Archive for December, 2008

Happy Short-Sale Story

I went in for my regular annual check-up this week. To my surprise, my doctor still remembers me even though I have not seen her for almost a year. Thank goodness for staying healthy and fit. During my doctor’s visit, I came across a nice lady named Karen who works at the check-out desk of the office. She told me about her short-sale story with a wonderful ending.

Karen felt the need to move out of her mobile home after a divorcing an unfaithful ex-husband. She put her mobile home up for sale and started her search for her new dream home – a home that would give her and her 9-year-old daughter a fresh start and new memories.

She got connected with a Realtor who had listed a home that she liked but was priced over her budget. She was shown many more homes and fell in love with a short-sale listing at East Mesa. It was move-in ready, with a huge lot, mature trees, guests quarters and many rooms. Thanks to her excellent credit rating, her offer was accepted from among multiple offers.

However, knowing it was a short-sale, Karen knew the process would take time. In the meantime, she was shown 27 other homes, but her heart always came back to the short-sale listing. She made the offer in June and one day in September, she received a phone call that her short-sale offer was approved by the seller’s lender.

To add to her euphoria, her mobile home sold around the same time. She got the home she wanted at an incredible deal: $135,000 for a 2,700-square-foot home ($50.00 sold price per square foot) in an established East Mesa location, with more money to put down and she did not have to pay two mortgages. She is paying just over $1,000 a month, including taxes and insurance, at a 4.5 percent interest rate. I think someone up there is watching over her.

Her advice to future home buyers is to ” short-sale can be frustrating but if you go for what you want and , be patient, good things can happen” she said.

Like many short-sale transactions’ endings, this one provides encouraging news for those attempting an offer on a short sale. Short sales are not for everyone. But, if you are patient; can deal with some degree of frustration and have the time to wait, a short sale may work for you. Karen’s story shows that short sales can be successful and a way to get a fantastic deal

December 22, 2008 at 5:12 pm Leave a comment

Chandler Rocks!

If you are looking for a place to invest your hard-earned money, look no further than Chandler, Arizona. Chandler was recently reported as the one place in the state of Arizona that has continually increased home sales this year. KPHO-5 reported on Sunday that Chandler home sales have increased seven months in a row, including 28% in August, 67% in September, 12% in October and 8% in November. Despite the housing crisis and the bad economy, many home buyers picked Chandler as the place to be. Here are some reasons why:

1. Location – Chandler is situated close to the heart of Phoenix and is still affordable compared to neighboring cities like Scottsdale and Tempe. Based on MLS data, the median sold price per square foot for a 3 Bedroom home between 1,500 – 2,000 in square feet in the last three months in Chandler is 125, compared to Scottdale at $200 sold price/sq ft and Tempe at $180 sold price/sq ft.

2. Strong Economy – Chandler has a solid economic base with large high-tech employers such as Microchip and Intel. Wells Fargo’s Ocotillo corporate campus, Countrywide’s mortgage operations and data center, Verizon’s regional headquarters and Toyota Financial Services are among the companies that have a strong financial presence in Chandler. Armorworks, Avnet, Orbital Sciences, Freescale Semiconductor and soon-to-open Covance laboratories also play a vital role in the city’s economy

3. Excelling School Districts – The Kyrene School District is a popular choice among families that live on the Northwest side of Chandler. Many schools in the Kyrene District have been ranked as excelling or highly-performing by Arizona’s Department of Education. The Chandler Unified School District has a sound educational program as well. Twenty one schools from the Chandler Unified School District (CUSD) was named as excelling schools for the school year 2006-2007. Both Kyrene school district and the CUSD have structured programs for the gifted and advance students. Recently, Chandler residents convincingly voted to extend the override budget needed by CUSD to continue its educational program. This approval shows the overwhelming support of the community towards education.

4. Friendly and Diverse Community – The City of Chandler was once again selected as one of the “100 Best Communities for Young People” by America’s Promise Alliance, a distinction the City enjoys for the third time since 2005. Chandler is also a hub for people with diverse ethnic backgrounds. The presence of Lee Lee supermarket located at the NE corner of Dobson and Warner is a popular place to shop for oriental food and other groceries. Within a two-mile radius of Lee Lee are thriving Asian businesses. South Chandler is home to three active adult communities: Sun Lakes, Springfield Lakes Solera, Springfield and Sunbird. Residents are at least 55 years old. Whatever your lifestyle is, Chandler has something available to you. Shopping, recreation, employment and education are at the forefront of Chandler’s services.

