Central Florida Short Sales: February 2012

When it comes to the level of business you do, what is your comfort zone? What are you trying to achieve? Are you in real estate to make as much money as you can or are you happy with just making a good living?

Do you judge your success by how many toys you have or by how much freedom you have in your life? Do you place limits on yourself or are you always trying to do more? Have you ever asked yourself these questions? I have.

I think it's very important to know what we want out of life and equally important to know how to get there.TLW and I decided a long time ago to keep our company small. For us, success is being able to do what we want, when we want and having the financial capabilities to do so. But, we are not money mongers. We don't judge our success by how much money we make. Personally, I have never had the desire to be a mega producing, Real Estate selling machine. Even though I can assure you, I have the tools and the ability to be one, if I choose to. It's just not for me. I enjoy my downtime too much.

Of course, I could always open an office and hire lots of agents and expand my business into a mega producing office. But again, it's not for me. To be honest, I don't want the hassle of operating a huge Real Estate company. It would cut into my freedom.

What I enjoy doing and what makes me happy is working with Sellers and helping them through the process of getting their properties sold. My goal is to always provide quality service to a limited quantity of people. Because of this, I turn business down quite a bit. I only want to work with folks that appreciate what I do and who want to work with me. We have to get along. We have to be on the same page. We have to have the same goals. By choosing to work like this I eliminate stress from my life. And that gives me peace. Being in this frame of mind enables me to give folks my best at all times. And to me, that's what it's all about. Quality not quantity.

"So, Broker Bryant, what's the point of this post?" The point of this post is to encourage you to evaluate what is you want out of Real Estate. Don't worry about what is expected of you but instead find out what it is you need to do to be happy. Then, make a plan and do it. Whether that's doing 20 transactions a year or 200. It doesn't matter. What matters is that it is YOUR goal, not somebody else’s expectations for you.

Money cannot buy happiness but endlessly pursuing it can definitely keep you from being happy. Find a balance. Find YOUR balance. Find your comfort zone and then reap the rewards of a peaceful life. Trust me when I say, your customers and clients will see this  in you and will want to work with you. Your business will be a lot easier because of it.

Always remember,"Real Estate is about people not money." What say you?

Hi folks. OK so I feel compelled again to write about Short Sales and knowing how to get paid. There is so much bad information out there.

There are many agents, brokers, attorneys, negotiators and others that are just adamant that agents are at the mercy of the lenders when it comes to commissions.

I read an article on another site where the agent asked a simple question wanting to know if his seller could pay him additional commission above the 6% the lender approved.

Responders were shocked that he would even consider taking more money from his “distressed seller” others stated is was illegal or a violation of RESPA and no lender would EVER allow it.

I guess my questions are:

1. Why do so many agents not understand how to get paid?

2. Why do so many agents believe RESPA has control over every transaction?

3. Why do agents assume all short sale transactions are from distressed sellers?

4. Why do agents believe lender guidelines are laws?

5. Why do so many agents not know how to negotiate?

Here’s what I suggest.

• Seek legal advice from a competent attorney in your State to see what you can and can’t do. Make sure the attorney can back up his opinions by case law. Remember attorneys are also giving you an opinion. It may be wrong.

• Ignore most of what NAR and our local boards say about short sales. Their job is to err on the side of caution to protect REALTORS(R). Their opinions and suggestions may very well be harmful to your customer/clients and your pay check..

• Always verify. Ask to see the law. Then read it an form your own opinion.

• Know when RESPA applies and when it doesn’t.

• Understand the difference between laws, guidelines, suggestions and opinions.

For example, this blog article is my opinion based on my research. Don’t take my word for it.  

Folks, your ability to help people with their Real Estate needs is greatly limited if you don’t become a student of Real Estate. Do your own research and figure out a business plan that works of you and your customer/clients. You may be surprised to find out what you can do. What say you?

Hi Folks. I’ve ran across agents, several times this week, not sure how to handle a Short Sale when the property is owned by a trust. So I thought I’d take a minute to explain how this works. Actually I can do it in about 1 second........

…......exactly the same as you would handle any other Short Sale!!

Here’s why.

Short Sales are done for Borrowers. Even though the property is owned by a Trust the note was more than likely signed by an individual. The individual is the one you are doing the Short Sale for. He is the Borrower.

The ownership of the property was probably placed in a Trust after it was purchased. Usually this is done for estate and/or tax purposes.

