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"How dumb is that?" isn't what I want to hear

by Patti Lyles

 When I told my buyers last week that Fannie Mae's 2007 Conforming Loan Limit Remains at $417000, they quickly chime in with "How dumb is that?"  As a Santa Cruz County Realtor what do you tell them next week if the buyers come back?

OMG,  The trouble is that $417,000 is the maximum loan amount for a single family residence that Congress will allow Freddie and Fannie to provide, doesn't work in California.  It doesn't help my buyers in the San Lorenzo Valley.  Which is the cheap seats of the real estate theater in my county, I can't believe this.  

This may be fine for some parts of California, it does not provide much help for any home buyers and homeowners in Santa Cruz County where the median price in July was $780,000.  Even if that went down in the next 4 months the conforming limit would still be a joke.  Amazingly, years ago Congress saw fit to raise this conforming limit to $625,500 in the "high-priced" states of Alaska and Hawaii. I will never understood why they didn't include us. Why can't we get the same breaks that Hawaii gets?

The House of Representatives has recently passed a bill raising the limit but the Senate has yet to act. While today's borrowers might still have access to the wide variety of mortgage options that existed prior to this month, there aren't as many viable options to satisfy most of my earnest home buyers or any homeowner (past client) who calls me and wants my advice about refinancing.

I strongly urge the Senate to make this a priority, because we need to help homeowners get access to needed credit.  I sent out an short email to express my thought to Reps. Barney Frank, D-Mass., and Gary Miller, and Sen. Charles Schumer.  I understand they are on my side.  What else can I do?  I do still service the high-end $2mil +++ stuff http://www.LuxurySantaCruz.com but I can't get my next door neighbors into homes any more.

I am not a lender but don't you think that in general, the more mortgages the two entities can purchase, the more confident lenders can be about making loans?

I want to buy a Santa Cruz Home in the next 60 days

by Patti Lyles

Q: I want to buy a Santa Cruz Home in the next 60 days. You asked me what my FICO scores are.  I just found out that the score was below what you would have liked.  My FICO scores are a little low, is there a way I can improve my scores very quickly?

A: The first rule of maintaining and keeping a healthy FICO score of 720 or higher is NEVER BE LATE!  Primarily any MORTGAGE PAYMENTS. I can't emphasize the point of how important it is to never be late on your mortgage payments.

But it is not the sole deciding factor of your FICO score, the three major credit bureaus involved with FICO scoring are Experian, Equifax, and TransUnion. All three of these companies use algorithmic equations taking in a multitude of factors in determining your FICO score. The FICO score range is between 300 and 850 and to get the best rates from lenders today, a mid-score of 720 is needed.

For example, if you have the following three scores, 680, 730, 745, you are in a position to get the most competitive rates because your mid-score of 730 is over the 720 benchmark score. So what happens if your mid-score falls under 720? There are a few things you can do to get a rapid turnaround in 30 days.

The first and most immediate impact is to look at your credit cards. If you have any credit cards at or over 50% of the maximum credit limit, pay those credit cards to under 50% of the credit limit immediately. For example, if you have a bank credit card and the credit limit is $5,000 and you have a standing balance of $3,500, pay that down immediately to 50% of the credit limit, which means sending a payment of at least $1,000 to bring the balance under $2,500. One of the biggest detriments to your FICO score is having what is classified as a revolving debt (a credit card) maxed out or over 50% of the balance. Once the revolving debt is paid down to under 50% of the credit limit, the impact on your FICO score can be significant.

What happens if you don't have the cash to pay down your credit card debts to 50% of the balance?. If you do not have the $1,000 to pay down the balance, you can ask for a credit limit increase. With the above example in mind, requesting the bank to increase your credit limit to $7,000 will reduce your debt to 50% of the credit limit and can give you a boost in your scores. But this is only for the most disciplined of people because most people are in the habit of just spending and putting more on a credit card once they are granted a credit limit increase.

There are other things you can do to improve your scores to buy that Santa Cruz Home which include limiting credit inquires to no more than 12 a year, do not cancel credit cards you may have had for a long period of time, and there are a list of others which we can go into with the lender you choose to work with on any Santa Cruz Real Estate transaction.

What to be apart of an online auction?

by Patti Lyles

Would you want to be notified when another online property auction happen in Santa Cruz County? Of course you would….

From the

 $442,000 in online property auction - With neither gavel nor auctioneer, 5 months ago Santa Cruz County staged its most successful tax-defaulted property sale this week, peddling 10 parcels for more than $442,000.

