For missing the $8000 you gain $54,612 in interest charged for your loan. On a $200,000 mortgage at 5.5% interest over 30 years versus the current 4.25% you will have saved $54,612.

 Buy now and gain so much more than the $8,000, you really do not want to miss out on this benefit. These rates will not last long, so call us today!!!!

^[1]RISMEDIA, July 3, 2010—FHA Pros, LLC, a national FHA condo approval service, has developed a list of facts speaking to the top misconceptions associated with FHA loans in order to help home buyers better navigate an already confusing market. FHA loans are mortgages issued by qualified lenders and insured by the Federal Housing Administration (FHA).

“We have seen home buyer interest in FHA loans go from practically zero three years ago to upwards of 87% today,” said Christopher Gardner, founder and president of FHA Pros, LLC. Read the rest of this entry »

Shopping for a Condo? Ask These 4 Questions before You Buy

Condominium homes have always been, and will likely always be, an efficient and economical route to becoming a first-time homeowner. They can offer the comfort, prestige, and even luxury appointments that apartment living may lack, often at a cost that is not much different than rent. With the current first-time home buyer tax credit and the deadline for the move-up tax credit fast approaching, I advise you move fast on any condo purchase you may be considering.

With my experience as Member of the Top 5 in Real Estate Network®, I am well aware that not all condominiums are the same, however, so make sure you ask the following four questions before you buy:

What will you own? Read the bylaws and be sure you understand what you will be responsible for and what belongs to the condo association. Will you own the boat dock at the back of your unit? Can you elect to build a spa on your patio? Generally, unit owners own and are responsible for the interior of their condos, while costs for outside maintenance including common areas and sewer lines are the association’s responsibility.

Who lives there? Are the majority of residents owners or renters? Owners generally take more interest in proper maintenance and are more willing than renters to serve on the association board and enforce complex rules and regulations–including the regular collection of homeowner dues.

How effective is the homeowner’s association? Do they have legal counsel, reasonable funds and a capable, caring volunteer board? One way to judge is to check with residents about restrictions, oversight and timeliness of repairs and upgrades. Another is to take a hard look at the grounds and be wary of signs of neglect.

What about special assessments? The association should have the power to special assess for needed, one-time large expenditures. Otherwise, things that need to be done may never get done at all, leaving the complex vulnerable to disrepair and lowered property values.

Don’t miss this great opportunity to become a homeowner or to downsize by buying a condo (remember, the move-up tax credit does not require you to move to a larger or more expensive home). Please e-mail me for more tips on buying a condo and forward this information to any family and friends who may be in the market as well.

FHA Announces Policy Changes to Address Risk and Strengthen Finances

New Measures Will Help FHA Better Manage Risk, While Maintaining Support for the Housing Market and Access for Underserved Communities

1. Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
   • The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
   • If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
   • This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
   • The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.
2. Update the combination of FICO scores and down payments for new borrowers.
   • New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
   • This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
   • This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
3. Reduce allowable seller concessions from 6% to 3%
   • The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
   • This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.
4. Increase enforcement on FHA lenders
   • Publicly report lender performance rankings to complement currently available Neighborhood Watch data – Will be available on the HUD website on February 1.
     • This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
   • Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
     • Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
     • This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
   • Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
     • Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
   • HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:
     • Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
     • Legislative authority permitting HUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches

10 Ways to Protect Yourself from Mortgage Fraud in Central NJ

As a leader in real estate, I am repeatedly asked specific questions about today’s market – especially in today’s economy. In an effort to provide more information to my community, I am sending you this Top 5 Real Estate Social Networking Systemsm “e-Article,” in which I provide useful real estate information to my real estate networks. If you find the enclosed information beneficial to your family and friends, I encourage you to forward it to your “social network” as well.

10 Ways to Protect Yourself from Mortgage Fraud

Many of the challenges homeowners and home buyers are confronting today are the result of unscrupulous mortgages extended over the past several years. Help protect yourself during the home buying process with these tips from the American Homeowners Foundation and the American Homeowners Grassroots Alliance, www.AmericanHomeowners.org, or in Canada, with tips found at www.genworth.ca:

1. Deal only with reputable mortgage bankers or mortgage brokers. Get recommendations from neighbors and friends who dealt with them as customers. Check on the mortgagor’s record with the local Better Business Bureau and state licensing authority. As a Member of the Top 5 in Real Estate Network®, I can also provide you with many credible mortgage resources.

2. Ask how long they have been in the business, and be wary of working with someone with less than five years experience, no matter how reputable their employer may be.

3. Unlike professional real estate agents like myself, mortgagors owe you no fiduciary duty. While it is in the long-term interest of mortgage lenders and brokers to treat consumers fairly, for many, that doesn’t stand in the way of charging higher fees or interest rates. Always get quotes from at least three mortgage lenders and/or brokers, and make sure each one knows you are doing so.

4. Since you’ll be providing them the most comprehensive personal financial information you’ll ever provide any company, ask the lender to describe their data security policies, both online and offline.

5. To reduce the likelihood of overpaying for a home, make sure that you review recent selling prices for similar homes in the same neighborhood before you make an offer. I can provide you with a detailed analysis of the homes in our communities.

6. Set aside some extra money for closing costs. One of the vexations of real estate financing are the differences in estimated settlement costs on the Good Faith Estimate (GFE) forms, and the actual settlement costs, which very often include several hundred additional dollars worth of previously undisclosed and creatively named fees.

7. Pick the right kind of mortgage. Interest rates are higher on 30 year fixed rate loans than on 15 year fixed rate loans. Adjustable rate mortgages are always a gamble. You may well save money over the first few years if interest rates are dropping, but predicting their direction further out is very speculative. Prepayment penalties can more than offset any savings if the rates go up after that and you want to refinance.

8. Get pre-approved for your loan. Even though there is a glut of homes for sale in most areas right now, a mortgage loan pre-approval is essential to many sellers, and gives a big negotiating advantage to buyers in almost all cases.

9. It is important to review loan documents in advance and understand all the terms. Don’t be afraid to ask questions. Try to avoid loans with prepayment penalties if at all possible.

10. Save all the copies of all documents you receive and/or provide mortgage lenders or brokers.

For more advice on how to secure the best mortgage in today’s challenging economic times, please e-mail me directly. I can help you make sense of the current mortgage landscape and the ever-changing credit standards. Also, if this information can be of benefit to your friends and family members, please feel free to forward this email to them.

