Are You A Smart Cookie?

When is the last time someone called you a "smart cookie?" Now I know my grown children would roll their eyes and go "huh?", but it has always been a compliment to me.

Which brings me to ask, when is the last time you complimented someone on something they did? OK, I realize all I'm doing is asking questions, but as I type away on my laptop or spend time on the phone with a variety of clients and vendors, it occurred to me that we don't often go out of our way to compliment or thank someone for their help.

I certainly love to be thanked for my hard work, whether or not I really thought what I was doing was hard work. And so I implore you, the next time someone you work with, network with, or even talk to on the phone, thank them for their time and tell them they're a "smart cookie." It rubs off and makes you a "smart cookie" for recognizing someone else's efforts.

What's A Short Sale & Why Should I Buy One?

Everyone is talking about short sales today. Buyers love them, seller's fear them, Realtors hate them, and lender's are willing to do them. Great, but what exactly is a short sale, and why should you want to buy one?

A short sale is when the property is worth less than the seller owes. For example, the house was purchased 1-2 years ago for $300,000 OR the seller took out a second and/or maybe a home equity loan on the property and now owes $300,000 or $350,000 on the property. However, as everyone knows, Las Vegas properties are not going up in value because of foreclosures. So now that same house is worth $250,000 or less. So the lender, who would rather not foreclose, is willing to take less than what is owed for the property.

Why do seller's fear them? Seller's fear short sales because they don't know if the lender or lenders are going to go after them for the amount they owe and what the house sells for. Let me first state that I am not a financial professional or CPA and you should always obtain good legal and financial advice from those professionals, but here goes.

The good news right now is if the property is your primary residence, the lender's are not going to chase you for the deficiency or the difference between what you owed and what they're willing to take IF you can find a buyer before they actually foreclose. However, the lender will send you a 1099 for the difference and that's reported as income to the IRS which means you could owe taxes on that money as if you earned it, even though you didn't. Not fair, but that's the law. Thanks to the bill that President Bush just signed, the IRS is not going to tax you on the deficiency IF it is your primary residence that went into foreclosure and the bank accepted less than what you owed as payment in full.

Why to Realtor's hate them? They don't really, but a short sale is a lot of paperwork and a lot of phone calls and faxing with the buyers, sellers and lenders. If a Realtor isn't familiar with the process, it can be rather daunting. However, as a Realtor, it is our job to get our clients the most money for their property is you're representing the seller, or get the best deal we can if our client is the buyer.

Why do Buyer's love them? Buyers love getting a deal. Doesn't everyone? Don't you love saving money on something you wanted, but you can get it cheaper than you thought you could? With the status of the real estate market as it is, short sales are a great way to buy a property for a great discount. Who wouldn't love that?!

Why do lender's do them? It's simple. Lenders are in the business of lending money. They're not in the business of owning real estate. The lender can only make money by loaning money. When a lender takes back a property, that's money they can't loan. To make matters worse, thanks to the savings and loan scandals of the late 1980's, lenders are now required by law to keep 5-6 times the value of the property in reserves which means that's money they can't loan. So if a lender forecloses on a $200,000 house, that means they can't loan out $1 million dollars. Take that amount times the number of homes being foreclosed on, well, you can see where that's going. So if a lender has to accept less than what's owed, and not have to incur all the other fees that come with foreclosures including paying appraisers, lawyers, transfer fees, etc., they will consider reasonable offers for the property for less than what's owed.

But remember, lender's aren't stupid. They know what a property is worth and are only willing to take so much of a loss. So despite what you see on late night TV infomercials, you can't buy a $300,000 house for $100. The type of loan on the property will dictate what the lender's will accept. But that doesn't mean you shouldn't try to get the best deal you can. So find a real estate agent who's willing to help you find a great short sale property, and help you put together the paperwork needed so the lender will seriously consider your offer.

If I can help you find a great short sale, and put together what it takes to get the offer accepted, don't hesitate to call 702-595-7380 or drop me an email at heatherrpeck@cox.net. The government has just dumped hundreds of millions into FNMA and FREDDIEMAC to fund mortgages. This is a great time to buy.

Why Buy Now? Isn't the Market Still Going Down?

I speak to lots of potential buyers and investors everyday, and all are looking for a great deal. But time and time again, I hear the same thing. I don't think the market has bottomed out yet, why should I buy now?

My response is - if you get the property at a price that is significantly below market by at least 20%, even if the prices drop another 10%, wouldn't it still be a great deal? Of course that comes with some caveats. What I mean is, just because a property is priced great, you need to make sure you've adjusted for condition and unseen issues like plumbing, electrical and even mold (yes, believe it or not some properties in Las Vegas have mold issues).

If you work with a professional Realtor, they should be able to put you in touch with those professionals who can help you identify those potential land mines. This is a great time to buy and get a smokin' deal the likes of which won't be seen again for a long time, if ever.

If I can be of assistance to you in identifying great properties, obtain financing, or invest in real estate (because they're not making any more land, are they), don't hesitate to call or email me. You can reach me through my website at www.HeatherSellsVegas.com.