Short Sales – A Step By Step Process
February 25th, 2008 Categories: Foreclosures & Short Sales
A short sale in real estate occurs when the outstanding obligations (loans) against a property are greater than what the property can be sold for. If you’re facing a short sale or foreclosure situation, read the following and call or e-mail us for more assistance.
Step 1:
Verify the value of your property. If you are selling the property through a real estate broker, your broker will provide you with an estimate of market value. If you are selling the property yourself, do your own market analysis of the area and your property.
Step 2:
Add up all the costs of selling the property. If you are using the services of a real estate broker, the broker will provide an estimate of closing costs. If you are selling the property on your own (for sale by owner), call a local title company or real estate attorney and ask, as a seller, what the closing costs will be.
Step 3:
Determine the amount owed against the property. This will be the total of all loans against the property.
Step 4:
Do the calculations. Subtract the total amount owing against the property from the estimated proceeds of the sale. On a short sale, this will be a negative number.
Step 5:
Contact the lender or lenders. Talk to someone in the customer service department and tell them the situation. They may direct you to a specific department. Talk to a supervisor or manager if possible; this person will have more authority.
Step 6:
Ask the lender what its procedures are for a short sale. Some lenders are willing to work with you by reducing the amount owed or making other arrangements. Others will look to the agents involved (if any) or anyone else who’s making money off the transaction to see if they are willing to make concessions to make the transaction happen. Still other lenders will tell you that your debt is your responsibility, one way or the other.
Step 7:
Sell the property.
Debt Relief
Here is a link t othe IRS website that has a pretty good explanation fo the tax consequences of a foreclosure. This would apply to a short sale too. http://www.irs.gov/newsroom/article/0,,id=174034,00.html
We would like to emphasize that in California there is usually no “cancellation of debt income” from a foreclosure with respect to a mortgage held by a bank or financial institution because these loans are “non-recourse”.
The same might not be true if debt is from a private lender. Cancellation of debt income is the excess of the loan amount over what the lender sold the house for. This is ordinary income, not capital gain and is not reduced by the $250K or $500K exclusion for gain on sale of residence. Not good stuff here….
If the amount of the loan forgiven exceeds the cost of the house, the difference is treated as gain from the sale of a residence. If the 2 our of 5 year rule is met, you can use the $250K or $500K exclusion.
For additional information or if you are facing a possible short sale or foreclosure, please don’t hesitate to call or e-mail us. We’ll send you information free of charge and without obligation.
short sales - a step by step process provided courtesy of ehow.com
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Reasons Why We Believe The San Diego Real Estate Market Will Turn Big During The Spring Season!
December 27th, 2007 Categories: Carlsbad, Carmel Valley, Real Estate News
Historically, Real Estate downturns last 27 months. We are now in the 25th month.
- The unemployment rate in San Diego is excellent.
- Interest rates are still at historical lows, and have dropped a little bit more.
- We have lots of buyers on the fence, and they will start moving when good news starts trickling in.
- The press is actually now going to begin to look for positive economics because now it’s new – the negativity is getting old, even to them.
- Lawrence Yung, the very respected chief economist for the National Association of Realtors, said on December 10th that sales of existing homes should trend upwards in 2008. “The unusual mortgage market disrupted home sales in August and September, so the market was actually underperforming. Now that the mortgage market has improved, postponed activity should turn up in existing sales, and I expect sales to be at fairly stable to slightly higher levels”.
- In the Northeast in October, pending home sales went up 16%. That was the first region to slump, and that is a trending sign of the start of recovery.
- The government has stepped in to ease the pain for many adjustable rate mortgage holders – and that will stave off some foreclosures. This is a consumer confidence biggie!
- A spokesperson for Freddie Mac said “We are expecting and forecasting a bottoming out by mid 2008″. Investors will act if this becomes part of the mainstream theory.
- A respected U.C. Berkeley Economist stated that no matter what happens, coastal California will be the least affected area of the country if things worsen.
Other things to consider:
- The Senior Economist for the National Association of Home Builders said “new home construction will stabilize in the second quarter next year and begin improving in the third”.
- Walter Molom of NAR says “we feel the current quarter is probably the bottom of the market“.
- Realty TRAC reported that October default notices were actually down 9%, so some of the alternatives to staving off foreclosures may be starting to have an impact.
Additional market information researched by Rich Johnson
Some information from the experts
- 1990 correction started when business and the government came together, much like they are now and when the stock market became over-sold, as they are now. Most will tell you that these types of corrections normally last about 24-28 months, as stated above, we are now in the 25th month – the turn-around is in sight.
- One last piece of the puzzle that shows signs of the end – there are typically 850 thousand homes created each year in the US, we’re now at that level again.
- The Feds gave another rate cut and this fuels consumer confidence and will ultimately transfer to home buyers and seller’s confidence. Fed rate decrease and foreclosure forgiveness = good news!
Examples of Zip Codes stats in the last six months: (you can find these online or call us for your areas of interest).
San Diego – Carmel Valley 92130 Zip Code
- 180 homes were sold – for a $1,185,398 average in 47 days
- 87 homes in June – for a $1,265,163 average in 42 days
- 30 homes in November – for a $1,071,822 average in 62 days
- 5 homes in December (partial month) – for a $1,345,000 average in 43 days
Carlsbad and Encinitas 92009 and 92024 Zip Codes
- 336 homes were sold – for a $1,001,089 average in 57 days
- 142 homes in June – for a $1,050,831 average in 45 days
- 41 homes in November – for a $918,560 average in 70 days
- 8 homes in December (partial month) – for a $1,046,250 average in 55 days
We see this as a good indicator that things are going in a positive direction, less days on the market and higher average price. True, not a big sample yet, but a positive sign . In worse case, the price has basically stayed somewhat flat.
Call Us For Your Area Stats of Interest!
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