Can you just walk away from a Short Sale?

A Short Sale contract is no different than a regular contract with the exception of the 3rd party approval contingency. This contingency is related to the Lender approving the “Short” NOT approving the contract. The lender has no authority to approve the contract since they are not a party to the contract.

They do however have the authority to approve or disapprove the Seller’s request for a “Short” payoff.

A contract is binding and legally enforceable when:

It has a legal purpose
The parties are legally competent
The offer has been made and accepted
There is consideration
The parties have willingly consented to the terms

There may also be contingencies in the contract. Contingencies are conditions which must be met if a contract is to be performed.

Some contingencies may be to protect one of the parties:

Survey
Inspections

Some contingencies may need to be removed in order for the purchase to be completed:

Title
Short sale approval
Financing

The Short Sale approval is just one more contingency in the purchase contract. And just like any other contingency it should have a time period to be removed.

If it can’t be removed in the time allowed then the parties can either extend the time period or cancel the contract and return the escrow deposit.

If it can’t be removed at all because the Short Sale was denied then the contract becomes “null and void”. The Seller is now unable to perform. This is no different than when the Buyer’s financing is denied. He too is now unable to perform.

Here in the Tampa Bay Area, prices have fallen steeply making it necessary for many people to do a short sale if they want or need to sell.  Waiting for the Seller’s lender to approve the short payoff can be a true test of patience and a positive outcome isn’t even guaranteed!  You are however, bound by a legally binding contract to wait for the approval time stated in the short sale addendum before walking away and/or moving on to the next home if the contract has been signed by both the Buyer and Seller and has been properly executed by the dates and times specified in the offer.  Many Tampa Realtors seem to be confused by this and in turn confuse both the Buyers and Sellers, but it’s really quite simple.

FHA mortgages

FHA loan programs have been gaining popularity and are now even considered the norm with first time home buyers in the Tampa Bay area. They’re excellent vehicles to bring new or first-time Tampa home buyers into home ownership, and they represent some of the best and most reliable fixed rate mortgage values on the market right now.

I find that a lot of borrowers have a hard time understanding exactly what makes Tampa FHA Loans different from Conforming Mortgages. Hopefully this will clarify the big differences.

One of the key differences between conventional and FHA loans is that your credit score doesn’t have to be as rock solid as it does with a conventional loan. The one thing potential FHA home loan borrowers need to keep in mind is this:

FHA backs mortgages because the borrower (you) has shown credit worthiness. In short – you pay your bills on time, all the time.
The actual score is less important. So, if you’re just starting out and have a score in the low 620s, but you’ve been consistent on all your bills, there’s a good chance you will still get approved for your FHA mortgage.
Conventional loans will require a much higher credit score to qualify than an FHA mortgage will. You can still get a conventional loan with a moderate or lower credit score, but you’ll pay for it in a higher rate or in points, should you want to get your rate down to a desired level.

Down Payment Requirements: FHA vs. Conventional Mortgages
Another great thing about FHA loans is the fact that you’re required to put down considerably less cash than a with a conventional loan. With FHA loans, you’re looking at 3.5 percent down, versus 20 percent down – on average – using a conventional mortgage making it much easier to save up for a down payment.

On a related subject – future FHA loans can be made quite easy and very affordable for you in the future should you want to refinance. By opting for an FHA streamline loan – a current Tampa FHA home loan borrower can move quite easily into a new mortgage a little to no out of pocket expense.

Appraisals: FHA vs Conventional

When it comes time for the appraisal, FHA is generally more in depth and stricter than with a conventional mortgage, and rightly so. With an FHA loan and only 3.5% down, they want to make sure the home is worth the amount being loaned. FHA is also a stickler about the home being in decent condition. If there are problems with the roof or if major repairs are needed, FHA will often require these to be fixed prior to closing. This isn’t usually a problem if the home is being sold via a regular sale, but here in Tampa, or anywhere in Hillsborough, Pasco, or Pinellas counties, most of the homes for sale in the $100-$200k range are either short sales or homes that are bank owned. When the seller is doing a short sale, they aren’t allowed to receive any money from the sale, so they generally will not pay for any repairs to the home. This leaves the repairs up to the Buyer and it’s risky to put money into a home that isn’t officially yours and still has a chance of not closing.

