November 2009 Newsletter
Go Broncos! This year, the Broncos are 6 and 1, and we are leading the division. According to the “experts,” we were only supposed to win 4 games this year! The sports commentators remind me of the financial gurus. Neither seems to know what they are talking about. I believe I’m doing better thinking on my own and not worrying about the negative naysayers.
Some good news! Real Estate sales for October were up 18% over the same period last year. There were 39 sales this October versus 33 last October. Year-to-date sales are down 29%, which is a 3% improvement over last month.
I attended our annual Real Estate Convention a couple of weeks ago, which is always fun, especially since it is held at the Broadmoor – a 5-Star facility. The Convention serves several functions, such as networking with other Realtors from around the state. The educational classes are great, and I really enjoy the motivational speakers. Just “getting out of Dodge” for a few days can do a great service by refreshing my mindset.
The most beneficial thing I pulled from this session is what short sales are all about. It is a very complicated and very misunderstood process. Here is the Reader’s Digest analysis:
If you purchased a home in the past 3 years, there is a very good chance you are upside down on your mortgage. You owe more than your home is worth. So, a lot of you who want to sell are asking the bank to take a loss. In order for the bank to consider this, they need to know you cannot make the payments due to a change in your financial situation, a job loss, health issues, etc. To prove this, you need to have a hardship letter. Additionally, the bank will want to see your last two tax returns. Also, you will be required to provide your last two pay stubs for both you and for your spouse. The bottom line is the bank will only consider a short sale if you are destitute.
There are about 80,000 people per month asking for a short sale. In order to get your bank’s attention, you must dot all the I’s and cross all your T’s. The package you send to your bank is typically 60 to 100 pages long, and it must be complete, or it will just sit in a pile on someone’s desk going nowhere. If you decide you are a candidate for a short sale, it is critical that you get both tax and legal advice. If you don’t, you might find you have to pay taxes on the amount “forgiven” by the bank, or you may have to pay the shortfall yourself. This could be devastating.
Only 50% of short sales ever actually happen. The process will probably take 3 to 9 months to complete, and most buyers are not willing to wait. From a buyer’s perspective, bank repos are a much better way to buy. Further complicating a short sale is the fact that many Realtors are hesitant to show or promote a short sale property. Realtors know the headaches and complications that are bound to arise during the long, unpredictable process, and they often don’t want to deal with a “tainted product.”
If you are considering a short sale as either a buyer or a seller, give me a call or email, and I will give you some contacts to help you go through the maze of uncertainty.
We are quickly approaching the Holiday Season. I sincerely wish you and your family a great Thanksgiving. I also want to thank our troops for a job well done.