333  Santana Row #214, Sold for $515K. 1 Bedroom 1.5 Bath loft with catwalk, popout, large back patio, and 2 parking spots, great deal.

This short sale transaction just closed last week. For those of you who who are considering buying a short sale understand that the most important figures in the transaction are the negotiators, the listing agent, and the buyers agent, and the most important quality they must all poses is diligence.

Short sales are all about paperwork whether the paper work is the short sale package, lender addenda they need to be completed correctly or to the negotiators satisfaction and they need to be submitted in a timely fashion. Its my contention that a short sale can close quickly in 6 weeks, as long as the agents and negotiator are diligently meeting the negotiators request and submitting the paperwork in a timely fashion.

This particular short sale had two loans which made the agent’s diligence even more important and crucial. You have to satisfy the paperwork for two loans, but the complex issue is that the 2nd loan approval cannot be granted until the first is granted. Once the first loan has short sale approval they will offer funds to the second, the agent must find out from the 2nd loan what amount they will request in order to release their lien, and do that before the 1st loan approval expires.

With all the confusion and uncertainty its incredible that these transactions even close, but they do and its my impression that they are not that bad, and do close. The only frustration I feel is the uncertainty and the possibility of being thrown out of contract by a higher offer from another buyer. This can easily happen, be sure to read your addenda and understand the nature of your contract.

In the end because of the buyer’s patience, she got a great deal on this loft. It was really a great property, and I really enjoyed the feeling of being in this property.

Rivermark Townhome Short Sale

In order remove the notice the owner must make the home current and pay back the mortgage owed.

Newer developments have seen a higher rate of defaults due to the recent sales within the last 5 years of these homes. Home owners are unable to refinance their properties since many owe more than the current market values.

In Rivermark alone there are several short sales and 11 homes that have notices of defaults filed and 7 condo’s in the Miraval Complex. Many of these Rivermark home owners have already engaged in trying to sell their home as a short sale. Others may be attempting to renegotiate with their banks to stay in their houses, others perhaps bracing for foreclosure.

When confronted with this reality the homeowner needs to contact their bank and try to work out a resolution. This is where your persistence will pay off. Lenders seldom give any concessions to anyone let alone a debtor, but if you are persistent and can show hardship and willingness and ability to pay you should be able to modify your loan.

The other avenue is to sell your home short. The process is similar. The bank wants to know your financial situation before it can agree to any deficiency sale. Essentially you have to prove you can no longer afford your home or that you are forced to sell due to relocation or some other factor.

Both of these options have become more viable to home owners, so their is no reason why homeowners should be foreclosing these days.

Rivermark Townhome Short Sale

Rivermark is a master planned community developed in 2002 by Lennar, Centex and Shea Homes encompassing over a 1500 single family and town home units. Also around the Rivermark development is the Miraval Homes Luxury condo development and Mission Gardens single family homes, townhomes, and condo’s.

Many of these units have resold in the last few years since their initial releases, leaving some home owners at peak prices resulting in short sales and no opportunity to refinance.

Currently in the Santa Clara Rivermark location there are 14 condo short sales and 1 bank owned condo. There are no single family short sales or REOs at the moment.

Miraval Condo

A good portion of these short sales are in the Miraval Condominium Complex. Miraval is a Luxury condo complex providing nicely appointed units with great amenities in the complex. Currently there are 5 short sale units for sale in Miraval. One bedroom units starting at $280K and 2 bedroom units at $400K.

As for the Rivermark development currently there are only townhomes availables. Which says alot about Rivermark and the fact that the single family home values have not been hit too hard. Many times buyers offten ask what is a better investment a townhome or a single family home. As you can see single family homes rarer in Rivermark have held up very well so var with all the market pressures.

For a list of active short sales and bank owned properties in the Santa Clara Rivermark area follow the link below.

Rivermark Short Sale Townhomes

SHORT SALES: THE LONG AND SHORT OF IT

1. What is a short sale?

A short sale* is a sales transaction in which the seller’s lender agrees to accept a payoff of less than the balance due on the loan. In addition to absorbing any loss on the loan, the lender in most cases agrees to pay the costs of the sale.

2. How long does the average short sale take?

It can take anywhere from 28 days to six months once the lender receives a signed offer from both the buyer and seller. The process frequently moves slowly. Currently, many lenders are working to revamp their system to speed up the procedure.

3. If a short sale transaction can take up to six months, why do they call it a “short sale”?

Clearly an oxymoron! Or look at it this way: the value is “shorter” than the loan amount.

The truth is, a short sale has multiple phases that may affect the transaction time frame. Depending on market trends, price positioning, and other factors, it can take anywhere from seven to 180 days or more for a property to sell. Once the negotiations are complete, the short sale proposal is sent to the lender who will evaluate it from a financial perspective. In addition, the homeowner must establish eligibility for the short sale by providing supporting documentation such as, W-2 forms, bank statements, tax returns, and other financial documents. Understandably, this process takes time!

