TRULIA and ZILLOW Questions and Answers…

During the past couple of months I have been monitoring and answering Real Estate Question posted on Trulia and Zillow. I think people ask some good questions and are seeking clarity about local Real Estate Markets and want expert advise from realtors.

I am going to share some of their questions and print my answer to them:

Trulia Question

“Short Sale vs Foreclosure: Can we actually owe the bank money in a Foreclosure?  Can someone tell me how a foreclosure can demand money from us, and how we can avoid this in either a short sale or a foreclosure?”

Answer:

 What you seem to be eluding to is a “deficiency judgement” after a short sale or foreclosure. The deficiency amount is the difference between the amount owed on your mortgage and the amount the lender receives in a short sale. The lender can require you to sign a “note” for the remaining balance. This “note” is unsecurred.

 A 1099 is something different. A 1099 is often sent to the seller  after closing and  is also on the deficiency amount owned to the lender. You would have to report the deficiency amount as part of you income for tax purposes.

When doing short sales we always try to get the lender to forgive the seller on their debt. I have yet to come across a situation where they required the seller to sign a note. If that does happen the lender can guarnish wages to collect the defiency amount but then you have the right to file for bancruptcy as a way to protect you from ever having to pay this deficiency.

Foreclosure and retirement. We have 2 homes. A primary home in Chicago with no equity and losing value and a short term rental in Florida.”

Answer:

Why have you not considered a short sale for both your primary residence and your investment property. You would be better off doing a short sale than let them both go into foreclosure.

Short sales can be done for both primary and investment properties. If a short sale is not accepted then try to negotiate a Deed-in-lieu of foreclosure for both properties.

You should consult with an attorney and tax consultant to protect you against any and all future claims against you since you are looking to retire in the next couple of years.

Zillow Questions:

“Some foreclosures seem quite hight in price for what the house has are banks willing to negotiate price or closing fees?”

Answer:

When banks finally put the property on the market as an REO it has been through an internal evaluation process with a Broker Price Opinion (BPO) done by a Realtor or an Appraisal from a certified appraiser.

Often the investor of the loan is the person who agrees to a certain “Net” dollar amount they want at closing and often these BPO’s are manipulated to reach that “Net” dollar amount and thus the reason why so many REO’s tend to be listed high.

But remember buyers set the price  by writing offers on properties. If nobody writes an offer prices will come down.

REO’s want offers and often prices are reduced every 30 days if no offers are received.

My only advise is do not over pay for something and not every deal is a good deal.

LET THE BUYER BE WARE.. STILL HOLDS TRUE IN TODAY’s MARKET..

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