Joel L. Naroff
Chief Economist

INDICATOR: June Existing Home Sales
KEY DATA: Existing Home Sales: +3.6%; 1-Family: +2.4%; Condos: +14.0%

IN A NUTSHELL: “The turnaround in the housing market appears finally to
be here and indeed may be gaining some speed.”

WHAT IT MEANS: Housing may no longer be the weakest link. Existing home
sales rose in June, the third consecutive monthly increase. Demand has clawed itself back to where it was a year ago, a very nice signal that the market has not only hit bottom but is making its way back. Importantly, demand rose in every region of the country. In the West, which is the poster child for problems, sales were well above what they were a year ago.
Yes, many of those purchases were for foreclosed homes, but a sale is a sale. While demand was stronger for condos and coops than signal-family structures, we shouldn’t take much from that. The condo market is more volatile. Meanwhile, sales of single-family homes were actually higher in June than they were in June 2008. The inventory of homes for sales fell a little but is still too high and median prices are down by over 15% for the year.

MARKETS AND FED POLICY IMPLICATIONS: This was a very good report. One or two months of gains doesn’t tell us a lot. Three consecutive months of rising sales provides so hope that an upward trend is actually under way.
The increases are also well distributed across the country. While some
may argue this is just a rally being caused by tax incentives and foreclosures, I disagree. Does it really matter what type of home is sold?
Not really. I believe that prices have come down significantly enough to encourage buyers to start making offers. We are also seeing prices start to rise off the bottom. Given that so many of the sales are foreclosures, the increase in the purchase price, even if it is not adjusted for seasonal trends, is still a good sign. When buyers see prices rise they get off the fence so they don’t get priced out of the market. In addition, the belief that if they wait they can get a lower price disappears. Thus, look for demand to continue to improve. The markets should like this report.
Investors are looking for reasons to believe earnings will rise going forward and a turn in the housing market can only improve expectations. As for the Fed, Mr. Bernanke commented that he thought the market was stabilizing (Fed Chair rarely goes out on a limb) and that indeed seems to be the case. This report reminds us that investors will soon have to focus more closely on when the Fed will start removing some of the stimulus in the system and also how fast they will do so. When we get to that point in psychology, we can really believe the recession is over.

Top 5 Must-do’s When Selecting a Real Estate Agent

While getting your home sold is the number-one priority for any home seller, having the right person in place is the first, all-important step to achieving maximum results. But with so many real estate agents to choose from, how do you ever know if you are picking the best one possible?

If you are getting ready to sell your home and are in the process of looking for a real estate agent, follow these “must-do’s” to ensure your agent is equipped with the necessary skills to effectively sell your home.

1. Do Select a Marketing Agent. Demand that your agent is fully committed to being your marketing agent—not just to getting your home to sell, but to helping your home sell for more. Marketing agents leverage the laws of supply and demand. Your marketing agent will create the optimum competition for your home and will encourage all other agents to sell your home.

2. Do Select an Effective Real Estate Negotiator. If your marketing agent has a fiduciary responsibility to only you, demand that their full negotiating efforts are focused on your benefit. Your agent should leave the interests of the other party in the transaction to the agent representing them, however, your agent becomes more valuable to you through the effective way in which they engage the other party to the transaction on your behalf.

3. Do Select a Property Promotion Specialist. Demand an agent who is committed to robust off- and online marketing of the properties they represent. Insist upon a comprehensive marketing plan that is customized for your property’s distinctive characteristics. And remember—no two homes are exactly alike, so demand a tailored marketing approach for your home.

4. Do Select One Who Sells Homes for More. Demand that your prospective agent can point to a significant number of homes they have successfully marketed/sold. In addition, make sure the prospective agent is focused on selling your home for more.

5. Do Select Great Service and Great Skill. Although you want your doctor, lawyer or pilot to provide great service, their professional skills are of far greater value. Carry these same skill-based expectations when you are selecting your real estate agent and demand high-level real estate skills.

If you keep these ‘must-do’s’ in mind while picking your real estate agent, you will be sure to choose an agent who is focused solely on you and getting your home sold. As a Member of the Top 5 in Real Estate Network®, I possess all these skills and more. If you are interested in receiving a free copy of the Top 5 publication, What Every Home Seller Should Demand…of Their Real Estate Agent, please e-mail me. Please also feel free to forward this e-mail to family and friends who might benefit from this information.

Please disregard this information if your home is presently listed with a licensed real estate agent.

There seems to be people scamming consumers on Craig’s list using realtor’s rental listings. They copy most of the details from a posted rental ad, change the price to make it cheaper. Then when potential renters get In touch with the scammer they get the renter to send them a deposit. If it all possible please do not put rentals onto Craig’s list.

The below listing is one of my agents and it is on the market for rent at a MUCH higher price, see what this guy did…..

——————————————————————————–

From: Gary Megson

To: potential renter
Subject: Re: townhouse for rent

Good day ,

Sorry for the late response.The Home is still available for rent for $1350.i am in West African,Nigeria and i will reside here for some time due to my current assignment.And we are on a campaign program to West African,Nigeria tagged “Empowering Youth to Fight Racism, HIV/AIDS, Poverty and Lack of Education”.I just need someone with an open heart,love and clean to occupy the home and put all my worries off concerning the maintenance of the home, since i am not residing there for now and presently my house is still available for rent for $1350 (per Month) including the utilities like hydro,washer,electricity and security..note that you are free to go and view the house but you will not be able to see the inside.

Also the keys to the Home are right here with me, and the lease document. Which i can send to you after all necessary agreement has be accepted. Also i will like you to know that the rent charges is not really the issue ,but your absolute maintenance of my Home , because that is the only valuable property my late father left behind, and it also took him so much time and money to put all those facilities in place.,so i will solicit for your absolute maintenance of this House and want you to treat it as your own,is that taken,it is not the money the main problem but want you to keep it tidy all the time….below is the location…

House Address: 171 Patriot Hill Dr
Basking Ridge, NJ 07920

Available Date: Now

N.B:Note that i am in West African , Nigeria and will not be able to show you the Home. You can go and have a look at the exterior and also you will be paying a deposit payment of $1000 which is refundable back to you OK.

