Florida Real Estate Blog

They are both part of the Foreclosure process when a family can no longer afford their home. Yet there is a marked difference in the time it may take to successfully purchase the home. So let’s understand the differences.

Short Sale – this is a home that the family still owns and has stopped making payments on. They may still be living in it or they may have moved out and taken appliances and in some cases all the plumbing and electrical fixtures. This home is being sold by the Realtor for the family and the families Lender(mortgage) has to approve this sale as they will be receiving less money than they are owed (that is the reason it is called short sale).

These can take 3 to 4 months to complete and even then you may get to the closing only to find out that some of the documents the family’s lender is requiring them to sign is not agreeable to the family and they walk out of the closing. We have successfully sold and purchased these type homes for our sellers and buyers but do not recommend this opportunity to anyone that has a specific time frame that they need to be in a home.

Bank Owned – is exactly that, it probably was a Short Sale and it did not sell and the bank foreclosed on the property. In this case they can make a decision usually within two weeks and expect to close within 30 days once they accept your offer.

Both of these will expect a “proof of funds letter” from any cash buyer or a Pre Approval for anyone that is going to purchase with a mortgage. They will be selling AS-IS with a right to inspect (to be done within 10 days after acceptance of offer). As neither the seller or the Bank will put any money into repairs that may be needed.

So why go after these properties? They usually are the best priced properties in the neighborhood and they may actually pay up to 3% of your closing costs. They do not however sell at .70 on the dollar (i.e. 30% discount). In Seminole count lately they have been selling within 90% of asking. So a $200,000 home would sell some where between $180,000 and $200,000 and can have a multitude of buyers bidding on it.

This is a light read on this subject, much more can be found by going to Google and type in “Short Sale or Foreclosure”.

As a Realtor we have the opportunity each month to work with numerous Lenders and the group we fear working with the most are the monster mega banks as Clark Howard (Radio Talk Show host) calls them. They are the one group of lenders that consistently promise to deliver and 90% of the time they do not.

We are left with a family hoping to move in over the weekend only to find out they have to unpack the rental truck and return it or pay for 3 to 4 more days of rent. The Realtors are running around on the last day of the contract trying to get an extension from the Seller and Buyer so we can stay under contract.

This is very frustrating for the poor Seller who may be planning on buying their next home that same day. Now we have 3 families impacted all because the bank is allowed to misrepresent their ability to provide a mortgage package in a time frame less than 35 days. That is just my rant if you really want to get upset with the banking system go to ClarkHoward.com he has some major blogs about what they are doing with ATM cards and their credit card companies. Please, what ever you do, stay away from those banks. They will only hurt you over time.

This is an IRS credit to a homebuyer it will reduce your tax liability or if you have already filed your tax return you can file an amendment form and they will send you a check for the amount you qualify for. There is a cap on the size of home and your income. Home size is nothing over $800,000 (poor baby). Income is $125,000 single and $225,000 family filing jointly. The credit is actually 10% of your sale price. So a home purchased for $50,000 would only qualify for $5,000 not the $8,000.

First time home buyers credit is a max of $8,000. First time buyer is defined as anyone who has not owned a home in the past 3 years. The $6,500 credit is for a family that has owned their home at least 5 of the last 8 years.

The form you need to file is a 5405 we can supply that to you or you can go to IRS.gov and download your own and preview their FAQ’s that covers this in a lot more detail than a blog allows.

P.S. That long form you had to sign 8 different copies at the time of closing. Yep they want to see one of those( you will find it in the folder the Title Company gave you that day).  Hope you already corrected your drivers license with your new address cause they would like a copy of that.

Our company sent this out today. Consider this my public duty. I did it you can to.

REMEMBER: Cell Phone Numbers Go Public this month.

REMINDER..... all cell phone numbers are being released to telemarketing companies and you will start to receive sales calls. .... YOU WILL BE CHARGED FOR THESE CALLS

To prevent this, call the following number from your cell phone: 888-382-1222.

It is the National DO NOT CALL list. It will only take a minute of your time.. It blocks your number for five (5) years. You must call from the cell phone number you want to have blocked. You cannot call from a different phone number.

HELP OTHERS BY PASSING THIS ON .. It takes about 20 seconds.

https://www.donotcall.gov/default.aspx

They are both part of the Foreclosure process when a family can no longer afford their home. Yet there is a marked difference in the time it may take to successfully purchase the home. So let’s understand the differences.

Short Sale – this is a home that the family still owns and has stopped making payments on. They may still be living in it or they may have moved out and taken appliances and in some cases all the plumbing and electrical fixtures. This home is being sold by the Realtor for the family and the families Lender(mortgage) has to approve this sale as they will be receiving less money than they are owed (that is the reason it is called short sale).

These can take 3 to 4 months to complete and even then you may get to the closing only to find out that some of the documents the family’s lender is requiring them to sign is not agreeable to the family and they walk out of the closing. We have successfully sold and purchased these homes for our sellers and buyers but do not recommend this opportunity to anyone that has a specific time frame that they need to be in a home.

Bank Owned – is exactly that, it probably was a Short Sale and it did not sell and the bank foreclosed on the property. In this case they can make a decision usually within two weeks and expect to close within 30 days once they accept your offer.

Both of these will expect a proof of funds letter from any cash buyer or a Pre Approval for anyone that is going to purchase with a mortgage. These homes will be selling AS-IS with a right to inspect (to be done within 10 days after acceptance of offer). As neither the seller or the Bank will put any money into repairs that may be needed.

So why go after these properties? They usually are the best priced properties in the neighborhood and they may actually pay up to 3% of your closing costs. They do not however sell at .70 on the dollar (i.e. 30% discount). In Seminole count lately they have been selling within 90% of asking. So a $200,000 home would sell some where between $180,000 and $200,000 and can have a multitude of buyers bidding on it.

This is a lite read on this subject much more can be found if you google “Short Sale” or “Foreclosure”. Please give us a call with any questions.

So why is the house I want to buy more expensive than what the county appraiser says it is worth?

The Appraiser uses two values Market value and Assessed Value. Market value is always determined before the current tax year and takes into account recent sales activity. Our experience find no support for the number they come up with.

How can my tax increase when my Market value decreased? The Save Our Homes Amendment states that your assessed value must increase by the annual cap (1/10 of 1%) until it reaches the Market Value.

If you want to Petition to adjust your tax responsibility you have up until Sept. 11,2009

To file. You can get the form online at the County Appraisal site or go to their office.

Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.  Suggest you go to the following Home Builders link below it has all the info you need.

http://www.federalhousingtaxcredit.com/2009/faq.php

How can you not love our Government? Every time they attempt to do something to help the people they show just how inept they really are. So here we go again.

$8,000 first time home buyer credit. Sounds great and this time (unlike the $7,500 of last year) you don’t have to pay it back. But the devil is in the details. To qualify for this you cannot have owned a home in the past three years. Well that’s not entirely correct. You see in this new economy of ours we are neutral on all things that our founding fathers held dear. I.E. Marriage. In the details of this package a couple (not married but living together) can purchase a home and qualify for the $8,000 credit even if one of them has owned a home in the last 3 years. Where as a Married couple that has owned a property cannot qualify for even half of the credit. So the lesson to be learned from this is “Parents don’t let your kids grow up to be married”. In this case you are treated as a 2^nd class citizen and it cost you $8,000. Oh yes that’s right our new government as our President said during the campaign will decide how much you really need and what did Joe say, Oh yeah it is patriotic to give. I just don’t understand how a married couple making $50,000 has any more money to give than an unmarried couple making the same amount and living together has. Could someone explain this to me?