Short Sales 101 - Could This Be the Answer To Your Problems?

According to the latest Realtors Confidence Index (RCI), one out of every 10 recent homes sales has been a short sale. What's a short sale you ask? A short sale is when the lender agrees to let the homeowner sell their home for less than what they owe that lender to avoid a foreclosure, which can be a win-win for both the seller and the lender. How can this be? Typically a foreclosure will cost the lender more than taking less than what is owed on the property due to legal fees. The win for the seller is the fact that they will be able to get another home loan within 24 months after the short sale. Those looking to get a home loan that have been foreclosed on would have to wait at least 5 years.

Something a potential buyer of a short sale property needs to remember is that yes, you can get a good deal on a short sale, most of the time better than when a property has gone into foreclosure, but the deal has to make good business sense to the lender. It must make the lender more money than what they would make if they foreclosed, paid the legal fees, and sold the property closer to market value. Thus, most lenders will not agree to a short sale for 50% of asking price!

Homeowners, remember that the short sale must be approved by your lender. If you financed your home with two liens, a first and a second, the secondary lender in theory should receive nothing if a short sale doesn't cover what the first lien holder is owed. However, the second-lien holder must release their claim in order for a short sale to proceed, which gives them some leverage. There is not much incentive for them to agree to a short sale and receive nothing, so both lenders and your real estate agent must work together to make the process come together. This is just one of the reasons why short sales are known to be a long process. Still, the benefits to a short sale are well worth patience from both a buyer and a seller.

Are you behind on your mortgage payments, facing foreclosure, and think a short sale may be the answer for you? First, find a good real estate agent (BW Home Team has excellent, highly trained agents in the short sale process!) and start gathering documentation. Your real estate agent can help you with this.

The paperwork you will need for most lenders is:

1) Authorization to release information to your real estate agent. You can't start the file without this.
2) Detailed financial information. This includes 2-3 months of bank statements, federal income tax returns for the past two years, and paycheck stubs for the last 2-3 months. These must be provided by all borrowers on your lien. You must state you are unemployed if you are.
3) Financial worksheet - Each bank may have their own you can download. This worksheet shows all assets and debts. This will establish whether you are financially going through hardship.
4) Hardship Letter - You must state the hardship you are facing. Lenders would like to see that the hardship is not temporary. Make sure the letter is clear and legible and have your real estate agent proof it for you!
5) Bankruptcy - Are you going to decide to file for bankruptcy? This can cause delay to the short sale. Make sure your short sale is done before any legal proceedings begins.
6) Listing agreement with your real estate agent - Lender would like to know that you have made an attempt to sell the property.
7) Offer - The lender will not start or take your short sale seriously until you have an offer on your property.

Contact the BW Home Team today if you are interested in finding out more about short sales, whether you are a buyer or a seller. As a buyer, you can even search our website via keywords such as short sale, lender must approve, etc.! It's as easy as typing those words in the description box.

List courtesy of Jimmy Nguyen and Short Sale Rockstars - Facebook

The Tax Credit Extension for Homebuyers is Official!

Obama has officially signed the bill that extends the first time homebuyer tax credit of up to $8,000 through June 2010 as long as the homebuyer executes a contract by April 30, 2010. This new legislation expands the tax credit program to include an up to $6,500 tax credit for existing homeowners who buy another home as long as they have lived in their current residence 5 years or more.

The bill caps the eligibility for the credit to homes costing less than $800,000 and raises the current income limit from $75,000 per year for a single person or $150,000 per year for a couple filing jointly to $125,000/single and $225,000/jointly.

For all future homebuyers that have been waiting for this, visit www.bwhometeam.com for all your homebuying needs!

Voters Strongly Support All 11 State Amendments

Yesterday, with expected low turn out, Texans approved all 11 Texas Constitutional amendments on the ballot Tuesday.

Voters approved three amendments related to Texans' property taxes that the Texas Taxpayers and Research Association said will lead to "the most signifigant property tax reform in 30 years."

The specific results on these 3 propositions are as follows:

Proposition 2, which requires tax appraisals of a person's primary residence be appraised to the property's value as a homestead instead of the "highest and best use" standard, including a property's potential value as a commercial site: For - 68 percent / Against - 32 percent

Proposition 3, which allows the state to enforce uniform property appraisal standards across all of Texas' 254 counties: For - 65 percent / Against - 35 percent

Proposition 5, which lets adjoining counties consolidate review boards that hear appeals to appraisals: For - 61 percent / Against - 39 percent

Tax Credit Inches Closer To Being Extended Through April AND New Tax Credit For Repeat Buyers!

Senators agreed yesterday in an 85 - 2 vote to extend the $8500 tax credit for first time homebuyers through April 2010 to a final vote. Senior members of congress expect the bill to pass next week.

Even bigger news is the tax credit may expand to repeat buyers that have owned their current home for at least 5 years, allowing those homebuyers to receive a tax credit of up to $6500.

Qualifying home buyers who are in an executed contract by April 30, 2010 will have through the end of June 2010 to close on their next homes and be eligible the tax credit if the measure is passed.

Stay tuned for more information!!!!