We are proud to announce that we just launched our simple to navigate site http://www.ZeroShort.com to help owners facing foreclosure explore their options.
From a Q&A article scheduled to appear in @In Home Magazine Next Month:
@ In Home Magazine speaks with Orange County Real Estate Expert, Nancy Moeller about the options available to homeowners have who are struggling with their mortgage.
@ In Home - What can a homeowner do to stop a public foreclosure?
Nancy - They have several options. For most, the best first option is a loan modification. A loan modification can be a permanent change in the terms of the homeowner's loan which results in a lower monthly payment. It's important to mention that a homeowner must qualify for the new payment based on their current income level.
@ In Home - How does a homeowner get a loan modification?
Nancy - While they can do it yourself, we recommend using a reputable loan modification professional with a proven track record of success. Loan Modification professionals understand each lender's guidelines and can help homeowners submit the most accurate, complete package possible. The Loan Modification professionals we recommend also consult with bankruptcy attorneys because sometimes a loan modification followed by a bankruptcy is a good solution that changes the terms of the first loan, eliminates the second loan and keeps the homeowner in their home.
@ In Home - What happens if a loan modification doesn't work?
Nancy - The next best option is a Short Sale. In a short sale, we find a buyer for your property and ask the lender to forgive the remaining mortgage debt plus pay for all of the expenses of the sale. In other words, the homeowner pays nothing.
@ In Home - What are the advantages of a Short Sale?
Nancy - In a short sale, the homeowner can walk away from the sale with significantly less damage than a foreclosure and usually buy a new home sooner than had they gone through foreclosure. Another advantage is that there are no upfront fees or costs associated with the Short Sale. Your lender pays for all fees including, closing costs, escrow fees and realtor commissions.
@ In Home - How does a homeowner qualify for a Short Sale?
Nancy - In order to be eligible for a Short Sale, a homeowner must prove to the lender that they have experienced a hardship and they are unable to continue making payments on their mortgage.
@ In Home - How does a homeowner get a Short Sale approved by their lender?
Nancy - Like with loan modifications, they can do it themselves or work with a professional. Since the lender pays all of the fees, including the real estate commissions, it makes sense to work with a professional who can find a buyer, negotiate with the lenders on your behalf, and handle all of the paperwork.
@ In Home - Are most short sales successful?
Nancy - If handled correctly, most short sales are successful. Usually a denial occurs because the homeowner has waited too long and the property is about to go to Trustee Sale or they are using an inexperience short sale agent.
We believe the key is to work with a team of professionals. On our team, we have a loan modification expert, a short sale negotiation department, a Certified Public Accountant and we consult with bankruptcy and real estate attorneys, as needed.
@ In Home - What are the tax consequences of a Short Sale?
Nancy - They are complicated, but the good news is that in many cases a homeowner can minimize or completely avoid paying taxes on the short sale or forgiven mortgage debt. Every situation is unique and we advise every homeowner to contact their trusted tax advisor for guidance.
@ In Home - What happens to the homeowner after the short sale?
Nancy - Normally, it's not a question addressed by Realtors. However, on our team, we have a Relocation Department committed to helping homeowners find a new place to live. Our team helps homeowners assemble a complete and accurate rental application, write a letter of explanation and document their ability to pay a lease. While not always successful, we work hard to help our clients during and after the short sale process.
@ In Home - Thank you Nancy.
Nancy - Always my pleasure.
Nancy Moeller is a Certified Public Accountant and licensed Real Estate Broker with Seven Gables Real Estate and The OC Experts Team. She can be contacted directly at (714) 276-7006 or Nancy@TheOCExperts.com
1. The biggest benefit of buying bank owned foreclosures is they are almost always the best priced properties on the market. Banks must sell properties quickly and price their properties to sell in 30 days or less. No big secret here.
Here's the fact: Bank owned properties tend to be priced at or below the most recent sold comps, with very little value given to superior curb appeal, upgrades, etc. Unlike the tradition seller who believes their granite kitchen is worth $50,000 - the banks care very little and base their decision on recent comparables adjusted very little for condition and upgrades.
Key Strategy: Look for the upgraded homes as well as the fixers. They tend to be priced about the same! Your hope is that your bid is in quickly and is slightly better than the others. The rabbit beats the hare in this scenario every time. The time to be the hare is during escrow while you are doing your inspections and reviewing HOA documents!
2. In Orange County, we currently have slightly under a one month supply of bank owned properties on the market - despite the pressure on prices, this is a severe seller's market.
Key Strategy: If you are in the market for a bank owned foreclosure, it's imperative to be pre-approved and ready to place an offer immediately. Work with your agent to have an "offer" package ready to go with your pre-approval letter, deposit check and proof of funds to close. Also, make sure your agent has contacted the bank's agent for any necessary addendums or cross-approvals required by the bank. Being complete and prepared is the secret to bouncing on the best values.
3. The Myth about "As Is" - While bank owned properties are sold "as is", the lender will often make some "lender required" repairs, and we have even found that they will take price reductions during escrow if pressed by the buyer and if the request is supported by the appraisal or serious issues from the inspection report.
Key Strategy - While the bank's listing agent will not admit this and will cite the 10-page "as is" addendum, as a buyer (or buyer's agent) - you should make reasonable requests and push for a written response. As with many things in life, the worst answer is "no" and then you can make your decision based on good, bottom-line information.
4. The Truth about "As Is" - Foreclosures are sold "as-is" and you do not have the benefit of knowing the issues that the seller must disclose about the house and the entire investigation is up to the buyer. We recommend exhaustive inspections and a careful look at the Homeowners Association documents and financials. Diligence is a buyer's best friend. Also note that banks have serious "per diem" penalties for not closing on time. Be sure to allow enough time to close (FHA and VA takes longer!) and ask for a "penalty free" extension if necessary before your contingency periods expire.
As always, I hope you find our articles useful and informative.
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
Direct: 714 276-7006
We work with many investors and the first thing every one of them tells us is that they want to "positive cash flow" on their new investments. The good news is that in Orange and Riverside Counties - we finally can again. We are isolating tremendous opportunities for investors to secure properties and net a positive annual return.
So here's the question - how do you calculate true positive cash flow? I believe you must take into consideration income, expenses, tax benefits and every other influence on cash flow. As a CPA and Broker, I set out to create the easiest to use, most comprehensive spreadsheet to find out within seconds whether a property should be considered.
Whether you are an investor or Realtor, we are happy to share this spreadsheet with you. Just shoot me an email at Nancy@TheOCExperts.com and write a comment on my blog to spread the word and I'll send it to you the spreadsheet via email the next time I check my email.
My best,
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
Direct: 714 276-7006
There are two seldom discussed points about the new $8,000 tax credit that present potential benefits to qualifying buyers.
1. The taxpayer can choose to take the tax credit on their 2008 or 2009 tax return, depending on which is more advantageous.
2. The taxpayer can amend or extend their 2008 tax return in order to receive the credit sooner!
Here are the details:
Question: If I'm qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
YES! The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.
Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.
Question: For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
YES! If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.
As always, the most important thing is to consult with your tax advisory before implementing any real estate or tax strategy.
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
Direct: 714 276-7006
Here's a great chart that further summaries the major changes and improvements to the First Time Homebuyer Tax Credit. The chart compares the previous credit with the one retroactive to January 1, 2009.
As always, be sure to consult with your CPA and Real Estate Broker before making a decision to purchase, sell or exchange real estate.
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
Direct: 714 276-7006
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As a CPA, REALTOR® and financial expert, I focus on protecting our clients financial interests in the sale.
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