SHORT SALES Category
Need Help From Foreclosure Prevention Company?
HOME LOANS, SHORT SALES, TIPS FOR SELLERS
Fannie Mae launched a website this month to assist underwater borrowersincluding those in Redding/Shasta County. The site offers advice on steps to take to avoid foreclosure as well as directing borrowers to legitimate companies that provide foreclosure-prevention services. This is in response to a proliferation of companies claiming to offer foreclosure prevention services. In many cases, these companies take your money and do little or nothing to help the distressed borrower. The web address is www.knowyouroptions.com. Here is a summary of what the site contains:
- All information is available in English and Spanish
- Video explanations detailing what each site tab might accomplish
- Contact information for mortgage companies and loan counselors
- Calculators to help determine if a borrower is eligible for assistance
- Information on foreclosure alternatives such as short sales or Deed in Lieu of Foreclosure
The news release from the California Association of Realtors also recommends another helpful site www.homeloanport.com for consumers and loan counselors to submit financial documents to mortgage companies. This site also tracks the consumers efforts to avoid foreclosure which could be helpful when considering the various foreclosure alternatives.
Please feel free to contact me with specific questions. I’m here to help!!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
Redding Home Prices Slip Again?
SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
After 3 quarters of relative stability, Redding home prices lost about $8/sq ft in July. Blame an onslaughtof bank-owned properties (REO’s) for the decline. The second quarter of 2010 saw a slight increase to $126.54/sq ft from $125.34 in the first quarter 2010. The last quarter of 2009 pegged the average cost per square foot at $128.08. Forty home sales for July in Redding only averaged out at $118.21/square foot.
The number of active homes for sale on the Shasta MLS for all areas of Shasta County sits at 1635 today, up from 1526 a year ago. There are 443 homes in escrow compared to 500 last August at this time. Of those pending sales, 140 are bank-owned and 119 are short sales. That works out to 58% of the pending sales being distressed properties-REO’s or short sales. Last year, 40% were distress sales.
The number of REO’s listed for sale has risen steadily from 160 the first of this year to 229 today. 1200 homes have closed year-to-date, slightly more than a year ago at this time. The Federal and State tax credits pumped up sales in the spring but have expired now leaving the market to find its own way during these difficult economic times. Record low interest rates have not motivated buyers timing their entry into the marketplace. Home equity loss due to declining values has prevented many homeowners wishing to take advantage of these rates from refinancing.
Markets elsewhere in California, specifically the coastal areas, have stabilized or experienced year-over-year double-digit appreciation noted in some areas such as San Jose. Redding is suffering under higher than average unemployment and loss of equity refugee buyers from nearby metro areas. One positive note for July is the sale and closing of 5 riverfront properties from Redding to Anderson between $405,000- $537,500!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
Bill To Provide Borrowers Deficiency Liability Protections
INDUSTRY NEWS, REAL ESTATE LEGISLATION, SHASTA COUNTY, SHORT SALES, TIPS FOR SELLERS
Many homeowners are not aware of a loophole that allows banks to pursue certain borrowers for any cash loss they suffer as a result of a short sale or foreclosure. The existing law, which was passed in the 1930’s, protects homeowners from deficiency liability if the loan was used to purchase the home. The problem arises when the loan is refinanced. The protection does not apply to purchase money loans that are later refinanced, even if doing so allowed the borrower to benefitfrom a lower interest rate.
Senate Bill 1178, authored by Senator Ellen Corbett, does not protect borrowers that used cash-out refinances or equity lines to pay bills or buy cars, boats, RV’s or stock investments. Only borrowers that used cash generated from a refinance to improve their primary home would be protected by this bill if it passes. Most borrowers were unaware that a refinance caused a forfeiture of this liability protection. In legal terminology, purchase loans are non-recourse loans while refinanced loans are recourse loans.
Banks doing business in California understand that the property is the security for the loan, not the borrower. Purchasers that later refinanced had no idea they were losing this protection exposing themselves to personal liability and even new tax liability. Lenders can pursue the loss for up to ten years after a foreclosure or short sale. They can sell the accounts to aggressive collection agencies or bundle them as securities. This allows banks, which created this mess to begin with, to add insult to injury by chasing families that have already lost their home for money they don’t have.
