Kelly Holmquist, team leader of The Holmquist Team, part of Keller Williams Towne Square Realty (http://www.theholmquistteam.net), and Attorney Marty Eagan, addressed a roomful of homeowners at a free short sale workshop Tuesday night in Mine Hill. Those attending came from Randolph, Roxbury and as far away as Newton.
(Note: Ms. Holmquist talks about how common short sales are today and how much more streamlined the process is in this video: http://www.youtube.com/
Ms. Holmquist explained that a short sale is selling a home at just under market value and asking the bank to forgive the difference. Depending on the negotiations, the bank may forgive the debt, may demand that the seller contribute some cash at the closing to make up some of the difference or may demand repayment of the difference over time, added Eagan.
“They want you to share a little of the pain,” said Eagan, adding mortgage forgiveness is reported as income to the IRS and could result in a taxes owed if the homeowner does not qualify for one of a few exemptions.
And that, explained the pair, is one of two reasons homeowners need to act now. A federal law, due to expire Dec. 31, 2012, allows the government to forgive the debt from a short sale if certain conditions are met. While there’s speculation that the law will be extended, there has been no definite news on that front..
The pair also explained the second reason for fast action: recent court decisions have made it easier for banks to proceed with foreclosures. That means people counting on the complicated foreclosure process to give them time to stay in their home while figuring out a way to deal with the changed housing market are running out of time.
The pair offered some additional pieces of advice:
• Eagan warned people not to use their 401K to pay their mortgage or other home-related fees. The money is legally protected. “You need that money to get re-established,”
• Homeowners selling short should maintain their homes because one of the big advantages they have over foreclosed homes is the history of the home. “If there are minor repairs to be made and staging to be done, we recommend you do it,” said Ms. Holmquist. “We’d never recommend you put a lot of money into a house to be sold by short sale because you’ll never get it back.” But, added the Realtor, “A short sale is much more attractive to a seller because the buyer is still living in it. The seller can talk about maintenance and repairs. In a foreclosure, there’s none of that.”
• Short sales have become rather common. Between a fifth and a quarter of homes sold in northwestern Morris County are short sales. “If you look at 1 in 5 sales being short sales, it’s not that unusual,” said Ms. Holmquist.
• In a short sale, the bank has to agree to the price before the sale can close. As a result, Eagan said he likes to start the process early. Not only does that include having the bank start its valuation process, but having potential buyers do a home inspection early in the process. “I would rather have the buyer submit a lower offer up front than submit a higher offer and then discover a problem.” Eagan said it was difficult to go back to the bank after it approves an offer and get them to lower the value. Ms. Holmquist added that pricing has to be realistic because the bank won’t accept too much loss. “We want to be aggressive, but not too aggressive,”
For Kathy and Bruce Berglind of Succasunna, the session opened their eyes to some possibilities and “strategies”
“We had questions about the effect on our credit scores,” said Bruce, who said that they had a chance to talk with Eagan after the formal part of the workshop. They liked what they heard.
Kathy said she was impressed by the idea of a Realtor and an attorney working as a team.
“Every Realtor says they know about short sales,” she said. “But the fact that Kelly’s done a lot of them and works with an attorney means a lot to us. I believe what I heard tonight.”
Ms. Holmquist is the team leader for the Holmquist Team, part of Keller Williams Towne Square Realty, and one of the top-producing real estate teams in Morris County, N.J. She has been in real estate since 1997, specializing in residential home sales. After working at other agencies, she founded The Holmquist Team in 2008. A Certified Residential Specialist (CRS), she holds a bachelor of science from Penn State University. For more, call click on http://www.theholmquistteam.net or call (908) 867-7109.
Eagan heads an office that focuses on real estate and is one of New Jersey’s fastest growing specialty law firms. The firm has successfully represented thousands of individuals and business clients across the state in residential and commercial real estate transactions. More information is available at (973) 898-7300 or http://www.martyeagan.com.