Foreclosures and Short Sales | Northeast Florida Life

Will The Bank Take Less Than The List Price?

November 13, 2013 by Pam Leave a Comment

One of the questions I get asked a lot when dealing with foreclosures is: Will banks take less than the list price? That’s a good question, because really, everyone wants to get a good deal and save some money. I got to thinking about this question the past couple of days and wanted to actually look to see what the trend has been for 2013. Plus, I kinda like real estate statistics. 🙂
Here’s what I found:

Sold Foreclosures in Duval County

The 2nd column is the number of foreclosures that sold for that month in Duval County. The 3rd column is the Sales price to ORIGINAL list price ratio. I capitalized original, because it’s important. I’ll explain further. Let’s take January, the SP/OLP is 90.6, which means that on average, the 191 foreclosed homes sold in Duval County, they sold for 90.6% of what they were originally listed for. The reason I stressed original, is because some agents will advertise a really high list price to sale price ratio to make it seem that they save their sellers more money. However, some use the list price of the house when it goes under contract, not the price of the home when they first listed it. So if they originally listed it for say 150k, then eventually the price is reduced to say 140k, which generates a full price offer, it could seem they have a 100% sales price to list price, which is not accurate. They actually would have a ratio of around 93%.

Let’s look at the other two counties:

Sold Foreclosures in Clay County

Sold Foreclosures in St Johns County

Now, before you go and get all excited about making a low offer on a foreclosure, stop for a moment to think this through…..

So what does all this data mean? Does it mean that if you come across a foreclosure that is 150k, that you are gonna be able to offer 10% lower? Not necessarily. Here’s some things you want to factor before making your offer. Has the bank already lowered their price? Is this a multiple offer situation? How is the home priced compared to the rest of the neighborhood? Is this home in a desirable neighborhood? How bad do you want this house? Remember, these figures above are ratios from when the house was first listed with that agent, and could have already seen price drops that reflect those SP/OLP ratios above.

I’m not trying to tell you not to offer lower than list price, if you can get the house for less, than that makes me pretty darn happy. I just want you to look at it with an educated view point, so you’re not disappointed with the outcome.

Maybe, you want to look for all available homes in Northeast Florida, whether they are foreclosures, short sales, new construction and resales. If you have any questions or need some help, feel free to shoot me an email at pam@pamgraham.com or call/text me at 904-910-3516.

Short sale Scam in Jacksonville Florida

June 6, 2013 by Pam Leave a Comment

Short Sale Scam in Jacksonville Florida

I recently came upon a short sale listing in Jacksonville, that had expired from the Multiple Listing Service. For people unaware of what an expired listing is, it means the listing contract with that broker expired and is no longer valid. Now, I see a bunch of expired listings in the MLS everyday, but this one caught my eye due to the reference of a document, explaining how that particular short sale transaction worked. I checked it out and red flags began to wave.

The short version is this: The investor will buy the property from the seller and negotiate the short sale with the bank, then re-sell it to the buyer or if the investor does not buy it, they will allow the buyer to buy it and the buyer pays the investor a fee.

Sounds innocent enough. The agent is disclosing it in the MLS. The fee to the investor is going to be put in the HUD. The investor will record an affidavit, showing their interest in the property.

Here’s the issue or should I say, issues. The investor wants to make money. There is nothing wrong with that at all. The issue the bank is going to have, you know the seller’s lender who is being asked to take a loss, is the investor will sell it at a higher price to that buyer instead of the lender getting the higher amount. In a normal sale where the lender is getting full payoff, it’s not a big deal. In the situation of a short sale, it is a big deal and the lenders are pursuing it as fraud. In fact, in Jacksonville the FBI have been investigating it. Guess who can get sued for fraud? The investor, the listing agent and the seller. Shoot, maybe even the title company or attorney handling this transaction could get sued for fraud too. I’m not sure on that one.

Can you blame the lender really? They are owed 200k, the investor is buying it for, let’s say 100k and the buyer buying it from the investor is buying it for 150k. (I just made those numbers up), that’s 50k more that the lender could have gotten.

The second part of the equation is charging the buyer a fee, if the buyer buys it straight from the seller, instead of the investor. Well, that’s practicing real estate without a license, EXCEPT for the fact that they have an equitable interest in the property, that allows them to be able to be paid a fee and negotiate the short sale.

Now that brings up a situation involving the seller signing their deed over to an investor, and not realizing the house is no longer theirs, but the mortgage still is. They think the nice investor solved their foreclosure problems, but instead have created more.

