Short Sale Tips

Archive for December, 2009

The short sale is a very good tool to be used for two reasons: extends the foreclosure process for many months and saves the homeowner from a public (foreclosure) sale. It appears that short sale is a good solution if the homeowner wants to keep the house and also if he wants to sell it. It works perfectly in both cases. The biggest challenge people have is preparing the short sale package. It is important the package to be put together correctly. Usually, the lender sends a list of items needed for the package. And if something is missing, they will send a letter requesting the document. I think that sometimes is a good idea to miss something. It can add one more month to the process. Any communication with the bank buys more time for the homeowner.

Now, back to the package. The items that need more explanation are:

1. The buyer. As a homeowner who wants to initiate a short sale, you must find a buyer. (In my opinion, real estate agents are not the best choice). You can look for a buyer in the local newspaper. Find ads that say: We buy houses. Those are investors looking for a deal. You can also ask friends and relatives if someone wants to become your buyer. You need two things from the buyer: executed purchase contract and pre approval letter from his future lender.

2. The hardship letter. It is a free text letter to the lender explaining what happened to you. Make the letter emotional. Tell your story. Extend on the reason why you are experiencing the hardship. Describe the condition of the house (may be you were not able to keep up with the maintenance and repairs). Do not ask anybody else to write this letter for you. You have to do it yourself.

3. The preliminary HUD. This document is prepared by the closing agent (title company). It describes the real estate transaction and shows the lender how much they are going to net. In the short sale transaction the lender pays the closing costs in behalf of the seller. For example, if the contract is for $100,000 and the closing costs (together with junior liens pay off) are $10,000, the bank will be interested in the net amount, which is $90,000. Find a local title company and promise to close with them. They will prepare the HUD for you (for free, because they will get your business).

4. Financial statement. It is easy to fill out. The lender provides the form. Do the best you can. The idea is to show your monthly income and expenses. Usually, during a foreclosure process, the people are financially distressed. This means that the expenses are more than the income.

5. Cover sheet. Always use a cover sheet when you fax the package. Make sure you write there your contact information (include your email address also). Write the loan number on each sheet of the package.

Go over the items list and make sure you have everything. After you fax the package, you have to call your lender in a week. Ask if the short sale package has been posted on your account. If not, send it again.

Conclusion: know what you are doing. If you don’t know, learn. When you learn, take action.

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More likely than not, you may be wondering how to get a Citimortgage short sale approved. Too many, a short sale can be daunting, but if you have an experienced Realtor behind you it does not have to be. This person will be the eyes and ears for both you and the bank, which is what you want. All three of you need to approach a short sale with the mind frame of getting as much money back to the bank as possible.

This in turn will lead to less stress on you, the homeowner. However, and this is vital, finding a veteran Realtor who has a history of getting short sales approved an important factor in getting a short sale approved.

Citimortgage is one of two very prominent banks, the other being Bank of America, and it handles more loans than they have in house. They follow specific procedures when it comes to proceeding with a Citimortgage short sale. The first vital guideline is you have to have a severe hardship.

You have to be very detailed with what is happening financially that pertains to your short sale. The best way to approach this is when sending in your hardship letter handwrite it, and make it as authentic as possible as well as expressing it as best as you can. This can be used for almost any bank, but City in particular.

The second important guideline you should know is that Citi does not handle most of the decision making. The negotiators, or the Loss Litigation Department, do not really have all that much authority to move things around or to make extensions as you would think.

Another question that rests in the minds of many is, is there a trick to figure out how much the bank will approve for a short sale? The answer is yes, but how much is owed on the property is not where it starts; it is the property’s current market value.

Most banks are willing to get within 10% of the appraisal value if under 200,000 and between 5%-8% for higher appraisals, in addition to 10% for misc. fees that can include the title and Realtors fees. You can take the BPO, or appraisal, and deduct 15%-18% of that to estimate how much the bank is will to take for your property The Realtor should be willing to work extra hard in the beginning to come up with an offer as close to the appraisal as it can get. To do so, he/she may obtain their own BPO and pay another Realtor for a BPO that way you can present the bank with all of these forms when starting the process.

For all of these reasons and more is why having a knowledgeable Realtor standing beside you through this process is key. It is their knowledge that you need and want that will make this as smooth as possible and get closer to having it approved, especially when dealing with a Citimortgage short sale.

