- It's not a problem unless you HAVE to sell-The short sale dilemma.
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Recently, my business partner (and Mom), Kathy Frisbie, brought to my attention a call she received from a former client in distress. Apparently, he was extremely upset about the value of his home and wanted to do a short sale. He had just signed what he thought was a listing agreement (with some fly by night that happened to send a postcard that day). He was nervous and had unanswered questions:
How would this affect my 820 credit score? How soon will I be able to buy again? What if it doesn't sell and is foreclosured? The "agent "advised him to stop making payments.
We did a Comparative Market Analysis for him and determined that he was approximately $25,000 upside down in his 1400 square foot ranch... purchased in 2005 for just under $200,000. It was a good deal at the time, and he had obtained and FHA loan, 3% down, with closing costs wrapped in. Not bad compared to those we meet with on a daily basis (whose values are half of what they paid)! She strongly encouraged him to get out of the listing agreement and hang in there. His payment was only $1200/month... you can't rent a nice house for that in Vancouver, WA! Geez, rent it out and move into a small apartment, or get a roommate and stick it out for a couple years. This guy has options!
He wasn't convinced, so she asked me to follow up with him and see if I could make any headway. I am a "Certified Distressed Property Expert" or "CDPE", close many short sales, and interview many buyers in the same situation. I go through my initial short sale qualification questions:
- Have you missed any payments? No, not yet.
- Filing bankruptcy? No way. I just paid off all my bills, AND my truck!
- Have you experienced a reduction in income? No, I just got a raise.
- Are you having trouble making the payments? Not at all.
- Are you being relocated or divorcing and forced to sell? Nope.. worked at the same place for 10 years and never married... but my girlfriend and kids just moved out, which means I will spend even LESS money because I don't have to take care of them.
- Had a death in the family or an illness that you anticipate will cause financial distress? No.
- Okay... hmmm... so under what circumstance do you feel a short sale is appropriate? My house isn't worth what I paid for it!
Huh???? The bad news is... you can't short sale your house. Any bank reviewing these circumstances is going to say absolutely NO WAY will we take a hit just because you don't like the small amount of depreciation you have experienced. The fact of the matter is... you qualify for that house TODAY, which means you don't qualify for a short sale. I am still perplexed by his thought process, but
UUHHHH.........
!!!!
I explain the repercussions to short sale/foreclosure:
- You cant buy a house for 2-5 years due to the negative impact on your credit
- Your credit score will be negatively affected-possibly 250-300 points if a foreclosure occurs
- Foreclosure can affect your on the job security clearance, your current employment, and future employment opportunities
- Some banks will require you to carry a personal loan for the balance
- There may be severe tax implications-consult your tax adviser for specifics in your state
Former client ended up keeping the listing contract with the other agent (that promised him a short sale under impossible circumstances was possible). They have not received an offer yet after 3 months and many price reductions. They are now WAY below the actual market value of the home. Why, you ask?
- There are many great owner occupied and foreclosure homes available
- There is a time crunch due to the tax credit expiration
- Buyers have just HAD IT with waiting on short sales
- Buyers agents are qualifying sellers agents handling short sales to determine if the situation is good for their buyer-now more than ever (and good for them.... way to look out for your buyers)
What does that mean for my former client? He hasn't made a payment in months, (per his agents instructions so now his credit is ruined). Every dollar the price is reduced, is a dollar that the bank can require him to pay back, and he is 3 months closer to foreclosure. Ouch! When they do get an offer, I'd be really curious after months of waiting... what that bank is going to say? Probably, NO!
In closing, if you don't have to short sale or foreclose... don't do it! People lose money in investments every day. All markets are cyclical and you need a roof over your head anyway. Stay put and ride the tide if its feasible financially.
I tell people all the time, your depreciation is only a problem if you HAVE to sell! Talk to someone who knows what they are doing, and cares about your best interests. Listen to them too! I am specially trained to deal with distressed homeowners, foreclosures, and short sale situations. If you are experiencing hardship and would like to discuss your options... OR you just aren't sure and want to run your scenario by someone honest please call/email me. All consultations are discreet and held in the strictest confidence.
- Open House in Pleasant Valley on Sunday
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Pleasant Valley, Vancouver - We invite everyone to visit our open house at 5300 NE 102nd Street on December 27 from 1:00 PM to 3:00 PM.
Property information
- Open House in Lookout Ridge on Sunday
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Lookout Ridge, Washougal - We invite everyone to visit our open house at 488 W. Dogwood on December 27 from 1:00 AM to 3:00 AM.
