1) Section, variety, choices! It’s never been better; it’s like being a kid in a candy store.
2) Make an offer. Back up a couple of years, when you made the offer you had to compete with several others. Many times you had to pay higher than the listing price in hopes of being the best offer!
3) No bidding wars. There is no competitive bidding in this market.
4) Few, if any investors. Statistics say that 1/3 of all sales in 2005 were investors. This caused the market to inflate unrealistically and mortgage loans were given on a handshake.
5) Real loans are available to qualified buyers. Fixed rates are back, FHA financing, first time homeowner programs and special loans for teachers and police officers are back. Mortgage loan rates are at a historical all time low.
6) Plenty of time to browse. In the hot market, buyers were rushed; they had to find the house before somebody else did and hurry to make an offer. Now you can look a several homes and take a few hours to think about your decision.
7) Plenty of builder homes available. In the past when you wanted a brand new home you had to get on waiting lists, enter a lottery and attend a party to see if you won or sleep in your car in order to be at the front of a line when a new development was announced. No more waiting and builders are offering great incentives to new buyers.
8) Repair request are honored. Back in the day, when a buyer completed the home inspection, the decision was usually “do I take it as is or move on.” Backup offers were common and buyers didn’t want to upset the sellers who knew their home value was increasing daily.
9) Due diligence is protocol again. Buyers are back to basics getting their termite, mold, radon and home inspections as well as putting appraisal contingencies back into the contracts. Buyers have the advantage of feeling good about making sure they are getting what they paid for.
10) Pride of ownership and mortgage interest deductions. Pride of ownership is the number one reason that people want to own their own home. It means you can paint, modify and decorate to your own taste. You are also investing in your future and you can deduct the interest you pay on your mortgage from your taxable income.
So what are you waiting for? The time to buy is NOW!
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
Monday, August 31, 2009
Wednesday, August 26, 2009
2008 Cost vs. Value Report: Still Many Happy Returns for Home Rehabs
Remodeling magazine's annual report shows that maintenance-related projects and moderately priced upgrades are providing stable paybacks, even in a slower market.
Despite home price drops in many cities, remodeling projects are holding their own as a way for owners to add value.
Many people are wondering where their money will be safest during these uncertain economic times. When home owners turn to you for your expert advice, counsel them that some things never change: Investing in their home still pays off.
NATIONAL ASSOCIATION OF REALTORS® statistics show that home prices have fallen by an average of 7 percent nationally in the past year. But the value of home owners’ investment in remodeling projects has declined only 3.86 percent on average between 2007 and 2008, according to Remodeling’s 2008–2009 Cost vs. Value Report.
Remodeling produces the Cost vs. Value Report each year in cooperation with REALTOR® magazine. REALTORS® responding to a survey in midsummer said home owners could expect to recoup a national average of 67.3 percent of their investment in 30 different home improvement projects. At the height of the housing boom in 2005, home owners could expect to recoup a national average of 86.7 percent on projects.
Remodeling remains hot in 10 cities, where, on at least some projects, home owners can recover 100 percent of their costs. In Charlotte, N.C., for example, decks, midrange kitchen remodels, vinyl siding, and window-replacement projects all would net more than they cost, in respondents’ estimation. High rates of recovery were seen in both strong real estate markets and weak ones.
Many cities with the highest rates of recovery were smaller—Jackson, Miss., and Billings, Mont., for example—which may point to lower labor and materials costs that are easier to recoup.
Seattle also made the list of cities with a cost recovery of more than 100 percent on decks and minor kitchen remodels. In fact, Pacific Coast cities recorded the best payback on remodeling by a wide margin, as they did in 2007. Although construction costs on the Pacific Coast are nearly 17 percent higher than national averages, the value of renovations at resale more than makes up for those higher prices.
The result is an average cost-recouped percentage that’s 14.8 percent higher than in the rest of the country. The toughest place to get your money back: Midwestern cities such as Chicago, Cleveland, Indianapolis, and Milwaukee.
Top 10 Project Paybacks
Once again, exterior remodeling projects lead the way for recovery on dollars spent in this year’s Cost vs. Value survey. When you compare the national averages, replacement projects that boost curb appeal—siding, windows, and decks—give you the greatest chance of recouping your money. Inside, only kitchen remodels can compare, at least on a national level.
