Short Sale Advice from Nic Petrossi, Orange County Realtor

There are 5 things you can do when you realize you can no longer make your mortgage payments:

1. Nothing
2. Deed in Lieu (Hand the Title, and keys, back to bank)
3. Short Sale
4. Bankruptcy
5. Loan Modification

All of these options will adversely affect your credit.  However, some options ARE better than others.

For example, the on the severity scale of how bad your credit will take a hit, on a scale of 1 to 10, an outright foreclosure or bankruptcy is like an 11.  The Deed in Lieu is probably the dumbest thing to do because the bank will let you stay in the home rent free for a while anyhow while you work this all out.

A Loan Modification is the best route to take, but you have to know what you’re doing.  There are only a handful of legitimate Loan Modification companies out there that know how to handle this for you (for a fee) but are well worth the money.  Making your monthly payment smaller could allow you to keep your home and sometimes the bank will reduce the AMOUNT owed (principal balance). 

A short sale is the best route to take, usually, if you…A) Can’t get a loan modification, B) The loan modification doesn’t help anyhow because you can’t afford even the new amount, C) The home you’re living in is your principal residence (i.e. it’s not an investment property), and D) you can work out discharge of indebtedness with the IRS.

We get the term “short sale” from the fact that the bank is taking less from the proceeds from the sale of your home than the current loan amount owed.  Ergo, the bank comes up “short.”  In other words, the bank takes the hit in the pocket and you take the hit to your credit.  When you short sale, the amount “forgiven” you by then bank for the difference owed and the final purchase price is actually considered a “gift” by the government, and the government will tax your income accordingly. 

Example:   You bought your home in 2006 for $750,000.  The home is now worth $600,000 and you’ve lost your job.  Your wife (or husband) can’t handle the payments with their income alone.  You try to call the bank and work out a loan modification but the bank says “no” even though the person on the phone is not authorized to tell you “no.”  So you call an expert who can negotiate with the bank for you.  THAT doesn’t even work so now you must short sale your home.  You find a real estate agent who lists the home you once bought at $750,000 for $575,000.  The agent tells you that you need to get together a “packet.”  The packet consists of two years taxes, 2 months bank statements, a hardship letter to the bank explaining why you can’t make your payments, and any other documentation of income.  The agent gets several offers and eventually (after several weeks) submits the highest and best offer (we’ll say $600,000 for the sake of this discussion) to the bank with the “packet.”  The packet with the offer reaches the bank’s loss mitigation department where it sits on a desk with several other offers and packets on several different properties.  If there are 2 or more lenders on your home, the packet and offer have to be sent to those banks as well.  When there is a Second on the property, it gets sticky because the First Lien Holder always wants to screw the Second Lien Holder and the Second wants to get something out of the deal.  The negotiations between the 1st, 2nd (and sometimes) 3rd Lien Holders will often delay this process even longer.  Let’s say the bank settles on the $600,000…and you owe $700,000 since you originally put down $50,000 when you bought the place.  Now, you are taxed on that $100,000 as if you made that money since it is considered a gift by the IRS.

The good news is that there was a bill passed by Congress to relieve you of that “gift” taxation as long as you live in the property as primary residence and can prove insolvency (that your bills are more than your income).  You would then apply for this using IRS form 982 called “Reduction of Tax Attributes Due to Discharge of Indebtedness.”  You apply when you file your income taxes.  The word on the streets is that the IRS is so back-logged that they are not going after people for the difference on their home’s short sale, but I wouldn’t trust in that information but consult a CPA or lawyer to see how you’ll be affected.

Need help selling or buying a home in Orange County? 

Contact me, Nic Petrossi with Prudential at (714) 272-3646 or email me at npetrossi@yahoo.com

Click here to check out my website —–>    CLICK HERE

Yorba Linda Real Estate Agents Top 5 Reasons You Need a Realtor for Yorba Linda Homes

Re-blogged by 0 agents

Why Even Use a Realtor? Top 5 Reasons from a Yorba Linda Placentia Realtor (edit/delete)

A Placentia Yorba Linda Real Estate Agent’s Top 5 Reasons to Use a Realtor:

I was noticing from talking to my clients that people don’t like to sit around when they’re ready to buy a home….they are actively looking online themselves.