Property Information
Type:Single Family Home
Bedrooms: 3
Bathrooms: 2
Square Footage: 1,450 square feet
Neighborhood:
School District :
Elementary School:
Middle School:
High School:
Interior
Kitchen
Dishwasher
Microwave Rooms
Amenities
Fireplace

Lease
Availability: Immediate Lease Terms:
3 Months
6 Months
9 Months
1 Year or More
Application Fee:
Deposit: $1000
Rent: $1350 per month
Policies
Pets: Allowed
Call for details Smoking:
Exterior
-2 Dedicated Garage Spaces Community:
lovable Arena
So if you are interested in the Home you get back to me by filling the Rent Application Form Below:
RENTAL APPLICATION attached

Also the keys to the place are right here with me in West African and the lease document. Which i can send to you after all necessary agreement has be accepted. Also i will like you to know that the rent charges is not really the issue , but your absolute maintenance of my place, because that is the only valuable property my late father left behind, and it also took him so much time and money to put all those facilities in place

Looking forward to hear from you with all this details so that i can have it in my file in case of issuing the receipt for you and contacting you.
Best Regards…
***********************************************************************

In this case a woman actually sent $1000 to the scammer and our office has gotten 2 other calls from potential renters who thought we were renting the property at the discounted price.

So if you are looking to rent or buy Real Estate contact your local Realtor

Get the most out of your homebuying tax credit
Programs, states offer ways to get $8,000 break to first-time buyers faster
The Associated Press
When it comes to the $8,000 tax credit for first-time homebuyers, it seems there’s a new program every week to help tap that money today.

The credit can be claimed on 2008 or 2009 tax returns. Homebuyers who get a loan backed by the Federal Housing Administration can use the money to cover closing costs and other fees, and at least 10 states offer ways to use the tax credit faster.

“There are some real neat tax planning strategies you can apply now,” said Bob Meighan, vice president of TurboTax.

To be eligible, a buyer cannot have owned a home in the past three years. So if you’re ready to buy, here are some tips:

INCOME CONSIDERATIONS: The tax credit, for home purchases made through end of November, comes with income thresholds, $75,000 for individuals and $150,000 for joint filers. After those limits, the credit begins to phase out. If you bought a home this year and expect your 2008 income to be lower than next year’s, it makes sense to file for the credit this year using a 2008 amended return.

However, if you think your income will decrease, due to job loss, wage cuts or hour reductions, it makes more sense to file for the tax credit on your 2009 tax returns to get the most out of the credit, Meighan said.

TAX WITHHOLDING: Another benefit to waiting until 2009: You can increase your take-home pay. By taking the credit next year, you can change your tax withholding status with your employer now and get more on a paycheck-to-paycheck basis, Meighan said.

You’ll be giving up a “fatter” tax refund next year, but each month you’ll have more change in your pocket.

Also, don’t forget to reduce your federal and state tax withholding to account for the tax deduction you can take on the mortgage interest and property taxes you pay.

BRIDGE LOANS: Ten states (and the list keeps growing) are offering so-called “bridge loans” for the federal tax credit, so homebuyers can take advantage of the $8,000 before the 2010 filing season. Qualified homebuyers in Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania and Tennessee can receive a loan with little to no interest and repay it with the tax credit refund next year.

“I see it as an upside,” Meighan said. “It gives homebuyers more flexibility,” with the money.

Each state program varies and some require a minimum down payment contribution from the buyer.

Some nonprofit organizations like NeighborWorks America are also offering bridge loans for the tax credits.

California also enacted its own one-time home buying credit for newly built homes purchased between Feb. 28 and March 1, 2010. The nonrefundable credit, which is for all buyers, not just first timers, is equal to 5 percent of the purchase price up to $10,000. It can be claimed over a three-year period. The property must be a single-family residence, the principal residence and eligible for the property tax homeowners exception.

A California resident can take both the federal and state tax, according to Kathleen Thies, a state tax analyst at CCH Inc. However, only $100 million has been put aside for the state credit and that money is expected to run out this month or next. And there are no plans to add more funding to the program.

“It’s on a first-come, first-serve basis,” Thies says.

ADVANCE CREDIT: Last month, the FHA said its borrowers can receive advances on the $8,000 first-time homebuyer tax credit from lenders, so they don’t have to wait to get the money next year from the Internal Revenue Service.

Borrowers will still have to come up with the FHA’s required 3.5 percent down payment, but the advance from the tax credit can be applied toward closing costs, fees or to increase the down payment.

John W. Roth, a senior tax analyst at CCH, believes some lenders won’t participate. The process involves more work for lenders, but lenders can only charge an additional 2.5 percent fee for that.

“How many qualified FHA lenders will offer this option to their borrowers will be interesting to see,” he said.

Q. What are my options as a home seller when my property is in or heading toward default?

A. In the event that you have been delinquent in paying your mortgage or anticipate that you will not be able to make payments moving forward, your options will vary based upon several factors or variables that are specific to you and your property. Always remember that each possible resolution will be evaluated on a case-by-case basis by all parties involved. When considering your options, you should take into account:

the amount of equity you have in your property compared to the outstanding loan balance
the additional financial resources you may be able to bring to bear
whether or not you live in a homestead state, and the nature and amount of the homestead exemption
and/or the amount of private mortgage insurance you have.
All of these factors should be taken into account along with many other variables and special conditions.

The most important decision you need to make is to “make a decision.” Typically, when homeowners avoid confronting the serious lifestyle and financial consequences of defaulting on their mortgage, they end up with a significantly more deleterious outcome than they would have, had they taken charge of their own destiny while they could.

Once you decide to take action, we recommend that you contact a lawyer and a real estate agent qualified to assist with your special real estate needs. Top 5 in Real Estate members are not just committed to helping you pursue the potential option of a short sale, but to encouraging you to fully consider all other options that may be available.

Early on in the potential foreclosure process, all homeowners should not only contact an attorney, but also research all potential guidance and assistance available from the government, including the U.S. Department of Housing and Urban Development (HUD). HUD’s Guide to Avoiding Foreclosure may be particularly helpful. HUD’s toll-free telephone number is (800) 569-4287. Not all homeowners, however, can qualify for certain HUD programs. Whatever guidance you seek as a homeowner, we recommend, at a minimum, that you also carefully consider each of the following questions and answers:

Questions: What is a better or more likely outcome for me and why?

A short sale or a foreclosure?
A short sale or a repayment plan?
A short sale or a forbearance plan?
A short sale or a loan modification?
In the case of an FHA loan, a short sale or a partial claim?
A short sale or a short sale/assumption agreement?
A short sale or a deed-in-lieu of foreclosure?
A short sale or a bankruptcy?

