Your real estate agent is the best person to advise you on the short sale process. It is not a simple answer, and it all depends who the bank is, how the bank does business, if the home owner has missed any payments, if it will soon be in the foreclosure process. Your agent can find out those answers for you. Good luck.
I'm a Stroudsburg agent. Thanks for your question!
The taxes are actually on par with what we'd expect in Monroe County for a home that size. Taxes are not lower than they've been in years. At the beginning of the housing crisis, the occasional buyer had success in lowering taxes on a foreclosure or short sale by getting a reassessment based on the purchase price. It wasn't common then, however, and it's even rarer now. Our primary source of school funding is property tax, and the lion's share of our property tax is school tax. Reassessments resulting in lower taxes means reduced funding for already strapped schools. It's just not going to happen on any grand scale.They're not likely to increase substantially either, as growth has slowed drastically. It looks like we're finished building new schools for a while.
I can't comment on the price without knowing where this home is, but if you send me the MLS number or address, I'll be glad to look it up for you and do a quick comparison to similar properties. Your mortgage payment would depend on the selling price and your down payment. VA loans allow 100% financing, and you can roll the funding fee and closing costs into the loan. However, you'd be expected to make an earnest money deposit if your offer were accepted.
Short sales can go for substantially less than market value, but again, without knowing anything about this home or its specific location, I couldn't begin to guess if the asking price is anywhere close to that. We'd do a comparable market analysis to determine the right purchase price, and you'd use that as a yardstick for setting your offer price.
We'd prepare an offer by writing a sales contract and submitting it to the seller via the listing agent, along with your mortgage preapproval and a copy of your earnest-money deposit check. If the seller accepts the offer, it goes to the lender for approval. That can take weeks or, more likely, months. You should expect the whole process to last at least 6 months and you should be prepared for it to last significantly longer.
Please don't hesitate to contact me if you'd like specifics about the house or more information about the process. I'd be glad to give you contact information for a few local mortgage consultants, too.
Daria Kelly Uhlig, Realtor
Better Homes and Gardens Real Estate Wilkins & Associates
304 Park Ave.
Stroudsburg, PA 18360
570-421-8950 Ext. 422
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Why are the taxes so high? Is the house being offered below its real value because it's a short sale? Are those taxes common for the area on similar homes? What does your agent say about the taxes?
If the taxes are common for similar homes, you can more than afford what you have proposed. If the taxes are out of line, then find out what it takes to contest them. It may be that the seller can start the process while waiting for the short sale approval.
For the basis of my $1,950/mo estimate in your other question, I was using a 4% interest rate on a loan amount of $216,905 ($213,911 + 1.4% VA Funding Fee), which gives a principal/interest payment of $1,035/mo. Property taxes of $808/mo ($9.7k/year). Insurance of $100/mo ($1,200/year) = $1,943/mo.
When your offer is accepted on a short sale by the seller, it still needs to go to their own bank for review/approval. If you are the first offer, that process can take many months (3-6 months isn't uncommon), as the sellers bank needs to confirm the value of the property/compare it to the amount the seller has accepted, as well as get approval from the investor of the seller's mortgage (this isn't usually the same as who they make their payments to). After all of that is done, then the seller's bank will issue a "short sale approval" which usually matches the terms that the seller has accepted... but sometimes it is different/less favorable to the buyer and then you need to determine if you want to accept the seller's bank short sale approval terms. If there has already been a previous accepted offer but the buyer bailed out for whatever reason, and all or part of that process has already been done, then it may just take a few weeks to a couple months for the new short sale approval to be issued (there was one situation where the bank was ready to approve a new offer within 1 week - talk about a short short sale).
I am not sure how property taxes are reassessed in Pennsylvania, but it could very well be based on the new sales price. You can actually figure it out on your own. You can call up the township & county to find out what they base their assessed values on - and if a sales price for much less than their current assessment happens, would they take that into consideration. Hopefully a real estate agent from this area will chime in with exact specifics on this though. In California that is how it is done though, it's all based on the new sales price (which can drastically change the amount of property taxes - up or down).
Have your agent check the taxes to make sure they are listed properly through city records. In Michigan we have homestead taxes for owner occupied homes which are about 40% lower than non owner occupied or non homestead taxes. Not sure if you have the same in PA.
Short sale is processed differently with each lender. Some banks have streamlined the process using 3rd party processors such as the Equator System. In any case, if you are willing to wait 4 to 8 month or more for this home then go for it. However, there is no guarantee that the sellerâ€™s bank will approve the short sale. Put a time limit in the Purchase agreement to get the short sale approval normally 60 to 90 days.
As far as Real Estate taxes, that is a decision that you would have to make based on a number of factors, location, schools, surrounding RE taxes, family location etc.
