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In my previous blog post, I estimated that in 2014, home prices were expected to rebound. 2012 however surprised all of us with sharp price increases. What is causing this price increase? A number of factors may play into it but one of the main variables is the lack of supply thus increasing demand and prices. It is a seller's market and will probably remain until the latter half of this year. However, I don't believe this will last.

Based off our research, there is a artificial lack of inventory meaning, home prices may very well halt its increase and decline for some time. Let's explore why short selling now would be in your best interest.

What will the status of the housing market be in the next couple of years? Only time can tell. What we can investigate are the factors that led to the volatile home prices.

We are seeing large hedgefund investors like blackstone and other cash investors, buy out most of the inventory. Concurrently, new legislation as seen in California, Oregon, Nevada, and Washington, are slowing down the foreclosure flow in those areas which according to Daren Blomquist, VP of RealtyTrac, will result in a backlash of foreclosure activity at the end of this year and into 2014. RealtyTrac is still expecting to see about 600,000 REO's enter the market in 2013. This indicates a hit on home prices to come.

At the same time, homeowners are vulnerable to a large tax liability at the end of this year. The mortgage forgiveness debt relief act is set to expire Dec. 31, 2013. For more information, please read our previous blog post.

A short sale is when you sell your home for less than what is owed. The remaining balance owed is negotiated so if home prices decrease, the difference between the sale price and the amount owed will only grow meaning you have a higher risk of owing more to your lender after you short sell your home.

Moral of the story, no one can fully time the housing market but the uncertainty should create urgency this 2013 year.

Hope this helps

Peter

 www.seattleshortsaleblog.com

According to the Obama Administration’s October (2012) housing scorecard and “[…]the FHFA housing price index posting its largest annual gain in five years and new home sales at its fastest pace since April 2010” (Erika Poethig, assistant secretary for policy development and research at the Department of Housing and Urban Development) as well as numerous other sources, we can confidently say we have a recovering housing market. Even Warren Buffett, deemed as one of the greatest investors of all time, is bullish on the US housing market recently purchasing multiple real-estate brokerages including Prudential and his partnership with Brookfield Asset Management, a Canadian real-estate investor, to more than double his size of his brokerage business.

Our housing market is rebounding slowly due to various factors such as tight lending practices, fluctuations of supply & demand, and just the general current economic health but it is on its way to recovery. Will your client be ready to secure their next home investment and cease this opportunity?

Clear Capital exposed a sobering point: “Prices are 37.6 percent below the peak. This means a home bought for $200,000 in 2006 would be worth somewhere in the range of $124,800 today.” (source: dsnews.com) Prices were up 4.6% annually in October and as I have stated multiple times in previous articles, prices will not rebound in a U-shape but rather similar to a NIKE symbol. Concurrently, mortgage interest rates have remained at all-time lows with the latest report from Freddie Mac announcing a 15-year fixed-rate at 2.66% and 30-year fixed averaging 3.37%.

The opportunity is there and will be there for some time but are your clients preparing themselves to be able to jump on the bandwagon of nationally appreciating housing values?

A recent report shows that 23 percent of consumer mortgage requests were turned down by banks and I know from several sources around the Washington state that it is increasingly difficult to obtain a loan due to the fact that mortgage rates are so low that they aren’t incentivized to generously hand them out to just anyone.

I'm an agent. How do I prepare my client(future)? If your client had a short sale and got a significant ding on their credit score but want to prepare their credit situation to qualify for loans for their next home purchase, by the end of this article, have them talk to a Lexington Law credit specialist. I have personally researched and found them to be the absolute best company to work with in rebuilding credit scores. Here is a direct number provided through the seattleshortsaleblog for a free consultation: 888-586-6113 or you can apply through their website.

Hope this helps

Peter

By now you are probably telling yourself, having an investment property is not as easy as you thought. To make matters worse, your property is now underwater and it shifted from an Asset to a Liability. It is a liability because you may be dealing with negative cash flow, accruing repair costs, vacancy, and most importantly, it is underwater meaning you owe more on the home than it is worth. Let’s explore some options.

