Kathy Brown Sells Northern Colorado

So, what is a Short Sale, anyway?

This is a question I am frequently asked in today's real estate market, and I have to remind myself that most people truly don't know what it is, unless of course they are active in the market themselves. I am writing a general overview of what is known as a "short pay" or "short sale" to shed a little light on the subject.

So, exactly what is it? Simply put, it is a process where a mortgage lienholder or lienholder(s) will agree to accept less than what is owed on the mortgage debt and will release their lien from the property so that the property can be sold to a new owner. It is a process that is normally undertaken when a homeowner is behind in their mortgage payments and facing foreclosure. It is offered as one of many options to actually having a foreclosure on their credit record.

Sounds simple, doesn't it? Not so fast. There are many factors that play into the process. Where there are multiple lienholders (a 1st, a 2nd, even a 3rd), each lienholder must be willing to accept some portion of the debt owed to them in agreement to release their deed. This can be tricky and depends on many factors, market conditions, property value, amount of debt, etc. Generally, the home is listed on the market at an aggressive price in an effort to obtain offers to purchase the property. Once the offer(s) are obtained, the numbers are processed and the negotiation with the lienholders begins. It is a very tedious and often very frustrating process during the negotiation phase and can oftentimes take up to 90 days to have the lienholders respond to an offer and come to agreement. It will take a lot of persistence and patience on the part of the negotiator.

Luckily, we do have options for short sale specialists who will help make those frustrating phone calls, who will help keep the communications going with the banks, and who will help present all the numbers and documents in the correct format for submittal to the lienholders. This really takes the burden off of the homeowner having to do it themselves during their busy days.

Is short sale always the answer? Sometimes. Sometimes not. Each situation is different, and there are many things to consider. Oftentimes, if the property is sold short by $30,000, for example, then the homeowner is sent a 1099 from the lienholder which they must claim as income and pay income taxes on for the year. Depending on circumstances, you may or may not be exempt from the 1099 process. Alternatively, the lienholder releases the lien and does nothing for a period of time, but has up to six years to come back to you for the deficiency, which may cause big problems down the road.

As you can see, it is not always a good as it seems, and I would advise anyone who is in this situation to thoroughly explore all options they may have when facing foreclosure, and to ask for professional help in getting through the short sale process if that is the option of choice.

Questions? Feel free to contact me for resources and guidance.

Kathy Brown, RE/MAX Alliance www.SellsNorthernColorado.com 970-214-6927

The tragic events of 5/22 in the quaint town of Windsor, Colorado left countless familes without a home, without power, but not without hope. Volunteers from within the local community, as well as from neighboring communities were out in full force to assist those familes left victimized by this terrible storm. The sense of community is so awesome, as large groups gathered as teams and went from home to home to clear yards and streets of the piles of debris left behind. There are volunteers providing food services, free daycare and handling donations to help in this time of need. The sense of a caring community is overwhelming and heartfelt. It's so nice to know that people really do care, and when others' lives come to a hault, there is hope for a new beginning. God Bless to all involved in the rebuilding of the Windsor community!

Wondering how to get your home Sold in a challenging Buyer's market? A key factor is in pricing it right. What a home brought a year ago is not a valid price point today, in a constantly changing real estate market. So what exactly is market value? Let's start by understanding what market value is not. Market value is not a tax assessed value, and it is not a replacement value. Market value does not mean the price you paid plus the value of improvements, or what the home appraised for when you refinanced last summer. Rather, market value is the value at which a Seller is willing to sell and at which a Buyer is willing to buy. The market always determines the price, and the market is always changing.

Value is affected by many factors: condition, location, obsoleteness of features, progression/regression, etc. Comparable sales help determine how to price it right, as well as an updated knowledge of what price points are doing in any given area. There are many ways to arrive at a price that will bring offers in no matter what the market is like. Any property will sell if it is priced correctly!

Negative media regarding the housing market is driving pricing down. Many folks are of the belief that Sellers are selling at a blue light special prices of 30% off and are making offers which so reflect. This is simply not true! While housing values are down because of the foreclosure and short sale situations, I can assure you we're not seeing many blue light specials!

So, who is buying? First time homebuyers, investors who plan to hold properties for a couple of years to gain an equity position, and new investors who are taking advantage of self-directed IRAs to get started in real estate investing. It's a great time to buy real estate!! In a downturned housing market, the bad news is that you may be taking quite the haircut in selling your home, but the good news is that you will likely also be giving a pretty good haircut on the next home you purchase. It's still up to you to make the move!