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What The Heck Is A Short Sale
Please note, this transcript is an abbreviated version of the video.
Hello Hello Hello my loves this is Laura Key, I am the Realty Goddess of Los Angeles California. I help "Establish the Community One House At A Time" and I have been in the business for 11 years. I started my career in Colorado and now I am in Los Angeles. I have been in Los Angeles for about six years now and I was a Realtor in Colorado for five years. I love me some Denver. Denver is actually going through a big boom right now as well as Los Angeles.
What the heck is a short-sale? You see them listed on the MLS sometimes and you hear that you can grab a bargain if you purchase one. Today we will discuss these issues and educate you on how these types of sales are processed.
The first thing to learn about a short-sale is that there is nothing short about a short-sale! What is actually short, is what the owner currently owes the bank compared to what the current market value is. If the home is upside down or less than what the current owner paid then the owner has to ask permission from the bank to sell the home at a loss. There are many different reasons that people have to do a short-sale but it's typically centered around a hardship. Maybe the owner lost a job, lost a spouse, has to relocate for a job or has become ill and can no longer afford the home.
Let's take a quick look at what a short-sale is and how it is processed so you can get a better understanding as a buyer so you can decide if you want to go for them as a purchase OR have a better understanding if you are in the seller role.
The number #1 rule is worth repeating...There is nothing short about a short-sale.
The first thing you want to do if you are the owner and have found yourself in a financial bind and you need to sell your home but you cannot pay off the full mortgage, you must contact your financial institution immediately. Let them know the situation and tell them you are interested in doing a short-sale. The majority of financial institutions have short-sale packets ready for you to fill out. The more pro-active you are the more chance you will have in selling your home as a short-sale. These packets can be very tedious and frustrating because it's a lot of paperwork and a lot of writing.
Here is typically what you are going to be asked for: two years worth of taxes, a hardship letter that explains why you need to sell, 3-6 months of pay stubs, 3-6 months of bank statements. If you don't have any of these items, you must write a note as to why you do not have theses items. Simply saying "I don't have them" will not work. Write it out and put it in the packet. Your hardship letter needs to explain exactly why you are having a hardship. Keep it simple and to the point, there is no need to write a book. My advice is to have all of these items completed BEFORE you list the home. Your real estate professional can help guide you on this.
Your home will be marketed just like a regular home for sale. We will have open houses, we will advertise, we will have showings. Once that has been completed and we have an offer or offers, we choose the best offer to accept then prepare to present it to the bank. I must stress that a COMPLETE short-sale packet must be sent to your bank or it can cause problems. It will be the ultimate decision of the bank if they will accept the offer or not. Most likely they will respond to what "their" terms will be for any potential buyer. It takes about 45 to 120 days for a short-sale to be completely processed.
To the buyer, short-sales are not always easy, you are going to have to be patient. If you like that house and you want that home then you must be patient while this process is going on. Unfortunately, an agent is not going to be able to update you daily, but a good agent knows that they must talk to the bank at least twice a week to keep the short-sale moving smoothly. I typically give all parties an update once or twice a week as I get them.
Are short-sales always a good deal?
Some are and some are not. It also depends on the market itself. We are in a seller's market (May 2017) and this means inventory is low so ALL homes are being considered by many buyers. You will find multiple offers even on distressed sales. Sometimes being a backup offer on a short-sale can benefit you because nine times out of ten the writer of the original winning offer is no longer interested.
How does a short-sale affect your credit as a seller?
Short-sales are not as bad as a foreclosure on your credit. If you keep your credit clean after your short-sale, you may be able to buy again after two years. Short-sales are reported on your credit. It will affect your credit score.
I always advise if you are in trouble with your payments, please contact your financial institution as soon as possible and inquire if a short-sale is for you. In the long run it's going to be better for you and your future home buying.
For more information about short-sales or any other real estate topic please reach out to me and I will help assist you!
Home Underwater and You Feel Trapped?
What if I told you there is a legitimate program that will allow you to short-sale your current home and buy a home the next day? Yeap, I bet that got your interest. Some peoples homes are underwater due to no fault of their own. Yes, my friend....we can help! No crazy fills or frills...a honest to goodness solution for those who need help.