Cash For Clunkers and 1st time buyers do not mix!

The Cash for Clunkers incentive for car purchases is creating quite a buzz here in the Tampa Bay area. It’s pretty enticing getting $4500 off of the purchase of a more efficient, more dependable new car, especially when new cars are being sold at rock bottom prices. However, if you’re trying to cash in on the first time home buyer tax incentive program, buying a new car is a BAD idea.

Making any major purchases while trying to qualify for a mortgage, is a BAD idea and can disqualify you from being approved for a home loan. Even if you’re approved and just waiting to close on your home, applying for a new credit card, purchasing new furniture and financing it, or buying a car can disqualify you from getting a home mortgage.

As hard as it might be, when you’re in the market to purchase a home, the best practice is to be extremely conservative with credit cards, and financing ANYTHING. I’ve heard stories of people buying furniture a day or two before closing and not being able to go through with the purchase because of it. So as tempting as the government is making it to run out and purchase a new car, please wait if you’re also planning on buying a new home.

Craigslist Scam on Tampa Real Estate

If you are looking to find a Tampa Bay rental property or home for sale on Craigslist, be very careful before you turn over your deposit. I recently had a woman call me saying she saw an ad on craigslist for a property I had listed.  The home is Tampa Palms and is listed for sale for $599k and someone had copied my ad, pictures, everything and listed it on Craigslist for rent for $1300/month.  They even went so far as to sign up for a yahoo account with my name!  My email address is Loree@welovetampa.com but they signed up for LoreeNichols@yahoo.com.  Pretty sneaky!  Luckily, the potential renter was able to look me up on the internet via my website and call me directly.  I was shocked!  and by the time I looked on Craigslist, the ad had already been pulled down.

The scam artist was able to copy my ad, get a free and instant email address that made sense, and advertise the property, probably in a matter of minutes.  It was all free for him/her to do and it’s very easy to do.  Don’t ever hand money over on a rental home or house for sale without doing your homework if it is not listed with a Realtor!

Craigslist is a great resource, but if you are going to use Craigslist, be smart. Call the local property recorders office or check online to find out who owns the property before handing over a check. These scams are too easy to pull off and getting your money back will be nearly impossible.

I’m in love with Skype!

As much as I try to keep up with technology, one thing I’ve never really learned about until last week is Skype.  I’ve had people call me on my cell phone using Skype before, but the number came in as unrecognizeable which is always annoying, at least to me, so I never really gave it a second thought. [Read more]

How to deal with multiple offer situations – Buyers

First there were no offers, now there are multiple offers on many properties, especially on bank owned (REO) properties in the $100-200k range. Lots of people are trying to get in on the first time homebuyer $8,000 credit and are worried that a short sale won’t close in time.

So, what exactly is a multiple offer situation?

A multiple offer situation occurs when more than one buyer submits an offer on a property at the same time. This happens a lot with REO properties especially because it often takes them several days to respond to an offer leaving a wide time-frame for other offers to come in. When this happens, the offer turns into more of an auction, with buyers having to compete to purchase the property.  Many times the listing agent will take offers for a few days and then contact everyone and ask for their “highest and best offer” and submit that one on to  the bank for acceptance.  This happens with short sales too sometimes, but that’s a whole separate post.

