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The Seller’s Market Continues!

April 15, 2013 by Leave a Comment

In case you have not been paying attention, the Phoenix Real Estate market continues to maintain low housing inventory levels and above average appreciation. For over a year now, Phoenix Arizona Homes are hard to find for buyers. At the same time home owners are enjoying nice appreciation on their homes. Here are few numbers to gauge the market:

  • Overall Home Supply – At the end of March, the total number of Phoenix Homes for Sale for the entire Phoenix MLS was 16,268. Year over year, this is about a 1% increase in housing inventory.  The number of sold listings for the entire month of March is 9,621. Based on the March sales, the inventory of active listings represents a 1.7 month supply. With inventory of homes well under 20,000, the Phoenix market should continue to see appreciation of Phoenix homes.
  • Local ZIP code of 85224 – HOT! The Chandler ZIP code of 85224 shows that in March there were a total number of 48 active real estate listings, with the total number of sold listings coming in at 71. In other words:  there’s less than a month supply for this popular Chandler ZIP code.
  • City of Chandler – EVEN HOTTER! If you are looking for a “starter” home in Chandler, inventory is low. For the entire city of Chandler, the number of active listings for single family homes between 1,200 and 1,500 square feet is 26. The number of sold listings in March came in at 83. THAT means there is less than a one month supply of homes.
  • Phoenix Home Sales –Year to date, the Phoenix MLS recorded sales of 22,102 homes – or an average of 7,367 homes per month. That’s a stellar start for 2013 for Phoenix AZ Realtors and this data shows buyer demand is continuing to be robust.

Do you need to consider a short sale to unload a burden of debt? Or are you looking to maximize your selling price? Here at the Thompson Group, our goal is to show you the BEST options for your situation. Give us a call at 480-776-5214 or find us at www.ThompsonGroupAZ.com .

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Freddie Mac Not Pursuing Deficiency in Short Sales

June 6, 2012 by Leave a Comment

In their Feb 15th, 2012 Bulletin to their servicers, Freddie Mac stated that in the event of a successful short sale closing where all parties have acted in good faith they will accept the proceeds of the sale and will not pursue the borrowers for the deficiency (entire amount owed on the original mortgage note). Furthermore they have instructed all servicers to release the lien and mark the mortgage note as “Satisfied”.

This is good news for those sellers who have Freddie Mac as the investor on their loan and who need to do a short sale.  Most servicers are acknowledging the regulation change with adding deficiency language to their approval letters. Of the major lenders Aurora is the only one we have come across who is thus far refusing to add the proper deficiency language. (Shame on you, Aurora)

To see the Freddie Mac Servicer Bulletin please go to: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1205.pdf

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Reasons for Pursuing a Short Sale

April 17, 2012 by Leave a Comment

Homeowners who purchased Phoenix Arizona Homes between 2002 and 2009 may owe more than their home is worth. Homeowners who refinanced or took out a home equity line of credit are in the same situation. Reports estimate that half of all homeowners in the Valley owe more than their home is worth.

Many of these homeowners want to move, but feel trapped and helpless about their situation due to the Phoenix Real Estate market. For some, their property no longer meets their current needs. Others simply can’t afford to stay in their home due to financial hardship. And for many others, the truth is finally setting in. It simply doesn’t make sound financial sense to stay in their home.

No matter the reason, all of these homeowners have the same question: What is the best way to move forward with their lives? For most homeowners facing one or more of these challenges, a short sale is the best solution.

