Contemplating a Short Sale?

In today’s economy, those of us in real estate are seeing more and more people who need to sell their homes to unburden themselves of their mortgage payment.

Some people are just unhappy that the market went down and their property is not worth as much as it was when it was purchased.  But, many people have lost jobs, pensions, retirement benefits, or have had their pay cut.  Not to mention those who are going through divorces or loss of a spouse.

What can a real estate licensee do to help?

We can give you a CMA (comparative market analysis) of the current market value of your property and suggest you call your “lender”…meaning you call the entity to whom you are paying your loan payments.  Remember that your loan may only be serviced by that entity.

First, request to talk to someone in loan modification and discuss your situation with them.

Second, it may be necessary for you to talk to someone in loss mitigation because you have little or no income and the loan modification department feels you do not meet their requirements for a loan modification; but, before you do, see an attorney. 

Arizona real estate licensees cannot give you advice.  They can explain real estate terms, documents, phrases, processes…but, they cannot advise you to do a “short sale” or how the tax events of a “short sale” will affect you.  An attorney who specializes in bankruptcy, real estate, or tax issues is the person who can review your situation and determine which route is best for you to take in order to get your financial house in order.

Does your Arizona real estate licensee keep up with information about “short sales” and foreclosures?  Many learn as much as they can so they can make accurate explanations to you about the “short sale” process and its implication.

Example:  This is a recent notice from the Arizona Association of REALTORS(R):

“Mortgage Forgiveness Debt Relief Act

The Mortgage Forgiveness Debt Relief Act generally excludes income realized as a result of modification of the terms of the mortgage, or foreclosure on a principal residence in years 2007 through 2012. 

 Even though the forgiven debt is excluded from income, it still must be reported on a Form 982.

http://www.irs.gov/individuals/article/0,,id=179414,00.html

There are other times when cancellation of debt is not taxable: 

1.  Bankruptcy

 2.  Insolvency: If total debts are more than the fair market value of total assets.

3.  Non-recourse loans: The lender cannot pursue a deficiency.  However, it may result in other tax consequences.

 These exceptions are discussed in detail in Publication 4681.”

Kathy Howe

Hiring a real estate professional who keeps up on issues that affect the sale of your property is the best thing you can do for yourself when you find that your finances are dwindling and you need to make some changes.  But, don’t forget to be looking for a good real estate attorney as well.  That attorney can save you making the mistake of signing documents saying you will pay any amount not realized by the lender in a “short sale” or a foreclosure.  You need advice about Arizona’s Anti-Deficiency law and Arizona’s homestead act.  The attorney’s advice will be worth its weight in gold.

Kathy Howe, Designated Broker

Single v. Married Households 2000 v 2008

Arizona, take a look at the upclick of single households since 2008!!

http://www.realtor.org/research/economists_outlook/didyouknow/dyk110609sl

REALTOR.org gives a country-wide look at the changes over the years.

Kathy Howe, Designated Broker

Kathy Howe

how2ariona real estate

PS.  I moved the “single” status up a knotch when I moved to Sedona from Honolulu in 2006.

25 W. Gunsmoke, Sedona, AZ 86336

Great Room

A great property in West Sedona.  Check out our office website for more information.  Then click on “Our Listings which will take you to the public MLS site.  Or visit our Blog for quick pictures and information.

Thunder Mountain Sedona AZ

Kathy Howe, Designated Broker

kathy@kathyhowe.com

Sedona and the SR89A street lights

Kathy Howe

Sedonans are going to meet at the Sedona Library in a few hours to attend an Open House with ADOT and see the street light design choices that ADOT has selected for the lights that will be installed along SR89A in West Sedona.  Sedonans get a vote!

Most of you who visit Sedona are probably wondering why lighting that stretch of highway has taken so long.

Keep Sedona Beautiful, the Sierra Club, and others who are using the misinformation that the lighting of that area will keep Sedona from gaining a Dark Sky designation are among those who do not wish for lighting of SR89A. 

