Alternatives To Foreclosure: The Short Sale

Short sales get government incentives

Although short sales are not hassle-free, at least you’ve got the government backing you. The Home Affordable Foreclosure Alternatives (HAFA) program provides financial incentives for lenders and borrowers to avoid foreclosure through short sales or deeds in lieu of foreclosures.

Participation in the HAFA program requires adherence to guidelines–including a standard process and minimum timeframes–that speed the process, says Dallas-based REALTOR® Tom Branch, co-author of Avoiding Foreclosure: The Field Guide to Short Sales. The HAFA program is for homeowners who can’t keep their homes with the help of a loan modification.

Advantages of a short sale

• You can be a homeowner again more quickly with a short sale in your past than with a foreclosure. New Fannie Mae guidelines help you qualify for a new mortgage in as little as two years after a short sale, as opposed to up to seven years after a foreclosure.

• You will have more time to make relocation plans and save money than with a deed in lieu. A short sale may take four to 12 months. A deed in lieu of foreclosure arrangement typically requires you vacate your home within 30 to 60 days of signing, according to real estate attorney Lance Churchill.

• You can receive up to $3,000 from your lender for moving expenses at the time of closing of a HAFA short sale or a HAFA deed in lieu of foreclosure. Relocation funds are part of the incentives of HAFA, but not necessarily for other short sale or deed in lieu programs of the lenders.

• You can help your community’s home values. Because the lender often receives a higher amount of the remaining loan balance than it would from the sale of a home after a foreclosure, short sales help support home values in the surrounding community.

Disadvantages of a short sale

• Your credit score will take a severe hit. But that would happen anyway with a foreclosure. Fair Isaac, creator of the FICO score, says foreclosure and short sales have virtually identical impacts on your credit score. VantageScore–a company that has created a credit score model for consumers–says a short sale will lead to only a marginally lighter hit when compared with foreclosure.

• You may owe additional taxes. In the past, if your outstanding mortgage was $100,000 and your lender accepted a short-sale purchase offer of $90,000, you were liable for income tax on the forgiven $10,000, says Harlan D. Platt, economist and professor of finance at Northeastern University in Boston. However, the Mortgage Forgiveness Debt Relief Act of 2007, which runs through 2012, generally allows taxpayers to exclude income from the discharge of debt on their principal residence in some circumstances. Full relief is available only if the amount of forgiven debt doesn’t exceed the debt that was used to acquire, construct, or rehabilitate a principal residence. Consult a tax professional and an attorney to minimize or avoid this liability.

• In some states, your lender may still be able to come after you for the difference between the short sale price and the amount needed to pay off the mortgage. Your actual agreement with your lender and state and local laws and regulations spell out the details. Consult a tax professional and an attorney to minimize or avoid this liability.

How to proceed with a short sale

• Find a qualified REALTOR® experienced in short sales. Short sales are tough to navigate, and they’re further complicated by your loan type–FHA vs. Veterans Administration vs. conventional loans. Real estate agents who specialize in short sales will know the proper steps and order of the steps involved. They’ll also be able to navigate the many parties involved in the process and over-burdened loss mitigation departments. Look especially for agents who have Short Sales and Foreclosure Resource (SFR) Certification, which requires specialized training.

• Gather evidence to support your need for a short sale as opposed to a foreclosure. You’ll need to prove that you have little or no equity in your home, you’re behind on your payments, and you’re no longer able to afford your home. You’ll need to write a hardship letter to the lender describing your circumstances, such as a divorce, job loss, illness, death, or other event that has impacted your income.

A short sale can be a time-consuming process, but if you can avoid foreclosure, it’s worth it in the long run.

Keller Williams top real estate franchisor in annual list | Inman News

Keller Williams top real estate franchisor in annual list

Franchise 500 report: Coldwell Banker ranks as industry’s ‘fastest-growing’

BY INMAN NEWS, MONDAY, APRIL 25, 2011.

Inman News™

Austin, Texas-based Keller Williams Realty led among real estate brokerage franchises in an annual survey by Entrepreneur Magazine, and ranked 78th overall out of 500 franchises.

Coldwell Banker Real Estate LLC ranked second among real estate franchises, and was also ranked as the fastest-growing real estate franchise, placing 14th overall out of 100 franchises on that list.

