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If you are a buyer, and trying to buy a property in today’s market, most likely you will come across the properties that are sold as Short Sales. Here are a few things you need to know and to have before applying for a Short Sale.
1). You need to be flexible with time. If you need to move in ASAP, Short Sale transactions are not for you. In today’s market it might take 2-3 months for the banks to approve the Short Sale (sometimes even more – depends from the bank and/or investor).
2). You might need to come in with additional $2,000 or $3,000 dollars in addition to your original offer, to make transaction go through. Sometimes the first lien holder (bank of investor who holds the 1st Trust Deed) will not pay enough to the 2nd Trust Deed holder, or there is per diem charge. Be ready to step in and cover that difference. The sellers usually will not pay that amount as they are not receiving any money from the sale. You as a buyer are purchasing the property 10%-15% below the market price, so when the time comes – you might need to make a business decision.
3). The properties are usually come “as is.” Neither the banks nor the sellers will make repairs on the property. All the inspections are usually made just for information purposes only, and there might be no contingency for the home inspection.
4). The banks usually do not approve the closing fees paid to the buyer, and they do not provide Home Warranty Plan either. Be ready to buy the plan by yourself, after the transaction is finished, or include the plan into your closing costs.
5). You will have to be ready to deposit the Earnest Money Deposit to the Escrow right away (prior to receiving the Short Sale Approval from the banks), showing the listing agent that you are willing to wait for the Approval, and will not switch to another property. There is nothing worse for the listing agent than working hard on the Short Sale transaction for 2-3 months just to find out that the buyer will walk away at the last minute, because they changed their minds. Don’t be one of those buyers! Treat others like you would like to be treated. If you are not sure about the property simply do not apply. Let the people who really want the property to be the one who get it.
6). Be prepared when submitting the offer to the listing agent. With the offer send the following items:
a. Pre-approval letter (must be from the direct lender)
b. First page of the credit report with FICO scores
c. Copy of the Earnest Money Deposit 2%-3% of the purchase price
d. Proof of funds (copy of your checking or saving account showing the amount needed for the down payment and closing costs).
7). Have your agent to follow up with the listing agent every week. Sometimes the listing agent has 20-30 properties and they just simply do not have time to call every agent who represents buyer. Remember there might be multiple offers. Don’t blame anyone for anything. Always be polite and have a positive attitude. Being rude and blaming someone will not get you anywhere. Remember everyone is working hard in order for you to buy the property under the market value.
8). If you receive any documents during the Short Sale transaction from Escrow or the listing agent, make sure that you read them, sign them and return the documents ASAP.
9). Do as much work on your loan as possible. Always give to your loan officer updated information (paychecks, W-2s, checking and saving accounts info, etc.); sometimes you will have to close as soon as possible.
10). Stay motivated and make sure that the listing agent knows what he or she is doing. Have your REALTOR interview the listing agent about Short Sales to determine if the listing agent is knowledgeable in Short Sale transactions. It is wise to think about this detail before applying for a particular Short Sale property.
Hope this will help you in the future. Meanwhile if you have any questions, you can reach me at ihorpochay@hotmail.com. Feel free to contact me at (562) 334-7393 if you need to sell or buy a property.
Sincerely,
Ihor Pochay
Realtor / Short Sale Specialist
Tarbell, Realtors
Cell: (562)334-7393
Off: (909)629-6186 Ext. 339
Fax: (909)629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogger.com
Friday, March 20, 2009
Friday, March 13, 2009
Homeowner Affordability and Stability Plan and Short Sales
Recently, President Obama signed a plan designed to help the homeowners to stay in their homes and avoid foreclosure. The three main points of the plan are as follows:
1. It will help homeowners refinance their homes to lower interest rates. The “Loan to Value” on the loan should be no more that 105%. So let’s assume the house was bought for $500,000 with the first Trust Deed of $400,000 and the second Trust Deed of $100,000. If the value of the home dropped to $420,000, the homeowner still can refinance as it is 105% from the first Trust Deed. If the Value dropped below $420,000, the homeowner will not be eligible to refinance. This section of the plan will receive $75 billion to help seven to nine million homeowners to refinance.
2. The plan will help homeowners modify their loans. All the loans which were bought by FNMA and FDMAC can be modified (60% of all the loans in today’s market fall under this category).This section of the plan is designed to help approximately four to five million homeowners. The bank will modify the loan where the new PITI (Principle+Interest+Taxes+Insurance) will be 38% and they the bank and FNMA will split the additional 7% of the costs and bring the PITI to 31%. If the loan is not held by any of the mentioned above investors, the homeowner should contact the bank directly and try to work out some options. Homeowners should be aware of the many scammers working in the loan modification field. Make sure you hire someone with a license and do not pay any up front fees for these services. At the end, you can do the modification yourself.
3. This part of the plan is designed to make some money (over $200 billion) available for people who are buying a home for the first time (first time home buyers) by providing new mortgages with very affordable and low interest rates, including tax credits that will be available to them at the end of the year: $8,000 tax credit if new homeowners buy in 2009 and up to $18,000 if they buy from a developer.
