Short Sale Changes

Short Sale Changes

“Effective December 31, 2013 – Short Sales no longer have an automatic waiver of the deficiency.  It is even more important now for agents to recommend sellers get advice from their accountant or legal counsel.”

This statement was sent to all agents  in our Local St George Real Estate MLS recently. Basically what it means is, up until now if a person entered into and sold his or her home short (for less than they owed) there was no tax penalty. This was because the Federal Government had passed a bill allowing people that sold their homes in a short sale to be forgiven of the tax liabilities associated with it. This is significant not only in our St George real estate market, but across the nation.

Hire A Professional

You my be wondering, “what tax liability? I am struggling right now and had to give my house away and mess up my credit”. Exactly now according to the above statement, if a person sells their house for less than they owe, they will be taxed on the amount they benefit from. If you owe $300,000 on your house and were only able to sell it for $250,000, you would be sent a 1099 tax form to notify you that you will be taxed for $50,000 as if it were income. There are some exceptions to the rule, one of which is proving that you have had some type of hardship that contributed to the short sale. At any rate this is something that requires the help of a trained CPA.

Short Sale Specialist

I work closely with a short sale specialist in the St George Real Estate market. Her expertise is unsurpassed when it comes to helping with a short sale. It is like anything, when someone specializes is something they become better at it than people who dabble in it. She has knowledge of how the various lenders operate, and the nuances of each of them. Armed with this additional knowledge she can expedite the process as much as possible. There is really no way to hurry the bank as they work through their tedious, slow and drawn out process. The St George Real Estate market short sale specialist assures that the bank is never waiting for the person listing their home.

Short Sale May Not Be a Good Idea

In our St George Real Estate market it may be a good idea to wait for the market as it continues to climb. Many people have been fortunate enough to see their home values climb to where they can sell and put a little money in their pockets. In spite of the slow economy, real estate values continue to climb. There is a difference in the climb we are currently experiencing and the bubble that burst a few years ago. The increase in the St George Real Estate market values this time is more gradual and consistent. Professionals in the real estate industry believe that this increase will be sustained and more consistent. All of that being said it might be a good idea to hang on a little longer, if at all possible, rather than short sale. This is even more important given the new tax penalty. Of course it is impossible to guarantee consistent growth.

Distressed Property Update

Things are continually changing in the St George real estate market so I wanted to offer this Distressed Property Update. First item I would like to discuss are the Short Sales in the St George Real Estate market. The quantity of short sales has definitely shrunk. This may be a sign that property values have reached a point where people that were formerly upside, have enough equity to sell. Until now, many people felt hopeless and thought the only way out of their house was a short sale. Those lucky enough to hang on through the difficult times may have even escaped with a little equity in their homes.

Short Sale Prices

The list prices on St George Real Estate short sale homes are fairly close in price to all of the other homes listed in the MLS. While it is true that you may be able to purchase a short sale for less than another home of equal value, there are a few things to consider. First, the time required to finalize a short sale, is anything but short. Some short sales are still dragging on for over 6 months start to finish. Second with shorter supply, and constant demand for good deals in real estate, the banks are holding out for stronger offers than they were satisfied with in the past. Finally a serious buyer needs to consider the risk of hoping to make a killer deal on a short sale or any real estate in the St George area and missing a good deal on a non short sale property.

REO Properties

There are sill a St George real estate properties available through foreclosures auctions.  These are a little more difficult to find, and can be a little tricky to purchase. The minimum price of the home being auctioned usually includes the amount of the unpaid loan, interest, attorney fees, and other costs associated with the home. Another factor to consider when looking for a foreclosed home is the fact that someone may be living in it. The person who acquires the home will have to evict the person living in the home. The new home owner may also be responsible for any third party liens attached to the property. This type of investment may be a little risky for most buyers. For help with any Real Estate in St George give me a call 435 705 3356.

Washington Fields

A popular location in the real estate in St George area and southern Utah is Washington Fields. The area is relatively new and has some nice homes that are reasonably priced. Like many areas, Washington Fields has struggled with foreclosures, and short sales. The real estate market in St George has finally turned, in the fields, and homes prices are increasing. This is good if you have been waiting to sell, not so good if you are interested in purchasing in Washington Fields. Homes are currently selling for anywhere from $95 a square foot up to $140. There are still some distressed properties available, but they typically are gone days or even hours after they hit the market. In order to get a “good deal” in Washington Fields the buyer has to have a plan and be included in real time as houses come available. Real Estate in St George and in Washington Fields are both currently great investments.

Good Deals in Washington

In order to get a good deal in Washington a person needs to develop a plan. It is a good idea to understand how houses become available. The local St George Real Estate MLS is one of the best resources to view new listings. Another source for good deals are the government foreclosure websites. There are several to connect with. We have direct feeds from most of these sources, making it easy for us to forward them on to you. The Fannie Mae and Freddie Mac type foreclosures require the person purchasing to use an agent. There is really no incentive to take the time to set up your own notifications from them. If you are interested in a distressed property give us a call we can help you establish a plan to increase your chances of obtaining a lower priced house. It is important to understand that searching for a great deals in the Real Estate market in the St George area takes quite a bit of time, and is not for a person that needs a house right away. It is also important to consider that housing prices are increasing while a person may be spending time chasing the illusive great deal. In other words if you dedicate 9-12 months looking for a great deal you could have purchased a house and enjoyed the appreciation currently taking place. It might be a good idea to solicit the help of a real estate professional when looking for deals in Real Estate in St George.

