Short Sales in the Florida Keys
By Patti Nickless, www.BestKeysAgent.com
Available
Short Sale Properties from Marathon through Key West
As
in so many other areas of the country, we are seeing our share of short
sales in the Florida Keys. What is a short sale? A
short sale is when the proceeds from the sale are not enough to pay off
the mortgage, or in many cases, mortgages. Usually it is the better
of two evils for both the seller and lender—the worse ‘evil’ being
foreclosure.
As of October 29, 2008, in the Lower
Keys we had 42 residential contracts pending in our MLS, 16 of which
were short sales (38%). In the past two months we coincidentally
had 42 residential closings in our MLS, 7 of which were short sales (16.66%).
WHY?
We have seen a decline in our market
prices, as have most areas of the country. As a result, many sellers are upside down—owing
more than the market price of the home. Some sellers do not
need to sell and are in a position to ‘wait it out’. Others,
unfortunately, can’t wait and have to try to get out from under the
debt.
There are a few reasons why we are
seeing so many potential short sales right now. One is that Adjustable Rate Mortgages (ARM’s)
from 2004 & 2005 (the peak of our market) are resetting at much higher
rates, and many sellers can no longer afford to make the payments. In
some instances sellers took too much equity out of their home during that
time, and unfortunately find themselves in a similar position. Combine
that with the decline in market prices and we have quite a predicament.
BUYING
Many buyers see a short sale as
an opportunity to get a good deal. Short sales are not always the best deals, however. The
process can be very lengthy and complicated, with no guarantee that the
seller’s lender (or lenders) will approve the short sale in the end,
leaving both buyer and seller disappointed.
Of the short sales that I’ve closed, the quickest
response from the seller’s lender was just about 2 months, and the
buyers proceeded to close within 30 days. Many short sales drag on
for several months waiting for approvals—the longest that I’ve
personally experienced is 8 months and counting—but
that particular example is not the norm (thank heavens!)
As a buyer,
if you have time and patience on your side, and you choose to pursue a short
sale, be prepared to close very quickly once the seller’s lender gives the approval. The seller’s
lender is running the show and may give a very short time frame for closing.
Want
to buy a house and close quickly? You will
be better off concentrating on homes that are not short sales if you want
to close within 45 to 60 days, unless you find one ‘approved’ by
the seller’s lender (there may still be complications that could
drag the process out.) We have many great buying opportunities in
the Keys right now—most of which are not short sales.
SELLING
As a seller, if you find yourself
early in the process of facing problems with your mortgage, contact your
lender about a possible mortgage ‘workout’. Don’t ignore the issue; the
problem will not go away—it will only get worse if you avoid it.
If you are considering a short sale
as an option, talk to your lender’s loss mitigation department to find out their particular
process, what paperwork/forms will be required, etc. Each lender’s
requirements may vary.
Seek a real estate attorney and
tax attorney for legal advice and to find out the possible tax consequences
of your potential short sale circumstances. There are many
instances when the debt is not forgiven and the seller may be required
to sign a note for the difference. Information about H.R.
3648: Mortgage Forgiveness Debt Relief Act of 2007 can
be found on the following link: http://www.govtrack.us/congress/bill.xpd?bill=h110-3648&tab=summary
Your
Realtor® can give you some guidance on where
to start and assist with the short sale process to certain degrees. Remember
that we can not give you legal or tax advice.
I am so looking
forward to the day when ‘Short Sale’ once again means I’ll
get a good deal on a pair of shorts to wear walking on the beaches of
Bahia Honda State Park!!
Comments? Write
to Patti Nickless: Patti@BestKeysAgent.com
If you are interested in these properties please contact
me and I can
furnish you a list of properties