Contact me today for more details.
Laura Key, REALTOR® Laura.A.Key@gmail.com
Short sales show up on credit reports as foreclosure, sellers unable to get back in housing market
It is critical that your Real Estate Agent know what to look for in your short sale approval letter! Make sure you work with an experienced short sale agent! Call me today with questions! Laura Key 310.866.8422
More and more short sales are turning up as foreclosures on credit reports. The issue caught the attention of Senator Bill Nelson who this week asked for a federal investigation into why the mortgage industry does not have a separate credit reporting code for short sales.
Like some of his Trinity neighbors, George Albright unloaded his underwater two-story thru a short sale. A short sale damages credit versus a foreclosure that slashes consumer scores.
It's been more than two years since Albright sold his home, and now's he ready to buy again, but can't. It’s showing up as a foreclosure on his credit.
Veteran mortgage broker Pam Marron found it's a scenario repeating itself over and over again. Short sellers discover they can't get back into the housing market because their credit report shows a foreclosure.
Why? The banks and credit bureaus have no special code to report a short sale, according to Marron, who recently traveled to D.C. to educate lawmakers and lobby groups like the Consumer Protection Bureau to do something about the glitch that could affect many.
Experian says the problem is not theirs. In an email, a spokesperson explained. "The short sales and foreclosures are being coded correctly on Experian’s credit reports. Where we have found the discrepancies occurring is in the underwriting process."
Short term, Marron says, short sellers must demand a letter from their lender that states that the property closed is a short sale and any marking of a foreclosure should be deleted.
Source: www.ABCActionNews.com By: Jackie Callaway
Does HUD Offer Special Programs for Homebuyers?
Buying a HUD Home is not as difficult as you may think! I have helped many people purchase their 1st Home from HUD! Call me today for more details about the process! Laura.A.Key@gmail.com or Visit my website to sign up for FREE HUD Listings! http://www.KeyCaliforniaHomes.com
Yes, HUD offers a program called the GOOD NEIGHBOR NEXT DOOR PROGRAM for Police Officers, Firefighters, EMT and Teachers! Call for more details on this program! 310.866.8422. If foreclosures are not sold within six months, HUD will sell them for $1 each to approved nonprofit organizations and government agencies. Homes must then be used create housing for families in need or to benefit neighborhoods.
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More Struggling Home Owners Opt for Short Sales
You DO NOT have to lose your home to foreclosure! Contact me to discuss your options! Laura.A.Key@gmail.com
Short sales surged in 2012 to a level that was nearly triple the amount of foreclosures, according to recent data from RealtyTrac.
Foreclosure sales made up 11 percent of all transactions last year while short sales made up 32 percent, RealtyTrac reports.
"We're seeing fewer of the most disruptive sales, the [bank-owned foreclosures], hitting the market but there are still a lot of distressed property sales," says Daren Blomquist, spokesman for RealtyTrac. "They're shifting to short sales."
The increase in short sales is helping to give a boost to distressed home prices too. In the fourth quarter, foreclosure or bank-owned homes sold for an average of $171,704, a 4 percent rise from a year earlier, RealtyTrac reports.
Source: “Struggling Home Owners Turned to Short Sales in 2012,” CNNMoney (Feb. 28, 2012)
You DO NOT have to lose your home to foreclosure! Contact me to discuss your options! Laura.A.Key@gmail.com
Short Sale Process Cut in Half or More, Freddie Mac Says
Short sales are getting much shorter, Freddie Mac says. The mortgage giant launched a Freddie Mac Standard Short Sale program on Nov. 1 that sought to speed up the short sale process and make it easier and more transparent. "We estimate that the time to complete a short sale will decrease by approximately 50 percent to 75 percent," as a result of the changes, writes Tracy Mooney, Freddie Mac’s EVP in a recent blog post.
Among the changes that took effect Nov. 1, 2012:
- Mortgage servicers have 30 days to make a decision on a short sale once they receive an application. If they need to negotiate with a third party, they have 30 additional days. A final decision on the short sale must be made within 60 days.