Answers: Any and all of the above-mentioned options pursued by homeowners should take into account their:

individual present and projected future financial circumstances
short- and long-range lifestyle goals
concerns over credit rating
desire to remain living in their present home
a complete understanding of the impact each available option might have in comparison to all other options being considered

In order to best contextualize or prioritize one’s various opportunities or limitations with all other options, it is advisable that an attorney or other suitable counsel be engaged. Such counsel is vital in order to properly weigh all legal, financial, tax and lifestyle implications surrounding each option. Since this brochure principally focuses upon the subject of short sales as just one alternative, it is important to note that short sales usually benefit home sellers because they not only stop mortgage foreclosure, but typically prevent the lender from suing for deficiency. Deficiency refers to the difference between the outstanding loan amount and what the net proceeds are from the sale of the home, or in some cases, simply what the proceeds are that the lender receives from the sale of the home. During their short sale negotiating process, it is vital that homeowners have their attorney ensure that the lender agrees to forego suing for any monies that are written off due to the short sale.

Top

Q. Within the short sale packet presented to the lender, there is a hardship letter that homeowners must provide. How important is this component in causing the lender to approve the short sale?

A. It is absolutely critical that the homeowner be able to document that they do not have the income or necessary assets to continue making payments on their home. Homeowners must be meticulously honest in documenting and presenting their “hardship case” so they do not implicate themselves in mortgage fraud; mortgage fraud results from inconsistencies between what the homeowner is now representing compared to the information provided at the time of the original mortgage application. This is why it is vital to work with a qualified attorney in the area of pre-foreclosure/foreclosure law during this process.

Q. What types of hardships would a lender generally consider conducive to a short sale agreement?

A. In the context of consideration for short sale approval, “hardship” is not defined by law. As such, there is no one definitive definition upon which you can rely. One would, however, anticipate that a lender would expect a hardship to result from the loss of job or salary reduction, divorce or separation, debilitating illness, medical bills, business failure, excessive debt, mortgage payment increase or the recent loss of a close family member, such as a child or spouse. Consult with an individual lender to determine the duration of the hardship, as lenders are unique in this regard.

Q. What are the tax consequences of a short sale?

A. The tax consequences for individual homeowners regarding short sales are different depending upon your financial situation. For that reason, it is critical to consult with a Certified Public Accountant.

Q. What is the Mortgage Forgiveness Debt Relief Act of 2007?

A. Prior to the implementation of this act, the law required taxpayers to include discharges of mortgage indebtedness as income for the calculation of income tax. This Act provides an exclusion for discharges of some types of mortgage indebtedness. Check with your tax advisor early on as to whether your transaction will qualify for income tax exclusion.

Q: What effect will each alternative have on my immediate, mid-range, and long-term credit?

A: There is significant confusion regarding the precise and relative proportionality surrounding how various pre-foreclosure/foreclosure and bankruptcy options affect one’s credit score. It is therefore advisable that all property owners first check with their lender(s)’, credit bureaus, future lenders, government agencies, and an attorney in order to best gauge how each prospective resolution may potentially affect their future credit rating. Credit rating impact should also be evaluated contextually by considering the role of your credit rating regarding future financial and purchasing plans.

Q. How do I know if my property and I may be considered for a short sale?

A. Eligibility for a short sale resolution is determined by your lender’s short sale policy. Your lender will also direct you as to what you must do to comply with their process and procedure. You can either contact your lender directly or authorize an attorney, real estate agent or other representative to contact them on your behalf.

Q. If a lender agrees to the short sale option on my property, can the bank still proceed with a foreclosure?

A. The foreclosure could be considered as a separate and distinct action taking place, even though the lender has agreed to the short sale proposal. This can easily occur when different departments of the same lending institution are seeking different outcomes, or simply because the bank, after agreeing to a proposed short sale outcome, but before signing a contract, believes that foreclosure would represent a more favorable outcome for the lender.

The submission of a short sale package/kit to the lender does not automatically stop a foreclosure action. Once a lender initiates a foreclosure action, the homeowner should consider that the lender will most likely retain this position until the lender has a signed contract in hand, has agreed to the short sale proposal, and has closed on the sale of the property.

At the time the lender agrees to the short sale proposal, the lender may or may not choose to terminate or postpone the foreclosure. A foreclosure may also proceed in the case of subordinate lien holders not having agreed to waive their lien on the property.

Because of the multiple stakeholders involved, and the complex nature of the regulatory environment, qualified, licensed counsel can be critical in taking steps to prevent a lender from not following through with the short sale process, especially in the case of a lender who has the intention of opting for a foreclosure-based resolution.

Q. How would I initiate the short sale process?

A. To initiate the short sale process, contact your lender(s). Typically, the department to contact is your lender’s Loss Mitigation Department. Either you or your authorized representative needs to ask the lender for a short sale package or kit. Most lenders will make their particular processing forms and procedures pertaining to their required short sale documentation available to homeowners.

Unlike what many people believe, some lenders will also allow you to apply and get approval for a short sale even when the homeowner has never been late or missed a mortgage payment. Please note that lenders will typically only consider a short sale after the borrower has: missed two mortgage payments; has no means to continue paying the mortgage; provided all the necessary financial and hardship documentation to the lender; agrees that they will not derive any proceeds from the sale.

Q. Should I contact a real estate agent?

A. Absolutely. But before selecting a real estate agent to represent you, determine whether or not they are knowledgeable about preforeclosure, foreclosure and bankruptcy options. Your agent should not be giving you advice regarding your personal financial situation. Any real estate agent who asserts that he or she is prepared to assist you as a homeowner in a potential short sale outcome must also be willing to follow the specific administrative procedures of the particular lender involved. In addition, the real estate agent should also acknowledge that they essentially confine their guidance to determining the property’s value and how to best market the property, versus advising the homeowner on the best preforeclosure/foreclosure resolution.

Q. Should I contact an attorney?

A. Absolutely. We recommend that you contact an attorney with the understanding that the attorney needs to not only be well versed in real estate law and foreclosure law in your particular state or province, but also needs to be a proven negotiator on behalf of their clients. Not all short sales or other pre-foreclosure or foreclosure options are structured alike. Therefore, the role of a highly competent attorney in such matters-one who can skillfully negotiate on your behalf-can make a world of difference.