1. Upscale fiber cement siding (86.7%)
2. Midrange wood deck (81.8%)
3. Midrange vinyl siding (80.7%)
4. Upscale foam-backed vinyl (80.4%)
5. Midrange minor kitchen remodel (79.5%)
6. Upscale vinyl window replacement (79.2%)
7. Midrange wood window replacement (77.7%)
8. Midrange vinyl window replacement (77.2%)
9. Upscale wood window replacement (76.5%
10. Midrange major kitchen remodel (76.0%)
By G.M. Filisko December 2008
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
Despite home price drops in many cities, remodeling projects are holding their own as a way for owners to add value.
Many people are wondering where their money will be safest during these uncertain economic times. When home owners turn to you for your expert advice, counsel them that some things never change: Investing in their home still pays off.
NATIONAL ASSOCIATION OF REALTORS® statistics show that home prices have fallen by an average of 7 percent nationally in the past year. But the value of home owners’ investment in remodeling projects has declined only 3.86 percent on average between 2007 and 2008, according to Remodeling’s 2008–2009 Cost vs. Value Report.
Remodeling produces the Cost vs. Value Report each year in cooperation with REALTOR® magazine. REALTORS® responding to a survey in midsummer said home owners could expect to recoup a national average of 67.3 percent of their investment in 30 different home improvement projects. At the height of the housing boom in 2005, home owners could expect to recoup a national average of 86.7 percent on projects.
Remodeling remains hot in 10 cities, where, on at least some projects, home owners can recover 100 percent of their costs. In Charlotte, N.C., for example, decks, midrange kitchen remodels, vinyl siding, and window-replacement projects all would net more than they cost, in respondents’ estimation. High rates of recovery were seen in both strong real estate markets and weak ones.
Many cities with the highest rates of recovery were smaller—Jackson, Miss., and Billings, Mont., for example—which may point to lower labor and materials costs that are easier to recoup.
Seattle also made the list of cities with a cost recovery of more than 100 percent on decks and minor kitchen remodels. In fact, Pacific Coast cities recorded the best payback on remodeling by a wide margin, as they did in 2007. Although construction costs on the Pacific Coast are nearly 17 percent higher than national averages, the value of renovations at resale more than makes up for those higher prices.
The result is an average cost-recouped percentage that’s 14.8 percent higher than in the rest of the country. The toughest place to get your money back: Midwestern cities such as Chicago, Cleveland, Indianapolis, and Milwaukee.
Top 10 Project Paybacks
Once again, exterior remodeling projects lead the way for recovery on dollars spent in this year’s Cost vs. Value survey. When you compare the national averages, replacement projects that boost curb appeal—siding, windows, and decks—give you the greatest chance of recouping your money. Inside, only kitchen remodels can compare, at least on a national level.
1. Upscale fiber cement siding (86.7%)
2. Midrange wood deck (81.8%)
3. Midrange vinyl siding (80.7%)
4. Upscale foam-backed vinyl (80.4%)
5. Midrange minor kitchen remodel (79.5%)
6. Upscale vinyl window replacement (79.2%)
7. Midrange wood window replacement (77.7%)
8. Midrange vinyl window replacement (77.2%)
9. Upscale wood window replacement (76.5%
10. Midrange major kitchen remodel (76.0%)
By G.M. Filisko December 2008
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
Moving Done Right
With more than 40 million Americans moving each year, the Department of Transportation (DOT), which oversees the moving industry, receives up to 4,000 complaints each year. Most of these complaints stem from damaged goods and overcharging. If you have clients planning a move, here are some important tips they should consider.
Qualify the mover. Ask to see the movers’ DOT registration. Most complaints involve “rogue movers,” which are companies that operate without the proper certifications. Check their reputability on Angie’s List (angieslist.com) and the Better Business Bureau (bbb.org). Avoid any mover that offers quotes over the phone or the Internet. Instead, get at least three written estimates from separate professional movers that require an in-home inspection before providing a quote. Be wary of any quote substantially lower than others you get. The tactic of low balling to get the job and then demanding additional charges to cover actual costs is all too common.
Know your estimate. Professional movers offer different kinds of estimates. They can include binding and, more often, non-binding estimates with a guaranteed not-to-exceed price. Discuss all options and identify in writing any exclusions to the guaranteed not-to-exceed price.