The homeowners unable to qualify for the programs mentioned above will still be able and encouraged by the banks to do a Short Sale or a Short Pay Off to avoid foreclosure.
This is just short break down of the plan. If you have any questions or need to see if you qualify for any of the three programs discussed, or to learn more about Short Sale programs, you are more than welcome to contact me at ihorpochay@tarbell.com
Ihor Pochay
REALTOR / SHORT SALE & REO SPECIALIST
Tarbell, Realtors
Cell: (562)334-7393
Off: (909)629-6186 Ext. 339
Fax: (909)629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogspot.com
1. It will help homeowners refinance their homes to lower interest rates. The “Loan to Value” on the loan should be no more that 105%. So let’s assume the house was bought for $500,000 with the first Trust Deed of $400,000 and the second Trust Deed of $100,000. If the value of the home dropped to $420,000, the homeowner still can refinance as it is 105% from the first Trust Deed. If the Value dropped below $420,000, the homeowner will not be eligible to refinance. This section of the plan will receive $75 billion to help seven to nine million homeowners to refinance.
2. The plan will help homeowners modify their loans. All the loans which were bought by FNMA and FDMAC can be modified (60% of all the loans in today’s market fall under this category).This section of the plan is designed to help approximately four to five million homeowners. The bank will modify the loan where the new PITI (Principle+Interest+Taxes+Insurance) will be 38% and they the bank and FNMA will split the additional 7% of the costs and bring the PITI to 31%. If the loan is not held by any of the mentioned above investors, the homeowner should contact the bank directly and try to work out some options. Homeowners should be aware of the many scammers working in the loan modification field. Make sure you hire someone with a license and do not pay any up front fees for these services. At the end, you can do the modification yourself.
3. This part of the plan is designed to make some money (over $200 billion) available for people who are buying a home for the first time (first time home buyers) by providing new mortgages with very affordable and low interest rates, including tax credits that will be available to them at the end of the year: $8,000 tax credit if new homeowners buy in 2009 and up to $18,000 if they buy from a developer.
The homeowners unable to qualify for the programs mentioned above will still be able and encouraged by the banks to do a Short Sale or a Short Pay Off to avoid foreclosure.
This is just short break down of the plan. If you have any questions or need to see if you qualify for any of the three programs discussed, or to learn more about Short Sale programs, you are more than welcome to contact me at ihorpochay@tarbell.com
Ihor Pochay
REALTOR / SHORT SALE & REO SPECIALIST
Tarbell, Realtors
Cell: (562)334-7393
Off: (909)629-6186 Ext. 339
Fax: (909)629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogspot.com
Tuesday, February 24, 2009
You Now Want To Do A Short Sale. Top 10 Seller Short Sale Questions, Answered.
Number 10
I can’t make my house payments but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score…is a short sale right for me?
Probably not. In cases where the seller can pay back all or part of the negative equity (usually to the 2nd lien holder) it makes sense for them to work out a repayment plan. The lender will then release the lien and allow the home to close.
Number 9
If I pay mortgage insurance and default on my loan, wouldn't that cover the deficiency amount?
The mortgage insurance is not there for your protection, it protects the mortgage lender.
Number 8
Do I have to have my home ‘Approved’ by my lender prior to offering it for sale as a short sale?
No. Technically speaking, there is no such thing as being ‘Short Sale Approved.’ The actual approval only happens with an accepted offer.
Number 7
I just missed a payment and I know I will miss more….how long does the foreclosure process take and is there time to do a short sale?
In California it’s taking 6+ months. Generally speaking a well-priced short sale being processed by an educated short sale listing agent will sell and close in less than 120 days.
Number 6
Will I still have to pay property taxes if I do a short sale?
Property taxes will always have to be paid as part of any accepted short sale. Whether it’s you or the lender depends on their policies and the specific agreement you reach while negotiating the short sale.
Number 5
I owe more than my home is worth and I can’t make the payment, do I have to somehow qualify for a short sale?
The simple answer is NO. If someone can’t make their payment and they are otherwise insolvent, they qualify for a short sale. Note: insolvent simply means their total debts are great than their assets.
Number 4
Do I have to pay income taxes? I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me..the seller..is this true?!
It WAS true, now it’s not. Consult your Tax Attorney or Qualified CPA. Very recently the tax law was modified and now most people who do a short sale will have no Federal taxes due (CONSULT YOUR TAX ATTORNEY OR CPA).
Number 3
How do you, my listing agent get paid? Who pays your commission?
The bank will pay the commission along with all the other usual closing costs.
Number 2
Do I have to miss a payment to do a Short Sale?
No. Late last year most major lenders started accepting short sale offers from sellers who have never missed a payment.
Number 1
I want to do a short sale and have a 2nd mortgage, does this make me ineligible?
No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holder.
Ihor Pochay
Realtor / Short Sale Specialist
Tarbell, Realtors
Cell: (562)334-7393
Off: (909)629-6186 Ext. 339
Fax: (909)629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogger.com
I can’t make my house payments but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score…is a short sale right for me?
