Real Estate Information Thread...

I decided to call this real estate 202 because millions of people have already used 101 so we have to be up to 202 by now.

I'm a real estate broker and just wanted to let everyone know that I can answer questions for people if you'd like. You can post them for the world to see or PM me. If you have a "stupid questions" start it off with "A friend of mine..." that way readers will think the question is from someone else . Just Kidding. At any rate, I'm here for anyone that needs me.

I know that I could search out and find some real estate forum somewhere but I feel that this is my forum home so I'll help people here if they need me.

Here is where I put a few ground rules, disclaimers, notices, etc. Bla Bla Bla Bla Bla, I am not an attorney, if you need an attorney please get one. I can not give legal advice, it is not my intent to give anyone legal advise. I am a licensed real estate broker in the state of Arkansas, I am not practicing real estate in any other state. I am not trying to advise you how to fix your current real estate deal, bla bla bla bla bla. I hope everyone understands.

 

Where was this thread 30 days ago!!! I'm closing on my first home in 2 weeks and so far I have NOT enjoyed the process like everyone said I would! But at least I am enjoying the fact that I stole the house ( appraised 3 years ago at $289k and paid $96k) but I had a ton of questions......Hopefully someone else that has the same questions can now ask on here

 

What is a short sale...

A short sale is basically a pre-forclosure that is being sold for less than a wash for the seller, that the property owner needs the bank to take the hit (loss) on.

EXAMPLE: John has a house that he needs to sell. He purchased the house 3 years ago when the market was peaked in his area. He paid $150,000 for the house. John had to move to another state because his job played out and now he has to sell the house he purchased two years ago. Because of the economy, his house is only worth $155,000 and that is all he can sell if for. Due to the fack that John has no money, his credit is marred because the has missed a few payments on his house and other credit obligations, and he purchased the house zero down and now owes $148,000 on it (because of late fees, a couple of payments, etc.), his bottom line would cost him -$8,500. John needs to bring $8,5000 to close on the house he is trying to sell.

Recap:
Sales price: $155,000
Current loan balance: -$148,000
Cost to sale: -$12,000
Buyer Concessions: - $3,500
Cash needed to close: $8,500

So, since John lives pay check to pay check, has mared credit, and no one to borrow/moch the $8,500 from, he has to ask the bank to take the loss or the property will foreclose. So, John approaches the bank with his REALTOR and applies for a short sale. In this case, the bank agrees.

The numbers in the example above are the modest I have seen. They are usually like this:
Sales price: $180,000
Current loan balance: -$215,000
Cost to sale: -$12,000
Buyer Concessions: - $4,500
Cash needed to close: $51,500

Am I for real, YES! This is still not a bad case. Probably is a mild to average one. I have personally done short sales that cost the bank about $76,000. Still not bad.

So, why would a bank take this deal??? 1) Because John is behind on his payments and it's getting worse by the day. 2) Because it is better than foreclosing. If the bank goes through the legal process of foreclosing, the time it takes, the possible property decay while it is going through that process, and low price they will likely to get from a deal seeking buyer, they would likely loose 10% to 50% more, a year or two down the line.

What happens to the $51,500 loss??? The bank is allowed to write John an income statement (1099) for the loss that he would have to file as income on his tax returns. The kicker is this... If the property sold is John's primary residence, Uncle Sam said that he does not have to claim the income (this clause in the tax code will stay into effect until 2011).

 

My Bad! Sounds like you are buying my sisters house in the Orlando area. LOL

At least you are getting "The Deal Of The Days"!!!

Buying a house now days is like being held hostage for 45 days. The good thing is that you are let go and you now have a piece of the American Dream. It's worth the trouble.

 

Yes, I "Stole" the house.. The hardest part was waiting for the bank to go to court to get the lien under their name and away from the owner so they could sell me the house... The bank has a Judgment on the previous owner for $189k for the difference of payoff from what I am paying for the house and what he paid. Im sure it sucks to be the previous owner, but that's what happens when you buy things OVER and ABOVE your means of living! I think I started the process on August 26th of this year and I just now got the closing date... Took forever and a day but at least it's done with and now I don't have to file an extension on my current lease which expires Jan 31st!

 

Did they do a short sale or just repo the house from the previous owner?

 

Short sale to me, but the bank put a judgement on the owner so I wouldn't have to worry about the difference of their mortgage following me ( the house)....

 

So my realtor told me.