- Mortgage servicers are required to acknowledge they received the short sale application within three days of submission. Servicers must provide weekly status updates if they end up needing more time to review the application past the initial 30-day period.
- Mortgage servicers have authority now to approve short sales when qualifying financial hardships for home owners who are past due or current on their mortgage payments.
- Mortgage servicers are also now able to approve short sales without seeking a separate review by the mortgage insurance company.
- Following a short sale, home owners may be able to qualify for up to $3,000 in relocation assistance.
Source: “The Shorter Short Sale: Long on Borrower Benefits,” Freddie Mac Executive Perspectives Blog (Jan. 22, 2013)
Short Sale Approved! Ready to Close Escrow!
Short Sale Approved! Ready to Close Escrow! We will close this escrow by the end of January 2013! Are you facing foreclosure, not sure where to go? Don't know what a short-sale is and how it can benefit you? Give me a call, I can help you decide what is best for you! You have options!
How to Buy a Short Sale
Are you considering buying a short sale? More and more homes listed for sale these days are short sales and buying one can save you 20 percent or more. However, there are some major differences about short sales that you should know before you make an offer. Short sales are way for homeowners who are in financial trouble to get out of their mortgage obligations and get on with their lives. They lose their homes and they suffer nearly as much damage to their credit as if they go through a foreclosure. However, short sales are faster today than foreclosures, which can take a year or more. That's a major reason more and more owners are choosing foreclosures. The average foreclosure now takes 587 days from the time the owner defaults until the property is re-sold. It's no wonder families facing foreclosure want an alternative. In the past two years, short sale volume has tripled and they are expected to increase by another 25 percent in 2011.
Short sales make sense when owners owe more on their home than it is worth and they are 90 days or more delinquent on their mortgage. Under those conditions, lenders are willing to take a loss on the sale of the home.
For buyers, getting your offer accepted and then closing on a short sale can be more complicated and takes longer than a normal transaction. The more prepared you are for dealing with a short sale, the more successful you will be.
Buyers need patience, patience, patience. Though they are faster than foreclosures today they are not speedy. Short sales can take six months or longer. When short sales became popular several years ago, most lenders were neither staffed or prepared to handle them. Many lenders dragged their feet because they would prefer not to take the loss, or to delay putting in on their books as long as they can. The greatest problem many short sales run into is the fact that most mortgages today are securitized—bundled with mortgages and sold as securities to investors around the world. Getting approval for a short sale from the actual owners can be mind boggling.
If you're a buyer considering entering into a short sale, don't even think about going it alone. Consult a real estate professional who can answer your questions and help you navigate the process. In recent years, thousands of real estate professionals have obtained special training on short sales. New software platforms help them manage the short sale process, which can be like herding cats.
If you're ready for the challenge, here are six important steps you can take to significantly save time and improve your chances of landing a short sale.
1. Get your credit in order before you start looking at houses. If you're bidding on bargain you'll be bidding competitively, possibly against investors paying all cash. That's tough because when lenders see all cash they also see no risk. Do everything you can to reduce the risk factor by having your credit in tip top shape, putting down as much as you can muster and getting a Pre-Qual Plus letter. DON'T buy anything expensive on credit or be late on a credit payment by even a day until the deal is done.
2. When you make an offer, make a strong one and . Many first-time home buyers put down an earnest money deposit of $1,000, but an amount between 1 percent and 3 percent of the sales price puts you way above the crowd. The minimum down payment for FHA loans is 3.5 percent of the purchase price, and the earnest money is part of that down payment. Some real estate contracts call for the earnest money deposit to be placed into a trust account upon short sale approval. Sellers like to see that buyers are ready to put their money where their mouths are, because it shows that those buyers are committed to the transaction.
3. Do your homework on pricing. Check comparable sales on Realtor.com. Some short sale listings are deliberately priced under market value to attract eager buyers, but it doesn't mean the home will sell at that price. However, many banks will approve a short sale that is priced between 5% and 10% under market. Call the listing agent to find out if there are other offers. If the agent has already received a number of offers, your offer may need to be priced much higher than list price. If the seller has already accepted an offer and sent that offer to the bank, you may be wasting your time trying to buy that home.
