Whidbey Island Real Estate

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6 Tips for Buying a Home in a Short Sale

By preparing for a real estate short sale, you can emerge with a great home at a favorable price.

1. Get help from a short sale expert

A real estate agent experienced in short sales can identify which homes are being offered as short sales, help you determine a purchase price, and advise you on what to include in your offer to make the lender view it favorably. Ask agents how many buyers they’ve represented in short sales and, of those, how many successfully closed the transaction.

2. Build a team

Ask agents to recommend real estate attorneys knowledgeable in short sales and title experts. A title officer can do a title search to identify all the liens attached to a property you’re interested in. Because each lienholder must consent to a short sale, a property with multiple liens, like first and second mortgages, mechanic’s and condominium liens, or homeowners association liens, will be harder to purchase.

A title search may cost $250 to $300 up front, but it can help weed out less desirable properties requiring multiple approvals.

3. Know the home’s fair market value

By agreeing to a short sale, lenders are consenting to lose money on the loan they made to the sellers to purchase the home. Their goal is to keep those losses as low as possible. If your offer is dramatically less than the home’s fair market value, it may be rejected. Your agent can help you identify the price that’s good for you. The lender will determine whether approval is in its best interest.

4. Expect delays

There are two stages to a short sale. First, the sellers must consent to your purchase offer. Then they must submit it to their lender, along with documentation to convince the lender to agree to the sale.

The lender approval process can take weeks or months, even longer if the lender counteroffers. Expect bigger delays if several lienholders are involved; each can make a counteroffer or reject your offer.

5. Firm up your financing

Lenders will weigh your ability to close the transaction. If you’re preapproved for a mortgage, have a large downpayment, and can close at any time, they’ll consider your offer stronger than that of a buyer whose financing is less secure.

6. Avoid contingencies

If you must sell your current home before you can close on the short-sale property, or you need to close by a firm deadline, your offer may present too many moving parts for a lender to approve it.

Also, consider ordering an inspection so you’re fully informed about the home. Keep in mind that lenders are unlikely to approve an offer seeking repairs or credits for such work. You’ll probably have to purchase the home “as is,” which means in its present condition.

By: G. M. Filisko

This article includes general information about tax laws and consequences, but isn’t intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

More on short sales

Real-life discussions of short sales

G.M. Filisko is an attorney and award-winning writer who luckily has avoided the need for a short sale on her properties. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.


June 6, 2011 Posted by | Foreclosures, Real Estate, Short Sales, Whidbey Island | , , | Leave a comment

Oak Harbor Homes For Sale

We have been representing sellers with Oak Harbor Homes for Sale for over 60 years. This last few years have been some of the most difficult years for having  Oak Harbor homes for sale. Due to the huge appreciation that we had in home prices during the 2000-2005 boom years, we now have quite a few Oak Harbor homes for sale that the sellers are under water on their mortgages. They owe more than the current value of the home due to the decrease in home prices. The options  for these seller are not always easy. They can either sell their home at a loss and come out-of-pocket at closing for the difference, which is beneficial for their credit rating, and if they are military can keep their security clearance free of defects.  Other options  for a seller with an Oak Harbor home for sale is to allow the bank to foreclose on their mortgage and take the house back or the seller could consider a Short Sale of their home.  A short sale allows the home to sell at less than what is owed and the bank takes the loss. This can also have some detrimental effects on the sellers credit rating but it can be better than a foreclosure.  Banks normally would rather have a short sale than a foreclosure because of the economics involved and the condition of the home.

Due to the conditions for sellers of Oak Harbor homes for sale, buyers can benefit during this market. There is a large supply of homes available as well as some historically low interest rates available. Together with the lower values of most of the Oak Harbor homes for sale, this makes for an outstanding time to buy.  We would be happy to provide a list of Short Sale homes for sale or a list of Foreclosed homes for you to consider.If you would like more information regarding Oak Harbor homes for sale, please visit our website at any time. We are here to serve both buyers and sellers of Oak Harbor homes for sale.

April 27, 2011 Posted by | First Time Home Buyers, Foreclosures, Oak Harbor, Real Estate, Sellers, Short Sales, Whidbey Island, Whidbey Island Real Estate | , , , , , , , , , | Comments Off on Oak Harbor Homes For Sale

What Information is Needed to Process a Short Sale.

In order to help you avoid foreclosure and to process a short sale, we will need to have your house on the market for sale.  We will also need to communicate with the lendor(s). In order to start this process the following information will be needed (if applicable).

