Short Sale No No's.
This is just a quick post to let anyone know, who is considering a Short Sale on your home in the state of Arizona.
It has recently come to my attention while doing some checking through some friends of ours that here in Arizona the Anti Deficiency Laws do not help those who are performing a Short Sale. This Law only applies to Foreclosure.
What this means to you is, if you Foreclose on a property the Anti Deficiency Law will protect you from any future law suits by the bank to collect the unpaid balance of the forgiven debt. (That only applies to the original Purchase Money Loan). If you have a Junior Loan in a Foreclosure it is not protected under the Anti Deficiency Laws and the wiped out Junior Lien Holder still has the right to sue for any remaining deficiency.
As for those in a Short Sale Position. If you perform a Short Sale, the Anti Deficiency Law will (NOT) protect you from future law suits to recover any remaining deficiency. That also applies to Junior liens.
OK, here is the tricky part.
1). If you only have one primary Purchase Money Loan and you let it foreclose, the only thing that stings is the hit on your credit and the time it takes to regain the ability to buy another home. (That is info for future post).
2). If you have a primary Purchase Money Loan and a second or (Junior Lien) and you let the home foreclose, you will leave yourself open to a law suit for the Junior Lien Deficiency.
That being said, in many cases it is beneficial to attempt a Short Sale if the details are handled correctly and the conditions of the Short Sale are arranged in such a way that you obtain an agreement from the First Position (Primary Purchase Money Loan), Second Position (Junior Lien Holder) that they will sign off on any remaining deficiency. One example of verbiage you might see from all lenders involved in a Short Sale would go something like this. (lender accepts the short sale proceeds as payment in full for any outstanding obligation). It is CRITICAL in a Short Sale situation that any lien holder that still has a deficiency remaining on the loan that this type of verbiage be included as a condition of the Short Sale.
Remember, the Anti Deficiency Law does NOT protect you in a Short Sale Case, so it doesn't matter whether it is a first or second position, they can still sue for the deficiency.
In closing, if you are able to complete a Short Sale and all lenders involved agree to sign off on any future claims for the deficient amounts, you will end up in a much better position than a Foreclosure.
If you just elect to go straight into Foreclosure and there is a Junior Lien holder, or the First Position Lien Holder is not the original Purchase Money Loan, you are pretty much giving up any chance of getting them to sign off on the deficiency, leaving you open to Law suit. You really have nothing to loose in a Short Sale attempt. If you cannot get the lenders to sign off on the deficiencies it will just revert back to Foreclosure. You don't have to agree with the Short Sale conditions if you don't agree to the terms.
PLEASE NOTE: The Verbiage above is just an example. Not legal advice. If you do decide to perform a Short Sale or Foreclosure, have all documents reviewed by a qualified Real Estate Attorney before signing off on the transaction. There are also certain tax consequences that need to be evaluated by a qualified Tax Attorney.
Please don't be mislead. I always have any Short Sale candidate consult with a Real Estate and Tax Attorney to be certain they know all of the potential obligations they may face in either situation.
Of course there are many different scenarios to consider this is just one example.
Please if you have any questions on this or any other Real Estate related subject, feel free to contact me any time.
Thank you for reading.
Sincerely,
Ken Cuellar
Team Cuellar
Tyler Properties
623-340-3139
teamcuellar@q.com
Thursday, February 11, 2010
Tuesday, October 20, 2009
Long term real estate investing the way to go.
In opposition to my last post when I mentioned there are some great opportunities for high end home flips in the upper end Scottsdale/Phoenix Metro real estate market if you do your homework and know your market. The middle to lower end market investor will need a different strategy.
While there are still some good fix and flips out there that can turn a profit, those types of opportunities are not for the novice investor. When you purchase a fix and flip the operative word is FIX. You have to have experience in the fix part and this is where many people loose big time.
Now for the novice who wants to take advantage of the Phoenix real estate market without the fix part, here it goes. There are literally thousands of homes in foreclosure and short sale in the Phoenix area and more coming available every day. The key to making money in this market is to buy and hold. You will need to purchase the right property and hold it for two to four years depending on when, where and what you buy. What makes it possible to hold for such a long period of time is the current condition of the rental market and the increased demand for rental homes as opposed to apartments. Many of the families who have lost their homes to foreclosure are still desiring to live in a house so rental homes are in demand. The good thing is even though homes have decreased in value from as much as 30 to 50 percent, the rental market has only dipped around ten percent and that sometimes fluctuates up to no dip at all. Because of these two conditions it is a perfect time to purchase a foreclosure or short sale and be able to rent it for as much, or in many cases, more than the new mortgage payment.
This creates a perfect opportunity for the person who is five to ten years out from retirement. I can foresee a possibility for great gains over these periods of time with little effort. If the real estate is purchased in the right areas and for the right price and considering your only investment would be the down payment, I believe you can expect gains of 100% over a five year period. Gone are the days when you could get these gains in less than a year which is exactly what many did before the real estate bubble burst in late 2006, early 2007.
The market is poised for good old fashion real estate investing done right. All of the lemmings that followed the pack and ran up the price of real estate to the point of bust are out of the game, and with the new restrictions on lending, it will be a very long time before that will be allowed to happen again. Oh yes, it will happen again. I give it 15 or so years, amnesia will set in and the greed will once again take over.
If real estate investing has ever been of interest to you, but you were worried about loosing, now is the best time to take that risk. The market could dip lower, but if it does and there is no certainty that it will, it won't dip much lower than it is right now. The potential for increase is tremendous. Two indicators give me a bit of confidence in that statement.
1) Homes in many areas are priced as low as they were ten years ago.
2) You literally can't build a new home for the price of buying an existing home that is only a few years old.