Get additional insurance. The default insurance that movers provide is called valuation coverage, which assumes liability for no more than 60 cents per pound per item. Meaning: The 32" Sony LCD HDTV that cost $497.99 will fetch $15 if found damaged upon delivery. Fortunately, movers offer additional insurance policies in which you can pay to cover depreciation value or even replacement cost. Regardless of the type of insurance, notify the mover in writing about any articles of high value.
Finally, do not sign a delivery receipt for your household goods if it contains any language about releasing the moving company from liability. By law, anyone moving has up to nine months to file a written claim. Strike out this kind of language or refuse delivery until a proper receipt is provided.
Copyright 2009 Prospect Mortgage
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
www.CallNaplesHome.com
www.NaplesForeclosureREO.com
Qualify the mover. Ask to see the movers’ DOT registration. Most complaints involve “rogue movers,” which are companies that operate without the proper certifications. Check their reputability on Angie’s List (angieslist.com) and the Better Business Bureau (bbb.org). Avoid any mover that offers quotes over the phone or the Internet. Instead, get at least three written estimates from separate professional movers that require an in-home inspection before providing a quote. Be wary of any quote substantially lower than others you get. The tactic of low balling to get the job and then demanding additional charges to cover actual costs is all too common.
Know your estimate. Professional movers offer different kinds of estimates. They can include binding and, more often, non-binding estimates with a guaranteed not-to-exceed price. Discuss all options and identify in writing any exclusions to the guaranteed not-to-exceed price.
Get additional insurance. The default insurance that movers provide is called valuation coverage, which assumes liability for no more than 60 cents per pound per item. Meaning: The 32" Sony LCD HDTV that cost $497.99 will fetch $15 if found damaged upon delivery. Fortunately, movers offer additional insurance policies in which you can pay to cover depreciation value or even replacement cost. Regardless of the type of insurance, notify the mover in writing about any articles of high value.
Finally, do not sign a delivery receipt for your household goods if it contains any language about releasing the moving company from liability. By law, anyone moving has up to nine months to file a written claim. Strike out this kind of language or refuse delivery until a proper receipt is provided.
Copyright 2009 Prospect Mortgage
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
www.CallNaplesHome.com
www.NaplesForeclosureREO.com
Tuesday, August 18, 2009
America's 10 Best Undervalued Places to Live
America's 10 Best Undervalued Places to Live:
(Percent of undervaluation, according to IHS Global Insight.)
1. Las Vegas: 41 percent
2.Houston: 37 percent
3.Naples, Fla.: 33 percent
4.Oklahoma City: 29 percent
5. Sarasota, Fla. 28 percent
The real estate bust has created some attractive bargain opportunities in certain housing markets. While the national housing bust has devastated property values, it has also created some outstanding bargain opportunities for would-be home buyers—if you know where to look.
During the first half of the decade, easy credit and speculative fervor sent home prices in certain states—Florida, California, Nevada—scorching to phenomenal heights. But nearly three years into a real estate crash that's dragged home prices down 32 percent from their
2006 peaks, some of these once wildly overpriced markets present today's real estate shoppers with perhaps their best shot at long-term value. "What we have seen is that those markets that became significantly overvalued [during the housing boom] are right now very undervalued," says Jeannine Cataldi, senior economist and manager of IHS Global Insight's Regional Real Estate Service.
To pinpoint the nation's most undervalued housing markets, we turned to IHS Global Insight's first-quarter 2009 House Prices in America report, which uses household income, population density, and other data to compare a market's actual value with where it should be on a statistical basis. We then used employment, quality-of-life, and other research to determine America's best undervalued places to live.
Las Vegas. After a dizzying run-up in prices, Sin City has become a cautionary tale for real estate investors everywhere.