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- Single Story For Sale in Bear Prairie
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Gorgeous property & shop-home needs work
• 1,992 sq. ft., 2 bath, 3 bdrm single story - - Acreage fixer-Price 249,900.00
Bear Prairie, Washougal - Partial manufactured home with additions-considered to be stick built by county/certain lenders standards. BIG country kitchen with center island. 2 large decks off living room and kitchen. 3 outbuildings including a 24 x 52 Shop with water/power. Back of garage is a Game/Bonus room. Tool/storage barn with overhang, and covered dog run plus smaller barn for goats or chickens. Secluded, fenced, tree-lined property at the end of private drive-abundant with wildlife and trees. Newer roof. Needs some TLC but worth it!
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- 4815 square foot custom home with panoramic view- For Sale in Lookout Ridge
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Gorgeous daylight ranch w/panoramic view
• 4,815 sq. ft., 4 bath, 4 bdrm single story "Daylight Basement" - - $599,900.00
Lookout Ridge, Washougal - Spectacular Home! 180 Degree View of Mt. Hood, Columbia River & PDX Lights. Master Suite on main level with jetted tub, double shower, see through fireplace and walk in closets with organizers. Open Great Room with floor to ceiling fireplace Theater room wired for surround sound. Wine cellar with wet bar. Family room with 3rd fireplace,wired for surround, wet bar, and covered patio. Hardwood Floors, Tile, Granite, Crown Moulding, Wainscot and Cherry Cabinets throughout. Too many goodies to list-must see!
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- Price Reduced on 4861 Z Street in Columbia View
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Columbia View, Washougal - Announcing a price reduction on 4861 Z Street, a 2,902 sq. ft., 3 bath, 5 bdrm 2 story. Now $249,900 - Excellent Value.
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- Property at 107 West 38th Street has been Sold!
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- Property For Sale at 6017 NE 97th Circle!
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6017 NE 97th Circle
Vancouver
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Spotlessly clean home on a quiet dead end street. Large fenced backyard has 2 patios(one is covered) & a deck too. Play structure and playhouse stay. Newer laminate floors and carpet. Darling kitchen with eating bar & pantry. Gas heat. Conveniently located!
Photo Gallery at 6017ne97thStreet.com
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Price: $229900USD
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- Property For Sale at 1003 SE 105th Avenue!
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1003 SE 105th Avenue
Vancouver
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Got toys?? You can park'em here! Large fenced corner lot plus perfectly remodeled ranch conveniently located in Cascade Park. New floors, appliances, counters, lights, paint and more! Keep cool with the new heat pump. Move in ready! Motivated...bring us an offer!
Photo Gallery at www.juliebaldino.com
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Price: $229900USD
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- Property For Sale at 6610 NE 72nd Circle!
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6610 NE 72nd Circle
Vancouver
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Newly landscaped fenced backyard with 2 decks(1 covered). Kitchen has gas range, granite counters, instant hot water, island with raised eating bar. Hardwood floors down. Family room with gas fireplace. Designer paint and upgraded light fixtures. Cul de sac lot, central location. Motivated Seller!
Photo gallery at www.juliebaldino.com
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Price: $329900USD
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- Property For Sale at 911 NW 316th Circle!
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911 NW 316th Circle
Ridgefield
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Working 6.92 acre farm with all the ammenities- auto waterer's cross fenced pastures, dream shop wired for 220 & 110, plus barn. Huge fenced garden area. Two seasonal creeks at the back of property with custom treehouse. Man-made pond suitable for swimming at the bottom of a beautiful cascading rock water feature. Surrounded by trees at the end of a quiet cul-de-sac.
Darling, well-maintained, two story home with many custom features. Vinyl siding and new windows. Spacious master on main floor with soaking tub and shower. New carpet and designer paint throughout. White doors and trim. Tons of storage upstairs. Heat pump with AC. Plumbed for central vac. Water softener and extra deep 358' well. Bright and sunny country kitchen with island eating bar. Adjoining nook overlooking pasture and pond. Formal living room and main floor den. Two oversized bedrooms upstairs with full bath. Views from every window!
Photo Gallery and complete ammenities list at www.juliebaldino.com
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Price: $499900USD
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- Property For Sale at 7824 NE Loowit Loop!
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7824 NE Loowit Loop
Vancouver
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Enjoy maintenance free living in this unique condo... great location just a couple blocks to mall and restaurants. Very quiet and secure building/location. New siding, exterior paint, windows, gutters and appliances. Vaulted ceilings, skylights, master with private bath and deck overlooking secluded backyard. Must see to appreciate! Photo Gallery at www.juliebaldino.com.
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Price: $185000USD
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- Property For Sale at 581 East 13th Street!
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581 East 13th Street
Lacenter
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Upgraded like a model home! Beautiful Southview Heights home in immaculate condition. New hardwoods & granite counters. Bose sound system. Oversized backyard with play structure(included). Master suite with jetted tub & deck. Please see virtual tour at www.juliebaldino.com for complete list of ammenities.
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Price: $369900USD
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Cascade Crest Condo's-
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$119,900
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