Call your local State Senator and ask him or her to vote yes on SB 1178. In our area, call Senator Sam Aanestad at 530-225-3142.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Short Sale Could Lead To Big Tax Bill
HOME LOANS, SHORT SALES, TIPS FOR SELLERS
The IRS warns homeowners underwater to study the law regarding debt forgiveness before deciding which course of action to take to get out from underneath an over-encumbered property. The Mortgage Forgiveness Debt Relief Act of 2007 details who will be exempt from paying income taxes on debts forgiven by lenders. Some property owners that successfully sold their home are getting hit with huge tax bills because they were not exempt under this act.
Here are some basic provisions of the bill:
- Relief is granted to borrowers with mortgages on a qualified principal residence. Second homes, rentals and business properties do not qualify
- The maximum amount eligible to be forgiven is $2 million for married taxpayers filing jointly and $1 million for single taxpayers. This should cover 99% of Redding/ Shasta County homeowners!
- The loan must have been used to purchase, build or substantially improve a principal residence. Refinances qualify if the debt stays the same or if the mortgage increased, the funds were used for capital improvements or renovations of the principal residence. In the event the money was used for personal purposes such as paying off credit cards, buying a car or boat, or investing in stocks, then the mortgage debt attributable to those items is not eligible for debt relief
- Homeowners in California who sold their homes in 2009 using a short sale or were foreclosed upon, may be stuck with a bill for income taxes from the state
The IRS views forgiveness of debt as a taxable gift from the lender. The homeowner should inquire with a tax attorney or accountant before agreeing to a short sale. Short sales are less likely to cause as much damage to ones credit rating as a foreclosure but if doing so results in a huge tax liability the homeowner must factor this into their decision. Foreclosure or a Deed in Lieu of Foreclosure may be better options to divest oneself of an underwater property depending on individual circumstances and advice from a tax advisor.
Expect a push in coming months by some lenders to write down the principal balance on loans in an effort to keep homeowners in their homes and off the foreclosure block. Bank of America is undertaking a trial program to do just that due to the failure of loan modification programs. Homeowners can avoid unexpected tax consequences by consulting with qualified tax law professionals before agreeing to a short sale or loan modification.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL SALES EXPERIENCE
Efforts To Streamline Short Sale Process Underway
HOME LOANS, INDUSTRY NEWS, REAL ESTATE LEGISLATION, SHORT SALES, TIPS FOR SELLERS
Lenders, loan servicing companies and homeowners have been fighting over how to deal with mortgages that are underwater. According to a recent article in the New York Times “more than 5 million households are behind in their mortgages and risk foreclosure”. The Obama administration has targeted billions for loan modification programs that have helped very few.
A new program to be launched April 5 will attempt to help homeowners unload their homes using the short sale process. The program aims to streamline and standardize the process by establishing some ground rules for determining who gets how much. The benefits this program is intended to create include:
- More net proceeds to the investor doing a short sale than a foreclosure
- Set amount of cash for the loan servicer ($1,000)
- A predetermined amount for second lienholders, if any ($1,000)
- Less damage to the home owner’s credit rating
- Relocation money for the homeowner ($1,500)
- Assurance from lender the homeowner will not be sued for any dollar deficiency
- Fewer empty homes waiting to be foreclosed upon
Real estate agents would be used to establish the home’s current fair market value. This value estimate would not be shared with the homeowner but if an offer meets or exceeds the indicated value, the lender must accept the offer. Lenders want proof the homeowner has done everything possible to keep the home including trying to sell the home or utilized available savings to make payments.
Those of us that have handled short sales know how frustrating the process can be for homeowners, title companies, lenders and loan servicing companies. Some are easy to work with while others have made the process very difficult and time consuming. It’s not unusal to have the first couple of buyers fall by the wayside before the investor wakes up and agrees to a short sale. Any help by the federal government to regulate the process is welcomed by real estate professionals.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
Redding/Shasta County Real Estate Market Update
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Distress sales continue to represent a significant number of homes selling in today’s market. The second week of March was marked with 465 homes pending. Of these, 133 are bank-owned homes and 157 are short sales or 41% of all homes under contract. These same two segments of the market only account for 31% of the 1379 active listings.
