Short sales soon to be more costly for sellers

The Mortgage Debt Relief Act of 2007 expires December 31. This may not sound important, but what the act does is relieve those people selling their homes for less than is owed to the bank of any tax consequences (in most cases).




There are currently 11 million homeowners more than 90 days past due on their mortgage and some of them could get a a "relatively" new start if they could sell their home instead of going through foreclosure. However, the current law will be expiring soon and the short sale process is notoriously slow.



I am not advocating short sales, I would much rather see home owners ride out the down time and that can often be done with a refinance using one of the Freddie Mac, Fannie Mae, FHA or VA programs for underwater customers. However, there are home owners that need to move and a short sale is the way to get that done.



This area is starting to see a turn around in the real estate market and property values are following, although slowly. A Realtor(r) specializing in short sales is the best way to go if needing to get the process accomplished. A mortgage lender that is fast and efficient is invaluable when needing to close on a short sale after approval has been received from the owning bank. If looking to refinance under one of the above programs, contact a reputable loan officer for assistance. I would suggest looking in the region, rather than a national chain (which are often just lead generators) due to speed, accuracy and cost.



Right now is the time to get the ball rolling. Rates have been and continue to be at historic lows for those refinancing and the sooner the short sale is behind, the sooner the seller can start re-establishing their credit.


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US Home Prices Rose for Sixth Month in a Row: Case-Shiller

U.S. single-family home prices rose for a sixth month in a row in July, though the improvement was not as strong as expected, a closely watched survey showed on Tuesday.


The S&P/Case-Shiller composite index of 20 metropolitan areas gained 0.4 percent in July on a seasonally adjusted basis, shy of economists' forecasts for 0.9 percent, according to a Reuters poll.

On a non-adjusted basis, prices fared better, rising 1.6 percent.
National home prices increased 1.2 percent in July compared with the same month a year earlier. It was the second straight year-over-year gain after two years without one.
Six years after its collapse, economists believe the housing market has turned a corner. The home price data confirmed "recent good news'' about the sector, David Blitzer, chairman of the index committee at Standard & Poor's, said in a statement. "All in all, we are more optimistic about housing. Upbeat trends continue."

The Disappearing of the Ghost Inventory

A large private equity firm says it’s embarking on a plan to buy homes across the country and turn them into rentals.

The Tampa Bay Times reports Blackstone intends to buy $1 billion in properties in that region over the next three years. Peter Rose, a spokesman for Blackstone, said Friday the firm has started acquiring homes “in a number of cities across the U.S.” but added that the amount of money spent in any one city would be a “tiny fraction” of $1 billion.

Rose declined to identify markets that New York-based Blackstone is targeting. He said the firm is working with local real estate agents in the various communities.

t’s a fundamental belief that the housing market in certain cities is stable, the economy is improving and people need affordable places to live,” Rose said. “The combination of all that makes this an attractive opportunity.”

. David Dweck, founder of the Boca Real Estate Investment Club, said he hasn’t seen anything specific either, though he has heard rumbling

www.RWSF.com

Deadline looms for short sales

Like many South Floridians, Victoria Woolford is trying to sell her home for less than she owes -- while doing her best to brush off the nagging reminder of a ticking clock.




Unless Congress grants an extension, a law created in 2007 to help troubled homeowners expires at the end of this year. It allows them to avoid paying taxes on forgiven debt for their primary residences.



Some sellers will face daunting tax bills once the law expires. If, for example, a lender wipes away a $100,000 debt in a short sale, the typical South Florida borrower could owe more than $25,000 in taxes. The only way to avoid the hit would be to file for bankruptcy.



Because lenders often take several weeks or months to approve short sales, homeowners who don't start the process soon are likely to miss the deadline, real estate agents and lawyers say.



"We don't want to scare anybody, but they can do the math," said Joe Kohn, a Fort Lauderdale real estate lawyer.



Woolford paid $320,000 for a four-bedroom house near West Palm Beach in 2010 but says it's worth only about $250,000 now. Because of a pay cut, she applied for a short sale this spring, but she said the buyer walked away as the deal dragged on without a resolution.



