FindaShoreHome.com

Washington, DC, September 20, 2011

Increased lending to creditworthy home buyers and more loan modifications and short sales are necessary to reduce the rising inventory of foreclosed homes and help stabilize and revitalize the housing industry and economy, according to the National Association of Realtors®.

That was the message delivered today by Allan Dechert, 2011 president of the New Jersey Association of Realtors®, who testified on NAR’s behalf before the Senate Banking, Housing and Urban Affairs Subcommittee on Housing, Transportation, and Community Development regarding new ideas to address foreclosures.

“As the leading advocate for homeownership, NAR knows that foreclosures don’t just affect the families that lose their homes – communities, the housing market and the economy all suffer,” said Dechert, broker-owner of Ferguson Dechert Real Estate in Avalon, N.J. “Ensuring credit availability to qualified buyers and helping more distressed homeowners with loan modifications and short sales will help reduce the growing inventory of foreclosed homes and ensure that housing leads the way out of today’s economic struggles.”

Dechert said that creditworthy consumers continue to have difficulties securing fair and affordable loans despite their proven ability to afford the monthly payment. He said that NAR supports responsible lending standards; however, unnecessarily tight credit restrictions are putting downward pressure on home values, increasing the number of homeowners whose mortgage exceeds the value of their home, and adding to the number of foreclosures.

“Increased fees, higher down payments and reduced loan limits are making it harder for borrowers to obtain safe and sound mortgage financing products. Greater access to financing for qualified borrowers and investors could help absorb the excess inventory of foreclosed properties,” said Dechert.

In testimony, NAR also urged the lending industry to take greater action to keep struggling families in their homes through loan modifications that reduce the probability of default and prevent further increases to the large inventory of foreclosed properties. Helping more families remain current on their mortgage by significantly reducing their monthly mortgage payment will allow them remain in the home that they worked so hard to obtain and reduce the impact of foreclosures on local home prices.

Dechert said that continued short sale delays are also contributing to foreclosures and urged lenders and servicers to quickly approve reasonable short sale offers that would allow home owners to avoid foreclosure. The current short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a home owner from foreclosure.

“Loan modifications – and short sales for those unable to meet their mortgage obligations – help stabilize home values and neighborhoods, and limit the losses incurred by lenders, the federal government and taxpayers,” said Dechert. “More must be done to streamline short sale transactions, since many potential home buyers are simply choosing to walk away from transactions due to the length of time it takes for lenders to approve and complete these sales.”

Dechert also testified about the pooling and disposition of foreclosure inventories held by the Federal Housing Administration and Fannie Mae and Freddie Mac. NAR is concerned that, although bulk sales may quickly alleviate the large inventory of homes held by the agencies, those sales would likely result in larger losses than necessary. Realtors® strongly believe that every effort should be made to incentivize individual versus bulk sales because individual sales maximize asset recovery and minimize the impact on housing values.

Regarding another proposed option to combine foreclosure disposition with affordable rentals through lease-to-own programs, Dechert testified that the focus should be on keeping families in their homes whenever possible. He recommended that any lease-to-own programs be privately administered by local entities that understand the needs and challenges of their local communities.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

New York, September 27, 2011 – Data through July 2011, released today by

S&P Indices for its S&P/Case-Shiller 1 Home Price Indices, the leading

measure of U.S. home prices, showed a fourth consecutive month of

increases for the 10- and 20-City Composites, with both up 0.9% in July
over June.Seventeen of the 20 MSAs and both Composites posted positive

monthly increases; Las Vegas and Phoenix were down over the month and

Denver was unchanged. On an annual basis, Detroit and Washington DC were
the two MSA that posted positive rates of change, up 1.2% and 0.3%,

respectively. The remaining 18 MSAs and the 10- and 20- City Composites

were down in July 2011 versus the same month last year. After three

consecutive double-digit annual declines, Minneapolis improved marginally
to a decline of 9.1%, which is still the worst of the 20 cities.

