Kathleen West Flagler County & Palm Coast Realtor

For anyone who has been shopping for Real Estate over the last year or two or if you are just beginning to shop, you would be hard pressed not to come across the term "Short Sale" on a least a few properties. Here in Palm Coast, houses for sale as a "Short Sale" represent a little over 30% of all houses for listed for sale in our MLS. I find myself talking short sale explanations on almost a daily basis with both buyers and sellers. I am also finding that many people have either made inaccurate assumptions or received inaccurate advice regarding "short sales". Since this type of sale situation is a reality for today's buyer and seller (and will be for probably a while longer), I wanted to address some of these common "myths" regarding "short sales".

First, one must understand what a "short sale" is and is not. The term "short sale" is used to denote a situation where a seller is distressed and is attempting to sell their property to avoid foreclosure but the property will not sell for equal to the amount or more than what is owed. Since the seller is 'distressed' (having difficulty making payments and unable to pay the difference with selling the property), the seller is also asking the lender to make arrangements to handle the difference with them.

With that said, let's look at some of the "myths" (or misconceptions) associated with "short sales":

Buyers

1. Short sale is the same as foreclosure and the bank wants to 'unload it' as quick as possible. First, a "short sale" IS NOT a 'foreclosure". "Foreclosure" is the situation where the lender has seized possession of the property. A "short sale" is a pre-foreclosure option for a borrower, and the borrower still has possession of the property. Therefore, the lender is seeking the borrower to sell the property for as little loss as possible and has agreed to work with the borrower in reagrds to any unpaid difference.
2. The bank has to 'forgive' the difference on all "short sales". Actually, it is up to each inidivdual lender how they handle these situations and the options they provide to the borrower(s). The lender is NOT obligated to do anything for that matter. The "short sale" is simply an option provided by many lenders, and it is also means to make potential buyers aware of the special circumstances regarding the sale of that property.
3. Since it is a short sale, I can offer a lot lower than what the property is listed for. Actually, you often have less 'wiggle room' for negotiation because it is not solely up to the owner as to what can be accepted. The lender is also involved in the acceptance of offers. The lender does not say "yes" or "no" to offers, but rather provides an amount they are willing to accept as a difference in what is owed. In addition, there is also the negotiation of how the difference will be handled with the borrower which is often times not 100% agreed upon up front. Remember, the lender is attempting to minimize their loss as much as possible NOT just 'get it sold quickly'.

Sellers

1. I owe more than what houses are selling for, so I can sell as a "short sale" and won't have to be responsible for the difference. Again, a "short sale" is a pre-foreclosure scenario. Therefore, a lender will not even consider "short sale" negotiations with a borrower until the can show that they are having difficulty making payments and must sell to avoid foreclosure. The lender will also want to see that there is an inability to pay the difference between what is owed and what the property will sell for. And more importantly, keep in mind that each individual lender will handle this differently according to their policies.
2. Since it is negotiation with the lender, why do I need a Realtor? A Realtor experienced in short sale scenarios is valuable in assisting you with the three parts of these difficult situations . . . initial negotiation and filing with the lender to offer the property for sale as a short sale, offering and advertising the property to get offers, and negotiation with both the lender and buyer to get the sale finalized. The Realtor should also keep in constant communication with the lender as well especially when an offer has been submitted from a potential buyer.
3. With all of this hassle, I should just let the bank foreclose. This is a difficult and stressful time, but it is important to make sure you are weighing all of your options. Foreclosure can having credit repercussions that last longer than a short sale. "Abandonments" and foreclosures may result in income tax obligations that are greater than a short sale scenarion. See the The Mortgage Forgiveness Debt Relief Act and Debt Cancellation for more information on "debt forgiveness". See also the IRS's Publication 4861 for examples and explanation of tax obligations.
4. Buyers don't want to even look at short sales because they are too difficult to purchase. Not true, and buyers know that short sales can often times be great purchases and often in better condition than foreclosure properties may be. A property offered for sale as a short sale should not be offered with the same diligence as any other property. The goal is the same . . . to get it sold for the owner at the best financial benefit.

There are obviously other rumors and opinions which can go around, and it is important to get the truth and facts when it comes to short sales for both buyers and sellers. For assistance with short sales in the Flagler County/Palm Coast, FL areas, fell free to contact me today.