I won’t get involved with those situations and as my client, I would never ask you to get involved either. I always use a reputable and honest closing attorney, if you don’t already have an established relationship with one. During the short sale process, I handle all the details for you, but at any time, you can call and talk to your mortgage company to discuss the process with them. I will never sway you to not be in communications with your bank.

I currently service short sales in Jacksonville, Fleming Island, Orange Park and the surrounding Northeast Florida Area. Call me at 904-910-3516 to discuss your situation and find the best solution to help you avoid foreclosure, while avoiding a Short sale Scam in Jacksonville Florida.

Jacksonville Florida Short Sales FAQ:How Do I Hire The Best Short Sale Agent?

January 15, 2013 by Pam Leave a Comment

Jacksonville Florida Short Sales FAQ:How Do I Hire The Best Short Sale Agent?

This is very important. Not just any agent who lists homes, will be the best short sale agent. Here are some questions to ask:

How many short sales have you closed?

You want an agent who has some short sale experience. Every agent had to start at their first short sale, but you don’t want to be that first experiment.

How many have you not closed and what were their outcomes?

Not every short sale will close. Some sellers may change their mind, do a deed in lieu, or even foreclosure. The house may have ended up with major structural repairs that the owner just couldn’t afford to make. These are things an agent can’t control. However, a successful short sale agent should have a higher percentage of successful short sale closings.

Do you handle the short sale yourself or do you have a 3rd party negotiator or attorney handle it?

Not all agents handle their own short sales. They may take the listing and then hand the file over to an attorney’s office, title company or a 3rd party negotiating company. They get updates, then pass the updates on to you. This can be an issue if the company, who the agent has handed your file off to, doesn’t have a system in place or they are not very aggressive in follow ups and escalations. If the agent handles it themselves, they should have a system in place themselves for updates and a checklist to make sure every step is being completed and when. They should also have an attorney or two to help with legal issues or to step in to help if needed.

Do you market short sales the same way as normal listings?

Some agents don’t do the same marketing on their short sale listings as they do their normal sales. I’ve seen some short sales not have any pictures and have been on the market for 6 months or more! There’s no reason that a short sale listing should be treated less than a normal listing.

What is your short sale education?

Education is important and laws or short sale rules change frequently. Are they part of a network of short sale agents who share new information? If so, they probably are on top of the changes. Now if the agent has a designation, maybe a CDPE or something similar, that designation DOES NOT mean they truly are an expert. They may not have done 1 short sale, but took the class, paid their fee and passed a test. You still want to ask them all these questions. And don’t believe them if they tell you that, because they have one of those designations, they will do a better job than an experienced short sale agent who doesn’t have a designation. That’s not always the case.

How often will I get updates?

You should expect weekly updates, even if those updates are to say that they called the lender and nothing has changed.

What are the ramifications of me doing a short sale?

They should be able to explain the ramifications you may face. Whether it’s 1099, cash contribution, promissory note and credit. They can not give you tax or legal advice, unless they are an attorney or a CPA. If they are neither, they should be able to point you in the right direction.

How will you determine the price for my home?

The correct answer is based on the market and what has sold in the past 4 months, maybe 6 months. If they tell you at the amount of your mortgage, and the market value is not at your mortgage amount, then that is a red flag. If they want to price it way below market, that’s a red flag as well. You will waste precious time, if the bank doesn’t accept that lower offer and the buyer walks.

How will you handle the lender in situations of lack of communication from them or negative outcomes?

This is another good one. I don’t think there is just one correct answer. If they say they won’t do anything, well that’s not good, so that should be a pass. You want to look for an agent who will be respectful to others, being rude doesn’t cause positive outcomes. Do they have contacts for higher executives from the various lenders or do they know how to get those contacts, for times when a file needs to be escalated?

These are not all you can ask, and I’m sure you have more, specific to your situation. Doing a short sale can be a stressful time, so hiring the best short sale agent is very important to a successful short sale.

See below for FAQs on short sales in the Jacksonville Florida and surrounding areas.

Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com.

I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.

More Jacksonville Florida Short Sales FAQ:

What’s in a Hardship Letter?

How long will a short sale take?

Will the bank come after me for the difference?

How will a short sale affect my credit?

I have no money, will I have to bring money to closing?

How will the closing costs get paid?

How long does it take for the bank to foreclose on my home?

What are the tax ramifications doing a short sale?

How does the bank determine how much they will accept?

Can a family member buy my home, then let me stay and rent it from them?

How do I hire the best real estate agent to get my short sale done?

Jacksonville Florida Short Sales FAQ: Can My Brother Buy My House, then I rent It From Him?

