Flat Fee MLS Blog

Why do some sellers choose to sell their home “As Is”?

An “as is” real estate sale means that the seller will not pay for any property repairs, but must disclose all known defects to the buyer.

Typically, foreclosures, bank-owned real estate and tax-forced sales of property are sold “As Is”.   Also, individual home owners may choose to sell “as is” for a variety of reasons, such as, (a) they don’t want to be inconvenienced or live a long distance from the property, (b) they feel the typical buyer for their home will want to tear it down or remodel to their own liking, (c) they simply can not afford to make the repairs.

“As Is” properties are generally priced below the market because they are in need of a lot of work.   Sellers of “as is” houses should be aware that it is a “red flag” warning buyers that the property is distressed.   Buyers expect to obtain a bargain price and their offer will generally be lower than the full market value of the property.   The seller should note that the buyer will also make their offer contingent upon a satisfactory inspection report.

Conclusion:  If you intend on selling property ”As Is”, disclose all known defects;  Expect low ball offers;  Discount the property to compensate for its condition.

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                                                                                           According to expert Barry Ritholtz, author of the forthcoming book, “Bailout Nation,” today’s news shouldn’t directly impact anyone who has a mortgage and is paying it on time. But if you are unable to pay your mortgage or are looking to refinance your mortgage, the most recent developments in the credit crisis could have repercussions.

If you are facing foreclosure banks are likely to be much more open to discussing a way to avert foreclosure than they were even a few months ago-because banks are already dealing with a glut of foreclosed homes.

People who are looking to refinance or access a new loan may find that stricter lending requirements make it more difficult or maybe impossible, even though mortgage rates are very low.

Experts do expect more banks to fail as the current credit crisis continues to pay out, although they think most banks will stay solvent. And as the saying goes, time will tell.

In the event of a disaster, it pays to take a few simple steps to ensure that your money is safe. When you are marketing your home on the MLS or FSBO, this is good info for buyers and sellers.

Here are a couple of tips for you:

1. Make sure that your money is with an institution that is FDIC-insured-this means that the government will back your account if the bank fails.

2. FDIC will cover you up to $100, 000. per individual account, or $200,000. per joint account. So make sure that your accounts at each of your banks fall below that limit.

3. If you have large cash holdings, it makes sense to stash your cash in several banks.

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                                                    The Mortgage Forgiveness Debt Relief Act prohibits the IRS from demanding income tax payments from home sellers whose lenders write-off a percentage of the outstanding debt balance owed on their loan. The act rocketed through the Senate and the House in the final 10 days of the Congressional session. President Bush signed the bill into American law on December 20, 2007.

It’s biggest advantage is for investors and realtors. The legislation, which is in effect now, should calm the fears among home owners who are financially stressed, that participating in a short-sale will leave them exposed to heavy taxes the following year. Delinquent home owners steering for foreclosure had to factor a federal tax code into their decisions on whether to participate in a short sale or other type of debt forgiveness.

For now, the tax burden has been removed from the table until 2010. Investors and realtors should encounter one less objection by home sellers wanting to participate in a short-sale, creating a win-win outcome for all involved. Investors can now acquire, renovate, rent-out or resell houses at deeply discounted prices.

This should take some pressure off home owners with pre-foreclosure opportunities as they get a helping hand from big brother.

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 Short Sale: An alternative to foreclosure for down-on-their luck homeowners. It’s a sale for less than the owner owes on their home, and is never easy. 

A short sale is not a simple process and it requires the lender’s approval at every stage. If an offer is made, the bank needs to decide if it is within the range they will accept. If they do accept it, the owners need to find out for sure if their remaining debt will be absolved. Some lenders will do this but others may force the seller to pay their remaining debt by selling off their other assets.

Foreclosures mark one’s credit rating for seven years and the impacts of foreclosure are far reaching and negative. The chance of being absolved of debt is very appealing to down-on-their-luck home-owners, considering the alternative is to foreclose. However, even though a short sale shows up differently on your credit report it can still have a negative impact. 

Most banks prefer to accept a short sale than to foreclose, as they must pay taxes on every property in their possession. Taking a small cut in the sale of the home may still save them the money and hassle involved in foreclosing. So short sales are a better option, but they can end up taking months longer than conventional home sales.

A short sale is a serious thing, and won’t be accepted by the lender without proof that the market drop has created a situation wherein the homeowner will absolutely not be able to sell the home for what they owe. Also, a short sale usually can’t happen until the homeowner is in default, or is about to go into default. The homeowner will probably be expected to show, in writing, why they are unable to make further payments or pay the remainder of their debt. Suitable reasons include a death or critical illness in the family, divorce, loss of a job or bankruptcy. Homeowners will also need to show the lender that they have little or no assets. Ultimately, it’s in the lenders hands whether or not a short sale is accepted.

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                                                  Now is the time to buy! You have the luxury of waiting to capture the better deals and negotiate your terms. If you drive around your area, you’ll see that there is six to eight times the inventory on the market right now as there was a year ago and homes are taking longer to sell.

Here are some tips for buyers:

1. Check out pre-foreclosures, foreclosures properties and distressed home sales, it’s time to take advantage of the  “creative financing” that many buyers abused.

2. If  you’re an investor, you will be able to buy distressed properties at low prices and properties with tremendous appreciation potential at the same time.

3. Target markets where speculation has run rampant over the past few years while also focusing on markets that are likely to boom in the next few years.

Take your time, make smart offers and stay cool!

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    The abandoned pets are overwhelming animal shelters and drawing fury from bloggers, especially, as  photos of emaciated animals circulate on the internet.

The first people to enter an abandoned house, such as property inspectors and real estate brokers, have discovered dogs tied to trees in backyards, cats in garages, and turtles, rabbits and lizards in children’s bedrooms.

No one keeps track of the numbers of abandoned pets, but anecdotal evidence suggests that forsaken animals are becoming a problem wherever foreclosures are climbing. The situation has become so widespread that the Humane Society is urging home owners faced with foreclosure to take their animals to a shelter.

Shelters are trying to keep up, but the spike in abandoned pets comes at a time when fewer people are adopting animals. Home sales are plunging to their lowest level in decades, and new homewoners are often the most likely to seek a pet.

The mortgage crisis showed few signs of easing after a real estate tracking company announced that many homeowners started to fall behind on mortgage payments in the last three months, setting the stage for more foreclosures this year.

The problem is exacerbated because most people grappling with foreclosure are returning to rental housing or moving in with relatives-two situations where it can be difficult or impossible to bring pets.

The ASPCA offers this advice for people who are faced with foreclosure and the loss of their pets.

1. See if friends, family or neighbors can provide temporary foster care for your pet until you get back on your feet.

2. If you are moving into a rental property, make sure pets are allowed. (Get written permission in advance)

3. Contact your local animal shelter, humane society or rescue group before you move. If a shelter agrees to take your pet, provide medical records, behavior information and anything else that might help your pet find a new home.

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