The county's first eBay-style online auction garnered 752 bids from 38 people in six states. Generally, fewer than 10 people bid in previous county auctions, said Treasurer Fred Keeley.

The online auction "draws a larger field of folks who have the willingness to bid these properties up," he said.

The properties, which were more than five years past due on property tax payments, sold for between $8,900 and $121,100 to bidders in California and Hawaii.

The money first goes to pay a total of $51,100 in back taxes. The previous property owners have one year to collect the rest of the auction proceeds — $391,489.50 all together. If unclaimed, the county divides the money among cities, schools, and other tax recipients.

Dunstant Smikle of Camarillo bought the cheapest property, a 4,300 square-foot sliver of land in Scotts Valley on Lockhart Gulch Road. He hasn't seen the land yet, but hopes to build a small house or cabin.

"Where else in California can you find property for $9,000?" Smikle said.

A controversial Felton property also sold. Damaged in a 1982 mudslide, the county condemned a house on View Circle, just north of Henry Cowell Redwoods State Park. Raymond Tate, the owner since 1986, fought the county and ultimately lost an 18-year legal battle.

"They've forced my hand," Tate old the Sentinel in 2001. "Now it's time to go for the jugular"

The county spent $11,000 to tear down the house in 2004.

Al Tamesabi of San Marcos bought the 1.25-acres for $13,600.

Initially 28 properties were available, including a Santa Cruz Home one block from West Cliff Drive and a large house on Highland Avenue worth more than $700,000. Those properties and 15 others fell off the auction block before the three-day sale started on March 12. The owners had until midnight March 11 to pay the taxes they owed.

Maryland-based Bid4Assets ran the auction for a flat fee of $75 for each property sold. Keeley said the county saved $10,000 by not running a live auction.

Santa Cruz County now plans to hold future tax-defaulted property auctions online.  I will notify you when, just email me at Patti@PattiLyles.com

 

Vacation Home Sharing and Ownership

by Patti Lyles
Vacation Home Sharing is a way to have a piece of a Santa Cruz Home
Many people who wish to own vacation property cannot afford or justify bearing the full cost, maintenance and management burden when they expect to use the home only occasionally Santa Cruz Vacation home sharing creates a situation where the cost and management burdens of the vacation home are more closely related to actual usage. It is an excellent alternative to vacation rentals.

In vacation home sharing in Santa Cruz and surrounding areas, a group of families and/or individuals buy and share a vacation property for their own use and, sometimes, for rental to others when no owners are using it. A typical vacation home sharing agreement includes rules governing how often each owner can use the home, how usage is reserved and managed, how expenses and other responsibilities are shared, and when and how each owner can leave the group by selling his/her share, being bought out by other owners, or forcing a sale of the entire property.

Emaill me Patti@pattilyles.com for more articles that provides a comprehensive discussion of the issues associated with vacation home co-ownership.

How do vacation rentals work in Santa Cruz?

by Patti Lyles

Q. How do vacation rentals work in Santa Cruz?

A. First of all this is a function of specific rules (ordinances) in City of Capitola and the lack of any rules in the City of Santa Cruz, and in Santa Cruz County areas. 

 

As for the City of Capitola, there are strict ordinances that govern daily/weekly/vacation rentals. (That is any time period less than 1 month or 30 days.) The property must be zoned commercial and in the Village, Downtown to be rented in this manner. Also, there is a 10% hotel tax (otherwise known as room tax or transient tax) due at all times. Penalties for not paying this are extreme. 

 

Most is positive about vacation rentals. They are a vehicle to “have your cake and eat it too”.

You buy your Beach House, enjoy it when you want to (or when it’s not rented) and collect about four times the normal rent per month. A rule of thumb is vacation rentals get about the same income per week as you would get per month in the off-season. Of course, you must deduct cleaning, advertising, bookkeeping, maintenance, hotel tax, and any management charges. This total can range anywhere from 25%-45% of the price charged to the guest.

 

Another perk is the constant appreciation that Beach Properties in Santa Cruz County have enjoyed. Even in so-called down markets,  Beach Homes here have stayed strong since most are cash buyers that are not relying on large loans or high LTV’s (loan-to-value) and our limited product inventory.

Contact Patti@PattiLyles.com

http://www.santacruzrealestatehomes.com for more information about real estate or buying a vacation rental.