Case Shiller Report 08/30/2011 Chart

The chart above depicts the annual returns of the 10-City and the

20-City Composite Home Price Indices In July 2011, the 10- and

20-City Composites recorded annual returns of -3.7% and -4.1%,

respectively. Both Composites and 14 MSAs – Boston, Charlotte, Chicago,

Cleveland, Dallas, Denver, Detroit, Las Vegas, Miami, Minneapolis,
Phoenix, Portland, Tampa, and Washington DC – saw their annual rates
improve in July compared to June.

“With July’s data we are seeing not only anticipated monthly increases,

but some fairly broad improvement in the annual rates of change in

home prices,” says David M. Blitzer, Chairman of the Index Committee at S&P

Indices. “This is still a seasonal period of stronger demand for houses,

so monthly price increases are expected and were seen in 17 of the 20 cities.

The exceptions were Las Vegas and Phoenix where prices fell, while Denver was
flat. The better news is that 14 of 20 cities and both Composites saw their
annual rates of change improve in July.

“While we have now seen four consecutive months of generally increasing prices, we do know that we are

still far from a sustained recovery. Eighteen of the 20 cities and both Composites are showing that home

prices are still below where they were a year ago. The 10-City Composite is down 3.7% and the 20-City is

down 4.1% compared to July 2010. Continued increases in home prices through the end of the year and

better annual results must materialize before we can confirm a housing market recovery.

“As with May and June’s reports, we saw some unusually large revisions across some of the MSAs. In

particular, Detroit was most affected in July, with the revisions showing a much healthier market than

previously thought. Our sales pairs data indicate that this market reported a lot more sales in May and June,

which caused the revisions. As we have indicated before, when sales volumes are relatively low and the

ratios of distressed-to-non-distressed sales are changing rapidly, revisions are more noticeable. These

factors likely contributed to the revisions we saw not just in Detroit, but in many of the MSAs over the past

few reports.

“Other recent housing statistics show that single-family housing starts were down slightly in August, and

are about 2% below their year ago level; and these levels are at 30-year lows. Existing-home sales,

however, were up in August and are about 20% above their August 2010 level. The S&P/Experian

Consumer Credit Default indices showed a continuing decline in mortgage default rates, a two-year trend.

However, if you look at the state of the overall economy and, in particular, the recent large decline in

consumer confidence, these combined statistics continue to indicate that the housing market is still

bottoming and has not turned around.”

The chart on the previous page shows the index levels for the 10-City and 20-City Composite Indices. As

of July 2011, average home prices across the United States are back to the levels where they were in the

summer of 2003. Measured from their June/July 2006 peaks through July 2011, the peak-to-current

declines for the 10-City Composite and 20-City Composite are -31.0% and -30.9%, respectively. The

peak-to-trough declines are -33.5% and -33.4%, respectively. The 10-City Composite hit its crisis low in

April 2009, whereas the 20-City reached a more recent low in March 2011.

As of July 2011, 17 of the 20 MSAs and both Composites posted positive monthly changes. Denver was

flat. Las Vegas and Phoenix were marginally down over the month, with Las Vegas down by 0.2% and

Phoenix down 0.1%. Las Vegas was the only city that posted a new index level low in July 2011. It is

now 59.3% below its August 2006 peak.

The table below summarizes the results for July 2011. The S&P/Case-Shiller Home Price Indices are

revised for the 24 prior months, based on the receipt of additional source data. More than 24 years of

history for these data series is available, and can be accessed in full by going to

www.homeprice.standardandpoors.com

September 20, 2011

A rental property can generate “taxable losses” that can be used to reduce your normal salary income, hence the federal income taxes you pay. It’s difficult for most people to understand how taxes work, and even more confusing once we get into the realm of rental properties and taxes. Below are some of the basics to understanding rental properties and federal income taxes. (Note: Understanding how taxes impact personal residences are a completely different topic, as those are governed by totally separate tax codes and go elsewhere on your 1040 form.)

Often I hear people saying that they want to buy some real estate to save money on income taxes. However, depending on your tax situation, owning real estate might not save you a dime on taxes. It wholly depends on your specific tax picture and the IRS rules about Passive Activity Loss Limitations.

