Short sales have quickly become the method of selling a home in Las Vegas. This is for a number of reasons and the main reason is because of necessity. With so many home owners in Las Vegas owning far more than their home is worth, there often seems to be no other way to keep the real estate market alive. It can be said that this is a good deal for home owners but it really is just a way to move on with life. As people have begun to realize Las Vegas Real Estate is not going recover quickly, if ever, they have decided it may be better to get out from under their mortgage debt now. Of course the government has added an incentive to this by creating the mortgage debt relief act but that will soon be over and people will be left to other devices to figure out how to deal with their outstanding mortgage debt.
It is a given that the IRS wants to get their share of every one's pie and when people face crisis, such as short sale or foreclosure, the IRS still thinks that is a blessing for you because you have had debt relief. They failed to understand that most of the time hardship is the reason for people having to leave their home or be evicted. But the often unknown fact is that any amount of debt that is reduced, the borrower has to report that as income on their tax forms.
During the recent real estate and housing meltdown, the government decided to give people a break on this so called "income". They Mortgage Debt Relief Act was created and will be ending as of December 31, 2012. Right now the debt relief home owners receive is not considered taxable because of this law. It was only a temporary law that was to be phased out. Most people had no idea that the real estate crisis would be so long nor did they think the economy would be so bad this far into the crisis. However, Las Vegas is still in the very deepest part of the housing crisis and still over 70% of home owners are underwater. This has created a void of inventory and with out the short sale option, real estate business would have been ground to an absolute halt. This relief act was really just another form of government stimulus to give some lift to the economy.
Las Vegas would be in even worse condition if there were no short sales. It would mean no inventory and absolutely no business for Realtors. Unfortunately the desperation of Realtors and Real Estate companies has often pushed people into short sales when it really many not be the best option. This will prove to be even more the case after the first of the year as Realtors will push for business. Already realty company executives are lobbying the government and Presidential candidates to keep the debt relief act in effect in order to keep the real estate business afloat.
I suspect there might be a conspiracy between the banks and the government that will rear it's ugly head after the election. It will be the perfect opportunity for banks to put their REO property back on the market and command premium prices because their will be no competition. The inventory could easily shift back to 70% bank owned homes as people figure out they can not afford the tax bill that comes with a short sale. There will be no options for sellers unless they are insolvent. See www.consideritsoldlasvegas.com for an article that discusses the insolvency issue and how to figure out if you may qualify.
Wednesday, October 31, 2012
Tuesday, October 16, 2012
Short Sale Process May Difficult in Some Cases
If you are considering a short sale and have a home that is in need of repairs you still may be able to get the bank to work a deal with you. If you start the process with your bank work and work with your Realtor to get a pre-approval for the short sale you will have a shot. Initiate the contact with your bank and tell them you are interested in doing a short sale and that you have already chosen a Real Estate Agent. The bank will initiate contact with the realtor and get the paper work in order that is necessary to do the short sale. Sign everything and return it as soon as possible.
Your agent will then be contacted by the bank in order to set up an appraisal of the property. The bank in essence will be telling you the listing price. If you have approved already you have cleared a major hurdle. It really doesn't matter what the appraisal comes in for because the bank is already agreeing to work with you to the best of their ability and to forgive a portion of your loan. You will not know how much until the final closing but if you get through the appraisal process and get a willing buyer at market value it is likely you will be getting a significant reduction in your balance owed.
1. The bank can forgive the entire difference and push the sale through.
2. The bank can forgive the entire difference and offer you cash relocation assistance.
3. The bank can forgive a portion of the difference and work out a payment plan for you to a portion of the difference between the sales price and the loan amount.
4. The bank can forgive a portion of the difference and agree to push sale through if you pay one lump sum at time of closing. This could be $1000, $5000 or any amount. It is called "seller participation" and it can be seen as the cost of getting your mortgage reduced by a significant amount. It really just amounts to a fee for getting to unload your underwater home. This is not the most common outcome.
