Short Sales Lake Tahoe

Now might be the perfect opportunity to own a home in South Lake Tahoe. Star will keep you updated with the hottest South Lake Tahoe Short Sale listings in the area including Price Reductions.

Short Sales, California, South Lake Tahoe, 96150
Find that perfect South Lake Tahoe California home at a great price!  Review the South Lake Tahoe real estate short sales in the greater South Lake Tahoe area zip code 96150.

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WHAT IS A SHORT SALE?

Background: Foreclosures and delinquency rates for mortgages are occurring in record numbers in the South Lake Tahoe real estate market.  In general, reasons include high unemployment rates, loss of income due to decline in consumer spending, slower housing starts, and mortgage rate increases after conclusion of teaser-rate periods. Also contributing to the difficulties in making mortgage payments is the softening rental market.  Investors who have rental homes from North Lake Tahoe to South Lake Tahoe, or resort rental properties (Marriott Grand Residence), have a harder time getting sufficient rents now to cover their mortgage payments or even getting tenants because of a large number of rental properties on the market.  Higher insurance costs are adding to the difficulty for borrowers to keep up with their mortgage payments.  Now that property values have significantly decreased around Lake Tahoe, these owners are in a predicament. Many have negative equity, i.e. owe the lender more on the mortgage than the property is worth. When this is the case, and the borrower needs to sell, one solution is a "Short Sale".  

Definition: A “Short Sale” is when the lender agrees to accept a payoff for less than the remaining mortgage balance, and possibly forgive the entire shortfall, as well as pay the seller’s closing costs including the Realtor fee. The loss is either completely written off by the lender, a payment arrangement is made with the borrower (promissory note), or a lump-sum for a potentially lesser amount is agreed to (cash contribution).

Why Would A Lender Accept a Short Sale? Banks don't want to own real estate.  A foreclosure can cost a lender $30,000 to $60,000.  They have to maintain the property, market the property, pay for utilities, and spend money on closing costs.  They would rather do a Short Sale- where the groundwork has been done for them and generally costs them less than a foreclosure.

SHORT SALE BENEFITS

 

A “Short Sale” is a much better alternative to Foreclosure or a Deed-in-Lieu of Foreclosure, and will do less harm to your credit.  A Foreclosure will drop credit ratings by 200-300 points and remain on credit reports for seven to ten years.  It usually takes 5 years before new mortgages maybe obtained, with 7 year lending restrictions.  A Short Sale, however, may drop credit by 60-100 points, and 2 years is the common waiting period before new mortgage loans may be procured.  Further, a "Foreclosure" on your credit will require you to answer certain questions on applications, such as for new loans or even employment with a "YES, I have had a foreclosure".  Thus, if you have a house, condo, townhome or lot from Tahoe Keys, Meyers, Al Tahoe or Montgomery Estates and you are considering the alternatives, remember that a Short Sale may save your future ability to borrow.

STEPS TO A SHORT SALE

  • Provide a Letter of Authorization for Star Poell for permission to speak with your lender on your behalf.  The letter should specify your property address and loan number.  I will also need the last four digits of your social security number for verification with your lender.  You or I will ask the lender if they will consider a short sale before beginning. Larger lenders, such as Countrywide, Wells Fargo, Bank of America, etc. allow short sales, but some smaller lenders may not.
  • I will place your property on the market for fair market value.  Most lenders will only consider offers that net at least 85%-95% of what the property appraises for, based on their independent appraisal, and the criteria of the end-investor on your loan.  "Net" means after all costs, including any payoffs to second mortgage holders, taxes, real estate commission, title insurance, etc.  Thus, I will monitor your list price closely to advise you of probably bank appraisal.
  • When we get an offer, I will ensure that it states it is "contingent on seller's mortgage holders' approval". 
  • You may counteroffer the buyer at this step, as we don't want to send an offer to the bank that we think will be rejected.
  • I will package up the contract with the following documents and fax or express mail them to your lender: 
  • Buyer's pre-approval letter
  • Hardship letter which explains why you need a short sale
  • Financial worksheet itemizing your income and expenses
  • Most recent tax returns
  • Most recent pay stubs or quarterly profit and loss if self-employed
  • Most recent bank statements
  • Copy the listing agreement
  • Estimated net sheet or HUD-1 Settlement Statement and other documents
  • Expect to wait 90 to 120 days for a response from the bank.  They will be ordering an independent appraisal or Broker Price Opinion on the property to ensure the offer is for fair market value.  If the value is higher than the offer amount, they may counter-offer at the appraised price. The buyer may choose to comply, to stay firm, or to come up at this point. 
  • If there are two lenders involved, or a Private Mortgage Insurance company (PMI), then I will facilitate the negotiations between them focusing on a fully approved sale on your behalf. 
  • If the lender deems you have sufficient income or savings, they may ask you for a cash contribution or promissory note, usually at favorable terms, to mitigate some of the loss.
  • Further steps and negotiations occur behind the scenes. Rest assured, I will be following up on a successful sale for you every step of the way.

Note: Different lenders have different procedures for short sales, thus the required documentation may vary slightly from one lender to another. This information is not considered tax or legal advice.

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