5. Future of Chandler – The city’s future is bright and vibrant. The City of Chandler recently approved a plan to build a mix townhomes and lofts with shops, restaurants and office space. The South Shore project is similar to Kierland Commons in Scottsdale and will be located on a 43-acre lot at Arizona Ave. and Chandler Heights Blvd. It will feature a 1.6-acre lake, firepits, fountains, a clubhouse and boutique hotel. The project hopes to break ground in 2010.

Other mix-used projects in the city’s plans are The Metropolitan,located West of Chandler Fashion Mall; San Marcos Commons in Downtown Chandler, which has begun selling townhomes; and Downtown Ocotillo, South of Queen Creek Blvd. between Price and Dobson roads. The concept behind mixed-use projects is for people to have a place to live, work, shop and play. Despite the economic crunch, Chandler is positioned to construct these projects with positive reception from residents. The average household income in Chandler is $74,172, compared with an average of $64,537 for Phoenix households.

For home buyers looking to grow their investment at the soonest time possible, Chandler offers a sound vision, quality of life and a great location at a still affordable price. For more news on Chandler, visit my blog at http://www.MariaRealEstate.com. For an online video of the newscast on Chandler home sales, go to http://www.kpho.com/video/18280030/index.html.

December 16, 2008 at 2:50 pm 1 comment

Cash Back Deal – Too Good To Be True?

I came across a first-time home buyer the other day. He has indicated to me that a real estate agent from a prominent online real estate company promised him $1,500 cash back in the form of a check after buying a home with him.

My initial reaction was, that doesn’t seem right. By that, I mean, it doesn’t seem legal. So, I went ahead and did some further investigation. I called my broker at Realty Executives and left a message regarding the legality of such incentives. My broker called back and said, “Only if the lender allows it, can a cash back check be allowed. If the lender disapproves of it and the check transaction still existed, then it is considered lender fraud.” Nowadays, due to tight lending guidelines, lenders will not approve this kind of a deal.

The loan application Form 1003, which is filled out by the borrower, stipulates this regulation. Further, Title 18 of the United States Code, Section 1001, addresses the provisions and criminal penalties of fraud and false statements.

The bottom line is on these cash back incentives is that the lender (the bank that funds the loan) should be informed of the “true nature of the transaction.”

Whenever the lender is not informed in writing of the true nature of the transaction, the transaction is illegal. And if you go along with the scheme, you become an accomplice, subject to prosecution. A legitimate cash back incentive by a builder, Realtor or seller usually appears in the HUD statement prepared by a neutral title company, although giving a cash back check to the buyer after closing is not a common and acceptable practice.

So, what should you do if you sense something isn’t right? Call your lender immediately and let them know. They will be happy to receive your phone call.

December 14, 2008 at 11:14 am Leave a comment

Metro Phoenix 2008 Real Estate Statistics and Short-Sale Interesting Revelations

Metro Phoenix Statistics

Did you know that …..

· The average number of days on the market for homes to close was 108 days in January 2008 and 75 days in October 2008?

· Homes sold for 94% of their list price in January 2008 and 96% in October 2008?

· The number of homes sold via MLS was 2,900 in January 2008 and 53,008 in October 2008?

· The median price for a home in Metro Phoenix was $314,000 in January 2008 and $211,000 in October 2008?

Short-Sale Revelations

Did you know that….

· The typical workload for a loan mitigation officer at GMAC Bank is around 500 files, combined loan modification and short-sales?

· At one point Countrywide had more trainees than seasoned staff assigned to decide the outcome of loan modifications and short-sales?

· At some major banks, an employee being paid about $10 an hour decides on the future of families needing assistance with paying for or selling homes valued at up to $500,000?

December 10, 2008 at 11:23 am Leave a comment

Frequently Asked Questions (FAQ) on Selling a Short Sale

What is a Short Sale?
Simply put, a short sale is used to describe the sale of a home in which the homeowner owes the bank more than the home is worth. The bank agrees to allow the home to be sold for less than what is owed (AKA “Short Sale”).

Would I qualify for a Short Sale?
There are 2 main qualifications for a good Short Sale candidate…
(1) A good Short Sale candidate is a homeowner who is behind on their mortgage payment and is unable to keep up with all of their monthly obligations. Some of the reasons for falling behind on their mortgage payment may include sudden change in monthly household income, loss of job, divorce, and more.
(2) A good Short Sale candidate also has no equity in their home. They are not able to sell their home and pay off all of the outstanding loans that are secured against their property.

