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How Long Is My Short Sale Going To Take?

by Mark Brace

How long do Short Sales take?... quite and interesting question, as there are several variables in play when you are working on a Grand Rapids Short Sales. Things you to understand in regards to short sales, which can complicate the negotiation process.

  1. There can be more than 1 lien on the home (i.e. 80/20 mortgage, HELOC, water) If 2 mortgages they may be with the same bank or different banks, if different it can take longer to get them to agree on the settlement, if they will agree, some will never agree.
  2.  Even though the mortgage is serviced by a bank that doesn’t mean the primary investor is that bank they may need to take the negations to another bank to see if they will work with it. (Typically this is how Fannie or Freddie fits in) as they are the primary investors in the majority of loans.
  3. There may be defects in title, or legal disputes such as property lines etc... That may be involved that can hold the process up.
  4. The Realtor or third party negotiator that is working on the file my be very experienced and have connections or not. This can vary the time of a short sale by over a month or two.
  5. From the time you make an offer the short sale times can differ if the sellers have already started the process with the bank, compared to starting at Square one.

I guess what I’m trying to convey to you is that they are very complicated, and can be simplified if things are be handled by professionals. I have had probably close to 40-50 short sales completed in the last 2 years. And they have ranged from 45 days to just over 10 months. I would say a typical short sale should take around 3-4 months. You should look the professionals you are working with to give you an indication of how long you individual situation is going to take, and the variables involved.

Kent County Loses 1.2 Billion in Property Values

by Mark Brace

View this MLive.com Article regarding the amount of money Kent County has lost in its property values.

http://www.mlive.com/news/grand-rapids/index.ssf/2010/04/kent_county_loses_12_billion_i.html

10 Most Likely Features that Builders will Include in 2010

by Mark Brace

According to REBAC (Real Estate Buyer's Agent Council, Inc.) there are 10 features that builders will most likely include in 2010 :

1. Walk In Closet in Master Bedroom.

2. Laundry Room

3. Insulated Front Door

4. Great Room

5. Low-e Windows

6. Linen Closet

7. Programmable Thermostat

8. Energy Efficient Appliances and Lighting

9. Separate Shower & Tub in Master Bathroom

10. 9 Foot Ceilings or Higher on 1st Floor

"THE DETAILS" for the Homebuyer Tax Credit Deadline

by Mark Brace

FIRST TIME HOMEBUYER TAX CREDIT – WHAT IS A “WRITTEN BINDING CONTRACT”

As most REALTORS® are aware, the Firstā€Time Homebuyers Tax Credit (“ax Credit” expires on May 1, 2010. However, there is an exception for any taxpayer who enters into a written binding contract on or before April 30, 2010 to close on the purchase of a principal residence before July 1, 2010. Two questions have been raised a number of times by REALTORS® with respect to this exception. First, what constitutes a “inding contract”under the terms of the exception? Second, if the terms of a binding contract entered into on or before April 30, 2010 are amended after that date, does the buyer still qualify for the Tax Credit? As a practical matter, the two questions are part and parcel of the same analysis. There is no case law or other documentary analysis of what constitutes a “inding contract”as that term is used in connection with the Tax Credit. However, the phrase was used in a similar provision of the Tax Reform Act of 1986 (the “RA”. In the TRA, a qualifying “ritten binding contract”was determined to be: (1) A contract that is enforceable under state law; AND (2) A contract that does not limit damages for breach of the contract to an amount less than 5% of the contract price; AND (3) A contract in which any contingencies are beyond the reasonable control of the taxpayer. Obviously, the intent was to prevent taxpayers from hastily concocting incomplete “ontracts”before the specified deadline and then negotiating or renegotiating the actual terms and details of the transaction after the deadline.

 

Assuming the Internal Revenue Service would apply the same test for a written “binding contract” for purposes of the Tax Credit as it did under the TRA, then there are at least two (2) areas of risk which REALTORS® should be aware of in preparing purchase agreements which are intended to qualify for the Tax Credit. First, most inspection clauses in purchase agreement forms used throughout the State simply permit the buyers to accept or reject the results of an inspection within their sole discretion. It certainly could be argued that such an inspection contingency is not beyond the reasonable control of the buyer/taxpayer but, instead, is under the total control of the taxpayer/buyer. There would appear to be two alternative solutions to this problem. First, the buyer could complete and/or waive any inspection contingencies on or before April 30, 2010. Second, the inspection contingency could be amended to establish conditions by which the buyer would be permitted to terminate the transaction based upon inspection results, for example, the buyer could only terminate the contract if the inspection uncovers defects or damage in excess of $10,000. While normally we do not recommend the use of such a provision as it leads to all types of controversy as to the existence and extent of a defect, the benefit of the Tax Credit to the buyer may outweigh this concern. Second, many forms of purchase agreements throughout the State call for a buyer to make an earnest money deposit (“EMD”) upon the making of the offer or upon seller’s acceptance of the offer. If the provision in the purchase agreement provides that upon the buyer’s default, the seller’s sole remedy is to keep the EMD and the EMD is less than five (5%) percent of the purchase price, then the purchase agreement may not constitute a written “binding contract” for purposes of the Tax Credit. On the other hand, if

