Time to Take Advantage of Short Sale Homes

As the summer draws to a close, you can expect more short sales to enter the pipeline with both distressed homeowners and lenders trying to work out an agreement so that both enjoy a win-win situation.
Just to remind you – a short sale is considered to be the best foreclosure alternative as it allows the homeowner to leave the home without much repercussion as a result of mortgage default. On the other hand, more and more lenders are accepting short sale proposals especially since their books are already overflowing with foreclosure inventory, which are considered to be non-performing assets.

The timing is certainly right to consider a short sale.

Lenders are being pressured by the federal government to work with the owner instead of foreclosing and are more likely willing to negotiate.

Sellers are also working double time to have their short sale proposals accepted especially since there is the risk of losing the tax break incentive which is set to expire by the end of the calendar year.

What Sellers Need To Do

For obvious reasons, it is important for a homeowner/seller to make a smart move. Initially, it is necessary to check with their lenders for new short sale guidelines. For example, Bank of America and JP Morgan Chase have actually decided to expedite short sale transactions by prequalifying the homeowners at a price already agreed upon. Such decision has certainly cut the duration for the entire sort sale process. In some cases, the bank even makes an offer to the homeowner just to speed thing up.

Of course, the tax break is incentive enough if you do not want lenders coming after you with a deficiency judgement, which is subject to income tax.

In any case, your chance of getting out of your unfortunate situation in relatively good condition is much better if you hire a professional short sale Realtor.

3 Short Sale Myths Debunked

It definitely is not surprising if you have grown to be familiar with short sale properties. With the real estate industry still suffering from the mortgage debacle, there is still a significant number of homeowners who are hoping to avoid a foreclosure with a short sale.

Times have certainly changed considering it was not long ago when the mere mention of short sale is enough to give someone an anxiety attack. It was not a common transaction and this could probably be the reason why, until today, there are still plenty of myths about short sale.

For your peace of mind, consider the following debunked myths:

1. Buyers interested in a short sale home can simply offer an amount below market value and the lender will accept it.

Although it is true these properties are sold at a discount, most lenders will still look at the home’s appraised value. You have to keep in mind these houses usually do not require major repairs and are only on the market because the owner is upside down on his mortgage. To be able to buy a short sale, you need to make a reasonable offer, one which is based on a comparative market analysis. In lay man’s term, you can simply check similar homes sold within the neighbourhood. Of course, you need to also know the home’s condition.

2. Short sale and foreclosed homes are the same.

Do not make the mistake of thinking these properties are one and the same. For starters, it would be worse to experience a foreclosure than a short sale especially since the former can lower your credit score by as much as 300 points. In addition, your financial credibility will suffer for the next three years. On the other hand, short sale will usually appear in your report as “paid as negotiated”. Although your credit score will still take a hit, it can be as little as 50 points.

3. Buyers who are willing to pay the asking/list price can buy the short sale home.

You have to understand that in a short sale transaction, you need the lender’s approval to be able to buy the home. In some cases, lenders are more than willing to accept short sale proposals but there are also cases when the lender will not approve the proposal because the seller failed to submit all paperwork. This is perhaps the reason many sellers work with a short sale Realtor to improve the chances of getting approved.

What to Expect After Submitting the Short Sale Proposal

After finally finding a serious short sale buyer and sorting through all the paperwork, making sure each of the lender requirements have been met, you are now ready to submit the short sale proposal. However, if you think that once you have submitted the proposal, you can sit back and relax, think again. You need to know what you have to expect after this step in the short sale process in order to make the necessary preparations.

There are several possible outcomes:

1. Short Sale Proposal is accepted. If the lender finds your proposal to be acceptable, you will need to notify the buyer immediately and proceed with the closing. Obviously, you will need to move out of the home soon so you also need to think about this and start looking for a place to move into. Soon after this you’ll need to start making arrangements for a place to move into.

2. Lender makes a counter –offer. This is still considered good news since it means the lender is willing to negotiate. You can respond to a counter offer by agreeing to the lender’s demand or asking for a re-appraisal to justify the initial offer, especially if the lender based the counter offer on an earlier appraisal. Also, if the lender is asking for upfront money, your short sale realtor should be able to negotiate this particular requirement.

3. Lender rejects proposal. In this case, you need to go over what went wrong. There are several reasons why a lender might reject a proposal. For example, a low offer, incomplete papers and absence of hardship. If there is time, you can re-submit your short sale proposal.

Whatever the outcome is, you have to be ready in order to avoid wasting time. Keep in mind you and your Short Sale Realtor are working overtime to make sure you avoid a foreclosure.

3 Short Sale Myths Sellers Should Not Believe

As you consider avoiding a foreclosure with a short sale, you will not help but feel worried about the many things you might be hearing about this transaction. The world of short sales is certainly as complicated and confusing as you think and navigating it with an expert short sale Realtor is the only way to go. Of course, knowing the truth about certain myths can help as well.