Keller Williams ranked 66th overall in a list of 200 top global franchises — higher than any other real estate franchise. Keller Williams had 672 franchises in the U.S. and 15 in Canada in 2010, according to the magazine.

Overall, eight real estate franchises were chosen among the Franchise 500. Financial strength and stability, growth rate, size of the system, number of years in operation and total time franchising, startup cost, litigation, percentage of terminations, and other statistics factor into the franchiser rankings, according to Entrepreneur.com.

The rankings are based on data from July 2008 through July 2010.

via Keller Williams top real estate franchisor in annual list | Inman News.

Happy Earth Day

Tips for Investing a Tax Refund in Your Home

If you are fortunate enough to be getting a little back from Uncle Sam this year…. here is an idea on how to spend it!  HouseLogic talks to financial planner Alan D. Kahn, who offers tips for investing a tax refund in your home based on where you are in life–and with your house.

HouseLogic: What should be your priority if you get a $2,500 refund?

Alan Kahn: No matter what your situation, first and foremost, if you have credit card debt, pay it down. That’s the one item that’s creating financial havoc throughout the country. In fact, the enormous interest payments may ultimately affect your ability to meet mortgage payments.

Although you may be tempted to put a refund in a retirement account, and just continue paying the credit card minimum each month, retirement accounts may not be earning much. However, your credit card company may be charging 15% or more. The best thing to do is get rid of that noose.

HL: What’s the next priority?

AK: Use the refund to create, or add to, an emergency fund, to cover something like a new hot water heater or leaky roof. You need a liquid account you can access quickly.

After that, it all depends on where you are in your life and with your home. If you have children, a 529 college savings plan is a good idea. You may get a state income tax break if you invest in your state’s 529 plan. If college is not an issue, add to your retirement plan.

Also, some may think, “Now I can afford the life or home insurance I knew I should have,” but this is poor reasoning: You should have that anyway, not wait for an IRS windfall.

HL: What about settling non-credit card debt, such as getting ahead on mortgage payments?

AK: This is a little trickier. If you’re fairly young and have many years ahead at a low fixed rate, in the 4% to 5% range, don’t bother with early repayments. But if you’re older and the end is in sight, it can be nice to own your house outright. It gives you a future pool for a loan you may need later, or a reverse mortgage. Some may say you shouldn’t have money tied up in your house, but I say, “Don’t feel this is bad!” You can get more liquidity later, if you need it.

HL: What about HELOCs?

AK: Many homeowners have taken out home equity lines of credit or similar second-mortgage products. These usually give you a tax break and tend to have a low interest rate, so again, you probably don’t need to use a refund to pay these down, unless they’re very high.

HL: How about using the refund to improve your house and make it more valuable?

AK: If you’re thinking of selling your house in the near future, you can use a refund to help with a remodeling job that you may get back later in the form of a higher selling price. Anextra bathroom may make a house more saleable in a tough market.

But don’t think too much in the long term. If you’re planning to spend many years in your home, it’s too early to think about the future [sale of it]. Of course, you can still make a home improvement, but it should be something that makes you happy, not some far-distant buyer.

Richard J. Koreto (courtesy of) has been editor of several professional financial magazines and is the author of “Run It Like a Business,” a practice management book for financial planners. He and his wife own a pre-Civil War house in Rockland County, N.Y.

Real Estate technology is “really”… way cool

I love technology, always have. I remember the first remote controls I ever used.  You would hoist this rather large and clunky device, make sure you weren’t more than 10 ft. or so away from the TV and click. I mean “really click”.  It was as if the TV was controlled by the sound of loud click than by any other technological means.

Please check out my newly redesigned websites

I’ve been hard at work on two new sites, www.alanendermann.com and www.homesinmadisonville.com with hopes that you find your experience with them to be both user friendly and enjoyable. My goal with the redesign of my websites was to make information more readily available and easier navigation for my clients. I’ve rebuilt my resources to make it much easier to navigate and share information about the homes which are currently on the market and also provide additional resources, better tools, and a new visual design to support all requests I have received from buyers and sellers. Any questions, give me a call at 985-778-1903 or email at alanendermann@kw.com via my new affiliation with Keller Williams.