How long does it take to do a Short Sale?
There are several stages that are involved with the Short Sale process…
(1) The first stage requires working with you as the homeowner to get all of the required documentation that your bank will require. This stage shouldn’t take longer than a couple of days.
(2) The second stage involves preparing the listing paperwork and scheduling an appointment with you to see your home and prepare your home to be listed for sale. This stage only takes a few days as well.
(3) The third stage entails aggressively marketing your home for sale and producing a willing, ready, and able buyer. This stage can take as little as a few days or as long as a few months.
(4) The fourth stage is the actual presentation of the offer to your bank. This is where my expertise in negotiating Short Sales takes place. The actual negotiation/approval process can take as little as 2 weeks or as much as 3 months. On average most Short Sales take between 30-90 days from the date the offer is presented to the lender to the date of the Short Sale approval. In most cases, heavy exchange of phone calls and faxes between the lender and myself are required. The process is usually not described as “fast”, but rest assured I will make sure that your transaction is taken care of.
(5) The fifth and last stage to the Short Sale process is the period of time between Short Sale approval from the bank and the buyer closing on the home. It is good practice to prepare the buyers to be ready to close in as quickly as 3 weeks from the time of Short Sale approval. Often buyer’s will even close in as little as 10-14 days.

Are Short Sales successful?

Recently, more lenders are approving short sales than ever before to avoid a costly foreclosure. The outcome may be greatly influenced by your lender’s policies and procedures. Some banks have a better system in place to review short-sales than other banks. Nevertheless, I will be tirelessly working to accomplish a win-win situation for all parties involved. By that I mean, the lender avoids foreclosure, the seller settles his account with the lender and the buyer gets a great deal on a home.

Who pays the Realtor commissions?
Your lender is responsible for Realtor commissions. While I do not charge an up front fee to list your home on a short sale, I do charge a cancellation fee of $200.00 for the work and time that was spent in marketing your home for sale.

Are there any tax ramifications to a Short Sale?
You may have heard, “Don’t do a short sale because you will get a 1099 and have to pay taxes on the difference between what you owed on your home and what you sold it for or the amount the bank wrote off.” This is true, but this is not the whole story…

If you do a Short Sale you will receive a 1099 from your bank. This 1099 will be called a “1099-C.” The thing that most people don’t know or don’t tell you is that with a Foreclosure, you will also get a 1099. In the case of a Foreclosure the 1099 is called a “1099-A.”

So what’s the difference between a 1099-C and a 1099-A? The ‘C’ stands for “Cancellation of Debt” and the ‘A’ stands for “Acquisition or Abandonment of Secured Property”. The differences are much more than you get the ‘C’ with a Short Sale and the ‘A’ with a Foreclosure. It is important to know that while there are many differences, the tax consequences for the ‘C’ and the ‘A’ are the same. You may not even be required to pay taxes on the ‘income’ as shown on the 1099-C, but don’t just assume that you won’t have to pay. Before making your final decision, first consult your CPA or Tax Preparer. I am not a tax expert. Please, consult a professional CPA or Tax Preparer before beginning the Short Sale process.

One more thing you should know is that in approximately 99% of the cases, the amount of the loss at Foreclosure is greater than that of a Short Sale. If you are going to receive a 1099 in either case, it is in your best interest to do a short sale instead of allowing your property to be sold for less at Foreclosure or as an REO (Real Estate Owned or Bank Owned Property). Now that you know this, don’t allow rumors and incorrect information to influence an important decision in your life. Losing your home to Foreclosure is always the last resort and you should seriously look at all of your options before letting your home go to Foreclosure.

Are there any credit consequences to a Short Sale?
This question is asked very frequently and has many different variables involved. The first thing to keep in mind is that the moment you go 30+ days behind on your mortgage payment, your bank has the right to report to all of the credit bureau’s that you are 30 days behind on your payments. When a late payment is reported to the three major credit bureaus, it does have a direct affect on your credit. After going through a Short Sale or a Foreclosure, most people have multiple 30, 60, and 90+ day late payments reporting on their credit report.

When the actual Short Sale is completed, most banks will report to your credit report that your account was “paid in full for less than the full amount.” Your credit report may also be marked as “settled.” It is important to keep in mind that each lender has a different way of reporting that a Short Sale was done, but this is the most common language that is seen. If your home were to go to Foreclosure you would most often see the bank report “Foreclosure” on your credit report.

It is difficult to gauge how much of a credit scoring affect a Short Sale has vs. a Foreclosure. Credit experts will agree that neither a Short Sale nor a Foreclosure is favorable to your credit or credit score, however, the impact of a Foreclosure is much worse. We strongly advise you to work with a Credit and Credit Scoring Expert for more specifics on this topic, and ways in which to improve your credit after the Short Sale is complete.