February saw 131 homes sold. 85% were listed for $300,000 or less. More than a third of the homes sold were priced under $150,000. Ten more homes sold this February than a year ago. The number of bank-owned properties listed for sale has doubled from a year ago.
Home prices continue to slide downward as noted by a local real estate appraiser. The last quarter of 2009 saw the average cost per square foot of homes in all areas served by the Shasta MLS drop from $122.75 to $114.86. On the positive side, prices for new homes actually increased to $158.29/square foot from $147.72. However, there have been far fewer new homes sold year-to-date than the last quarter of 2009. Homes more than 5 years old in Redding sold on average for $125 the end of 2009 and for $120 thus far this year.
The area price declines can be pegged to continuing high numbers of homes in various stages of foreclosure due to high unemployment and sharp price declines after the housing market bubble burst. Banks seem to be in no hurry to clear their books of overvalued assets which prevents steeper declines in prices in the near term but prolongs the overall recovery of the housing sector.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Redding Real Estate:Newer The Home, Higher The Value!
INDUSTRY NEWS, REDDING LIFESTYLES, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
A local appraiser points out that homes 5 years of age or newer have the highest average value on a cost per square foot basis. The average price of a newer home is $286,172 or $155.9 per square foot. The average of homes 6 years or older drops precipitously to $116.7/square foot. All homes sold in the area served by the Shasta MLS average $121.6/square foot. To get a rough idea of what your home is worth, multiply your square footage by the average cost per square foot based on your home’s age.
My own numbers indicate homes for sale on the Shasta MLS inched up to 1329. Pending home sales have risen to 429 Monday compared to 382 one month earlier. The number of bank foreclosures listed for sale continues to rise with 176 available active home listings.. That number was less than 120 for most of 2009. 111 of the total pending home sales are bank repo’s. 138 homes have closed escrow thus far this year.
Short sales continue to be a significant part of the market. 233 sellers are trying to sell their homes for less than what is owed. Together with foreclosures, distressed sales are predicted to represent half of all transactions in 2010.
Those that lose their homes to foreclosure can expect to wait 3-4 years before being qualified to buy a home again. Members of credit unions may be able to purchase again in as little as a year. Credit unions typically hold their loans instead of selling them to Fannie or Freddie GSE’s allowing them to set their own rules for reconsideration. Divorce, medical bills or job loss may be legitimate reasons for allowing someone to re-enter the housing market on a case-by-case basis. Chapter 7 bankruptcy is likely to prevent one from buying for 5 years or more.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL SALES EXPERIENCE
Is Your Taxable Property Value Too High?
LOCAL GOVERNMENT, SHASTA COUNTY, SHORT SALES, TIPS FOR SELLERS
Proposition 8 requires county assessors review property values used to calculate property tax bills when the current value drops below the base year valuation. Some California assessors have waited for property owners to request a new appraisal while others, including our elected assessor Leslie Morgan, have taken the initiative to examine thousands of properties purchased after 2002. Leslie Morgan and members of her staff updated Realtors on actions taken by their department to bring area property values in line with the current market at our weekly MLS meeting.
More than 32,000 of Shasta County’s 95,000 properties were reviewed and approximately 16,400 saw a drop in their taxable value. In fact, Shasta County property owners collectively paid $12.5 million less in property taxes as a result of Leslie’s actions. This translates to billions of dollars of lost property values across the county. Sacramento feels the hurt because they keep the lion’s share of property tax dollars that are collected by the county and forwarded to the state’s general fund. Only 13 cents of each tax dollar is returned to the county.
The challenge for county appraisers is selecting from two distinct pools of sales data-arms length transactions involving owner occupied, well-maintained properties or distress sales which include neglected bank-owned properties and short sales. Referred to as two-tiered market comparables, the appraisers must decide which pool to draw sales data from when conducting a reappraisal.
