Friday, December 28, 2012

Clock ticking on Mortgage Tax Break for struggling homeowners


A tax break that has saved struggling homeowners from paying thousands of dollars to the IRS is just days away from expiring.

If the Mortgage Forgiveness Debt Relief Act of 2007 does not get extended by Congress by the end of the year, homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction.
That means if someone owes $150,000 on their home and it sells for $100,000 in a foreclosure auction, they could owe taxes on the remaining $50,000. For someone in the 25% tax bracket, that would mean paying $12,500 in taxes on the foreclosure. Similar taxes would apply for amounts that were forgiven in short sales and principal reductions.

"Allowing the act to expire would harm these families and their communities and it would run counter to current loss mitigation efforts," wrote Tim Pawlenty, president of the Financial Services Roundtable, Mike Calhoun, president of the Center for Responsible Lending, and John Dalton, president of the Housing Policy Counsel in a letter to the Senate Finance Committee.
So far, though, very little has been done to extend the act as Republicans and Democrats continue to butt heads over the fiscal cliff.

Many mortgage borrowers would be affected. More than 50,000 homeowners lose homes to foreclosure each month. Meanwhile, the number of short sales has tripled over the past three years to a rate of about half a million a year. And, under the terms of the $25 billion foreclosure abuse settlement, roughly one million borrowers may have their mortgage debt lowered through principal reductions over the next couple of years.
"If there ever was a no-brainer in housing policy, this would be it," said Jaret Seiberg, a policy analyst for Guggenheim Securities.

Congress may return to the act after the other fiscal cliff issues are resolved, but by then the housing market will have taken a hit, said Elise Brooks Perkins, communications director for the Financial Services Roundtable. "It can be done retroactively, but the lag time will have a chilling effect on homeowners considering a short-sale," she said.
Most short sellers will not follow through on sales to closing without debt forgiveness in place. Instead they'll fight foreclosure, prolonging the housing crisis.
Congressman Brad Miller, however, said he doesn't see debt forgiveness passing unless it's part of a larger fiscal cliff deal.

Still, the price tag for such an exemption could make it a point of contention, said Seiberg. The office of Sen. Max Baucus, who heads the Senate Finance Committee, estimated the cost of a one-year extension at $1.3 billion.

Even if Congress allowed the mortgage debt forgiveness to expire, not all borrowers who lose their home to foreclosure, sell their home in a short sale or have their principal reduced will take a tax hit. If the debt is discharged in a bankruptcy, no tax is due. And anyone who is insolvent -- meaning they have more debt than assets -- at the time the debt was forgiven would not have to pay the tax.
And in some states like California, certain borrowers are protected against paying the tax because of the way the state treats foreclosures.

REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?


Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS


At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...

Thursday, December 27, 2012

Happy New Year from Lotus Realty Group



(Quote) Alchemy is the art that separates what is useful from what is not by transforming it into its ultimate matter and essence.


I hope you all had a wonderful Christmas. I had a nice relaxing time curled up with a book that I have been meaning to read for years. I originally gave it to a dear friend of mine after only reading a chapter. Two years later, another friend of mine gave it to me 7 months before he passed away. I ended up giving it away for the second time to a client. Two weeks ago my hair dresser gave it to me after a conversation we had about dreams that we wanted but didn't know how they were possible. Three times this book came back to me as if the universe was slapping me across the face to say " wake up" I am right here.


Its called "The Alchemist" by Paulo Coelho. Its a fable about a man who was trying to find his personal legend. For him it was buried in the Pyramids in Egypt, so he thought. After many trials, and tribulations and unexpected detours receiving OMENS from the universe that were at times confusing trying to make sense of what all of it meant; he realizes the treasure lies where your heart belongs. The treasure is the journey itself, the discoveries we make along the way and the wisdom we acquire and when your heart really wants something the whole universe conspires so that your dreams can come true.


When I was a little girl I wanted to be a lawyer but I ended up working two sometimes three jobs at a time to survive. Instead of going to school I took a course to be a Certified Nurse Assistant so I could work double shifts and make more money to pay my bills. Years later I picked up a book at a library on Amortization not even knowing what the hell it was and found a business card in it for a Mortgage company. After calling that number I met my first mentor in the lending industry. Years later, I was on one of the top teams in San Diego learning from one of the Best Realtors in the Country which would catapult me into my career. Finally, I never thought in a million years I would meet one of the best people I know and together we would build a successful Real Estate company helping homeowners and Realtors negotiate short sales.


