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By Debbie James, July 23, 2010

The difference between a short sale and a foreclosure is that with a short sale the seller still has control of the property, whereas a foreclosure is bank owned, (and also called a REO, real estate owned).

Here are the definitions:

A short sale is a sale which the sale proceeds fall short of the balance owed on the property’s mortgage. Typically this occurs when a borrower (seller) cannot make the payments on their loan. The lender decides that selling the property at a loss is better than the cost of foreclosing, which can cost the lender upwards of $70,000-$80,000!  Both parties must consent to the short sale process. This agreement does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.

Continue reading 'Short Sale vs. Foreclosure'»

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By Debbie James, September 14, 2009

RUMOR: Short sales are a great deal.
FACT: Banks are NOT giving anything away.

Everyday I have buyers telling me they want a short sale because they think it’s a “deal”. My question to them is: “Are you willing to wait 90-120 days just to get a response from the lender, with NO guarantee the lender will even accept the offer”? From the day a short sale goes under contract to the day of closing can be 4-6 months! Is it really worth waiting 6 months – to most likely be disappointed in the long run?

Tired of Waiting?

Recently, I had a buyer get frustrated and did not want to extend his contract. I encouraged him to allow at least 120 days for a response from the lender, but he would only do 90. In the end, he grew weary…said he knew it would take time but didn’t believe it would take this long; (even after I said it would be 4-6 months). At one point he believed the seller was taking his time so he could collect the rental income thru our peak rental season. Not so at all…on this transaction, Bank of America was the lender. Right there it tells us it’s going to be at least 120 days for a response.

Banks are overwhelmed. Everyday they receive thousands of new short sale files. If a negotiator spends only 15 minutes per file, that’s 4 per hour or 32 in an 8 hour day. Once they move onto the next file, yours goes to the bottom.

My experience has been that buyers grow weary and don’t want to wait, even though they say otherwise. If it’s really a “deal” you are looking for…compare today’s prices with those of a few years ago, they are no doubt a bargain.

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By Debbie James, November 10, 2008

According to The Associated Press, Nevada, Michigan, Florida lead ‘underwater’ list:

It is said that almost half of Nevada homeowners with a mortgage owe more to the bank than their homes are worth. Add in the homeowners in the same situation in California, Arizona, Florida, Georgia and Michigan, and together they account for nearly 60 percent of all homeowners who are “underwater” on their mortgages. Nationwide, it’s about 1 out of 5 homeowners who are underwater.

Some experts predict the problem will get much worse, others feel we are at the bottom. Remember real estate is localized, so some areas just might be at their bottom. In my opinion, I believe the worst is yet to come (in a majority of the states). My area “topped” in June 2005, where as NY topped around Dec. 2007. Buyers who got the adjustable mortgages (or negative amoritization loans) are seeing their payments adjust. And depending on the terms (1 year, 3 year, or 5 year adjustable), will depend on when the homeowner/investor gets into trouble with the higher payments. Continue reading 'Top 5 Underwater States Regarding Mortgages'»

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By Debbie James, September 1, 2008

I’ve had a lot of people ask me what the difference is between these 2, so I thought I would help clarify…

Question #1: Short Sales versus Foreclosure Sales – What is the difference between a Short Sale and a Foreclosure Sale?

Answer: Foreclosure – “The legal process in which a mortgagee (lender) forces the sale of a property to recover all or part of a loan on which the mortgagor (borrower) has defaulted.” (The Dictionary of Real Estate Appraisal)

Short Sales are not Foreclosure Sales but they are sales which have some duress involved. In Short Sales, the owner often owes more on the home than it is worth, and is generally behind on the payments (also referred to as being in an “upside-down” position). The lender, hoping to avoid the expense and time involved in a foreclosure, allows the owner to list the property, with the condition that the lender can approve the sale price. The agreement may relieve the owner from an obligation to pay for the loss, or it may leave the owner open to a deficiency judgment, depending on the agreement. As a result of a Short Sale, the borrower may also face additional tax consequences as the forgiven debt may be considered as income.

Continue reading 'Short Sale vs. Foreclosure Sale'»

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By Debbie James, August 31, 2008

We made it thru Tropical Storm, Faye. Got lots of well needed rain and here comes Gustov. Looks like we dodged another bullet, though. It’s going to our neighbors to our west. According to The Weather Channel, Gustov is going to hit somewhere along the Louisanna coast or Texas coast. The center of the cone is just west of New Orleans. The Northeast quadrant of a hurricane is the worst place to be. And unfortunately for New Orleans, they might end up there. Thankfully, they are taking this seriously and doing a great job of evacuating everyone.

I wish I had a dollar for everyone that has asked me that question. (In 5 or so years from now, we will know). it is a fair question, though. Here are my thoughts…I think we are close to the bottom, in my area. Remember that real estate is localized. The area where I live is a resort destination. It’s not a “city” like New York, Atlanta, Houston or Los Angeles. I lived in Atlanta for 12 years and invested in houses. (I am very familiar with their market and I think they have a longer time frame before they hit bottom). Prices are back to 2002/2003 prices. Buyers are coming back and looking. Investors are buying again. There are a lot of cash transactions (sorry to all my lender friends out there). All great indications. Buyers who couldn’t afford to buy a couple of years ago, are now able to afford a condo or home. Even though lending has tightened, interest rates are still low.

Continue reading 'Have We Hit The Bottom?'»