2012 is the year of the short sale. Your Real Estate agent needs to understand how to help underwater homeowners avoid foreclosure. As a buyer of short sale homes, you need to understand the process. Don’t make the mistake of believing these myths:

Myth #1: The homeowner must fall behind on mortgage payments in order to qualify for a short sale.

Debunked:Years ago this may have been true, but not in 2012.

• A financial hardship must exist, such as the ARM (Adjustable Rate Mortgage) increasing in monthly payments.
• Loss of job or income.
• Health or medical issues.
• Extraordinary loss in home value (which may be considered a hardship).

Note: Agents should not advise a homeowner to miss a mortgage payment.

Myth #2: Banks would rather foreclose on a property than approve a short sale.

Debunked: Many still believe this myth to be true, but more accurately, banks would prefer not to foreclose on a property due to the $50-70k it may cost the bank per transaction. Banks lose less money on a short sale than on a foreclosure.

Note: In California, some lenders may pay owners as much as $25,000 to opt for a short sale.

Myth #3: Homeowners must be pre-approved by their lender to be eligible for a short sale.

Debunked: Absolutely not true. By and large, most lenders will consider short sale offers. However, each lender may have unique and specific processes to follow, from listing the home to the acceptance of a short sale. Bypassing any part of this process may result in the sale not closing, so be sure to follow each lenders’ processes closely.

Myth #4: Short sales never close.

Debunked: Obviously not true. In some areas of the U.S., nearly 50% of all closings are considered to be “distressed” properties, meaning REOs and short sales.

Myth #5: Short sales take months (and months) to close.

Debunked: The short sale processes must be learned. Once mastered, it may not be uncommon to close a short sale in 30 days. However, certain idiosyncrasies may slow the process and each lender presents their own unique set of specific challenges. No two short sale transactions are identical.

Myth #6: Damage to the homeowner’s credit standing is comparable in a short sale and a foreclosure.

Debunked: In many cases, credit repercussions and deficiency protections are more damaging with a foreclosure. Short sale transactions can often lead to faster financial recovery for the homeowner and should be carefully considered.

Note: If the homeowner missed no mortgage payments, they may be eligible to finance the purchase of a home immediately following a short sale transaction.

Myth #7: Following a short sale, the homeowner will be ineligible to purchase another property for the next 5-7 years.

Debunked: Not true. Using conventional lending guidelines, some consumers may obtain a Fannie Mae backed mortgage a short 24 months after the close of their short sale.

Myth #8: After a short sale transaction, the homeowner will receive a 1099 and be forced to declare the loss as income.

Debunked: The owner may indeed receive a 1099, but due to the 2007 Mortgage Forgiveness Debt Relief Act, among other considerations, the homeowner may not owe any taxes on their transaction.*

Note: This Act is due to expire at the end of 2012.

Myth #9: The lender will sue the homeowner after the close of a short sale (or foreclosure, or deed in lieu of foreclosure) for the deficiency.

Debunked: California has certain anti-deficiency protections in place for short sales and foreclosures, depending on the circumstances.*

Myth #10: As an agent, I don’t need additional training to learn all of the ins and outs of the short sale process. And if I wait long enough, the market will recover so I may not need to deal with short sales at all.

Debunked: How long are you willing to wait? Based on the most recent housing reports, home values are still falling. Hopefully, 2012 will see the bottom of the housing market but price recovery may continue to take some time.

Contact us to find your South Lake Tahoe short sale, foreclosure or traditional Tahoe home for sale.

Lake Tahoe is not immune to short sales.  Out of the 436 active listings on the south shore, 59 are being offered as a short sale and 52 are in foreclosure.  Nationwide, short sale homes sold at a 21% discount to non-foreclosure homes, while bank owned went at a 40% discount.

So, what does this mean to you? There are some excellent opportunities in South Lake Tahoe to own a very nice home at a great price.  Buying a short sale gives you the first opportunity to purchase rather than waiting until it goes into foreclosure (if it makes it that far).

Short sales are a positive solution because of two main factors.  The short sale reduces losses for the lender because they avoid full foreclosure costs.  Also, borrowers can qualify for new mortgages sooner after a short sale than a foreclosure.

Paradise Real Estate has current listings of all short sales in the South Lake Tahoe area, as well as foreclosures and non-foreclosures.  Check out our CA Short Sale and NV Short Sale list today and find a great bargain!

As of today, April 21, 2011 @ 3:15 pm:

Current active single family residential and condo listings for all of Lake Tahoe, NV; 167. 11 of these active listings are bank-owned or short sales.

Homes sold from April 1, 2011 to April 21, 2011 are: 8. Of the 8 homes sold, 3were foreclosures (bank owned or short sales). During the same time period last year 6 homes sold, of which 2 were foreclosures. Total homes sold year to date is 48, of which 24 or 50% are foreclosures. Total homes sold for the same time period last year were 40, of which 15 or 37% were foreclosures.

