Archive for the 'Short Sale Information' Category

Tampa Foreclosures-Topped Out?

May 1st, 2008 categories: Tampa Real Estate, Tampa Market Conditions, Short Sale Information

With the abundance of pre-foreclosure and bank-owned properties in Tampa currently, one has to wonder when this process will peak and subside. And while some areas have been relatively free of distressed sales, others areas are hotbeds. I see the headlines, follow the market, and I’m in the business. But there’s nothing like hard numbers to get a clear picture of what’s transpired in the last 12 months with regard to foreclosure filings. So with that in mind I recently took a look at the Lis Pendens filings in Hillsborough County for the last 12 months. The results are displayed in the chart.

A Lis Pendens is a notice of some legal action against the property owner. These are recorded with the Hillsborough County Clerk of Court, and the overwhelming majority of these notices relates to a foreclosure on a mortgage. The typical language reads:

You are notified of the institution of this action by Plaintiff against you seeking to foreclose a mortgage encumbering the following real property in Hillsborough County, Florida:…

And with the decline in property values, the slowing economy, and the many risky mortgages resetting to higher interest rates (and much higher payments), foreclosures have certainly been on the rise. Starting in September of 2007, there was a steep rise in the number of Lis Pendens filings. But in recent months, the number of filings has seemed to stabilize, at a high rate. So what will the coming months bring? Will we begin to see a decline in the number of foreclosure filings? I’ll take another look next month and update the chart.

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Posted by Lenny Gurvich | 3 Comments »

Short Sales and Phantom Numbers

April 29th, 2008 categories: Tampa Real Estate, Tampa MLS, Tampa Market Conditions, Short Sale Information, Tampa Home Buyer Tips

By now many Tampa home buyers are aware that purchasing a pre-foreclosure property is not all that easy. Short sales, or short listings, as they should really be referred to, are abundant across the Tampa Bay area. A short sale listing is a home for sale for which the listed price will not be adequate to cover the seller’s loan payoff(s) and other related costs of selling.

Once it is obvious that the seller can no longer make payments and is facing foreclosure, most sellers will begin dropping the listed price of the home to find the sweet-spot (a moving target these days), the price in which a buyer sees value and finally makes an offer. I call it the phantom number, because that’s really what it is. For many short listings, it has nothing to do with the market value of the home. It’s simply a number dropped low enough to entice a would be buyer to make an offer (market value?). The seller signs off on the offer and presents it to the note holder, and pleads a hardship case. The bank, or holder of the note, solicits an independent opinion of value, and makes a decision to either approve the sale, or counter the buyer’s offer with a higher number.

Quite often the bank comes back with a number that was much higher than the listed price or, phantom number. The bank has to consider many factors, including estimated market value, payoff on the loan, the costs involved in the sale, etc. The bank, in trying to mitigate its losses, will attempt to get the highest price possible.

So many would-be buyers are getting frustrated by waiting months for third party approval, only to find out the bank wants an even higher price than what was listed. The phantom number effect. A disclosed bait and switch? Is it fair to list a home for sale at a short number without first getting the bank’s approval? Banks most likely don’t want to approve any number until an offer is presented and a clearer picture of the market is available. Sure, the fact that the listed price will be short has to be disclosed. Our MLS requires certain language be included on the listing:

Listing price may not be sufficient to cover all encumbrances, closing costs, or other seller charges and sale of Property at full listing price may be conditioned upon approval of third parties. Call for details.

And there’s also a disclosure for buyers to sign that includes the language:

1. You may not simply “walk away” from a contract which is subject to lender or third party approval - you will become obligated to perform under the contract from the date of its execution until the lender or third party disapproves the contract or a term in the contract permits either the seller or buyer to terminate.
The lender or third party is under no obligation to consider, respond to, approve, or disapprove your contract within any specified period of time.
It is possible the lender may elect not to approve the contract, in which event you will not be able to buy the property at the listing or contract price.
At the time the seller enters into the contract with you, the seller may not have been informed by the lender:
(a) what an acceptable purchase price may be, or
(b) that the lender would participate in or consider a potential Short Sale offer.

So buyers beware. That number may look great, but chances are you’ll not even get a response, much less approval. Every situation is different. Some lenders respond quickly, some short listing prices have already been approved. But the fact is, lenders would rather not have to foreclose on the property and attempt to auction it if they think they can do better by letting the borrower sell it short. Short sales are being approved. Let’s face it, market values have declined. So anyone who purchased near the top of the market in 2005-2006, and did not put 20% or more down, is most likely upside down. Likewise, anyone who refinanced in that time period, and tapped out their equity, most likely owes more than it’s worth.

So understanding the circumstances, the processes, and the fact that the list price is just a phantom number, can go a long way in reducing the frustration factor for would-be short sale buyers.

Did you know?

There are 707 MLS listings tagged as “Pre-Foreclosure” in the City of Tampa (as I type).

Posted by Lenny Gurvich | 1 Comment »

Reminders Of A Crazier Time-Short Sales In Tampa

March 20th, 2008 categories: Seminole Heights Homes, Short Sale Information

A client sent me a property to review earlier today and in the brief time that I researched its background I learned that:

1. The property is listed as a short sale.
2. The property is listed at $129,900.
3. Last sale was June of 2006 for $302,000.
4. There was a $302,000 mortgage recorded at the time of purchase (8.8% ADJ).

Now that’s what I call a short sale, or at least a short price. The sale has yet to happen. You have to have a buyer first, and third party approval of course.

Just another reminder of the $$ that was being thrown around in the years of past.

Posted by Lenny Gurvich | 5 Comments »

Market Reports-Seminole Heights Area Zips

March 19th, 2008 categories: Seminole Heights Homes, Short Sale Information, Tampa Neighborhoods

2007 4th Quarter (October-December) Sales Report

33603 (South Seminole Heights, North Riverside Heights, Wellswood, etc)

• Average Sale Price:$ 152.4k
• Price Change from Q4 2006: -16.13%
• Sales Volume Change from Q4 2006 : -45.95%

33604 (North (Old) Seminole Heights, Lowry Park area, Sulphur Springs, etc)

• Average Sale Price:$ 154.9k
• Price Change from Q4 2006: -15.22%
• Sales Volume Change from Q4 2006 : -43.75%

Prices, along with sales volume, continued to drop in both of these zips from late 2006 through late 2007. These areas had a high volume of rehabs and investor flips occurring during the heat of the seller’s market back in 2004-2005. This was pushing prices up quickly and making taking away one of the main draws of the area-affordability. Prices have been and are still correcting in these zips for the most part. Only the best properties in the best locations are holding value.

These zips have many bank-owned properties (relative to others) and there are many sellers trying to short sell their homes to avoid foreclosure. That noted, there are some good buying opportunities currently for those that can stomach the process of waiting for third party approval (short sales).

Posted by Lenny Gurvich | No Comments »

Facing An ARM Reset? Expect A Letter From The FHA

February 11th, 2008 categories: Tampa Real Estate, Short Sale Information

The FHA is being proactive and sending letters to those homeowners facing a reset on an adjustable rate mortgage. Some borrowers may qualify to refinance with an FHA insured loan through the FHASecure program.

FHA Secure lets borrowers who have a non-FHA insured ARM, whether current or delinquent on payments, refinance into a FHA insured mortgage. Homeowners who are delinquent on payments must be delinquent due to the reset of the ARM, or the recasting of an Option ARM.

FHASecure

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Posted by Lenny Gurvich | 2 Comments »

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