Probably not. In cases where the seller can pay back all or part of the negative equity (usually to the 2nd lien holder) it makes sense for them to work out a repayment plan. The lender will then release the lien and allow the home to close.
Number 9
If I pay mortgage insurance and default on my loan, wouldn't that cover the deficiency amount?
The mortgage insurance is not there for your protection, it protects the mortgage lender.
Number 8
Do I have to have my home ‘Approved’ by my lender prior to offering it for sale as a short sale?
No. Technically speaking, there is no such thing as being ‘Short Sale Approved.’ The actual approval only happens with an accepted offer.
Number 7
I just missed a payment and I know I will miss more….how long does the foreclosure process take and is there time to do a short sale?
In California it’s taking 6+ months. Generally speaking a well-priced short sale being processed by an educated short sale listing agent will sell and close in less than 120 days.
Number 6
Will I still have to pay property taxes if I do a short sale?
Property taxes will always have to be paid as part of any accepted short sale. Whether it’s you or the lender depends on their policies and the specific agreement you reach while negotiating the short sale.
Number 5
I owe more than my home is worth and I can’t make the payment, do I have to somehow qualify for a short sale?
The simple answer is NO. If someone can’t make their payment and they are otherwise insolvent, they qualify for a short sale. Note: insolvent simply means their total debts are great than their assets.
Number 4
Do I have to pay income taxes? I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me..the seller..is this true?!
It WAS true, now it’s not. Consult your Tax Attorney or Qualified CPA. Very recently the tax law was modified and now most people who do a short sale will have no Federal taxes due (CONSULT YOUR TAX ATTORNEY OR CPA).
Number 3
How do you, my listing agent get paid? Who pays your commission?
The bank will pay the commission along with all the other usual closing costs.
Number 2
Do I have to miss a payment to do a Short Sale?
No. Late last year most major lenders started accepting short sale offers from sellers who have never missed a payment.
Number 1
I want to do a short sale and have a 2nd mortgage, does this make me ineligible?
No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holder.
Ihor Pochay
Realtor / Short Sale Specialist
Tarbell, Realtors
Cell: (562)334-7393
Off: (909)629-6186 Ext. 339
Fax: (909)629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogger.com
Friday, February 13, 2009
Ok, I Get It…A Short Sale May Be My Best Option…Tell Me More…
A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy.
For example, a homeowner, who is facing foreclosure, has an existing first mortgage of $500,000. The market value of the home is $350,000. Long story short, the lender accepts the offer for $350,000 and the home is sold.
That’s a short sale.
Why are lenders so eager to take such a huge discount? Banks do not like bad loans. If they see an opportunity where they can sell the property without the huge loss of a foreclosure, they will do it. Some lenders report that if the home goes into foreclosure by the time the home actually closes with the new buyer, the lender will be lucky to net 50% of the original loan balance.
Bottom line from the lenders perspective? They are in the business of lending money, not owning homes. If they can accept a short sale offer and rid themselves of the bad loan AND net more, vs. the home going into foreclosure, they will do it every time. It’s simply smart business.
Time is not on your side when you are considering a short sale. You must act quickly and work only with a real estate expert who has successfully completed and graduated from advanced real estate education programs.
Ihor Pochay
Realtor / Short Sale Specialist
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
http://www.myrealtorihor.com/
www.shortsaleyourhome.blogger.com/
For example, a homeowner, who is facing foreclosure, has an existing first mortgage of $500,000. The market value of the home is $350,000. Long story short, the lender accepts the offer for $350,000 and the home is sold.
That’s a short sale.
Why are lenders so eager to take such a huge discount? Banks do not like bad loans. If they see an opportunity where they can sell the property without the huge loss of a foreclosure, they will do it. Some lenders report that if the home goes into foreclosure by the time the home actually closes with the new buyer, the lender will be lucky to net 50% of the original loan balance.
Bottom line from the lenders perspective? They are in the business of lending money, not owning homes. If they can accept a short sale offer and rid themselves of the bad loan AND net more, vs. the home going into foreclosure, they will do it every time. It’s simply smart business.
Time is not on your side when you are considering a short sale. You must act quickly and work only with a real estate expert who has successfully completed and graduated from advanced real estate education programs.
Ihor Pochay
Realtor / Short Sale Specialist
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
http://www.myrealtorihor.com/
www.shortsaleyourhome.blogger.com/
Wednesday, January 21, 2009
No One is Safe in Today's Market!
No one is safe. News stories from across the country tell the tales of both celebrities and average Americans who are all considering selling their homes through a short sale.
Selling your home through a short sale doesn’t need to be a shameful, life-ruining experience. Sometimes short selling your mortgage simply makes smart economic sense, especially for homeowners who find themselves "upside down" — that is, they owe more on their mortgage than their house is worth.