There are other arguments being made, such as ADOT will be cutting down of trees along SR89A in West Sedona.  Truth?  ADOT states in an email that it will work as it did on SR179 (which has street lights similar to those being considered on SR89A).  ADOT worked around trees in some situations on SR179 and replaced trees that had to be removed.

What does any of this have to do with buying and selling real estate in Sedona?

If you are living in Sedona or planning to purchase here, you need to understand that more construction will continue on our streets.  We are a city in transition.  Complete with the disagreements and inconveniences that any city goes through to make for a better future.  If you have driven the new SR179 into Sedona, you know how beautiful is the drive versus the old road.  A photo-op at every curve. 

And lighting SR89A will ultimately give the commercial area the safety they so desparately need at night in order to protect their customers. 

Gotta run… off to the Library!  Can’t wait to see the designs…

Oh, if you want ADOT to know what you want Sedona street lights to look like, fill out this form.

Kathy Howe               

how2arizona real estate, 1120 W. SR89A, A-1, Sedona, AZ 86336

Sedona Real Estate…Today’s Info from MLS

This is this week’s report from Rapattoni, Sedona’s MLS for Sedona & West Sedona:

Active: 196

Pending: 3

Sold: 0

Other: 2

Total: 201

	Bedrooms	Bathrooms	Square Feet	List Price	Selling Price	DOM/CDOM
Minimum	1	1.00	707	$152,500		2/2
Average	3	2.71	2,939	$931,754	$0	231/311
Median	3	2.50	2,700	$649,000	$0	147/197
Maximum	5	7.50	9,068	$10,000,000	$0	1611/1611
Total Dollar Value					$0

Have a great day!!

Kathy Howe

Real Estate, Banks, and Investors…

Recently our office had a property listed for sale.  When we originally listed it, we knew it had to be sold but thought we could cover the cost of the loan and closing costs with the initial list price.  The market continued downward…

Then the first offer came in…for $50,000 less than the list price.

We made a counter offer which was turned down by the buyer.  But, as many sophisticated sellers know, the first offer is many times the best…best, in that the buyer is usually “sold” on the property. 

We discussed with the seller the possibility of a “short sale”.  The seller asked what to do, we laid out a plan, contacted the rejected buyer and began renegotiating.  The original offer, along with the seller’s ”short sale” package, went into the hands of the lender servicing the loan.

Clarification:  You take out a loan with an entity, say Wells Fargo, start paying your loan payments…say, six months later you get a notice that Countrywide is taking over your loan.  Understand that the terms of your loan cannot be changed, but the servicing entity can change.  If you carefully read the loan documents at signing, you will find a paragraph granting the loan originator permission to sell your loan to another entity.

Back to our scenario.  The loan negotiator for the lender got back to us with a counter offer of an additional $10,000.  That buyer rejected the counter offer.  Luckily another buyer who had seen the property entered an offer the same day as the Trustee Sale was scheduled.  The offer was the same offer as the first and the lender countered with the same $10,000 increase as with the first buyer.  Buyer number 2 refused the counter offer.  Within days, another offer came in…yes, the same price as the other two.  This offer was verbally transmitted to the lender because the buyer refused to sign an “as is” addendum.  That buyer dropped out when told his offer would not be considered without the “as is” addendum.  Lenders don’t want to pay for any repairs and don’t want any risk associated with the condition of a property they have never occupied. 

Offer number 4 came in and was counter offered to the price acceptable to the lender.  We were in escrow again.  This time with a family whose 6 year old had fallen in love with the back yard.  All documents signed and executed and then came the preliminary title report.  It seems a lien had been filed against the sellers and placed on the property.  The sellers had their attorney ask that the judgment be voluntarily removed because there was no equity, it was a short sale, and if this sale went to foreclosure the judgment would be wiped out anyway.  For their trouble, they were hauled back into court on a contempt of court citation by the attorney wanting more of their financials.  The judgment remained against the property.