Since its 2006 peak, Las Vegas home values have plummeted by more than 50 percent. And today—at $77 a square foot— existing homes are actually priced below the cost of building materials, says Steve Bottfeld, the principal of Las Vegas-based People Who Read This Also Read The Top 10 Housing Markets for the Next 10 Years Top 5 Fastest- Growing States in the Union 10 Affordable Places to Retire The 10 Most Dollar- Discounted Housing Markets- 11 Best-Kept-Secret Careers
Marketing Solutions, which specializes in real estate economics. "That's truly undervalued," he says. Although the market may be depressed today, several factors will support strong housing demand in Las Vegas over the long haul, Bottfeld says. The opening of MGM Mirage's CityCenter, which is expected later this year, will bring new jobs. The city's enviable climate—hot summers and mild winters—and its exciting downtown district will continue to attract residents. And the best-in-class architectural design of area properties will appeal to would-be buyers. "We are on the bottom of prices at this point," Bottfeld says. "There is no question that the residential market in Las Vegas is undervalued." The median single family home price in Las Vegas was $140,000, in the first quarter, which IHS Global Insight considers 41 percent undervalued.
Houston. Unlike other metropolitan areas, Houston has not been hammered by the national housing bust. In fact, real home prices increased nearly 5 percent from the first quarter of 2008 to the first quarter of 2009, according to a Brookings Institution report.
But even without a sharp decline in real estate values, projected job and population growth should drive future home price appreciation and create value, says James Gaines, a research economist at the Real Estate Center at Texas A&M University. "The medium- and long-term prospects for Houston are extremely good," he says. The area's low-tax, probusiness climate will lure new employers to Houston and help bolster an already sound local economy anchored by the energy and healthcare sectors, Gaines says. More jobs, of course, mean more residents and greater demand for housing. "[Houston has] good demographic growth, job growth, and a reasonably balanced housing market," he says. The median home price in Houston was $120,000, in the first quarter, which IHS Global Insight considers 37 percent undervalued.
Naples, Fla. More than two years of price declines have turned some of Florida's most overpriced communities into buying opportunities, says Jack McCabe of Florida-based McCabe Research & Consulting. "There are definitely opportunities in the marketplace now that make sense," he says. The upscale retirement community of Naples is one such market, McCabe says. With plenty of golf, beaches, and fishing, Naples is an enchanting, sun-drenched spot along Florida's southwest coastline. And after home prices plummeted by nearly 50 percent from the first quarter of 2006 to the first quarter of 2009, the housing America's 10 Best Undervalued Places to Live . Naples market is looking increasingly tempting. IHS Global Insight considers the median home price in Naples—$200,000—to be 33 percent undervalued.
Oklahoma City. Like Houston, Oklahoma City was able to dodge the housing crash. Real home prices in Oklahoma City increased nearly 3 percent from the first quarter of 2008 to the first quarter of 2009. Housing demand was fueled by a strong local economy, which had the nation's ninth-lowest unemployment rate—5.6 percent—as of March of 2009, according to the Brookings Institution. The state's pro-business philosophy plays a key role in its economic strength, says Dawn Kennedy, the CEO of the Oklahoma City Metropolitan Association of Realtors. "Businesses come in because the tax situation is favorable," she says. "They bring in jobs, which brings in workers, which brings in homeowners." At the same time, the pleasant weather, friendly residents, and an affordable real estate market make Oklahoma City a great place to live, Kennedy says. "It is like the biggest small town on Earth." IHS Global Insight considers the median home price in Oklahoma City— $105,000—to be 29 percent undervalued.
Sarasota, Fla. Another alluring option for those looking to buy into the depressed Florida housing market is Sarasota, McCabe says. Like Naples, Sarasota is a relatively upscale community along the state's west coast. "Sarasota has got a lot of culture to it—a lot of art, a lot of art festivals," McCabe says. "It's a nice boating community, and they have got a lot of beautiful homes there." And after home prices plunged 44 percent from the first quarter of 2006 to the first quarter of 2009, the market presents would-be buyers with some attractive opportunities. IHS Global Insight considers the median home price in Sarasota— $141,000—to be 28 percent undervalued.
1. Las Vegas: 41 percent
2.Houston: 37 percent
3.Naples, Fla.: 33 percent
4.Oklahoma City: 29 percent
5. Sarasota, Fla. 28 percent
6. San Francisco: 25 percent
7. Atlanta: 24 percent
8.Omaha: 23 percent
9. College Station-Bryan, Texas: 21 percent
10.San Diego: 21 percent
By Luke Mullins Posted July 16, 2009
USNews.com
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
(Percent of undervaluation, according to IHS Global Insight.)