Late last year, CNBC financial guru Jim Cramer was telling homeowners to ‘Just Walk Away.’ (Watch the video on YouTube.com)
We are clearly in uncharted waters. The current housing crisis is different from all the previous housing recessions. It is well known that many financial institutions sold mortgages in a deceptive manner — for example, by approving people for loans they couldn't really afford — then why should homeowners feel obliged to honor their commitments?
From a homeowner’s perspective, why should they stay in a home that is depreciating? Often times it’s possible to rent the same style home in the same area for half (or less) than their current mortgage payment. Assuming it takes years for the market to recover, the homeowner who sells their home via a short sale now will be far ahead of the person who ‘stuck it out’.
Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
Selling your home through a short sale doesn’t need to be a shameful, life-ruining experience. Sometimes short selling your mortgage simply makes smart economic sense, especially for homeowners who find themselves "upside down" — that is, they owe more on their mortgage than their house is worth.
Late last year, CNBC financial guru Jim Cramer was telling homeowners to ‘Just Walk Away.’ (Watch the video on YouTube.com)
We are clearly in uncharted waters. The current housing crisis is different from all the previous housing recessions. It is well known that many financial institutions sold mortgages in a deceptive manner — for example, by approving people for loans they couldn't really afford — then why should homeowners feel obliged to honor their commitments?
From a homeowner’s perspective, why should they stay in a home that is depreciating? Often times it’s possible to rent the same style home in the same area for half (or less) than their current mortgage payment. Assuming it takes years for the market to recover, the homeowner who sells their home via a short sale now will be far ahead of the person who ‘stuck it out’.
Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
Tuesday, January 6, 2009
A National Epidemic of Short Sales
Are you stressed out about mortgage payments? Do you think your only option is a foreclosure? Is a short sale right for you? Millions and millions of homeowners are asking themselves the same questions. It is projected that more than 20,000,000 homeowners will have negative equity in their homes in the very near future. In other words, they will owe more on their homes than the homes are actually worth. More than 2.9 million homes have foreclosed in the last three years and the number is only expected to grow. Expect the effects of the estate recession to ripple for years to come.
What can you do now?
There is expected to be massive tsunami of homeowners who are simply making the decision to sell their homes through a short sale vs. staying in a home, hoping that one day it may be worth what they paid.
No one is safe. News stories from across the country tell the tales of both celebrities and average Americans who are all considering selling their homes through a short sale.
Selling your home through a short sale doesn’t need to be shameful, life-ruining experience. Sometimes short selling your mortgage simply makes smart economic sense, especially for homeowners who find themselves "upside down" — that is, they owe more on their mortgage than their house is worth.
To find out if you qualify to sell your home in a Short Sale transaction, call me today at (562) 334-7393.
Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
What can you do now?
There is expected to be massive tsunami of homeowners who are simply making the decision to sell their homes through a short sale vs. staying in a home, hoping that one day it may be worth what they paid.
No one is safe. News stories from across the country tell the tales of both celebrities and average Americans who are all considering selling their homes through a short sale.
Selling your home through a short sale doesn’t need to be shameful, life-ruining experience. Sometimes short selling your mortgage simply makes smart economic sense, especially for homeowners who find themselves "upside down" — that is, they owe more on their mortgage than their house is worth.
To find out if you qualify to sell your home in a Short Sale transaction, call me today at (562) 334-7393.
Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
Tuesday, December 2, 2008
Ten Steps in the Short Sale Process
For better understanding of Short Sales, below is the break down into such steps:
Step 1: Seller needs to talk to the Real Estate Attorney or CPA to make sure that the Short Sale is the right choice for them.
Step 2: Seller needs to find the Realtor who specializes in doing Short Sales.
Step 3: List the property with a qualified REALTOR.
Step 4: Seller should provide to the REALTOR all the documents needed by the Bank.
Step 5: The REALTOR, by advertising and conducting open houses, should obtain the reasonable offer from a Buyer who is pre-approved for a loan or has enough cash to buy the property.
Step 6: After completing the Short Sale Package, the REALTOR should submit it to the Bank(s) for review.
Step 7: The Bank will send the Appraiser to evaluate the property (usually the Bank that trying to foreclose the property).
Step 8: The Bank will make a decision about the Short Sale (to give the positive answer to the Short Sale transaction, the Bank should come to conclusion that the Short Sale will bring more money for them than a Foreclosure).
Step 9: If the decision is negative, the REALTOR should put the property back on the market and advertise the price which was specified by the Bank.
Step 10: If the answer is positive, the REALTOR should open Escrow and follow the Escrow Instructions and Instructions from the Bank(s) to complete the Short Sale transaction.
To have a successful transaction, the Listing Agent should be in constant communication with the Buyer, Seller, Selling Agent, and Short Sale Negotiator.
Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
Step 1: Seller needs to talk to the Real Estate Attorney or CPA to make sure that the Short Sale is the right choice for them.
Step 2: Seller needs to find the Realtor who specializes in doing Short Sales.
Step 3: List the property with a qualified REALTOR.
Step 4: Seller should provide to the REALTOR all the documents needed by the Bank.
