Banks Take Losses on Short Sales as Foreclosures Soar

Banks Take Losses on Short Sales as Foreclosures Soar

Drew Schlosser tried for two years to sell his three-bedroom Punta Gorda, Florida, waterfront condominium for less than he owed on its two mortgages. The deal only went through last month when Wells Fargo & Co. agreed to take a $165,000 loss on the loans.

Even after he had an offer of $155,000 for the property, it took five months for the San Francisco-based lender to approve the purchase, a so-called short sale, in which the bank accepts less than the balance owed on a property. Schlosser said earlier offers had fallen through as bidders lost faith the bank would take less than the $320,000 in two mortgages.

“It was just kind of a mess,” said Schlosser, 31, a market research company director living in Estero, Florida. “You really have to get buyers who are patient.”

Banks are beginning to go along with short sales in increasing numbers, three years into a U.S. housing slump that pushed the economy into a recession and cut resale values by 30 percent from the peak in July 2006. Short sales tripled to 40,000 in the first six months of 2009 from the same period a year earlier. Yet for each short sale, there were 25 foreclosures started or completed in the first half of this year, according to data from the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

Dubai: A High Rise, Then a Steep Fall

Dubai: A High Rise, Then a Steep Fall

As financial crisis roiled much of the world in October 2008, the head of Dubai’s biggest state-owned developer unveiled his latest megaproject: a $38 billion development that would include a tower nearly two-thirds of a mile tall.

“I’m sure most of you are asking why we’re launching this, and you’d be mad not to question it,” said the executive, Chris O’Donnell, at a news conference. Though there would be economic ups and downs in the years needed to build the tower, he told listeners, demand would continue to outstrip supply.

“The fundamentals in the market are too strong,” he said. “There won’t be a crash.”

Since then, residential real-estate prices in Dubai have slumped by almost 50%. Developers have slashed jobs and scrapped projects. Groundbreaking on the tower was long ago put on hold. The yearlong retrenchment culminated in last week’s surprise announcement that Dubai would seek to restructure $26 billion of debts owed by Dubai World, the holding company for many of the government’s port, infrastructure and real-estate businesses.

Hanging on in sinking market

Hanging on in sinking market

In the fourth grade, he says, he sold more raffle tickets than the rest of his class combined.

After graduating with his MBA from the University of Georgia, he founded a golf ball retrieval company, swimming among alligators to recover balls in water hazards. He opened offices in Wales and France.

Shortly after moving to Charlotte, he sold his first project – renovated office and residential condos uptown – with relative ease.

Now, four years after Donnelly’s arrival here, most projects he started are struggling as commercial real estate continues to falter.

Give a Home for the Holidays

Give a Home for the Holidays

‘Tis the season of giving. But if you’re tired of the offerings at the mall, why not consider giving your children something grander, like the gift of a down payment to buy a home—or even a home itself?

Uncle Sam encourages such generosity, at least within limits (the IRS site has details). You and your spouse are each allowed to give gifts of $13,000 of money or property to as many people as you want, without triggering taxes for you or the recipients. If you give more than this amount to any one person, the excess counts, dollar for dollar, against your $1 million lifetime gift-tax exclusion ($2 million for married couples).

So if you and your spouse wanted to give $50,000 to your son for a down payment on a house, together you could gift him $26,000 this year, and $24,000 next year, tax-free.

This gift could help him qualify to buy a home before the federal government’s tax credit stimulus expires early next summer. If the gift allows him to make a down payment of 20% or more of the sales price, he’d also avoid having to pay private mortgage insurance.

Buying-and-selling real estate in this market takes experience, deep pockets

Buying-and-selling real estate in this market takes experience, deep pockets

In a booming real-estate market, making money investing in homes is easy. Buy a house, slap on a new coat of paint or replace the carpeting and ride the appreciation train to a quick, profitable resale a few months later.

When prices decline — as they have in the Puget Sound area over the past two years — the scenario changes. Most home investors disappear, as the risk is too high that property won’t be worth more in a few months.

The few who remain have experience and investment partners or other funding sources to avoid the loan process. They also know how to fix up homes fast and cheap, to keep expenses low.

“It’s a definite science,” says longtime Bellevue investor Will Heaton, who’s partnered with other investors to buy 15 homes this year. “If you don’t know what you’re doing, you could lose money.”

Condo bulk buyers enliven market [South Florida]

Condo bulk buyers enliven market [South Florida]

As the year starts winding down, real-estate investors have begun closing on large blocks of South Florida condominium units — known as “bulk deals” — at a quickening pace.

The burst of new activity indicates investors — mostly seasoned real-estate professionals from other markets and abroad — perceive the new construction market is nearing bottom, according to analysts.

Since the end of October, investors have closed on five bulk transactions totaling 518 units and 710,500 square feet throughout Miami-Dade County.

The combined purchase price for four of the five deals was $43 million.