A short sale is when your lender(s) allows you to sell your home for less than the unpaid mortgage(s). Here are the top reasons why doing a short sale in 2012 is likely your best alternative:

  • It’s easier than ever. Banks are now embracing short sales. Why? Because they now realize that short sales save them money when compared with the expenses involved in completing foreclosures. The process is more streamlined and less stressful than ever.
  • There is absolutely NO cost to you. Your lender pays for all closing costs and commissions for Phoenix AZ Realtors. You may even get additional cash at closing. A recent trend is that some homeowners are getting cash to complete the sale.
  • You can stay in the home until the sale is complete and make no mortgage payments unless you choose to make them. Many Phoenix Homes for Sale advertised through the local MLS have homeowners that choose to remain in the home until completion of the sale.
  • Arizona is an Anti-Deficiency state. In Arizona your lender is unable to pursue you for a deficiency judgment, if you used the borrowed money to purchase or make improvements to a home. That means that your lender cannot sue you for the difference between your mortgage and the sales price of your home. Situations do vary, so consult an attorney about your specific situation.
  • Your debt forgiveness is NOT taxable. Prior to 2008, any mortgage debt forgiven by a bank was taxed as normal income. If you had a $300,000 mortgage and short sold your home for $200,000, then you would owe taxes on the $100,000 shortage that was forgiven by your lender. The Mortgage Forgiveness Debt Relief Act that went into effect in 2008 essentially eliminates this problem.
  • The Mortgage Forgiveness Debt Relief Act is expiring soon. At the end of 2012 this Act expires meaning that any debt forgiveness as in the previous example is taxable income.
  • A short sale is better on your credit score than foreclosure or bankruptcy. You can purchase a new home sooner than with a foreclosure. You will be eligible, under Fannie Mae guidelines, to buy another Phoenix MLS home in 2 years instead of 5 to 7 years. You are also in a much better position to secure lower rates on all types of loans in the future. Additionally, some employers look at a foreclosure as a sign that you are not dependable. As more employers rely on credit reports for hiring practices, it is best to do all you can to avoid a foreclosure.
  • Best of all, you can move on with your life. Get rid of stress. Being upside down on your mortgage is incredibly stressful. A short sale can help you get through the process in a shorter period of time while reducing the emotional and mental stress involved.

Do you owe more than your home is worth? You are not alone. For a private consultation, please contact us at   www.ThompsonGroupAZ.com or (480) 776-5214.

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Arizona’s Market Heats Up for Sellers

March 14, 2012 by Leave a Comment

On a recent listing which was a short sale transaction, the buyer activity was truly amazing.  The list price started in the high $140’s and got bid up to the high $150’s.  The listing was on the market for 6 days and received 40 showings from Phoenix Arizona Realtors and over 10 offers.  If this seller where not underwater on the mortgage, the home may have sold for $10,000 more.

As of today, the number of active Phoenix Homes for Sale in the Phoenix MLS has dropped to 15,231.  With this low amount of inventory valley wide for Phoenix Arizona homes, prices in the Phoenix Real Estate Market should see increases in value until more inventory returns to the market.

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Do I Have Enough Equity to Sell My Home?

February 16, 2012 by Leave a Comment

A seller that purchased a home in the last year came to us about selling their home due to being relocated out of state. This Arizona seller asked us, “Do I have enough equity in my home to sell now and not lose money?”  Unfortunately, with the current market conditions in the Phoenix Real Estate market – and this seller’s short time of making mortgage payments – the seller is looking at a loss of $20,000 to $30,000.

In most areas of the country and when selling Phoenix Arizona Homes, the costs of selling a home run between 6% and 7% of the sales price. For example, a home sold for $250,000 would actually net a seller $232,500 after 7% in real estate fees, meaning the cost of sale is $17,500. In order for a seller to break even after expenses of the sale, the seller needs one of two scenarios to break even.  The seller must own the home long enough to make enough mortgage payments to cover the expenses or the seller must be in a real estate market where enough appreciation occurred to cover the expenses.

If the home owner’s financing is a 30-year mortgage at 5.5%, then after five years a home owner has made enough mortgage payments to sell the home. According to www.amortization-calc.com, a seller will have $18,491 in home equity after five years or only owe $231,509 on the home.

If a seller is in an appreciating market where annual appreciation is 3%, then a home owner will gain enough appreciated value in three years to sell. In our case, with a $250,000 purchase, the three-year appreciation will bring the house value to over $273,000, allowing for $23,000 in costs to cover the sale.

