Short Sale Strategies

<p> Have you called Countrywide for an update lately? Oy vay! They now have it all automated! Now, instead of a &quot;real&quot; person you talk to their computer system that will tell you an &quot;update&quot; which on all the ones I called on today were non updates . They said they&#39;re working on the file, and that collection activities have been temporarily stopped. They said they will have another update on x date, and DO NOT CALL BACK until then. On one they told me 10/14 and another 10/21. </p> <p> Just when I thought we were on a roll... though on the bright side maybe this will make them work faster when they can devote less resources to phone answering. </p>

<p> Will Mortgage companies work with people who need to sell their rental property because they can no longer afford to feed it? Because they are an investor, will they automatically get a deficency judgement or can that be negotiated? Anyone have any experience with this? </p>

<p> It seems that there is a trend for lenders to put a moratorium on Foreclosures while they try to pro-actively do work-outs for people with ARMs that are re-setting. Not sure about sub-prime sufferers. Any thoughts on whether this will result in increasing difficulty getting lenders to accept short sales? </p> <p> Bernard Gibbons </p> <p> +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++<br /> Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist<br /> J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526<br /> Phone (925) 997-1585<br /> <a href="mailto:bernard@bernardgibbons.com">bernard@bernardgibbons.com</a> </p>

<p> My northern california based client took a new job in southern california and now it is obvious that the only way his home will sell is as a short sale (he is about $100,000 upside-down plus closing costs. </p> <p> He has not missed any payments on his mortgage and he is now renting an apartment in southern california with his wife still living in the present home. </p> <p> I have been advised that he should contact his bank to determine if they will accept a short sale but I have previously understood that this is a pointless waste of time until we have an offer to present with supporting documents to justify a short sale. </p> <p> Any thoughts on this one? </p> <p> Bernard Gibbons </p> <p> +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++<br /> Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist<br /> J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526<br /> Phone (925) 997-1585<br /> <a href="mailto:bernard@bernardgibbons.com">bernard@bernardgibbons.com</a> </p>

<p> I have seen many pricing strategies and I would like to share mine. I also want to see what others are doing throughout the country and what the results have been. </p> <p> If a home is in the foreclosure process already, I list it at loan value. If it is not yet in foreclosure I list at 8% above loan value. I write into all my listing agreements a clause that allows me to systematically lower the price on the 1st and 15th of each month until an offer is recieved. Usually I lower it by 3% each time but if the sale date is near I somtimes get more agressive. All my listings expire on the 30th of each month this way I don&#39;t have to figure out when to reduce prices or contact clients about expiring listings. I also write them for one year out to be on the safe side. </p> <p> I also advised the seller not to expect much at the begining because we have to show the bank a concerted effort to get full loan amount for them. </p> <p> I haven&#39;t had a problem yet, however you must really pay attention to dates because the values have dropped so much, you always don&#39;t have the time necassary. </p>

<p> Do you generally open a pre-escrow when working a short sale or wait until the buyer&#39;s agent opens escrow once an acceptable offer is received? </p> <p> Bernard Gibbons </p> <p> +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++<br /> Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist<br /> J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526<br /> Phone (925) 997-1585<br /> <a href="mailto:bernard@bernardgibbons.com">bernard@bernardgibbons.com</a> </p>

<p> I&#39;m trying to get my head around the newly signed bailout plan and how it will effect my business and short sales in general. Since the government will buy the foreclosed property, does that mean that banks will be more willing to now foreclose rather than sell short or modify a loan? If the government is buying the properties cheap, are the banks still better off selling short? How will the government manage all these vacant properties- will they just sit until they can sell them at a profit whenever that may be? Will the government fix them up and have their own Realtors through a Resolution Trust Company type of company and do they work with Realtors? I wasn&#39;t selling when this happened in the 80&#39;s so I&#39;m not familiar with how that worked and hope someone on this blog has some insight into how all of this will affect us realtors. Thanks in advance for your thoughts. </p>

<p> I have been working this short sale for almost 5 months. The Lender is Countrywide...not the problem. I have been having a lot of trouble with the PMI company asking for a very high promissory note from the Sellers...Any input on this? Lori </p>