First and foremost you should never make real estate investment decisions based solely on tax considerations. The first order of business is do your due diligence and determine if an investment makes sense based on cash flows, cash on cash returns, renovation costs, rental income, financing, and the risk of any particular property. Once you believe it makes sense in every other sense, then you can contemplate the tax effects.

(Important note: Always have a CPA, attorney or licensed tax professional guide you through your individual tax picture – this article is an illustration of one scenario but your scenario can be very different based on your financial picture.)

To better understand, let’s first quickly discuss the IRS 1040 form (http://www.irs.gov/pub/irs-pdf/f1040.pdf).

Your 1040 form you fill out each year – the form that most people start about midnight in April 14 – does two things:

1. Calculates the amount of federal income taxes you owe for the year based on how much you earned in salary, income, wages, profits, distributions, etc. LESS all the deductions (tax “shields”/subtractions) to those totals in the form of losses, deductions, exemptions, etc., to get to your Taxable income on Line 43. Then, look at the IRS Tax Tables and determine how much you owe in taxes based on your tax filing status (Single, Married Filing Jointly, etc.) and your Taxable Income.
2. Second, it reconciles the amount you owe from #1 above against the amount you have already paid during the year. This is commonly called “withholdings” from your salary, or if you are self-employed, you probably paid quarterly estimated income tax amounts to the IRS during the year.

• If you paid more in #2 than you owe in #1, you get a tax refund!
• If you paid less in #2 than you owe in #1, you write the IRS an additional check!

Tax Considerations of Rental Properties

Rental properties generally show taxable losses for the first many years. That taxable loss is essentially another “deduction” that lowers your taxable income – noted in #1 above – and hence lowers your income taxes.

This chart below shows an example of how a loss would be calculated. For example, this property might show a ($7,500) loss. That loss would filter through your IRS 1040 form, reducing your taxable income, and hence reducing your taxes.

This is how you might save money on taxes by owning rental properties – using losses on your rental real estate to reduce your taxable income, which allows you to pay less in federal income taxes.

How much it reduces your taxes depends on your income and filing status. It is a little complicated and can get very complicated depending on your situation.

There are also limits on how much of a loss on rental property any particular taxpayer can use to “shield” their income. These limits are called Passive Activity Loss Limitations. If your losses are over $25,000 and/or your Adjusted Gross Income is over $100,000, you may not be able to use all of the losses. You may have losses, but you are not allowed to reduce your income with them based on the IRS rules. Consult a professional.

Trenton, NJ – On Wednesday, Governor Christie signed legislation to boost New Jersey’s real estate market and cut red tape in order to ease the individual sale of homes and seasonal rentals by providing an exemption from New Jersey’s bulk sales notification process. The bulk sales notification process was established in 2007 to ensure the State was able to collect outstanding tax liability from businesses before they left the State or disposed of a large portion of assets.

Because of the manner in which the law was written, the sale of single family homes from individual sellers was made subject to the requirements, resulting in home purchasers having to file paperwork and provide ten days notice to the Division of Taxation for every real estate transaction, or else risk being held liable by the State for the seller’s delinquent taxes. Under A-2748, the sale by individual sellers of any dwelling unit, primarily one- and two- family homes, will no longer be subject to the bulk sales notification requirements.

BILL SIGNED:

A-2748/S-2313 (Diegnan, Schaer, Lampitt, Conners/Van Drew, T. Kean) – Exempts sales of certain homes and seasonal rentals from the bulk sale notification requirements

By BETH D’ADDONO

For the Daily News

The past few weeks have been like a dream for Louise Esposito, who, along with her husband Michael and sons Michael Jr. and Louis, owns the iconic Chef Vola’s restaurant in Atlantic City.

“That this happened to us, out of the whole country of restaurants, is so exciting I still can’t believe it,” said Louise, an animated blond beauty who looks a decade younger than her 62 years. “This” is winning the Oscar of the food world, a James Beard Foundation America’s Classic Award saluting “Restaurants with timeless appeal, beloved in their regions for quality food that reflects the character of their community.”

Awarded annually to just five American restaurants, past winners have included White House Subs in 2000, also in A.C., and, last year, another Jersey classic, Mustache Bill’s Diner, in Barnegat Light.

