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Real Estate Trends in Pinellas County

by Doug & Gwen Campbell at Sun Bay Associates

If you are looking for a bargain in real estate, and think that chasing after foreclosures is the answer, take a look at these numbers and then consider if this is your best strategy.

In April 2014, there were 720 active foreclosure listings in Pinellas County.  The previous month there were 764.  In April, 299 foreclosures were sold, in March 323 sold.  The arithmetic says that if there are 720 available foreclosure, 299 sold, then the absorption rate is 41.5%.  The absorption rate means that there is only a 2.4 months inventory of foreclosed property.  The competition for foreclosed property is pretty aggressive.

According to statistics from the Pinellas Realtor Organization, foreclosures are selling at 97% of the list price and are going under contract in an average of 71 days.

So you might think that shifting to short sales is a better strategy.  In April, there were 438 short sales listed and in March there were 448.  In April 113 short sales sold, in March 83 sold.  The absorption rate for short sales is 438 active listings with 113 sales, thus a 25.8% absorption rate.  This works out to an inventory of 3.9 months for short sales in our market.  And, short sales are selling for 98% of the list price.

So far, I'm not sure I am seeing the proverbial "deal" in these distressed properties.

Let's take a quick look at non-distressed, or "traditional" sales.  In April, there were 5,798 properties for sale, March has 5,904.  In April, 1,367 sold vs. March when 1225 sold.  Now we have an absorption rate of 5798 active listings and 1367 sold for an absorption rate of 23.6%.  Meaning that there is a 4.2 months inventory of homes for sale in Pinellas County, and they are selling at an average of 95% of list price.

Of the three groups of property, short sales are going for 98% of list price, foreclosures for 97% of list price, and traditional (non-distressed)properties are selling for 95% of list price.

Part of your strategy should be to consider the cost of repairs, especially for a foreclosure property -   things like a new roof, plumbing repairs, possible mold remediation, etc.  The short sales have somewhat different issues, most notably the length of time from contract to closing, with the uncertainty of the final purchase price.  This uncertainty is caused by increasing real estate prices, which makes the bank often ask for thousands of dollars more after the house has been under contract for months at a lower than "market" value.  The buyer then has to determine if the short sale is worth the additional and unexpected cost, or should he simply move on.

Finally, with a traditional transaction, the price is agreed to, the loan is made and the deal can close in 30-45 days with often no significant repairs.  

So, in the current market for Pinellas County real estate, which transaction presents the best value for the time and money invested in a property?  You tell me.

Short Sales Are Affected by the Debt Relief Act

by Doug & Gwen Campbell at Sun Bay Associates

Short sales are affected by the Debt Relief Act, and that act has expired.  As of Dec. 31, 2013, the Mortgage Debt Relief Act expired and here is what that means.  If you, and this is a generic you, owed $300,000 on your house but could only get a market value of $200,000 when you sold it, and you are in a 30% tax bracket, you now are looking at having the $100,000 shortfall considered income.   This means that you are now on the hook for a $30,000 tax bill.  That is money due the IRS, and we all know the IRS does not fool around when it comes to collecting money owed.

Your congressman can get things started and re-enact the Mortgage Debt Relief Act so that you do not get hit with a tax bill of $30,000 or whatever you could be responsible for when your house is sold at short sale.  Say you "only" are forgiven $25,000 on a mortgage.  That still translates to a tax liability of $7,500 if you are in that 30% bracket.  Sounds like a tax increase to me.

Contact your congressman or congresswoman and tell them that it is time to extend the Mortgage Debt Relief Act so that we can get the housing market back on its feet, get the homeowners out from under crushing debt - or tax liability, and get our economy moving.  There are many homeowners who owe more than their houses are worth in today's market and they are not selling yet.  In Florida, where we are just about at the top of the foreclosure rate, short sales are still better than a foreclosure.  Couple this with the uncertainty of flood insurance, which is a topic for another blog, Congress can do something to help the real estate market moving forward.