The problems with this is that you have people looking on Zillow.com and Realtor.com and Redfin.com and finding homes that are often already off the market, in escrow, or sold.  Also, these websites do not let the consumer exclude or include features or special conditions (e.g. “short sales”).  So, I will often get emails from my clients with MLS #’s saying they would like to see these homes.  Don’t get me wrong, Zillow.com and Realtor.com can be good sources of information.  However, when it comes to finding homes that are currently on the market, these websites are not always the most up-to-date and reliable.  The price of the home may be different now, or, as mentioned, the home is already sold.

So, reasons to use a Realtor to help you find a home?

#1   They have access to the world’s most powerful home-searching tool — the MLS.  “Oh, but Nic, I’m searching the MLS through a Realtor’s website or through Redfin or Zillow,” one may say.  Yes, but the MLS on these sites does not allow you to eliminate certain features or add certain features that can streamline your search and save you hours or even days of looking, spinning your wheels and wasting time. 

#2   Private Remarks.   Real estate agents are privy to what are called “Agent Private Remarks” when they pull up a property profile off the MLS.  Real estate agents will give out insider info on a property or sometimes sensitive information that the public is not aware of which could be extremely valuable.  For example, the private remarks could read that the home is not available to show until June 1st, which would save someone from driving to the property and spinning their wheels when the home really isn’t even able to be shown.

#3   Market Knowledge.  This is one of the main reasons people hire a professional.  They want someone who knows the market, who knows the area, who knows what homes are really selling for in a given area.  This kind of knowledge is invaluable when it comes to putting an offer on a home.  The agent can run “comps,” or comparables of all recent sold homes in the neighborhood area to find what a home should REALLY sell for. 

#4   Negotiations.  Buying and selling a home is not a cut-and-dry venture.  The price of a home is rarely fixed and it is up to the skilled communicator and negotiator to hammer out a deal for their client.  Most people would rather have a professional handle this on their behalf.

#5   Peace of Mind.  What would you pay for peace of mind knowing that your Realtor has the situation under control.  Your Realtor is handling the paperwork, checking the deadlines, protecting you from potential legal pitfalls or problems with the property.  If you have someone strong and reliable in your court, you can rest your head at night knowing that it’s all going to work out.

 

Contact Nic Petrossi for a market evaluation of your home’s value and to put your home on the market.

Nic Petrossi specializes in Yorba Linda Homes, Placentia Homes, Brea Homes, Fullerton Homes, Anaheim Hills Homes and all of Northeast Orange County.

(714) 272-3646  Cell

Click here for Nic’s website ——>   WEBSITE

Brea Short Sale Realtors & Agents – What are my options???

There are 5 things you can do when you realize you can no longer make your mortgage payments:

1. Nothing
2. Deed in Lieu (Hand the Title, and keys, back to bank)
3. Short Sale
4. Bankruptcy
5. Loan Modification

All of these options will adversely affect your credit.  However, some options ARE better than others.

For example, the on the severity scale of how bad your credit will take a hit, on a scale of 1 to 10, an outright foreclosure or bankruptcy is like an 11.  The Deed in Lieu is probably the dumbest thing to do because the bank will let you stay in the home rent free for a while anyhow while you work this all out.

A Loan Modification is the best route to take, but you have to know what you’re doing.  There are only a handful of legitimate Loan Modification companies out there that know how to handle this for you (for a fee) but are well worth the money.  Making your monthly payment smaller could allow you to keep your home and sometimes the bank will reduce the AMOUNT owed (principal balance). 

A short sale is the best route to take, usually, if you…A) Can’t get a loan modification, B) The loan modification doesn’t help anyhow because you can’t afford even the new amount, C) The home you’re living in is your principal residence (i.e. it’s not an investment property), and D) you can work out discharge of indebtedness with the IRS.

We get the term “short sale” from the fact that the bank is taking less from the proceeds from the sale of your home than the current loan amount owed.  Ergo, the bank comes up “short.”  In other words, the bank takes the hit in the pocket and you take the hit to your credit.  When you short sale, the amount “forgiven” you by then bank for the difference owed and the final purchase price is actually considered a “gift” by the government, and the government will tax your income accordingly. 

