Short Sales: New Trends Making It From Short To Shock?

Despite of the numerous headlines proclaiming that short sales are improving greatly, convincing the unsuspecting reader that the time has arrived to write up an offer on one, this could not be further from the truth.

Now, more than ever one should avoid short sales. Even though the general perception is that the banks “are getting slightly easier to deal with”: offering programs and online platforms for short sale sellers and their agents, the transactions themselves are getting even tougher to close.

Although, it is clear that foreclosures are costly and expensive for banks, the fact that banks are hugely reluctant to participate in HAFA is a shocking reality. Here are a few common statements: banks are not in the business of buying or selling homes. When banks foreclose on a home, they become responsible for selling it. It’s difficult for banks to sell foreclosed homes, yet they still do everything possible to complicate short sale process and they continue to do everything possible to deny short sales, rather than approve it. Well, there might be a new good reasons for the banks now chose to opt for foreclosures, read on and you will be shocked.

Making Home Affordable. “Home Affordable Foreclosure Alternatives Program”: the statement behind HAFA, is powerful and clear, and the government put so much good will and effort behind it. Unfortunately, it remains just a “wishful thinking”! The banks now more than ever, proclaim one thing but do entirely different “behind the scenes”.

Here are a few new trends to watch:

BPO’s continue to come ABOVE current market value! Seriously, where is the logic in this?

Investors: Banks hide behind their “investors”: a very dangerous and fast-growing trend.

One of my short sales was denied yesterday because the “investor” wanted to net 25% more than the actual market value! What a preposterous request! The property was listed at current market value, supported by current and relevant comps, and surprisingly, by the bank’s own BPO.  The contract price was slightly higher than the listing price, respectively higher than current market, yet the “investor” wanted more! That same “investor” made a statement that they prefer to foreclose rather than agree to accept a contract slightly above market. One cannot help it but wonder where were these “investors” when the banks were in a desperate need of financial help? The government not only stepped in and “bailed out” the banks, but continues to seek programs and solutions to restore the economic balance. It is intolerable that the banks do not reciprocate in playing their important part in the process, or at least honor their part of the deal.

Non-institutional liens: In many cases, short sale lenders are unwilling to use any money from the sale proceeds in order to help the short sale seller to pay off these non-institutional liens. You can talk with the lender until you are blue in the face, but there are certain investors and specific lien holders that will refuse to give in and allow any money towards non-institutional liens, such as: state tax liens, abstracts of judgment and HOA liens continue to be a huge hurdle to closing short sale transactions.

Incentives, offered to sellers: not honored. Many are the banks that advertised attractive incentives to those sellers willing to consider short-selling their home. It is now very clear that some of these banks used this as a desperate attempt to correct the negative publicity they had generated in the recent years. Good example, whereas the original lender was : Bank of America, the file was handled by “Servicer”, Green Tree- and of course they had “never heard” of any incentives offered to sellers…Out of 15 files I had for BOA, 13 were handled by servicers.

Real Estate Commissions: banks continue to request reductions on the real estate commissions and fees. Despite of government efforts to correct this, it is happening again and again. Realtors did not receive any breaks when their business was hit when real estate markets went down; they were not “bailed out” by the government! They took their losses and went day in and day out to do the best they could to help an entire industry in distress. They did not cause the difficult situation of the seller; neither did they cause the decline in the market values, although the banks quickly tried to include them in the category “to blame”. So why do the banks feel that the Realtors should not get paid especially in short sales when both, the seller’s and the buyer’s agents have to double their work to compensate for the in adequacies of the banks? 

Foreclosure vs Short Sale: and, yes: banks openly state that they prefer to foreclose rather than agree to a short-sale on a property, contradictory to the popular belief and general perception that “banks are not in the business to own real estate”! This is the latest trend to watch: banks are looking to expand their efforts in actually foreclosing and managing the properties as landlords.

Wonder, what comes next?

Stay tuned for more on Foreclosure and Short Sale news.