Why exactly would a bank agree to a Short Sale?
It is much more cost effective for a bank to do a Short Sale rather than Foreclose on a home. Banks are not interested in owning real estate. Banks make their money from receiving monthly mortgage payments. While banks will take a loss doing a Short Sale, they can often minimize their loss by as much as 10-20% over a Foreclosure.

Can the bank sue me or place a judgment against me for the difference between what I owe and what the home sells for?
This is a good question that is best answered by a qualified Real Estate Attorney. What you should know is that Arizona is what most people refer to as a “Non-Judgment Deficiency” state. What this means is that generally speaking if the bank forecloses on your home, they cannot pursue you for a deficiency judgment. For more specifics on this topic, please refer to the Arizona Revised Statutes and consult a qualified Real Estate Attorney.

It is also important to know that most Home Equity Lines of Credit (HELOC) are not just secured to your home, they are also personally “backed” by you. What this means is that even though your HELOC bank may agree to do a Short Sale or Foreclose on your home, they still may attempt to collect on your account – even after the Short Sale or Foreclosure is complete.

I’m behind on my payments, how long until the bank forecloses on my home?
Most notes (the “I Owe You” document that you signed with the bank when you first qualified for your loan) give the bank the right to file the “foreclosure notice” or the “notice of default” as soon as you are 30 days behind on your mortgage. While the bank has the right to file the “foreclosure notice” or set the trustee sale date (the date your home will be foreclosed on) as little as 30 days after you miss your mortgage payment, they often will not do so until you are 90 days or more behind on your payments. The bank has the sole discretion on when they want to file the sale date and all banks make this decision differently and within different time parameters.

When the official “foreclosure notice” is filed (whether it is filed after you miss 1 mortgage payment or 3 mortgage payments), there is a 91 day period of time between the filing and the actual “foreclosure sale” or
“trustee sale.”

How do I select the right agent to successfully manage and negotiate my Short Sale?
Before hiring just any ‘Agent’ to assist you in a Short Sale, make sure they are qualified and understand all the work that is required to see you through to the end. A properly trained Short Sale Agent knows how to qualify you for a Short Sale transaction. To be in a short sale business, your agent needs to be on top of things and persistent.

When should we begin working on the Short Sale together?
Ideally it would be best to begin working on your Short Sale as soon as you recognize that you are unable to keep up with your payments and will be falling 30+ days behind. The important thing for you to know and keep in mind is that the sooner we work on the short sale process, the more you increase your chance of a successful closing. Don’t wait any longer, act today, call me at (480) 650-0075 to get the process started!

December 7, 2008 at 10:04 pm 5 comments

Merry Christmas or Happy Holidays – What’s the Difference?

I was doing a Google search today and found myself not knowing the best keywords to choose to find a list of community programs for this season of giving. I wondered, should I be searching under “Christmas” community programs, or should I search under “Holiday” community programs?

It was just a few years ago when the game of “political correctness” reached widespread proportions threatening to change the meaning of a very special season once simply called – Christmas!

Nowadays, because of fear, or the need to please others, or the sense that we must be very courteous not to offend other people not celebrating Christmas, the word “holiday” is increasingly being used to mean Christmas!

History tells us that the origin of the word CHRISTMAS was taken from CHRIST. Christmas is a celebration of Christ’s birthday. Christ is the essence of Christmas. He was, is now and will forever be the reason for and meaning of Christmas and the Christmas season.

To change that to HOLIDAY departs from the true meaning and purpose of this special celebration. The word HOLIDAY by definition means any day of exemption from work to honor an event or a person. By using “Happy Holidays” to mean “Merry Christmas” is putting Christ on equal footing with every mortal being for whom we celebrate holidays, such as George Washington, veterans, laborers or Martin Luther King, Jr. Reducing acknowledgment of Christ’s birth to the level with which we honor a once-great person is dishonoring the one that is above all men.

Unfortunately, many businesses that are afraid to lose customers casually promote “Happy Holidays” within their billboards and ads. Some people go through their lives following the rest of the followers. If this evolving tradition continues without resentment and protest by individuals, we will hear our children’s children sing “Merry Holidays,” or “I’ll be Home for the Holiday,” or “The 12 Days of Holiday”. The new songs will be revised to, “It’s Beginning to Look a Lot Like a Holiday,” and “I’m Dreaming of a White Holiday.”

People dictate what is acceptable behavior for society, and unless we begin with ourselves, this relatively new tradition of “Happy Holidays” will be the direction of our future generation. It is sad and one I hope will go away.

So, if I greet you with a “Merry Christmas,” it is not meant to offend, but rather to respect and honor the true celebrant of the occasion and the reason for the season – Christ, the Lord.

Merry Christmas to you!

December 6, 2008 at 1:55 pm 2 comments