Top 6 Things Real Estate Agents Wish You Knew – ABC News#

Because we always LOVE for our clients to be informed, as well as provide great advice to help stay ahead of the curve when it comes to selling or buying a home, check out the link below from ABC News with some great advice!

Top 6 Things Real Estate Agents Wish You Knew – ABC News#.

 

 

The Wilson Group

1805 Monument Avenue, Suite 314, Richmond, Va. 23220

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Navigating Short Sales: What to Do When the Sale Price Leaves You Short

If you’re thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won’t cover your total mortgage obligation and closing costs, and you don’t have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as: Refinancing your loan at a lower interest rate; providing a different payment plan to help you get caught up; or providing a forbearance period if your situation is temporary. When a loan modification still isn’t enough to relieve your financial problems, a short sale could be your best option if:

  • Your property is worth less than the total mortgage you owe on it.
  • You have a financial hardship, such as a job loss or major medical bills.
  • You have contacted your lender and it is willing to entertain a short sale.

2. Hire a qualified team. The first step to a short sale is to hire a qualified real estate professional and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won’t try to take advantage of your situation or pressure you to do something that isn’t in your best interest. A qualified real estate professional can:

  • Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).
  • Help you set an appropriate listing price for your home, market the home, and get it sold.
  • Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
  • Ease the process of working with your lender or lenders.
  • Negotiate the contract with the buyers.
  • Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

3. Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale “package” that accompanies any offer typically must include:

  • A hardship letter detailing your financial situation and why you need the short sale
  • A copy of the purchase contract and listing agreement
  • Proof of your income and assets
  • Copies of your federal income tax returns for the past two years

4. Prepare buyers for a lengthy waiting period. Even if you’re well organized and have all the documents in place, be prepared for a long process. Waiting for your lender’s review of the short-sale package can take several weeks to months. Some experts say:

  • If you have only one mortgage, the review can take about two months.
  • With a first and second mortgage with the same lender, the review can take about three months.
  • With two or more mortgages with different lenders, it can take four months or longer.

When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender’s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

5. Don’t expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

  • You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can’t pay back the balance, talk with your real estate attorney about your options.
  • Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.
  • Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.

© Copyright the National Association of REALTORS®.

 

Author: Lee Gosselin, Associate Broker & Owner

Appraised Value vs. Tax Assessment

Appraised Value verses Assessed Value can be one of the most misunderstood concepts in property values.

An appraisal is a formal estimate of market value performed by a licensed appraiser using analytical procedures and formulas.  The appraiser will use the sales price of recently sold, nearby homes, with similar features (comparables), making adjustments for any differences between the subject property and the homes being comnpared.  Most commonly, the appraiser will use a combination of three formula’s to determine market value; 1) Market Data Approach (Direct or Comparable Sales) 2) Cost Approach (Cost appreciation/determining the cost to rebuild and/or 3) Income Approach (present worth of future income/income producing properties).

Appraisals are done most commonly when a property is to be financed or refinanced, but may also be requested for a variety of other reasons.  We suggest that homeowners perform an appraiser once every few years to establish a value baseline, especially in cases of Eminent Domain or other scenario’s which could negatively impact your home’s value.

Assessed Value is assigned to a property by local government as a basis for determining property taxes.  The City/County Assessor’s office uses basic property information provided when the home was built, plus any improvements made which required a permit, in combination with any recent sales/refinance history, to make their tax assessment.  Typically Assessor’s do not visit the inside of a home, so there assessments will most likely not include basic improvements like countertops, upgrades to light and plumbing fixtures, flooring, painting and other improvements which do not require a permit or general maintenance and cleanliness.  As such Assessed Values can vary widely and cannot accurately be used to determine a home’s Market Value.

That being said, keep in mind….

  • Assessment = Basis for determining taxes
  • Appraisal = Basis for determining Market Value

Here are a few great points by Kim Daugherty, Real Estate Checklists and Systems, http://www.realestatechecklists.com

  • Appraisals provide an objective opinion of value, but it’s not an exact science so appraisals may differ.
  • For buying and selling purposes, appraisals are usually based on market value — what the property could probably be sold for. Other types of value include insurance value, replacement value, and assessed value for property tax purposes.
  • Appraised value is not a constant number. Changes in market conditions can dramatically alter appraised value.
  • Appraised value doesn’t take into account special considerations, like the need to sell rapidly.
  • Lenders usually use either the appraised value or the sale price, whichever is less, to determine the amount of the mortgage they will offer.

© Copyright the National Association of REALTORS® – Used with permission from Kim Daugherty, Real Estate Checklists and Systems, http://www.realestatechecklists.com

Intro Author: Lee Gosselin, Associate Broker & Owner