Unfortunately, appreciation is a rare occurrence in the Phoenix MLS since 2005.  If cases arise where the homeowner can no longer continue to make mortgage payments a short sale is a good option to consider.  Many Phoenix AZ Realtors are now capable at processing such transactions and many Phoenix Homes for Sale are closed as short sales.  More information can be found at www.MyAZHouse.com on short sales.

Are you considering a sell of your home soon?  Here at the Thompson Group our goal is to equip our sellers with knowledgeable and professional promotion of their home.  Would you like to learn more, or do you need Market Analysis of the value of your home?  Contact us at www.ThompsonGroupAZ.com or 480-776-5214.

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Does Your Realtor Understand Short Sales?

January 13, 2012 by Leave a Comment

In most situations, well-planned short sales of Phoenix Arizona Homes have significant advantages over foreclosures. Indeed, a close look at the Phoenix MLS shows a relatively high percentage of short sales among all Phoenix Homes for Sale. However, a short sale is not to be taken lightly – preparation and experience is essential. Among the important questions to consider when pursuing a short sale is the big question: Does my Realtor understand short sales?

To help you evaluate how well prepared your Realtor is for handling your short sale, have a discussion with him or her about the short-sale process, and be sure to ask the questions below. If you don’t hear the answers or the knowledge and familiarity you’re looking for, be prepared to keep looking for a Realtor that’s equipped to help you.

  1. Who is the service company and what do they do in the process? In general, the service company of the mortgage is the name on the mortgage statement you receive every month. Bank of America, Chase and Wells Fargo are common service companies. In most cases, the service companies are only in charge of processing the file and have very little to do in the decision-making process and negotiation of the sale itself.
  2. Who is the investor? Fannie Mae, Freddie Mac and Ginne Mae tend to be the investors of the majority of loans. Large service companies such as Bank of America, Chase and Wells Fargo may also be an investor on a mortgage. The investor is usually the decision-maker on each loan and has specific guidelines to follow in negotiating a short sale. Experience in negotiating with different investor guidelines is essential experience for a Realtor to have in order to have a successful close of escrow.
  3. Who is the MI company? Not all loans have MI (mortgage insurance), but some do. In the event that there is MI on a loan, you be certain that the MI company is going to negotiate with you (the seller) before allowing a close of escrow. The MI company is generally covering the loss in the short sale and paying out the investor for the loss on the mortgage, so the goal of the MI company is to reduce the lost payout as much as possible.
  4. How will each be negotiating with me? This is a great question for an agent. Negotiating with service companies, investors and MI companies is not like negotiating a normal purchase contract. The process is bureaucratic, paperwork-intensive, and detailed. Experience really pays here and a good Realtor will know how to get it done and cost you very little at closing. However, a lack of experience and less-than-thorough paperwork by your agent could result in you writing a large check at closing, or worse, a foreclosure.
  5. What are the potential tax consequences? In every short sale, there are potential tax consequences that a seller must deal with. Asking your CPA or tax advisor about your particular situation and possible consequences is a very important part of planning for your future. A Realtor should have some general knowledge of the potential consequences as well as a good reference for you to get further help, but should also encourage you to discuss with your CPA or tax advisor.
  6. What are the potential liabilities after closing? Most loans are written as “non-recourse”, meaning that the lender will not be able to pursue you in the future for a loss incurred. However, some loans are recourse loans in which the financial institution may choose to pursue legal and collection avenues for the loss. When working with a recourse loan, there is always future potential liability where you should consult an attorney about the situation and again, a competent Realtor experienced with short sales in the Phoenix Real Estate market will encourage you to discuss the situation with your attorney.

Remember – a short sale is truly a “double-edged sword.” On one hand it can usually offer significant advantages over foreclosure, but on the other hand it requires specific knowledge and expertise to successfully complete. Our Phoenix AZ Realtors have the short sale knowledge and experience to help you succeed – give us a call today!

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The Short Sale – What is the Verdict?

December 19, 2011 by Leave a Comment

Not long ago it seemed no one knew of a short sale. Now, it seems that of every ten Phoenix Arizona Homes I show to buyers at least five are listed as “Short Sale.” Simply defined, a short sale means that the seller is “short” enough money to pay off the mortgage by selling the home. Therefore, the homeowner must negotiate with the lender to determine a lesser amount allowable to pay off the mortgage at close of escrow.