Example:   You bought your home in 2006 for $750,000.  The home is now worth $600,000 and you’ve lost your job.  Your wife (or husband) can’t handle the payments with their income alone.  You try to call the bank and work out a loan modification but the bank says “no” even though the person on the phone is not authorized to tell you “no.”  So you call an expert who can negotiate with the bank for you.  THAT doesn’t even work so now you must short sale your home.  You find a real estate agent who lists the home you once bought at $750,000 for $575,000.  The agent tells you that you need to get together a “packet.”  The packet consists of two years taxes, 2 months bank statements, a hardship letter to the bank explaining why you can’t make your payments, and any other documentation of income.  The agent gets several offers and eventually (after several weeks) submits the highest and best offer (we’ll say $600,000 for the sake of this discussion) to the bank with the “packet.”  The packet with the offer reaches the bank’s loss mitigation department where it sits on a desk with several other offers and packets on several different properties.  If there are 2 or more lenders on your home, the packet and offer have to be sent to those banks as well.  When there is a Second on the property, it gets sticky because the First Lien Holder sometimes doesn’t care about the Second Lien Holder and the Second wants to get something out of the deal.  The negotiations between the 1st, 2nd (and sometimes) 3rd Lien Holders will often delay this process even longer.  Let’s say the bank settles on the $600,000…and you owe $700,000 since you originally put down $50,000 when you bought the place.  Now, you are taxed on that $100,000 as if you made that money since it is considered a gift by the IRS.

The good news is that there was a bill passed by Congress to relieve you of that “gift” taxation as long as you live in the property as primary residence and can prove insolvency (that your bills are more than your income).  You would then apply for this using IRS form 982 called “Reduction of Tax Attributes Due to Discharge of Indebtedness.”  You apply when you file your income taxes.  The word on the streets is that the IRS is so back-logged that they are not going after people for the difference on their home’s short sale, but I wouldn’t trust in that information but consult a CPA or lawyer to see how you’ll be affected.

Need help selling or buying a home in Orange County? 

Contact me, Nic Petrossi with Prudential at (714) 272-3646 or email me at npetrossi@yahoo.com

Click here to check out my website —–>    CLICK HERE

NIC PETROSSI, Nov. 7, 2008 – Brea Foreclosures | REO’s | Bank Owned Homes from Brea Real Estate Agent / Realtor

Below is a complete list of all Brea foreclosures | REO’s | Bank Owned properties as of Nov. 7, 2008.

Contact me on my cell through my website, click here —–>  WEBSITE  to set up a time to see any of these awesome opportunities in BREA.  Brea has been rated one of the best cities to live in, with top restaurants e.g Olive Garden, Taps, Yardhouse, Bobby McGhee’s, Red Lobster, Cheesecake Factory, BJ’s, the Market, and one of Orange County best shopping locales.  The Brea Olinda Unified School District is ranked as one of the top in the state and most homes are freeway close. 

Fri, Nov 7, 2008 09:05 AM

RES	MLS #	Status	P	V	H	T	Q	Type	A/D	Address	City	Area	Zip	TGNO	Trct/M	Bd	B t/f	Sty	Gar	SqFt	Yr Blt	Price	DOM
1	P651183	A	8		H	T	Q	SFR	D	1933 Lotus Pl	BREA	86	92821	708G6	OTHR/0	4	2/2	1	2	1,583	1971	$399,900	88	*
2	R809103	A	3		H	T	Q	SFR	A	651 N Willow Dr	BREA	86	92821	709B7	VILB/1	4	2/1	1	2	1,431	1956	$404,000	35
3	P652141	A	6		H	T	Q	SFR	D	468 Redtail Dr	BREA	86	92823	709H6	OTHR/0	3	2/2	1	2 A	1,077	2002	$419,900	81	*
4	S551832	A	6		H	T	Q	SFR	D	710 W IMPERIAL Hwy	BREA	86	92821	708J7	OTHR/-	4	3/2	2	2 A	1,745	1971	$452,900	16
5	P658669	A	1		H	T	Q	SFR	D	846 De Jur St	BREA	86	92821	708H5	OTHR/0	4	2/2	1	2	1,550	1960	$460,900	37	*
6	L27671	A	3		H	T	Q	SFR	D	3601 Falcon Way	BREA	86	92823	709H6	OTHR/1	3	2/2	1	2	1,500	2002	$465,000	37
7	P661576	A	11		H	T	Q	SFR	D	401 Union Pl	BREA	86	92821	739B1	OTHR/0	3	2/2	1	2 D	2,050	1950	$483,000	17
8	P662965	A	2		H	T	Q	SFR	D	150 Madrona Ave	BREA	86	92821	709A7	ASH/*	3	3/2	2	2 A	1,635	1997	$489,000	7
9	S552519	A	8	V	H	T	Q	SFR	D	1513 Zachary Ct	BREA	86	92821	708H6	OTHR/0	3	3/2	2	2	1,617	1994	$526,900	9

