FREE ARIZONA LUXURY SHORT SALE SEARCH
The Adam Lee Team is excited to announce our new FREE Luxury Short Sale home search. Short sales are a great way to get an awesome price on a home without having the repair costs that are normally associated with a foreclosed/ bank owned home. Keep in mind that generally a Luxury Short Sale is going to be in better condition because the owner of the property still has vested interest in the sale of the home. With the huge depreciation we’ve seen in Arizona over the past few years short sale are going to be here to stay. We’ve created this search tool to help you search through the luxury short sale market in the comfort of your home. If you would like any further information or want to set up an appointment to see one of these properties then please contact us.
Saving Your Luxury Property from Foreclosure
The fact that a homeowner is facing foreclosure may have resulted from a variety of diverse reasons, some of them to do with the circumstance if the homeowner, or others that may be to do with external influences outside of the homeowners control.
If for example the homeowner has overextended themselves in purchasing a luxury property, this position has vastly different potential for remedy than if the purchase of the property was well within the means of the borrower, but for external force emanating from the broader economy, or legislation.
In the case of the broader economy experiencing a downturn for example, the property may well fall in value, but this will be consequential to a far more fundamental reason, namely, unemployment. Directly affecting the homeowner will be their income and if this is affected by redundancy or the after effects of subdued economic demand, it is quite natural for a mortgage commitment to come under threat.
Objective consideration of the predicament may reveal to the homeowner that the property should not have been purchased in hindsight. Certainly, most individuals that purchase a luxury property would do so in order to be able to live in it, but the fact that it is highly geared with borrowing, demands that a broader view of the investment always be borne in mind.
On the other hand, a dispassionate deliberation may suggest that the property is a sound investment and that if it was possible to retain the property a capital gain would ensue. Of course this would also require that economic fundamentals be sound. The capital gain will necessarily increase the equity in the property which can always be liquidated in favor of the homeowner in the future.
If this is what presents itself, the homeowner ought to investigate the possibility of financing the property through other than conventional methods. If other assets are able to be liquidated in order to save the luxury property from foreclosure, this should be the first preference.
Secondly, finance from other lenders may be possible. If there is any equity in the property at all, this may prove sufficient security for a second mortgage to be taken out, however in times such as the present, the equity securing such a second mortgage will need to be substantial.
Unsecured loans are available from some lenders at extremely high rates of interest, but here too some form of income stream is required in order to indicate ability to honor repayment.
In situations where these forms of financing are unavailable, if the property is of high quality, it may be prudent to investigate the possibility of raising capital from private financing. Family members or associates may be interested in making an investment in the property. If so individual shares in the property may be able to be offered, but in the event of only a portion of the property’s value being covered in this manner, the lender may require a new financial agreement to be entered into. Ideally, the entire value of the property will be raised in order to pay out the existing financial obligations and then the risk will be shared amongst the shareholders rather than the individual homeowner.
Courtesy Eureka Luxury Short Sales
High-end home distress: Foreclosures, short sales catching up to luxury properties
The trend of short sales, foreclosures and walk-aways from distressed mortgages is moving from outlying, middle-class cities to the mansions of Paradise Valley and Scottsdale.
Beth Jo Zeitzer, president of ROI Properties in Phoenix, said some high-end homes in PV and North Scottsdale have lost 40 percent to 50 percent of their value — losses that can be measured in millions of dollars — and she expects the slide to continue.
“I don’t think we are done quite yet,” she said.
Such declines mirror the loss of value in the West Valley, Pinal County and other less affluent areas, where many mortgages are underwater and the markets could take more than a decade to recover. Zeitzer said expensive homes that were bought for $2 million or $2.5 million now are valued at below $1 million, and distressed homeowners are walking away or turning to short sales.
“There’s a lot of abandonment out there,” she said. “We’re seeing it particularly in PV, a lot of the high-end condos, and we’re seeing some in North Scottsdale as well.”
Christopher Karas, a real estate agent with Russ Lyon Sotheby’s International Realty in Scottsdale, also is seeing an upswing in the number of short sales in wealthy submarkets.
“We are doing a lot of short sales of higher-end homes,” said Karas, who specializes in the PV and Scottsdale areas.