Q. How would multiple liens on my property impact short sale approval?

A. Each lender must recognize how it is in their best interest to approve a short sale resolution versus a more costly and protracted alternative. Here again, an attorney/lawyer or real estate agent who possesses experiential knowledge in this particular multiple-lien scenario can be instrumental in developing a multi-party resolution strategy satisfactory to all.

Q. Am I responsible to continue to make mortgage payments if I have intentions of applying for a short sale on my property?

A. Unless you have received information to the contrary from the lender in writing, you are responsible to continue to make mortgage payments.

Q. As a homeowner, what incentive do I have to assist in the sale of my property if I am not going to receive any proceeds from the sale?

A. The authors of this publication believe that homeowners first and foremost have an ethical responsibility to expend the necessary effort to support as high a sales price as possible-even though they will not experience a financial gain-when expecting the lender(s) to forgive any and all of the homeowner’s outstanding mortgage debt.

We also believe that the higher the realized sales price, the more likely the lender will be in granting a short sale outcome for the homeowner and possibly either fully or partially waive a deficiency judgment. Moreover, we also advise homeowners to be wary of any real estate agent who, for the sake of facilitating a guaranteed sale in order to collect a commission before a property is foreclosed (ruling out any possibility of a commission), demonstrates a less-than-professional marketing commitment. Such real estate agents will often justifies this lackluster attitude by saying to a homeowner, “No matter what the home sells for, it really doesn’t affect your pocketbook-only the lenders.” This disregard for marketing on behalf of some real estate agents seeking to facilitate a short sale at all costs (but not to them) is one that lenders readily recognize.

We find that this unprofessional approach to real estate marketing, notwithstanding the special circumstances surrounding a proposed short sale outcome, is to the detriment of well-intentioned homeowners who are hopeful of gaining lender cooperation. Lender cooperation is, without question, influenced by how honorable they believe both the homeowner and the real estate agent are, despite the difficult circumstances facing the homeowner and the challenging marketplace facing the agent.

Q. Does a “Listing Agent” represent me (as the homeowner) or the bank if I have intentions of gaining short sale approval from the lender?

A. The Listing Agent does not represent the bank.

Q. Is there a real estate commission paid in a short sale and, if so, who pays it?

A. Like all commissions, this has to be negotiated. Typically, the commission is paid from the proceeds of the sale. In the case of short sales, the home seller does not typically pay the commission. This is another incentive for a home seller to pursue a short sale remedy and use a qualified real estate agent. Moreover, many lawyers, although representing home sellers, are able to have the lender pay their fees. This makes it even more imperative that every homeowner considering any pre-foreclosure/foreclosure possibility-but especially where a short sale is the desired outcome-contact an attorney immediately. Homeowners should also encourage their attorney and their real state agent to meet as a group for the purpose of creating an effective overall short sale and marketing strategy.

Q. On average, how long does a short sale process take?

A. The time period will vary based upon circumstances, although the approval process and time to closing, in many/most cases, is longer than that associated with the sale of a property in a non “short sale” situation.

Q. Which process has a more adverse affect on my credit rating: short sale: foreclosure; bankruptcy; or deed-in-lieu of foreclosure?

A. It is critical that homeowners, either personally or through a representative, research their individual situation with the various agencies that determine credit ratings. Be careful of categorical representations and sweeping generalizations regarding the credit rating consequences of short sales, foreclosures or other homeowner options. There exists wide-spread confusion, oversimplification, and inadequate guidance presently being offered, especially by individuals purporting to be experts.

Q. What is a deficiency judgment?

A. A deficiency judgment is a court order authorizing a lender to collect part of an outstanding debt from foreclosure and sale of the borrower’s mortgaged property or repossession of property securing a debt after a finding that the property is worth less than the book value of the outstanding debt.

Q. Should I take the word of my real estate agent if he or she tells me that I probably will not have a deficiency judgment, or should I have an attorney try to have this guaranteed as a condition of the short sale agreement?

A. Consultation with legal counsel on this matter is highly recommended.

Q. Am I more likely to be responsible for the deficiency judgment under a short sale or a foreclosure?

A. If we respond to this question with the belief and understanding that the waiver of a deficiency judgment would be a binding element in the short sale proposal and subsequent agreement, then the answer, of course, is that the homeowner in default of their mortgage would more likely be responsible for a deficiency judgment under a foreclosure. We recommend, however, that you consult with qualified legal counsel in this regard and investigate specifically whether or not steps can be taken to ensure that a waiver of the deficiency judgment can or cannot be incorporated into a final settlement.

You should also determine whether or not the lender is likely to call upon a collection agency after the closing to pursue you for any outstanding sums due the lender. If you sense that an attorney should be representing your interests, we believe you instincts are correct.

Q. When is a bankruptcy preferable to a short sale or to a foreclosure?

A. This multiple choice question can only be answered after exhausting all possible outcomes as they relate to individual circumstances along with the meticulous advice of legal counsel.

Q. How important is the short sale package or kit when applying for a short sale to a lender?

A. Indispensible!

Q. On my own, can I prepare a short sale package/kit, and if so, how would I go about doing it?

A. The short answer is yes, you can prepare your own short sale proposal and submit it to your lender. Some lenders may even assist you in the process. Just like preparing your own taxes, however, you might need help in this critical process. Real estate agents experienced in short sales understand that the bank will want to find out what efforts have been made or could be made to market the property for the highest price and best use of the property. In addition, most lenders will require Broker Price Opinions and or Competitive/Comparative Market Analysis to determine benchmark pricing.

Q. Will lenders tell me what I need to have prepared in a short sale, or do they only make this information available to real estate agents and attorneys?

A. While it is advisable to have a real estate agent assume this very time-consuming and administratively complex responsibility, homeowners themselves are recognized by lenders as being capable of dealing with short sale matters themselves. Lenders, however, are very vigilant regarding the information they require pertaining to marketplace pricing and related real estate information, and rely heavily upon the expertise of high-caliber real estate professionals.

Q. In selecting a real estate agent, when the prospects of a short sale are desirable, is it more important to choose a real estate agent who is very competent in overall real estate sales and marketing, and not as knowledgeable in the short sale process, or is it better to select a real estate agent knowledgeable in the short sale process, but very inexperienced or ineffective in real estate sales and marketing?