Step 5: The REALTOR, by advertising and conducting open houses, should obtain the reasonable offer from a Buyer who is pre-approved for a loan or has enough cash to buy the property.
Step 6: After completing the Short Sale Package, the REALTOR should submit it to the Bank(s) for review.
Step 7: The Bank will send the Appraiser to evaluate the property (usually the Bank that trying to foreclose the property).
Step 8: The Bank will make a decision about the Short Sale (to give the positive answer to the Short Sale transaction, the Bank should come to conclusion that the Short Sale will bring more money for them than a Foreclosure).
Step 9: If the decision is negative, the REALTOR should put the property back on the market and advertise the price which was specified by the Bank.
Step 10: If the answer is positive, the REALTOR should open Escrow and follow the Escrow Instructions and Instructions from the Bank(s) to complete the Short Sale transaction.
To have a successful transaction, the Listing Agent should be in constant communication with the Buyer, Seller, Selling Agent, and Short Sale Negotiator.
Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
Wednesday, November 19, 2008
SHORT SALE DISCLOSURES
The following disclosures should be given to Buyer(s) and/or Seller(s) in a Short Sale transaction in the state of California:
1) Transfer Disclosure Statement (TDS form). Must be filled out by the Seller(s) and given to the Buyer(s) in every real estate transaction which involves residential 1-4 unit dwelling. This is the form where the Seller discloses all facts that he/she knows about the property to the Buyer.
2) Disclosure Regarding Real Estate Relationships (AD form). This form disclose of the relationships between the Agent and Principle (Buyer or Seller). The Listing Agent should give only one form to the Seller(s). The Selling Agent should give one form to the Buyer(s), and one form to the Seller(s), providing that the Buyer(s) and the Seller(s) are represented in the transaction by different Agents.
3) Lead-Based Paint Hazard Disclosures (FLD form). This should be given to the Buyer(s) by the Seller(s) if the property being purchased was built before 1978.
4) Statewide Buyer and Seller Advisory (SBSA form). This form educates the Seller(s) and the Buyer(s) about the inspection that they will have to do, California's laws, taxes, etc.
5) Water Heater and Smoke Detector Statement of Compliance (WHSD form). This form should be given by the Seller(s) to the Buyer(s), assuring the Buyer(s) that at the end of the transaction the Water Heater and the Smoke Detectors will be in compliance with the current law.
6) Seller's Affidavit of Non-Foreign Status (AS form). Should be given from the Seller(s) to the Buyer(s), stating the Seler's SSN or TIN number. If the Seller(s) does not feel comfortable to disclose this information to the Buyer(s), they can give this inormation to the Escrow company and the Escrow should issue the letter-certificate to the Buyer(s), that they received the AS form or certificate from the Seller(s).
7) Seller Property Questionnaire (SPQ form). This form should be given by the Seller(s) to the Buyer(s) to answer the questions and conditions about the property that is being transferred.
8) Natural Hazard Disclosure Statement (NHD form). This is given to the Buyer(s) by the Seller(s). All the Natural Hazards about the area where the property is located should be disclosed by the Seller(s) to the Buyer(s). If the Seller is not sure, they should hire a third party company to do the required reports.
9) Agent Visual Inspection Disclosure (AVID form). This should be given to the Buyer(s) and Seller(s) by the Real Estate Agent, disclosing any defects about the property that were found by the Agent during the inspection.
10) Short Sale Addendum (SSA form). This form should be given to Buyer(s) by the Selling Agent to sign, and should be submitted to the Seller(s) together with the purchase contract.
11) Short Sale Listing Addendum (SSL form). This should be given to the Seller(s) by the Listing Agent at the time when the listing is taken.
Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.comwww.MyRealtorIhor.com
1) Transfer Disclosure Statement (TDS form). Must be filled out by the Seller(s) and given to the Buyer(s) in every real estate transaction which involves residential 1-4 unit dwelling. This is the form where the Seller discloses all facts that he/she knows about the property to the Buyer.
2) Disclosure Regarding Real Estate Relationships (AD form). This form disclose of the relationships between the Agent and Principle (Buyer or Seller). The Listing Agent should give only one form to the Seller(s). The Selling Agent should give one form to the Buyer(s), and one form to the Seller(s), providing that the Buyer(s) and the Seller(s) are represented in the transaction by different Agents.
3) Lead-Based Paint Hazard Disclosures (FLD form). This should be given to the Buyer(s) by the Seller(s) if the property being purchased was built before 1978.
4) Statewide Buyer and Seller Advisory (SBSA form). This form educates the Seller(s) and the Buyer(s) about the inspection that they will have to do, California's laws, taxes, etc.
5) Water Heater and Smoke Detector Statement of Compliance (WHSD form). This form should be given by the Seller(s) to the Buyer(s), assuring the Buyer(s) that at the end of the transaction the Water Heater and the Smoke Detectors will be in compliance with the current law.
