There are several areas of concern homeowners have in considering a short sale.  If you’re contemplating a short sale or ‘walking away’, you need answers to these questions to make an informed decision.  Please contact me for assistance in getting these answers from reliable sources:

There are legal issues you absolutely have to be aware of before moving forward with a short sale.  A consultation with an attorney to determine what option is best for you is imperative.  For example, would you be responsible for a deficiency?  Go to this 3 minute video by a real estate law firm explains the laws in Arizona and different loan issues you should be aware of.

3 minute video:  AZ’s laws and issues of short sales:  click here.

To discuss your circumstances privately, please contact me.

For most of my clients who are considering short sales, the thought of not paying their mortgage is nerve-wracking enough, let alone the thought of short selling or foreclosuring.  I understand; you want good credit-you may want or need to use it, and you don’t want to risk being sued by the lender, naturally.  These are serious issues and questions to be answered.  And it is necessary to know all the ramifications to make an informed, educated decision that’s best for you today and tomorrow.

This video is helpful in the understanding the foundation of law when in your position.  Once you’ve gotten this done, you’ll be able to have a much more intelligent and detailed conversation with a professional, and know all the right questions to ask: Short Sale Legal Video

With historically low interest rates and market prices at a generational low, it appears to be a good time to determine if its the ideal time to take a step up, whether its getting into that neighborhood you adore, adding another 1,000 square feet of living space, or a larger yard with a pool and great outdoor entertaining.

There are 5 things to consider:  finances, equity, housing trends, family considerations and energy.  Click here for a link to the full article to get the details on each of these considerations.

One of my favorite sources for exceptional and worthy information is the CEPR (Center for Economic and Policy Research).  The latest Housing Market Monitor Report (which is published monthly and provides an incisive breakdown of the latest indicators and developments in the housing sector) shows that the first time home buyer tax credit (which expired last year) was buoying our housing recovery.  Now that it has expired, we’re seeing the bottom tier priced housing (which attracts most first time home buyers) take a dramatic dip down, which is having an effect on the higher end homes, as well.

“The price declines now showing up for the overall indexes in most cities indicate that the price drop for bottom-tier homes is now having an impact on the prices of more expensive homes. This is predictable, since the sellers of bottom-tier homes are buyers of higher-end homes.”

What does this mean to sellers?  Things aren’t going to get easier for you, athough maybe this is an indication that it is time to get out from underneath.  The advice I have is to ensure you stay ahead of the market where pricing is concerned.  What does this mean to buyers?  It’s a buyers market…and will be for a while.

Click here for the entire article, which is a nationwide view of foreclosure rates and economic foreshadowing.  Contact me to discuss your circumstances.

On average, 21.2% of single family homes have received at least one Notice of Trustee Sale (the bank is letting you know that you have an auction date) since the beginning of 2006.  !!!!!

On average, 12.6% of the single family homes in Maricopa County have been foreclosed (ie the bank took them back) with a recorded Trustee Deed since the beginning of 2006.  That’s just over one in eight homes.  !!!!!  NOTE:  there are some 1,300 or so unrecorded Trustee Deeds as of December 22.

So where in the Valley has this foreclosure percentage been highest?  Here are the top 10 zip codes with the highest foreclosure rates:

1-85043 Phoenix

2-85353 Tolleson

3-85037 Phoenix

4-85335 El Mirage

5-85354 Tonopah

6-85326 Buckeye

7-85323 Avondale

8-85033 Phoenix

9-85379 Surprise

10-85031 Phoenix

All of these are in the West Valley; in fact, it isn’t until #24 that you find a property not in the West Valley (it’s in S. Phx).    There’s also evidence that foreclosure prevention attempts are not successful in these areas (or maybe not attempted?).

We see that the two types of areas least affected by foreclosures are those containing higher end homes and the 55+ communities. In many of the luxury home areas there is evidence reflecting a higher success rate in avoiding foreclosure, most frequently through a short sale (or maybe more aggressively or consistently pursued?).

It almost goes without saying that foreclosures have a direct effect on home pricing. Hence the ZIP Codes with the most foreclosures are usually those where home prices have fallen the most, while those with lesser foreclosures have fallen the least. However, the relationship is not exact.

Sun City West 85375 has the greatest preservation of $/SF across the whole valley. But then it also has had the lowest percentage of foreclosures. Again looking for anomalies we see that Chandler 85286 and 85249, Gilbert 85233 and Mesa 85205 have preserved their pricing better than would be expected based on their foreclosure rates.