4. Shorten your contingency period for inspections. In most states standard purchase contracts give buyers from 14 to 30 days to conduct inspections without jeopardizing their deposits. That means the home is basically off the market while the buyer does due diligence, and the house is not considered solid until that contingency period ends. You will speed up the process and gain a competitive edge if you can line up two or three inspectors in advance and cut your contingency period in half in your offer.
5. Communicate patience. If you're not willing to be patient, don't get into a short sale. It's not enough to be patient, you must also communicate the fact that you are willing to wait on the bank for the short sale approval process. Although it is possible to receive short sale approval within 3 to 4 weeks, many banks take at least 6 to 8 weeks, and sometimes longer, to approve or reject short sales. Be prepared to wait 120 days and to act immediately if approval arrives earlier. The biggest problem short sale listing agents and their sellers face is buyers who walk away. No short sale listing agent wants to work on a transaction for several months only to find out the buyer whose offer was accepted has vanished upon short sale approval.
At the end of the short sale rainbow lies a great deal on a home that would have cost you thousands more if it were not a short sale. Though you may have to wait months to close, your new home will probably be in better shape that it would be if it were a foreclosure and sat vacant for a year or more.
Source: By Steve Cook Real Estate Economy Watch
Ready to purchase your home? A little home education will help you enjoy the journey! Contact Laura Key for a schedule of Home Buying Classes! Laura.A.Key@gmail.com www.KeyCaliforniaHomes.com
Underwater Sellers, what are your Options? Cash to Short Sell? Cash for Keys? Foreclosure?
We get these questions and would like to share our thoughts about this dilemma. Some home owners who are underwater may not know their alternatives. The “Cash for Keys” is a program that banks do for some home owners. The “new twist” you’ll be hearing more about is “Cash to Short Sale”. Lenders are figuring out that if there is anything they can do to make a deal happen, they need to do it. This apparently is what is starting to take place with people that are trying to “short sale” their homes. Instead of “Cash for Keys” to homeowners that lose their homes to foreclosure. This was not offered to home owners who were trying to short sale their home. Often the banks would basically give them a certain time to complete the short sale until they foreclosed.
Now because of tight lending practices, new buyers would take so long to qualify, it is often “too little, too late” to close escrow before foreclosure. When that happens it seems everybody loses. The lenders lost a willing & able buyer and the seller because, now, not only did they lose their home to a foreclosure, but also because a foreclosure was now on their credit report instead of a short sale. (It may be better to have a short sale than a foreclosure on a credit report?) Plus, the buyer may or may not wait until the home came back on the market at a later date.
Source: http://realtyworld-sierraproperties.com by Douglas Zeller
Banks Pay Homeowners to Avoid Foreclosures
"This is no joke! Our office just closed a short sale and the owner was paid $30,000" You have to fit into the "box" but if you do it's a great incentive against foreclosure!
Banks, accelerating efforts to move troubled mortgages off their books, are offering as much as $35,000 or more in cash to delinquent homeowners to sell their properties for less than they owe.
Lenders have routinely delayed or blocked such transactions, known as short sales, in which they accept less from a buyer than the seller’s outstanding loan. Now banks have decided the deals are faster and less costly than foreclosures, which have slowed in response to regulatory probes of abusive practices. Banks are nudging potential sellers by pre-approving deals, streamlining the closing process, forgoing their right to pursue unpaid debt and in some cases providing large cash incentives, said Bill Fricke, senior credit officer for Moody’s Investors Service in New York.
Losses for lenders are about 15 percent lower on the sales than on foreclosures, which can take years to complete while taxes and legal, maintenance and other costs accumulate, according to Moody’s. The deals accounted for 33 percent of financially distressed transactions in November, up from 24 percent a year earlier, said CoreLogic Inc., aSanta Ana, California-based real estate information company.
Karen Farley hadn’t made a mortgage payment in a year when she got what looked like a form letter from her lender.
“You could sell your home, owe nothing more on your mortgage and get $30,000,” JPMorgan Chase & Co. (JPM) said in the Aug. 17 letter obtained by Bloomberg News.