For Chef Vola’s legions of fans, the Espositos’ national recognition is no surprise. “A lot of places claim to be a ‘family restaurant,’ but at Chef Vola’s you really feel like you’re part of the family. Best veal Milanese I’ve ever had,” said Medford, N.J.’s, Lauralee Dobbins. She’s been tucking in at Chef Vola’s for nearly 20 years.

Louise Esposito, who is the front of the house and owner of Chef Vola's in Atlantic City, NJ, greets customers inside the restaurant on May 14, 2011. (David Maialetti / Staff Photographer)

Esposito, who along with her husband hails from South Philly (she’s 13th and Packer, he’s 21st and Snyder), spent two days in Manhattan leading up to the May 9 awards, rubbing elbows with the likes of celeb chefs Emeril and Bobby Flay, hobnobbing at fancy cocktail parties and even strutting down the red carpet before the big show at Lincoln Center in New York.

The family was photographed (Louise bought a new gown for the occasion), interviewed and, when the time came, got up in front of 1,600 people to relay a one-minute thank-you speech.

“Cameras are going, I’m trying to stand up straight, look taller, keep smiling, say the right thing,” Louise Esposito said. “It was all like a dream. Everyone was so wonderful to us. It was really something.”

Esposito was still flying high the weekend after the awards in the face of a typical Friday night crowd at the restaurant she’s owned with her family since 1982. The effusive one in the partnership, Louise is out front greeting the guests, many by name, many with a standing reservation each week. She manages the staff, juggles the reservations and keeps a close eye on the food coming out of the kitchen.

She’s also baked all of the restaurant’s 25 or so homemade desserts herself. Her husband Michael is the creative force in the kitchen, although his quiet presence is felt in the dining room as well. “We all bring different skills to the table,” said Louise. “One of us is always here, no matter what. We’ve all done every job, and can jump in anywhere we’re needed.”

Chef who?

If you’ve never been to Chef Vola’s or even heard of it, that’s no wonder. It’s the kind of place that insiders kept to themselves for decades. The number is still unlisted, although now easy to find online.

Located in the nondescript basement of a rowhouse on South Albion Place, a tiny way street in the shadow of the Tropicana, Chef Vola’s has no liquor license and no sign out front. Its green awnings are the only clue that something special might be going on inside. A statue of the Blessed Mother keeps a benevolent eye on the doorway.

Opened during Prohibition in 1921 by Pina Vola as a boardinghouse with a little restaurant in the basement, Chef Vola’s was a locals’ haunt, a place for simple Southern Italian comfort food, nothing fancy.

The Espositos bought the business the first time they ate there. Both Louise and Michael came from restaurant roots – family-owned neighborhood spots in South Philly proffering meatballs and sausage and roast beef sandwiches.

When they met as teenagers, their spooning was usually done with a spoon, and fork, in hand. “All the other kids were going to dances, to the movies,” recalled Louise. “We were going out to eat.”

Food was always at the heart of their family life, evidence of the warmth, love and traditional Italian culture they both hold dear.

The couple relocated with their two young sons to the Shore in 1976, with Michael commuting to Philly until snagging a job as chef at the gourmet II Verdi at the Trop. Louise worked as a restaurant supervisor at Harrah’s. The problem was, they worked opposing hours and never saw each other.

“We missed each other, missed our family time together,” she recalled. Louise took matters into her own hands and in March 1982 started saying a novena to St. Jude for nine weeks, praying for the family to be together.

She and Michael tried Chef Vola’s on a rare shared Monday night off and, before they left for home, had bought the restaurant. “We had two boys in private school, a mortgage. I was scared to death. Michael said, ‘Don’t worry. Everything is going to be OK.’ ”

And it was.

Simply great food

Michael made the menu his own, bringing a new level of sophistication to the Vola’s crowd, along with recipes culled from his grandparents and Louise’s.

He swabs pasta with more than just homemade red sauce, including what may be the best clam sauce in recent memory, bright with fresh herbs and roughly chopped bits of Atlantic surf clam. An average of seven kinds of fresh fish are offered nightly.

The veal chop, a massive specimen, is pounded thin and served Milanese style, topped with field greens or parmigiana, is still the kitchen’s most popular order.