4. Why would a lender agree to a short sale?

There are various reasons why a lender may agree to a short sale. For example, Senate Bill 1137 (which became effective in July 2008) imposes strict requirements on lenders prior to exercising their right to foreclose. Foreclosures take time, and as we all know, time is money.

The expense to the lender is another factor. Foreclosure costs may include: internal fees and expenses, eviction, repairs and maintenance of the property, security, as well as Home Owners Association (HOA) dues and utilities. These factors, combined with the federal and state government’s push to halt foreclosures, make it easy to see why a short sale may be in the lender’s best interest.

5. Is a short sale still an option if foreclosure has already taken place on my home?

No. Once the lender has completed the foreclosure process, a short sale is no longer an option. For that reason, it is vital that homeowners understand the importance of early communication with the lender. Don’t wait until it is too late. Speak to your lender, and let him or her know that you are having financial or other difficulties. If you want to retain ownership of your home, you may be able to work with your lender to explore alternatives to foreclosure.

6. I have a second mortgage on my home. Does this make me ineligible for a short sale?

In many cases, a short sale can be achieved on properties with multiple loans. Depending on the amount of the loss to the junior lien holder (second trust deed), a short sale may be possible under certain circumstances. Proposals and requests for short sale consideration should be submitted to both lenders at the onset.

7. Once I have an offer on my home, what happens next?

Your realtor will assist you in negotiating the best price and terms. Once the negotiations are complete, the offer and all supporting documentation should be packaged and submitted to the lender’s loss mitigation department. Follow-ups and ongoing communications are significant components of a successful short sale.

8. Will I have to pay capital gains taxes if I sell a property as a short sale?

A short sale has no bearing on the calculation of capital gains taxes. However, there are other tax liabilities that must be evaluated. Seek the advice of tax and legal advisors before agreeing to a short sale. For additional information, you may visit www.irs.org to learn more about taxation of short sales.

9. Will a short sale affect my credit?

Yes. Your tax advisor will be able to address your specific situation.

10. I would like to buy a short sale. Where do I start?

Choose a REALTOR® who has the ability to recognize a short sale property and who possesses the skill and training to work through any difficulties that may arise during the buying process. Be prepared for a bumpy road. If your REALTOR® is knowledgeable, he or she will help you manage your expectations.

11. When buying a short sale, do I have to pay all of the escrow fees?

The allocation of costs is a negotiable item in any real estate transaction. Typically, the buyer and seller each pay their own fees.

In short sales, lenders may request that certain fees be paid by the buyer, as a condition of the lender’s approval. Some of these costs may include: funds owed to junior lien holders, closing costs, delinquent property taxes, and Home Owners Association Dues. Expect the unexpected and work with a REALTOR® who understands short sales and can walk you through the process prior to preparing an offer to purchase.

12. How is Coldwell Banker Residential Brokerage simplifying and streamlining the short sale process?

Coldwell Banker Residential Brokerage has been working diligently on a multi-faceted program to educate its managers and sales associates regarding the intricacies of the short sale. In response to the unprecedented challenges today’s homeowners face, the company has developed a unique short sale package that allows Coldwell Banker sales associates to deliver comprehensive proposals to lenders, thereby increasing the likelihood of a successful and swift transaction.

13. How do I determine if I’m eligible for a short sale?

Homeowners must be aware of their options before considering a short sale. Other options include: loan modification/refinance, deed in lieu of foreclosure, foreclosure, and bankruptcy. There are many non-profit counselors available to advise homeowners on the advantages and disadvantages of each of these options. A complete list of counselors may be obtained at www.hud.gov

* When the amount of the loan and other costs of the sale exceed the current market value of the property, there are a number of options struggling homeowners may consider, including loan modification, deed in lieu of foreclosure, foreclosure, bankruptcy and short sale. Any homeowner considering a short sale should consult with legal and tax advisors. A complete list of non-profit counselors is available at www.hud.gov

WASHINGTON (AP) — Housing Secretary Shaun Donovan said Thursday it’s critically important that banks and lending institutions “step up to the plate” to help make certain the Obama administration’s new home foreclosure initiative succeeds.

“This started as a mortgage crisis but it’s become a jobs crisis,” said Donovan, speaking a day after President Barack Obama announced a $75 billion program aimed at a problem many analysts say has been at the heart of the country’s economic tailspin.

In addition to the new mortgage lifeline for millions of Americans on the brink of foreclosure, the administration on Wednesday announced an additional $200 billion in government assistance to mortgage giants Fannie Mae and Freddie Mac, the largest makers of home mortgages in America.

It’s all part of a stepped-up effort to encourage lending institutions to refinance homes for millions of homeowners considered to be “under water” — properties held by people whose mortgage payments exceed the value of their homes in the depressed housing market.

Interviewed Thursday on NBC’s “Today” show, Donovan said the administration feels certain there are sufficient requirements to ensure heavy bank refinancing, saying that could “tip the balance for millions of homeowners.”