$200,000 Short
Farley, whose home construction lending business dried up after the housing crash, said the New York-based bank agreed to let her sell her San Marcos, California, home for $592,000 -- about $200,000 less than what she owes. The $30,000 will cover moving costs and the rental deposit for her next home. Farley, who is also approved for an additional $3,000 through a federal incentive program, is scheduled to close the deal Feb. 10.
“I wondered, why would they offer me something, and why wouldn’t they just give me the boot?” Farley, 65, said in a telephone interview. “Instead, I’m getting money.”
Tom Kelly, a JPMorgan spokesman, declined to comment on the company’s incentives.
“When a modification is not possible, a short sale produces a better and faster result for the homeowner, the investor and the community than a foreclosure,” he said in an e-mail.
A mountain of pending repossessions is holding back a recovery in thehousing market, where prices have fallen for six straight years, and damping economic growth. Owners of more than 14 million homes are in foreclosure, behind on their mortgages or owe more than their properties are worth, said RealtyTrac Inc., a property-data company inIrvine, California.
Foreclosure Holdouts
Short sales represented 9 percent of all U.S. residential transactions in November, the most recent month for which data is available, up from 2 percent in January 2008, according to Corelogic. Bank-owned foreclosures and short sales sold at a discount of 34 percent to non-distressed properties in the third quarter, according to RealtyTrac.
As lenders shift their focus to sales, they are finding that some borrowers would rather risk repossession while they wait for a loan modification, according to Guy Cecala, publisher of Inside Mortgage Finance, a trade journal. In a loan modification, the monthly payment, and sometimes principal, is reduced to help prevent seizure. Homeowners facing foreclosure may live rent-free for years before they are forced out.
“That’s why the banks have got to pay the big bucks,” Cecala said. “The real question is why is the bribe so big? Is that what it takes to get somebody out of their home?”
Multiple Banks
Banks also pay a few thousand dollars to the owners of second liens, whose loans can be wiped out by a short sale, to encourage them not to block the deals.
While JPMorgan is giving the largest incentive payments, other banks and mortgage investors are also offering them, according to interviews with 12 real estate agents in Arizona, California, Florida, New York and Washington. Lenders also provide incentives on loans they service and don’t own when the mortgage investor, such as a hedge fund, requests it.
JPMorgan, the biggest U.S. bank, approves about 5,000 short sales a month. It generally offers $10,000 to $35,000 in cash payments at settlement, real estate agents said. Not all of the sales include incentives.
Borrowers also can receive payments from the federal government’s Home Affordable Foreclosure Alternatives program, which in 2010 began offering as much as $1,500 to servicers, $2,000 to investors and $3,000 to homeowners who complete short sales.
Quicker Resolution
For banks, approving a sale for less than is owed on the home can cut a year or more off the time it takes to unload a property. From listing to sale, the transactions took about 123 days on average at the end of last year, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.
Lenders spend an average of 348 days to foreclose in the U.S. and an additional 175 days to sell the property, according to RealtyTrac. In New York, a state that requires court approval for repossessions, it takes about four years to foreclose on a home and then resell it, the company said.
Lenders can often afford to forgive debt, offer the incentive and still make a profit because they purchased the loan from another bank at a discount, said Trent Chapman, a Realtor who trains brokers and attorneys to negotiate with banks for short sales.
Chapman, who also writes a blog on TheShortSaleGenius.com, said he’s heard about 50 homeowners who have received incentives from lenders including JPMorgan, Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.
Wells Fargo
“My guess is they want to get rid of bad loans,” Chapman said. “If they short sale these types of loans, they have less of a headache and have some goodwill with the homeowner.”
Wells Fargo, based in San Francisco, offers relocation assistance of as much as $20,000 for borrowers who complete short sales or agree to transfer title through a deed in lieu of foreclosure “in certain states with extended foreclosure timelines, including Florida,” Veronica Clemons, a spokeswoman, said in an e-mail.
Bank of America Corp. sent letters to 20,000 Florida homeowners as part of a pilot program, offering incentives of as much as $20,000, or 5 percent of the unpaid loan balance, Jumana Bauwens, a spokeswoman, said in an e-mail. The program expired in December and theCharlotte, North Carolina-based bank hasn’t decided whether to introduce it in other states, she said. About 15 percent of the homeowners agreed to participate in the program, she said.
