Any AZ. SS experts in here ????

Foreclosures, Short Sales, Tax Foreclosures
1

Hello,

We have a current loan modification business now and would like to explore doing short sales here in Arizona.

But we had some questions:

What happens if we can submit a short sale,get approved and can’t find a buyer?
Can we back out?

If we get a ss aproved, will bank allow for a 60-90 closing time? This is so we can find a buyer.

Is this “flipping” and is that still allowed?Ways to get around it?

For the end buyer, are there any title or seasoning requirements for the house they are going to purchase from us?

If we do find a seller to do a short sale, can we offer money to them to get out of house?This would be so they could move into a rental.

Anyone out here in AZ that can answer these for us.
I appreciate your viewing this.

T.

2

Hi,

Since my primary investing market is Arizona and Nevada, I might just know how to answer this.

First a little background on our Arizona market! We currently only average about 25% of short sales actually being excepted by lenders. (1 in 4 offers)

As of September 30th, the new Arizona Law SB1271 will become law unless repealed which basically say’s that a lender can now collect the difference between the original mortgage and the shortfall if the property is foreclosed on, this new law if not repealed will probable induce lenders to not even bother with short sales as if they agree to a short sale, they can not go after assets or garnish wages under our new law.

This will very seriously reduce the number of short sales in Arizona.

If a short sale is handled through a realtor in Arizona, Approved and then not closed because you back out under the financing provision provided under Arizona law, you get your earnest money back.

If you are the negotiater and the buyer and then do not perform you are a 50/50 shot at whether the lender will release your earnest money. (I have heard stories both ways)

Typically if a lender approves a short sale they want closing ASAP (Generally in 21 to 30 days. (The last short sale I attempted to do in Arizona I was prepared to buy the property myself)

A lot of lenders here are putting wording in the sale agreement prohibiting re-selling the property in the first 90 days. (Title companies have been honoring this as recorded on the note and deed of trust and refuse to close during that 90 days for a re-sale)

If the lender prohibits a re-sale in the first 90 days it is public record here.
(Available in the title documents)

Definately 90 days for FHA, and could be 90 days for lender “Prohibit sale in 90 days” agreement.

No, you can not give the party in default any money! You can buy there old 1931 refrigerator for $1000 dollars if you want. (Must actually recieve merchandise you bought and paid for)(This is a personal agreement without a promise of any action)

Right now REO’s are a much better buy than a short sale here so investors are buying a lot of bank owned properties. The typical discount on a short sale property is 15 to 20% below fair market value.

Reo’s have been selling as low as 40 cents on the dollar, but were buying typically at 50 to 60 cents on a dollar.

Most Short Sales now are being sold to “End Users” seeking an actual home to move into and most of these are being done by the big real estate agencies.

Hope this answers your questions.

Good luck,

             GR
3

Thanks GR.

That sheds a lot of light on this.
GR few more questions…

Is it still possible to follow this type of business model of A to B, B to C with a back to back closing?

REO’S ? What business model can on follow(generally) to make money?

Like I said we have sellers and buyers and would like to exploit this opportunity.

Again thank for you response.

Tim

4

GR

That law is only affecting people that have not lived in the property for 6 months prior the auction date if I’m not mistaken.

This is not going to affect my short sales business here in Arizona as most of my clients are not investors but rather homeowners.

tvaldez, Short Sales are still very prominent here in the Valley. There are always legal and ethical ways around any of your concerns.

5

Hi,

You are absolutely correct motiv8td there is a home owner exemption with 6 months or more of primary residence.

However Arizona is a snow bird state, take a look at ownership statistics and what is owned by whom?

For a normal family who has been at home for 6 months plus, where Arizona is there resident state and there struggling, that works great.

But for all the properties currently in foreclosure and potentially being sold at short sale, only about 50% of current foreclosures fall under the ownership exemption, for the rest it is lose 2nd home, lose child’s home, lose mom or dads home provided by a child, lose child’s college home, etc.

And don’t forget about investor’s like us that are under (upside down) who are still able to make payments this month but no guarantee’s to get through this if it continues to much longer.

Flagstaff is made up of some 70% vacation homes owned by valley residents, and since flagstaff run’s 12 to 18 months behind the valley in market conditions, well what do you think happens next.

I will no longer make portfolio investments in Arizona if this law is not repealed, we will continue to fix & flip as worst case we can’t sell a home or homes we just pay them off in cash and make them rentals.

I would think this new law will effect all of us!

                              GR
6

Man that sure would suck a whole lot. Is this law anywhere else yet?