We can also see that many parts of the Southeast Valley, particularly Tempe, Ahwatukee and South Chandler have preserved their pricing much better than Maricopa County as a whole. This is also true of most of the Northeast Valley.

It is true that foreclosures cause home prices to fall, but it is a vicious cycle since it is also true that falling home prices cause foreclosures – they cause more homes to go underwater and their owners to feel less motivated to maintain their loan payments.

What does this mean to you? It depends from what angle you’re looking.  If you’re looking to short sell, we should look at the trends in your neighborhood and act accordingly.  If you’re looking to buy, ‘a deal’ isn’t necessarily found in a neighborhood with high foreclosures.  A deal is a good price on a home you love in a neighborhood you’re excited about.

Please contact me to discuss your specific situation and needs.

1. Deficiency issues: Call in with your agent and get an answer upfront concerning Bank of America suing homeowners for deficiency judgements.

2. Streamlined Short sale approval process & cooperative process with your agent; with the determination that there is a genuine hardship, as a homeowner you will not have to send in updated financial documents after the initial submittal.

3. Approved short sale RESETS: If you get an approval and then lose the buyer (it happens), you don’t have to start over with the short sale process;  you can ask for a reset and get the new buyer approved right away.

BOFA resources:
http://realestateagent.bankofamerica.com/default.aspx.
Escalation line: 1-866-880-1232

Bank of America says it doesn’t want to foreclosure, they want to Short Sale.  Some things (like mortgage insurance) will remain out of their control, however they want us to get their short sales done.  See here for more legal information on short sales in Arizona.

As concerning as short selling your home is, the good news is the lenders are catching on and generally want to approve your short sale so you can press the ‘reset’ button on your financial life!

The 20-City index in September’s Case-Shiller reports fell by 0.7 percent, with only Washington, D.C. and Las Vegas posting modest gains. The other 18 cities all had declining house prices for the month (including Phoenix).

Phoenix is seeing sharp price declines again with prices dropping 1.5 percent in September and having fallen at a 13.1 percent annual rate over the last quarter.   The price declines are being driven primarily by sharp drops in the bottom tier of the market. Prices for homes in the bottom tier had a 3.4 percent in Phoenix.

The annual rate of price decline over the last quarter for bottom-tier homes has been incredible in several of these cities, with prices dropping at a 27.0 percent annual rate in Phoenix.

Clearly, this plunge is a response to the end of the first-time homebuyers tax credit. This credit disproportionately affected homes in the bottom tier both because these were the homes most likely to be purchased by first-time buyers and also because the credit was a larger share of the price.

With the sharp price declines in many cities since the expiration of the tax credit, the loss of equity has likely exceeded the amount of the credit for many buyers. In other words, they would have been far better off buying at current prices without the credit than having bought earlier in the year and received the benefit of the credit.

For these buyers, the credit effectively amounted to a transfer to the seller, or in the case of many underwater sellers, to the investors holding the mortgage. From this perspective, the tax credits were good policy for banks and other mortgage holders but provided little benefit to homebuyers. They also did nothing to sustain the housing market over the long run.

(THAT’S unbelievable to me-to those who opted to not buy since they missed the tax credit, here’s a gift for you!)

The October data on new home prices provide serious grounds for concern about the future direction of house prices. It is important to remember that Case-Shiller data is a three-month average, based on sales prices, for a period that ends two months before the release of the data. Given the lag between contracts and closings, the period of contracting for the most recent data ran primarily from May-July, the period immediately after the expiration of the tax credit.

By contrast, the new home sales data reflect contracts that were actually signed in October. For this reason, it gives a much more up-to-date picture of the state of the market. It is likely that with homes sitting unsold for many months, and little prospect for new government assistance in sight, sellers are now cutting prices in a desperate effort to unload their homes. This could mean another period of rapid price declines as the bubble completes its process of deflation

WHAT I TOOK AWAY FROM THIS ARTICLE:  This market is the one that we’re going to be sitting with for a while.  There’s nothing artificially supporting it; run on supply, demand and credit.  Only those who truly want and can qualify to buy, will.  Fewer buyers, more inventory means lower prices…another dip in value.  THE GOOD NEWS IS:  If you’re a qualified buyer, this market was destined for you! If I wasn’t going through a short sale myself, I’d be finding the perfect house at an amazing price right now.  I’m jealous.  And wishing I had been reading these types of articles 7 years ago!!