I believe the detours we take are the omens in life and the mentors we have along the way are our angels and soul mates to help us to discover who we are. When I had to work multiple jobs and give up my dream of being a Lawyer I learned hard work and responsibility and how to take care of myself. When I worked in the Convalescent hospitals taking care of old people I learned patience, compassion for the vulnerable and the weak. I use to listen to their stories of their journeys and it gave me strength and hope. When I worked for the mortgage broker she challenged me. She use to put files on my desk and say "figure it out" but hurry, we have a deadline. It forced me to think out side of the box. When I was on one of the top teams and San Diego in Real Estate I learned to step out of my comfort zone, I learned discipline and to fight for what I want. Finally, working with my business partner building our company has helped me grow up in every sense. Its given me passion for what I do, adventure and at times even danger. All the things that make a person desire more and to keep going no matter what. The desire of my heart has always been to help others and my quest for that will go on forever and will manifest in different ways I am sure I have not even thought of yet but I am open to it.


It is easy to get frustrated when we look at the detours along the way. If we perceive them as dreams lost and give up we will never feel the peace and oneness in our hearts. We will always be restless. Where your heart is, so will be your treasure. What would it feel like to be at peace and one with our own hearts? I have a feeling that the book may be right; the universe will conspire and return to us all we felt we have lost and it will be even better than we could ever have imagined.


I share this with you because this has not been an easy market and industry to be in. People have lost homes, jobs and family. It is easy to give up. I have been there and I believe in those times that's when the universe slaps you in the face and gives you a book, THREE TIMES to remind us that nothing is really lost and to follow your heart always. I wish all of you A HAPPY NEW YEAR full of peace, love, success and prosperity and may you all find your personal legends.

Whats new at Lotus Realty Group

David Bright, number one Real Estate attorney in San Diego and Cari Drolet, Founder of Lotus Realty Group are teaming up in 2013 to offer a DRE approved 2 day seminar teaching the legal and practical sides of Real Estate. In addition we will be covering Short Sales, REOS and foreclosures. 12 hours of DRE credits and a short sale certification and logo will be given upon completion of the course. Dates, times and locations will be up on our website in January at www.proreseminars.com. For more information please contact Cari Drolet at 858-764-7300 or David Bright at 760-747-3200.


REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?


Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.


LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS


At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...

Monday, December 17, 2012

Don't Let Your House Sale Fall Through- Wall Street Journal

I read this article today in the Wall Street Journal and wanted to share. It really reflects the importance of keeping on top of your transactions. It does not talk about short sales. I agree with nearly everything in this article but I wanted to shed some light on the short sale side. If you have a short sale listing and are working with a buyer it is important to enforce these principals mentioned below as we are working with deadlines that require extra care as they could potentially not only kill the transaction but put the home into foreclosure.



One thing I wanted to point out is we are seeing buyers put in offers and asking for closing costs back from the bank. There is no guarantee that the short sale lender will approve that. The expectation must be set with the buyer up front that their offer cannot be contingent upon receiving those credits. That is another issue that will blow up at the end. If it is not approved and the buyer walks you will need to start over with a new offer which will need to be resubmitted for approval and that can take up to 2-3 weeks.



Knowing your listing in and out to be able to disclose the proper information to a buyer will minimize your risk of the transaction falling through. Taking it a step further; staying on top of the buyers lender and making sure all parties are working together towards one common goal " To close the deal" will ensure success.

Don't Let Your House Sale Fall Through


Encouraging signs in the housing market may entice more homeowners to put their properties on the market in 2013.


Still, it isn't exactly a seller's market yet—and deals can fall through at the last minute for a variety of reasons. Financing delays, low appraisals, title problems, home inspections and even buyer's remorse can interfere with a seller's ability to close.