1. Las Vegas: 41 percent
2.Houston: 37 percent
3.Naples, Fla.: 33 percent
4.Oklahoma City: 29 percent
5. Sarasota, Fla. 28 percent
The real estate bust has created some attractive bargain opportunities in certain housing markets. While the national housing bust has devastated property values, it has also created some outstanding bargain opportunities for would-be home buyers—if you know where to look.
During the first half of the decade, easy credit and speculative fervor sent home prices in certain states—Florida, California, Nevada—scorching to phenomenal heights. But nearly three years into a real estate crash that's dragged home prices down 32 percent from their
2006 peaks, some of these once wildly overpriced markets present today's real estate shoppers with perhaps their best shot at long-term value. "What we have seen is that those markets that became significantly overvalued [during the housing boom] are right now very undervalued," says Jeannine Cataldi, senior economist and manager of IHS Global Insight's Regional Real Estate Service.
To pinpoint the nation's most undervalued housing markets, we turned to IHS Global Insight's first-quarter 2009 House Prices in America report, which uses household income, population density, and other data to compare a market's actual value with where it should be on a statistical basis. We then used employment, quality-of-life, and other research to determine America's best undervalued places to live.
Las Vegas. After a dizzying run-up in prices, Sin City has become a cautionary tale for real estate investors everywhere.
Since its 2006 peak, Las Vegas home values have plummeted by more than 50 percent. And today—at $77 a square foot— existing homes are actually priced below the cost of building materials, says Steve Bottfeld, the principal of Las Vegas-based People Who Read This Also Read The Top 10 Housing Markets for the Next 10 Years Top 5 Fastest- Growing States in the Union 10 Affordable Places to Retire The 10 Most Dollar- Discounted Housing Markets- 11 Best-Kept-Secret Careers
Marketing Solutions, which specializes in real estate economics. "That's truly undervalued," he says. Although the market may be depressed today, several factors will support strong housing demand in Las Vegas over the long haul, Bottfeld says. The opening of MGM Mirage's CityCenter, which is expected later this year, will bring new jobs. The city's enviable climate—hot summers and mild winters—and its exciting downtown district will continue to attract residents. And the best-in-class architectural design of area properties will appeal to would-be buyers. "We are on the bottom of prices at this point," Bottfeld says. "There is no question that the residential market in Las Vegas is undervalued." The median single family home price in Las Vegas was $140,000, in the first quarter, which IHS Global Insight considers 41 percent undervalued.
Houston. Unlike other metropolitan areas, Houston has not been hammered by the national housing bust. In fact, real home prices increased nearly 5 percent from the first quarter of 2008 to the first quarter of 2009, according to a Brookings Institution report.
But even without a sharp decline in real estate values, projected job and population growth should drive future home price appreciation and create value, says James Gaines, a research economist at the Real Estate Center at Texas A&M University. "The medium- and long-term prospects for Houston are extremely good," he says. The area's low-tax, probusiness climate will lure new employers to Houston and help bolster an already sound local economy anchored by the energy and healthcare sectors, Gaines says. More jobs, of course, mean more residents and greater demand for housing. "[Houston has] good demographic growth, job growth, and a reasonably balanced housing market," he says. The median home price in Houston was $120,000, in the first quarter, which IHS Global Insight considers 37 percent undervalued.
Naples, Fla. More than two years of price declines have turned some of Florida's most overpriced communities into buying opportunities, says Jack McCabe of Florida-based McCabe Research & Consulting. "There are definitely opportunities in the marketplace now that make sense," he says. The upscale retirement community of Naples is one such market, McCabe says. With plenty of golf, beaches, and fishing, Naples is an enchanting, sun-drenched spot along Florida's southwest coastline. And after home prices plummeted by nearly 50 percent from the first quarter of 2006 to the first quarter of 2009, the housing America's 10 Best Undervalued Places to Live . Naples market is looking increasingly tempting. IHS Global Insight considers the median home price in Naples—$200,000—to be 33 percent undervalued.
