Improving the Short Sale Process

August 2, 2008

I have been calling to Ban All Short Sales .short sale process in phoenix

We are over run with short sales, lender owned homes (REO) and foreclosures here in Greater Phoenix, Scottsdale, Mesa, Peoria, Tempe and other parts of the east valley.

It has drastically effected market prices in all cities; even in areas normally immune to price declines like golf communities in North Scottsdale like DC Ranch, Troon and Grayhawk.

It has further hurt the supply dramatically. Foreclosures statistics reported by R.L. Brown were 3,275 foreclosures compared to 4,565 resales.

Almost 42% of all homes sold are foreclosed properties. (which mostly become bank owned (REO).

Prior to these foreclosures most of these homes are listed as Short sales. The problem is that the vast majority of these homes are not-approved short sales. You have buyers wasting time making offers that may never get accepted even at full price as the bank has not agreed to the sale.

The Arizona Association of Realtors (AAR) has worked diligently and made every effort to improve the short sale process in light of the fact that each lender (bank) has its owned specific guidelines on what they require to approve a short sale.

Foremost, agents are becoming educated on the process through a revised short sale addendum.

This is the language of the Short Sale addendum that agents and buyers and seller should be aware.

Foremost, sellers are advised that they explore all options available prior to a short sale; Primarily due to the fact that lenders are not apt to accept a short sale unless the seller is truly in financial hardship and do not have much or any money available at all.

  • The first step is to draft a hardship letter explaining the situation including supporting bank account information, tax returns, etc… to expedite the claim.
  • Sellers need also be advised that the short sale will almost certainly effect their credit score negatively.
  • Importantly, the seller need to be aware that the sell is unlikely to forgive the debt (short sale deficit) obligation completely.
  • The seller will likely receive a 1099-S from the bank for the deficit of the short sale; this is considered a relief of debt from the IRS and may be treated as income for tax purposes.
  • Finally, the seller is advised to speak with an attorney and CPA.

The above information may sound intimidating.

However, it is critical that this AAR Revised Short sale addendum is read and understood by real estate agents prior to advising sellers and taking listings.

It is more critical that short sale sellers (tongue twister) understand what needs to transpire to not only sell the property successfully, but also the possible risks they face.

Disclose, Disclose, Disclose is my motto. Always, better to know and be prepared prior to any issues.

The more educated real estate agents and sellers are in today’s market, the better the short sale process becomes.

As a result, the short sale becomes a more effective tool to close transactions, create market liquidity, and more quickly reduce our overhang of inventory in Maricopa County.

Please share your thoughts, good , bad , … just not indifferent

____________________________________________________________________________

Copyright © 2008 By James Wexler, All Rights Reserved. *Improving the Short Sale Process*

Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs

Related Posts

Written by James Wexler · Filed Under Articles, Short-sales / Foreclosures 

Comments

Got something to say?