The list of downsides for the Short Sale are numerous: tons and tons of bank bureaucracy to work through, super-long escrows lasting three times as long as a normal escrow, waiting for bank negotiators for days on end, real estate agents who may not know how to operate in the banking world. Last but not least – the seller’s bank is always able to say no.

On the other hand, the bank industry is dramatically improving processes required to complete short sales in a timely manner. Large national banks such as Bank of America, Chase, Seterus, Wells Fargo and CITI – which received black eyes in the past for poor performance – are now able make decisions in less than 90 days if provided the proper paperwork. Even smaller regional banks such as MetLife, Green Tree, Desert Schools, Provident Funding, and American Home Mortgage Servicing are also showing improvement. With Fannie Mae and Freddie Mac – the two largest holders of mortgages – continuing to implement short sale support, short sales of Phoenix Real Estate continue to improve on closing ratios.

With that silver lining in mind, remember that a short sale is not a foreclosure! Completing a short sale is an option to unload piles of mortgage debt. A well-planned short sale should include legal, tax and credit planning. With the correct planning, a homeowner may be able to qualify for a new home in as little as two years. And as a rule, banks are approving 90% of short sales of sellers with viable financial hardships.

And, don’t forget that the Home Affordable Foreclosure Alternatives is paying homeowners for completed short sales. Do you qualify? Contact us today at 480-776-5214 or www.ThompsonGroupAZ.com and one of our Phoenix AZ Realtors with extensive Phoenix MLS experience in the short selling of Phoenix Homes for Sale can help you find out.

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My Home is Worth Less Than I Owe…But I Need to Sell! What do I do?

November 15, 2011 by Leave a Comment

Our office received a call from a homeowner who needed to relocate to another city due to a job transfer.  The homeowner had lost his job in Phoenix and wanted to take the new out-of-state job, but he was unsure of whether to take the job… because if he did he’d have to sell his house, and the mortgage debt on his home was more than he could get in today’s Phoenix Real Estate market.

Basically, the home owner had three options.  He could:  (A) turn down the out-of-state job and continue to look for local employment; (B) walk away from the home and give it back to the bank in foreclosure; or (C) pursue a short sale of his home.  In the end, the homeowner decided to pursue a short sale.  Here is why:

  • Credit Implications: One of the biggest reasons to pursue a short sale is to lessen the impact to your credit that occurs due to foreclosure.  Missing a mortgage payment is one of the most damaging acts a consumer can do to their credit rating.  Missed mortgage payments continue to damage your credit until the sale of the home is complete.  Once a short sale or foreclosure is complete, you are no longer missing mortgage payments and continuing to damage credit.  The trick to lessening the impact is to get the sale completed sooner!  By pursuing a short sale, missed mortgage payments should be greatly reduced as opposed to waiting for the bank to complete a foreclosure.
  • Legal Implications: In this situation, the seller had two loans on the home.  If the homeowner let the home go in foreclosure, then the non-foreclosing lender would be able to pursue the homeowner directly for a deficiency judgment.  By pursing a short sale, the homeowner is able to get protection from any future deficiency litigation.
  • Tax Implications: Whether through a foreclosure or a completed short sale, a mortgage lender may write off the loss and send the homeowner an income tax bill for the amount of the loss.  In our situation, the homeowner was able to plan in advance with tax specialists to help minimize the impact from this income tax bill.
  • Avoid Foreclosure Implications: A foreclosure may stay on a homeowner’s credit record for 7-10 years and is sure to be a potential source of embarrassment.  A foreclosure could also affect the ability to get future employment and security clearances.  A foreclosure can also prevent the purchase of new Phoenix Homes for Sale for 3 years or more.  For this homeowner, avoiding the negative stigmas of foreclosure was a very important reason for pursuing the short sale.
  • Potential Relocation Payment: Through Home Affordable Foreclosure Alternatives (HAFA) and Federal Housing Administration (FHA) many homeowners are receiving relocations expenses of up to $3000, if they pursue non-foreclosure alternatives.