Kate Smith, Realtor®, ABR, CRS, CLHMS, CDPE, E-Pro, SFR, TRC
Luxury Residential, Commercial and Distressed Properties Specialist
Cell: 786.412.8510; Fax: 954.923.4554;
kate@hollywood-beach-real-estate.com
http://www.facebook.com/HollywoodFlorida
http://www.facebook.com/MiamiFloridaEstates
blog: http://4realestate.wordpress.com
http://www.linkedin.com/in/miamirealtorkatesmith

“Some make it happen, some watch it happen, and some say, what happened?”

IRS- Taxes – Finally, All Filed!

And, here is what I have to say: “Everyone should be paying their taxes with a smile! I tried… but the IRS wanted cash!”

Fortunately, there is Real Estate! Owning real estate has always been the most beneficial investment.

Top Ten Tax Deductions for Landlords

Rental real estate provides more tax benefits than almost any other investment. Here are the top ten tax deductions for owners of small residential rental property.
1. Interest; 2. Depreciation; 3. Repairs;  4. Local Travel; 5. Long Distance Travel; 6. Home Office; 7. Employees and Independent Contractors; 8. Casualty and Theft Losses; 9. Insurance; 10. Legal and Professional Services

Owning a Home — What’s Deductible?

Home ownership allows a lot of tax advantages not available to someone who merely pays rent. A homeowner can deduct points used to obtain a mortgage when buying a home, mortgage interest paid during the year, and property taxes. Your biggest deduction – Interest!

Here are some points to consider:
Defining “Home”:  your home can be a house, co-op, condominium, mobile home, trailer, or even a houseboat. For trailers and houseboats, one requirement is that the home must have sleeping, cooking, and toilet facilities. Even a rental can be considered a second home, provided you live in it either fourteen days out of the year or at least ten percent of the number of days you rent it for, whichever is greater.
Interest as a Tax Deduction: At the end of each year, your lender should send you a form 1098. This is your deductible interest, provided you meet certain conditions.

Home Acquisition Debt (an IRS Term): An important IRS term is “home acquisition debt.” Any first or second mortgage used to buy, build, or improve your home is considered to be home acquisition debt:

Home Equity Debt (another IRS Term): The IRS has another term called “home equity debt.” Basically, this is any loan amount in excess of what was spent to purchase, build, or improve your home.  For the interest to be fully deductible, home equity debt cannot exceed $100,000 and the total mortgage debt on the home must not exceed its value. This can create a problem for those using 125% loan-to-value second mortgages to consolidate debt. That portion of the loan amount that exceeds the value of your home is not tax deductible (unless you used it for home improvement).

Deducting Points When Refinancing
: Points paid during refinancing must be deducted over the life of the loan. For a thirty-year loan, you divide the points by thirty and get to deduct that amount each year. Exception:  If you did a “cash out” refinance and used some of the funds to improve your primary residence, a portion of the points are deductible in the year you paid them. If you obtained a $200,000 loan and $50,000 was used for home improvement, then one-fourth of the points are deductible in the year you obtained the loan.

Deducting Property Taxes: Most homeowners pay property taxes to a local, state or foreign government. In most cases, property taxes are deductible.

Impound Accounts: Many mortgages have impound or escrow accounts. When calculating your property tax deduction, don’t deduct what you pay into that account. Only deduct what is paid from the account to the taxing authority.

Limits on Deductions: You may be subject to a limit on some of your itemized deductions.

Certified Public Accountants: Whenever you reach a point where you begin itemizing deductions, it is best to have your tax returns prepared by a Certified Public Accountant. Internal Revenue Service rules and regulations can quickly become…confusing.

As always, if you need a sound real estate advice, remember that “Real Estate Is A Serious Business; Get A Pro!”

Kate Smith, Realtor®, ABR, CRS, E-Pro,TRC, CLHMS, SFR, CDPE
Luxury Residential, Commercial and Distressed Properties Specialist
Cell: 786.412.8510; Fax: 954.923.4554;
kate@hollywood-beach-real-estate.com
http://www.hollywood-beach-real-estate.com
http://www.facebook.com/MiamiFloridaEstates
blog: http://4realestate.wordpress.com
http://www.linkedin.com/in/miamirealtorkatesmith

“Some make it happen, some watch it happen, and some say, what happened?”