First-Time Home Buyers Prepare for Best Buyer’s Market in Recent History | RISMedia

RISMEDIA, March 18, 2011—While affordable housing prices, ample inventories, and historically low interest rates signal ‘buyer’s market’ for investors or move-up buyers in many U.S. markets, inexperienced first-time buyers may not know if the time is right to make a move into real estate.

“It’s not about timing the market. It’s about time in the market,” says Steve Berkowitz, chief executive officer at Move, Inc., a leader in online real estate. “Once you know how long you expect to own a home, look at the historical value performance of properties in the neighborhood. Be confident about your own job security, down payment resources and tolerance for upkeep, as well as the lifestyle you want today and in the near term.

While homeownership may not be for everyone, it is the right choice for hundreds of thousands of people. Today’s housing market, especially for first-time buyers, makes it almost impossible not to think about the possibilities.”

When you are ready to make the move to home ownership, it would be my privilege to assist you with your search.  Please contact me at alanendermann@kw.com or visit one of my many websites at www.alanendermann.com www.homesinmadisonville.com

What are barcodes doing on my yard sign?

If you read anything about real estate marketing, you probably can’t miss all the buzz and hype surrounding QR codes. They’re popping up on business cards, home flyers, for sale signs, even on webpages. If you don’t know what a QR code is, it is basically a bar code that you can scan with a smart phone application and it will take you off to the internet to view a web page, play a video, show images, text you a message or whatever. QR stands for “Quick Response” and they were originally created by a Japanese company to be used in distribution logistics. “Back in the day”, when I was involved in distribution for a major regional retailer, bar codes were a necessity to keep track of inventory for the thousands of stock items we had on hand. This technology has now found its way onto your real estate yard sign!

I think QR codes are great. They are pretty amazing little pieces of technology.

The image you see above is an example of my QR code used in some of my marketing materials to send clients to my webpage. For consumers to benefit, however, usually requires a “smartphone” with an application used to read the code and forward the phone’s browser to wherever the code directs. How many people are willing to go through the steps required to get the information when they see a code is yet to be seen. My take is that it is just one more tool which help clients gain additional information which they may otherwise not have been exposed too! As an aggressive REALTOR why not use every selling tool that is available? I thrive on cutting edge tools and technology to deliver results.

The QR code is a bit “gimicky” and is still in the infancy stages of development for use in real estate. Will it survive the test of time? I’ll let you know……………

There Comes A Time For Change

Change is inevitable….. at least that what the experts say and in my case they were right. I recently changed my Broker Affiliation. I’ve been asked many times as to the “why” for the change? I spent some time thinking about my broker, my career, and my direction over the past few weeks and it was rough on me. Hints of self-doubt and questioning “am I doing the right thing” were common place, but I knew something was missing from my current position. I wasn’t comfortable. I didn’t feel right. I was uneasy and therefore not as productive as I could be.

I was working with knowledgeable agents, an expert office manager, a friendly and accommodating staff and broker who has a true love of the real estate business. The company remained on the cutting edge of technology and fostered an encouraging atmosphere. For some reason that was still not enough. It then occurred to me what I felt was missing………..Most real estate companies operate on a dependent model where the broker provides some tools, some education and a great deal of encouragement to salespeople and then offers them a commission, or they operate on an independent model where agents receive minimal support from the broker but keep more of the commission.

In contrast to these traditional models, I found, after researching major real estate franchises, the Keller Williams model which fosters a synergistic environment where both parties (agents and broker) seem to succeed through teamwork. By encouraging agents and brokers to share their best practices with each other and reward associates who help the company to grow both parties are rewarded. It is a WIN-WIN situation! It is these industry-changing philosophies that have fueled the recent growth of Keller Williams Realty past older, more established companies to claim a top-four spot in the real estate industry. I thought this would be an interesting and challenging framework to work within. Selfishly, I do need someone to recognize the value of what I do right and is willing to correct what needs improvement. Teamwork, rather than a management led self-contractor business, I believe is going to be a “better fit”.

If you, any of your family, your friends or acquaintances are ready to buy or sell any real estate please give me a call. My cell phone is still the same…..985-778-1903. My office is now located at Keller Williams Real Estate Services 1522 West Causeway Approach, Mandeville LA 985-727-7000.