Karas and Zeitzer said banks are slower to foreclose and kick out high-end homeowners who have stopped paying their mortgages, because those homes cost “a lot to maintain.”
Zeitzer, whose work includes representing buyers of distressed high-end homes and condos, said it could cost a bank a much as $2,000 a month to maintain pools, landscaping and other features of expensive properties. The result, she said, is that banks are allowing walk-away mortgage holders to stay in those homes for as long as two years while they try to work out a short sale or modify the existing home loan.
Walk-aways and short sales have been occurring in hard-hit subdivisions on the Valley’s fringes for some time, with banks taking an inconsistent approach to dealing with those situations.
Karas said allowing homeowners to stay in their high-end properties and at least do some basic upkeep can help move short sales along and maintain the desirability of those neighborhoods.
“The bank has no desire to clean that up,” said Karas, adding short-sale homes and their neighborhoods show much better if residences are not abandoned.
Mike Bodeen, a real estate broker with Realty Executives Desert Ridge, said Scottsdale has seen a 37 percent drop and PV a 40 percent decrease in high-end home values since late 2007, when the housing bubble burst and the recession began. He said the declines aren’t as dramatic as those seen in outlying towns, but he expects things to get worse before they get better.
“Where many or most other communities have leveled off and are sprawled out at the bottom, PV is still in a free-fall,” Bodeen said.
The real estate agents said falling values and distressed mortgages are drawing investors and wealthy second-home buyers with cash from Canada, California and Chicago, seeking bargain-priced estate properties. Karas and Zeitzer said they are seeing high demand for entry-level luxury homes of 5,000 to 6,000 square feet priced around $800,000.
The Arizona State University-Repeat Sales Index released earlier this week confirms what the agents are saying. The index reports an increase in foreclosure sales of homes of more than $1 million, and it shows resale prices in PV and Scottsdale down 36 percent from April 2006 to April 2010. That’s compared with a 56 percent drop in Glendale, 50 percent in Mesa and 53 percent in Peoria during the same period.
Courtesy Phoenix Business Journal
I am protected, Non-recourse or not???
This is a MAJOR topic for Luxury Short sales because we are talking about a lot of money tied to the possibility of a deficiency. As you read this post please keep in mind that I strongly urge you to talk to a REAL ESTATE Attorney. Each case is so different. If you need one, I have an excellent one I can refer you to.
Here is my take on the subject, although I am not an attorney, I have talked with many of them trying to get a committed answer. If the loan or loans are purchase money (you used the money to by the home) then you are protected in most cases. If you took out a Home Equity Line of credit then this is where it gets really muddy really quick. Some attorneys feel that you could be protected and some feel that you wouldn’t be protected.
Normally on a home equity line of credit it works like this. If it’s not purchase money on your primary residence you may still be liable for the difference of what the bank agrees to take on the short sale and the balance of the loan. This is the case regardless if it is foreclosed on or a short sale.
The beauty of a short sale is that you can, in most cases, get the bank to put in writing that they won’t go after you for the difference.
So in an nutshell, the recourse of a loan is loan specific but if you are trying to sell your primary residence and haven’t taken out a h.e.l.o.c after you purchased it you should be in great shape.
Even if you have please contact me so I can get you in contact with a great attorney because you most likely will be protected and not know it.
Are luxury short sales harder?
I recently was asked this question so I thought that I would address it formally. The answer is yes and no. How do you like that for an answer.
Here is what I mean by that response. YES, they can be very different than an “non-luxury” home. The main reason is an obvious one; there is more money involved in a luxury short sale. A bank may be loosing anywhere from 10,000 to 150,000 (just estimates for an example) a bank maybe loosing millions on a luxury short sale. This is a substantial loss for a bank.
Which brings me to my NO response. The process for the bank is no different on a Luxury short sale versus a normal home. It does take more skill to do a luxury short sale because it is your agent responsibility to negotiate with the bank to get the numbers to line up in order for the bank to see the savings over foreclosure with a short sale.
On another post I will be talking about the possible ramifications of a short sale in Arizona and why these can be pretty dramatic for a Luxury short sale.
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