Everything is served a la carte, and prices are on par with most casino restaurants: $7.95-$17.95 for appetizers; entrées in the $18.95-$37.95 range. But the portions are huge, and you can still get a half chicken, broiled Italian-style, for $12.95 if that’s that you want. The average check for a multicourse meal is in the $50 range – a great bang for the buck, considering the quality.

Only the freshest ingredients are allowed in the door, locally sourced whenever possible.

“Every cucumber, every head of lettuce, every piece of fish, we check it,” said Louise. “We’re not a restaurant where you come in, eat, pay your check and leave. As soon as you walk in the door, we want you to feel warm, like part of the family.”

Many of her customers would walk over hot coals for a slab of one of Louise’s homemade desserts, including airy ricotta cheesecakes (“I use one less yolk and fold in extra whites to make it light”) flavored with the likes of peach schnapps, butterscotch and rum, and limoncello atop a homemade lemon cookie crust.

Her four-step banana cream pie was the first thing Frank Sinatra hankered for when he came to town, such a fave that he once said he wanted to be buried with one.

All the recipes are closely guarded secrets, family treasures that add another layer of mystique to the Chef Vola’s experience.

If you thought it was tough to score a reservation at Chef Vola’s before all the James Beard hoopla, expect to wait even longer now that the word’s out.

But get on the books and, when the time comes, savor an American classic at its best. By the end of your meal, you won’t just feel full; you’ll feel warm, safe, like one of the family. And what better reason to come back for seconds?

Chef Vola’s, 111 S. Albion Place, Atlantic City, N.J., 609-345-2022.

By Jen A. Miller

For The Inquirer

Heading to the Shore over an expressway isn’t for everyone. Some folks prefer the backroads.

But for the experienced trekker, writing down the names of the roads can be tricky. Notes can include phrases such as “past the car dealerships,” “that farm stand with the peaches,” “that graveyard” and “666.”

Jersey Shore backroads can be hard to pin down. Except for adventurous drivers wandering off the Atlantic City Expressway or Garden State Parkway’s standard routes with a map or GPS in hand, most Shore routes were handed down by parents and grandparents. They started their summer vacations before the Atlantic City Expressway opened in 1964, and ahead of the Garden State Parkway’s completion in 1957.

“I grew up with parents trying to figure out the back way to avoid part of the Garden State Parkway by going through, parallel, and over it,” says Kathryn Quigley, 44. Her family drove from Northeast Philadelphia to Stone Harbor along a route that included “the TAC” (i.e. the Tacony-Palmyra Bridge), a “restaurant with a triangle-shaped roof, and the bathrooms were out back.”

Now Quigley lives in Deptford, but she still takes the backroads, albeit of the Route 55 to Route 47 variety, with a few twists and turns.

“Why would I go down Atlantic City Expressway?” Quigley asked. “If I go to Atlantic City I do. From Deptford, it makes no sense to go that way,” she said.

Quigley starts by heading onto Route 55 south until it turns into Route 47. From there, she has two options: continue taking Route 47 or head on to Route 347, which leads back into Route 47. Quigley said that taking the Route 347 leg means less traffic. She then turns left onto Country Highway 657, which goes behind the Cape May County Zoo and eventually turns into Stone Harbor Boulevard, the main thoroughfare into Stone Harbor.

Barbara Hagin lives in San Francisco, but she grew up in New Jersey and visits her father, who lives in Wildwood Crest, every year. She flies into Philadelphia International Airport.

“I usually take the main roads, but from time to time I veer off the beaten path and take the smaller highways,” she says.

Two of her backroads are common and direct: Once she’s over the Walt Whitman Bridge into New Jersey, she takes the Black Horse Pike or White Horse Pike straight down to Atlantic City, avoiding the Atlantic City Expressway tolls, but “those aren’t very scenic, frankly,” she said.

They are also littered with stop lights, but it can be less traffic than the Atlantic City Expressway. From there, she can take Route 9 south.

The route she prefers, though, is like Quigley’s. She gets on Route 47 south, but she sticks to it instead of taking the Route 347 sidetrack.

My own backroads are a lot more winding but scenic.