1. All owners present at appointment (if at all possible). All the persons included in the title and mortgage loan(s) must be present at appointment. Out of state homeowners can complete transaction through power of attorney or fax and email.
2. Hardship letter. A letter that states the events and reasons that caused the owners to not be able to make the house payments. We can help you with this.
3. Bank Statements. Last (2) months bank statements from all the banks where the owner(s) have accounts.
4. Financial statement. A statement that shows all the income sources, savings, assets and expenses of the owner(s). We can help you with this.
5. W-2 Forms. Last (2) years W-2 forms from all the jobs of all the owners or 1099 forms if applicable.
6. Tax Returns. Last two years federal tax returns.
7. Insurance Claims Proof when there is damage in the property.
8. Bankruptcy Letter or proof of bankruptcy proceedings.
9. Proof of Divorce. Any document that proves divorce.
10. Court Approvals. Any court approvals needed for the sale of properties in case of owned by a diseased person.
11. Proof of Disability if person is presently disabled.
12. Any document useful that may demonstrate inability to keep up with mortgage payments.
13. Police Reports in case of property damaged by fire or similar event.
14. Authorization Form-Permission for us to talk to your lender(s) on your behalf.

We will keep all the information you provide to us confidential. It will only be used, in a limited way as per required by the bank(s) that hold(s) your mortgage.

Time is of the essence. Please collect all the material as soon as possible and call us for an appointment. As you know, there is a very limited amount of time to take action, particularly if there is already an auction date.

Please feel free to contact us for further information regarding any of the above.

January 11, 2011 Posted by | Bank Owned Properties, Foreclosures, Home seller questions, Sellers, Short Sales, Whidbey Island, Whidbey Island Real Estate Condition | Leave a comment

9 Frequently Asked Short Sale Questions

1. What is a real estate short sale?
A short sale occurs when a lender agrees that it will take less than what the homeowner owes on their note.  The lender usually agrees to this during the beginning stages of foreclosure when the they realize that the homeowner will not be able to meet the terms of their agreement and will be foreclosed upon if a short sale does not occur. This short sale would result in a substantially discounted purchase price for the end buyer of the home. The buyer would then proceed with the purchase of the home when the lender agrees to a price.

2. Will a lender allow a real estate short sale when the seller has some a good amount of equity?
If the home has some amount of equity, the lender may choose to continue with a traditional foreclosure proceeding to regain title to the property and dispose of it at a fair market price. Short Sales are generally discounted below fair market value, because the time value of money makes it more viable for the lender to sell it quickly rather than waiting through the redemption period, which in some states can be 6 to 12 months.  Banks are not in the real estate business and generally don’t want to own the home.  

3. What documents are necessary to proceed with a short sale?
The individual documents necessary to proceed with the short sale will depend on the lender. Typically, the lender will require hardship letter detailing the circumstances leading to a short sale. A signed, valid purchase and sales contract, preliminary HUD-1 settlement statement and a preliminary estimate of proceeds to the lender. There may be additional requests for more detailed information on the financial condition of the seller, ie; pay check stubs, bank statements, a personal financial statement and monthly budget assessment, amongst other things.

4. Will the seller’s credit be affected if they agree to a short sale versus a foreclosure?
While it is up to the individual lender to decide what to report, what often happens is the loan will report as “paid” on their credit report for a short sale, and sometimes with a reference that says “settled for less than originally owed”. A foreclosure will show as a default and can affect one’s credit for 3-7 years.  It is absolutely less damaging to have the short sale referenced than to have a foreclosure on a credit report.

5. Will a lender allow the homeowner to make a profit on a short sale?
Absolutely not. The lender is taking a loss when they agree to a short sale and they will not agree to let the homeowner benefit financially.

6. If a seller is in bankruptcy, will that affect the short sale of the property?
Absolutely, as most lenders will not consider a short sale if the homeowner is in the middle of a bankruptcy proceeding. Negotiating a short sale between the parties is considered a collection activity and such a negotiation is prohibited during bankruptcy proceedings.

7. Will the bank or lender require an appraisal on the home in a short sale?
Most lenders will hire a broker to develop a Broker’s Price Opinion (BPO) to determine the value of the home. Some will require that a full appraisal be submitted in the short sale package. The lender will need some formal assessment of the value of the home in order to make a decision as to an acceptable offer.  Settling on an agreeable price usually requires some negotiating between the end buyer and the lender and this can be an iterative process.
8. Are there tax implications for the short sale?
Much like the issue of credit reporting, the circumstances vary by lender. As a short sale represents a loss for the lender, they can report the amount lost as “debt forgiveness” to the seller. If a formal tax form 1099 is filed, the seller may be responsible for paying taxes on the amount of debt forgiveness. A CPA should be consulted by the homeowner in this situation.

