I have had several people stop me and say ” is it worth it to do a short sale or should we just walk away, not deal with the hassle of a short sale and hand the keys back to the bank?” This is something only  you and your family can answer, but before you make that decision, lets look at some things I understand to be some key factors.

Short Sale Benefits

Here are a few benefits for doing a short sale that may not have occurred to you:

• You are in control of the sale, not the bank.
• You may sleep better at night knowing who is buying your home.
• You will spare yourself the social stigma of the “F” word, foreclosure.
• Contrary to popular belief, you can be current on your payments and still effect a short sale.
• Your home sale will be handled like any other home sale.

Buying Again After a Short Sale

If your payments have never fallen behind 30 days late and the lender does not require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately. The wait for an FHA loan is 3 years.If your payments are in arrears yet a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years, regardless of whether the home is your primary residence.

Buying Again After a Foreclosure

With certain restrictions, you may be eligible to buy another home in 5 years if the home was your primary residence. Without restrictions, the wait is 7 years.If you are an investor and do not occupy the home, the wait to buy with a Fannie Mae insured loan is 7 years.

Affects on Credit After a Short Sale

A short sale is not a derogatory mark on your credit because credit bureaus do not show the word “short sale” on your credit report. It may say “pay as agreed” or “paid as less than agreed,” among other categories. Some clients have reported negative FICO score drops from 50 points to 130 points.The point drop is typically due to being in default, that is behind on your payments.

Affects on Credit After a Foreclosure

A number of sources have reported FICO score drops from 200 to 400 points after a foreclosure. Generally this credit score will remain on your credit report as a public record for 10 years.

Credit Reports After a Short Sale

All lenders report short sales differently and some do not report them to the credit bureaus at all.

Credit Reports After a Foreclosure

If a prospective employer runs a credit check on you, your job application may be denied if you have a foreclosure on your record.

Deficiency Judgments After a Short Sale

Judgments are often negotiated between the seller and the short sale bank. In some cases, in many states, if the home is your personal residence and was financed through purchase money, there is no deficiency judgment.

Deficiency Judgments After a Foreclosure

Banks are unwilling to negotiate deficiency judgments with the homeowner after a foreclosure, in many states.. 

Loan Application Questions After a Short Sale

Loan applications do not ask questions about a short sale. You may report that you sold your home.

Loan Application Questions After a Foreclosure

You are required to answer the question: “Have you ever had a property foreclosed upon or given a deed-in-lieu thereof in the past 7 years.” If the bank sees you have had a foreclosure, your loan most likely will be denied. If you lie, you may be subject to investigation by the FBI for mortgage fraud.

Length of Time to Move After a Short Sale

If you’ve had a foreclosure notice filed, you may be able to postpone that action while the bank considers your short sale. The wait for short sale approval can be from 2 to 3 months, or LONGER.

Length of Time to Move After a Foreclosure

Unless prior arrangements have been made, the bank may want you to immediately vacate the property and can commence eviction proceedings.

Taxation After a Short Sale

A personal residence is exempt from mortgage debt relief until the end of 2012 on a federal level. Some states will still tax you unless you qualify for an exemption. An investor is not exempt from mortgage debt relief, subject to certain conditions.

Taxation After a Foreclosure

Same as with a short sale. Except some lenders immediately send out 1099s, even if the owner is exempt. With all of this being said, Sellers and buyers MUST realize, hold on you in for a ride……

In closing, always obtain legal and tax advice before making a decision between a short sale or a foreclosure…. visit our website at www.theeliteteam.net for shortsale and foreclosure listing, or call us at 2087131123 Lori

 “It was the best of time, it was the worst of times, it was the age of wisdom, it was the age of foolishness” a quote from Charles Dickens novel a ‘Tale of two cities’ seems appropriate for the Boise, Idaho real estate market.  The anxiety and suffering in what is being called the ‘Great Recession’ is all to real and painful to the tens of thousands of Boise, Idaho residents whose lives have forever changed with job losses, housing foreclosures, reduced wages, and minimized benefits. Many real estate agents were caught up in the ‘tidal wave’ of the rising market as real estate schools popped up on every corner to graduate real estate agents faster than they could say “flip that house”. But as the ‘wave’ receded it turned into a ‘rip tide’ and many real estate agents have fallen victim to the economic ills that plague America.  Those remaining Treasure Valley agents including those practicing real estate in not only Boise but Meridian, Nampa, Caldwell, Star, and Eagle are constantly barraged with negativity from their client’s disappointment over negative equity in their homes or the lengthy time to close escrow.  The real estate agents who are able to withstand these tumultuous times are growing fewer by the month.  With over 6,000 agents at the peak in the Fall of  2006 that number has dropped almost in half to 3,000 agents by December 2009.

      As Boise, Idaho real estate hovers at what many experts predict as the bottom of the market the time is perfect to become a real estate agent and/or increase your real estate investment portfolio.  Boise short sales and Boise foreclosures blanket the market of properties for sale.  Estimated yearly single family residential sales of approximately 8,000 units are far from anemic.  First time home buyers, investors and upper end buyers are scavenging Boise, Meridian, Nampa, Caldwell and surrounding areas for unbelievable prices on homes.  Throw in tax incentives and low interest rates and it is obvious that it is a great time to invest in or have a career in real estate.  As difficult as it seems from many perspectives it really is the ‘best of times’ for real estate investors.

