Ann Adams

We are seeing an increased interest in properties with a view in Arizona. Many people looking to Arizona for retirement want to do so and have a view to go with this. Most view homes will cost a buyer $400,000 and more in Arizona. At the far ends of town you may find a view for less.

The SE Valley will normally be less than a Scottsdale or Cave Creek View. Golf communities also have a big draw for the social aspects inside these subdivisions. They attract both golfers and non golfers for the entertainment value inside these areas. Dobson Ranch waterfront homes have a good value in Mesa and you may find one under $400,000. Val Vista Lakes in Gilbert is very nice and will run closer to $500,000 give or take depending on the square footage of the home. Scottsdale and Tempe both feature luxary waterfront lofts for sale that allow for full service conveniance. These will tend to have higher HOA fees but will deliver superior services. Scottsdale and Tempe also both have waterfront homes available to buy as well.

Another popular search for Arizona home buyers is to search by homes inside a gated community. If your home in Arizona is a second home this aspect may offer some added security while you are away. There are also services that you can hire to check up on your home while you are away.

As a buyer wanting a unique home in Arizona you can customize a search in Arizona to include specific features. We can choose options such as lake subdivision, mountain views, gated communities and waterfront home to name a few. This ability to cater your search can help you narrow down your ideal home and find the best value in less time. You can customize your search at www.azfreehomelistings.com and have a no obligation look at current inventory in Arizona.

A foreclosure, short sale, loan modification or deed-in-lieu of foreclosure can all have a negative impact on your credit. Many times a bank will force you to go behind before they will consider a short sale. There is a difference in the severity of the damage between them. A foreclosure will show on your credit as a foreclosure/repossession whereas a short sale will show as pre-foreclosure in redemption status, settled or even as a completely satisfied account. A foreclosure can prevent you from purchasing a home for 5-7 years whereas new Fannie Mae and Freddie Mac guidelines have changed the seasoning of a short sale to 2 years - which means you can purchase a home much sooner.

Jobs that need security clearance may be impossible to get with a foreclosure on your record. When looking for a new job an employer may pull your credit report and this may make you look bad to have a foreclosure on your record versus a short sale. Short sales show that you tried to minimize the damage to the bank.

Foreclosures also generally have a more severe impact on your FICO score, because of the high number of missed payments that people accrue over the course of their foreclosure, most people report a drop of 200-300 points in their score. If you are proactive about short selling your home, you can reduce this number by acting quickly to get your home on the market and sold. Most people who complete a short sale report a drop of 80-120 points in their credit score and some have been able to fully recover in as little as 12-18 months.

The short sale process is far more invasive and is less stress in most cases on the homeowner. Friends, family and neighbors do not need to know you are doing a short sale on your property and your property will be marketed just like other home for sale. When the property closes escrow, you will move out and move on with your life. When your home is facing foreclosure, the bank generally posts a notice of trustee sale on your property. If the property does go to foreclosure and you or a tenant is living in the home there will be an eviction process and you will have someone knock at your door to try to get you out of the home.

A short sale allows you to get out of a home that is causing you a financial hardship and rid you of the debt associated with negative equity without facing foreclosure. We highly recommend that if you are considering a short sale you meet with a professional as soon as possible to reduce the impact on your credit and begin the negotiations with your lender.

Tax Issues on short sales

Home equity lines and investors be sure to consult your CPA prior to considering a short sale or foreclosure. The IRS wants you to pay and you must have great tax planning and strategy to minimize your risk and lower your tax burden. The tax laws change so frequently that you MUST not depend on a realtor for this advice. You must consult a tax expert.

If you can prove you were insolvent prior to the close of a short sale this is better. When you access your balance sheet and consider your assets and liabilities they do not consider your retirement as part of your assets. That said these guidelines change and you need to consult a CPA to assess your tax burden and put together a balance sheet.

If you have tax consequences after a short sale you would have owed in foreclosure to. We all would love to say you can wipe your tax burden away by letting a home go but in some cases you can't.

For now if the home was a purchase money primary home the tax scenario is different than if you are an investor or have a home equity line that is not purchase money.

Knowing your options is important. The IRS is not always out of the picture after the home is gone.

Strategic Default

Homeowners underwater are looking to make the best business decision on this underwater mortgage. Many have detached themselves from any moral conflict they may have had initially and even buy another home then short sale later. Strategic defaults especially in Arizona have increased significantly over the last year.

Walking away without attempting to mitigate or negotiate a loan prior to foreclosure may not be the best plan. If a homeowner that is underwater attempts to do a loan modification or a short sale and mitigate the loss they may have a better opportunity to negotiate a settlement of a second lien through a short sale. The home may also have a larger loss at foreclosure than it may have had in a short sale.

The bottom line is these decisions are not easy to make and you must consult with a proven and effective real estate attorney, tax advisor and well trained real estate broker or agent. Experience matters and doing things correctly the first time is important.

Proper legal and tax advisement is a crucial element. This will allow you do better understand your options. For example if the property loan or loans are not a purchase money primary residence you may have different options.

Home Equity Lines in short sales

An equity line that is considered purchase money and an equity line used for buying a boat are two different types on scenarios and need to be handled differently. Each state also has different laws about how short sales are handled. We have seen the larger banks settle for pennies on the dollar on home equity lines. For example we had about a $100,000 debt settled for $8000.00 recently and other clients have both settled for more or less depending on the situation and the lender. It appears that Credit Unions and smaller banks are more difficult to negotiate with in our experience.

Investor short sales

Investors considering strategic default must also plan well. It may not be a good choice to simply mail in your keys. What if the home is damaged? Will you be liable for the time period prior to the foreclosure date? We advise all homeowners to leave the home in good condition and not strip the home of appliances and light fixtures. Damage to the home, vandalism and back HOA fees can cause you problems later.

Tax Issues on short sales

Home equity lines and investors be sure to consult your CPA prior to considering a short sale or foreclosure. The IRS wants you to pay and you must have great tax planning and strategy to minimize your risk and lower your tax burden. The tax laws change so frequently that you MUST not depend on a realtor for this advice. You must consult a tax expert.

How to lower your liability when doing a short sale.

We also advise homeowner to stay current on Home Owner's Association fees and to maintain their insurance policy if possible to lower their liability. HOA's can pursue collection regardless of if you foreclose or do a short sale so perhaps you should just stay current with them to avoid any future problems.

Strategic default is clearly a strategy that requires professional advice and planning. Take the time to pursue the information for you to make the correct decision about your home and speak with qualified real estate and tax professionals.