If you’re trying to purchase a property and get caught up in a multiple offer situation, here are some tips to help you WIN:

1. Work with a Realtor who communicates well and keeps you informed.  If it takes your Realtor 24 hours to return calls, you could easily lose out on the opportunity to put your “highest and best” offer in.  Also, a Realtor who keeps in close contact with the listing agent is more likely to be successful in getting your offer through.  Also, your Realtor is important because they need to make sure they get any additional addenda required by the Seller or bank.  Banks won’t usually look at an offer unless they have a complete package.
2. Be prepared!  Make sure you are pre-qualified with a mortgage broker or your bank.  This means having a written (and current) confirmation stating how much they are willing to loan you.
3. Keep the offer clean.  Asking for the seller to pay for your closing costs, having long inspection periods, or long closing dates can work against you.  Try to keep the inspection periods short, the closing to 30 days, and Seller-paid closing costs to a minimum.
4. Determine what you want to spend before you write the offer.  It’s very easy to get caught up in a bidding war.  Make sure your Realtor does a thorough market analysis so you don’t go higher than the real value of the home just for the sake of winning.  Remember, in most cases this is something you will be paying on for the next 30 years.  At the same time, if you’ve fallen in love with the home, a few thousand dollars more won’t equate to too much more on a monthly payment.  Still, make sure you determine your limits BEFORE the emotions start flying along with your determination to “WIN”.

Please feel free to send me an email with any questions you might have……..and good luck with your home search in Tampa Bay!

Finding a rental home after a short sale

We’ve been doing a lot of short sales this year and one of the questions many of my clients have is how to go about finding a place to live now that they have imperfect credit. While this is a problem, there are SO many people in this same situation that many landlords understand they will not be able to find a tenant with stellar credit today. Anyone with perfect credit would be BUYING in a market like this! Many (if not most) people who have or are doing a short sale on their home are not paying the mortgage and are basically living there rent free for a pretty long time period. Hopefully you are saving the money you would normally be paying so when it does come time to move you have the funds to do it.
Some landlords will rent to someone who has done a recent short sale, but many of them require an additional security deposit which I think is fair. Most landlords I’ve spoken with regarding rental homes in Tampa want to see that you have a steady income and are capable of making your monthly rent payment but as long as you can show that and are willing to pay an extra deposit, you shouldn’t have a problem finding a nice place to live.
It is sometimes easier to deal with an actual owner as opposed to a rental company, but honesty goes a long way with both. If you are upfront about your situation landlords are much more likely to work with you.
As a potential tenant, you need to make sure the property you are renting isn’t in foreclosure. If you contact me with the property address I would be happy to check it against the court records and make sure it isn’t in Lis Pendins (litigation pending). I’ve run across several properties, especially on Craigs List, that were in foreclosure, but the owners were trying to rent them and make some money on the way out.
If you would like to have rental properties emailed to you as they come on the market, please send me an email with your requirements. I can set up an account for you that will automatically send you an email when a Tampa Bay rental property hits the market. I only work with rental homes in the 33647 zip code, but I would be happy to send you listings for homes, condos, or townhomes anywhere in Hillsborough, Pasco, or Pinellas counties.

How taxes are determined for homes in Hillsborough County

What can the Hillsborough County Property Appraisers website do for you?

For homes in Hillsborough County (this includes Tampa, parts of Lutz, Riverview, Brandon, Temple Terrace, and a few others)… the simplest way to find out what a home previously sold for, how large it is, how large the lot is, what the taxes are and more….is to visit the Hillsborough County Property Appraiser’s website. It’s simple and easy to use and can be a great resource when researching homes or when putting together an offer to purchase. It’s also a good idea to check and see what your current home is assessed at and appeal to the board if they have it over-assessed.

The Hillsborough County Property Appraiser’s site also has a form that lets you estimate taxes of a property with their tax estimator. This will  give you a really good idea of what the taxes will be for a home you are thinking of purchasing.

To file a homestead exemption, just click here and download the appropriate forms.

Short sales with Countrywide

Countrywide Bank is notorious with Real Estate agents for being difficult to work with on short sales, but since they’ve been taken over by Bank of America, I’ve noticed a huge and very welcome change. I am pleased to say Bank of America has been great to work with on the short sale I was in the middle of with Countrywide. I’m a little shocked, but definitely glad to see progress being made by at least one lender.