Historically, when home values dip lower than the cost of construction, the effect on the economy takes a much larger hit than just a down real estate market. It is at this point that the Government has to step in and make things happen, which by the way is exactly what is happening right now. The $8000 tax credit has increased sales across the country and I believe this has helped to stabilize home values and in many areas they have come up slightly. The good thing is there is a strong feeling that the tax credit will be extended and possibly expanded for 6 to 9 months.
If you're in the Phoenix area and would like to contact me for more information on this market, fill in the information form to the right and I would be happy to assist you.
Thanks for reading.
Type at you later.
Ken Cuellar
While there are still some good fix and flips out there that can turn a profit, those types of opportunities are not for the novice investor. When you purchase a fix and flip the operative word is FIX. You have to have experience in the fix part and this is where many people loose big time.
Now for the novice who wants to take advantage of the Phoenix real estate market without the fix part, here it goes. There are literally thousands of homes in foreclosure and short sale in the Phoenix area and more coming available every day. The key to making money in this market is to buy and hold. You will need to purchase the right property and hold it for two to four years depending on when, where and what you buy. What makes it possible to hold for such a long period of time is the current condition of the rental market and the increased demand for rental homes as opposed to apartments. Many of the families who have lost their homes to foreclosure are still desiring to live in a house so rental homes are in demand. The good thing is even though homes have decreased in value from as much as 30 to 50 percent, the rental market has only dipped around ten percent and that sometimes fluctuates up to no dip at all. Because of these two conditions it is a perfect time to purchase a foreclosure or short sale and be able to rent it for as much, or in many cases, more than the new mortgage payment.
This creates a perfect opportunity for the person who is five to ten years out from retirement. I can foresee a possibility for great gains over these periods of time with little effort. If the real estate is purchased in the right areas and for the right price and considering your only investment would be the down payment, I believe you can expect gains of 100% over a five year period. Gone are the days when you could get these gains in less than a year which is exactly what many did before the real estate bubble burst in late 2006, early 2007.
The market is poised for good old fashion real estate investing done right. All of the lemmings that followed the pack and ran up the price of real estate to the point of bust are out of the game, and with the new restrictions on lending, it will be a very long time before that will be allowed to happen again. Oh yes, it will happen again. I give it 15 or so years, amnesia will set in and the greed will once again take over.
If real estate investing has ever been of interest to you, but you were worried about loosing, now is the best time to take that risk. The market could dip lower, but if it does and there is no certainty that it will, it won't dip much lower than it is right now. The potential for increase is tremendous. Two indicators give me a bit of confidence in that statement.
1) Homes in many areas are priced as low as they were ten years ago.
2) You literally can't build a new home for the price of buying an existing home that is only a few years old.
Historically, when home values dip lower than the cost of construction, the effect on the economy takes a much larger hit than just a down real estate market. It is at this point that the Government has to step in and make things happen, which by the way is exactly what is happening right now. The $8000 tax credit has increased sales across the country and I believe this has helped to stabilize home values and in many areas they have come up slightly. The good thing is there is a strong feeling that the tax credit will be extended and possibly expanded for 6 to 9 months.
If you're in the Phoenix area and would like to contact me for more information on this market, fill in the information form to the right and I would be happy to assist you.
Thanks for reading.
Type at you later.
Ken Cuellar
Saturday, October 17, 2009
Scottsdale Foreclosure Market
Yes, even the posh northern upscale neighborhoods of Scottsdale are experiencing foreclosure. In many cases, the old saying, the bigger they are the harder they fall can't be closer to the truth. In the majority of the Phoenix Metro Real Estate market the average home has dropped in price somewhere between 40 and 50 percent and Scottsdale Real Estate is pretty much in the same boat. From what I have been seeing, there are many homes that were selling for between three and four million dollars that have since foreclosed and dropped in price as much as 30 to 50 percent on average. That's not to say all of the North Scottsdale homes are worth 50 percent less. There are plenty of homes that are on the market that have not dropped to near those levels, but many of those homes have been on the market for over a year and they have not been foreclosed on yet. However, for the ones that have either foreclosed or had been a short sale, there are some AMAZING deals out there.
If you are an investor and want to make a good investment, I believe the Scottsdale Real Estate market is ripe for the picking. One thing that is helping in the upper end areas of North Scottsdale is that although there are some foreclosures in these upper end neighborhoods, there hasn't been enough to negatively effect the appraisal process, which means the right investor who does his homework can get an amazing deal and actually be in a situation to flip the home for a profit.
The market in a given area and the specific neighborhood has to be watched closely in order to make this work, but the payoff can be big!!! I hope this sparks some good ideas for the high end investor out there. If you are interested in any of the upper end homes in these areas just get in touch with me I am always following the Scottsdale market and well equipped to help.
Good luck out there and good hunting.
Thanks for reading.
Ken Cuellar
Team Cuellar
Tyler Properties
teamcuellar@qwest.net
623-340-3139
If you are an investor and want to make a good investment, I believe the Scottsdale Real Estate market is ripe for the picking. One thing that is helping in the upper end areas of North Scottsdale is that although there are some foreclosures in these upper end neighborhoods, there hasn't been enough to negatively effect the appraisal process, which means the right investor who does his homework can get an amazing deal and actually be in a situation to flip the home for a profit.
The market in a given area and the specific neighborhood has to be watched closely in order to make this work, but the payoff can be big!!! I hope this sparks some good ideas for the high end investor out there. If you are interested in any of the upper end homes in these areas just get in touch with me I am always following the Scottsdale market and well equipped to help.
Good luck out there and good hunting.
Thanks for reading.
Ken Cuellar
Team Cuellar
Tyler Properties
teamcuellar@qwest.net
623-340-3139
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