Recently there has been allot of information about Boise, Idaho real estate in the news.  Although Boise has not been immune to economic challenges and as the Idaho legislature grapples with budget cuts and financial difficulties the Boise real estate market continues to move.  In 2009 there were 3,256 residential properties sold in Boise, Idaho.  The average purchase price was $193,552 and the median price was $163,475.00.  Compare that to 2008 where there were 3,259 residential properties sold in Boise, Idaho.  The average purchase price was $234,292.00 and the median price was $194,900.00.  Although purchase price’s dropped the volume of sales was constant.  That is great news for investors in a market that saw average rents stay constant during that same period.  In other words higher return on investment.

Investors should purchase real estate in areas that they have a certain level of familiarity and knowledge.  Single family residential homes make a great option for real estate investors who are skittish or unsure of their abilities to dissectreal estate investments.  Most have purchased several single family residential properties to live in as a primary residence in their lives.  That process has created the valuable  skill of being able to understanding the most difficult issues of real estate  investing including financing, property values, taxes, property repairs, and property saleability . Evaluating neighborhoods and competing properties can be helped by selecting the right real estate professional.  A Realtor can help provide you with information and negotiating purchase price to advocate on your behalf to get the best real estate investment available.

Here’s an brief explanation about the program. 

“Fannie Mae and Freddie Mac are offering financing incentives for buyers of foreclosed homes owned by Fannie and Freddie. Home buyers have until Jan.31rst 2010 to apply for Freddie Mac’s SmartBuy program and close in March of 2010 , which started in July.2009.This program offers up to 3.5 percent of a home’s sale price to help cover closing costs; so lets get those contracts written this week!!!!!!!

To qualify, the home must be the buyers principal residence and must be selected from Freddie Mac’s HomeSteps Web site: visit www.homesteps.com/homeshoppers.htm
for a list of its foreclosed properties. Loans must close by year’s end. The HomeSteps properties also include two-year warranties on major appliances and electrical, plumbing, and air-conditioning and heating systems.

Fannie Mae’s HomePath program www.homepath.comis an ongoing program and offers more incentives than Freddie Mac’s. Through participating lenders, Fannie will offer mortgages to buyers who make a down payment of 3 percent. The buyers do not have to secure private mortgage insurance, a common practice with nearly all lenders. Home buyers also can negotiate for Fannie Mae to offer closing-cost assistance. Unlike Freddie Mac’s program, Fannie’s assistance level is not capped. Under the HomePath program, the average participating homeowner has received payments equivalent to 3.75 percent of the loan’s value.”

Thousands of Realtors have lobbied for the government to extend these great incentives for Buyers!

Short Sale Negotiations

The sellers can agree to any type of purchase offer put before them for signature, but it’s not binding unless the sellers’ bank approves the offer. It doesn’t matter what stipulations are in the offer if the bank won’t accept them. Your true negotiation does not lie with the seller; it lies with the bank’s negotiator.

Banks rely on desktop appraisals and third-party BPOs (broker price opinions) to determine value. Although banks don’t want to follow through on a foreclosure, they also want fair market value. It is up to the listing agent to provide comparable sales and to substantiate the price submitted by the buyer. Call Me at 208-713-1123,208-941-5177, or visit our website at WWW.theeliteteam.net for further assistance.

Sales have been picking up steam since April, and, in July they increased year-over-year for the first time since November 2005. The increase was driven by first-time buyers seeking to capture the $8,000 tax credit and by bargain hunters and investors lured by discounts of 15% to 20% from market value on foreclosed homes and short sales (properties sold for less than what was owed on the mortgage). Federal intervention in the credit markets helped shore up mortgage lending at super-low rates.

After surging 10% in October, sales of existing homes jumped again in November, growing 7.4% compared with October to an annualized rate of 6.54 million units, according to the National Association of Realtors.

“This clearly is a rush of first-time buyers not wanting to miss out on the tax credit,” said NAR’s chief economist, Lawrence Yun.

November was originally going to be the last month in which sales to first-time homebuyers would qualify for a federal tax credit of up to $8,000. However, that deadline was extended and expanded, and buyers now have through June to purchase homes.

The strength of sales in November surprised the industry. A panel of experts compiled by Briefing.com had forecast month-over-month sales growth of just 2.5% to 6.25 million from 6.1 million a month earlier.

The sales total was a also huge improvement over a year ago. Sales rose 45.7% over the paltry annualized rate of 4.49 million units during November 2008.

The contribution made by first-time buyers is evident in a separate survey NAR conducted of its members. They estimate that 51% of sales in November were by newcomers to the market, up a point from 50% in October. Normally, first timers account for about 40% of sales.

Also propelling sales higher were rock-bottom interest rates. The average for a 30-year, fixed-rate loan during the month was just 4.88%, down from 4.95% in October and 6.09% a year ago.

With rates that much lower, homebuyers can save more than $150 a month on a $200,000 mortgage.

Something on a new note:  How about the $6,500.00 tax credit. The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.  Homes priced above $800,000 are not eligible for the tax credit.  For answers to basic questions, we suggest visiting the frequently asked questions about the $6,500 Home Buyer Tax Credit at the Federal Housing Tax Credit site.

“Move-up” buyers who buy a new home don’t have to purchase a more expensive home than their previous home to qualify for the $6,500 tax credit., but they need to have lived in their previous home for at least five consecutive years of the eight years prior to the purchase of the new home. Both married taxpayers, must qualify.

Remember, there are income limits you must meet to qualify.  A single taxpayers less than $125,000; and the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) above those limits. Ask your accountant if you have specific questions! Good Evening.