Sheila Bair, chairman of the Federal Deposit Insurance Company, said: “There will still be some borrowers who lose their homes to foreclosure. Some of that will be inevitable. But this should have a significant reduction in the foreclosure rate, bringing it more in line with historical levels.”

Bair, who appeared on ABC’s “Good Morning America,” said that as a person making regular mortgage payments herself, she understands the resentment of homeowners with safe loans who feel others are being rewarded for risky behavior. She said, however, that the plan would help many, but not all, and that’s appropriate at a time of plunging home prices.

“Is it fair to everyone? Perhaps not,” she said. “But I think frankly we’re beyond that.”

Bair refused to predict when home prices might stabilize, but said she hoped the loan modifications beginning in March would temper the ongoing declines.

Donovan said mortgage refinancings under one key part of the program would be available only to people with good credit.

But he also said that “there are clearly a number of homeowners around the country who won’t benefit and shouldn’t benefit,” saying he was referring in part to “investor owners” — people who bought properties they never occupied.

On the surface, it may appear that a short-sale buyer is getting a good deal. Although a slim margin of short sales may be profitable for a buyer — because there are always exceptions — much of the time, a buyer would be better off buying a home that is not in default.

In Santa Clara County, where I work, for example, many agents ignore short sales like the plague.

Here are 9 Reasons Why Buyers Should Not Want to Buy a Short Sale:

1) Sellers Paid Too Much.

If a home sold for $500,000 a few years ago and is now for sale at $400,000, that doesn’t mean the buyer is picking up $100,000 of equity for free. It means the seller paid too much in a rising market and now the market has fallen. It means the seller has no equity.

2) Stringent Qualifications.

Inexperienced or unethical real estate agents might push a seller into considering a short sale when the seller does not qualify for a short sale. Sellers must prove a hardship and submit evidence of the hardship to the lender for approval. Some agents list homes as short sales without ever talking to the lenders or pre-qualifying the sellers.  Thus this results in a waste of time for the buyers who are attempting to buy the short sale home.

3) Homes Sell at Market Value.

Lenders aren’t naive or unaware of the value of a home. Lenders will insist on a comparative market analysis, known as a CMA, or broker price opinion, known as a BPO. If a lender believes a better price can be obtained by taking the property back in foreclosure over a short-sale offer, the lender may hold out for a higher price. That price will be close to market value.  In the Santa Clara Valley where some areas still have held on to their home values, like Cupertino, Sunnyvale and Saratoga lenders are less likely to take low offers. 

Lenders will accept short sales when the home is worth the short-sale price, which means market value.  Many buyers feel that they can get a deal on a short sale and in some cases they do, but that is more to do with the properties condition and frustrating process then the fact that the lender is relinquishing the property for a better price. 

4) Homes Sell "As Is".

If a mortgage company agrees to a short sale, it is most likely also paying the closing costs in the transaction. Lenders ask buyers to purchase the home in its present condition. Lenders typically will refuse to pay for:

    * Suggested repairs disclosed on a home inspection.
    * Pest inspections or work necessary to issue a clear pest report.
    * Roof certifications or roof repairs.
    * Home protection plans for the buyer.
    * Deferred maintenance.

In a regular sale, sellers may be motivated to sell and offer up incentives and improvements to get their properties sold.

5) Length of Time to Close.

Depending on when the Notice of Default was filed, the lender’s back-log of foreclosures and how much paperwork the seller has already submitted, it could take anywhere from two weeks to two months to get a response on a purchase offer from a lender. In addition, if two lenders are involved because there are two loans secured to the property, it could take longer to satisfy the demands of the second lender.

6) Lenders Can Change Conditions.

Some lenders reserve the right to renegotiate the terms of the short sale at the last minute. If the market changes, new laws pass or new information crosses the lender’s desk, the lender can attempt to change the terms of the contract. Lenders generally have lawyers at their disposal, and ordinary buyers do not.

7) Higher Buyer Closing Costs.

Because lenders rarely will pay for any extras, like a seller would be willing to do, if you want any of those extras, you will pay for them yourself. Sometimes lenders will refuse to pay for standard seller closing costs such as transfer taxes, too. If you want specific inspections, you will probably pay for them out-of-pocket.  Expect to pay higher transcation costs for short sales.  You will have to pay for inspections to have the property inspected, and it has been my experience in areas like Santa Clara, Sunnyvale, and San Jose rarely will the lender agree to make any repairs or offer up any credits.

Lose Control of Transaction.

If you need to close escrow by a specific date, lots of luck with that. A short sale home closing process takes an indefinite amount of time. The seller’s lender calls the shots, not the buyer nor the buyer’s lender. If you are trying to close escrow concurrently with the sale of your home, it might not happen.

9) Little Seller Motivation.

When the seller discovers that the short sale effect on credit is identical to that of a foreclosure, there is little incentive for a seller to cooperate with a short sale. There is no benefit to a seller to consider a short sale and move out before the foreclosure is concluded, except for peace of mind that the nightmare is over.