9. Why would a lender agree to a short sale?
The lender doesn’t want to own the home because they are not real estate experts.  Foreclosure proceedings can be very time-consuming and costly.  The seller is relieved of the home they can no longer afford. The buyer is purchasing the home at an attractive price. A professionally executed short sale can benefit all parties involved in the transaction.

Request Additional Short Sale Information

Courtesy of:  Donna Sanford

November 29, 2010 Posted by | Bank Owned Properties, First Time Home Buyers, Home buyer questions, Home seller questions, Sellers, Short Sales, Whidbey Island Real Estate, Whidbey Island Short Sales | , , , , , | Leave a comment

Short Sales – What They Are, How They Can Help

 When you’re looking at an underwater mortgage or are having the kind of financial difficulties that are pretty common in this economy, home short sales are one way out.

In a short  sale, your mortgage lender agrees to let you sell your house and agrees to take the amount you get for it-not the full amount of the mortgage.

Short sales help in many ways. For one, during the process of negotiating for and holding the short sale, you can live in your house. Also, when you have a short sale on your home, you don’t walk away with as big of a black mark on your credit as you do with a foreclosure. Of course, even if you start out with a short sale, you may only be delaying the time before you end up foreclosing if your house doesn’t sell.

Now, you can’t just walk into your lender’s office and say you want to have a short sale on your house. You are going to have to prove financial distress, and you’re going to have to walk in with proof of what your house is actually worth now. You will also need to have a proposal, complete with total costs of the sale. Your Realtor will work with you to create these documents.

But even if you qualify, you may have a hard row to hoe with your lender at first. Many lenders are still resisting, even though the sales save them thousands of dollars on foreclosing costs, property maintenance, and sales costs. So be persistent if you have to – someone at your lender may well see reason.

Also, there’s a new federal program that is giving money to both lenders and homeowners to help the process along. This program will also help if you have more than one mortgage on your house. We have more information about the Home Affordable Foreclosures Alternatives program. Please contact us for more information.

So before you get into a panic over your situation, realize that you do have some power here. You can come out of this with your family, your pride, and even some of your finances intact. Just take the lead and start negotiating – home short sales save lenders money, save homeowners heartaches, and save communities from the blight of foreclosed, empty houses!

Don’t worry about finding an educated, certified short sale Realtor to list your home. Just contact us and we’ll be happy to help you.

Article Source: William Bud Gragg Jr.

October 20, 2010 Posted by | Bank Owned Properties, Foreclosures, HAP, Real Estate, Sellers, Short Sales, Whidbey Island Real Estate, Whidbey Island Short Sales | , , , | Leave a comment

Bank Of America Halts Foreclosures

WASHINGTON (AP) — A mushrooming crisis over potential flaws in foreclosure documents is threatening to throw the real-estate industry into chaos, as Bank of America today became the first bank to stop taking back tens of thousands of foreclosed homes in all 50 states.

The move, along with another decision on foreclosures by PNC Financial Services Inc., adds to growing concerns that mortgage lenders have been evicting homeowners using flawed court papers.

Charlotte, N.C.-based Bank of America Corp., the nation’s largest bank, said today it would no longer complete foreclosures in all 50 states as it reviews documents used to process foreclosures. That applies to homes that the bank takes back itself and those that it transfers to investors such as mortgage giants Fannie Mae and Freddie Mac.

A week earlier, the company had said it would only do so in the 23 states where foreclosures must be approved by a judge.

October 8, 2010 Posted by | Foreclosures, Real Estate, Sellers, Short Sales | Leave a comment

What Are The Advantages of a Short Sale in Real Estate

A short sale occurs when a property owner sells real estate for less than the property’s loan balance. The property owner typically does this when he becomes upside down on the loan, meaning the property value is less than the loan amount. The lender must give permission for the short sale to proceed. In some instances, the lender forgives the unpaid amount, while in other cases the lender issues a deficiency judgment against the borrower after the short sale.

Lender’s Advantage
•When a borrower defaults on a loan, one option for the lender is to foreclose on the property. During a foreclosure process, an angry homeowner might damage the property, refuse to leave or leave prematurely without making necessary arrangements for the care and maintenance of the house. With a short sale, the borrower initiates the process, and if the property is a home, he typically agrees to continue residing at the property. While the lender may receive less than the initial loan balance when the property sells in a short sale or after a foreclosure, the lender could issue a deficiency judgment after the short sale in an attempt to recoup the unpaid balance.