BofA: Offering Rent Option As Foreclosure Alternative- Good Or Bad?

BofA to offer rentals as foreclosure alternative

NEW YORK – March 23, 2012 – Bank of America says it has begun a pilot program offering some of its mortgage customers who are facing foreclosure a chance to stay in their homes by becoming renters instead of owners.

The “Mortgage to Lease” program, which was launched this week, will be available to fewer than 1,000 BofA customers selected by the bank in test markets in Arizona, Nevada and New York.

Participants will transfer their home’s title to the bank, which will then forgive the outstanding mortgage debt. In exchange, they will be able to lease their home for up to three years at or below the rental market rate. The rent will be less than the participants’ current mortgage payments and customers will not have to pay property taxes or homeowners insurance, the bank said.

“This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support,” Ron Sturzenegger, legacy asset servicing executive of Bank of America, said in a statement.

Among requirements to qualify for the program, homeowners must have a BofA loan, be behind at least 60 days on payments and be “underwater,” owing more on their mortgages than their homes are worth.

The bank based in Charlotte, N.C., said it will at first own the homes, then sell them to investors. If the program is successful, it could be expanded to include real-estate investors who buy qualifying properties and keep the occupants on as tenants.

“If this evolves from a pilot into a more broadly based program, we also see potential benefits from helping to stabilize housing prices in the surrounding community and curtail neighborhood blight by keeping a portion of distressed properties off the market,” Sturzenegger said.

Foreclosure tracking firm RealtyTrac says foreclosure activity has picked up in some states, as banks deal with a backlog of homes with mortgages that had gone unpaid yet remained in limbo due to delays stemming from foreclosure-abuse claims.

Nevada has the nation’s highest foreclosure rate as of last month, with one in every 278 households in the state receiving a foreclosure-related filing, twice the national average, according to RealtyTrac. Arizona ranks third behind California, while New York has not been as hard hit, with one in every 4,604 households receiving a foreclosure-related filing.
AP LogoCopyright © 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

As always, it pays to consult someone who knows. As I say, “Real Estate Is A Serious Business, Get A Pro”!

Kate Smith, Realtor®, ABR, CRS, E-Pro,TRC, CLHMS, SFR, CDPE
Luxury Residential, Commercial and Distressed Properties Specialist, Brosda & Bentley Realtors
Cell: 786.412.8510; Fax: 954.923.4554;
kate@hollywood-beach-real-estate.com
http://www.hollywood-beach-real-estate.com
blog: http://4realestate.wordpress.com
http://www.linkedin.com/in/miamirealtorkatesmith

“Some make it happen, some watch it happen, and some say, what happened?”

Top 10 turnaround towns- Miami and Ft. Lauderdale top the list

Top 10 turnaround towns- Miami and Ft. Lauderdale top the list, and 8 of the Top Ten cities are in Florida. GO FLORIDA!!!

CNNMoney finally caught up on the news we have been confirming for the last 8 months.  As they wrote in the latest market report : “Florida’s cities were some of the hardest hit by the housing bust, but now they are leading the charge back. Of Realtor.com’s top 10 turnaround towns, eight are in the Sunshine State.”

 http://money.cnn.com/galleries/2012/real_estate/1201/gallery.turnaround-housing-markets/index.html

Not only that Florida has been making a remarkable and quick come-back, but certain segments of the market even show shortage of inventory.

Sunny Isles for example, shows a shortage in newer oceanfront condos that are priced below $800,000, which creates a strong seller’s market. The sellers are firm on their prices, yet, the appraised values for this specific area and product are at $550,000 median. As financing continues to be very restrictive for condominiums, with tight loan limits, these properties are only available to cash buyers. 

Cash buyers are not required to have the property appraised, and as there is shortage in this category, they are purchasing at prices well above current market value determined by Dade County Appraiser. 

This naturally raises a few concerns, and the most important question- where are we headed? And, when are the banks finally going to catch on and increase the limits on luxury condominiums, thus keeping the values in some control.

Now, that CNNMoney has caught up with the REAL reality, hopefully the banks will follow suit.

Copyright © 2012 | Kate Smith, LLC | Information deemed reliable, but not guaranteed |