Since this was an investment property, not their primary residence, the judgment could not be overwritten by the title insurance.  If it were a primary residence that met the conditions of Arizona’s Homestead Exemption statute, the $150,000 exemption could have been the key to overwriting the judgement.  But…

After doing everything possible, we finally told the lender that we could not get the judgment removed, either voluntarily or by any other means, and the only way the judgment would go away was for the lender to proceed with the Trustee Sale.  We asked the lender to allow the terms and conditions of the contract to be reinstated after the Trustee Sale.  We received a form letter cancelling the agreement and the Trustee Sale date was reinstated.

Several days after the sale, we got a call from a local real estate licensee who was considering listing the “asset”.  We gave him the name of the buyer who we thought might still be interested in purchasing the property and the name of the real estate people who had represented the family.  Several weeks passed and the property showed up in the area MLS.  The list price was for $7,500 LESS than our contract price with the lender. 

Where does the money go? 

First, understand that when a lender sells your loan, it is not for the amount of your loan.  Loans are packaged and sold at a bulk rate…a bulk, discount rate.  If your loan has been sold several times, that $200,000 might have only cost the last lender $100,000.  Then too, lenders and investors may have insurance on these loans.

Second, lenders servicing loans are not interested in negotiating with anyone unless there are big new dollars for them…an increase in their investment.  A “short sale” can give a servicing entity more money.

Do you as a buyer get a great deal if you buy a “short sale”.  Not as good a deal as if you buy a foreclosure.  Problem is, will the property you want still be available as a foreclosure…

We are getting down to the bottom of the market… choose well… it’s a great time to be a buyer.

Kathy Howe, Designated Broker

how2arizona real estate

Sedona Real Estate…

We get daily stats from our MLS and thought you all might like to know what is really happening in Sedona and the Verde Valley.

Are we finding the bottom of the real estate market in Sedona?

Are people buying properties in Sedona?

Stats from 9/12-19/09 at 4:15PM

Over the last 7 days:

• 41 listings have been put on the market.
• 4 listings have been put in escrow.
• 21 properties have closed escrow.

These figures only include residential houses.

Other stats:

• 8 properties expired
• 11 listings were cancelled
• 5 properties were temporarily taken off market

You want to know about vacant land?

• 4 new listings put on the market
• 5 properties put into escrow
• 4 properties closed escrow

These statistics are as accurate as the information input and output of the area real estate licensees and the MLS.  The intent of this information is to let Sedonans know that the market has begun to move in the residential home area and that land…well, it’s going to be a while.  Some of the properties selling are very inexpensive lots.  To date, many vacant lots continue to have list prices that are higher than market buyers are inclined to pay…or on which to submit an offer.  Land sales usually lag residential home sales by at least 1 year and it is possible that this downturn will not see absorption of current inventory for 2/3 years.

Hope this gives you some thoughts about your residential property and when might be the best time to list and sell it.

Happy thoughts… and please feel free to contact me for additional information.

Kathy Howe, Designated Broker

how2arizona real estate, Sedona, AZ   928-274-4088 kathy@kathyhowe.com

We are an equal opportunity company.

Friends Forever…

Today I drove my Nissan Xterra, “Goldie”, from our home in Sedona up to Planet Nissan in Flagstaff to have some fuel thingie replaced so when I’m down in Phoenix in the middle of the summer and I stop at Costco to gas up, the needle will spin upwards to show a full tank of gas, instead of remaining on E, indicating there is only one gallon of gas left.  The danger of ignoring this anomoly?  The car’s computer will believe the dumb indicator and shut the car down.  But then, life always comes with some risks.

Planet Nissan has this nifty service that calls the day before to remind you of your appointment.  8AM.  Why is it that anything that’s going to be painful needs a reminder?