 

Once you leave Capitola, both north and south, you are in Santa Cruz County designation. These areas include Rio del Mar, Seacliff, Seascape, La Selva Beach, Manresa, and Pajaro to the south. To the north of Capitola, there is Opal Cliffs, Pleasure Point, Live Oak, and the Yacht Harbor. All of these areas have no restrictions except to pay the 10% Hotel Tax.

 

The City of Santa Cruz also has little or no restrictions on vacation rentals that I know of except the 10% Transient Tax due. Fortunately, this Hotel Tax goes to either the City or County areas where the property is located and into those coffers for use on roads and maintenance of that local infrastructure.  When choosing areas for your new beach home that you intend to rent, be sure to call one of the several local vacation rental management companies or a network of owners who want to manage their own. (You can call or email me for this list.) It is important that you ask which property areas are in most demand and exactly what amenities should the property have to get the most rent and be most desirable for vacation tenants.

 

In summary, the positive aspects of vacation rentals are the following: you have your own Beach House when you want it (maybe with a locked closet or room to keep your personal things on site); you enjoy the appreciation over the years; you off-set the expenses with great income; someone else (if you have a management company) takes care of the problems and maintenance; short-term rentals allow more owner control than long-term; you may need to use your assets for income gain; it’s good for the economy of Santa Cruz – tourism is our #1 business. People who rent vacation homes shop, eat, and are entertained in our little Paradise. Call or email questions

 

or comments regarding where to buy and how it works

 

Santa Cruz one of nation's best cities

by Patti Lyles

Outside Magazine issue latest issue names Santa Cruz one of the nation's best cities.

Santa Cruz Home owners once again have proof they live in one of the best towns in America. The upcoming issue of Outside magazine names Santa Cruz in its annual list of the most desirable places to live.

 

The editors at Outside Magazine said they chose Santa Cruz for its mix of laid-back and cosmopolitan atmospheres. The story describes it as, "old-time hippie culture, complete with dread locked street urchins and lots of wheatgrass, blending with the Volvos and BMWs of the high-tech crowd".

John Bradley, a senior editor for Outside Magazine, said the magazine was looking for "smallish" towns that could blend outdoor treasures with an active nightlife.

"It's that juxtaposition in lifestyle of sports and culture that makes Santa Cruz unique," said Bradley. In its profile of Santa Cruz, Outside recommends hiking in Henry Cowell Redwoods State Park, surfing at Cowell's and tasting local wines at Soif Wine Bar.

Living in paradise does have its drawbacks, though.

Resident Kris Carson, 60, admitted it was hard to make a living in Santa Cruz, and the housing prices don't help.

Santa Cruz has one of the highest costs of living on Outside's list.

But Carson said it's worth it because, "Santa Cruz lets me be myself" As an avid sailor Carson said he loves being near the water. He also acknowledged Santa Cruz's proximity to San Francisco as a bright spot, especially because Santa Cruz "is a terrible town for restaurants," said Carson, a construction manager.

Even those who don't live in Santa Cruz are influenced by its charm.

"It's magical," said Stacie London, who attended UC Santa Cruz and is now an industrial design artist who lives in Los Angeles. "It has everything you'd want for a healthy lifestyle"

London and her husband said they are considering moving here after spending just a few days in town and driving Highway 1 from Half Moon Bay. They said they are impressed with the friendliness of the people and the diverse array of cultural and physical activities. "This would probably be a great place to raise children," said Luis Herrera, London's husband.

This is not the first time Santa Cruz has graced the magazine, popular with outdoor enthusiasts. In 2003, the magazine named Santa Cruz the best college town in America.

The editors at Outside chose one town with a population less than 100,000 in each of nine geographic regions. The August issue hits newsstands July 10.

Contact your real estate agent Patti@PattiLyles.com or look at her site at www.santacruzrealestatehomes.com or www.luxurysantacruzhomes.com for Vacation homes, beachfront and oceanview homes.

Best Towns in AmericaOutside Magzine selected the nation's best cities, with less than 100,000 residents, to live in by region. Santa Cruz was given the honor for the California coast. http://www.gadling.com/2007/07/17/outside-magazine-s-best-towns-2007/

 #1California Seaside: Santa Cruz.

  • Northwest: Bend, Ore.
  • Rocky Mountain: Jackson, Wyo.
  • Southwest: Santa Fe, N.M.
  • Midwest: Iowa City, Iowa
  • Northern Lakes: Duluth, Minn.
  • Southern: Asheville, N.C.
  • Atlantic Coast: Portland, Maine
  • New England: Burlington, Vt.