Borrower’s Advantage
If a homeowner discovers she is upside down on a loan and needs to move and sell the property, one option is a short sale. In some instances, the lender will agree to forgive the unpaid balance after the sale. Other circumstances can prompt a short sale, such as when the property owner has lost her job and is unable to continue making the house payments yet cannot sell the property for enough to cover the loan balance.

Property owners often perceive short sales in a less negative light than a foreclosure. In some instances, the short sale may be less damaging to the borrower’s credit, but it depends on how the lender reports the short sale on the borrower’s credit history.

Buyer’s Advantage
•Both a foreclosure and a short sale can be a bargain. But in a foreclosure, the buyer is purchasing from the lender, while the buyer is purchasing from the borrower in a short sale. When buying from the property owner, the buyer has more opportunity to learn about the property and receive a full disclosure. Lenders usually do not know the intimate details about a house during a foreclosure, such as, for example, a mold infestation the previous year. A property owner who is the seller is obligated to give a full disclosure on the property to the buyer. A homeowner would be less likely to do malicious damage to the property during a short sale, as opposed to a foreclosure, since he is a party to the transaction as the seller.

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By Ann Johnson, eHow Contributor

    October 4, 2010 Posted by | Foreclosures, Real Estate, Short Sales, Whidbey Island Real Estate, Whidbey Island Short Sales | Leave a comment

    Foreclosure & Short Sale Scams are Going Strong

    The housing market in the United States may not be thriving, but business is booming for foreclosure rescue and loan modification scammers.

    The US Government Accountability Office (GAO) released a report in July 2010 entitled “Home Ownership Preservation”. It states that: “The current foreclosure crisis has provided persons who may perpetrate mortgage foreclosure rescue and loan modification schemes with unprecedented opportunities to profit from homeowners desperate to save their homes.

    The GAO report says there are two main types of foreclosure rescue and loan modification scams: advance-fee loan modification schemes and sales-leaseback schemes, with advance-fee schemes being the most common.

    The Federal Trade Commission (FTC) reports on a new twist on the advance-fee scam that’s showing up this year, a “forensic mortgage loan audit.” The scammer offers to find regulatory violations in your original mortgage that will help you avoid foreclosure or even cancel your loan. There’s no evidence that anyone has ever succeeded in modifying their loan using this approach.

    Here are some “red flags” that at-risk homeowners should watch out for when looking for foreclosure help, courtesy of the FTC. You should avoid any business that:

    • guarantees to stop the foreclosure process – no matter what your circumstances
    • instructs you not to contact your lender, lawyer, or credit or housing counselor
    • collects a fee before providing you with any services
    • accepts payment only by cashier’s check or wire transfer
    • encourages you to lease your home so you can buy it back over time
    • tells you to make your mortgage payments directly to it, rather than your lender
    • tells you to transfer your property deed or title to it
    • offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale
    • offers to fill out paperwork for you
    • pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.

    courtesy of MilitaryAvenue.com

    September 16, 2010 Posted by | Bank Owned Properties, Foreclosures, Short Sales | 1 Comment

    Whidbey Island Short Sales

    Whidbey Island, Wa. is home to Naval Air Station Whidbey Island. Many of our homeowners are active military members and must relocate every 3-4 years. During normal economic times, purchasing a home, living in it for 3 years and selling when needed is not a problem. With a normal 3% – 5% yearly appreciation, selling costs are absorbed and a small profit can be made if the owner needs to sell after 3 years of home ownership. They have experienced the tax benefits, as well as all of the other benefits of owning a home on Whidbey Island during that time.

    During today’s economic times though, most of our homeowners that purchased a home in the last 3 -4 years are upside down with their mortgage. There is more money owed than the house can sell for thus creating a predicament for the homeowner. One of the solutions is to allow the bank to foreclose on the home, drastically affecting credit ratings, etc. Another possible solution is to work out a compromise with the lender and sell the home for less than what is owed. These are commonly known as a short sales.

    On Whidbey Island today, we are experiencing quite a few short sales. It is a large segment of our real estate market at this time. Anyone considering purchasing a home would want to consider short sales. There are some unusual circumstances and time lines required with short sales and they should be entered into only with a knowledgeable agent as your guide.

    View a list of Whidbey Island Short Sales and contact a qualified agent today.

    July 26, 2010 Posted by | Foreclosures, Short Sales, Whidbey Island, Whidbey Island Short Sales | Leave a comment


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