6) Seller's Affidavit of Non-Foreign Status (AS form). Should be given from the Seller(s) to the Buyer(s), stating the Seler's SSN or TIN number. If the Seller(s) does not feel comfortable to disclose this information to the Buyer(s), they can give this inormation to the Escrow company and the Escrow should issue the letter-certificate to the Buyer(s), that they received the AS form or certificate from the Seller(s).
7) Seller Property Questionnaire (SPQ form). This form should be given by the Seller(s) to the Buyer(s) to answer the questions and conditions about the property that is being transferred.
8) Natural Hazard Disclosure Statement (NHD form). This is given to the Buyer(s) by the Seller(s). All the Natural Hazards about the area where the property is located should be disclosed by the Seller(s) to the Buyer(s). If the Seller is not sure, they should hire a third party company to do the required reports.
9) Agent Visual Inspection Disclosure (AVID form). This should be given to the Buyer(s) and Seller(s) by the Real Estate Agent, disclosing any defects about the property that were found by the Agent during the inspection.
10) Short Sale Addendum (SSA form). This form should be given to Buyer(s) by the Selling Agent to sign, and should be submitted to the Seller(s) together with the purchase contract.
11) Short Sale Listing Addendum (SSL form). This should be given to the Seller(s) by the Listing Agent at the time when the listing is taken.
Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.comwww.MyRealtorIhor.com
Monday, November 3, 2008
Tax Effects from the Short Sale
The tax effects can be very significant on a homeowner. It is advisable to get professional advice from a Tax Attorney and a CPA before the seller will have to pay taxes on the forgiven debt (difference between the indebtness and the sale price of the home). In December 2007, the President signed a new bill, "The Mortgage Forgiveness Debt Relief Act," which forgives the debt for the homeowners who did the Short Sale or Foreclosure on their primary residence in 2007-2009. The homeowner still will receive the 1099-C Form (Cancellation of Debt) from the Lender by the end of the year. After receiving the 1099-C the homeowner should carefully look through the form and check for any discrepancy (the amount of the discharged debt is incorrect). If the homeowner finds any of the information to be inaccurate, the lender should be contacted immediately to correct the mistake and provide the homeowner with the new 1099-C form with accurate information.
The homeowners should use form Form 982 (Reduction of Tax Attributes Due to Discharge of Indebtedness) when filling their tax return. You can get this form by going to www.irs.gov or by calling 1-800-829-3676.
If part of the forgiven debt does not qualify under this act, then the homeowner will have to prove insolvency at the time of the Short Sale transaction or Foreclosure. The homeowner will have to show that their liabilities is bigger than the assets, or file for bankruptcy. The amount that can be forgiven can go up to 2 million dollars (1 million for married couples who file separately) at the time when the loan was forgiven. Debt eligible to be forgiven are those used for building, buying or improving the principle residence and should have been secured by the property. If the homeowner refinanced for the bigger mortgage, part of this debt can also be excluded up to the old mortgage amount. The other thing about this Act is that a homeowner can not apply it to second homes, vacation homes, credit card debts, etc. This Act is design to help the homeowners who were in Foreclosure, or did a Short Sale or Loan Modification for primary residence only.
You can find more information by going to www.irs.gov or www.car.org
Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
The homeowners should use form Form 982 (Reduction of Tax Attributes Due to Discharge of Indebtedness) when filling their tax return. You can get this form by going to www.irs.gov or by calling 1-800-829-3676.
If part of the forgiven debt does not qualify under this act, then the homeowner will have to prove insolvency at the time of the Short Sale transaction or Foreclosure. The homeowner will have to show that their liabilities is bigger than the assets, or file for bankruptcy. The amount that can be forgiven can go up to 2 million dollars (1 million for married couples who file separately) at the time when the loan was forgiven. Debt eligible to be forgiven are those used for building, buying or improving the principle residence and should have been secured by the property. If the homeowner refinanced for the bigger mortgage, part of this debt can also be excluded up to the old mortgage amount. The other thing about this Act is that a homeowner can not apply it to second homes, vacation homes, credit card debts, etc. This Act is design to help the homeowners who were in Foreclosure, or did a Short Sale or Loan Modification for primary residence only.
You can find more information by going to www.irs.gov or www.car.org
Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
Sunday, October 26, 2008
How a Short Sale Affects a Homeowner's Credit Score
After a Short Sale is completed, the Bank reports the transaction to the Credit Bureau as “Settled for Less.” A Short Sale will bring the credit score down about 150-200 points. Besides the Short Sal, every late payment is reported to the same bureau as 30-, 60- or 90-day late payment, and these actions will bring the credit score down as well. Each late payment will the homeowner's FICO score 10-15 points down.
A good REALTOR/SHORT SALE SPECIALIST has to try to save a homeowner’s FICO score, by simply negotiating with the Bank. In most cases, saving the homeowner's FICO score will not likely happen, but if you do not ask, you will not receive. If the homeowner is short only $10,000 to $15,000, and the homeowner wants to save his/her FICO score (providing that a move is necessary and does not have money to cover the difference), the REALTOR/SHORT SALE SPECIALIST can negotiate with the Bank about the pay off. Usually the Bank will agree to give to a homeowner an unsecured loan for the difference (for this example, $10,0000 to $15,0000) for 5-7 years with 0-1% of interest. Instead the Bank will report the transaction as paid in full and it will not have any negative effect on the homeowner’s FICO score. And the homeowner will be able to move on with life and buy another property if desired.