Short Sales in Washington Fields

The number of short sales in the Real Estate market in St George have reduced greatly over the last few years. This has made searching for short sales much more difficult. Like foreclosures, when a short sale hits the market in Washington Fields, or the entire St George Real Estate market for that matter, they are usually gone in less than a week. Most have multiple offers on them. Multiple offers on St George short sales means that many times the house sells for more than the asking price. Multiple offer sales on real estate in St George are basically what they sound like. The seller, and the bank will have several offers to choose from.  In some cases the seller is totally disengaged and doesn’t care what the house sells for, they just want to move on. They may accept a low offer, but the lender who is “coming up short” has the final say on how much the property will actually be sold for. Making an offer on a short sale on St George Real Estate needs to be carefully researched to assure that you are not paying more than you need to. Care should also be taken to offer enough to beat the competition trying for the same property. The appraisal is also a factor to be taken into consideration. If a person offers too much for a house there is a chance it may not appraise for the sales price. Short sales, in the St George Real Estate market can be a good deal. You might want the help of a real estate professional especially since it won’t cost you, the home buyer, to use one.

Credit Worthiness

Credit Worthiness is a term used to indicate if a person is capable of obtaining, or worthy to get, a loan. There are several factors that play into a bank being willing to loan a person money. The process has tightened dramatically in the last few years. Some people say that the entire housing crisis and subsequent drop in the real estate market was a result of poor lending practices. Many people were allowed to get loans, and for higher amounts than previously allowed. These loans were granted according to new government outlines.

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Housing Bubble

This increase in people that were able to buy houses created a balloon, or a bubble effect. This led to houses increasing to many times their actual values. When the inevitable happened, and people could no longer afford the houses they purchased, the market was flooded with millions of dollars vacant over priced houses.  As a  result of this bubble bursting there was a housing price correction. Real estate values plummeted everywhere. Banks and lending institutions across the country were left with over priced houses, and loans that would not be paid back. It has taken our great country many years to work out of this housing crisis. Prices, and real estate values are nearing, or back to, pre-bubble days. The current growth in the real estate market seems to be more sustainable than the growth leading to the mess we were previously in. Leading real estate economist, believe this year will continue to enjoy fairly good price increases, with prices leveling out in the next two to three years.

Now What?

The result of these problems mentioned are a series of new lending and appraisal practices. A person wanting to get a loan, now has increased scrutiny and more hoops to jump through. We have included guidelines courtesy of Patriot Mortgage. Unfortunately many people have damaged or destroyed their credit as a result of the real estate crash and associated problems. The attached link might be helpful in determining a home buyers credit worthiness.

2013 Realtor Booklet-quick guide copy

It is a good idea to learn what type of house a buyer is qualified to purchase. It is also important to monitor interest rates. This is significant because when interest rates go up, so do monthly payments. If a person was pre approved for a house with a monthly payment of $1,000 and interest rates jump a percent, they may need to adjust the price range they are looking in. Most lenders are willing to give this updated information with relatively short notice. It can save a lot of time looking for  a house when the field is narrowed to houses in the buyers price range.

St George Home Short Sales

Don’t Shoot the Messenger

When it comes to determining the price of a piece of property, emotions are definitely a factor. Ironically, both the seller and the agent have the same goal in mind, “Sell the Property” the challenge is getting both seller and agent to agree on a price. The value of a home can be estimated by a process known as a CMA or a Comparable Market Analysis. This process looks at the homes sold in a given area, taking into consideration differences in the homes, how long they took to sell, the number of bedrooms and bathrooms etc. This is not an exact science, but it has been working for many years. Once the figures are entered into the computer, a suggested price is given. Ultimately the home owner is the person that sets the price they would like to sell their home for.

But All of Our Children Were Born Here

Because of the emotional attachment many people have with their home many people think their home is worth more than the comparables indicate. This is where the challenge of listing a home lies. The agent will not make a commission and the home seller will not be moving on until the house sells. As with any industry there may be some agents who will accept a listing for a price that is unrealistic. The home owner will usually end up reducing their price to get it sold anyway. The agent will sometimes even lose the listing, because they set unrealistic pricing expectations. As we mentioned in the previous paragraph, the CMA can get a pretty close estimate of home value. We are happy to help anyone desirous of obtaining a CMA, even home owners that would like to sell their home on their own.

Apples and Oranges

The biggest challenge in using a CMA is trying to find two homes exactly the same to compare to each other. This is obviously impossible as no two homes are the same. This then opens the door to what are known as adjustments. Adjustments are not an exact science, and are always made to the properties being compared to the home that is for sale, rather than the Subject Property or home being listed. There are times when doing a CMA that the agent must use a little discretion, and estimate the cost to add a bathroom, or a bedroom.