Considering a Las Vegas Short Sale?

Do you know all your options to avoid foreclosure?

Don't be in denial, you have choices!

Did you know that 44% of all the available home on the Multiple Listing Service in Las Vegas are SHORT SALES?  That number is larger than the current bank owned homes.  What exactly is a short sale?  A short sale is when the bank allows you to sell your home for less than what you owe.   Let me clear something up right now, they should call these kinds of transactions LONG sales, because they take on average 90-180 days.  Hopefully with legislation passed to encourage lenders to approve short sales, the process will be easier.  I have a client who just bought a short sale and he was able to close in 60 days.  That's really fast for our market, so maybe the legislation is working??

Here are some common questions about short sales:

• Will the banks approve my short sale?: Each short sale is different and each bank is different.  Some banks can be more difficult, like ones that start with the letter B and end with America, but some banks are streamlining the process.
• How long does it take? I would plan on anywhere from 3-6 months. 
• Why not just foreclose?  Foreclosures stay on your credit report for 7 years.  With a short sale, you will be able to purchase with in 2-3 years.  Short sales are able to negotiate a payment in FULL or a full satisfaction of the loan.
• Can I stay in the property? Many times a short sale can delay the foreclosure process allowing the sellers to stay in the property while the short sale is being approved.
• What documentation do I need? Every short sale package needs to have the following documentation:
  • Last two years tax returns
  • Last two bank statements
  • Last two pay checks
  • Hardship Letter (Bank need to know you are having a hard time making your payments)
  • Financial Statement (I can provide you with one)
  • Listing Agreement to sell your home
  • An Offer on your home
  • .....and various other documents your Realtor will provide for the bank.
• What are the tax consequences? This is a question for your accountant.  There are definitely tax implications that you need to discuss with your accountant.
• Will I owe the bank money? In certain circumstances, the banks will ask for a promissory note for the difference. My goal when negotiating a short sale is to have a satisfaction in full from the bank.  Certain banks are harder than others. 
• I don't have money to pay the commission.  Who pays the real estate agents?

THE BANKS PAYS ALL REAL ESTATE COMMISSIONS

These are just a few questions I hear consistently from my clients seeking to do a short sale.  If you'd like to read more about short sales, visit www.LasVegasShortSaleConnection.com  or you can call me toll free at 1-866-589-1646. Don't keep your head in the sand about your options to avoid foreclosure!

Felipe Crook

Certified Short Sale Professional

Prudential Americana Group Realtors

Las Vegas NV 89117

1-866-589-1646

Felipe@felipecrook.com

My team at Prudential, the Crook and Abiera Team, successfully closed two short sale transactions this week. These short sales were with Wells Fargo on one, and Select Portfolio Servicing and Citibank on the other property. Both of these owners purchased during the peak of the market and had experienced a loss of income with the economic downturn. Let's talk about the scenarios:

Property 1:

1. Bought in 2005
2. Sellers Owed $305,000
3. Got the offer in July for $145,000
4. Had an IRS tax lien.
5. Successfully released the Federal Tax Lien
6. Got Bank Approval in 3 months
7. Closed 4 1/2 months from the listing date
8. NO Deficiency judgement for the seller
9. Bank took a $160,000 loss

Property 2:

1. Bought in 2007
2. Sellers Owe $290000
3. Got an offer for $155,000 in September
4. Successfully negotiated the first and second loan
5. Got Approval 45 days after offer
6. Successfully closed in 97 days
7. NO deficiency judgement for the seller
8. Bank took $150,000 loss on the property

The best part about these short sales is the fact that that BOTH short sale approval letters, from ALL the banks involved, gave the seller's FULL SATISFACTION of debt. The banks are not going to be pursuing the sellers for the amount they were deficient! That is the whole point of trying to do a short sale, a full release of the debt. Many banks are becoming ruthless and are seeking deficiency amounts from the sellers. It's a very difficult task to get the banks to change the verbiage on their approval letters, but luckily these banks worked out well.