If you take Route 42 south to the Atlantic City Expressway, you can continue on Route 42 by going straight instead of taking the expressway by veering left. After passing the line of Turnersville car dealerships, make a right into Country Road 610 and a left onto Tuckahoe Road. Stay on Tuckahoe (with a few name changes) until you reach Route 666. Yes, I said those creepy numbers. It splits from Tuckahoe to the right. It ends onto Route 49 – make that left, and then a right into Woodbine Road. Then turn left onto Dehirsh Avenue, right onto Kings Highway. That will lead you onto Route 9, which parallels the Garden State Parkway.

Wrangling the knowledge of Jersey Shore backroads out of people can be like Fight Club: First rule is there are no backroads because they, too, can get clogged. On part of Quigley’s route, local residents will sell sodas and candy bars to people stuck at traffic lights.

I haven’t had that problem. Maybe it’s because people are scared of traveling on Route 666.

Either way, it’s a lot better than being stuck on an expressway that turns into a parking lot.

Posted: Sunday, September 25, 2011

By KEVIN POST Press of Atlantic City Business Editor

The real estate industry was gleeful this past week, especially in oceanfront towns, after Realtors succeeded in getting the state to ease a regulation that was interfering with home sales.

“This was huge. I can’t even begin to tell you how many deals it killed,” said Nicholas Marotta, president of the Ocean City Board of Realtors.

The rule, which will no longer apply to sales of single-family and duplex homes, requires businesses to give the state advance notice of unusual asset sales. That allows the state to seek any taxes owed by the business and to require an escrow account for possible payment of taxes before the sale is closed.

An inconvenience for real estate agents everywhere, the 2007 so-called bulk sales law was a serious problem along the Jersey Shore, where most properties are rented at some point during the year and therefore were business assets under the law.

This duplex home on Wesley Avenue in Ocean City, listed for $875,000, is an example of the kind of properties that sometimes ran into trouble from the state's bulk sales law but are now no longer subject to it.

Marotta said home sellers would have a deal lined up and notify the state, and then the state would tell purchasers they must set aside money in case it turned out past taxes hadn’t been paid.

“I had sellers on the bayfront with a buyer for $1 million, and it was their primary home, not a rental. They filed the form and the buyer got back a notice to escrow $100,000,” Marotta said.

That killed the deal, since the bulk-sales law makes the buyer responsible for any back taxes the state can’t collect from the seller.

“It didn’t matter that it was baseless because we knew it was a primary residence and not a business in any way,” he said. “Everything had to be filed, and we were supposed to wait until they sorted through everything.”

Buyers were often told they’d have to hold off until the back-tax issues were resolved at some point in the future, but many chose to walk away instead, he said.

As such horror stories spread, the Ocean City Realtors started working through the state Realtor organization and county government to get relief.

“God bless Ocean City because we were out in front on this thing. We were the first board to raise some flags and got the N.J. Association of Realtors involved,” Marotta said.

NJAR championed a bill through the state Legislature to exempt single- and two-family homes, including seasonal rentals, from the bulk sales notification process.

Jarrod Grasso, CEO of the state Realtors, said the exemption simply brought the 2007 law back to its original intent, clarifying an issue that had been left too broad.

Among 16 sponsors of the relief measure, which drew broad bipartisan support, were Sens. Jeff Van Drew, D-Cape May, Cumberland, Atlantic, and Jim Whelan, D-Atlantic; and Assemblymen Nelson Albano and Matthew Milam, both D-Cape May, Cumberland, Atlantic, and Vincent Polistina, R-Atlantic.

Marotta also credited Cape May County Freeholder Susan Sheppard for discussing the need for relief with the Governor’s Office.

On Sept. 14, Gov. Christie signed the bill into law “to boost New Jersey’s real estate market and cut red tape in order to ease the individual sale of homes and seasonal rentals,” said a signing statement released by his office.

“Thank God. That’s one major thing that we don’t need to consider doing in a property transaction,” said Midge Grunstra, director of sales at Goldcoast Sotheby’s International Realty in Ocean City.

She said she never lost a sale to the bulk sales process. “Everybody I dealt with had paid their taxes.”

