Short-Sale at One Miami
January 13, 2008 by Lucas Lechuga
Property is being sold as short sale. All docs already submitted to the bank. Bank approved 272,000, less then 272K will not be considered by the bank.
This is the type of information that I want to see if I'm working with a client that wants to make an offer on a short-sale. I don't want to waste my time submitting an offer on a short-sale that is going to take 4-6 weeks to be reviewed by the REO department and likely rejected. With a few exceptions, short-sales have been a complete waste of time for me. Hopefully, this will change in 2008.
If you're a Realtor and have a client that wants to make an offer on a short-sale then make sure you know what the current owner paid for the property. If the current owner paid $400,000 and it is now listed for $200,000, then tell your client to move on and forget about it. As of right now, the banks, for the most part, won't accept your offer. Why waste your time?
The banks may not want their listing agents to disclose that they are willing to accept "x" amount of dollars on a property because they are hoping that they'll receive an offer that is greater. Get out of this mindset! Buyers are not stupid! The Internet is filled with a ton of housing information. In this market you won't get anybody that is going to overpay for your property. Set a price and stick to it for a month. If you don't get any interest then drop the price next month. Enough said?
Very interesting Lucas..and a very good point.Why waste everybody’s time .What is your opinion on the JUDICIAL SALE’S that take place every week?There are more and more properties coming up for sale than ever before.Not being familiar with the system and how it REALLY work’s,can you give us a brief rundown?Are all the properties sold to the highest bidder regardless of price?In other word’s is this an absolute sale that every property get’s sold no matter what?Or is there still a reserve of some kind.The problem is that you don’t get to see what your buying beforehand.That is unless you… Read more »
Sean,
I’ve never attended a foreclosure sale on the steps of the courthouse so I’m not really sure.
Great site Lucas,we are really enjoying it.We’d like to see more update’s in the DEAL’S section.I would also like to find out about the COURTHOUSE AUCTION’S .There are a lot of them lately.Maybe some of the reader’s of this blog will be able to inform us of how they work and if the Deal’s there really exist.
Well, at $322 psf this really isn’t a great deal! I hope the bank enjoys owning this unit for a while….
Unfortunately, most (if not all) lenders won’t give you an approved sales price until they have received an initial offer. So you have to go through this “dog-n-pony” for 4-6 weeks just to get the price where the lender will agree to short sell a property. The idea is to have someone (usually an investor) place an offer within the first week that the unit is listed as a short sale in order to get the “ball rolling”. It would make everyone’s life (sellers, buyers & agents) easier if the agent could just pick up the phone, talk to the… Read more »
Lucas I think as the Banks inventory of bank owned properties grows and their balance sheets look worse and worse short sales will be the future because the bank understands what is happening to the market and when they accept a short sale they can expense it and save the time of ging to auction or taking the property in their books but I have done 4 short sale offers last month and it takes a couple of weeks to hear back from the bank an actual answer and its hard for clients to understand that especially when they are… Read more »
Isn’t a short sale a bad move for the seller?
IIRC the difference between the sales price and the mortgage has to be paid then to the IRS, which I do not think is as forgiven as a Bank.
Why would a owner prefer a short-sale instead of going to foreclosure?
I think I would prefer having a foreclosure in my credit report (especially if it was nt good to start with) than owe money to the tax man.
Any comments?
Ignacio,
A short-sale is no longer taxed by the IRS. A bill was passed towards the end of last month. I’ve been meaning to write a post about this because it seems that many people are not aware of this.
I thought I wrote a post on here about how the auction process works, but now I can’t find it. As for the IRS Short Sale Rules, it used to be that if under debt forgiveness, you were taxed on the amount of debt forgiveness as if it were ordinary income. Now, however, beginning in tax year 2007 through 2009, Taxpayers can exclude up to $2 million of debt forgiven on their principal residence. The limit is $1 million for a married person filing a separate return. This provision applies to debt forgiven in 2007, 2008 or 2009. Debt reduced… Read more »
I found my post on my experience going to a court-room auction: —— —— —— —— ——- The first and most important thing you need to know is that when you buy a property in auction at court you have to close THE SAME DAY so you either need to be flush with cash, or have a good hard money lender in your back pocket. If I remember correctly you must post 10% cashier’s check when you win the auction, and the other 90% must be paid by 3 pm that day. The auction I went to had 148 properties… Read more »
As a poster mentioned, it is important to note that the recent “debt forgiveness” tax exemption ONLY applies to principal residences–not investment properties. That would exclude many (if not most) condo owners in the Miami area. Also, it doesn’t apply toward cash-out refi’s. As far as courthouse auctions go, there is a reason that very few properties sell at those auctions (they usually go back to the banks). Almost all of the foreclosures are properties that were worth less than what was owed on them. The starting bid in these courthouse auctions is usually more than the property is worth.… Read more »
Sean, To answer your question regarding sales at the Courthouse… My family has been attending these sales for years. What I can tell you is that Candela is right about the purchase process… 10% down and 90% same day by 3pm. Something not mentioned is that you do not get the title right away. There is a 10-day waiting period before you can get the title, and yes within these 10 days the owner can still get his/her house back. So you have no guarantee that the property is yours, even after you have spent all this time researching the… Read more »
Thank you very much for all the Information that everybody has given about short sale’s Judicial sale’s and Forclosure’s.There are a lot of property’s to be bought in Miami and area …but seller’s are still in denial about what’s going on.This is 2008 ……not 2004 let’s get with the program and clean house.