Learn how foreclosures and short sales can save you thousands with our expert advice.
I wrote a blog last year talking about how short sales would slow down because Congress did not extend the Mortgage Forgiveness Debt Relief Act (MFDRA). Based on the real estate statistics for Tampa in January the number of short sales have decreased. I believe some of it has the do with the law not being extended and home owners have a little equity in their homes because of the price increases of 2013. Either way, it's good news that the short sale market is depleting.
Expired short sale tax relief may impact home sales
“According to Fitch Ratings, the recently expired tax relief provided by the Mortgage Forgiveness Debt Relief Act (MFDRA) of 2007 may lead to modestly negative pressure on liquidation timelines as potential short sellers hold off listing their home. The longer it takes for Congress to renew the tax forgiveness – assuming it does – the more home sales will be impacted.
The tax relief expired Jan. 1, 2014, creating larger tax burdens for underwater borrowers who receive some form of mortgage debt forgiveness. Without tax forgiveness, the IRS considers any capital forgiven by a lender in a short sale or foreclosure to be income to the homeowner, and it taxes it accordingly. The MFDRA provided tax relief by allowing certain borrowers to exclude such income on their tax returns. The act applied only to debt associated with a primary residence, and no more than $2 million of debt could be excluded per year.”
If you have any questions about the real estate market in Tampa Bay, please give me a call. I pull market statistics every month and have a great pause on the real estate market in Florida. I have been doing short sales since 1999 and am an expert in that field. Click here to visit my short sale webpage.
The plunge of the housing market roller coaster over the past few years is finally balancing out and coasting along an even track. Along with other homeowners across the nation, Tampa residents were subject to foreclosures. Short sales transferred their dream home to another. Better circumstances while home prices and interest are still low have those affected by these options wondering about the best way to buy a home.
Florida residents will find the Federal Housing Administration, commonly known as FHA, is a good place to start a new loan process. The mandatory down payment is lower and income qualification is more flexible. Banks are able to rely on FHA to insure loans, giving them more leeway with qualifications.
There are a few basic guidelines for those previously affected by short sale or foreclosure. A three year waiting period is observed until a person or family is eligible to apply for an FHA loan. Just like the lesson learned in English class, there are rules followed by exceptions to the rules.
Borrowers that pursued a principal residence short-sale agreement just to take advantage of the deteriorating market conditions are ineligible for a new FHA-insured mortgage.
If the mortgage was in default at the time of the pre-foreclosure or short sale, the 3-year eligibility waiting period starts from the date of the pre-foreclosure sale.
Exceptions are permissible if the borrower was in default due to circumstances beyond his or her control, such as:
- long-term job loss or layoff.
- death or long-term illness of primary wage earner (credit history prior to that situation must have been satisfactory)
FHA- insured mortgage eligibility states for each of the 12 months prior to a short sale, the payment must have been made on time, with other installment payments made during the month due.
Any borrower subjected to a deed-in-lieu of foreclosure or actual foreclosure during the last e years on any real property is ineligible for FHA mortgages.
Exceptions are allowed if the foreclosure was due to extenuating circumstances backed up with documentation, such as the death or serious illness of one of the wage earners. Good credit must have been reestablished since the foreclosure.
Two common events frequently resulting in foreclosure are divorce and the inability to sell property when relocating to another area. Neither one of those reasons is considered an extenuating circumstance.
If you have any questions or are considering the purchase of property in Tampa, Fl, please visit www.tampa2enjoy.com.
The recession displayed terms like short sales and bank owned homes so often it began to seem normal that so many thousands were losing their homes. Short sales gave homeowners the opportunity to sell homes rather than undergo foreclosure. A lot of paperwork is necessary, as the homeowner must convince the lender that without permission to proceed with a short sale, foreclosure will result. The lender either agrees to a discounted payoff or refuses to consider it. The current owner makes no money from the sale.
To help resolve the thousands of short sales in Tampa Bay and other parts of Florida, Bank of America made a dramatic move earlier this year to reduce approval time to twenty days. A waiting time of 180 days or more interfered greatly with offers from buyers and the ability of the homeowners to make a positive resolution in the disposal of property. Streamlining the process reduced the amount of documentation, such as pay stubs, and forms.
Gone is the image of dismal bank owned homes in Tampa Bay. Replace it with the image of a beautiful, well-kept home in the much-desired Wesley Chapel subdivision of Seven Oaks. It really does not matter that you work with your agent to get this home from the bank. The Community Center, pools, tennis courts and wonderful life in this beautiful area are yours to enjoy. The advantage is enjoying considerable savings on your purchase.
