I also talked with someone doing a deed-in-lieu. Which is essentially deeding your property back to the bank so they don’t foreclose. The harsh reality of this option is that it doesn’t help the owner at all. It hurts you just as bad a foreclosure does on your credit. All you are doing is helping the bank out.

Which brings us to short sales. These are my favorite option and not because I am a real estate agent who has been doing short sales for the past 7 years but because it helps owner to alleviate debt. When you have a short sale on your credit and not a foreclosure, it positions you to rebuild your credit quicker. It also puts you in buying power sooner to purchase a new home. When you purchase that new home you will be able to enjoy the appreciation in value instead of waiting for the nest 10 years for your equity to get to ZERO!

Now with government programs you may qualify to get paid 3,000 or more to do a short sale. That’s on top of not having to pay a real estate agent to sell your house. Now more than ever you have the ability to get rid of the negative equity in your home and position yourself for a brighter future. We have more information on our website so look around and enjoy.

In general, sellers have gotten more realistic in pricing their homes than they were right after the housing bubble burst, but agents say that many still don’t grasp how much they must concede to close a deal. And buyers are still spraying lowball offers around in hopes that sellers will be desperate enough to bite.

Take such unreasonable expectations, multiply by two, and what do you get? “A standoff,” says Glenn Kelman, CEO of real estate brokerage Redfin.

With the busy summer home-sale season drawing to a close, there’s little time to waste. Whether you’re trying to unload your place or land a new one, follow these dos and don’ts to negotiate the best deal — fast.
If you’re buying

Don’t say: “I’ll pay 85% of your asking price and not a penny more.”

Instead: Look for homes that are fairly priced and make a reasonable offer. “Coming in about 10% below list is a good starting place for negotiations now,” says Denver real estate broker Jeff Fogler. Yes, you have the upper hand in most markets, but the average homebuyer is paying only 2.7% below list price (see the chart). Set your expectations accordingly. You can always ask if the seller is willing to bridge a price gap in other ways — for example, by picking up your closing costs (which can run $7,500 on a $300,000 house).

Don’t say: “I haven’t put my own place on the market yet.”

Instead: List your current home before you start shopping seriously for the next one. Because it takes almost three months to move a house these days, sellers are loath to write home-sales contingencies into purchase contracts. You’ll have far more leverage if you’ve gotten rid of your house before you start negotiating: Sellers know there’s less chance of the deal falling apart. (Prequalifying for a mortgage helps too.) What’s more, you’ll know exactly how much money you can put into your new digs.

Don’t say: “This is my dream house.”

Instead: Stop imagining the great parties you’ll throw there and gird yourself to walk away if the seller won’t make reasonable concessions. Your ability to abandon negotiations is your most powerful bargaining chip. Given that plenty of other homes are on the market now, finding another place to love shouldn’t be too hard. You might let the seller know that. Nicely.
If you’re selling

Don’t say: “You’re offering how much? Forget you!”

Instead: When bidders lob low-balls at you, thank them for their interest — and ask that they come back with earnest offers. “If you become offended, enraged, or unreasonable, you’ve blown any chance at negotiation,” says Warwick, R.I., real estate agent Ron Phipps. These days many buyers are just testing you to see how big a discount they can get. Point the bidder to comparable recent sales that support your list price. (Received several super-low offers? Check the comps to make sure your price isn’t too high.)

Don’t say: “I didn’t know the deck was rotting.”

Instead: Pay a few hundred dollars to get your house inspected before you put it on the market. Then arrange to make any necessary repairs yourself. (In most states the law requires you to disclose to potential buyers any defects of which you’re aware.) “Taking care of any inspection issues upfront helps sellers limit the points that buyers can negotiate on,” says Pat Lashinsky, CEO of the national brokerage ZipRealty.

Don’t say: “It might take us a while to move out.”

Instead: Make sure to tell buyers — especially those who might have children starting school this month — that you’re willing to scram pronto, if possible. That will help you stand out from any short sales in your area, which may have lower list prices but can take months to close. “If the buyers have a strict time limit, they’re going to pay more money to get into a house quickly,” says Ellen Klein, a realtor in Rockaway, N.J. More money plus more speed: That’s what it’s all about.

Courtesy cnn

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

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