So.....your listing agreement and the purchase contract would be in the name of the owner of record. This could be a Trust, LLC, INC or a person(s). You would need a copy of the Declaration page for the Trust, LLC or INC to see who is authorized to sign and act on the entity’s behalf. This is the person who signs the agreements.

The Borrower(s) is the person that took out the loan and signed the Note. This could be the same person that is authorized by the Trust or it could be someone else. Whoever it is, this is the person who must go through the Short Sale process. Simple.

Any questions?

1. Do I have to be behind on my mortgage payments to qualify for a Short Sale?

• Not necessarily. Some lenders will negotiate a settlement if you are current on payments. You won’t really know until you go through the process. If you are current on payments the lender may very well require you to “participate in the loss” by making a cash contribution, signing a promissory note or both.

1. What is a deficiency and how do I avoid it?

• A deficiency is the difference between the amount of money you owe and the amount of money paid to or collected by the lender. The deficiency is the “Short” in a Short Sale. A deficiency ALWAYS exist with a short sale. You cannot avoid it unless you just keep paying on your mortgage obligation. The real question is..........

1. What happens to the deficiency?

• The deficiency can be waived, written off, paid later, settled or the lender can, at least in Florida, choose to go in front of a Judge and ask for a Deficiency Judgment against you.

1. What is a Deficiency Judgment?

• A Deficiency Judgment is when a Judge issues a Judgment making you personally responsible for the deficiency and giving the creditor the right to go after you for the money you owe. In Florida the creditor has 5 years from the creation of the deficiency*** to ask for the Judgment and another 20 years to collect on it if granted. To collect they may take assets, levy bank accounts and garnish wages. ***Please seek legal advice on this matter.

1. Will I have to pay taxes related to the short sale?

• Maybe. A short sale IS a tax event. Just as with any real estate transaction the sale is reported to the IRS. In addition the “Short” may be written off as a loss to the lender. A loss to the lender is income to you. How this income is taxed is a question for your tax professional. You may also refer to the Debt Relief Act. Unless extended the Debt Relief Act is set to expire at the end of 2012.

1. How will a Short Sale affect my credit?

• How credit scoring works is one of the great mysteries of the universe! The Short Sale itself is not reported as “Short Sale”. Missed and late payments are reported. Also, how the transaction is reported makes a difference. Is it reported as “settled..”, “paid...”, “charged off..”? And have you been paying your other bills? There are just too many variables to be able to give you a precise answer. If your credit score is important to you then my advice is to make your mortgage payments.

1. What advantage is there to doing a Short Sale over just letting the lender foreclose?

• Credit scoring aside....on average you can get another mortgage within 2-3 years assuming you pay all of your bills after a Short Sale. A foreclosure will affect your ability to get a new mortgage for 5-7 years. A Short Sale also gives you the opportunity to negotiate a settlement. It gives you some control over the situation. With a foreclosure you are 100% at the mercy of the lender.

1. How long will the Short Sale process take?

• A normal Short Sale with no complications will take on average 2-3 months from time of contract. Some go much quicker and some take much longer.

1. Will my Short Sale be approved and closed or am I wasting my time?

• We close more than 90% of our Short Sales. As long as you participate, by providing me what I need, when I need it, then yes, your Short Sale will be approved and get closed.

1. When will I have to vacate the property?

• Unless we are able to negotiate something different the day of closing belongs to the Buyer. Most lenders will not allow you to rent the property back after closing so plan on moving. You will normally have 30-45 days notice prior to closing.

1. Who pays your commission?

• The listing agreement is between you and I. So legally you are responsible for paying my commission. However, just as in a regular transaction, the costs of the sale are deducted from the purchase price. This means the buyer brings money to purchase the property and we pay everything out of that. The lender gets whats left. You pay nothing. Unless it is required by the lender and you agree to do so.
  

Additional information:

• CDPE Site
• Contact Bryant
• FannieMae/HAFA Program
• FHA Preforeclosure Sale
• From The Lawyer's Mouth
• HAFA FAQ
• HAFA Guidelines
• IRS Debt Relief Act
• Is Your Loan Owned By FNMA?
• Military HAP Program
• My Short Sale Story
• Property Search Map
• Sample Approval Letters
• Short or Stay?
• Short Sale Approvals
• Short Sale FAQ
• Short Sale Network
• Strategic Short Sales
• Testimonials
  

I hope this helps. Please feel free to contact me with any additional questions you may have.