Citigroup Offers
“The bank is pleased with the response,” Bauwens wrote. “The state is experiencing higher foreclosure rates than other parts of the country and is therefore seen as a viable market to gauge incremental short-sale response and completion rates when presenting homeowners with relocation assistance at closing.”
Citigroup offers $3,000 to most borrowers who qualify for its program, but the “amount may increase based on the circumstances of each individual case,” Mark Rodgers, a spokesman for the New York-based bank, said in an e-mail. “Investor programs have different guidelines for relocation incentives, which we honor.”
Susan Fitzpatrick, a spokeswoman for Detroit-based Ally, didn’t comment specifically on incentives when asked about them.
Borrowers typically can’t negotiate the incentives, which arrive by mail, Chapman, the Realtor, said.
Tap on Shoulder
“It’s not really easy to identify the guidelines because Chase doesn’t tell you, they kind of tap you on the shoulder,” he said. “When I first saw it in January 2011, I thought it was a joke or a typo. I was convinced it must say $3,000, not $30,000.”
Offering enough for the homeowner to put down a deposit on a rental apartment is reasonable, said Sean O’Toole, chief executive officer of ForeclosureRadar.com, which tracks sales of foreclosed properties. Giving tens of thousands of dollars to delinquent homeowners sends the wrong message, particularly if they got into trouble by running up home-equity loans during the housing boom, he said.
“It may make sense for people to walk away, it doesn’t make sense for them to get rewarded for doing it,” O’Toole said. “It’s not the homeowner’s fault that house prices dropped so dramatically, but they have already received months of free rent, if not cash out.”
Cecala of Inside Mortgage Finance said he wonders whether lenders are making big payments on properties with underlying title problems. Evan Berlin, managing partner of Berlin Patten, a real estate law firm in Sarasota, Florida, said representatives of a large bank told him the incentives are primarily given to borrowers when it doesn’t have the proper paperwork needed to win its foreclosure case. He declined to name the bank for publication.
Incentive Disconnect
State attorneys general across the U.S. began investigating foreclosure practices in October 2010 following allegations that the nation’s top mortgage servicers were using faulty documents to repossess homes.
Berlin said his office negotiated about 400 short sales in the past year and about a quarter included an incentive, ranging from $3,000 to $48,000. In some cases, the payments aren’t incentives at all because they’re offered after the borrower has almost completed the short sale, he said.
“The idea is that this is relocation assistance,” Berlin said. “But when you’re offering $48,000, obviously it doesn’t cost $48,000 to relocate.”
Cooperation Sought
The size of the payment may have little to do with sales price. JPMorgan gave one Phoenix homeowner $20,000 after she sold her property in June for $32,000, according to Royce Hauger, the real estate agent who represented the seller and shared a copy of the settlement sheet with Bloomberg News. The bank also agreed to forgive more than $70,000 in debt, she said.
Kelly, the JPMorgan spokesman, declined to comment on the payment.
The homeowners are getting the money in exchange for their cooperation, said Kris Pilles, a Riverhead, New York-based real estate broker who represents banks, servicers and hedge funds that own distressed housing debt.
Pilles is frequently dispatched to the homes of delinquent borrowers to explain the benefits of avoiding foreclosure, he said. His clients have paid as much as $92,500. In return, the lenders expect the seller to clean the house before showings, and trim the grass.
“Money talks,” Pilles said. “From the bank side, it’s anything to initiate a conversation with someone who may not be listening to them.”
SOURCE: By Prashant Gopal
http://www.bloomberg.com/news/2012-02-07/banks-paying-homeowners-a-bonus-to-avoid-foreclosures-mortgages.html
The Most Important Short Sale Facts!!!
Do educate yourself. This is THE most important thing you can do. Short sales can be complicated. You need every bit of information you can get when you jump into the short sale process.
Don’t wait until it’s too late. If you drag your feet and hide from the fact that you’ve stopped making mortgage payments, it will cost your credit rating and it will put any chances of a short sale in risk.