January 14, 2013 by Pam Leave a Comment

Jacksonville Florida Short Sales FAQ: Can My Brother Buy My House, then I rent It From Him?

While this would seem ideal, be able to stay in your home, rent it from a family member or friend for for a few years, then buy it back for market value. The bank is not going to agree with you on this one. Most banks now require your short sale transaction to be an arms length transaction. Meaning, all parties are not family members, business associates, or share a business interest. That’s actually a sentence taken from a Wells Fargo Arms length transaction form. They also state that there can be no agreements written or implied for the seller to stay in the property after the close of their short sale.

The banks are getting more aggressive on this subject and some require ALL parties (from the buyer and seller, to both agents and closing company) to sign, stating their are no agreements in place.

For more information on this topic, written by a Florida Attorney: Freddie Mac Short Sale Affidavit

Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com.

I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.

Coming soon, more Jacksonville Florida Short Sales FAQ:

What’s in a Hardship Letter?

How long will a short sale take?

Will the bank come after me for the difference?

How will a short sale affect my credit?

I have no money, will I have to bring money to closing?

How will the closing costs get paid?

How long does it take for the bank to foreclose on my home?

What are the tax ramifications doing a short sale?

How does the bank determine how much they will accept?

Can a family member buy my home, then let me stay and rent it from them?

How do I hire the best real estate agent to get my short sale done?

Jacksonville Florida Short Sales FAQ: How Does The Bank Determine What Price They Will Take For My Home?

January 14, 2013 by Pam Leave a Comment

Jacksonville Florida Short Sales FAQ: How Does The Bank Determine What Price They Will Take For My Home?

You are thinking about doing a short sale, and wonder how your lender will determine what price they will take for your Jacksonville home. It has nothing to do with what you owe on your mortgage. That number has no affect on the short sale price. When an offer comes in on your house and your listing agent has submitted the short sale package to your lender, the lender will order an appraisal (from an appraiser) or a BPO (broker’s price opinion) done by a real estate agent. The BPO and appraisal look at the available properties similar to yours. Most importantly, they look at the homes similar to yours, that have sold in the past 4 months. The appraiser and the agent will determine a price, based on those sold comps. The bank uses that value to determine what they will take.

Your listing agent, when determining the starting price needs to look at the available homes and the sold homes (past 4 months). They should not be pricing it at the mortgage owed amount, unless of course that’s what the value is. Chances are, that won’t be the case. They also should not be pricing it way below market value, just to get into a bidding war or to just get an offer in quickly. If the purchase price is well below market value, and the BPO comes back much higher, chances are the buyer will walk. Then, all the time the house has been off the market has been wasted. A good short sale agent will price the house based on the current market.

Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com.

I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.

Coming soon, more Jacksonville Florida Short Sales FAQ:

What’s in a Hardship Letter?

How long will a short sale take?

Will the bank come after me for the difference?

How will a short sale affect my credit?

I have no money, will I have to bring money to closing?

How will the closing costs get paid?

How long does it take for the bank to foreclose on my home?

What are the tax ramifications doing a short sale?

How does the bank determine how much they will accept?

Can a family member buy my home, then let me stay and rent it from them?

How do I hire the best real estate agent to get my short sale done?

Jacksonville Florida Short Sales FAQ: What are the Tax Ramifications of Doing A Short Sale?

January 13, 2013 by Pam Leave a Comment

Jacksonville Florida Short Sales FAQ: What are the Tax Ramifications of Doing A Short Sale?

This one gets alot of home sellers because not only do they have to deal with the ramifications of the short sale itself, but also tax issues. I should point out, that I am not a tax expert, so I won’t give you tax advice, but will point you in the right direction. For, one, your CPA is a good person to talk to about the tax ramifications of doing a short sale on your Jacksonville home.

The other place to look is online at the IRS website. You may have heard of the Mortgage Forgiveness Debt Relief Act of 2007. Before this came about, if you were to sell your house short, the balance that your lien holder did not collect was considered income, and would be taxable. You would receive a 1099 in January or February after the home had closed. But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain canceled debt on your principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. There are some conditions, so make sure you either talk to your CPA or visit the Mortgage Forgiveness Debt Relief Act of 2007 page. This has been extended until January 1, 2014.

If you don’t qualify for the Mortgage Forgiveness Debt Relief Act of 2007, it may be possible to prove that you are insolvent, which means you have more debt than assets. It’s not that simple, as you know, we are dealing with our government. So, speak to your CPA, to determine if that is your situation.

Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com.

I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.

Coming soon, more Jacksonville Florida Short Sales FAQ:

What’s in a Hardship Letter?

How long will a short sale take?

Will the bank come after me for the difference?

How will a short sale affect my credit?

I have no money, will I have to bring money to closing?

How will the closing costs get paid?

How long does it take for the bank to foreclose on my home?

What are the tax ramifications doing a short sale?

How does the bank determine how much they will accept?

Can a family member buy my home, then let me stay and rent it from them?

How do I hire the best real estate agent to get my short sale done?

Jacksonville Florida Short Sales FAQ: How Long Does It Take The Bank to Foreclose on My Home?

January 12, 2013 by Pam Leave a Comment

Jacksonville Florida Short Sales FAQ: How Long Does It Take The Bank to Foreclose on My Home?

In Florida, we are a judicial state, meaning the lender has to obtain a court order to foreclose and the court supervises the foreclosure process. The lender can not start the foreclosure process until you are 3 months behind, so you may get notices from your bank telling you they are starting the foreclosure process, when you’re only 2 months behind. Just know, they are just trying to collect what is owed to them. They may be starting their process, but they still can’t go through the court system yet.

After you’re 3 months behind, you will then receive a notice of default, which will call the total loan due and also let you know if you pay what you’re behind on, then the foreclosure process will stop, so don’t think at this point that it’s too late to catch up your payments. You can catch them up anytime, up to the house actually selling at the courthouse. Once the NOD is sent, there is a 30 day waiting period, and once that waiting period is over, the attorney for the bank can file a notice of Lis Pendens with the court.

Once the Lis Pendens is filed, the minimum time from that point, until the actual courthouse sale date is around 4 months, if the home owner does not contest it. The home owner can participate in the process and get more time if the judge grants it. In my experience, the judge usually does grant more time. If you are at this point, I HIGHLY recommend that you consult an attorney. Do not wait until the last minute either.

I know you have probably heard in the news, of people living in their home for a year or two without making a payment and the bank not foreclosing on them. It is possible, that the bank may take longer to foreclose, then the time frame above. They may wait 6 months before you get that NOD in the mail. That’s great if that’s the case, and it gives you more time to formulate a plan and to act on that plan. Just make sure you read every piece of mail your bank sends you, be mindful of the time line and don’t wait until the last minute to do something!

Once the attorney has file the Lis Pendens, it is public record and can be viewed by anyone. Here are the websites for the following counties:

Duval County Clerk of Court

Clay County Clerk of Court

St Johns County Clerk of Court

Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com.

I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.

Coming soon, more Jacksonville Florida Short Sales FAQ:

What’s in a Hardship Letter?

How long will a short sale take?

Will the bank come after me for the difference?

How will a short sale affect my credit?

I have no money, will I have to bring money to closing?

How will the closing costs get paid?

How long does it take for the bank to foreclose on my home?

What are the tax ramifications doing a short sale?

How does the bank determine how much they will accept?

Can a family member buy my home, then let me stay and rent it from them?

How do I hire the best real estate agent to get my short sale done?

Jacksonville Florida Short Sales FAQ: How will my closing costs get paid if I’m doing a Short Sale?

January 11, 2013 by Pam Leave a Comment

Jacksonville Florida Short Sales FAQ: How will my closing costs get paid if I’m doing a Short Sale?

This is a great question that many sellers in Jacksonville ask me. Typically in a normal sale, the sale price of the home covers all the seller’s closing costs. In a short sale, that is not the case, due to the sale price being less, than the mortgage balance. There are also situations where the seller has money to bring to closing to cover the deficiency and then it would not be a short sale and would close like a normal sale.

In a short sale, when an offer comes in, the listing agent submits a preliminary HUD (also known as a settlement statement) to the seller’s lender. The HUD shows the bank what the closing costs are going to be, based on the offer price and customary settlement costs. The HUD also shows the bank what the net proceeds will be at the close of escrow. If the bank agrees to the short sale and to the HUD, they cover the cost of the seller’s closing costs. However, that does make the deficiency amount higher, so when you are figuring how much you are going to be short, the closing costs need to be taken in consideration as well. Sometimes, the lender may ask you to participate in the loss, by requiring cash at closing or a promissory note.

I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.

Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com.

Coming soon, more Jacksonville Florida Short Sales FAQ:

What’s in a Hardship Letter?

How long will a short sale take?

Will the bank come after me for the difference?

How will a short sale affect my credit?

I have no money, will I have to bring money to closing?

How will the closing costs get paid?