Oklahoma City. Like Houston, Oklahoma City was able to dodge the housing crash. Real home prices in Oklahoma City increased nearly 3 percent from the first quarter of 2008 to the first quarter of 2009. Housing demand was fueled by a strong local economy, which had the nation's ninth-lowest unemployment rate—5.6 percent—as of March of 2009, according to the Brookings Institution. The state's pro-business philosophy plays a key role in its economic strength, says Dawn Kennedy, the CEO of the Oklahoma City Metropolitan Association of Realtors. "Businesses come in because the tax situation is favorable," she says. "They bring in jobs, which brings in workers, which brings in homeowners." At the same time, the pleasant weather, friendly residents, and an affordable real estate market make Oklahoma City a great place to live, Kennedy says. "It is like the biggest small town on Earth." IHS Global Insight considers the median home price in Oklahoma City— $105,000—to be 29 percent undervalued.
Sarasota, Fla. Another alluring option for those looking to buy into the depressed Florida housing market is Sarasota, McCabe says. Like Naples, Sarasota is a relatively upscale community along the state's west coast. "Sarasota has got a lot of culture to it—a lot of art, a lot of art festivals," McCabe says. "It's a nice boating community, and they have got a lot of beautiful homes there." And after home prices plunged 44 percent from the first quarter of 2006 to the first quarter of 2009, the market presents would-be buyers with some attractive opportunities. IHS Global Insight considers the median home price in Sarasota— $141,000—to be 28 percent undervalued.
1. Las Vegas: 41 percent
2.Houston: 37 percent
3.Naples, Fla.: 33 percent
4.Oklahoma City: 29 percent
5. Sarasota, Fla. 28 percent
6. San Francisco: 25 percent
7. Atlanta: 24 percent
8.Omaha: 23 percent
9. College Station-Bryan, Texas: 21 percent
10.San Diego: 21 percent
By Luke Mullins Posted July 16, 2009
USNews.com
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
Thursday, August 6, 2009
The ins and outs of short sales
Many of us have now become familiar with the term “short sale” in the context of the current real estate market. For those less familiar, this is a transaction where the seller agrees to sell the property for less than the balance owed on the seller’s mortgage. This is subject to the approval of all lien holders on the property, to the short payoff and release of the lien encumbering the property to enable the seller to deliver clear title to the buyer.
A short sale typically presents an opportunity for a buyer to purchase a property at a discount. The opportunity cost of the short sale for the buyers, however, is time. Buyers often endure many months of waiting before the seller’s lender approves the short sale. But what happens to the short sale contract if the seller files for bankruptcy protection before the short sale closing occurs?
At the time the seller files for bankruptcy protection a “snap shot” of all the seller’s assets and liabilities is taken. All of the seller’s property, except that protected by law, becomes part of the bankruptcy estate and is subject to being sold by the assigned bankruptcy trustee in the case to pay creditors. All uncompleted contracts also are listed in the bankruptcy filing, and this would include both the contract between buyer and seller as well as the contract between seller and broker. The seller lists the real estate in question in the bankruptcy petition, indicates intentions regarding that real estate, which, in the case of a property in a short sale contract under Chapter 7 bankruptcy, would typically be to abandon the property, and it is up to the assigned bankruptcy trustee then to make a determination as to whether to attempt to sell the property for the benefit of creditors or to abandon it again.
Because short sale real estate typically offers no equity for the seller, in other words, they owe more on any mortgages than the current fair market value, there is generally nothing for the bankruptcy trustee to administer or liquidate for the benefit of unsecured creditors. Because the bankruptcy trustee represents the interests of the seller/debtor’s unsecured creditors, he or she would also be likely to abandon the property after a review of its value and the liens encumbering it. The reason is that those liens must be satisfied, to the degree they can be, from sale proceeds, leaving nothing for unsecured creditors.
In a case where there is no short sale or where the trustee abandons the property, the lender will, with the bankruptcy court’s permission or upon completion of the bankruptcy case, proceed in state court with its foreclosure remedy. The lender may even pre-empt the trustee and request that the court permit the lender to proceed in state court prior to the trustee’s determination that the property will yield nothing for the bankruptcy estate.
After the state court foreclosure action, the bank will take title to the real estate, sell it and apply the proceeds to the mortgage balance. The bankruptcy discharge prohibits the lender from making any attempt to try to force the seller/debtor to make up any shortfall between the sale price of the property and what was owed on any liens against it.