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Yes, You Can Be A Hero And Have Your Best Year Ever

“One out of 10 homeowners is not making their mortgage payment.”

“One out of six homeowners has an upside-down mortgage.”

“Seven out of 10 homeowners who lose their home to foreclosure didn’t contact a real estate agent or lender prior to foreclosure.”

These are just some of the statistics I heard at a Short Sale Summit in February in Carlsbad, California.

The guest speaker was Alex Charfen, co-founder of the Distressed Property Institute, who added that, with regards to today’s market, “What’s going on has just begun. If this were a baseball game, it’s inning number two or three.”

And while today’s market is no game, it is, says Charfen, a “once-in-a-lifetime gold rush” if you become the short sale expert in your area. That doesn’t mean a reluctant “Yeah, OK, I’ll do that short sale,” or a desperate “I’ll take that short sale – I’ll take anything!” That doesn’t mean you just add “Short Sale Expert” to your business cards and advertising.

It does mean you’ve spent serious time acquiring the knowledge to become an expert on helping people who are facing the worst (or close to it) financial crisis of their lives. It means you seek out prospects in a short sale situation. It means that you advertise for those prospects, you embrace those prospects, and you commit to helping them negotiate the best possible outcome.

It means you understand that you’re not doing this just for the commission check. You want to sell that home. You want to help that family avoid foreclosure and financial ruin. You want to help not just your client, but their entire community so it doesn’t turn into a ghost town of empty, neglected houses.

Why would I want to do that, you’re asking? Why not let some other agent deal with those people and their problems? Just give me a nice two-income family, 720+ FICO, steady jobs, big down payment, and I’ll find them the perfect home.

Of course you will. That is, if you can find that dream client.

There just aren’t that many of them out there. If they’re that dreamy, they’re generally already in a house and they’re not moving up or down or anywhere else until the economy is in better shape. It’s that lack of dream clients that’s driving record numbers of real estate agents out of the business every month.

So, who is out there to buy short sale properties? Plenty of first-time buyers, especially people who are renting. Relocating families who have to move. Investors looking to start or expand their portfolio. Short sales are an opportunity to acquire a property at below-market value. Read: A great deal for buyers. There are a lot of properties to choose from, and banks would rather sell the property than go through the time and expense of foreclosure (that is, “They’d rather remove a non-performing asset prior to acquisition,” as Charfen puts it).

What’s truly a pity – it’s worse than a pity – is the number of people whose homes go into foreclosure when they might have had a successful short sale. There’s a wealth of misinformation out there, and there are many people who actually think, “Short sale or foreclosure – same thing.” So they miss a mortgage payment, and then another and then another, and their lives go into a high-speed, downward spiral.

It doesn’t have to be that way, says Charfen. Once an agent is armed with training and a support network, “The agent lets people in his database and others know that he’s the short sale expert, he’s available, and he can help the seller sell and the buyer buy. He begins helping people, and his delighted clients enthusiastically refer him to their family members, friends and coworkers in similar situations. He becomes known as the short sale ‘Super Hero’ who not only handles short sales professionally and effectively, but he saves people from foreclosure.”

That’s not to suggest short sales are easy – they’re not. They require significantly more, and different, paperwork than a traditional real estate sale, and one missing piece can delay the transactions for weeks or months – or kill it altogether. Being a short sale Super Hero requires exceptional negotiating skills as you represent the seller and interact with the buyer’s agent or offers from multiple buyers’ agents. At various times you may be in contact with attorneys, title people, property tax people, contractors, tax advisors, accountants, and others. And then there’s the lender in the form of the loss mitigator, an overworked, underappreciated person who already has 300 files on his desk and why should he give yours priority? No, short sales are not easy. If they were, everyone would be doing them – right?

There are amazing opportunities right now for real estate agents who

• Are willing to spend the time to become educated about short sales.

• Are committed to putting the systems in place to help manage these complex transactions.

• Want more than a commission check – you want to help people get the best financial results possible and move on with their lives.

Those agents will prosper in this marketplace and make 2009 their best year ever.

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Defaulting on your mortgage dues entails repercussions. For one, your property may be on the verge of being foreclosed. You can avoid this by entering a short sale in hopes your credit rating will not be severely tarnished. But the truth is, there is not much difference whether you pursue a short sale or foreclosure. Then again, there are some attributes of the short sale that can persuade you to opting for it.