Short Sale - A Happy Real Estate Story

by Doug & Gwen Campbell at Sun Bay Associates

Here is something you seldom see, a Realtor singing the praises of a bank with a short sale in the story line.  On May 26, 2013 we listed a condo, as a short sale, with two mortgages.  The two mortgages on the condo were both with Chase Bank.

Today, August 21, 2013, the short sale was completed.  Chase Bank is wonderful to work with!

Our seller is happy, our buyer is happy, and the Realtors who dealt with Chase Bank are happy.

Thank you Chase Bank.  A closed short sale in less than 90 days.  Woo Hoo!!

Now that the good news is out, here is the kicker.  Not every story has a happy ending.  The Mortgage Debt Relief Act will expire at midnight on December 31, 2013.  Congress has no intention of extending it.  If you are in the position of having, or wanting, to sell your home and it is worth less today than your mortgage balance, you might be in a short sale situation.  You still have time to list your house and get it sold and NOT have the forgiven balance count as income.  After January 1, 2014, the forgiven amount of a "short mortgage" may be counted as income.  Thus, someone who sells their home for, for example, $100,000 and the mortgage balance is $150,000, the amount the bank forgives, $50,000 could count as ordinary income.  What this could mean is that someone who earns $75,000 a year, and has a short sale after January 1, 2014, could have the $50,000 added to their taxable income.  If you're in a potential short sale situation, act now.

A short sale does not have to be a big scary monster.  Talk to us and we can provide you with expert information, including finding an attorney who specializes in distressed property if that is necessary.

To learn more about what this might mean to you, contact us at Sun Bay Associates.  If you are not sure of the current market value of your home, click on our home valuation link and get an estimate of your current market value.

Mortgage Debt Relief Act, tax forgiveness set to expire

by Doug & Gwen Campbell at Sun Bay Associates

Yes, here is yet another article from a Realtor about short sales. If you, or someone you know, own a home, need to sell it and owe more than it is worth in today's market, you or they may be in a short sale situation. If so, you will be asking your lender to forgive a significant amount of money. So far, nothing new.

What many people don't yet understand is that as of now, the Mortgage Debt Relief Act of 2007 will expire on Dec. 31, 2012. What this means to the homeowner in a short sale situation is that if they do a short sale that closes after Dec. 31, 2012, under current law, the forgiven debt may be taxed as income. Presently, if an owner has done a short sale for their primary home, the Mortgage Debt Relief Act has allowed taxpayers to exclude income from the discharge of debt, which means the forgiven debt is not taxed.

Before the Mortgage Debt Relief Act was put in place, the IRS considered forgiven debt as taxable income. Since 2007 and thru 2012, forgiven mortgage debt, for a primary residence, has not been considered taxable. Here is the issue, if Congress does not extend the Mortgage Debt Relief Act, or amend it in some meaningful way, any debt forgiven through debt restructuring, or short sale, may be considered as taxable income. An example would be a homeowner is forgiven $50,000 in mortgage debt when their home sells, in February of 2013. That $50,000 could be added directly to the homeowner's taxable income!

Now, if you are a homeowner who is considering a short sale, or if you feel that in the next several months you may be in a short sale situation, and if you believe that the Congress is going to agree to extend the Mortgage Debt Relief Act to 2013 or beyond, relax. If you have a hard time believing that Congress can agree what time it is, then you should be concerned.

Short sales happen for numerous reasons, mostly as a fact of life that our real estate market has suffered enormously in this recession. In the Tampa Bay area, almost every home purchased between 2004 and 2010 has a lower market value today than when it was purchased. Reasons to sell vary widely, from job transfer, to the kids have all moved out, to a death, a divorce, job loss or whatever else happens in life.

Before you do anything, consult your financial advisor and your attorney about the situation with your mortgage. Find a professional Realtor who is expert in short sales to guide you through the complex short sale process. Because of the backlog of short sales the banks are already processing, a short sale can take many months. So if you are considering selling your home and may be in a short sale situation, don't wait. Act now. You just might not have the tax relief next year that is available today.

