Great news for those who are interested in short selling their homes with a BofA portfolio loan(s). They were actually very good to work with, no delays, no excuses, no missing documents and actually gave an approval in less than 45 days. We have a good team and generally get approvals in less than 70 days, but this was just flat out fast. So what you say, many banks do that, right? Nope, after the approval the title company sent their final documents to BofA showing that the property had a hidden second lien in the form of a Gov't sponsored down payment assistance loan. Even worse, the loan and accrued interest was over $9500 and our short sale price was only $120k, which creates an additional 8% loss for BofA. We thought the deal was dead for sure, but nope, only 7 days later the negotiator emailed us a revised approval with the second lien being paid in full. We were amazed to say the least!
So the sale has closed and we wanted to publicly thank the BofA portfolio group for their efforts. They are actually helping homeowners start over, which also helps turn the economy around. Our clients are now working on repairing their credit and getting all of their other debts paid off.
If you are struggling financially and are considering a short sale, make sure you educate yourself about the process and the credit ramifications, as some careers will not allow the damaged credit that a short sale creates. Start by calling your local real estate professional and ask as many questions as possible. Good luck all!
Tuesday, April 10, 2012
Wednesday, February 29, 2012
Time to invest in real estate again
Since many of us have lost a home, lost their job and see nothing but bad news all around, how can Warren Buffett announce today that now is the time to buy residential real estate? Well, considering he is one of the smartest and wealthiest investors in the World, let's take a look and see what he sees. First, the large builders (Pulte, Lennar, DR Horton) have all posted small gains this quarter; the pending home sales were up in January; mortgage purchase applications increased in January and best of all, mortgage interest rates are at record lows. In other words, Buffet sees long term value in residential real estate because of low prices, low interest rates, shortage of inventory and long term equity growth. He even suggests to finance the home purchase to really take advantage of these economic factors.
What if you are a cash buyer or investor? An even better opportunity presents itself here. First, tenants. There are a lot of Americans out of work or who have lost their home, but still need a place to live and will now become renters. Also, with your cash sitting in the bank it is not actually working for you but for the financial institution where it sits. They are lending it out to other institutions, people, businesses and earning a small income from it everyday. In return, they pay you a small monthly dividend or interest return. Buying residential real estate using that cash now allows you to become the bank. It ensures that you earn that daily/monthly income, while paying a small percentage or fee back to someone else, like a landscaper, plumber, etc. Yes there are risks, but a long term hold right now looks like a solid investment.
So based on this analysis, I would say that Warren is correct, again! So everyone waiting to buy a home or those with money sitting on the sidelines, earning no interest, call your local realtor and see what is available in your area. You might find a gem that could earn you good short term income, long term equity growth or both.
What if you are a cash buyer or investor? An even better opportunity presents itself here. First, tenants. There are a lot of Americans out of work or who have lost their home, but still need a place to live and will now become renters. Also, with your cash sitting in the bank it is not actually working for you but for the financial institution where it sits. They are lending it out to other institutions, people, businesses and earning a small income from it everyday. In return, they pay you a small monthly dividend or interest return. Buying residential real estate using that cash now allows you to become the bank. It ensures that you earn that daily/monthly income, while paying a small percentage or fee back to someone else, like a landscaper, plumber, etc. Yes there are risks, but a long term hold right now looks like a solid investment.
So based on this analysis, I would say that Warren is correct, again! So everyone waiting to buy a home or those with money sitting on the sidelines, earning no interest, call your local realtor and see what is available in your area. You might find a gem that could earn you good short term income, long term equity growth or both.
Thursday, February 9, 2012
How much will my Short Sale cost?
So we have had a lot of inquiries recently regarding short sales, the costs, the tax consequences, etc. so we wanted to write a simple and quick tutorial for those who are considering it or even for those who already in contract on one.
In a traditional California sale, the seller (Mr. and Mrs. Smith) will be responsible for paying some closing costs, fees, commissions, etc. at the close of escrow. However, in a short sale transaction, the seller is actually a Bank/Investor like Bank of America, and they are the one's responsible for paying closing costs, fees, commissions, etc. In that scenario, Mr. and Mrs. Smith pay nothing, but lose their dream home and damage their credit. Bank of America takes a massive financial loss, but they send Mr. and Mrs. Smith a 1099 for that loss. The Smith's then become responsible for claiming the banks loss as income on their next years' tax returns. See your CPA for details as I am not a real CPA, I only play one on TV :-)
So bottom line, you will pay almost nothing to short sell your home, however there are some consequences to consider, like moving your family, the costs associated with moving, rent payments and of course, damaged credit. However, if you are a struggling home owner, who has a true financial hardship (job loss, death in family, job transfer, etc.) then you might be eligible for a short sale and it is an excellent start to getting back on your feet again!
In a traditional California sale, the seller (Mr. and Mrs. Smith) will be responsible for paying some closing costs, fees, commissions, etc. at the close of escrow. However, in a short sale transaction, the seller is actually a Bank/Investor like Bank of America, and they are the one's responsible for paying closing costs, fees, commissions, etc. In that scenario, Mr. and Mrs. Smith pay nothing, but lose their dream home and damage their credit. Bank of America takes a massive financial loss, but they send Mr. and Mrs. Smith a 1099 for that loss. The Smith's then become responsible for claiming the banks loss as income on their next years' tax returns. See your CPA for details as I am not a real CPA, I only play one on TV :-)
So bottom line, you will pay almost nothing to short sell your home, however there are some consequences to consider, like moving your family, the costs associated with moving, rent payments and of course, damaged credit. However, if you are a struggling home owner, who has a true financial hardship (job loss, death in family, job transfer, etc.) then you might be eligible for a short sale and it is an excellent start to getting back on your feet again!