Marotta, however, said there was a point to the original law, and the state has found that some limited liability corporations selling properties have had back taxes due.

“We weren’t able to get LLCs exempt, and that’s OK, because the state was finding some LLCs were not paying their taxes,” he said. “The state was collecting — legitimately — a good amount of money.”

The work on the issue by the Realtors in Ocean City — which he called “the rental capital of New Jersey” — isn’t quite done.

Marotta said in early October the board’s contracts committee will meet to revise the basic property sales contract used by members to reflect the bulk-sales exemption of one- and two-unit dwellings.

Short Sale vs. Foreclosure

Give Yourself Plenty of Time to List and Sell That Short Sale

By Elizabeth Weintraub,

If you’re thinking about doing a short sale, it’s smart to try to time the listing of that short sale. People are always trying to time the real estate market, and it really can’t be done. But you can be strategic about when you list a short sale.

There is an absolute worst time to list a short sale. That time is a few weeks to a few days before the sheriff’s sale or trustee’s auction. Ideally, you want to be as far away from that date as possible. Because there are too many things that can go wrong in a short sale.

Basic Steps of a Short Sale

• First, you need to find a committed buyer.
• Your agent will send the accepted offer and all paperwork to the bank.
• The bank will screw around for a few months, ask for more paperwork, lose stuff, demand revisions, in general, make your life a living hell as the bank’s collection department continues to hound you.
• Finally, somewhere between 2 to 4 months, on average, you will receive a short sale approval letter from the bank.
• Elated, your agent will notify the buyer, who will have canceled without telling anybody.
• You start the short sale over.

You may think I am joking, and while I have firmly planted tongue in my cheek, this scenario is all too familiar to many of us in the short sale business. With any luck, you have hired a short sale agent who is prepared for disaster and will not give up on you, no matter what.

Because starting over on a short sale is not the end of the world. It only becomes scary if you are behind on your payments. Many short sale lenders will not consider a short sale for a borrower if the borrower is not in default. Whether you should stop making your mortgage payments depends entirely on your lender’s guidelines.

If you are doing a Fannie Mae short sale, for example, Fannie Mae says you must be in default at the time your short sale is granted. Yes, our government is telling homeowners to stop making mortgage payments. It’s disgusting, isn’t it? But Fannie Mae is a government-sponsored entity that is supposed to be making a profit. It is not a non-profit organization.

If you are too close to the auction date, closer to that date than to closing your short sale, the likelihood is Fannie Mae will direct the bank to foreclose and reject your short sale. Therefore, you don’t want to get too close to that auction date. It’s a matter of careful juggling.

On the one hand, you might need to be in default. On the other hand, you don’t want to be so far into default that the bank will seize your home. Every state’s default procedures are different. You should check with a lawyer to find out the default period in your state.

If you stop making your mortgage payments, you could lose your home. It might be wise to keep those payments in reserve in case you need to bring your loan current to stop the foreclosure. However, if you have a lot of money in the bank, you might have a difficult time writing your hardship letter to explain your financial hardship. Unless you are doing a Bank of America cooperative short sale, the likelihood is your bank will want you to prove some sort of hardship.

The Ideal Time to List a Short Sale

You need time to properly market your home for sale, receive offers and to select the best offer to present to the bank. You want a buyer who will wait for approval. Sometimes buyers write offers just to see which offer is accepted first by a short sale bank and that buyer might not be dedicated to buying your home. Not every real estate agent is an honest agent, and an agent might not disclose if the buyer is writing multiple offers.

The best time to list a short sale is to time the listing so the bank receives an offer at a few weeks prior to the official 30-day behind mark. For example, if your mortgage payment is due on June 1, it will be 30-days delinquent on July 1. Therefore, July 1 might be the target date for your bank to review the short sale. If the bank takes 10 days to process the paperwork prior to review, you will want the offer to arrive at the bank around June 18th.

Most banks take 10 days to 2 weeks to pull together the documentation and assign a negotiator to study the file. From that point forward, it can take a few more weeks or months to get approval. Some banks are faster than others. Ideally, you want to leave yourself enough time that if a buyer flaked out on you or a bank required that you perform some other action that eats time, that you have the time to resubmit an offer.