 

 

NIC PETROSSI, Brea Real Estate Agent — List of Foreclosures | Bank Owned | REO from Realtor

Here is a list of all Brea foreclosures | Brea REO’s | Brea Repo’s | Brea Bank Owned Properties from the Socal MLS as of Nov. 1, 2008:

RES	MLS No.	Status	P	V	H	T	Q	Type	A/D	Address	City	Area	Zip	TGNO	Trct/M	Bd	B t/f	Sty	Gar	SqFt	Yr Blt	Price	DOM
1	P661871	A	1		H	T	Q	SFR	D	776 Sonora St	BREA	86	92821	708G5	OTHR/0	4	2/2	1	2	1,600	1973	$359,900	9
2	P651183	A	8		H	T	Q	SFR	D	1933 Lotus Pl	BREA	86	92821	708G6	OTHR/0	4	2/2	1	2	1,583	1971	$399,900	82	*
3	R809103	A	3		H	T	Q	SFR	A	651 N Willow Dr	BREA	86	92821	709B7	VILB/1	4	2/1	1	2	1,431	1956	$404,000	29
4	P652141	A	6		H	T	Q	SFR	D	468 Redtail Dr	BREA	86	92823	709H6	OTHR/0	3	2/2	1	2 A	1,077	2002	$419,900	75	*
5	S551832	A	6		H	T	Q	SFR	D	710 W IMPERIAL Hwy	BREA	86	92821	708J7	OTHR/-	4	3/2	2	2 A	1,745	1971	$452,900	10
6	P658669	A	1		H	T	Q	SFR	D	846 De Jur St	BREA	86	92821	708H5	OTHR/0	4	2/2	1	2	1,550	1960	$460,900	31	*
7	L27671	A	3		H	T	Q	SFR	D	3601 Falcon Way	BREA	86	92823	709H6	OTHR/1	3	2/2	1	2	1,500	2002	$465,000	31
8	P661576	A	11		H	T	Q	SFR	D	401 Union Pl	BREA	86	92821	739B1	OTHR/0	3	2/2	1	2 D	2,050	1950	$483,000	11
9	P662965	A	2		H	T	Q	SFR	D	150 Madrona Ave	BREA	86	92821	709A7	ASH/*	3	3/2	2	2 A	1,635	1997	$489,000	1
10	S552519	A	8	V	H	T	Q	SFR	D	1513 Zachary Ct	BREA	86	92821	708H6	OTHR/0	3	3/2	2	2	1,617	1994	$526,900	3
11	S551541	A	10		H	T	Q	SFR	D	197 N Thistle Rd	BREA	86	92821	709F7	CHE/1	4	4/3	2	2	2,403	1979	$629,000	2

Contact me (phone # on website) to see any of these homes —–>  www.NicPetrossi.com

NIC PETROSSI, Orange County Homes Specialist — Where are We Headed?