Myth 1: Lenders Prefer Foreclosures Over a Short Sale

You will be surprised at how most lenders these days are more open to a short sale proposal primarily because it will save them more money in the long run. In addition, the federal government is even encouraging lenders to consider a short sale first before initiating foreclosure, especially if the homeowner is qualified.

Myth #2: A Short Sale is Only an Option for Delinquent Borrowers

This particular myth used to be a fact, but with the collapse of the mortgage industry, many homeowners have found themselves underwater on their mortgages. Also, lenders are already suffering from a huge inventory of foreclosed properties and would not want to add to it, which makes them open to short sale proposals, even if the borrower is current on their mortgage payments. As long as the homeowner can provide proof of their financial difficulties and insolvency, a short sale is an acceptable option.

Myth #3 Most Short Sales Never Get Approved

This, of course, is certainly not true especially if you look at the last couple of months when there was a significant increase in the number of short sale transactions. The process is actually straightforward. You simply need to comply with all the client requirements and find a buyer with a reasonable offer. Certainly, your chance of getting approved is greatly increased with an experienced short sale Realtor by your side who will guide you every step of the way.

5 Short Sale Myths Buyers Should Not Believe

With the increasing popularity of short sales, it is not surprising they are enjoying much buyer interest. Unfortunately, when it comes to short sales, it is not only the sellers who suffer from misinformation. Here are the most common myths buyers might encounter:

Myth #1: Foreclosures are cheaper hence a better investment.

Yes, foreclosures are relatively cheaper but short sales are generally in a much better physical condition. So at the end of the day, you will be paying more for the repair and renovation done on the foreclosed home.

Myth #2: Short sales are a waste of time as lenders choose foreclosure.

This myth has been debunked so many times but many still do not believe lenders are not into short sales over foreclosure. For the longest time, lenders were more willing to initiate foreclosure than agree to the sale of the home for less than its market value. After getting stuck with skyrocketing foreclosure expenses and ballooning inventory, they are now more accommodating of short sales.

Myth #3: Short sale negotiations are adversarial.

Certainly not true as both sellers and lenders are willing to negotiate so everyone will come out a winner in the end.

Myth #4: Making multiple offers is a good idea.

Some buyers think it will help them secure a short sale home but it actually hurts the industry. Consider a situation where a buyer made an offer to 3 sellers and each one has been accepted. The poor seller might lose the chance to avoid a foreclosure when the buyer failed to make good on his offer. For this reason, a lot of sellers require earnest money deposit.

Myth #5: You can buy a short sale home without a short sale Realtor.

It can be done, but it would be really difficult. Besides, many lenders require the buyer to work with a short sale Realtor to expedite the transaction and some even shoulder the commission by as much as 6%.

Qualities of a Good Short Sale Realtor

Just like in any other industry, there are times when the mistakes of a few damage the general image of the many. In the case of short sales, there is a growing number of short sale Realtors who are doing the industry more harm than good.

 

If you are in the market for someone who can help you sell your home via a short sale, consider these following qualities:

Ø  Knows all about your rights as a seller. It is crucial your Realtor is updated with relevant legislations or laws involving homeowner’s rights. After all, you will be hiring them to protect your interest and this would be challenging for them if they are not aware of such laws. Please understand a Realtor is not an attorney so you should always seek legal counsel but, a Realtor’s knowledge about past experience can help you understand the pros and cons.

 

Ø  Patient and Diligent– a good short sale Realtor understands the complications associated with the short sale process and is willing to play the waiting game. Your Realtor should not tire of communicating with the seller, buyer and lender, sending out follow-up letters and making appointments or setting up meetings.

 

Ø  Accepts limitations – contrary to popular belief, a good short sale Realtor should be able to accept their limitation and not come off as a know-it-all. Being able to say “I don’t know” or “I’m not sure” is actually a good thing as long as there is the openness to ask someone who is more knowledgeable or experienced. For example, when certain legal issues arise, a good Realtor will refer to a real estate lawyer instead of trying to address it by himself without doing any research.

 

In many cases, a short sale’s success relies on the experience and expertise of the short sale Realtor. So if you are serious about avoiding a foreclosure, do your homework and find a Realtor who will be an asset and not a liability.

Writing the Florida Short Sale Qualification Letter

It is not unusual for Florida short sale Realtors to ask troubled homeowners considering a short sale to write a qualification letter. This document actually serves as the cover letter of the short sale proposal and contains a brief explanation on why you should be considered for a short sale.

What to keep in mind:

Be acceptable of your circumstances. Your lender might be more than considerate if your letter shows accountability. After all, everyone can make a mistake and in your case, a financial hardship is not really something which has no way out. By accepting your situation, you come off as a mature and responsible individual.