5. The bank can deny the short sale based on the type of loan, number of investors for the loan or lack of reasonable hardship on the part of the seller. They probably can deny the short sale just because the negotiator has a bad day, but for the most part once you get this far into the process, everyone seems to be working toward a common goal. The goal being to get you out from under your mortgage and get someone else into the home at a lower price with accurate paperwork and records. This may not be the common goal to the current homeowner but if the situation has come about that the short sale is the best possible outcome, then it is to the benefit of everyone involved.
It is unfortunate that it has come to this in our real estate market but the reality has to be addresses and it is a sad but true fact that some of these home in Las Vegas will never be equal to the value of their current mortgage. It is a shame and it can be a recipe for hopelessness but the short sale gives one of the least harmful options. People at times also may have to make a decision to walk away from a property if the bank will not work out a deal with them.
However, if you do decide to walk away, remember you will also be getting hit with a tax bill on the amount of debt forgiven in a foreclosure. If you can get the property sold and closed before the end of 2012 in a short sale, you will not be taxed on the forgiven debt amount. As of today this law will no longer be in effect as of January 1, 2013. This is extremely important to consider if you plan on doing a strategic default and choose to walk away from your property. Unless you can show you are completely insolvent, (your liabilities are more than your assets) at the time of the abandonment of the property, you will be held responsible for the difference between what the property sells for and what you owed. This will come in the form of a 1099 that is reported to the IRS. It will then have nothing to do with the bank and the tax collectors will be expecting some kind of payment when you do your tax returns.
Call today and discuss your options for a short sale or a traditional sale. You may even be a good candidate for a loan modification. This is a good place to start as well because many banks will want to go through the modification application and process before you opt for a short sale.
Chris LaHaie
Prudential Americana Real Estate
www.consideritsoldlasvegas.com
702-338-8526
Your agent will then be contacted by the bank in order to set up an appraisal of the property. The bank in essence will be telling you the listing price. If you have approved already you have cleared a major hurdle. It really doesn't matter what the appraisal comes in for because the bank is already agreeing to work with you to the best of their ability and to forgive a portion of your loan. You will not know how much until the final closing but if you get through the appraisal process and get a willing buyer at market value it is likely you will be getting a significant reduction in your balance owed.
1. The bank can forgive the entire difference and push the sale through.
2. The bank can forgive the entire difference and offer you cash relocation assistance.
3. The bank can forgive a portion of the difference and work out a payment plan for you to a portion of the difference between the sales price and the loan amount.
4. The bank can forgive a portion of the difference and agree to push sale through if you pay one lump sum at time of closing. This could be $1000, $5000 or any amount. It is called "seller participation" and it can be seen as the cost of getting your mortgage reduced by a significant amount. It really just amounts to a fee for getting to unload your underwater home. This is not the most common outcome.
5. The bank can deny the short sale based on the type of loan, number of investors for the loan or lack of reasonable hardship on the part of the seller. They probably can deny the short sale just because the negotiator has a bad day, but for the most part once you get this far into the process, everyone seems to be working toward a common goal. The goal being to get you out from under your mortgage and get someone else into the home at a lower price with accurate paperwork and records. This may not be the common goal to the current homeowner but if the situation has come about that the short sale is the best possible outcome, then it is to the benefit of everyone involved.
It is unfortunate that it has come to this in our real estate market but the reality has to be addresses and it is a sad but true fact that some of these home in Las Vegas will never be equal to the value of their current mortgage. It is a shame and it can be a recipe for hopelessness but the short sale gives one of the least harmful options. People at times also may have to make a decision to walk away from a property if the bank will not work out a deal with them.