Credit implications are relative to the reason why you are going for the short sale. If you are going for this process and you have other assets to augment the discrepancy of the sale, your score will not be affected. If you also choose to acquire new loans to suffice the difference in proceeds from the sale, you are even given the chance to improve your rating. However, your score will not be gravely affected if you do not have pending delinquencies on your mortgage or other loans.

When your lender accepts the fact they can only get an amount way less than what you owed, then the sale advances. If you are going through this process to avert foreclosure, there would be implications to your credit standing. Assuming that you are delayed in your payments for more than 59 days, your delinquency reflects your incapability to sustain your financial obligations. Thus, they would give a negative account on your record. If this is the case then a short sale is not unlike foreclosure at all. Your score still suffers. With this in hand, you will lose from 200 to 300 points. The only difference is the description of your status, wherein the sale would be treated as a pre-foreclosure process with an attempt to redeem the property.

Moreover, you have to compensate for the discrepancy from the sale. For example, the proceeds accumulated only an amount of $60,000 whereas the money you owed was $90,000. You have to pay for the remaining amount upon the deadline set by the lender. If you do not come up with such amount over the time you were given, the lender may sue. A deficiency judgment would appear in your record in case you do not have any means to disburse the balance. This data will put adverse results to your rating status as a homeowner/borrower.

On the contrary, rare cases wherein lenders do not deliver negative details to credit reporting agencies and bureaus present optimism for other sellers. Some real estate agents sporadically report their clients with three-month old delayed payments have seen their scores decrease by only 100 points. Thus, they can maintain a rather better standing.

There might not be deliberate credit advantage brought about by either foreclosure or short sale. However, the latter offers other forms of benefit. According to Fannie Mae guidelines, a seller who went through the short sale would be allowed to purchase another home with decent interest rates within two years. As for those who opted for foreclosures, they have to wait five to seven years before reasonable financing endeavors will be presented to them.

In order to be saved from the hassles of either set up, keep track of your payments so as to protect your credit score as well. This way, you can better enjoy full ownership of your home.

The Real estate market can be an enjoyable, satisfying and lucrative experience for you. Whether you are a homeowner, a buyer, a landlord or simply a real estate enthusiast, get to know more about the latest in the real estate market now. Read more about it here: Surprise AZ Short Sales and Buckeye Short Sale Properties.

Short sale information is vital for homeowners who want to sell their homes. A short sale is needed when the value of the house has declined below the cost of debts or loans. Some people accumulate debts and loans that are above the value of their property.

It does not mean that you should sell your property whenever you have a short sale. Sometimes, it may be beneficial to wait. The property market changes from time to time. A positive change can happen in the market and the value of your house may increase. If the value of your house surpasses your total debts, then you can sell the house. A homeowner must therefore decide the best way to go.

Sometimes, there is no time for waiting, especially if your creditor is not happy with your loan payments. If you are forced to sell your home, you must look for a buyer with the highest bid. A high bid may come close to the total amount of your loans or it may top the figure. In this case, you may sell your house and pay the difference to settle your loan. In the second case, you may pocket the difference for your own use. Let’s say your house is worth $500,000 and your loans are $550,000. You will either pay off $50,000 or save $50,000.

You are advised to look for a competitive price before you sell your house. Try to find the best property seller on the internet. If this avenue has failed, then you can sell your house immediately. The tricky thing is time and market prices. If you gamble with time, you may either win or lose. It happens that the market price may decline further if you do not sell today. It also happens that the price may increase if you wait.

You must know how to make an intelligent short sale. First, determine the actual price of your home. There are many methods of calculating the value of property. Some methods are simple estimates while others are detailed estimates. A simple estimate often involves a rough method of calculation, such as applying a square metre rate. The gross floor area of your house is measured and open places like the patio are deducted. The remaining result is multiplied by the square metre rate to get a rough value of your house.

A detailed estimate involves precise measurement of every item in the house. That is the structure of the building, depreciation and improvements. The location of your house also determines its price. There are many cost estimating systems on the internet. You just fill a quote form on the internet and the value of your house will be sent to you.

Short sale information is vital for homeowners who want to sell their homes. We’ve got all the info you’ll ever need now on http://nphsrealestate.org/short-sale.