According to the Orange County Register (who uses Data Quick for their home sales data), we are 56% better off than this time a year ago.  (If we didn’t count new home sales we’d be looking at more like 77%).  Here is how things will go down for the end of 2008 and the beginning of 2009:

End of 2008

   Typically the Holiday season is slow for real estate.  People are thinking of a head count for Thanksgiving and when to pull out the Christmas decorations from the boxes in the garage.  However, this year will be different.  There is a force in the real estate market called “pent up demand.”  This is when there are buyes who were “fence sitting” waiting for the market to hit bottom who are now coming out of the woodwork to buy a home.  This influx of buyers will mean increased demand and decreased supply.  Expect November and December of 2008 to be better than the November and December of 2006 or 2007. 

 

Beginning of 2009

   Although we will still see foreclosures and short sales popping up all over Orange County, we won’t see AS MANY as we have at the end of 2007 and beginning of 2008.  Orange County is faring much better than the Inland Empire (IE) where it seems like 2 out of 3 homes for sale are short sales or bank owned REO’s.  The balance between buyer and seller will be almost restored as we head into summer of 2009.  We won’t see as many “low ball” offers and the pendulum will swing back in favor of sellers.

 

Contact me through my website (phone # on website) if you’re looking to buy or sell a home in North Orange County ———->  NIC’S WEBSITE.

Boo!…Are You Scared Yet? Thoughts from a Placentia Realtor

Well here we are, it’s almost Halloween and it’s amazing how time flies!

We have seen so much happen in the last 4 years…the housing BUBBLE DEFLATION (the “bubble” is looking more like a deflated jumper on the lawn of a 7 year old birthday party).  We have seen banks scramble as they take back thousands of placentia homes, yorba linda homes and orange county homes back on their books.  We have seen BLACK MONDAY when the stock market plunged with almost unprecedented decreases.  (Scary, but felt almost the same way when I was watched the World Trade Center go down).  It has been a very volatile last few years.  Presently only home owners in North Orange County who bought homes 2003 or sooner have homes worth more than when they were purchased.  It has taken 3 years for homes to go back down to 2004 values.  Now, most buyers who have been sitting on the fence are eyeing the bank owned repos feeling that the best deals are in the foreclosure market.  We’re seeing bank owned foreclosures with attracting multiple offers and agents in our Prudential Brea office are complaining that in some areas they cannot win the bidding war to get their client a home! 

When you have multiple offers, you’re usually near the bottom of a downward trend.  It has taken a long time, but sellers are finally becoming more realistic about the true worth of their home.  Those that are unrealistic or just “testing the waters” of the market are taking their homes off the market when they sit for months and months with no serious offers.  Less people put their homes on the market in September / October / November / December so what we’re seeing is a decrease in inventory for re-sale homes and an increase in the number of buyers entering the market who are hoping to time the “bottom” perfectly (like trying to buy when stocks are at their absolute lowest). 

So, when is a good time to sell?  Answer:  Whenever you HAVE TO.  I’m finding that sellers who HAVE to sell are selling their homes because they’re lowering their prices to attract offers.  Sellers who WANT to sell will not sell their homes unless they’re willing to compete with the HAVE TO sellers and join the elite group who are pricing their homes under market, ahead of the bell curve.  These are the sellers that will look back and be glad they did what they had to do.  Those that played around with trying to get top dollar will be looking back saying, “Gosh darn, I should have been more aggressive.”

October 12, 2008 Placentia Foreclosures, Brea Foreclosures, Yorba Linda Foreclosures, Anaheim Hills Foreclosures, Orange County Foreclosures — A Response to O.C. Register Article

An article came out today in the Orange County Register Front Page regarding Orange County Foreclosures. (Orange County, CA that is).  Writer Mathew Padilla quotes DataQuick Data company as his source saying there are more than 3,300 unsold foreclosures in Orange County as of early September 2008.  Though we all know that good news does not sell newspapers and that the O.C. Register is notorious for skewing data to achieve their ends (increased newspaper subscriptions), Mathew Padila did admit that homebuyers are snatching up foreclosures.  This is true.  As a Realtor, I have made offers with buyers on short sale properties and bank owned properties (foreclosures) and have found pretty stiff competition with multiple offers and buyers often out-bidding each other by anywhere from $5,000 over asking price to (I’ve seen) $100,000 over asking price when the home is priced so far under market value that home buyers and investors realize to get the home, they have to sometimes go WAY over asking price. 