A. Obviously, home sellers should want a real estate agent who possesses significant expertise in short sales and in real estate sales/marketing. The greatest emphasis, however, should be placed upon selecting a real estate agent who is highly competent in the areas of marketing, merchandising (staging), negotiating, networking and information technology. The lender-required processes and information, although critical, represent more of a service. The aforementioned skills are indispensible in putting forth the best and most credible effort regarding the sale of the property. Lenders can discern the difference between real estate agents who only represent pre-foreclosure strategic advice and assistance-ee.g., the performing of the required administrative tasks-from leading real estate agents who can perform the required administrative tasks and who possess short sale acumen while representing world class real estate marketing-related skills.

Lenders . . . Recoup . . . To recover all or part of a loss

Q. When a real estate agent deems it necessary to alert cooperating real estate agents that their listed property is a potential short sale, so that the buyer does not unknowingly enter into a conditional negotiating process, how does this announcement prior to a lender’s consent impact the marketing, property value, and ultimately the negotiating position of the lender?

A. This practice of announcing a potential short sale “Sale,” before a lender agrees to the short sale conditions is considered by many real estate practitioners who represent home sellers as a method of undermining the integrity and market value of that particular property. Clearly, one can argue that by not providing this potential status to prospective buyer agents and thus, their clients, deprives them of a form of disclosure; this is why great debate exists surrounding the handling of a short sale situation.

Q. Should a lender do business with a so-called Short Sales Specialist who strategically advertises “Stop Foreclosures” to homeowners, when their intended approach is either most likely or solely a short sale outcome? Does the practice of labeling properties as possible short sales before they officially enjoy short sale status undermine the value of all homes within that marketplace?

A. We leave it to lenders to determine how they respond to the growing practice of homes for sale being labeled as members of either the troubled or the distressed property category, even though the property itself, and thus both the homeowner’s and the bank’s potential proceeds, is not troubled or distressed, but rather the homeowner and the lender. By categorizing properties as being distressed or troubled, it essentially undermines the underlying loan that supports the market value of the property.

Q. How can a lender best identify evidence within a short sale package/kit that the listing agent has placed much greater emphasis on supporting a lower short sale agreed-upon price than they have upon marketing for a greater selling price?

A. Lenders should respectfully challenge any real estate agent who supports any proposed sales price or offer as to the appraisal method they employ along with the specific and customized off- and online marketing methods they have designed for the subject property. In other words, evidence-based marketing versus merely evidence-based pricing.

Q. How can a lender best determine how dedicated a listing agent truly is to not just “Selling” a home but selling a home for more, in a climate where almost all low offers can be justified or rationalized as representing the best or the only possible offer that could be brought to the lender?

A. Simply ask the real estate agent what methods they employ to market homes for more. Otherwise, attention might be diverted to how they sell more homes versus how they sell homes for more. This is a powerful distinction that lenders must demand real estate agents respond to in order to best determine if the offer, which is part of the short sale kit, represents either optimum marketing or instead a convenient rationale for a significantly lower price.

Q. What can lenders do to prevent the real estate industry from becoming a “foreclosure-prevention” industry instead of an industry of world-class marketers dedicated to bringing back property values for both presently challenged and future home sellers?

A. Again, by communicating to the entire local real estate marketplace that any short sale packet being presented for short sale consideration must include an evidence-based marketing overview of the property, and not just a dazzling display of pricing data supporting a self-fulfilling prophecy of lower prices.

Q. When should a lender who holds a subordinate lien on the property being considered for short sale agree to or choose to resist a short sale resolution?

A. It would be presumptuous to suggest that lenders, given what is financially at stake for them, have not carefully considered the bottom-line implications of each and any lien position they hold as it relates to short-sale resolution and all other options available to the lender(s).

Q. When properties are promoted as being distressed or as potential “short sales,” does such labeling stigmatize not only the subject property but all other properties, and does this practice potentially damage the lender’s greater loan portfolio as well as the asset value of all homeowner properties? If so, should lenders communicate their concern to the real estate industry regarding how properties upon which they hold mortgages are being marketed given our economic climate?

A. We believe lenders should make it known to the real estate industry that certain marketing practices, which seem intended to exploit the current marketplace, are not being overlooked and will influence which real estate agents are selected to represent bank-owned/REO properties.

Q. Since a home seller does not stand to receive any money from the short sale, how can they best be motivated to enthusiastically support a marketing effort designed to realize an optimum sales price of their property?

A. As we responded to this question in the section for homeowners, the authors of this publication believe that homeowners first and foremost have an ethical responsibility when expecting the lender(s) to forgive any and all of the homeowner’s outstanding mortgage debt to, in return, expend the necessary effort to support as high a sales price as possible (even though there is not a financial gain to the homeowner). We also believe that the higher the realized sales price, the more likely the lender will be in granting a short sale outcome for the homeowner and possibly either fully or partially waiving a deficiency judgment. Moreover, we also advise homeowners to be wary of any real estate agent who-for the sake of facilitating a guaranteed sale in the hopes of generating a commission before a property is foreclosed (where they might not gain a commission)-demonstrates a less-than-professionalor lackluster marketing posture or commitment. Such agents justify this attitude by saying to a homeowner, “No matter what the home sells for, it really doesn’t affect your pocketbook, only the lender’s.” This less-than-professional marketing commitment on behalf of some real estate agents seeking to facilitate a short sale at all costs (but not to them) is one that lenders readily recognize. We find that this unprofessional approach to real estate marketing, notwithstanding the special circumstances surrounding a proposed short sale outcome, is to the detriment of well-intentioned homeowners who are hopeful of gaining lender cooperation. Lender cooperation, without question, is influenced by how honorable they believe both homeowners and real estate agents are in spite of the difficult circumstances facing the homeowner and the challenging marketplace facing the agent.

Q. Should a lender be concerned when a real estate agent is representing both sides of the transaction against the backdrop of a seller desperately seeking to avoid foreclosure and a bank’s predisposition towards short sales, versus the protracted, costly and legally cumbersome foreclosure/REO alternative?

A. Yes, lenders, more than ever, need to be circumspect regarding the individual circumstances surrounding how their mortgaged property is being recommended to “closure.” Buyers . . . Reap . . . Create Reward from the Benefit of A Short Sale Before buying a property marketed in a “short sale” context, consider the following:

Q. How much less should I offer on a property once I learn that the real estate agent has “labeled it to fellow agents” as a possible short sale, even though the bank hasn’t yet classified the property in such a fashion?

