Last Chance For Short Sales?

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“The End is Near part 2″

By Noel Pulanco, REALTOR®

Broker/ Real Estate Investor

12/31/12, the last day of “The Mortgage Debt Forgiveness Act” is coming fast…do you need to get a deal done? The reason I ask is because the clock is officially ticking, and you may be running out of time. Arizona is one of the few states that is still considered an “anti-deficiency” state, meaning the banks cannot force you to pay back a balance left from foreclosure, or an approved short-sale. Per ARS 33-814 , the lien holder’s  sole remedy is to retain possession of the property, or in many cases they will instead opt for a short-sale. This “special”  debt forgiveness legislation is set to expire at the end of this year, meaning many owners are rushing to begin the short-sale process, in hopes of completing before the laws change. I have seen evidence of this in-house, as we have completed nearly 20 short-sales for our owners already this year. Also, there are still many short-sales available on the open market, many with an opportunity to get a great house at a great price. Since short-sales can be very challenging to close, most buyers who acquire property this way are realizing the benefits of patience, as they are getting in at the “bottom line price”. Investors are beginning to understand that patience is paying off, and they are finally setting aside their fear of chasing these types of deals.

Do you need to short-sell? Well, that depends…are you making any money on this property? Taxes, cash-flow from rents, appreciation (it is happening again!). If so, then I would generally recommend that you keep your property, and keep in rented. We are seeing prices rise as much as 30% in certain neighborhoods, and the inventory continues to shrink every-day….so it may not be long until you are back to “even” on your property. This is great news! However, if none of these are true, and you are still well upside down, or seeing “negative” cash-flow in your rents- then now may be the time to have the dreaded “short-sale” discussion.

Do you qualify? They main variable that the banks look at when considering a short sale is your specific “hardship”. You must be able to show that by continuing to pay or keep a property, it is hurting you financially, not helping. We know that many of our owners are renting due to job transfers, combining households and families, or unexpected moves out of state. These types of landlords are many times left unprepared for a new vacancy, and the costs of a “turn”. Coming up with repair money, paying a mortgage without rents coming in, and simply understanding that it will be a few weeks, at minimum, until rents begin coming again, has left many owners realizing too late they simply cannot afford to keep paying on their rental house. If this sounds like you, we should talk.

Many of us have discovered that we need to consider a short-sale very late in the game, but there is still good news. The banks have slowly, but surely begun to streamline these sales. It can still be an arduous and frustrating process, however having an expert with experience on your side can make the entire process so much easier. The turn-around times are faster, the documents are easier to understand, there are plenty of buyers ready to make a deal, and we still have enough time to complete the sales, before time runs out.

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