As I started up the Canyon (Oak Creek)  I called my friend in Flagstaff who lives near the Mall/Marketplace and asked if she wanted to have breakfast.  Yes, and we decided she would pick me up and we’d head to Brandi’s.

Oak Creek Canyon is always my touch with the world, both physical and spiritual…the drive is soothing…the trees…the creek…the sense of security…and it made me think how wonderful that I could see my friend Becky.  We met somewhere back in the mid-’70s, began to play golf together, shared our thoughts, mixed our worlds…

She was pregnant with her son, who now works with her… I remember her dog Cotton who got loose and was hit by a car on I-40…the golf tournaments we won together…Yancy Lewis telling her that she should be selling Insurance and she now owns the real estate company he had owned…she telling me I needed to get serious about getting my degree at NAU…me telling her she should finish her dissertation…her divorce…her remarriage…our mutual friends…my move to Hawaii…and my return to Arizona alone after my husband’s death.

At breakfast we talked about how we could spend more time together both as friends and as business associates…we decided on a few ideas…we went back to her office and made some phone calls…

I even went over and looked at a small 2 bedroom townhouse in the Country Club that I might want to use for an investment and personal use in the summer.

Then lunch at Pita Jungle and we talked about the loss of her Mother our friends who were having trouble, the changing economy, and how much we missed each other.

She dropped me off reminding me to call her business friend and let’s make all of this work…she’d begin to schedule time to come to Sedona for lunch.  I made the call and have an appointment set up with her friend for next week.  As I paid my bill at Planet Nissan, Jed told me that he was able to get the factory to pay for the bad part, that my instincts were right about my battery which he replaced, and he gave me an estimate for 4 new tires ($880!!! all inclusive) that will probably be a low bid.  I thanked him and told him that my friend’s son might be coming in to try out an Xterra since her husband really enjoyed driving it when I was up last time.

Isn’t it amazing how one friend can make your world revolve?

You never know when you will find a friend…

…and some of them are forever.

Kathy Howe                                            

The Real Estate Market in Sedona is on the Move!

You all have been waiting for the news that the real estate market is beginning to show signs of improvement.  At every chance meeting in Safeway and Basha’s, during my lunches at Shugrues or Picasso’s, putting up “Open House” signs in Uptown, at Sedona City Council meetings,  walking with my friend and neighbor, Jean Kielblock, through Manzanita Hills, you ask me, “Is it getting better yet?”

You can feel it.  You can see it.  Notice that we have fewer real estate signs in your neighborhood.

As the bottom of the market  moves up (Sedona’s bottom is considered $350,000 and below) in lower inventory and higher prices, the rest of the market moves up accordingly.

Lately we have seen a movement in the mid-range of $400,000-$700,000.  That is a significant area because as it moves up it helps the upper end.

Only one thing remains in order to make the market fully revolve:  the lenders to grant loans of $417,000 and above.  This is the roadblock to recovery.

Kathy Howe

Enjoy the day!

Kathy Howe

www.651ManzanitaDrive.com

We’re doing “Open House” most weekends at our listing!  Come by and visit…better yet, write us an offer!

Our sellers will even consider Owner Financing.

If this house had been on the market when I purchased my house 2 blocks away, I would be living in this house right now, and you wouldn’t have the opportunity to purchase it.

Picture a courtyard, surrounded by 2 buildings, with surround-views of red rocks, forest service land, vistas…

Then there’s the “bonus building” which is not included in the 2167 sqft of the main house.  It was used as a hobby room, but my co-agent on this house has done a floorplan of potential changes that might work as a remodel without having to enlarge or change the alternative waste disposal system.  We are trying to work with the County of Coconino and the City of Sedona to get as specific as possible on remodel of the “bonus building”.

Hmmmm.  Sound interesting?  651 Manzanita Drive, Sedona, AZ

See you this weekend?

Kathy Howe

www.how2arizona.com