Does all of this make sense? Are you struggling to pay your mortgage? My team and I can help you with your short sale. We also have recommendations to lawyers and accountants we have used before to help you make an educated decision on your home. You do have options, so don't give up. Read more below or feel free to contact me on my toll free line at 1-866-589-1646.

What is a Short Sale?

• A Short Sale is when the home sold for less than the debt against the property and the lender(s) agree to accept a discounted payoff. The lender agrees to accept less than what is actually owed on the mortgage.
• A Foreclosure is when the lender seizes the home that the loan is secured by through the foreclosure process, which is notice of acceleration of note, notice of default, notice of sale, and then actual forced sale of the home known as a 'trustee sale.'

What are the tax consequences?

• Short Sale & Foreclosure....all debt forgiven results in 1099C debt. Whether it is a primary or rental property makes a difference as to how much tax you may pay. Simply stated, if you get released from debt the IRS sees that as income to you, just like you got a pay check. See this publication from the IRS http://www.irs.gov/pub/irs-pdf/p4681.pdfon "Canceled Debts Foreclosures Repossessions and Abandonments."
• You may qualify for an exemption under the Mortgage Forgiveness Debt Relief Act - visit this IRS article for more information: http://www.irs.gov/individuals/article/0,,id=179414,00.html

What are the Credit Issues?

Foreclosures and Short Sales will appear on your credit history and affect you for up to 10 years. This may affect a.) employment or b.) security clearance, etc. Rumor is that a short sale is better than foreclosure for these items? There is no evidence to back this up. Arguments on both sides are out there. We do know that there is a specific spot on the credit reports for foreclosure, whereas short sales are reported differently. We have also seen examples of the credit score being impacted based on the total number of missed payments.

What is the liability for the Debt AFTER the foreclosure or short sale?

6 Months Foreclosure - The foreclosing lender has the right to sue the home owner after the foreclosure for the difference between the amount gained at the 'trustee sale' discussed above and the balance of debt owed. The lender has only 180 days (six months) from trustee sale to file, after that the owner is no longer liable.

6 Years Foreclosure 2^nd Deeds - All deeds that are junior to the foreclosing lender have different rights than the foreclosing bank. These lenders are called 'sold off junior lien holders' and they have six (6) years to recoup their debt. That means you get foreclosed on November 12, 2009, these junior lien holders have until November 12, 2015 to sue you.

Short Sale - All lenders that agree to a discounted payoff and 'release the lien' from the property to allow the short sale are no longer 'secured lenders' and are now 'sold off junior lien holders' as described above and have six (6) years to sue you. UNLESS, the short sale is negotiated so the lender releases the homeowner from any future liability as to the forgiven debt. Many lenders are taking a hard stance on this issue and NOT fully releasing and satisfying the forgiven debt.

As always, consult a lawyer when handling any legal issues and always consult an accountant for any tax advice.

Felipe Crook

Prudential Americana Group Realtors

Las Vegas, NV 89117

1-866-589-1646

2009: A Year of Declining Inventory and Increasing Lender Involvement

During the past year, the number of available listings fell by one half, while the count of properties under contract nearly tripled. By year-end, availability reached 11,359 units, which was well below the 23,014 properties listed when the year began. Movement was primarily sourced to a reduction in the number of vacant properties listed for sale, which witnessed a decline from nearly 14,600 homes to 6,300 during the past 12 months.

The count of vacant properties listed as available was impacted bank-owned properties (REOs). At the beginning of the year, Realtors identified nearly 8,200 units as bank-owned, which represented 35.4 percent of total inventory; by the close of 2009, the number of REOs listed as available dipped to 2,246, or 19.8 percent of availability. The total number of REOs remains much higher than the nearly 5,900 listed as available, contingent or pending. Properties held by banks at year-end is estimated at approximately 12,000, while another 7,000 units remain in the foreclosure process, suggesting vacant inventory levels have the potential to remain somewhat volatile in the near term.