The aviation consultant said a second buyer is getting antsy, and there's still no word from the lender, Wells Fargo.



After what she's been through already, she can't fathom the possibility of a big tax bill to boot.



"If you can't afford the mortgage, how can you afford the taxes?" said Woolford, 39.



The Great Recession combined with plummeting home values have left millions of Americans in a financial crisis over the past six years.



More than 412,000 South Florida homeowners are "underwater," owing more than their properties are worth, according to real estate website Zillow.com. It could be a decade or more before values return to a level that allows these homeowners to break even in a sale.



In many cases, a short sale is the best option for escaping a burdensome mortgage. The seller avoids foreclosure and often can negotiate with the bank to reduce or eliminate the deficiency – the difference between what's owed and what the house sells for.



Since 2007, more than 53,000 homeowners in Palm Beach and Broward counties have completed short sales, according to the RealtyTrac listing firm. Over the same period, lenders have repossessed nearly 85,000 homes in the two counties, RealtyTrac said.



To apply for a short sale, a homeowner must have a financial hardship, such as a job loss or large medical expenses. New government guidelines that take effect in November allow for a short sale if the homeowner must relocate more than 50 miles away for a job transfer or new position.



After finding a buyer, the seller submits to the lender the written contract, along with pay stubs, bank statements and tax returns. Then the waiting begins.



Even though the short sale process has improved in the past year, with banks responding to offers more quickly, delays are still common, agents and sellers say.



Given the depth of the housing bust, the law should be extended for at least another year to give borrowers relief and to help clear the glut of distressed mortgages, said Guy Cecala, publisher of the Inside Mortgage Finance newsletter.



While there appears to be bipartisan support for keeping the law, some analysts say an extension may not come until after the presidential election in November.



Others say the law may well expire, but Congress could grant an extension early next year and apply it retroactively.



Because of the uncertainty, homeowners should assume no extension is coming, said Jim Heidisch, broker with Campbell and Rosemurgy in Pompano Beach. He said many of his clients are stunned to learn of the looming expiration.



As the end of the year draws closer, short sale applications are likely to increase, and the backlog could result in frantic homeowners struggling to close, real estate professionals say.



"I'm not making any plans for Dec. 31," said Gary Singer, a real estate lawyer in Sunrise. "I expect to be in the office very late."



Powers@tribune.com, 561-243-6529 or Twitter @paulowers





Copyright © 2012, South Florida Sun-Sentinel

6 low-cost marketing ideas to get noticed

 You don’t need to break the bank to expand your marketing efforts and build connections, marketing expert Julie Ryan, with Strategic Thinking in Australia, told a crowd at the Marketing Without Money session during the National Association of Realtors® (NAR) 2011 Realtors® Conference & Expo in Anaheim, Calif. “If you have a tight budget, you tend to be more focused on making sure every single dollar works harder,” Ryan said.

Regardless of how large or small your budget is, make your marketing message stick by focusing on three core areas: Impact (offering a message of value to clients), frequency (making contact a minimum of at least three times in three weeks to get people to remember you), and building relationships to form lasting connections.

Ryan suggested some of the following low-cost marketing ideas at the session:

1. Offer congratulations: Scan the local newspaper in search of good-news stories, such as people in the community earning an award or a job promotion, and then send a note congratulating them on the feat. That pat-on-the-back recognition makes you memorable and helps you build connections with people in your market, Ryan said.

2. Provide a special touch: To give your message more impact, print out an invitation to an open house for your listing and roll it up and tie it with a ribbon. Then, place it in door hangers on neighbors’ doors, mail the rolled-up invitation in a cylinder or even hand-deliver it.

3. Show time: Create videos showing off your listings and post them on sites like YouTube to expand your reach. Also, consider creating videos of your community that explain what it’s like to live and work there, or that answer common real estate questions, Ryan suggested.

4. Try location-based social media: Sites like Foursquare aren’t just for checking-in to local areas, but you can use them to leave tips and relevant, helpful information at every single location your customers are likely to frequent – such as local restaurants or where to find the best views in the city.