 Getting Out Of A Dead Market - The Case For Taking What's There And Movin' On
Patti Lyles @ http://www.santacruzrealestatehomes.com

There of course those who might disagree, but as I've said so many times before, buying small residential income properties in Santa Cruz haven't made sense for quite awhile now. Furthermore, I can envision any scenario resulting in positive change so radical that small units become investor friendly in the foreseeable future.

Larger properties offer different dynamics than the little guys, but I still don't see how the rising rents will have much of an impact with the cap rates remaining so relatively low. You just know though, that with the future rents in Santa Cruz almost sure to be higher than they are now, that investors will be attracted to the larger projects in good to excellent areas. With home prices what they are, more and more folks will be renters - a demand factor guaranteed to raise rents region wide.

The smaller units - 2-4 - are selling for, (throw out the high and low) $650-900K  for duplexes, on up to $1.2mil-2,5mil for fourplexes. The owners of these properties wouldn't buy them again at their current values. Ask ‘em. Some of them would immediately start laughing. I have asked some of them, and the ones who've bought in the last 18 months or so regret their decision - sometimes bitterly. But when they think about selling, the thought is quickly squelched. "Just can't do it" they say. Owners say this even when they bought it two hundred grand ago - and will profit handsomely.

Why?

They aren't sure of where else they'd take their equity. Most have read or heard from others about the markets investors like these days - but don't seem to have the confidence, or maybe enough solid info to pull the trigger. I'm guessing many of them are still strong believers in the Santa Cruz Real Estate market, expecting it to bounce back. You can't blame ‘em, that's been their experience the last 40 years or so. Why should this market be different?

Indeed.

The only question now is - how long will it take for them to realize the prices for their type units don't make any sense whatsoever - and most likely won't ever again?

So, what should they do? EXIT NOW

If they're still in growth mode, and their equity to value ratio is favorable, (they have a bunch of equity) they should be moving their capital by way of a tax deferred exchange to an area more hospitable to investors. In other words - find the exit sign and take your equity elsewhere. What many of these investors don't realize is they can easily afford to acquire 2-4 times the property they now own - and with significantly younger buildings to boot.

Here's a quick example.

One client took a small Seabright duplex and executed a tax deferred (1031) exchange. He sold for just over $799K  last October.  He traded into just under $1.2Mil of better located and much younger properties. His tax shelter (depreciation) literally rocketed upward. He now owns five small properties (huge flexibility), his capital growth rate is now turbo-charged, and he's taken himself out of management. That last one didn't exactly upset his wife. 

You're in a changing forever-changed market. You can trade yourself into a far better position - in every way you'd want.

I urge small unit owners in Santa Cruz County, and the many regions just like it, to think long and hard about their current circumstance. Ask yourself - what reasons compel you to keep putting up with the status quo?

Let's review.

Increase the value of your portfolio by two to four times.
Move your tax shelter into the stratosphere.
Get your capital growth rate going in the right direction again - and faster
And for dessert - get out of managing the dang things.  
 

There's no case for a growth oriented investor to keep their equity in Santa Cruz- or any place like it.  We can do a 1031 exchange and get you into a higher cap rate local in 80 days.

What would you do with all the above listed improvements to your investment portfolio and no more management?

I rest my case.

 