However, if you do decide to walk away, remember you will also be getting hit with a tax bill on the amount of debt forgiven in a foreclosure. If you can get the property sold and closed before the end of 2012 in a short sale, you will not be taxed on the forgiven debt amount. As of today this law will no longer be in effect as of January 1, 2013. This is extremely important to consider if you plan on doing a strategic default and choose to walk away from your property. Unless you can show you are completely insolvent, (your liabilities are more than your assets) at the time of the abandonment of the property, you will be held responsible for the difference between what the property sells for and what you owed. This will come in the form of a 1099 that is reported to the IRS. It will then have nothing to do with the bank and the tax collectors will be expecting some kind of payment when you do your tax returns.
Call today and discuss your options for a short sale or a traditional sale. You may even be a good candidate for a loan modification. This is a good place to start as well because many banks will want to go through the modification application and process before you opt for a short sale.
Chris LaHaie
Prudential Americana Real Estate
www.consideritsoldlasvegas.com
702-338-8526
Monday, October 15, 2012
4 Tips for Selling in this low inventory market
There are really several things you can do to try and get more for you home in this low inventory market that is occurring now in Las Vegas. You could possible take what may have been a short sale and turn it into an equity sale. Some people just needed the values to come up 10 or 15% to get over the hump and now we have seen that amount of appreciation and more in Las Vegas. We have even seen many homes selling with multiple offers at well above list price. So what are the best ways to try and get the most for your home in this market?
1. Price the home within reason even though there is not much on the market. Yes you can price the home a bit higher than in a normal market but one of the biggest mistakes is price the home too high and push buyers away. If you price it accordingly, even at the top of the price range, you have a better shot at getting multiple offers. Over pricing a home can cost you in the long run because if it sits on the market long enough, the percentage you get of the listing price usually goes down.
2. Be sure to give ample time for interested parties to view the property. Try giving buyers a 5 day window before you will consider offers. Let buyers know that offers will be accepted on day 5 and that you will be looking for the best offer and best terms at that time.
3. Consider stipulating that the price will not be subject to an appraisal. Often homes are being sold for more than listing price but the appraisal comes in too low. You plan ahead for this and make sure only buyers who have the cash to make up the difference in case of a low appraisal be considered.
4. Be sure you use an agent that is a skilled negotiator. Negotiating contracts is a very subtle art form and it often goes unnoticed. However, if you have a skilled negotiator you can nearly always get a few thousand extra dollars in your pocket.
If you are considering selling your home in Las Vegas call me today. I will evaluate your situation and make sure you get the most possible for you home in the proper amount of time. I have nearly 20 years experience in buying, selling and negotiating real estate contracts. I will always provide the best possible service while doing what is best for my clients.
Chris LaHaie
Prudential Americana
702-338-8526
chrislahaie@gmail.com
chrislahaierealestate@gmail.com
1. Price the home within reason even though there is not much on the market. Yes you can price the home a bit higher than in a normal market but one of the biggest mistakes is price the home too high and push buyers away. If you price it accordingly, even at the top of the price range, you have a better shot at getting multiple offers. Over pricing a home can cost you in the long run because if it sits on the market long enough, the percentage you get of the listing price usually goes down.
2. Be sure to give ample time for interested parties to view the property. Try giving buyers a 5 day window before you will consider offers. Let buyers know that offers will be accepted on day 5 and that you will be looking for the best offer and best terms at that time.
3. Consider stipulating that the price will not be subject to an appraisal. Often homes are being sold for more than listing price but the appraisal comes in too low. You plan ahead for this and make sure only buyers who have the cash to make up the difference in case of a low appraisal be considered.
4. Be sure you use an agent that is a skilled negotiator. Negotiating contracts is a very subtle art form and it often goes unnoticed. However, if you have a skilled negotiator you can nearly always get a few thousand extra dollars in your pocket.
If you are considering selling your home in Las Vegas call me today. I will evaluate your situation and make sure you get the most possible for you home in the proper amount of time. I have nearly 20 years experience in buying, selling and negotiating real estate contracts. I will always provide the best possible service while doing what is best for my clients.
Chris LaHaie
Prudential Americana
702-338-8526
chrislahaie@gmail.com
chrislahaierealestate@gmail.com
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