Placentia Home Example:

  A home in my own neighborhood in Placentia (smaller unit) was selling as bank owned for $399,990.  I put an offer on this home at full asking price.  It turns out, there were already (1st day on market!!!) several offers already on the table, according to listing agent.  The home ended up selling for (get this) $455,000.  So, although it may be true that there several foreclosures on the market, the GOOD ONES are being bought up immediately and buyers are often paying MORE than asking price when they realize what a ridiculous deal it is. 

Furthermore, the article in the O.C. Register does not specify the number of foreclosurs per city / area.  What this means is that there the 3,300+ homes are mostly in areas where most of the bad loans (stated income negative amortization or adjustables) were issued.  The real numbers for local cities?

Placentia Foreclosures:  25 Bank Owned (REO) Properties out of 186 homes on the market as of TODAY, October 12, 2008.  That’s a whopping 13% baby!

Yorba Linda Foreclosures:  15 Bank Owned (REO) Properties out of 384 homes on the market as of TODAY, October 12, 2008.  Hold on to your hats and glasses for this stat — That’s a whole 4% !!!!! 

Brea Foreclosures:  7 Bank Owned out of 111 total properties (again as of today)…that’s 6% folks.

Is Supply really ahead of Demand as Mathew Padilla says?  Well, in some cities, but when you have only 15 foreclosures listed on the MLS in Yorba Linda out of 384 homes, I wouldn’t call that a majority.  In fact, I’d say that these 15 properties are either going to be bought and gone tomorrow or there is something seriously wrong with some of them.  Buyers are buying REOs like they’re going out of style, when they are priced right (which 90% they are) and they are in good areas.

Looking for a foreclosed / bank-owned property in a great area?  Let me do the research.  If you’re looking in the North Orange County area (Fullerton, Placentia, Brea, Placentia, Orange, Anaheim Hills) or even some of the perimiter cities, I’ll run the search for you and send the properties to your email.

Send your request to:  npetrossi@yahoo.com    or visit my website, click here —> Nic’s Website

For more foreclosure information, check out RealtyTimes, RealtyTrac.com or Yahoo! Real Estate.  (make sure you click the “foreclosures” bubble.  Your best bet is to send your request to my email since I can weed out the homes that are already in escrow or in neighborhoods that are right for you.

$700 Billion Bailout Plan — What does this mean for Placentia Homes, Yorba Linda Homes, Brea Homes and Orange County Home Values?

$700 Billion….what does this mean for values of Placentia homes, Yorba Linda homes, Brea homes, and Orange County homes in general?  Well, first of all, I want to address Senator John McCain’s response to the question asked in the debate on Tuesday, October 7, “What are you going to do to help our economy?”  The answer was something to this effect — (For the government to) Buy up all those bad loans in America.”  Why is this significant?  Though foreclosures in Orange County (and the rest of America for that matter) are still going to be commonplace in 2009-2010, the ability of people stuck in Negative Amortization or 3,5,7 year adjustable mortgages to refinance their home after the government has “bought” their old loan will enable them to lower their payments and remain in their homes.  This won’t be the cure completely, but will at least stop the bleeding of the downward spiral of home prices in Yorba Linda, Placentia, Brea, Fullerton, and Orange County as a whole.

   Foreclosures and short sales are killing home prices.  When a Realtor prices a home well below the comparables (comps), and the home sells for much much less (as in a short sale situation), the rest of the “regular” sale homes in the neighborhood suffer.  When a bank hires a Realtor to sell a placentia bank owned (Placentia REO) home and that Realtor does a BPO (Broker Price Opinion) and prices the home way below the comparables, AND it sells, all the homes in the neighborhood suffer. 

So, what hopefully, though someone can correct me if I am wrong (and I’m open to correction) part of this bail out plan encompasses is relieving a large percentage of home owners with loans that are about to “re-set” sometimes to double the monthly payment (as in an adjustable situation) from this burden and giving them a chance to remain in their homes, NOT have to give their home back to the bank, this helps to alleviate some of the downward pressure on homes in America.

This post is from a Placentia Realtor / Yorba Linda Realtor.  Comments and feedback are more than welcome.  There is much that remains to be seen and see where we are once the dust settles.