As of today, April 14, 2011 @ 4:00 pm:

Current active single family residential and condo listings for all of South Lake Tahoe, CA; 315. 65 of these active listings are bank-owned or short sales.

Homes sold from April 1, 2011 to April 13, 2011 are: 13. Of the 13 homes sold, 7 or 53%, are foreclosure (bank owned or short sales). During the same time period last year 20 homes sold, of which 8 or 40% were foreclosures.

Total homes sold year to date is 142, of which 66 or 46% are foreclosures. Total homes sold for the same time period last year were 137, of which 77 or 56% were foreclosures.

There are a lot of great opportunities for buyers for both bank owned/short sales, as well as sellers that are competitive with the bank owned and short sale properties.

If you would like to search for current homes for sale please use this easy search tool for South Lake Tahoe, CA and NV real estate. There is also an option to get instant email notifications of brand new listings as they get posted by real estate agents in the South Lake Tahoe area.

As of today, April 7, 2011 @ 3:30 pm:

Current active single family residential and condo listings for all of Lake Tahoe, NV; 164. 11 of these active listings are bank-owned or short sales.

Homes sold from April 1, 2011 to April 6, 2011 are: 1. Of the 1 homes sold, 0were foreclosures (bank owned or short sales). During the same time period last year 3 homes sold, of which 1 was a foreclosure. Total homes sold year to date is 39, of which 20 or 51% are foreclosures. Total homes sold for the same time period last year were 37, of which 14 or 37% were foreclosures.

As of today, March 24, 2011 @ 3:15 pm:

Current active single family residential and condo listings for all of Lake Tahoe, NV; 160. 9 of these active listings are bank-owned or short sales.

Homes sold from March 1, 2011 to March 23, 2011 are: 9. Of the 9 homes sold, 5were foreclosures (bank owned or short sales). During the same time period last year 6 homes sold, of which 1 was a foreclosure. Total homes sold year to date is 37, of which 19 or 51% are foreclosures. Total homes sold for the same time period last year were 28, of which 13 or 46% were foreclosures.

As of today, March 10, 2011 @ 4:00 pm:

Current active single family residential and condo listings for all of South Lake Tahoe, CA; 331. 73 of these active listings are bank-owned or short sales.

Homes sold from March 1, 2011 to March 10, 2011 are: 11. Of the 11 homes sold, 7 or 63%, are foreclosure (bank owned or short sales). During the same time period last year 16 homes sold, of which 8 or 50% were foreclosures.

Total homes sold year to date is 90, of which 42 or 46% are foreclosures. Total homes sold for the same time period last year were 86, of which 50 or 58% were foreclosures.

There are a lot of great opportunities for buyers for both bank owned/short sales, as well as sellers that are competitive with the bank owned and short sale properties.

If you would like to search for current homes for sale please use this easy search tool for South Lake Tahoe, CA and NV real estate. There is also an option to get instant email notifications of brand new listings as they get posted by real estate agents in the South Lake Tahoe area.

As of today, March 3, 2011 @ 3:15 pm:

Current active single family residential and condo listings for all of Lake Tahoe, NV; 163. 7 of these active listings are bank-owned or short sales.

Homes sold from February 1, 2011 to February 28, 2011 are: 9. Of the 9 homes sold, 3were foreclosures (bank owned or short sales). During the same time period last year 12 homes sold, of which 8 were foreclosures. Total homes sold year to date is 28, of which 13 or 46% are foreclosures. Total homes sold for the same time period last year were 22, of which 12 or 54% were foreclosures.

As of today, February 24, 2011 @ 3:15 pm:

Current active single family residential and condo listings for all of South Lake Tahoe, CA; 338. 80 of these active listings are bank-owned or short sales.

Homes sold from February 1, 2011 to February 24, 2011 are: 26. Of the 26 homes sold, 11 or 42% , are foreclosure (bank owned or short sales). During the same time period last year 26 homes sold, of which 17 or 65% were foreclosures.

Total homes sold year to date is 71, of which 30 or 42% are foreclosures. Total homes sold for the same time period last year were 65, of which 40 or 61% were foreclosures.

There are a lot of great opportunities for buyers for both bank owned/short sales, as well as sellers that are competitive with the bank owned and short sale properties.

If you would like to search for current homes for sale please use this easy search tool for South Lake Tahoe, CA and NV real estate. There is also an option to get instant email notifications of brand new listings as they get posted by real estate agents in the South Lake Tahoe area.

You can get some great deals on short sales but there are a few things from the transaction point of view that I would like to share with you. This weeks tip is: Be prepared for a counter offer from lender. More often than not, the lender will want to net more than what they would get with the initial offer, so they will counter the purchase price. At that time you may want to increase your offer and your agent may have to back up the purchase price with comparables.

Check back next week for my next helpful short sale tip.

Deborah Gigliotti, Transaction Coordinator
Paradise Real Estate