Waterfront homes in Tampa Bay may have seemed beyond your budget until you discover that some of these properties are bank owned, as well. Save tens of thousands of dollars off the market value and enjoy the beautiful view of the water from your tri-level home. Special features like a pool and the gourmet kitchen of every chef's dreams are yours, along with the instant equity with your purchase.
When property reverts to the bank, it must eliminate things like tax liens and delinquent HOA dues. The plus side is that a potential buyer can look at the home and decide what expenses will be involved to repair any problems. Adding anticipated expenses to the adjusted purchase price quickly indicates whether the home is indeed a bargain. Using other homes for sale in the neighborhood as comparison, you might find it is better to make an offer for one of them.
Click here to view all short sales in Tampa.
NAR President Moe Veissi praises new help for struggling homeowners. The Federal Housing Finance Agency on Tuesday announced measures to make “short sales” of underwater homes easier for homeowners, including extending help to people who have financial difficulties but haven’t missed mortgage payments.
View video from Moe at New Help on Short Sales
The housing market in Tampa has taken a turn for the better due to several factors, the first of which is the significant return to a seller’s market. One of the areas in Florida that is benefiting from the status of more buyers than sellers, the demand is driving up housing prices in Tampa Bay.
At the same time, short sales in Tampa are having better results with completion, reducing the amount of foreclosures and resulting in a better ending for all concerned. Accepting less than the balance owed is a less bitter pill for the lender than foreclosure. A new owner now has a desirable piece of property at the agreed price. The seller typically receives a 1099-C, used for cancellation of debt, by the end of January the following year. The amount forgiven is considered income and must be reported when filing taxes.
How have banks managed to find the way to improve the results of short sales? The inventory of distressed sales was moving slowly at first. Short sales, which accounted for more than half of that inventory, forced the banks to rethink their methods in working to get the sales closed. Approving the seller’s request for the property’s short sale meant reviewing the offer from the buyer and determining its merit. In addition, realtors in Tampa familiar with short sale requirements and forms assisted sellers with the documents needed to shorten the months of waiting for approval.
Other things that have affected the housing market around Tampa are low home prices and the opening of new businesses and centers. The unemployment rate is dropping as more positions become available. As potential homeowners and investors take note of the stimulated economy in the area, homes are being bought up, leading to the seller’s market previously mentioned.
Homeowners that have been considering putting their property up for sale recognize the signs of recovery. If there is no pressing need to list their home at this time, such as relocation or late payments, the prospect of waiting for a higher selling price induces them to wait. That has contributed to the inventory reduction, bringing it down to a three-month supply. The result emphasizes the need for additional for-sale properties, as this is the time of year when families traditionally consider moving to another area.
Over the last several days I have been getting quite a few questions from people and the main one seems to be, what is better to buy a bank owned property, REO, or short sale.
First, let me define a couple of things for you, as far as REO. REO stands for real estate owned so it could be a bank owned property or maybe a corporation like a relocation company would have real estate owned.
The second one would be the foreclosure. Now, foreclosure is the legal process that the bank is going through to get the home back. So if someone passes away and obviously not making their mortgage payment the home is going to be in a foreclosure or if it is a short sale and the seller has stopped making their mortgage payment because maybe they cannot sell it because they are upside down on it, that would be a foreclosure.
Most of them are going to be bank owned as far as the REOs and most of them in the foreclosures are going to be short sales, so it really comes down to what is better a short sale or a REO.
In my opinion, I would take a bank owned property 10 times out of 10 over a short sale for several different reasons.
When it comes to bank owned, the bank will make up their mind relatively quick. If an offer is submitted then they will usually make up their mind two to five business days from the time it is submitted. Now a lot of times the banks put the property on for a real low price because they want to force multiple bids. Well, you are paying based off what the home's value is not what they are asking or at least I should hope you are doing that. You could certainly get a real good deal with a bank owned property in a lot of situations. Now it comes down to supply an demand, if you are in an area like New Tampa, Riverview, Westchase, or subdivisions like Tampa Palms or Cheval, there is going to be a lot of demand. So you are not going to be able to get such a good deal unless the home is just absolutely destroyed or beat up to some degree where most buyers cannot buy it unless they are paying cash or rehabilitating it with hard money.
The problem is when it comes to short sales is this. Short sales can take a very long time from the time you submit the offer it could take anywhere from two weeks to two months to four months just to hear back from the bank. Now while you are waiting two or three months to hear back I guarantee you there is going to most likely be, unless you are very, very particular in what you want, some good deals coming up either on a traditional sale or a bank owned property that would probably meet your criteria. So you are going to be missing a lot of them. You could wait, and I just had this happen today, my buyers have been waiting three months for a property they like, probably had some that they could have bought, and the bank wanted the seller to sign a note and the seller refused to sign it so the deal is done. Now after three months the buyers are back looking all over again. They new this could happen because I went over this with them.