Short Sales - Nothing Short About Them

by Doug & Gwen Campbell at Sun Bay Associates

Short sales.  Yes, the explanation is the bank is "shorting" the debt.  How about the banks looking at shorting the time span, which in many cases borders on eons.

In our area, one brave Realtor, Liane Jamason, sent an email to senior bank executives about a short sale that had been stuck on hold for a year.  It got done.  Her action made the front page of the St. Pete Times today.

Why can the banks' "negotiators" send routine requests to the sellers every 30 days for bank statements, pay slips, etc. and not take the time to look at the information so they can make a decision.  If they are looking at hundreds or thousands of short sales everyday, they can tell quickly that a seller is in dire financial straits or not.  Many banks still refuse to consider a short sale until the homeowner is delinquent on the mortgage.  If a homewoner is foregoing food, medical care, insurance, general lifestyle and still making payments, why cannot a bank accept the facts and review the short sale possiblity?

We cannot ever get the housing industry out of the doldrums until the banks actually take action on short sales to help the millions of families who are barely hanging on, the realtors who can't make a living because it often takes a year to complete a short sale, the contractors can't build new houses or hire people, because there are so many undervalued houses lingering on the market, and on and on.  Then,  the banks stall for months, and after doing a BPO, come back and say they want 30% more than the contract price of the house, which was the market value six or nine months ago.  This kills the deal, the house has to go back on the market and the stupid cycle starts all over again.

Who is going to fix this??  Realtors have invested time and money to gain expertise in short sales, including the Certified Distressed Property Expert designation.  We know how to present a complete short sale package to the banks.  Our sellers know what to expect and gather the requisite documentation.  The buyers are told to expect the process to take months.  Yet the banks continue to drag their feet, "reviewing" the same files over and over and over and over, until the seller is frustrated, the buyers walk away in utter frustration, Realtors lose months of time and energy and the bank loses even more money on the property because no one is capable of making the right decisions to get that bad debt off the books.  All it takes is for someone to do the right thing, is that so hard?

Can someone please offer a solution!?

Foreclosure is Avoidable with HAFA

by Doug & Gwen Campbell at Sun Bay Associates

The latest government initiative to combat the millions of foreclosures across the country is called the Home Affordable Foreclosure Alternatives Program, or HAFA.

HAFA is the program put in place to benefit homeowners who do not qualify for HAMP, or Home Affordable Mortgage Program.  HAFA was released in April of 2010 and is designed to expedite the foreclosure avoidance options for homeowners in need. HAFA, using the short sale process, can potentially save millions of homeowners the financial devastation of a foreclosure.  Since the statistics tell us that 1 in 7 homes are in default, right in your neighborhood there are people who need help with avoiding foreclosure.  A short sale process is simply selling a property for less than the mortgage amount due in order to avoid foreclosure.

Here is how someone can qualify for the HAFA Program.

They must:

1. Be delinquent on the mortgage or face imminent risk of default

2. Occupy the property as the primary residence

3. Have a mortgage that  originated on or before January 1, 2009

4. Have an unpaid principle balance no greater than $729,750 for a one unit property; AND

5. Have total monthly mortgage payments exceeding 31 percent of the gross income.

The HAFA short sale process is the primary solution to avoid foreclosure, salvage one’s credit score and move on with dignity through the process.  The following link shows lenders currently participating in HAFA: 

http://www.makinghomeaffordable.gov/contact_servicer.html

If you know anyone who is in need of expert guidance to navigate the short sale process, be sure they contact someone who is an expert, such as a Certified Distressed Property Expert, or CDPE.