After the Short Sale is reported to the Credit Bureaus, the homeowner will be able to buy another property after 2 years. If compared to Foreclosure, a homeowner will be able to purchase another property in 5 years; Deed in Lieu, 5 years; Bankruptcy 7 years; Judgment, 10 years. The 2-year wait period to purchase a property after a Short Sale is one of the biggest advantages of the Short Sale compared to the others options listed above.
Another advantage of a Short Sale is that the homeowner will be able to get a better selling price when he/she chooses this transaction (usually 10% below the market price) than if the Bank chooses to do a Foreclosure. How this will benefit the homeowner if no proceeds are received from the Short Sale anyway?
Let’s assume that after the homeowner purchases the property, down the road, he/she pulls equity from the property (majority of homeowners do) as a Second Lien. This makes the the second loan a recourse loan, meaning that the Bank (second Lien Holder) can sue the Seller for the Deficiency Judgment after transaction is over. By controlling the price in the Short Sale transaction the homeowner has a chance to reduce the amount that the second Lien Holder can sue him/her for, and that means the Bank will bring down the deficiency amount as well. Whereas, in a Foreclosure, the Bank will sell the property 30-40% below the market price and the second Lien Holder will be able to sue the homeowner for the full amount of the Second Loan.
Ihor Pochay
REALTOR/SHORT SALE SPECIALIST
Tarbell, Realtors
(909) 629-6186 ext. 339
ihorpochay@hotmail.com
http://www.myrealtorihor.com/
A good REALTOR/SHORT SALE SPECIALIST has to try to save a homeowner’s FICO score, by simply negotiating with the Bank. In most cases, saving the homeowner's FICO score will not likely happen, but if you do not ask, you will not receive. If the homeowner is short only $10,000 to $15,000, and the homeowner wants to save his/her FICO score (providing that a move is necessary and does not have money to cover the difference), the REALTOR/SHORT SALE SPECIALIST can negotiate with the Bank about the pay off. Usually the Bank will agree to give to a homeowner an unsecured loan for the difference (for this example, $10,0000 to $15,0000) for 5-7 years with 0-1% of interest. Instead the Bank will report the transaction as paid in full and it will not have any negative effect on the homeowner’s FICO score. And the homeowner will be able to move on with life and buy another property if desired.
After the Short Sale is reported to the Credit Bureaus, the homeowner will be able to buy another property after 2 years. If compared to Foreclosure, a homeowner will be able to purchase another property in 5 years; Deed in Lieu, 5 years; Bankruptcy 7 years; Judgment, 10 years. The 2-year wait period to purchase a property after a Short Sale is one of the biggest advantages of the Short Sale compared to the others options listed above.
Another advantage of a Short Sale is that the homeowner will be able to get a better selling price when he/she chooses this transaction (usually 10% below the market price) than if the Bank chooses to do a Foreclosure. How this will benefit the homeowner if no proceeds are received from the Short Sale anyway?
Let’s assume that after the homeowner purchases the property, down the road, he/she pulls equity from the property (majority of homeowners do) as a Second Lien. This makes the the second loan a recourse loan, meaning that the Bank (second Lien Holder) can sue the Seller for the Deficiency Judgment after transaction is over. By controlling the price in the Short Sale transaction the homeowner has a chance to reduce the amount that the second Lien Holder can sue him/her for, and that means the Bank will bring down the deficiency amount as well. Whereas, in a Foreclosure, the Bank will sell the property 30-40% below the market price and the second Lien Holder will be able to sue the homeowner for the full amount of the Second Loan.
Ihor Pochay
REALTOR/SHORT SALE SPECIALIST
Tarbell, Realtors
(909) 629-6186 ext. 339
ihorpochay@hotmail.com
http://www.myrealtorihor.com/
Wednesday, October 22, 2008
Why Would Banks Choose to Do a Short Sale?
Why would banks want to agree to do a Short Sale?
First of all, the banks are in the business of lending money, not owning properties. They are very motivated to sell the property as soon as possible and get loans off their books.
Secondly, if banks choose to do a Short Sale, they will net (gross proceeds minus sale expenses) more than if they were to go into Foreclosure or trying to sell the property by themselves. Because if the banks choose one of the latter options, they will have to pay for all the utilities, taxes, HOA fees, repairs, asset management fees, etc.
The bottom line is, when banks do a Short Sale, they will usually loose 10%-15% of the market value. But when banks do a Foreclosure, they will loose 25%-30% of the market value, sometimes even more (depending on the market condition).
A bank will evaluate the financial situation of the homeowner, current market value of the property and will then make a decision about the Short Sale case. If for example the bank realizes that the market value of the property is $300,000, but $210,000 was offered for the property, the bank will most likely not approve this Short Sale as it will be more profitable for to Foreclose the property and sell it as an REO (Real Estate Owned by bank).