You have other things in short sales that could happen, it could be vandalized because of how long it stays on the market and not being lived in, you could have the seller decide to come back in the property because they have the key and take fixtures or take appliances or dump concrete down the pipes or even gut the home. You could have the bank where they went out and did their evaluation of the property and they used someone to do the evaluation that was brand new in the business and did not know what they were doing or they are coming from four counties over doing a whole bunch of BPOs not knowing what they are doing and they bring the property in at too high a price. The home is worth maybe $150,000 and the person doing the evaluation brings it in at $180,000 and the whole deal is killed and you do not know this for several months later. That is the biggest problem with short sales.
If you are looking for a deal, if that is your goal, then I would probably focus on bank owned if I were you. There are not nearly as many bank owned out there but you know the bank wants to sell it because they actually own the property. On a short sale the bank does not own the property so it does not really matter. Of course the bank wants to sell it but the problem is the negotiator, who is the decision maker for the most part, they are getting paid their weekly, monthly, or biweekly paycheck no matter what so they really do not care and they really have that attitude when talking to them on the telephone.
Again, obviously as a buyer if you find the perfect home in the perfect subdivision and it is a short sale and you just love it and you want to wait that is okay. But if I had my druthers and I had to pick between a bank owned and a short sale, I would never pick a short sale. It is just way, way to long of a process and there are no guaranteed results. There are no guaranteed results with anything, but I do not want to find out two and three months later that we did not get the property.
Over the last several years there has been an absolute plethora of information on the Internet regarding short sales and foreclosures, and when I say foreclosure, I mean in the process of being foreclosed on. A lot of the information on the Internet is good but in my opinion most of it is bad, and a lot of people giving it just do not understand short sales and how they work.
The two main reasons why short sales do not work are:
1. The buyer is not properly educated in how long this process could take.
2. The bank just does not get the deal worked out for several reasons.
The reason number one with how long the short sale is taking, these banks are marching to the beat of their own drum and they are absolutely buried. It could be a month, a week, two months, three months; it just depends on how long it is going to take the bank to get back. Most banks' attitude is do not call us we will call you.
The other reason is that the deal is just not getting approved because the buyer is just not offering enough money. There are some other reasons I am going to bring up as well that piggy back on this. Please take what I say with a grain of salt, see if it makes sense to you, and do some more homework on this.
We specialize in Tampa Bay, FL foreclosures
But let us use for an example an imaginary home and it is priced at $200,000. You have to understand, the bank does not own the home, the seller still owns it, and the bank does not put the price on the home, the seller and their real estate agent put the price. So they list it at $200,000, but the problem is the property is really worth, $250,000. A buyer goes out there, they put an offer on the home for a $190,000, after two weeks or two months the bank sends their BPO (Broker Price Opinion) agent out there and they do the evaluation on the home. They show it comes up to be worth $250,000. The deal is not going to work out and here is the reason why. Let us say the bank on the property is Bank of America, there is an 85% to 90% chance that Bank of America does not own and control that mortgage. It is usually someone like Fanny May, Freddie Mac, HUD, VA, Private Mortgage Insurance Company, or maybe an investor and they all have guidelines, they do not look at each individual case.
Example: Fannie Mae, their guidelines state that they can only take 85% net, it does not make any difference what the that appraisal or BPO came in at. Whether it came in at $200,000 or whether it came in at $300,000, guidelines state that Bank of America can only take 85% net of that. So 85% net, that is after all the attorney fees are paid off, any real estate commissions are paid off, any title insurance, escrow fees, if it is a homeowners' association back homeowners' association dues and penalties, back taxes, etc., it can only add up to 85%. So as much as they might want to sell the home and get it off their books, that is just the guidelines.
Now there are a lot of other reasons. Sometimes you have two mortgages, the first mortgage will only want to give the second mortgage maybe $3000 to relinquish their lien and the second mortgage wants $10,000. Other things that could happen are the seller ends up going in there and vandalizing, taking stuff out of the home when they move out. I have had sellers completely gut homes, there are no kitchen cabinets in, there are no counter tops, there are no air conditioning units or handlers, and there is just nothing there.
