just some of the special features in this home include granite slab counter tops, stainless steel appliances, Viking Gas Range, Hickory Cabinets, heated tile floor in the master bath, Spa Tub, Gas fireplace, Large game room with a wet bar, 2 large family rooms, and much more!! You have to see this home to appreciate the size and beauty.

Custom built in 2006
Sunny 12,342 square foot lot
Priced at only $185 per square foot!
Viking stainless steel range
Custom granite counter tops
Maintained in mint condition
Short sale subject to banks approval of a short sale

If you are in the market for South Lake Tahoe real estate and would like to set up an appointment to view this short sale listing in South Lake Tahoe, contact South Lake Tahoe real estate agents Brent and Jill Johnson today!

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!