The best time to talk about listing a short sale is before you go into default. Talk to your agent about your bank’s guidelines. You might not need to be in default at all to do the short sale. But if you must in default, then put that home on the market as fast as can you can. Do not wait for a good time. When you’re in default, there’s no such thing as a good time to list a short sale. Just do it.

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Brought to you by Ian Lazarus

The Lazarus Team

The Landis Co., Realtors

609-457-0258 direct cell

ian.lazarus@mygo2realtor.com

Buyers who are lucky enough to shop for a home in a buyer’s market are in the enviable position of being more likely to get a lowball offer accepted. In seller’s markets, homes quickly sell and, since there is little inventory or competition, it is difficult to negotiate a lowball offer.

Lowball offers, if presented correctly, can be successful.

If you are shopping for a new home in a seller’s market, your best bet for finding sellers who might be receptive to a lowball offer is to check out those sellers of overpriced homes lingering with excessive DOM. But whether the market is hot, cold or neutral, lowball offers can result in big savings to a buyer if they are presented and negotiated properly.

To get started, let’s look at what NOT do when making a lowball offer:

Common Mistakes Made by Lowball Buyers

• Can’t Afford or Unqualified to Pay More. Don’t tell the seller your price is fair because that’s how much the lender has qualified you to buy. Sellers don’t care what you can or cannot afford to buy. If you can’t afford to buy the house, that’s not the seller’s problem; it’s yours.
• Paying Cash. It’s all cash to the seller in the end. Most buyers don’t realize that. If a property will appraise at selling price and the buyer’s credit is acceptable, a conventional loan transaction will close just the same as a cash deal.

The main advantage to paying cash for a home is it removes the loan contingency, the right for a buyer to walk away if a loan isn’t possible. But most loan contingencies follow the same number of days as other contingencies, so who cares? It’s not a big selling point.

• Walking Away. Some buyers get their knickers in a twist and walk away when the seller counters the offer at more than the buyer was prepared to pay. Maybe the counter was list. Maybe less. Doesn’t matter. The point is the doors have been opened for negotiations. Only the inexperienced or truly stupid walk away.
• Find out the Seller’s Motivation. If you don’t know why the seller is selling, you can’t meet the seller’s needs. Maybe the pressing issue is financial. Maybe the seller needs to quickly move. If you know the reason behind the sale, you can structure your offer to fulfill those needs.
• Write a Clean Offer. Dot I’s and cross T’s. Don’t ask for items that oppose local custom. Shorten inspection periods, reduce or waive some contingencies and submit a lender preapproval letter. Don’t give the listing agent a reason to doubt your ability to perform. Appear strong, qualified and ready to close.
• Always Counter the Counter Offer. It goes without saying that the first counter is only an invitation for the buyer to offer a second counter offer. But sometimes buyers get discouraged. It’s a dance to see who will win. Until they turn off the lights and close up the bar, keep dancing.
• Move Attention Away From Price. There are many other considerations than price. It’s smart to change tactics and ask for other concessions such as closing cost credits, repair credits, longer escrow periods or focus on tangible goods such as furniture or appliances.
• Give a Logical Reason Why Your Lowball Offer is Fair. Don’t insult the agent by handing over a list of comparable sales. Show you have done your homework. Make notations on each sale that compares it to the subject property. Maybe the higher priced homes had remodeled kitchens. If the home you want to buy is not updated, then knock off a believable figure reflecting the remodeling work from the seller’s list price.

Strategies for Winning the Lowball Offer

When Your Lowball Offer is Rejected and Negotiations End

Don’t pack up your toys and go home. Just wait. Sellers have reasons for rejecting offers. Maybe you made an offer on a new listing, when the seller thinks that a really great offer is just around the corner. Let them sit out the market. After a month or two has gone by, resubmit your offer. Just cross off the date, but leave enough of it so the seller can see how long it’s been since you last made an offer. Then write in the new date and resubmit.

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Brought to you by The Lazarus Team

The Landis Co., Realtors

609-457-0258 cell direct

LazarusTeam@mygo2realtor.com