How long does it take for the bank to foreclose on my home?

What are the tax ramifications doing a short sale?

How does the bank determine how much they will accept?

Can a family member buy my home, then let me stay and rent it from them?

How do I hire the best real estate agent to get my short sale done?

Jacksonville Florida Short Sales FAQ: I’m broke, will I have to bring money to closing?

January 10, 2013 by Pam Leave a Comment

Jacksonville Florida Short Sales FAQ: I’m broke, will I have to bring money to closing?

This is a common question I get all the time. This is something that is totally up to your lender and has to do with your hardship. Most lenders require to see some type of financial information from the home owner. Typically, they require a financial worksheet showing what you have coming in as far as income and what you have going out as far as bills. Usually required by your lender is 1 or 2 years tax returns, 2 or 3 months of bank statements and 1 or 2 months of paycheck stubs. This is how they determine if you truly have a hardship or not.

With the short sales I’ve done in the past, the sellers who have had to bring money to closing have had the following situations: 2nd mortgage or HELOC, still making payments, investment property or PMI (private mortgage insurance) on the home. This does not mean that if you are in those situations, you will have to bring money and it also doesn’t mean if you’re NOT in those situations, you won’t have to bring money. There’s no guarantee you won’t have to bring money to closing in any situation, but alot of it depends on your financial picture and hardship. If you truly have a hardship and proof of that, you may not have to bring a cash contribution.

I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.

Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com to discuss your options.

Coming soon, more Jacksonville Florida Short Sales FAQ:

What’s in a Hardship Letter?

How long will a short sale take?

Will the bank come after me for the difference?

How will a short sale affect my credit?

I have no money, will I have to bring money to closing?

How will the closing costs get paid?

How long does it take for the bank to foreclose on my home?

What are the tax ramifications doing a short sale?

How does the bank determine how much they will accept?

Can a family member buy my home, then let me stay and rent it from them?

How do I hire the best real estate agent to get my short sale done?

Jacksonville Florida Short Sales FAQ: How will a Short Sale Affect My Credit?

January 9, 2013 by Pam Leave a Comment

Jacksonville Florida Short Sales FAQ: How will a Short Sale Affect My Credit?

Most sellers want to know this questions, because eventually, they would like to own a home again. Some sellers, worry about their security clearance. In Jacksonville, we are a military town, so that question comes up alot. With short sales it seems there’s no easy answer and when there is one, it changes.

So let’s talk about the process of doing a short sale. Usually you have a hardship that is interfering with the ability to pay your mortgage, or you have to move for whatever reason. Some lenders, require that you have to be late in order to even be considered for a short sale, while a small few do not. If you are in the lucky group, where the lender considers the short sale even if you’re still paying your mortgage, then you will save the damage of late pays. That’s huge, and sometimes the first late pay is 100+ points off your credit score. So, you continue making your payment, all the way up to the closing of your Jacksonville Short Sale home. After 30, 60 days or so, the lender reports on your credit, paid for less than agreed or short pay, or settled. There are many ways it can be worded.

The homeowners who can’t make their payments, understand the biggest hit to your credit is the first late pay and expect your credit to get beat up along the way until your home closes. Here is a chart that shows short sale vs foreclosure, I include it so you can see how each situation affects your credit. You will notice that a short sale does not affect security clearances like a foreclosure does.

Another form, shows the waiting time requirements for derogatory situations and when you can purchase a home again. You will notice you could get into a home using an FHA loan as little as 12 months, if you had made all your mortgage payments on time and your other payments were paid on time. Other loans, you may have a wait time of 2 or more years.

So as you can see, there are many variables to how much of a hit your credit score will take and when you can expect to buy a house again.

Here’s my advice and it comes from a sincere heart: After you have completed your short sale, don’t rush back into home ownership. Rent for a little while. Take a hard and honest look at your financial situation and determine what you could have done different, to have prevented the short sale in the first place. Sometimes, there are situations out of our control, but be honest, in most situations, there is always something we could have done differently that would have helped us. For example, being debt free and having an emergency fund.

I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.

Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com.

Coming soon, more Jacksonville Florida Short Sales FAQ:

What’s in a Hardship Letter?

How long will a short sale take?

Will the bank come after me for the difference?

How will a short sale affect my credit?

I have no money, will I have to bring money to closing?

How will the closing costs get paid?

How long does it take for the bank to foreclose on my home?

What are the tax ramifications doing a short sale?

How does the bank determine how much they will accept?

Can a family member buy my home, then let me stay and rent it from them?

How do I hire the best real estate agent to get my short sale done?