No Credit Ding Options

• Option #1 – Ride It Out

If you have sufficient income to support your investment property, you can ride the market out in hopes of selling it at a higher price point.

• Option #2 – Improve The Property

You can improve the property by getting a fresh coat of paint or getting landscaping work done. However, this is very risky and rarely works in these types of situations.

• Option #3 – Lease Option Sale

This is an option where you can negotiate a lease option with your tenant/buyer. This way, the tenant can improve their credit, increase their savings, and eventually purchase the property.

• Option #4 – Pay The Difference

You can sell the property and pay the difference in the amount owed and the amount you can sell it for. Some ways you can pay this difference are, out of pocket or if you have other investment properties, you can borrow the difference amount against your other rental property.

Credit Ding Options

• Option #5 – Foreclosure

If your bank does not accept your hardship letter and short sale request, you can default on your payments and allow the bank to repossess your home. This last resort option will hurt your bank(s) and yourself. This option can leave you vulnerable to a deficiency judgment(s) depending on whether your state is a recourse or non-recourse state. For more information, read my previous article here.

In this situation, your credit score will receive an 85-160 (varies upon situation) point reduction and you will have a foreclosure stamped on your credit report. With a foreclosure, you will not be able to obtain another mortgage for at least a few years or typically, a 7 year period.

• Option #6 – Short Sale

This has been the most popular option for investors. If you can show legitimate hardship or foreseeable hardship, your bank may allow you to short sale where you can sell your property for less than what is owed, avoid foreclosure and walk away from the property with little to no remaining debt. The key is to find a pro negotiator in your area who is well connected with banks and can negotiate the deficient amount despite having other assets.

This is preferable by banks and the short sale is translated on your credit report as “paid for less than original amount.” You will be able to obtain another mortgage in some cases immediately or on average, 24 months.

Tax implications

One of the most important factors when walking away from your investment property whether it is via short sale or foreclosure, are the subsequent tax implications. The IRS deems the forgiven amount (deficiency) as “taxable income” unless it is your primary residence in which you would be able to exclude the income through the mortgage forgiveness debt relief act.

If however you are able to show insolvency where your total liabilities exceed your total assets or if the debt was discharged in a Title 11 bankruptcy, you can exclude the forgiven amount regardless of it being a second home.

Short selling your rental property with little liability is difficult to do if you do not have an experienced agent who is well connected with banks. Our agents have been VERY successful in getting our investors out of their bad investment situations. If you are in Washington State, connect with our experts today to discuss your best option for your situation.

Hope this helps

Peter

“Walking away from my property” is a phrase often used by struggling homeowners who are considering allowing their homes to fall into foreclosure. However, the phrase does not accurately depict what negative effects a foreclosure actually has on a borrower’s situation yet many believe that it is as simple as letting your home fall into foreclosure and walking away. That is certainly an understatement and I will tell you why.

Think about the basic situation. You borrowed money from X (lender one) and Y (lender two assuming you have 2 liens) and later you tell both X & Y you are unable to repay your debt. So you “walk away” from the situation. Would X & Y just accept the loss and wave their hands while you leave the situation? No. Here is what they will do.

Recourse & Non Recourse State
There are different foreclosure laws in every state. This determines what the lender can legally do in the event a borrower doesn’t pay the owed amount. In a recourse state, both X & Y are able to pursue you for the remaining balance even after your home is foreclosed on. In a non-recourse state, X is not able to pursue you legally BUT Y can and probably will come after you for the remaining balance. In other words, if you have a second mortgage (2nd lienholder) on your property, they can still get their money back.

Credit Reporting
If you “walk away” from your home and debt owed to X & Y, don’t you think they will tell A,B,C, and all other future lenders of what you did? However you handle your debt owed now will put on your credit report for future lenders to see. You will have either a “foreclosure” stamped on your report which means you really did just walk away from a bad situation or you can have a “paid for less than original amount” aka a short sale on your report which shows to A,B,C that you put effort in settling your remaining debt with X & Y rather than walking away from them.