With vacant properties accounting for nearly 71 percent of the inventory reduction, owner-occupied inventory contributed 23 percent of the decline, while tenant-occupied properties accounted for nearly 6 percent of the market-wide drop. The aggregate decline is sourced to several factors, including, but not limited to, increased demand (sales and contracting activity), home sellers opting to wait for price improvements before listing their properties and an escalation in the number of home sales pending bank approval.

While the count of properties listed by Realtors as "available" was down materially, the count of contracted but contingent properties escalated throughout the year. Jumping nearly three-fold, contingent units rose from nearly 3,700 units at the beginning of the year, closing out 2009 with 10,761 properties awaiting some action to take place. The bulk of contingent homes (77 percent or 8,300 units) are awaiting lender approvals on short sales. Should these properties not gain lien releases from their lenders in exchange for less than they are owed, a number of properties may potentially reenter available status.

Pending units, or properties that are awaiting customary closing procedures and likely to close, fluctuated throughout the year based on market demand. As of year-end, pending units totaled 3,077, which represented an increase of 18.7 percent compared to the same time one year ago.

Overall, resale home inventory conditions improved throughout the year with inventory declines noted in 42 weeks, while increases were posted during 10 weekly counts. Foreclosures and the success of hopeful short-sellers remain x-factors going into 2010.

The Obama Administration continues to take steps toward assisting struggling homeowners and the overwhelming number who are "underwater"  - amount owed vs. the current value of the home.  There are options to consider, research and attempt to avoid foreclosure - loan modification is one of them followed by a short sale. Here is a report from the AP referencing the latest influx of money to encourage loan modifications:

 
The U.S. government is offering another $3.1 billion to mortgage servicing companies to encourage them to modify loans for borrowers facing foreclosure. 
 
More than 9 percent of 45 million U.S. mortgages, or about 4 million loans, were delinquent in the first quarter of 2009, according to the Mortgage Bankers Association. 
 
The Obama administration put up $50 billion in March as an incentive to encourage the mortgage industry to modify loans to make monthly payments more affordable. So far, however, the plan hasn't been very effective with relatively few borrowers able to qualify.  
 
To increase the numbers, the administration last month expanded the program to provide incentives for lenders to streamline their short-sale processes.  
 
As of this week about 50,000 borrowers are enrolled in three-month trial modifications under the plan, the Treasury Department says. 
 
Part of the problem, lenders say, is the volume of applicants, which has overwhelmed workers charged with modifying the loans. 
 
Source: The Associated Press, Martin Crutsinger (06162009) 

If you are a homeowner facing foreclsoure - there are solutions!  Please contact me for more information and referrals to competent and ethical professionals and to discuss the possibility of a short sale.

Are you looking to purchase property in the Las Vegas area?

Now is the time to buy Las Vegas Homes.  Contact Us directly at 702-608-5260.

Search for Las Vegas Foreclosures

Use our Interactive-Map Search for all Las Vegas Homes for Sale

Search Our Las Vegas NEW Homes Database

Ive had a lot of clients interested in returning to our market to pick up a steal or two. Invariably, they start their home search on the internet by clicking "Search Las Vegas Homes for Sale" and they find these fantastically priced homes.  When they call me and ask me about the listing, 4 out of 5 times its a bank owned property or a short sale.  I wanted to write a post about the difference between the two.  First lets talk a little statistics to get you up to speed with our current market:

As of February 15, 2009 there are:

• 15,652 Single Family Homes on the market.
• 5,429 of those properties are Short Sales
• 5,563 of those properties are Bank Owned
• 4,544 of those are traditional sellers
• 169 Short Sales are under contract in contingent or pending status
• 3,544 Foreclosures are under contract in contingent or pending status
• 629 traditional sellers are in contingent and pending status.