<p> The United States Tax Court has affirmed an IRS decision that the taxpayer<br /> owed taxes for the amount of debt discharged by a lender from a short sale of real estate. <strong>Stevens v. Commissioner.</strong> </p> <p> George Stevens (&quot;Taxpayer&quot;) and his then-wife, Sharon Stevens (&quot;Spouse&quot;), purchased a residential property for investment purposes for $256,000. The property needed work, and so the plan was for the Stevens to put some money into the property and then either sell or rent it. The purchase was financed with a mortgage from Homecomings Financial (&quot;Lender&quot;). </p> <p> Shortly after purchasing the property, the Stevens were unable to make a mortgage payment. In order to avoid foreclosure, the Stevens entered into a short sale agreement with a third party, with the approval of the Lender. A &quot;short sale&quot; occurs when the lender agrees to accept a sale price lower than the value of the loans secured by the property. The Lender imposed a number of conditions on the short sale, including limiting the amount of commissions and closing costs. The sale generated $181,461.31 in proceeds for the Lender. </p> <p> Following the sale, the Lender sent the Taxpayer a Form 1099-C stating that it had canceled $74,494.96 in debt. A duplicate form was also sent to the Spouse (the couple had separated by this time). Neither the Spouse or the Taxpayer reported the discharged debt or property sale on their tax returns. </p> <p> The Internal Revenue Service (&quot;IRS&quot;) found that the Taxpayer&#39;s 2003 tax return had a deficiency of $21,323 and imposed penalties of $4,264 for the Taxpayer&#39;s filing of an inaccurate return. The Taxpayer challenged this determination. </p> <p> The United States Tax Court affirmed the IRS&#39;s decision regarding the Taxpayer. In general, a taxpayer is required to include within his or her income all discharges from indebtedness. A sale of a property with a mortgage is generally treated as a sale upon which a gain or loss is realized. There are exceptions to this rule, such as when the sale resulting in the discharge of indebtedness is part of a bankruptcy case, or if the taxpayer is insolvent, or if the indebtedness is a qualified farm or business real estate debt. </p> <p> While the Stevens claimed the property was for investment purposes, there was insufficient evidence for the court to evaluate whether the Taxpayer qualified for the business real estate exception. There also was insufficient evidence to determine whether the Lender intended to make a gift to the Taxpayer by forgiving the delinquency. Therefore, the court agreed that the difference between the short sale price and the loan amount, or $74,494.60, should be treated as ordinary income to both the Taxpayer and the Spouse as a discharge of indebtedness. Thus, the court upheld the IRS&#39;s determination that the Taxpayer owed taxes on the discharge of indebtedness. </p> <p> Source: <a href="http://www.realtor.org/letterlw.nsf/pages/1008stevens?OpenDocument&amp;WT.mc_id=LS100808&amp;CAT=Legal">http://www.realtor.org/letterlw.nsf/pages/1008stevens?OpenDocument&amp;WT.mc_id=LS100808&amp;CAT=Legal</a> </p>

<p> I have the buyers for a short sale. The lender is Countrywide. Included in our offer was $5,000 in seller concessions for closing costs. Our offer was an overbid of $5,000 to cover this concession. </p> <p> The negotiator is a lawyer. We were advised that they had a verbal approval and we could proceed with the transaction. I double and triple checked that the buyer&#39;s closing costs were covered and was assured at all times. </p> <p> My buyer lives in a 3rd floor apartment now. He recently had a heart attack, so we have put this closing on a fast track. </p> <p> Yesterday, 3 weeks after the verbal acceptance, we received the formal acceptance. In this, they allow $0.00 seller contributions to assist in the closing costs. Without the concessions, my buyers can not buy the home. As of right now, my sellers are screwed... big time! </p> <p> A previous offer on this home was declined. In that offer, the buyer had asked for 6% in seller concessions but Countrywide&#39;s response said that they would only allow 3%. Our offer on this home is $150k. Our $5,000 request for closing costs is close to this 3%. But this time around, Countrywide is saying NO! </p> <p> I have a call into the negotiator to suggest that he escalate this transaction to a higher level loss mitigator for possible approval. Do you think this will work? </p> <p> Any suggestions are welcome! </p>

<p> We are having some trouble contacting Washington Mutual lately with the numbers that are published, 866-926-8936 or 866-WAMU-YES. </p> <p> Does anyone have a good number to contact the loss mitigation department for WaMu? Maybe even a contact name? </p> <p> Please let me know, </p> <p> Thanks, </p> <p> Dave Walker, e-PRO REALTOR </p> <p> Short Sale Specialist </p>

<p> I am aware that lenders often pay separate parties, usually law firms, to handle the short sale negotiations. For this, they get paid, typically, 1% of the sale price, exclusive of the Realtor commissions. </p> <p> I want to have a contract, separate from the listing agreement, with the seller, authorizing that I get paid 1% to negotiate the short sale. </p> <p> If I negotiate my own short sale, I will get paid half of the Realtor commission plus the 1% for the negotiation service. It also allows me to negotiate a short sale for someone else and get the negotiating commission separate from their Realtor commission. </p> <p> I have been asking some law firms for samples of their short sale negotiation contracts but have pretty much been stonewalled. </p> <p> Does anyone use of have a contract like this that they could share with me? </p>

<p> As I go through the Notice Of Default list from the county I am finding that most phone numbers that I get through whitepages.com or zabasearch.com have been disconnected. How do you guys handle that situation? </p> <p> Thank you for any input. </p> <p> </p> <p> Michael Fischer </p>

<p> When I was told today that Countrywide no longer authorizes a 6% commission, I thought.. what a great discussion topic. How DO YOU hold the line on your commission? What arguments for the various banks work in your experience and what banks are useless to argue with? I&#39;ve had great success with holding onto commission except for B of A and WaMu. How about you? </p>

<p> I&#39;m working on on some Short Sales and there are recurring concerns from the sellers. I kinda know the answers but would like something more definative. </p> <p> 1. Question - I understand that the lender&#39;s loss on my loan is considered as income to me and the lender will send me a 1099. Will I have to pay taxes on this? </p> <p> 2. Question - The property I&#39;m in trouble with is income property. Can my lender come back and make me sell my home? Can they go after any other assets? What if I own another income property... can they come after that? </p> <p> 3. I heard that the lenders might ask me to sign a promisory note for their loss. Will this happen? Can you protect me from this? </p> <p> If any of you out there have some good replies, I&#39;d love to hear them. Of if you&#39;ve run into any other seller concerns, please present them. </p>