1031 Exchange and TIC's: Common Questions

by Patti Lyles
1031 Exchange and TIC's: Common Questions
  • Q: What is a TIC?
    A:TIC is simply a form of concurrent real estate ownership.  TIC is an abbreviation for "Tenant in Common".  This form of ownership may be used when more than one person (or entity) owns a property. Some of the main characteristics of TIC ownership are:
    • Two or more people co-own a parcel of real estate without the right of survivorship.
    •  Each co-owner can choose who will inherit his/her ownership interest upon death. 
    • TIC owners own percentages in an undivided property rather than particular units or apartments, and their deeds show only their ownership percentages.
  • Q: What types of properties are owned as TIC's?
A: Any real property can be owned as a TIC.  The common types of real estate that we see owned as TIC are as follows:
  • Residential TIC's - Most typical in areas like San Francisco and New York City where several parties co-own a multi-unit property with each owner desiring exclusive use of a unit.  The exclusive use is derived from a separate Tenant in Common Agreement. 
  • Vacation TIC's - Vacation home buyers and resort developers use the TIC form of ownership instead of the traditional timeshare arrangement.
  • Commercial TIC's - Income property investors pooling resources to co-own large commercial or institutional grade real estate.
  • Q: What to be aware of with a residential TIC?
A: There are numerous considerations when acquiring a residential TIC, just a few to consider are:   
  • The exclusive use to a unit will only come from a well written TIC agreement.
  • Each co-owner can sell his/her interest at any time although the sale may be subject to right of first refusal by the other owners and/or buyer approval, as per the TIC agreement.
  • Many lenders will not provide individual loans for TIC interests, so group financing may be necessary.
  • Q: What are the possible pros and cons of a commercial TIC?
A: The pros and cons of each commercial TIC will be largely dependent on the uniqueness of the underlying real estate.  In general, some of the pros and cons of this type of investment include:
  • Pros
    • Allows individual investor access to better/larger properties
    • Professional Property Management
    • Economies of scale
    • Predictable and stable cash flow
    • Diverse tenant mix
    • Non Recourse Financing
  • Cons
    • Liquidity, no established secondary market
    • Group decision making
    • No ability to individually pull money out (refinance)
  • Q: Can a TIC be part of a 1031 Exchange?
    A: Provided the real estate is used for business or investment purposes real estate owned as a TIC can qualify for a 1031 Exchange.
  • Q: If I sell a TIC and 1031 Exchange, do I have to buy a TIC?
    A: No. In a 1031 Exchange, property that is co-owned with one or more individuals can be sold and the replacement property can be individually owned.

Neighbor disputes erupt when trying to sell home

by Patti Lyles
 Disclosure laws put some at a disadvantage

There are few certainties in the home-sale market. However, there's one thing you can count on. If your neighbors have been harboring a concern about an issue affecting your property, you will surely hear about it when the for-sale sign goes up in front of your house.

Soon after a home in Oakland, Calif.'s Montclair district was listed, the seller's agent received a call from a neighbor asking if she was aware of the pending lawsuit affecting the property. This was the first she'd heard about it. It turns out that the sellers and their neighbors were in dispute over a minor encroachment involving a deck. In addition, their relationship was so acrimonious that they had restraining orders against one another.

California home sellers are required by state law to disclose material facts that affect a property to prospective buyers. Given this law, the sellers in the above example were obligated to disclose the possible encroachment and legal problems they had with their neighbors.

Ducking such a responsibility could have serious consequences. Neighbors often know what's going on in their neighborhood. Some neighbors enjoy getting to know new homeowners and bringing them up to date on the local gossip. So, it's best to assume that the buyers will become aware of the problems. It's far better to truthfully disclose problems before the closing than it is for the buyers to receive the news secondhand.

This is an extreme example and was sorted out only with the help of real estate attorneys. The sale was delayed a few weeks. However, a reasonable resolution to the problem was reached and the sale went through.

HOME SELLER TIP: Disclosure laws vary from state to state. Even so, it makes good sense to get any potentially bad news out in the open before a property is listed for sale, or at least before it hits the market. Most buyers would rather not buy into other people's problems. Ideally, any lingering disputes should be resolved before selling. And, in fact, the buyers might insist on it.

In another situation, a homeowner blew the whistle on his neighbor who had installed an air-conditioning system in violation of building-code requirements. The condenser had been installed too close to the neighbor's house, creating a noise nuisance. As soon as the seller's house went on the market, the neighbor spoke up and demanded that the condenser be moved.

The seller had paid a licensed AC contractor to install the system. The company had not taken out a permit to do the work, unbeknownst to the seller. Fortunately, the negligent company corrected the violation before close of escrow, at no cost to the seller.

Common and sometimes serious problems between neighbors involve easements and encroachments. Unfortunately, sometimes these problems date from before the seller's ownership of the property. However, that doesn't mean that the new buyers will accept the situation "as is."

For example, occasionally oversights occur when properties are subdivided. In more than one instance, a portion of a property through which the sewer line ran was split off and sold without reserving a sewer easement in favor of the seller's property. In a worst-case scenario, a future owner of the property that's left without a sewer easement could either have to pay to buy an easement from the adjacent homeowner or have to relocate his sewer line entirely.

THE CLOSING: In Santa Cruz Real Estate Homes Neighbor issues can often be resolved amicably between neighbors or with the help of the real estate agent involved. However, it's wise to hire an attorney with expertise in residential real estate matters to assist with the resolution of more serious problems involving legal issues, property boundaries, encroachments and easements.