Do be diligent. There have been very closable short sales that fail because the homeowners either stop responding to their agents, stop returning paperwork, stop returning phone calls, stop caring, etc. It can be a difficult process, but at the end of it you will be free of the mortgage, the upside-down house and your financial future will have a better foundation.
Don’t stop taking care of your home. Yes, you will be moving, but if you stop mowing the lawn or keeping the place tidy, that unkemptness will discourage any potential buyers.
Do keep paying your HOA dues! Any unpaid HOA dues will need to be settled either before or at the close of a short sale escrow. Sometimes the buyer or the first lien mortgage bank will contribute to these outstanding bills, but not every time. And Home Owner Associations will send your defaulted HOA bill to a collection lawyer who will slap you and your property with their own outrageous charges.
Don’t rent your home out. In these economic times there are unsavory renters, many of them lost their own homes, that don’t mind giving you the first month’s rent and a security deposit, only to never pay you another payment. You lose the house to foreclosure, but they live rent free for the foreseeable future.
Do your homework when choosing a real estate agent or broker when you go to list your house for a short sale. The wrong short sale agent can ruin your chances of avoiding foreclosure. Short sales require diligence, confidence and an unmatched work ethic. Find that short sale REALTOR that knows her stuff, knows how to work and knows exactly what the banks want to approve your short sale.
Don’t think that you need a real estate agent that knows your neighborhood to short sale your home. In a short sale transaction, it’s about the short sale negotiation and working relationship with your lender(s), not that your home’s location is special compared to the listing around the corner. Out-of-area agents easily price properties using a Comparative Market Analysis (CMA). In fact, banks regularly pay agents and real estate brokers a minimal fee, usually $50 or $75, to price out-of-area properties for them. Your local neighborhood real estate agent may not be the right person. You need a tough and knowledgeable short sale specialist.
Do expect to move soon, or not for months. When your home receives an offer that is just the start for your short sale transaction. But the bank could decide to approve your short sale right away, which means you may only have 30 to 45 days to relocate. But, the approval process could take up to three to six months!
Don’t move prematurely. It makes no sense to pay rent while your home sits empty. Communicate with your agent and keep updated on where the short sale process is.
Don’t stop paying your water bills, sewer bills or trash bills! Any unpaid bills may slow down or stop the short sale process.
Do consult your tax man or even a tax attorney when considering a short sale. Even the best short sale agents are not legally allowed to advise on tax implications of your particular situation, and the best short sale real estate agents don’t. A tax accountant CPA or real estate attorney has a better understanding and the legal right to advise you on such matters.
Don’t think that you must have a real estate attorney to execute your short sale. Most times these lawyers don’t understand real estate or the short sale process as well as an experienced short sale agent does. In fact, many if not most of these lawyers offering short sales require an upfront fee to process your short sale. real estate agents and brokers only collect commissions from the proceeds of the sale, which comes out of the bank’s pocket, not yours.
Do let your real estate agent put a yard sign in the yard. Yard signs tell buyers trolling streets looking at neighborhoods and houses that yours is a possible candidate.
Don’t make viewing appointments unavailable and hard on buyers and their agents. The more potential buyers that see your home the better chance of short selling it and avoiding foreclosure. Make that home as available to buyers as possible!
Do yourself a favor and remember that millions of Americans are going though their own short sale, or unfortunate foreclosure. This economy is dreadful, and many are experiencing financial hardships and your particular situation is nothing to be ashamed of.
Don’t apply for a home equity line of credit or any other type of credit. If you own other properties that have equity, refrain from pulling money out of any of them during a short sale approval. Your bank and any of your bank’s back-end investors will dig deep into your credit history and find this activity. This kind of action says you are just out for your own financial bottom line, and yes, they will take offense to that.
Do a quick pick up of toys, laundry and any other items lying around when a buyer’s showing appointment is scheduled. Buyers will criticize your messiness like your mother-in-law, and worse, it could affect their offer which in turn could affect your short sale!
Don’t make the mistake of thinking a foreclosure is not much worse than a short sale. It is. A foreclosure will decimate your credit; it will keep you from owning another home for years and it will be a part of your financial incompetence far more than you hope it won’t.
