Saturday, January 29, 2011

Quick Real Estate Stats - January, 2011

Call Frank Zedar for Accurate Real Estate Information:  386-931-1987

Quick Stats: (Extracted from Flagler County Association of Realtors MLS)

(65 listings)
List Price$52,900$2,299,000$204,705$149,000$13,305,816
Selling Price$42,000$1,800,000$182,235$135,170$11,845,290
Price/SqFt ($)$30.43$294.21$81.94$68.10--
Price/Acre ($)$0.00$3,159,905.66$208,647.00$0.00--
Days on Market29928207148--

   I know that the first month's sales don't tell the whole story, but it is a useful snapshot.  We sold 65 homes this month in Palm Coast and Flagler Beach (to include Bunnell, The Hammock, and the more rural areas of Flagler County), from $42,000 to $1,800,000.  Granted, there was only one sale over $1M, and the next highest was at $530,000.  It's taking about 5 months to get a sale at a Median price of $68/square foot.

SHORT SALES = 50 to 60% of the Market!
   Keep in mind that these stats are all over the map and can vary wildly, by neighborhood.   These sales represent only 5% of available homes, of which there are now 1,263.  At this rate, that's 20 months of inventory.  About 35% of this inventory (436 homes) are "distressed" listings (foreclosures, short sales, etc.), however 50% of this month's closings were distressed sales.  THAT"S GOOD NEWS, because it indicates that the bottom of the market may be starting to clear out.

   Condos are another world.  Lots of legal wrangling going on.  It's harder to get a mortgage too, because if 15% are behind in condo/association fees, they are dropped from the eligibility list.  There are loads of bargains... and Cash is King!  As an example, I know of a condo in one of the magnificent Ginn projects that sold for $680,000 in 2007 and today is offered as a $180,000 short sale.

   Don't be fooled into thinking that if it's a "short sale" or bank property, you'll automatically get a better deal.  That is surely not so.  Everything depends on the seller's motivation...  And Joe and Marry Seller may want to get sold and move back to New Jersey for family/personal reasons with greater need than a bank!


Thursday, January 13, 2011

The Skinny on "Short Sales"

What You Need To Know About “Short Sales”:

FACT:  If you ever wanted to buy a house... and if you missed the boat (luckily) in the 2000-2005 market rush... NOW IS THE TIME!   Yes, qualifying is tougher (thank God) than when they were giving money away, but if you have a decent job and credit, you can get a loan.  And money is cheap now at 4.5%.  Read this so you know more than the next guy, when folks start talking about "stealing a short sale."
Tax issue: A short sale is where the lender agrees to sale the distressed property for less than the borrower owes on the mortgage. Since the lender accepts the short sale net proceeds as full satisfaction of the mortgage, the borrower is “forgiven” the difference between what was owed on the mortgage and the net proceeds of the short sale. That difference will be considered income by the IRS and taxed accordingly, unless an exception applies.

Under the Mortgage Forgiveness Debt Relief Act (2007), taxpayers who were forgiven part of their mortgage on their primary residence can likely avoid tax liability by including Form 982 with their tax return. See IRS Form 982 instructions for full explanation of qualifying criteria.

Effect on Credit Rating:  Contrary to popular belief, the effect of a short sale on the homeowner’s credit is virtually identical to that of a foreclosure—a dip of 200 to 300 points. There is a notable difference, however. The owner who goes through a short sale may qualify to purchase a subsequent home in less time than someone who goes through a foreclosure. The waiting period after a foreclosure is 24 - 72 months, whereas the wait after a short sale is about 24 months. Also, in the case of a short sale, there may be fewer months of non-payment on the mortgage, which will result in less damage to the homeowner’s credit score.

A “deed in lieu (of foreclosure)”… where the borrower merely signs the property back to the bank, brings a credit effect roughly “somewhere in between” a foreclosure and a short sale.

Deficiency Judgment/Future Liability:  Where a home is sold for less than what is owed on the mortgage, there is the potential that the borrower will be liable for the deficient amount. In the case of virtually all Florida foreclosures, the lender is entitled to petition for a deficiency judgment if the sale of the home does not cover the balance due on the mortgage. Since foreclosure in Florida is a judicial process, the lender is already obligated to pay attorney fees and court costs. As a result, the lender may choose to request a deficiency judgment unless the discrepancy is relatively minimal.

In the case of a short sale, the matter is not nearly as clear: Whether the lender is entitled to a deficiency judgment may depend upon the terms negotiated with the borrower. In some cases, the lender will waive its right to a deficiency judgment in exchange for the borrower’s cooperation. If the lender does not waive this entitlement, whether it seeks a deficiency judgment or not will be a business decision based on the amount of the deficiency, costs of litigation, etc.

When attempting to purchase a short sale listed property, remember that you are not negotiating with the seller… you are merely a spectator to the seller’s negotiation with the mortgage holder.  Not always the bad guy, the bank wants value, as they are owed a just debt.

Frank Zedar, Direct: 386-931-1987  
Broker Associate, CDPE (Certified Distressed Property Expert)
ParkSide Realty Group, LLC, Flagler Beach & Palm Coast, Florida

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