However, seller’s/debtor’s attorney may also request that the bankruptcy court permit the debtor permission to go forward with the short sale transaction while the bankruptcy case is pending. The seller’s bankruptcy attorney will bring a motion in the bankruptcy court to sell the real estate. Once the court has heard the motion, an order to sell the real estate may be granted so long as the trustee has not determined that there is value in the property for the unsecured creditors and no creditor objects. Any lien holders on the property are made aware of the bankruptcy filing, as creditors in the seller’s bankruptcy, may object. However, many lenders may not object, and may continue on to approve the short payoff and the closing can still occur. This may benefit the lender because the longer the property lies empty, the lower the value the lender will receive once it finally finishes its foreclosure and then liquidates the property. It is better, then, to have a willing buyer at an acceptable price to present to the lender for short sale approval.
Although the seller cannot be held liable for the liens on the property post-discharge, there is still a possibility that he or she could incur liabilities for personal injuries on the property or code violations. Accordingly the short sale, which quickly removes title to the property from the seller’s name to that of buyer, protects the seller from such post-bankruptcy filing liabilities.
The Bradenton Herald
Published July 13, 2009
A short sale typically presents an opportunity for a buyer to purchase a property at a discount. The opportunity cost of the short sale for the buyers, however, is time. Buyers often endure many months of waiting before the seller’s lender approves the short sale. But what happens to the short sale contract if the seller files for bankruptcy protection before the short sale closing occurs?
At the time the seller files for bankruptcy protection a “snap shot” of all the seller’s assets and liabilities is taken. All of the seller’s property, except that protected by law, becomes part of the bankruptcy estate and is subject to being sold by the assigned bankruptcy trustee in the case to pay creditors. All uncompleted contracts also are listed in the bankruptcy filing, and this would include both the contract between buyer and seller as well as the contract between seller and broker. The seller lists the real estate in question in the bankruptcy petition, indicates intentions regarding that real estate, which, in the case of a property in a short sale contract under Chapter 7 bankruptcy, would typically be to abandon the property, and it is up to the assigned bankruptcy trustee then to make a determination as to whether to attempt to sell the property for the benefit of creditors or to abandon it again.
Because short sale real estate typically offers no equity for the seller, in other words, they owe more on any mortgages than the current fair market value, there is generally nothing for the bankruptcy trustee to administer or liquidate for the benefit of unsecured creditors. Because the bankruptcy trustee represents the interests of the seller/debtor’s unsecured creditors, he or she would also be likely to abandon the property after a review of its value and the liens encumbering it. The reason is that those liens must be satisfied, to the degree they can be, from sale proceeds, leaving nothing for unsecured creditors.
In a case where there is no short sale or where the trustee abandons the property, the lender will, with the bankruptcy court’s permission or upon completion of the bankruptcy case, proceed in state court with its foreclosure remedy. The lender may even pre-empt the trustee and request that the court permit the lender to proceed in state court prior to the trustee’s determination that the property will yield nothing for the bankruptcy estate.
After the state court foreclosure action, the bank will take title to the real estate, sell it and apply the proceeds to the mortgage balance. The bankruptcy discharge prohibits the lender from making any attempt to try to force the seller/debtor to make up any shortfall between the sale price of the property and what was owed on any liens against it.
However, seller’s/debtor’s attorney may also request that the bankruptcy court permit the debtor permission to go forward with the short sale transaction while the bankruptcy case is pending. The seller’s bankruptcy attorney will bring a motion in the bankruptcy court to sell the real estate. Once the court has heard the motion, an order to sell the real estate may be granted so long as the trustee has not determined that there is value in the property for the unsecured creditors and no creditor objects. Any lien holders on the property are made aware of the bankruptcy filing, as creditors in the seller’s bankruptcy, may object. However, many lenders may not object, and may continue on to approve the short payoff and the closing can still occur. This may benefit the lender because the longer the property lies empty, the lower the value the lender will receive once it finally finishes its foreclosure and then liquidates the property. It is better, then, to have a willing buyer at an acceptable price to present to the lender for short sale approval.
Although the seller cannot be held liable for the liens on the property post-discharge, there is still a possibility that he or she could incur liabilities for personal injuries on the property or code violations. Accordingly the short sale, which quickly removes title to the property from the seller’s name to that of buyer, protects the seller from such post-bankruptcy filing liabilities.
The Bradenton Herald
Published July 13, 2009
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