A. For the same reason that it most likely is not in the best interest of a lender or the ultimate sales price of a property when it is marketed as being “under duress,” it oftentimes is to the significant benefit of the buyer when a property is being labeled as a potential short sale. Any offer on any property in any marketplace should be made only after the buyer satisfies the need to thoroughly research what properties are selling for, how long properties are taking to sell, which way prices are trending, and to the degree possible, what pressures to sell might be facing the owner(s) of the property in question. Along with this approach to a proper pricing/offer strategy, it is recommended that the buyer be as aggressive as possible and anticipate an inevitable negotiating process. To that end, if a property is labeled as a potential short sale that might enjoy a stronger negotiating position, that will be reflected in your offer. At the same time, it is unwise to risk a great sales price (especially when one is seeking the lifestyle benefits of a particular home for sale) by pushing too hard and too unrealistically. It is recommended that when packaging the offer for a property that is being advertised as representing challenging circumstances, that the buyer make his/her case by understanding the position of the lender regarding a short sale outcome versus foreclosure or bankruptcy. The key is to not appear exploitive, but rather to appear as one who is willing to make a prudent decision, even while most others remain on the sidelines.

Q. Do some real estate agents make it a practice of building in preprogrammed or time-interval-based price reductions, and if so, can I assume that the longer I wait, the greater the discount I will enjoy?

A. Some agents do build in strategic price reductions to come at specific intervals and they see it as their earnest attempt to help their homeowner-client win the race against a foreclosure. Other agents, however, view this systematic concession as a lazy method that doesn’t require aggressive marketing (which is self serving to the agent who does not want to risk losing a sale before a foreclosure), even if it means contributing to the downward spiral of home values. If possible, buyers should try to determine if a particular real estate agent makes it a practice to systematically include interval-based price reductions when considering how to best “time” their offer, so it coincides with the agent’s willingness to concede to a lower price as a foregone conclusion.

Q. As the contract is subject to third-party approval, who is the seller of the property and with whom am I doing business?

A. You and the agent representing you are doing business first with the home seller and marketing agent regarding your offer, but must realize that ultimately the business decision will be made by the lender(s), although the home seller does not have to agree with the lender’s terms for the short sale approval.

Q. How can I, as a buyer, best determine whether or not the seller of a so-called potential short sale property significantly overpaid when they purchased the property?

A. Each property-although conveniently considered a comparable to other properties-is truly distinctive, and therefore, all pricing is subjective. Consequently, in order to best understand the relative value of a property and whether or not somebody overpaid or underpaid requires marketplace sophistication and savvy. The necessary marketplace information that is required to make the determination of what a property should have been bought for requires more than Internet-based research and statistics, but a thorough understanding and appreciation of the physical, exterior and interior condition and esthetics of a large number of properties that fall within the same range as the property being considered for purchase. We believe that an experienced real estate agent (like a Top 5 in Real Estate Network? member) can help buyers save tens, if not, hundreds of thousands of dollars by assisting them in determining how to best buy property in a financially challenged marketplace.

Q. Since short sale properties are expected to be purchased in as-is condition, given the lack of financial interest of a home seller regarding the outcome of their property, and considering the potential adverse physical effect that these circumstances have on the value of the property, how late in the negotiating process should my appraisal be in determining market value?

A. Any buyer for any property should be willing to pay for all relevant and necessary inspections and appraisals of the property, and have a pre-closing walk-through contingency as part of the sales agreement.

You should consider making any offer subject to the existing lender’s acceptance to include not only a general home inspection contingency, but also, where applicable, satisfactory inspection reports for lead-based paint, natural hazard disclosure, pest/insect report, underground storage tank, septic/sewer inspection, well water and seller (conditions) disclosures. All of these contingencies should be in addition to the typical mortgage, appraisal and title contingencies.

Q. How should a buyer negotiate with a lender on a short sale property when the lender typically is not subject to property condition disclosures and the seller, given their financial situation, may not be a viable party regarding future recourse?

A. Buyers, especially with certain types of homes (e.g., age and condition), should most definitely include disclosure concerns as they prepare and present their offer to the lender and as an overall part of their overall negotiating strategy.

Q. How can I find out about subordinate liens or other claims to the property, and how will this impact my negotiations and the time necessary to close?

A. Ask your agent to have a title search conducted; it will include all the necessary information regarding lien holders. This should guide you regarding the estimated time it will take before a closing might be possible. Further research into the short sale practices of each lien holder, and the institutions they represent, might also reveal their relative willingness to accept lower offers. It is also recommended that the buyer title the property with title insurance, although without a strategy to remove all liens, no closing will be possible.

Q. Please explain what options, other than a short sale, the primary lien holder has with regard to the disposition of this property.

A. The other options include deed in lieu, loan modification, forbearance and foreclosure.

Q. When is a short sale the bank’s better option, with regard to the disposition of the loan on this property?

A. When a lender deems that all other options are either too costly or carry with them a high level of financial uncertainty, the short sale represents closure and finality.

Lenders also often favor short sale resolutions because they are not in the business of, nor do they have expertise regarding, managing or owning properties. Moreover, short sales are typically less expensive for the lender than the foreclosure process.

Q. Where do you see my opportunity to reap a reward in the purchase of a property that is hopeful of a short sale resolution?

A. When your offer represents a quicker, cleaner and clearer financial outcome to the lender than the other options available to them.

Q. Under what circumstances would the bank reject or not consider my offer to purchase a short sale property?

A. The offer will not be accepted when it is considered to be either too low or not in the best interest of the lender. Mortgage preapproval, if possible by the lender, or a full-cash offer can eliminate the lender’s concerns regarding last-minute credit issues. A high loan-to-value ratio will also offer the seller/lender a higher level of comfort, especially if their institution will be the mortgagee for the transaction.

Q. Strategically speaking, what can I do to best ensure the bank’s acceptance of my offer to purchase the property?

A. From the lender’s perspective, the greatest qualities of the short sale resolution are closure and finality. By accepting your offer, even if the price is lower than market value, due to the situation, the lender can close the file and move on. To best ensure a smooth transaction, do not muddy the waters with contingencies and time frames inconsistent with conventional closing times. The lender will likely need to take time to deliberate prior to accepting an offer. Once the offer is accepted, anticipate that the lender will want to close within 30 days. Consider including language in your proposal and contract that provides the lender with the time they need to review the offer and reach a decision. Then include an iron clad means of closing (i.e., paying for the property on your part). When you remove obstacles in any real estate transaction, you pave the way to a smoother closing.

Q. With regard to price, what would you recommend to best ensure that the bank accepts my offer, and at the lowest possible price?