I originally wrote this post on November 24,2008.  While I was updating this post, I was a little surprised to see some of the numbers.  Take a particular look at the drop in inventory of homes(a great sign the market is improving).  Also take a look at the HUGE increase in foreclosures going into contract. A lot of buyers and investors are picking up these very well priced homes. Let's take a look at the statistics from November:

• 17,035 Single Family Homes on the market.
• 5,676 of those properties are Short Sales
• 5,770 of those properties are Bank Owned
• 5,589 of those are traditional sellers
• 1,818 Short Sales are under contract in contingent or pending status
• 701 Foreclosures are under contract in contingent or pending status
• 523 traditional sellers are in contingent and pending status.

So having brought you up to speed on the market, let me tell you from first hand experience the difference between Short Sales and Foreclosures.  The biggest difference between the two is a short sale is still owned by the seller and they are trying to sell the property at a loss. The bank who holds the note has to approve of the terms of sale.  This process on average in Las Vegas takes about 200 days.  Only 15 % of the short sales that go to contract  are actually closing and the long escrow is one of those reasons.  I personally have a client who submitted an offer on a short sale on July 10th, and we had not received a response as of January 1, 2009. That is almost 6 months!!  Buyers run a couple of risks on short sales:

• The bank foreclosing on the property even while youre in escrow.
• Tying up earnest money for months at a time.
• The bank countering at a higher sales price than agreed upon by the seller.

Now, having said some of the down sides, if you are patient there can be some substantial deals with these short sales and there are short sales that have APPROVED sales prices.  What does that mean?  It means the agent has already started the short sale process with the bank, an asset manager is assigned to the property, and they have a green light to proceed at that specific list price.   If a buyer comes in with a lower amount, they would have to go through the same process...just a little bit faster.    Another experience I had with a client:  We put in an offer on a short sale listed at $600,000.  We offered $500,000 and the bank rejected it.   Three weeks later it was foreclosed on, and put back on the market at $430,000.  Yes folks, that is the kind of logic that were dealing with in this market.    Banks are ill equipped to handle the extraordinary amount of short sales landing on their desks and consumers....actually we ALL are paying the price.

Foreclosures or REO (Real Estate Owned) are properties that a bank has taken back from a seller for non-payment.  Banks do not want to have these assets and try to sell them within 30 days of being put on the market.  Banks have never stepped foot into these homes, and have no idea what has happened inside the property;therefore they are sold "AS-IS" with no repairs and no disclosures.   They work just like a normal sale but there are a couple of things to be aware of if youre purchasing a foreclosure:

• Although faster than short sales, they take time too. 45-60 days for a "normal" escrow.
• Response times for offers can be slow. (I had a client wait 3 weeks for a response and then they reject it)
• Banks send out addendums to clients after an agreed upon price, close of escrow, closing cost, home warranty etc.  READ THESE ADDENDUMS TWICE!!  These addendums basically rewrite the contract to protect the bank.  There can be steep penalties for specific performance.
• Many of the properties are not in move in condition and are usually priced to reflect that. The foreclosures that are in good condition and are priced well are receiving multiple offers. 

84% of all closings in Las Vegas are Foreclosures.  In fact, I have only sold 2 "normal" property in 2008. EVERYTHING else has been a foreclosure.  These properties are usually priced in the bottom third of the market.  Buying a foreclosure is very similar to a regular sale. You still have your inspection period, you still get to approve of the Home Owners Association documents, you still have appraisal contingencies BUT READ YOUR ADDENDUMS!!  All of these terms are spelled out in the addendums and can favor the bank.

Are you a Homeowner Considering a Las Vegas Short Sale?

The O'Brien-Nikolv Team are experts with the Las Vegas short sale process.

Jan O'Brien is the co-author of the Certified Foreclosure Alternatives Consultant designation course.  

Call Us direct at 702-608-5260 to schedule a Foreclosure Alternatives Consultation today.

What is a short sale?