What you decide to do now will be put on paper either way. If you “walk away,” it may be easier now but harder later in various ways such as not being able to obtain another mortgage and/or a possible lawsuit.

Keep in mind that lenders WANT you to do a short sale. You may be wondering, “well I can’t afford to do a short sale…” This is a myth my friends. If you work with the right short sale agent, you shouldn’t be paying a penny. In fact, lenders typically pay YOU for doing a short sale and it can be up to $30,000 if you do.

In this 2012 year with all of the laws and lender practices now supporting homeowners who take the time to short sell their home, simply walking away from your home will make a strong statement to all who take a look at your credit report (future lenders, bosses, apartments for rent and etc.)

If you live in Washington state, our short sale experts will show you how you can settle with your lenders and walk away with little to no liability. Connect with us HERE and we will contact you within 24-48 hours.

Hope this helps

Peter

Trying to figure out what the best financial option is for your living situation? If you live in Seattle or other major areas in Washington State, some statistics may help you put into better perspective how you should handle your future living situation.

The first nugget of information is from an article by MSN 5 Places Where Renting Beats Owning. Seattle was one of the lucky five stated in the article.

A recent study done by Marcus & Millchap discovered that the average monthly rents in Seattle are $377 lower than mortgage payments. Using a suburban example in the Green Lake area, we can use a 1,800 sq. ft. home that rents for $1,795 a month. If the individual(s) decides to purchase the home with a 10% down, 30-year fixed mortgage at a 3.7% interest rate, they would be paying $2,130/month.

Homeowner’s should consider property taxes, insurance, maintenance, and other expenses that come with homeownership as well. We can conclude that renting in Seattle is the CHOICE way of living. Or at least until you are financially ready to purchase.

What if I am currently a homeowner?

The second nugget of information is from an article by Business Insider 12 Cities Where Homeowners Are Deep Underwater. Again, Seattle happened to be one of the lucky twelve.

Seattle, Washington
Negative Equity Share: 37.8%
Total Amount In Negative Equity: $23.0 billion
Delinquency Rate: 10.3%
37.6% of underwater homeowners owe 20 percent or less, while 9.1% of underwater homeowners owe more than double what their home is worth.

Negative equity means the borrower owes more on their mortgage(s) than their home is worth which is also known as “Underwater.”

Why are short sales so popular especially in Seattle and other places in Washington State? Because it is an opportunity to walk away from a home that is probably deep underwater, rebuild credit and ultimately your financial wellbeing.

Hope this helps

Peter

Full Article at: www.seattleshortsaleblog.com

Our team of agents at Seattleshortsaleblog has been extremely successful with short sales for many years now and pinpointing the key attributes that has contributed to our success is quite apparent once you meet our negotiators. As emphasized before in our previous blogs, one of the biggest downfalls in the short sale arena is the lack of communication, or more specifically, the lack of a good communicator. Facilitating a transaction with multiple parties who have only their own financial interests in mind, is not an easy task which is why we at seattleshortsaleblog continue to emphasize the importance of a professional negotiator in your short sale. Let’s explore some qualities to look for when choosing the right agent for your short sale.

Why is a negotiator important in a short sale? Picture a room of five famished people waiting for food and suddenly throwing one pie right in the middle. Most likely, a fight will break out for the pie and it will probably end up getting ruined resulting in a loss for everyone. A negotiator is like an individual who comes in to help everyone get a piece of the pie with minimal losses for everyone. A short sale transaction is a very similar situation. Everyone is trying to get the most pie they can get but without someone facilitating the portions each entity will receive, it often leads to a foreclosure which is a severe loss for all parties.

So, how do you identify a pro negotiator? I believe one very important factor for a good negotiator is his/her personality. To briefly describe some personality traits that I believe all successful negotiators should have is first and foremost, charisma.  You want a negotiator who is enjoyable to speak with and can build relationships.  Second, is stability and to be direct, an uncanny ability to control emotions. Third, and really most importantly is the ability to listen, you need to provide a party with what they want in order to get what you want or at least mediate their wants and fill as many as possible.