A. By the time you come to realize that a given offer on a given property makes sense for you, either as a personal or as a business investment, you should have completed a significant amount of research. Your research, or the research of your highly skilled and specialized real estate agent, should be able to help you arrive at a point where you have a rationally supportable negotiating range in mind, based upon market conditions, market prices, the investment you’ll be making and the return you are anticipating. We recommend that you consult with your real estate agent on how to best present your pricing rationale within the lender’s context. If you are going to make an offer because it is a good investment in today’s market and your offer is too low, the lender will likely reject the offer so they can gauge your perspective as a prospect. Share your reasoning with the lender so they can see your perspective as a buyer or as an investor. Creditworthiness notwithstanding, when the lender/seller understands your rationale they will also understand why they should not likely be able to anticipate a better competitive offer. When their other, more ambiguous options are not financially viable (e.g., foreclosure, bankruptcy, deed-in-lieu), and when your offer makes sense, you will have the best opportunity to have your offer accepted at the lowest possible price.

Q. What is the bank’s decision-making process in the consideration of my offer to purchase, and how long should I expect this to take?

A. The decision-making process varies, based on the institution. Here again, a highly skilled real estate agent experienced in this area can offer specific details regarding the details of the process in your situation. The lender/bank needs a rationale to justify any write-downs/write-offs. This can often be subject to internal lender protocols, and this can add time to the approval process. The lender will need to rely upon appraisals and broker price opinions that they will most likely order themselves. Both can be developed quickly. Some lenders will have a monthly meeting in which they review proposals. If a short sale package/kit is incomplete, expect it to be rejected or returned to you for clarification or review. This can delay your process up to one month or more. Lenders will generally need to negotiate to obtain releases from secondary lien holders. Anticipate that the time required for this process and subsequent negotiations have the potential to become protracted. Anticipate that a “simple” title search should be expected to take approximately three to five days. Remember, each lender has established their own rules for their short sale process, including what percentage of a debt-to-balance (ratio) payoff they will accept. The lender should also be expected to have internal guidelines for how much commission they will pay for real estate brokerage services and for attorney fees.

Q. What is an REO property?

A. The letters “REO,” stand for real estate owned. These are properties owned by a lender, in most cases a bank, and become classified as REO typically after an unsuccessful foreclosure auction when the title to the property reverts back to the lender. Some banks, given the number of properties they now own, have established their own REO departments. In many cases, leading real estate agents have developed relationships to create opportunities for buyers and investors. Buyers/investors can also contact the REO departments of lending institutions to learn about available properties or visit various bank-created websites, which list their bank-owned or REO properties for sale.

Q. In general, would a buyer benefit more from buying a bank-owned (or REO property) or a short sale property?

A. There is no general rule that can, with any degree of certainty, state which category of real estate buying results in a more favorable outcome for a buyer. It is important, however, that buyers understand that lenders are extremely motivated to sell when they own the property (REO). As a buyer, it is also easier to identify the true condition of an REO as the property should be vacant. Banks do not want to own properties and have a great incentive to not only sell their properties, but will actually offer credits to buyers, in some cases, if the buyer agrees to fix defects or perform renovations on the property. Short sales offer many advantages as well as evidenced throughout this information; but again, it is very difficult for anyone to categorically assert that either foreclosures or short sales represent the best opportunity for a buyer.

Q. What is the estimated time between the acceptance of my offer and the closing?

A. There are no norms with which we can guide you. Each jurisdiction has required time frames for notification of the intent to foreclose and for the various steps in the process. Once again, we recommend that you work with qualified, licensed professionals, including attorneys with local experience in your market, for specific guidance in this are. As a generality, however, it is not uncommon for a lender to consider a proposal for approximately 60 to 120 days and anticipate closing 30 days after they accept your offer.

Q. Is it worth the wait?

A. In many cases, yes, it is worth the wait, but this depends upon each person(s) circumstances.

Q. What is the benefit of buying a short sale property as opposed to buying a conventional property?

A. For the buyer, it is a better or lower price, resulting from a stronger negotiating position; for the seller/lender, it is the opposite.

Q. How do I learn about the relevant local real estate market during the last year or so, and how can I get predictive data regarding estimates of future prices?

A. Contact a real estate agent and ask them to provide all past and present pricing data, absorption rate data (where available) and all other contextually relevant information they can make available to you.

Q. Can I benefit from buying a property that was marketed as a distressed or short sale property, and then turn right around and sell (flip) it for more by removing this stigmatized label?

A. When real estate prices were escalating rapidly, properties were being purchased and refinanced as the market continued to rise. This practice created equity leveraged by credit debt. Fearing a reversal of this trend and the resulting under-collateralized loans that would inevitably follow, the Federal Housing Administration (FHA) implemented “anti-flipping” regulations as a condition of the loan, which, under specific circumstances, require the owner to hold the property for a fixed amount of time prior to selling it once again. As of right now, these regulations have been temporarily waived. Check with qualified counsel for details on how this may or may not affect your investment decisions.

Benefiting from the purchase and subsequent sale of a distressed or short sale property would depend more upon what your purchase price was than on how the property was labeled. However, because the property was “labeled” and viewed by the marketplace as being a “distressed” property, it may have very well led to a much lower price when you bought it. Fully consider the tax implications as well.

Ask your CPA about the $250,000 home sale exclusion. In the case of an owner-occupied residence, under the current IRS regulations, you would have to live in the property for two out of the first five years of ownership to qualify for the $250,000 home sale exclusion. We highly recommend that you consult with qualified licensed professionals prior to making such purchasing or investment decisions.

Limit of Liability/Disclaimer of Warranty: The information and opinions expressed herein are presented with the understanding that they do not represent any or all of the opinions of the Top 5 in Real Estate member making this publication available to you. The information contained herein is not intended to be a comprehensive discussion of the strategies or concepts mentioned. Nor is any information or data discussed intended as tax, investment or legal advice. In pursuing any concept or idea presented, you should rely on your own due diligence and on your own attorneys, accountants and other professionals to determine if such ideas or concepts are appropriate for you. Although information herein has been obtained from sources believed to be reliable, RISMedia, Inc., the Top 5 in Real Estate Network® and its local member do not guarantee its accuracy or completeness and accept no liability for any direct or consequential losses arising from its use. RISMedia, Inc., the Top 5 in Real Estate Network® and its local member assumes no responsibility for any errors, omission or damages arising from use of information contained herein.