The good news: Many of these problems are preventable if sellers are proactive and involved, says Lanny Baker, president and chief executive of ZipRealty Inc., a residential real-estate brokerage. Here are some tips:

1. Learn about the buyer's financing
 
Seek out a buyer who has been preapproved for a mortgage, says Mr. Baker, who evaluated 250 failed or delayed deals over a recent 2 ½-month span and determined that financing problems were to blame 40% of the time. Typically, the buyer's agent will be eager to share this information with you.


However, preapproval doesn't preclude a lender from rejecting a buyer's mortgage application later on, so don't stop there. Check in regularly with the buyer's agent to ensure that the loan is on track to close on time.


Lenders are requiring more stringent documentation, and if buyers aren't organized, or procrastinate when additional paperwork is requested, the closing could be delayed. To keep things on track, make sure your contract contains specific deadlines for buyers. "One key term is a financing contingency, and if the buyer cannot [resolve] that contingency, the terms of the contract would normally release the seller to entertain other offers," Mr. Baker says.


If a buyer is seeking a Federal Housing Administration-insured loan, the home being sold may have to meet certain safety and soundness requirements that typically wouldn't come into play with a conventional loan. To avoid delays, sellers can take care of things that might be flagged in an FHA appraisal, such as chipping paint, before listing. An experienced real-estate agent should be able to help identify such problems.


Sometimes buyers underestimate the amount of cash they will need at closing. If that happens, the agents involved in the transaction—who have a vested interest in the deal closing—may agree to give up part of their commissions to cover the shortfall, Mr. Baker says. A seller can pay some of those costs, as well.

2. Consider cash offers
A buyer who doesn't need financing is more of a sure bet than one who does, says Bob Kelly, an agent with Re/Max Main St. Realty in Moorestown, N.J. However, cash bids are typically lower, so sellers need to weigh their options carefully.


A buyer with a 3.5% down payment who is also asking for seller-assisted closing costs may bring in a larger return for the seller, but the deal could take longer to complete or be derailed by a low appraisal, Mr. Kelly says. A cash buyer won't need an appraisal, just verifiable funds, and may offer an earlier closing date—which in the seller's eyes could compensate for the lower offer.

3. Prepare for the appraisal
Real-estate agents will tell you that low appraisals have killed many transactions in recent years. Many agents say appraisers—who are hired by lenders to assess the value of the home—are overly conservative in their valuations these days, even as home prices are rising in many locations.


To avoid appraisal problems, price your home in line with comparable homes for sale in your area. Even then, however, problems may emerge.


John and Susan Moon priced their Bethesda, Md., home competitively and received multiple bids. Still, the appraised value was $5,000 lower than the offer they accepted. In the end, they split the difference, dropping the price by $2,500 while the buyers brought $2,500 more to the closing table, Mr. Moon says.


"In some cases, you're pioneering new values," especially when receiving multiple bids that raise your home's price, says Stew Larsen, head of mortgage banking at Bank of the West. "As a seller, you need to think about what is Plan B if [the appraisal is low."


Sellers can challenge a low appraisal, he says, but they rarely win unless the appraiser made an obvious mistake.


One option is to add a contingency to the contract, laying out how the sides will renegotiate if the home's appraised value is lower than the sale price, says Paul Reid, an agent with Redfin in Orange County, Calif.

4. Tackle title and inspection issues early on
Some listing agents include a preliminary title report as part of their package, but a good agent will be able to spot red flags when reading it for you, Mr. Baker says.


Perhaps a sewage assessment wasn't paid by the homeowner, the deed never got recorded, or an easement was granted that the owner is unaware of, he says. Addressing such issues early on will mean fewer surprises at the end.


Similarly, instead of waiting for the buyer's home inspection to turn up problems, sellers should get one themselves before listing, says Tony Geraci, broker/owner of Century 21 HomeStar in the Cleveland market. That way, they can make needed repairs before the buyer requests them—or gets scared off, he says.

5. Commit to a tight timeline
As a seller, time isn't your friend.
Encourage buyers to move quickly on things like the home inspection. If a deal is going to collapse, it is better to know sooner rather than later so the home can go back on the market.


A longer process also gives a buyer more time to get cold feet. After winning a bidding war, buyers sometimes look at closing documents and paperwork and realize they're spending more than they should have on the home, triggering buyer's remorse, Mr. Reid says.