The county also received more than 500 appeals from property owners contesting the value of their property as reflected on the tax roll. This usually happens when the tax bills are mailed out each fall. Less than half of these properties were adjusted downward according to Leslie. Appeals are accepted after the tax year begins July 1 but the appraisal must reflect the value as of January 1 of the current year.
Another challenge is the lack of closed sales to choose from. The slow real estate market means there are fewer properties in a given location to use for an appraisal. This is an even greater challenge in rural areas of Shasta County. In some cases, the appraisers are so buried with a backlog of properties to evaluate they encourage property owners to file a formal appeal to protect their rights to have their property reassessed. This way they can have the value adjusted at a later date and receive a refund if there was an overpayment of property taxes.
One positive note is the inflation rate was negative for 2009 so the county will not be adjusting property tax bills upward this tax year. Prop 13 allows up to 2%/year increase if the CPI has increased by at least that amount.
Legislators are discussing possible revisions to Prop 13 in light of the spending problem in Sacramento. There is a push to split the tax roll-assessing commercial properties differently than residential properties. If this happens, it would be one more reason for businesses to move out of California.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL SALES EXPERIENCE
Redding Home Prices Slip Further in 4th Quarter 2009
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Despite news that prices have bottomed elsewhere in California, Redding home values dived nearly $4 in the average cost per square foot in the last quarter of 2009 from $133.35/foot to $129.7/foot. The average cost per square foot year-to-year dropped from $148.16/square foot in the final quarter of 2008 representing a 12% drop in value for homes in Redding for the year.
A local appraiser tracks these statistics and reports them monthly to others in the local housing industry. These numbers are for Redding only and could be higher or lower depending on each property’s amenities. Newer homes will generally sell at a higher cost per foot while older homes will sell for less. The average home size is about 1750 square feet in Redding.
The avearge home price followed suit dropping from $260,102 in 2008 to $226,466 in 2009. According to the local paper, the median price for Shasta County finished the year at $185,000. This reflects lower values in neighboring communities of Anderson, Cottonwood and Shasta Lake City. In general, smaller homes around 1000-1200 square feet will sell at a higher cost per square foot and homes over 2000 square feet will sell for less than the average. This is due to the fixed costs associated with building a home-land and permit fees, that are about the same for any sized home.
As of Monday, January 11, 2010 there are 1313 active residential listings, 377 homes pending, 165 bank owned homes listed for sale and 215 property owners attempting a short sale. The big change here is the number of bank repo’s for sale. Last year the number hovered between 100-120 from June through October. Since October, that number has crept up steadily to today’s level. Based on the number of NOD’s (Notices of Default) being filed in Shasta County, this trend is not likely to change anytime soon. Our higher-than-average unemployment rate may be to blame.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Shasta County Housing Market-A Year In Review
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Thankfully, 2009 is in the history books! It was a trying year for many in the housing industry. Real estate offices closed, escrow companies pared their staffs to the bones, lenders struggled with ever-tightening underwriting rules and appraisers are valuing properties conservatively after being blamed for overvaluing properties during the bubble. What follows are my tabulations of yearly totals for 2009:
Homes sold-2045 ….up slightly from 1942 units in 2008
Distress sales-926 or 45% of all home sales, up from 33% in 2008
Inventory level-Started with 1495 active listings Jan. 5, 2009 compared with 1301 on Jan. 4, 2010
Pending home sales -Started with 257 in escrow the beginning of January and compared with 382 in escrow 1/4/2010
I started tracking REO’s (bank repo’s) listings in June because I believe these are an indicator of our local market’s health. The number was amazingly stable most of the year with 100-120 available on any given day. However, that changed in November when the number of active REO listings on the Shasta MLS started inching upward to today’s level of 160.
Before anyone can say the local real estate market is on the path to recovery, the level of distressed properties available in our marketplace must recede to less than 100 in my opinion. David Benda reports a monthly tally of the homes entering foreclosure which foretells what the market can expect 3-6 months later. Peak foreclosure activity may be behind us but these properties must be listed and sold before our market will return to something resembling normalcy.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN QUARTER CENTURY LOCAL SALES EXPERIENCE
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