Do keep your hardship letter short and sweet. Explain your situation as-matter-of-factly as possible. Then your bank will look at your finances, tax filings and other documents to verify and support your story. But DO NOT include in your hardship that you bought your home for more than it’s worth. The bank does not care your home is underwater. The bank is losing money too.
Don’t strip the house of its fixtures or other potentially valuable assets. Taking the pool system, or the ceiling fans or the beloved touch-action faucets will degrade your home’s marketability, and for what? A few hundred bucks will not make the financial blow of foreclosure any softer.
Do all your paperwork and return to your real estate agent in a timely matter. Short sales can die if the proper paperwork is not supplied. It’s a silly way to screw your short sale, but it happens all the time.
Don’t use a short sale negotiating company. They will charge you large upfront fees that they don’t have to return to you even if they do not complete the short sale. And these companies aren’t held up to the same Department of Real Estate code of ethics that real estate agents and REALTORs are. In fact, some banks will not work with them!
Do call and communicate with your bank(s) and let them know you are attempting a short sale. They have thousands of mortgages defaulting, and if they don’t know you are pursuing a short sale, your property may automatically be classified as a pre-foreclosure. Not keeping your mortgage holder informed of the status of your short sale can help expedite your house to foreclosure which will not help your short sale.
Don’t violate the bank’s At Arm’s Length requirement for the short sale. The Arm’s length agreement required from the short sale lender prevents you from “renting the house back”. To avoid any fraud or risk that can result in the bank coming back at you for the balance of your loan. Do it by the book and follow the rules. The risk is not worth it.
Do know that credit card companies may decide to pull your credit due to foreclosure. When a foreclosure shows up on your credit, it says that you are in financial distress and your credit risk increases dramatically.
Don’t think you can’t short sale if you own other properties. This is a common mistake many multiple property owners make. A bank will more than consider a short sale even if you own two or more homes.
Do clean the home and property when you move out. Remove any trash, debris and take or dispose of any of your personal property. The condition of the property before transfer can have a negative effect on the buyer and their desire to own the home, and give them a reason to back out. Cleanliness is next to Godliness, and Sold Short Sales!
Don’t assume the information about short sales you read on the internet is always correct. There are many real estate professionals, and many not-so-professional individuals, giving advice regarding short sales. Some do not have a clue how to handle a short sale, let alone give advice on the subject. Your best bet is to call and talk to any prospective short sale experts. Get a feel of their knowledge base and real estate confidence, and above all else only hire a real estate short sale agent with experience.
DO CALL Laura Key at 310.866.8422! I am a Short Sale Expert! HAFA, Making Home Affordable, and many more programs, just give me a call, I will help you through this difficult time!
Follow me on twitter, facebook, yelp, google+ and foursquare! Maybe we can share some laughs and smiles along the way.
Source: Garrigus Real Estate Blog
Short sales better option for homeowners
MSNBC reports that the recent increase in short sales may be the relief that the housing market needs during its slow recovery. The number of short sales has increased by 26,000 this year following a jump in the number of foreclosures and short sales in 2010.
According to the source, short sales may also be a better option for homeowners when compared to foreclosures, especially for those who don't qualify for loan modification.
Homeowners who choose short sales can stay in their homes and start rebuilding their credit sooner than those who find themselves in foreclosure, says the source. FICO reports that the number of points homeowners lose is the same when foreclosing or selling the home for less than the amount owed on the mortgage, but those who opt for short sales will likely obtain a loan quicker, which will help improve their credit scores.
The source reports that some economists are concerned that the decrease in foreclosures may be a result of a built up amount of foreclosures that have not been processed.
"Foreclosures are going to be a drag on the market for a long period of time," Dean Baker of the Center for Economic and Policy Research told the source. "Until these distressed homes are resold and assimilated back into the market, real estate prices can't stabilize."
Source: Today's MLS Real Estate Dec. 30, 2011
The Realty Goddess has Landed at 360 Realty!
The Realty Goddess has landed at 360 Realty in Los Angeles CA! www.360Realty.com
5900 Wilshire Blvd #2900 Los Angeles, CA 90004
800-399-9659 x361