So there is certainly a lot of liability, certainly the more liability the better price you will get, but really keep in mind when you are looking at buying a foreclosure or a short sale just look at the comparisons in the area. If it seems like it is too good a deal to be true, it probably is. They are going to have to use, unless it is VA. VA only requires three solds, but if they do a BPO, everybody else they are going to use three actives and three solds. By all means have your real estate agent out there when they do the BPO to make sure they have the proper data, because a lot of times BPO agents do not.
I hope this helps you and gives you a little insight on how to buy a short sale. So if you have any questions, feel free to get a hold of us at www.tampa2enjoy.com. We would be more than happy to answer any questions you have.
For those thinking about buying a Tampa foreclosure, condo or other property there are several credit considerations to take into account for the new economy. By now everyone has heard about the banking crisis taking place but it hasn’t yet reached the average consumer – until now. Credit cards, home equity lines of credit, mortgages and even car loans are beginning to get tighter. Larger down payments and stricter lending standards are beginning to take a toll on the average buyer.
Despite the economic uncertainty, now is a great time to buy a foreclosure. Prices are low and banks are willing to negotiate short sale offers especially on properties that may require a little additional work. Here is how to make sure you still qualify for the best rates and ultra-low selling prices:
1. Check your credit in advance. Work with all four (yes, Four) credit rating agencies listed below:
• Equifax: P.O. Box 740256 Atlanta, GA 30374. (800)-685-1111 www.equifax.com
• Experian: PO Box 2002 Allen, TX 75013. (888) 397-3742 www.experian.com
• TransUnion LLC: P.O. Box 2000 Chester, PA 19022 (800) 888-4213 www.transunion.com
• Innovis: P.O. Box 1358 Columbus, Ohio 43216 (888-567-8688) www.innovis.com
Notice, although Innovis is the lesser known of the credit agencies, they work closely with the mortgage market – much closer than some of the other credit agencies that target credit card/other consumer loans. When applying for a mortgage it is imperative to check Innovis.
2. Keep a solid debt-to-income ratio. If your credit cards, car loans and other debt is near the limit, take time to pay down some before applying for a mortgage. Stricter lending standards are increasingly resulting in reductions in credit lines so leave a little wiggle room prior to shopping for new homes.
3. Watch your banker. Remember how your grandmother used to say you were judged by the company you keep? Well, credit agencies are beginning to use the same criteria; where you shop, what you purchase and other banking – as well as lifestyle habits – are increasingly used s credit criteria when approving loans or rates.
The combination of deeply discounted Tampa Bay foreclosures / short sales and bank owned properties combined with historically low interest rates is a recipe for success. Take the time to implement these quick credit considerations to lock in great rates and even better buying opportunities in this once in a lifetime buyers market.
Tampa Palms is a popular area of Hillsborough especially among young influential home buyers and those that appreciate greenbelt sports or country living with modern convenience. If you have been searching for a place to call your very own then keep reading to find out if Tampa Palms is the destination of your dreams.
The number and price of Tampa Palms home sales hit its peak in 2005 with sales holding strong well into 2006; by summer of 2008 the median price of home sales in the 33647 zip code has fallen from a high of approximately $350,000 to under $250,000 making it a prime opportunity for those searching for bargain priced Tampa homes for sale.
Tampa Palms is conveniently located just outside the major metro areas of Tampa making it an accessible route for work, school or play but with the peace and privacy that only low density living can provide. With just over 620 people per square mile, Tampa Palms is definitely considered “low density”.
Property taxes remain relatively low with an average household paying $3,355 annually compared to a state-wide average of $1,260 annually. Keep in mind, most homes in the Tampa Palms area are newer, having only been built in recent years. There are also very few mobile or manufactured homes and relatively few rental units.
The demographics of the area are as follows:
• White population: 21,747
• Black population: 1,541
• American Indian population: 54
• Asian population: 1,806
• Native Hawaiian and Other Pacific Islander population: 15
• Some other race population: 503
• Two or more races population: 624
The median household income for Tampa Palms is over $74,000 compared to only $42,000 for Florida as a whole, making it a strongly middle class area predominated by families with children. Roughly 90 percent of home in the area have a current mortgage with an average monthly cost of $1,600.
Of potential interest to investors and foreclosure buyers, it is estimated that only 400 homeowners in the area have a second mortgage and less than 600 have a home equity loan. No records exist for homeowners with both a second and HELOC; translated to practical considerations this means the price of homes in the area has dropped dramatically in some instances but there is reason for optimism when approaching a short-sale since there are few secondary liens to content with when making an offer. If you are interested in purchasing a house in Tampa Palms, foreclosure or making a short sale offer then speak to a reputable and knowledgeable agent to gather comps and other recent data to support your position