If you are getting a home at a good value and can wait for short sale approval it could be worth the wait. Purchasing a home now with low interests rates and low prices could reveal itself to be a good investment if you plan on staying in the home.
Some questions to ask you sales agent;
Are there any second mortgages on the property?
Has anyone performed any lein searches?
Is the current owner cooperating with their sales agent?
Who is handling Short sale for Seller and what is there experience level?
Fiduciary responsibilities come into play, but is there a bonafide hardship for this short sale?
A short sale does not indicate that a homeowner is in default of a mortgage payment(s). It simply means the home's value is lower than what the current homeowner owes to the bank.
The homeowner in many instances does not walk away free and clear of the debt on the short sale. That is a separate negotation and the debt is frequently not forgiven by the lending institution. Often times, the deficit can be collected by the lending institution.
There are other discrepancies, but it is better for those discrepancies to be addressed by a real estate attorney.
Who qualifies for a short sale?
2. The homeowner is suffering due to the current value decline in the housing market.
- The homeowner has or will soon receive a notice of default from the lender/bank.
- The homeowner does not have adequate assets to pay the difference if a short sale is granted.
Examples of a hardship!
3. Unemployment, Divorce, Medical emergency or sudden illness, Bankruptcy, Death
Who benefits from a short sale?
4. The Homeowner- Will be able to walk away free and clear of mortgage obligations. An opportunity to get back into the housing market after two years. The short sale does not cost the homeowner any out of pocket expenses.
The Lender-Will get considerably more from the buyer than to rely on the selling value of a foreclosed home, which decreases as the market value continues to fall. Will avoid the last step of foreclosure which are costly legal fees.
There is not a quick answer for the short sale process. All lenders have different requirements. 1 Seller has to talk with the loss mitigation department of their lender. 2. Supply thier lender with a hardship letter, past bank statements, past tax returns, recent pay stub, just to name a few items required.3 Have to show lender the home is listed on the market. 4 Must have a qualified buyer with a fully executed purchase agreement. 5 Supply a HUD statement showing all cost and fees involved in the transaction. These are just some of the requirements needed to complete a short sale . The process could take anywhere from 3 to 18months depending on the experience of the agent and the lender involved.
Taxes are what they are. I am from Michigan and each state/ city have different assessing systems.
The home you are buying I am assuming at one point cost maybe in the 400 to 500K range. So the taxes are assessed at those value. As in Michigan, as home value decrease so will the taxes. However, the taxing city is slow to catch up to the decreased value. But they are coming down. In addition, Michigan has homestead and non homestead taxes for primary residences. Taxes may be high currently if the home is non homesteaded. Check with the county and city taxe assessor.
Hope this helps
Ball park for a mortgage confer with a mortgage broker who can review your loan application and supporting documents determine loan amount you qualify for.
Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
We may be in the era of renting for one's lifetime, but we will only know that when we can look back at 2011-15 with hindsight. Certainly to buy for those emotional, not financial, reasons can never be discounted or denied. One thing, when inflation hits hard, what you buy today will seem cheap as houses increase in price. Incomes will have to increase along with prices. And that is a proposition not expected in this recession. People today with ability to buy and then rent out property will do well and become rich. 15-20 years from now we will have a small group of very wealthy property owners as landlords. In summary, buying a home today is a matter of long and short term factors, some predictable and some totally impossible to predict. As with most investments, if you have faith that the future will be there and the lights will come on when you turn the switch, buying a home makes as much sense as investing in a mutual fund did in 1970. Faith in the future? Do you have it?
The short sale process can takes months to complete and, there is no guarantee that the Seller(s) of the home will be approved for the short sale.
My mantra....when in doubt - don't buy it.
The "Save Our Homes" tax bill passed several years sago in Florida was an initiative to prevent the "sheriff of nottingham" from owning it all; however very little consideration was givent to FALLING property values, hence no provision.
You will have to owne the property before you can contest the taxable value, but paying for a Broker's Pricing Opinion to get an idea of what the values should be would be money well spent.
If you or your husbands middle score is below 740 when the lender pulls your credit, it could cost you hundreds of dollars a month in interest payments and thousands in closing costs (or points) simply based on your credit score.
Keep in mind, your question is related to your "cost" Any edge you get to keep your costs low will help you achieve your objective.
I attached a youtube video. I hope that helps.
The current CMA done by your agent should be within 10% of your offer. This way you can predict what the lender might counter with. If its close there should be no delay and counter offer. The farther apart your offer is from the comps, the longer the delay. Don't plan to steal it. Never works.
Finally, get a conventional or FHA qoute on financing too. VA may be more per month.
Short sales take time, so if you have time, they are a good deal. If not, I would move on to another property.