Ihor Pochay
REALTOR/ SHORT SALE SPECIALIST
Tarbell, Realtors
(909) 629-6186 ext. 339
ihorpochay@hotmail.com
http://www.myrealtorihor.com/
First of all, the banks are in the business of lending money, not owning properties. They are very motivated to sell the property as soon as possible and get loans off their books.
Secondly, if banks choose to do a Short Sale, they will net (gross proceeds minus sale expenses) more than if they were to go into Foreclosure or trying to sell the property by themselves. Because if the banks choose one of the latter options, they will have to pay for all the utilities, taxes, HOA fees, repairs, asset management fees, etc.
The bottom line is, when banks do a Short Sale, they will usually loose 10%-15% of the market value. But when banks do a Foreclosure, they will loose 25%-30% of the market value, sometimes even more (depending on the market condition).
A bank will evaluate the financial situation of the homeowner, current market value of the property and will then make a decision about the Short Sale case. If for example the bank realizes that the market value of the property is $300,000, but $210,000 was offered for the property, the bank will most likely not approve this Short Sale as it will be more profitable for to Foreclose the property and sell it as an REO (Real Estate Owned by bank).
Ihor Pochay
REALTOR/ SHORT SALE SPECIALIST
Tarbell, Realtors
(909) 629-6186 ext. 339
ihorpochay@hotmail.com
http://www.myrealtorihor.com/
Thursday, October 16, 2008
Deficiency Judgment in California
After a Short Sale transaction is completed in the state of California, the Lender, in some ccases, may sue the Borrower for the Deficiency Judgment (the difference between the indebtedness and the fair market value). The Deficiency Judgment will not apply to every case. There are five situations in which the Lender can not proceed with the Deficiency Judgment:
- Purchase money loan: The Borrower (homeowner) still has the original loan on the property and did not refinance the original loan since purchasing it.
- Three-month limit: The Lender has three months to sue the Borrower, or let it go.
- Seller’s financing: If the loan was financed by the seller, the original seller will not have a right for a Deficiency Judgment against the Borrower.
- When the Lender will do the Trustee’s Sale (sale conducted by the trustee) instead of the Judicial Foreclosure (foreclosure which occurs in the court).
- The Lender can not sue the Borrower for the amount bigger than the difference between the loan amount and the fair market value.
The Lender may obtain the Deficiency Judgment after the Judicial Foreclosure and/or when the loan is completely wiped out.
For example, let’s say that the Borrower obtained two loans (Trust Deeds) in order to purchase the property – one loan at $400,000, while the other at $100,000 – and then the Borrower decided to refinance the second loan in order to get a better interest rate. Later on, if the property is sold in a Short Sale for $395,000, the second loan therefore will then be completely wiped out. This will not qualify the second loan to fall under the purchase money loan exception to the Deficiency Judgment because of the refinancing. The Lender that provided the second loan may then sue the Borrower for the amount not to exceed $100,000.
You may reach me at:
Ihor Pochay
REALTOR/ SHORT SALE SPECIALIST
Tarbell, Realtors
(909) 629-6186 ext. 339
ihorpochay@hotmail.com
http://www.myrealtorihor.com/
Tuesday, October 14, 2008
What is a Short Sale?
A Short Sale is when the Lender (bank) agrees to accept less of what is owned on the property. For example if you have a mortgage of $400,000 on your home and the current market price is only $300,000, the bank will end up with the loss of $100,000 if they approve the Short Sale.
Now why would the bank will do a Short Sale and lose money? The answer is simple. The banks are in the business of lending money and making interest on those loans, not in the business of owning houses. If the bank does not approve the short sale, they will have to foreclose the property and try to sell it as a Real Estate Owned by Bank, which will bring them a lot less money than they could receive from a Short Sale. That is why banks are very motivated to do a Short Sale instead.
Why would the seller want to do a Short Sale? The reasons simply are:
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Off: (909) 629-6186 ext. 339
Fax: (909) 629-6710
ihorpochay@hotmail.com
http://www.myrealtorihor.com/
Now why would the bank will do a Short Sale and lose money? The answer is simple. The banks are in the business of lending money and making interest on those loans, not in the business of owning houses. If the bank does not approve the short sale, they will have to foreclose the property and try to sell it as a Real Estate Owned by Bank, which will bring them a lot less money than they could receive from a Short Sale. That is why banks are very motivated to do a Short Sale instead.
Why would the seller want to do a Short Sale? The reasons simply are:
- To be able to buy a new home as soon as 24 months from the close of a Short Sale (a Foreclosure will stay on the homeowner's record for 5-7 years);
- To be able to preserve the homeowner's credit score (a Short Sale has a lot less impact on the credit score than a Foreclosure);
- To avoid the Foreclosure;
- To have the opportunity to start all over again.
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Off: (909) 629-6186 ext. 339
Fax: (909) 629-6710
ihorpochay@hotmail.com
http://www.myrealtorihor.com/
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