Service work is one of the most rewarding things I have found in life.  Volunteering time and talent within your community offers so many great gifts.  The people you meet, the friendships that are born, the great feeling of a smile on another's face are just a few of those gifts I've experienced. 

The www.Serve.gov website is a great resource to start if you are wondering what you could do in your community.  We all have various passions and talents, and all can be very beneficial to your local community.  Remember, the little things can be huge in another's life. 

Click here for a a list of volunteer needs in the Flagler County, FL and surrounding areas.

Despite an excess of recent rain, Kemper Sports stated that they are "are still aiming for a target opening date in the Fall" in a letter to the Friends of Golf dated 5/18/09. While driving past the course it is noticeable all of the work that is being done, the progress, and the challenges faced to restore the course. Residents near the course are eager to see the course brought back to life. Many of whom built in that are specifically because of the golf-community aspect of the subdivision and know the potential impact to their property values without an operational course.

The new course is owned by the City of Palm Coast and its residents. Course Fees have not been set at this time. Earlier this year, the City Council stated that fees will be set by the City and plan to announce those fees prior to opening, but management of the course will be with an outside contractor. Kemper golf was contracted to manage the course operations and also announced the hiring of Bryan Plummer, who has 20+ years of resort and similar property management experience & education, as Superintendent of the course.

Visit www.PalmCoastHomeShow.com for the most powerful and comprehensive property search in the area!

As most sellers know, the more options buyers have . . . the more challenging it can be to sell. Good news in Palm Coast is that compared to to time last year, the number of houses for sale has reduced almost in half (roughly 44% lower than last year). In fact, this is one of the lowest periods for inventory in the past few years. We currently have about 1,050 homes for sale in Palm Coast.

So what does less homes for sale mean for sellers:

1. 1. 1. Obviously less selection which means less competition.
      2. Better negotiation position

But for those things to happen, buyers have to be present. We are running slightly down (-2%) compared to last year in Palm Coast through May for residential home sales. We are very much beginning to see stabilization in the area in terms of number of sales. This is very important in terms of price which is on most owner's minds. Remember, price can not change until buyers are consistently present and inventories go down which we are beginning to see both happen. Again, all positive signs.

Visit www.PalmCoastHomeShow.com for the most powerful and comprehensive property search in the area!

Many in the area remember over the last two years that it was not uncommon to see 2000+ houses for sale in the area. In fact, many are still under the impression that the level is still that high. The good news is that the number of houses for sale in Palm Coast and Flagler County has significantly dropped. As of 5/16/09 we have 1095 Residential Houses for sale in Palm Coast and 1502 for all of Flagler County (See a full market report for the area).

The biggest contributor are properties designated as 'Short Sales' (occurs when the owner owes more than the property can sell for). Short Sales contribute 393 of the listings or 26% of all listings in the county. Currently 63 are pending for sale in Flagler County. Short sales will remain a significant part of houses offered for sale for some time. There have been several issues that have hindered short sales including lengthy timeframe to get responses back from banks, varying policies depending on lenders, and a lack of guarantees which have caused "surprises" at closings and sales to be lost. Since these are situations where the lender will be receiving less than what is owed to them, they naturally want to minimize that loss as much as possible. Coupled with the fact that the lenders saw a flood of these cases go through departments that were not able to handle the volume or had not developed policy or processes since the situation is a rarity in real estate. Recently, the government has stepped in to bring both incentives to lenders and consistency to the process. Click here to get more information on these updates. We have seen over the last year better response times from lenders in terms of offers and more upfront information and direction form the lenders to make the process more efficient.

The other big question on seller and buyer minds is concerning foreclosures. This is an area where the Flagler County made significant progress over the last year with sell-thorughs and use of the short sale option. Currently the area has only a handful of foreclosure houses for sale (designated as 'Lender Owned' in the Flagler County MLS). Click here to see the foreclosure properties for sale in the area. There are currently 244 properties filed with the Flagler County Clerk of Courts Office at this time. Foreclosures are obviously attractive to buyers because of price, but can often be in need of repairs. An inspection by a licensed home inspector will give you a clear idea of repairs which need to be made allowing you to get the most accurate picture of the total cost of the purchase.

In terms of sales, Flagler County has had 462 Residential Houses sold through 5/22/09 compared to 478 the same period last year. So we are beginning to see the number of sales "flatten out" which is a positive sign for the future. We began to see the same "flattening out" in terms of median prices last year. Again these are both positive signs to stabilization in the market.