Simply put, a short sale is selling a property for a less than what is owed to the underlying mortgage holder(s).  The final sales price is essentially what the buyer is willing to pay for the property with the mortgage company/bank having the final approval of the associated closing costs, commissions, terms and acceptance of a discounted payoff(s).  The seller should always consult with an attorney, CPA or tax advisor to determine any legal or tax consequences of a short sale.  We have seen the gamut of scenarios from mortgage companies accepting the discounted payoff and releasing all remaining debt to deficiency judgments and negotiating a settlement or new payment plan with the homeowner.

The pre-short sale process begins at the time of listing the property for sale.  An experienced short sale real estate agent will counsel the seller about the entire process and assist the seller in establishing a competitive listing price based on the current market conditions.   The primary responsibility of the seller is to request and complete a short sale package from their bank or mortgage company. 

Seller Short Sale Tips.  Sellers should be prepared to provide the following documents and information for the short sale packet:

• Hardship letter - clearly outlining their financial hardship and substantiating the reasons for requesting the short sale
• A financial statement/budget - delineating all income and expenses
• Most recent 2-months paycheck stubs
• Most recent 2-months bank statements
• Past 2 years income tax returns
• If self-employed, 6 months of Profit & Loss statements

The listing agent may request additional information:

• Current copy of mortgage statements or any notices from the bank/mortgage company
• Copies of HOA statement showing current or past due amount (if applicable)
• An authorization form signed by the sellers that will allow the listing agent to communicate and negotiate with the bank on the seller's behalf

The short sale process begins in earnest when an offer to purchase is received from a qualified buyer.  The actual process from submission to the bank to final approval can take weeks to months.  A successful short sale can depend on several factors, among them  -

• how solid and complete the offer is
• the buyers ability to successfully obtain their financing
• the bank's particular process and workload
• the seller's completed and acceptable hardship package showing the bank(s) that there is a true financial hardship
• the knowledge and communication skills of the agents
• the resulting BPO/Appraisal ordered by the bank
• the patience and determination of all parties involved

Buyer Short Sale Tips. To ensure as smooth a transaction as possible, buyer's agents must also be knowledgeable about the entire short sale process and take the necessary time to brief the buyer and set realistic expectations.  Some key points we include in our buyer's interview and qualification meeting:

• What is your time frame?  Are you prepared to wait for possibly weeks to several months for the transaction to close?
• Are you interest-rate sensitive?  If interest rates go up will it negatively impact your ability to get a loan?
• Be prepared for the reality of limited information about the status of the approval and the need for patience if deciding to go the short sale route.
• Be aware of numerous roadblocks along the way to closing.  Everything from getting approvals from 2 separate banks to liens and clouds on title to be cleared prior to closing is possible.
• Some listing agents will list the property well below the comps to entice activity and offers.  What seems too good to be true  is usually proved correct when the bank counters the sales price to actual market conditions.  Don't fall into this trap!
• Strengthen your offer by having a pre-approval (not pre-qual) letter and proof of funds letter from your lender. 
• Remember the bank wants the highest net possible after acceptable closing costs.  Are there multiple offers on the property? We encourage you to write your best possible offer first.

Are you looking to purchase property in the Las Vegas area?

Now is the time to buy Las Vegas Homes.  Contact Us directly at 702-608-5260.

Search for Las Vegas Foreclosures

Use our Interactive-Map Search for all Las Vegas Homes for Sale

Search Our Las Vegas NEW Homes Database

The Foreclosure Process in the state of Nevada typically takes about 6 months from the time the Notice of Default is filed to the Eviction of the homeowner. 