5. Be a valuable resource: Once you’ve identified something your customers are interested in, set up a Google Alert to monitor that topic so you’ll get a notification when something matching those keyword terms surfaces on the Internet. You can then pass the message along through an e-mail or quick phone call to let your client know about something they may not know about yet. It’ll help you build stronger connections with consumers, Ryan said.

6. Reach out to the community: Instead of just writing a donation check to schools or charitable groups, try offering up an award that you can present or hosting a special event with community involvement. For example, present a book award at a middle or elementary school to a student for a job well done, or hire the local elementary school band to play at your upcoming auction or as part of a special event at your office.

Home-appraisal complaints rise in volatile resale market

Leesburg resident Russ Sloan knew something was wrong when an appraiser valued his home at $113,500.

Sure, the housing market had crashed since he and his wife paid almost twice that amount for their three-bedroom home five years earlier. But Sloan suspected the appraisal had compared his house to some distressed properties

"Three of the six comps were short sales or foreclosures, and two of them were houses on the market without sales prices," said Sloan, who filed a complaint with the state. "There was no adjustment for the distressed ones he used."

Complaints about appraisers in Florida have edged up this year for several reasons: More people are getting appraisals so they can refinance their mortgages; prices have increased so much this year that sales comparisons are quickly outdated; few properties are listed for sale, making comparisons difficult; and distressed sales still dominate the market, dragging down the value of "regular" homes with paid-up mortgages or no mortgage at all.

"We are transitioning so fast that most people can't keep up with it," said Joyce Potts, president of Southern Appraisal Group Inc. in Altamonte Springs. "In a transition market, either up or down, you have to acknowledge the lack of inventory and adjust accordingly."

Resale prices in the core Orlando housing market have increased 16 percent just since the beginning of the year, hitting a midpoint price of $125,750 in July, according to the Orlando Regional Realtor Association. In addition to contending with such fast-moving prices, appraisers in the core market must assess current market conditions with only a 3.4-month supply of homes listed for sale — about half the inventory considered healthy for a balanced market.

And if appraisers are deciding the value of a regular house, the odds are good that they will have to compare it to some foreclosures and short sales because, even now, slightly more than half the homes for sale in the Orlando area are such distressed properties.

Potts said appraisers are forced to weigh whether they should include foreclosures when determining the value of a regular home. In cases where a clear majority of the sales in a given neighborhood arediscounted, distressed transactions, she said, they will tend to define the value of all homes in that particular area.

The home-appraisal business changed significantly in 2009, after the nationwide housing bubble burst, when Freddie Mac agreed to follow new rules outlined in the Home Valuation Code of Conduct. The code was part of a legal settlement between the giant federal mortgage backer and the New York State Attorney General's Office, which investigated charges that lenders had pressured appraisers to set homevalues high enough that sales would close without complications.

Under the new rules, appraisers are supposed to keep their distance from lenders; often they do this by working through appraisal-management companies that have come to control the industry since the reforms took effect.

Under new rules or old, appraising real estate is a challenging task, said Orlando Re/Max agent David Welch. He said he meets with appraisers at homes under contract and explains how why the sales price makes sense based on everything from school districts to transportation. Welch said he also details why certain other sales should not be considered comparable to the one being discussed.

"It's a daily event that you hear about folks having issues with appraisals," Welch said. "Appraising is a very difficult job. You're always looking behind you, and the market is different today than a few months ago."

In Sloan's case, the Leesburg resident was so unhappy with the appraisal done on his house in October that he complained to the state Department of Business and Professional Regulation. He's not alone: Through the first seven months of this year, 373 Florida property owners have complained to the department about appraisals; during the same period last year, 327 complaints were filed.

The state did not side with Sloan. He said he was disappointed because the appraiser had used erroneous information about one of the comparable properties.

Yet his complaint was validated in another manner: Two months ago, another appraiser pegged his home's value at $144,500 — more than $30,000 higher than the judgment of the October appraisal.

mshanklin@tribune.com or 407-420-5538