SHORT SALE -MUST KNOW THIS STUFF

by Patti Lyles

 SHORT SALES:  THE LEAST YOU NEED TO KNOW.  The last 3 offers I wrote in Santa Cruz Real Estate would have been short sale transactions

•q       "RISKY" ALTERNATIVES TO THE SHORT SALE:

Become an "Equity Purchaser," aka "Shark." One who is a Non-Owner occupied "equity investor," buying a sellers equity at a DEEP DISCOUNT, to bring loan current. The EP is often deeded onto title. Seller's often remain in the property as co-owners, or rent back from the EP. The plus for the seller is no damage to credit, with a place to live, without moving.

Beware of the "Foreclosure Consultant," who charges a separate fee (not a commission) for a "Rescue Plan" Consultation, and does not have any agency with bank, buyer, or seller. This means no fiduciary responsibility. "Consultants" often do not hold real estate licenses. Both Equity Purchasers and Foreclosure Consultants invite Civil Code Violations CC 2945 and 2945.11, which protect distressed sellers from fraud by the above. 

Be aware of the: "Soldiers and Sailors Act" by Congress, which provides protection with an Automatic Stay of Foreclosure, for military.

•q       A "SHORT SALE" IS DEFINED BY: "ALL liens of record PLUS costs of sale, EXCEEDING CURRENT MARKET VALUE." Said to be "Upside- Down" in payment.

Simply put: Seller owes more than what they can sell for.

This includes, but not limited to: Tax Liens, Mechanics Liens, 1st TD, 2 TD, 3TD et al., Unpaid Judgments and Small Claims, and Unpaid HOA Dues. (Many people who do not pay their mortgage are also not paying many other bills, which may be secured by real property. For example: Home Equity Lines of Credit (HELOC's), Mechanics Liens, and Boat Notes).

•q       BANKS DO NOT INITIATE SHORT SALES. SELLERS & AGENTS DO:

The above Beneficiaries (aka "Bennies") are always negotiated with by the seller, or assisted by the agent. Lien holders rarely agree to 6% listings. Commissions can range from 1-5%, depending a number of factors.

•q       "VALUE OF A SHORT SALE VS. THE COST OF FORECLOSURE" ANALYSIS:
 
This is performed by the bank. Banks take up to 45 days to perform this analysis, only after a Short Sale Package is submitted.  All lien holders must weigh options before committing to a Short Sale, IN LIEU OF A FORECLOSURE. By foreclosing, lien holders assume all the risks by taking back the property:

•q       RISKS INCLUDE:

Exposure to vandalism by the seller, deferred maintenance costs, cost of actual foreclosure process, the months of unpaid mortgage, (at least 4 months!). Also, the cost spent marketing the REO (Real Estate Owned), and commissions paid to future agents.

•q       A four-month process is typical from Notice of Default (90 Days/ 3 Moths), to a Notice of Trustee's Sale (21Days/3 weeks), and is sold at auction by Trustee's Sale on day 22 if no resolution is reached, AND NO BK IS FILED.

•q       Many sellers will file chapter 7 Bankruptcy, forcing a "Stay of Foreclosure." Some sellers do this simply to buy time sufficient to close a current escrow, and then just cancel the BK application. This is known as "Stopping the Clock" of the four month process. Once a bankruptcy is accepted, a bank IS NOT ALLOWED to offer a Short Sale to the seller, and will be sold at a BANKRUPTCY SALE.

•q       The bank then hires attorneys to file for a "Relief of Stay" which allows them to continue foreclosing even though you are in BK.

•q       However, courts are reluctant to approve this, and prefer a BANKRUPTCY SALE in order to pay off more creditors than a NON-JUDICIAL FORECLOSURE would, provided there is more equity over and above paying off the lien holders. Other "Non-Secured" creditors may be able to be paid off.

Example: If 450k is owed on the home, and the home can sell for 600k, the courts know the bank will "under price it" to recapture just the loan and costs- but not a penny more, especially in a declining or even a flat market. Banks want to "cut their losses." Courts want to realize the MAXIMUM RETURN, where Banks want only the note value and costs.

(In a rising market, banks are willing to price REO's along side the competition, going with the upward trend).

•q       WHAT TO ASK A SELLER:

It is very much like a traditional listing except for the "sense of urgency," caused by deadlines and a sense of doom by the seller. Ask the seller: Did the seller disclose All Liens and encumbrances? Are there Late Payments, Notice of Default, or Notice of Trustee's Sale? Determine with a net sheet if there is enough equity to pay all liens AN

 

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Photo of Patti Lyles Real Estate
Patti Lyles
Century 21 Showcase, REALTORS
P.O. Box 67275
Scotts Valley CA 95067
831-335-2100

DRE #01385517