In working with all parties of a transaction, the negotiator should be able to influence servicers (banks), agents, and buyers (exempt sellers because negotiators are on their side). Without building good rapport and maintaining good relations with all of these members, the short sale can easily fall through.

Another key factor for a good agent/negotiator is organization. A short sale involves a plethora of various documents coming from different parties. Without have these files organized, a short sale typically fails as lenders are very particular about timely file submissions. For more information, please read our previous blog on The Key Factor For A Good Short Sale Agent.

What do you think? Are there more qualities a pro negotiator should have? Would love the feedback. Thanks!

Peter

https://www.youtube.com/watch?v=KqMxoNoy_hQ&feature=player_embedded

Are you in pre-foreclosure or can foresee yourself in foreclosure status in the near future? You are not alone my friend. There are government sponsored HUD counselors available for you in your area who can help you explore your options and choose the best one for your particular situation. Do this immediately as waiting may be consequential to your situation.

However, one option that HUD counselors may not discuss with you but is worth exploring if you are in pre-foreclosure is the “Produce The Note” strategy.

A few conventional options to stop foreclosure and stay in the home would be a refinance, modification, and a forbearance plan. The two popular exit strategies to avoid foreclosure would be a deed-in-lieu or the popular option, a short sale. Your HUD counselor should explain all of these options to you and recommend a particular plan depending on your specific financial situation.

One strategy to delay foreclosure which is not known or often discussed is the “Produce The Note” strategy. What this strategy entails is, the homeowner, whose home is in a foreclosure process, asks their banks to produce the original loan documentation when they purchased the home. It’s quite simple but surprisingly, a high number of banks are not able to come up with this information thus homeowners can delay banks from foreclosing on their property. There are no guarantees for this strategy as they may be able to “produce the note” but it is certainly worth giving it a try.

By using this strategy, some homeowners were able to stall their foreclosure process for years but keep in mind that delaying is not necessarily solving the problem. Choosing a short sale for your home will help you recover your financial situation much sooner than waiting and simply enjoying the free rent. A wise decision would be to exit the property on good terms with your current lender so you can have the chance to purchase a new home with your next lender who is able to see how you performed with your previous home mortgage.

Have you heard of the produce the note strategy? I would love to know what you have heard about the idea.

Peter

Improvements and more improvements have been the recurring case for the government sponsored enterprises Freddie Mac and Fannie Mae. Although these GSE’s (Government Sponsored Enterprise) had a slow start in finding the right solutions for the housing crisis we are facing, the momentum for improvements via federal guidelines have picked up speed. The Goal: Get through distressed properties quickly to catalyze the housing recovery. How? Streamline their short sales. Let’s explore new and improved federal guidelines these GSE’s will implement on November 1^st.

Click the links below to see if your mortgages are backed by Freddie Mac or Fannie Mae:
Freddie Mac or Fannie Mae

Please read this concise document from FHFA.GOV HERE for the new Fannie and Freddie Guidelines and eligibility requirements.

Notes on new FHFH Guidelines:

• A significant change for starters is homeowners being eligible for a short sale without being in default or at risk of imminent default. If the homeowner is able to show hardship and back it up with proper documents, a short sale is now possible. Note that it is not only for those who are relocating due to current or new employment (this may be confusing).
• The right to pursue deficiency waiver for monetary exchange or promissory note applies to those who have sufficient income or assets. Even then, if you have a solid negotiator and/or short sale team, you can walk away from the property with little liability.
• For those who are in serious financial distress (missed several payments and have low credit scores), a short sale will be more streamlined as documents required to show hardship has been reduced or eliminated.

In the past, the GSE’s guideline alterations were not received well by many professionals in the real estate community. However, these new changes presented by the FHFA were well received by U.S. Realtors and an international credit rating agency. This includes the National Association of Realtors who said, “Making the short sale process go more smoothly will help avoid foreclosure and keep homes occupied.”

www.seattleshortsaleblog.com

Peter