Monday, February 6, 2012
USDA and first time home buyer success
Just closed another first time home buyer sale. This is an amazing time to buy, so renters and buyers, call your favorite local agent now! Our clients were able to trade their 800 sq. ft. apartment and it's $900 rent payment for a 1700 sq. ft. home with only a $1000 payment. They closed with a USDA loan. Yes I said USDA! It is an excellent and unknown loan, typically used for rural community growth, however it has 100% financing, low rates and doesn't have the red tape and delays that FHA loans have. Check with your local loan officer, both the buyer and home need to qualify for USDA approval, however it is well worth it.
Congratulations Boe and Holly on your new home!
Congratulations Boe and Holly on your new home!
Tuesday, January 31, 2012
Short Sale success with River City Bank and B of A
So the short sale negotiations with River City and B of A took 131 days, start to loan funding. Not typical, but expected due to the volume of short sales, foreclosures and loan modifications that B of A is dealing with. This is mainly due to their acquisition of Countrywide Home Loans, but that's another discussion for another day.
Luckily our buyer was very patient, but did get anxious after about 2 months of waiting and wanting to see more homes in anticipation of a short sale denial by B of A. Nope, to our surprise the BPO come back in line with our offer, River City paid much of the closing costs we asked for, plus most of the B of A loss request. Great news, here we go right? Nope, you sitting down? The real snag came near the end of the sale, when someone broke into the home via the side garage door, stole the light fixtures, the water heater and the pool equipment. It got worse from there, as the appraiser took it upon himself to play inspector and requested pool equipment, hot water and electrical repairs to the home before he would issue a clean appraisal. Our buyer was not FHA, VA or USDA, so there was no real need for him to make those requests, but once the lender saw them, it was trouble.
Anyway, so we got an electrician, pool guy (Thank you Mike from Nor Cal Pools) and plumber out there to repair everything. We sent the inspector, sorry, the appraiser (avoid AVK Appraisal Services) back out there and he gave it a clean bill of health.
Congrats Joe and Laura on your new home!
Luckily our buyer was very patient, but did get anxious after about 2 months of waiting and wanting to see more homes in anticipation of a short sale denial by B of A. Nope, to our surprise the BPO come back in line with our offer, River City paid much of the closing costs we asked for, plus most of the B of A loss request. Great news, here we go right? Nope, you sitting down? The real snag came near the end of the sale, when someone broke into the home via the side garage door, stole the light fixtures, the water heater and the pool equipment. It got worse from there, as the appraiser took it upon himself to play inspector and requested pool equipment, hot water and electrical repairs to the home before he would issue a clean appraisal. Our buyer was not FHA, VA or USDA, so there was no real need for him to make those requests, but once the lender saw them, it was trouble.
Anyway, so we got an electrician, pool guy (Thank you Mike from Nor Cal Pools) and plumber out there to repair everything. We sent the inspector, sorry, the appraiser (avoid AVK Appraisal Services) back out there and he gave it a clean bill of health.
Congrats Joe and Laura on your new home!
Thursday, January 26, 2012
First time home buyer success!
Just closed our first internet buyer lead. She was a first time home buyer, all cash, great to work with and closed in only 17 days! The $100k home market in the Sacramento area is very competitive, but after only two weeks of searching we found her dream home. Congratulations Lori and Ron Hulsey!
Tuesday, November 1, 2011
Short Sale help in California
From March to July 2011, Senator Ellen Corbett was amending SB 458, which aimed to support and expand current laws SB 931 and SB 580e. Then in July 2011, SB 458 was approved and signed into law by Governor Jerry Brown, effective immediately. The new law states that after a short sale closing, (both) lien holders now will consider the outstanding balances paid in full and not seek monetary damages for their losses. In other words, Mr. and Mrs. homeowner no longer have to worry about the equity line and can walk away with only a short sale on their credit report.
Seems to be good news huh? Possibly for the home owners who short sell with Wachovia, Chase and Citibank, as those lenders have all been seller friendly and have been very good to work with from an agents perspective. So, for the millions of home owners who will be forced to work with other lenders, I am sorry to report that a short sale is a voluntary act for the banks and they do NOT have to approve anything. I am pretty sure they have attorney's working on a solution or work around for SB 458 because banks are in the business of making money, so if they are hand cuffed and can no longer seek monetary damages from us, they will find an alternative route.
Bottom line, my non-legal and semi-professional advice is to always hire an agent who is well experienced in short sale negotiations. To have an attorney look at the short sale approval to make sure there is no special language in there that we common folk overlook. Most importantly, consult with your tax representative or tax attorney for a complete big picture scenario.
Seems to be good news huh? Possibly for the home owners who short sell with Wachovia, Chase and Citibank, as those lenders have all been seller friendly and have been very good to work with from an agents perspective. So, for the millions of home owners who will be forced to work with other lenders, I am sorry to report that a short sale is a voluntary act for the banks and they do NOT have to approve anything. I am pretty sure they have attorney's working on a solution or work around for SB 458 because banks are in the business of making money, so if they are hand cuffed and can no longer seek monetary damages from us, they will find an alternative route.
Bottom line, my non-legal and semi-professional advice is to always hire an agent who is well experienced in short sale negotiations. To have an attorney look at the short sale approval to make sure there is no special language in there that we common folk overlook. Most importantly, consult with your tax representative or tax attorney for a complete big picture scenario.
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