Friday, February 17, 2012

2012 Will Be The Year of The Short Sale

While Sarasota seems to found its footing in the real estate market the past few months.  Yes, pending sales are up 38 percent for January.  not only are the numbers of units up, but so are prices.  In January of 2012, a total of 963 contracts were signed.  Single family homes have risen to a median price of $162,000.  So, what is going to happen in 2012?

I think there are two scenarios:

1. There certainly seems to be some inertia gathering around the housing market and prospects for a strong 2012 seem to be in the making.  The inventory is down, rates have remained low and Sarasota continues to get great publicity as a destination for people who are looking to invest or want to purchase a second home.  I am predicting a strong year for our area.

2. We still have some pressure from foreclosures.  If you look at the tax records that are available to realtor's, there are still a large number of foreclosures that are looming out in the market place.  Another stress on the market will be people who want to short sale their primary residences in 2012.  They may have been waiting to ride out the foreclosure process and drag out the proceedings, but after 2012, there will not be tax forgiveness given with regards to the 1099 someone might receive at the end of the year .  The government enacted legislation in 2008 that would give relief to  homeowners who might have had a large tax burden otherwise.  The cap on the forgiveness is $2,000,000.  Even at a 15% tax rate, a $2,000,000 mortgage forgiveness would save a homeowner $300,000 in taxes.  These factors will cause many people to go ahead and put their homes on the market.  This will keep home prices depressed, but I think we will see some relief as these short sales get absorbed into the market.

If the banks are smart (that will of course be questioned), they will slowly release their foreclosed properties back onto the market.  I think that will be one of the keys as to whether Sarasota makes a strong comeback in 2012.

Wednesday, February 1, 2012

Bank of America Deal Can Put Money in Your Pocket

Bank of America is offering up to $20,000 to people who will put their house up for sale if it is in the foreclosure process.  Bank of America contends that thousands of people will benefit from the the new program.  To date, only 60 Floridians have received anything from BOA (BAC) through the program.  The program lasts until August of 2012 and the hope is there will be thousands more who will take advantage of the program.

Bank of America said that the program is being offered to qualified homeowners (homesteaded properties) who will list their property and get an offer that is acceptable to the bank.  The owners would get 5% of the unpaid mortgage balance as of August 2011, with a minimum payment of $5,000 up to a maximum payment of $20,000.  The guidelines state that the sales price will not impact the payout.  My guess is that the rules and guidelines are a moving target and in flux.

Why is Bank of America offering the incentive?  The goal is to save the lender thousands of dollars in attorney fees, taxes, carrying costs if it goes to foreclosure, damages to the house that hurt the value, and court costs.  It also helps the bank get their bad loans off the books.

I guess you have to make a decision as to whether it is worth it to try the program.  If you are paying $5,000 and can fight the foreclosure for 3 years, it may not make sense to try the program. But, if you are along in the foreclosure process, it might make sense to give the program a try.

The other aspect of the program that might be more  appealing is the fact that the bank may waive the deficiency.  If that is the case, that would be a win win situation for a homeowner.

If you want to discuss your options, feel free to email me and I can put you in touch with a foreclosure attorney.