Say it directly. A Florida short sale qualification letter should be direct to the point. There is actually no room for “drama” and you can leave that to the Hardship Letter. Just think of it as writing an essay wherein you focus on the highlights of the problem leading you to your current situation. Avoid flowery phrases and be as honest as possible.

Tell it like a story. Although you need to be straightforward and brutally honest, it does not mean you will have to put the lender to sleep. Make sure you fill up the gaps in your story, so the lender will have a clear picture of your situation. For instance, explain the circumstances of your job loss in such a way the how, why, when and what questions of the lender are addressed. Leave no room for guessing.

When writing this Florida short sale qualification letter, you need to remember what you are asking for is actually a privilege, so you need to be polite and humble. You are actually appealing for a chance to avoid foreclosure and coming off as demanding will not help your cause.

 

When Buying a Short Sale, Consider These Factors

With the real estate market brimming with investment opportunities, it is only right homebuyers go out and find out for themselves which of these properties are worth their hard earned money. To no one’s surprise, many are looking into short sale homes for their more affordable prices.

But the question is: can anyone buy a short sale property?

Well, to be able to answer this question, you need to consider these factors:

1.       Resources – before you even think about looking at listings, you need to really look hard at your finances. Find out how much you can truly afford and always consider the worst case scenario, especially if you are planning on refinancing the home. Speaking of which, secure a pre-approval loan letter from a lender. This document will not only show you how much your budget is, but it can also establish your credibility as a buyer.

2.       Knowledge of the Process – a short sale is not as straightforward as a typical home sale, so you need to brush up on the process. Better yet, hire a short sale Realtor who probably knows the ins and outs of the business and has the experience which will surely come in handy during tough situations.

3.       Knowledge of the Short Sale Home – it does not mean because the home is in short sale it is automatically a good investment. You still need to do your homework and check the investment potential of the property. You might also want to first confirm its status to be sure it is still being sold via short sale.

Lastly, you need to prepare yourself for the short sale journey ahead of you. Prepare yourself not only financially but mentally and emotionally. There will be challenging moments as short sales are known to become quite complicated.

Tip for Short Sale Realtors: Set Realistic Expectations

Being in the short sale business, Realtors often find themselves getting excited about every prospective sale. Most get frustrated halfway through the process and start unraveling at the seams. Perhaps, it is because of unrealistic expectations. After all, a short sale can be one of the most sophisticated real estate transactions you will ever encounter and it will surely pay off if you give it the respect it deserves.

To help you avoid falling into a hopeless pit midway through the short sale process, consider these three tips:

1.       Accept short sales for what they are — complicated transactions. If you underestimate short sales and make the mistake of not really getting to know each nook and cranny of the process, you will find yourself way in over your head. For this reason, a new breed of Realtors has to be born to handle them. You just cannot rely on basic knowledge; you have to master everything related to this transaction from signing on a client to closing.

2.       Practice patience and humility all the time – in many cases, you will find yourself swimming in documents related to a short sale transaction. There are also the calls from the seller and/or the buyer you need to attend to especially if the lender approval is taking too long. Of course, you will be dealing with the lender as well. With all this on your plate, you can really feel overwhelmed. If everything becomes too much, take a deep breath and walk around. You will not gain anything by succumbing to the pressures of the business.

3.       Do everything with care – there are so many things which could go wrong with a short sale transaction such as the buyer walking away, the lender rejecting the proposal for not complying with their requirements and even the seller changing their minds at the last minute. This is why it is important for short sale Realtors like us to take each step cautiously and make sure all “i”s are dotted and “t”s crossed. It pays to be meticulous when it comes to short sales.

Short Sale Strategy: How to Attract Lender Attention

In the world of short sale, everything actually depends on the approval of the lender. As a short sale Realtor, your hard work will be wasted and you cannot claim success if the lender rejects the proposal.

So how do you increase the chances of the short sale application getting accepted? Make sure you attract the attention of the lender — for the right reasons.

Consider the following tips:

1.       First of all, you need to make sure every pertinent document is included in the short sale application and all lender requirements have been submitted.

2.       Be nice when dealing with the lender or any of their representatives. You do not want to be remembered for the wrong reasons.

3.       Establish solid relationships by responding to the lender’s inquiries promptly and being professional the whole thing. Keep in mind, a short sale actually benefits the lender as well so if you establish yourself to be a good Realtor, your short sale applications will most likely be taken seriously as well.

Dealing with the Seller

Aside from attracting the right kind of attention from the lender, it is also important you work well with the seller. After all, it is their home which you are trying to sell via a short sale transaction.

Keep in mind you are there to make sure the rights of the sellers are not violated and their interest is upheld. Seek attorney advice when necessary.  You still have to know the rights of the lender as well and make sure every decision considers these entitlements.

When things get tough, you just need to ride things out and still persevere. After all, no one will tell you a short sale is an easy transaction to close. It is more of a waiting game than anything else and being patient will matter in the end.