 

HAFA Explained - Simply

by Doug & Gwen Campbell at Sun Bay Associates

Does HAFA make sense to you?  You're not alone.  Watch this 2 minute video for a very clear and simple to understand explanation of HAFA and loan modifications.

http://www.youtube.com/watch?v=8TXx8rKy-Ow

Now, wasn't that better than reading pages of verbiage that just put you to sleep?  We can help, contact us.  We are Certified Distressed Property Experts, or CDPE, and know how to help you through a trying experience.

Florida Foreclosure Law

by Doug & Gwen Campbell at Sun Bay Associates

In Florida there are many distressed properties and many of those homes are subject to foreclosure.  It is a good thing for you to understand the Florida foreclosure law if you plan to allow you home to go to foreclosure, or if you can't avoid it because the short sale process simply didn't work.

A valid option to foreclosure is a short sale, however many people who own distressed property do not have the time or patience necessary for a successful short sale, nor do many buyers.  Currently, banks are causing the short sale process to take up to a year, and in some cases even longer because of the backlog of distressed property.  That is a very long time to put your life on hold.

Click this link for Florida foreclosures to help understand the complex issues of foreclosure in Florida as well as the protections afforded the consumer.  While a short sale can be the best option to protect one's credit rating, sometimes circumstances don't allow enough time for the homeowner.  Hopefully, the banking industry will use the new HAFA guidelines to begin to streamline the short sale process for all distressed property owners so we can begin the recovery in real estate we are all looking for.

Avoid Foreclosure in Palm Harbor, FL

by Doug & Gwen Campbell at Sun Bay Associates

Imagine that you live in Palm Harbor, FL, are behind on your mortgage, and facing foreclosure.  This is not an unusual scenario for people in Palm Harbor, FL, or almost anywhere else in Florida either.  On TV and the radio, you hear ads from attorneys telling people to extend the time they can live in their homes by not paying their mortgages and eventually declaring bankruptcy to avoid foreclosure.  In some cases this may actually benefit the homeowner, but not in most cases.  After foreclosure, the homeowner is, in almost all cases, still responsible for the TOTAL mortgage balance.  And if the homeowner goes to a lawyer, there is the up front fee that must be paid to that attorney.

A real alternative is to try the short sale route.  This is simply selling the home at market value.  When an offer comes in, the homeowner asks the bank to forgive the difference between the amount owed and the amount the house sells for.  In many cases, the bank will even forgive asking for a deficiency judgment.  If the short sale is successfully concluded and the deficiency judgment is negotiated away, the homeowner can then move on with his/her life without the cloud of a massive debt hanging over them. 

If you know someone who lives in Palm Harbor, FL and is upside down in their home, or someone in your community in that situation, give the short sale approach some thought.  It is far better than declaring bankruptcy or going through foreclosure.  Click here for additional information.

 

New HAFA Guidelines

by Doug & Gwen Campbell at Sun Bay Associates

 

Federal Short Sale Guidance Out

On November 30, 2009, the U.S. Department of the Treasury announced the Home Affordable Foreclosure Alternatives Program (HAFA), which provides financial incentives to servicers, borrowers, and investors for a closed short sale or a deed-in-lieu (DIL). The guidelines provide $1,500 in federal funds to help borrowers relocate, $1,000 to help servicers offset their  processing costs, and up to $1,000 to investors to secure release of subordinate liens. The guidelines prohibit a reduction in agreed-upon commissions (if they're not more than 6 percent) and take effect April 5, 2010, but can be implemented by servicers at any time.

If you would like more information on the HAFA program, send us an email and we'll respond within 24 hours with additional details.  Doug@SunBayAssociates.com - request HAFA guidelines.

 

 

 

Displaying blog entries 1-10 of 22

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Photo of Gwen and  Doug Campbell - Sun Bay Realty Group Real Estate
Gwen and Doug Campbell - Sun Bay Realty Group
at Keller Williams Realty
30522 US Hwy 19N, Suite 107 S
Palm Harbor FL 34684
Doug's Cell 727-741-4189
Gwen's Cell 727-741-7260
Fax: 888-447-7908