• Notice of Default starts the foreclosure process - it is prepared, recorded, mailed, posted, published and a copy sent to all parties (owner, all lenders, IRS, local, state, and federal tax agencies) who have an interest in the property.
• Reinstatement Period(month 1) - starts on the first day the notice of default is recorded.  This is a 35 day period in which the homeowner can reinstate the loan by making any back payments, foreclosure fees and other allowable expenses.
• Redemption Period (months 2-3) - starts on day 36 from the recorded date of the Notice of Default.  Now the homeowner is now responsible for paying the remaining loan balance along with all foreclosure fees and other allowable expenses.  It should also be noted that approximately 10 days before the end of the redemption period, the trustee will notify the lender for permission to prepare the Notice of Trustee Sale for publication.
• Publication Period (month 4) means the Notice of Sale must be published once a week for three consecutive weeks (21 days) prior to the Trustee Sale.
• Trustee Sale (month 5 ) is the final step in the foreclosure process and it is extremely important to remember the homeowner has no right of redemption after the sale is finalized.  If there is a successful bidder at the sale, the new owner will purchase the property in "as is" condition with no warranties.  If there are no bidders at the sale, the lender becomes the sole owner as an REO (Real Estate Owned).
• Eviction (month 6) process starts after the Trustee Sale is finalized.  The eviction process is initiated by posting a 3 day Notice to Quit on the property.  If there is no response, the new owner will file a 5 day Eviction Notice with the court.  If there is no response by 5pm on the 5th day, the Constable will evict the resident.

Additional Resources:

• Nevada Foreclosure Help  Useful resources and info from Nevada Department of Business & Industry
• Nevada Revised Statutes - Chapter 107 - Deeds of Trust
• Nevada Foreclosure Law Summary

Now that you understand the foreclosure process, here's how you can stop a foreclosure.  Do a SHORT SALE! With the majority of the homes in Las Vegas losing over 55-60% of their value since the peak in 2006, many home owners with adjustable rate mortgages are unable to refinance to a fixed loan rate. Unemployment in Las Vegas has reached over 10%, and the recession has hit EVERY industry in our city. With such a drastic change from the boom days, many people find themselves in homes worth half of what they are worth, unable to keep up with payments. I speak to so many clients in this exact same boat. If you are struggling to pay your mortgage, unable to refinance, or lost your job, you have options to help you. Instead of letting your home go into foreclosure you can try a short sale. What is a short sale? This happens when a seller tries to sell their home for less than what is owed on the property. The lien holder of the mortgage will determine if a sale is eligible and will either approve or deny the short sale.There are certain documents I will need to submit to the lender. If you aren't willing to get these documents, doing a short sale will NOT happen. Here they are:

DOCUMENTS NEEDED FOR A SHORT SALE

• Current copy of mortgage statement from all lenders
• Current copy of all delinquency notices
• Hardship letter
• Property & Borrowers Information
• Financial statement (I provide this form)
• Third-party authorization form (I provide this form)
• Most recent 2-month pay stubs
• Most recent 2-month bank statements
• Most recent 2 years tax returns if self employed we will need 6 months P & L statement
• Most recent HOA statement showing current or past due amount (if applicable)

Once I have all of this documentation, I will list your property on the Multiple Listing Service. I take pictures of the property, market the property just like a regular listing. Once we have an offer from a buyer, I will submit the entire Short Sale package to the lender. We price the property according to market value in the neighborhood, and the BANK not the seller pays the real estate commission.

I'm going to repeat that, THE BANK PAYS FOR THE REAL ESTATE COMMISSION, NOT THE SELLER.

There is no up front cost of doing a short sale. Many times, I've seen clients unable to pay their mortgage and because the process of a short sale can take anywhere from 60-180 days, the sellers stay in the property and are able to save money. The process can be tedious, but the benefits of doing a short sale can out weigh the drama of a foreclosure.

• Short sales are better for your credit. You can buy another home in two-three years with a short sale.
• You are able to stay in the property while the short sale process occurs
• The neighborhood can avoid the stigma of a foreclosure sitting vacant ready for people to vandalize it.
• The Banks save thousands of dollars doing a short sale instead of a foreclosure. The Obama administration is pressuring banks to approve short sales.

Are you a Homeowner Considering a Las Vegas Short Sale?

The O'Brien-Nikolv Team are experts with the Las Vegas short sale process.

Jan O'Brien is the co-author of the Certified Foreclosure Alternatives Consultant designation course.   Call Us direct at 702-608-5260 to schedule a Foreclosure Alternatives Consultation today.