the provision in the purchase agreement provides the seller with the option of either accepting the EMD as liquidated damages or pursuing other legal remedies (

i.e., suing for the amount of her damage by reason of the breach of contract), then there should not be a problem with qualifying the purchase agreement as a written “binding contract” for purposes of the Tax Credit. Many REALTORS® have inquired as to whether an amendment to a purchase agreement that would otherwise qualify as a written “binding contract” under the Tax Credit made after April 30, 2010 will render the transaction ineligible for the Tax Credit. If we look to Michigan law, the answer would clearly be “no.” In Michigan, a contract must contain the “essential elements of a contract with sufficient certainty and definiteness regarding the parties, property, consideration, terms and time of performance.” The Michigan Statute of Frauds, MCL 566.1 (the “Statute of Frauds”) provides that such contracts can be modified without new consideration provided that “the agreement changing, modifying, or discharging such contract, obligation, lease, mortgage or security interest shall not be valid or binding unless it shall be in writing and signed by the party against whom it is sought to enforce the change, modification, or discharge.” The Statute of Frauds demonstrates that subsequent modifications to the terms of a purchase agreement are just that, modifications, rather than an entirely new and distinct contract. Thus, there is no reason to believe that the date the purchase agreement was “entered into” would not endure even where amendments are made after April 30, 2010 in accordance with the Statute of Frauds.

There is authority in other contexts, however, for the proposition that at some point the IRS may view an amendment to a contract as being so substantial that the final contract “is a wholly different instrument from the original document.” In this situation, the IRS could take the position that the amended purchase contract does not qualify for the Tax Credit. In order to avoid an argument as to qualification for the Tax Credit, REALTORS® should avoid writing purchase agreements that include vague or broad future conditions or contingencies and avoid making significant or substantial changes to the essential terms of the purchase agreement after April 30, 2010. Finally, it is not difficult to imagine that some zealous sellers or buyers may try to induce their REALTOR® to fudge the date when the contract was entered into,

e.g. a contract signed on May 3, 2010 would provide that it was entered into “as of April 30, 2010.” Similarly, zealous sellers or buyers may wish their REALTOR® to prepare a purchase agreement dated on or before April 30, 2010 which is signed by a “straw” buyer and which will later be assigned to a new buyer and close before July 1, 2010. Obviously, there are any number of ways to attempt to perpetrate a fraud in order to obtain the Tax Credit. REALTORS® should run away as fast as they can if any seller or buyer attempts to induce them to participate in such activity. Under 26 USC § 7206(2), any person who “willfully aids or assists in, or procures, counsels or advises the preparation or presentation under, or in connection with any matter arising under the Internal Revenue laws, of a return . . or other document which is fraudulent or is false as to any material matter, shall be guilty of a felony and, upon conviction thereof shall be imprisoned not more than 3 years or fined not more than

© 2010 by the Michigan Association of REALTORS®

$250,000 for individuals ($500,000 for corporations) or both, together with cost of prosecution.” Finally, it should go without saying that if there are any issues as to whether a proposed purchase agreement will constitute a written “binding contract” for purposes of the Tax Credit, REALTORS® are urged to send their buyers to an attorney or accountant knowledge in the application of the Tax Credit.

Find Out Crime Statistics in Neighborhoods Before you Move

by Mark Brace

CrimeMapping.com is a website designed to help you find out the recent crime activity that has been happening in your neighborhood or a neighborhood you're looking to move to. The website has been developed by a goup that works with law enforcement agencies thoughout the US to provide the public with accurate statisitics of crime in all neighborhoods. The goal of the website is to lower crime rates by assisiting local police departments through a better informed society. This website is a great tool to use if you're looking to move or are planning on putting your home on the market.

Displaying blog entries 1-5 of 5

Contact Information

Mark Brace, Realtor, ABR, GRI, CRS, SRES, e-PRO, A
Berkshire Hathaway HomeServices Michigan Real Estate
3000 East Beltline NE
Grand Rapids MI 49525
Direct: (616) 447-7025
Cell: (616) 540-7705
Fax: (616) 447-7025

Berkshire Hathaway HomeServices - Michigan Real Estate is a full service, locally operated real estate brokerage company backed by the strength of a solid national and global brand. Our full service businesses include Residential, Commercial, Relocation, Mortgage, Insurance, Home Services and New Homes & Land. Our core values, service philosophy, cutting edge technology, and most importantly our people are what make us the leading real estate company in Michigan. We are committed to providing the highest quality real estate services possible and making each customer's experience one that surpasses their expectations.