At The Thompson Group, we believe a well-planned short sale of Phoenix Arizona Homes should present significant advantages for homeowners who need to sell.  (Always consult legal, credit and tax experts.)  Do you wonder if you qualify?  Contact any of our Phoenix AZ Realtors to find out at www.ThompsonGroupAz.com or 480-776-5215.

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Benefits of a Short Sale Versus a Foreclosure

April 12, 2011 by Leave a Comment

As unfortunate as it is to miss your mortgage payment and to realize that making future mortgage payments is unrealistic, it is important to realize that there are still options. In life there are usually benefits to being responsible, even in terrible situations.

For a home owner, executing a short sale promises many benefits over just locking the doors and turning the home over to the bank as a foreclosure. Here are a few…

•    A owner whose home is lost in foreclosure will not qualify for a FHA/VA mortgage for 7 years. However, if the owner closes a short sale on the same home the seller will be eligible for a FHA/VA backed mortgage after 2 years.
•    An investor whose home is foreclosed upon is ineligible for a Fannie-Mae-backed mortgage for 7 years. If the seller closes a short sale on the same home they will be eligible for a Fannie-Mae-backed mortgage after 2 years.
•    Credit scores for the foreclosed homeowner will drop 250 to 300 points and typically affect credit scores for 3 years, while short sale homeowner could see a drop in credit score of as little as 50 points and typically affect the credit score for 18 months or less.
•    A foreclosure remains as public record on a credit history for 10 years or more while a short sale is generally not reported on credit history.
•    Lastly, qualified sellers receive up to $3000 through the government’s Making Homes Affordable Program. Homeowners with Phoenix Homes for Sale who are foreclosed upon receive nothing.
•    A well-planned short sale should provide for protection to the seller from deficiency judgment. A foreclosure does not provide any protection.

While navigating the short sale process is at times a headache for the home owner, the homeowner is in control of the situation and is able to influence the outcome. The seller gets to make decisions that are in their own best interest.

Are you or someone you know facing a foreclosure? The short sale process may seem embarrassing and difficult – but actually it can help you to sell your Phoenix Arizona Homes and navigate out of a bad situation. Our Phoenix AZ Realtors are not only specialists in searching the Phoenix MLS and other aspects of the Phoenix Real Estate market – they have extensive experience in short sales and the short sale process. Contact us today to discuss your options.

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Short Sales – The Disturbing Truth about Deficiency Judgments

March 9, 2011 by 2 Comments

On a recent call, a short sale seller asked me some questions about a short sale completed in the last 90 days. The seller had been required to sign a promissory note for over $60,000 as part of an agreement with the lender to complete a short sale. The seller is now unable to continue payments on the promissory note and had this question for me, “Can the bank sue me in court for a deficiency judgment if I quit paying on the note?”  I told her the answer is “yes” and I recommended she find a good attorney.

Any short sale agreement between a seller and the seller’s lender should have definitive language relieving the seller from future liability of the loan. Without this language from the seller’s lender, the short sale seller continues to live with the liability of the loan and the threat of a deficiency judgment from the lender.

So you may have asked, “In the Phoenix Real Estate market, would I not be better off to let the bank have the home in foreclosure?”  The purpose of a short sale is to relieve the homeowner of future liability from any and all loans secured to the property. If the short sale is performed correctly then the main benefit to the homeowner is to receive relief from the loans. A foreclosure does not provide such relief. In addition, any time there are multiple lenders on a property that gets foreclosed, the non-foreclosing lenders can still pursue the seller for a deficiency judgment for up to six years.

Every short sale situation is different, and sellers need to do some planning in order to make a well-planned exit from a bad situation. A well-planned short sale of your Phoenix Arizona Home should protect you from future liability. If the short sale is unable to provide such protection, then other alternatives exist and should be explored. Got questions about Phoenix Homes for Sale or about anything on the Phoenix MLS? Our Phoenix AZ Realtors have answers – give us a call today at 480-776-5214.

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