But if the buyer is looking for reasons to get out of a deal, it may be better to oblige than waste more time. "You never want to keep a buyer that doesn't want to buy your house. Let them out and find the next buyer," Mr. Geraci says.

REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?


Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.


LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS


At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...

Monday, December 3, 2012

Back to Basics..Short Sales 101..



(Quote) We just have to keep working and keep trying to do
 the basics and hopefully a win will come. "Terrence Duffin"


There are moments in life in any profession you are in whether you are a Realtor, Doctor, Lawyer or a checker at a grocery store; work begins to look like a mountain to climb with requests and demands and unrealistic expectations. Its easy to lose your footing and at any moment it can feel like the walls are going to cave in. We can lose sight of the goal and ask ourselves "Are we going to blow it? Well, blowing it is not in my vocabulary and I have a feeling neither is it in yours. So what is the solution?


I have learned when transactions are on shaky ground one of two things have occurred; a) either something was overlooked or b) something was over promised and under delivered. I understand that we can get extremely busy and in our industry time is money and things do move quite fast however; I would like you to consider that those two issues I have just mentioned have the capability of ruining a reputation, waisting time as over promising and undelivered means we did not get the outcome we desired therefore losing time, money and a returning client which could have been a future revenue stream.

Lets talk about overlooking documents. In a short sale transaction the bank is looking for accuracy and consistency. One thing I have seen as agents send over files is missing signatures on contracts and disclosures. No holes is the object of the game. The more solid my short sale package is the better chances I will have less requests for revisions from the bank. Here is the top issue and tip to help you in the future:


Double check all contracts. If the home is being purchased by an LLC or an S Corp you will need articles of incorporation and an operating agreement. All the names have to exactly match the RPA contract. The names on the proof of funds and pre approvals have to match as well.


Remember to utilize the checklists I have created to ensure you do not miss anything in the short sale package that the bank will request. They really do work if they are used properly.


In regards to over promising please understand that if you promise your clients the moon and the stars and cannot deliver at the end of the day you will only disappoint them and lose their business. For example, we have had agents tell their clients that they will be able to get the short sale complete by the end of the year before the tax law expires in order to get the listing. That is a huge problem waiting to happen as there are never guarantees in promises like this with all of the unexpected issues that happen in these transactions which can lead to unexpected results. I know you want the listing but your clients need the truth not what they want to hear.


A better response would be; I understand Mr. and Mrs. Seller that the tax debt relief would be a huge benefit for you and your family however we are not positive that the law will be extended into the next year and with the expiration approaching I can tell you that we have a good track record of getting approvals faster than most other companies out there but I will not guarantee you something that may or may not happen. Approval is inevitable however I cannot promise you it will be done by the end of the year and anyone who tells you they can will be lying. What I can promise you is we will do our absolute best and hopefully we will get the extension into 2013. Who knows if they will even benefit from the Mortgage Debt Relief Act? Advise them to speak with a CPA. This will allow you to gain their trust and respect but most importantly, keep it.


Back to Basics means to go back to the beginning and do what works. Here are a few examples:


1. Pre qualify - Utilize the listing agent short sale package and checklists I have created to allow you to ask the right questions to determine if they will qualify.


2. Set proper expectations and time frames


3. Advise your clients to speak with a Real Estate Attorney and a CPA.


Its all about strategy in the short sale game. If you have no strategy you simply have no game.


Lotus Realty Group is here to assist you in the whole process from A-Z. The system works if you work it. Please reach out for any questions that you have and allow us the opportunity to turn your mountains into paths of opportunity.


Extra Tip

Regardless of what Bank it is; if it is a HAFA short sale transaction the ARASS ( Breakdown of all the fees) will include a document to ensure this is a non-arms length transaction. In addition, it will include a NO FLIP 90 day rule.


Reminder that we are having our Holiday party December 6th between 5:00-7:00 pm at 400 S Sierra Ave Suite 102 Solana Beach Ca 92075. Please RSVP to Sarah@LotusRealtyGroup.com.

Real Estate Attorney David Bright will be there do discuss short sales, legal updates and our upcoming seminar we will be offering to agents. Short sale certification and 12 hours of DRE credits will be provided with the completion of the 2 day course. Hope to see you there at the party.



REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?


Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.

LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS


At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...