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.

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.

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.

New Short Sale Timeline: Will It Make a Difference?

Big news this week as Fannie Mae issues a new guideline covering the short sale timeline. The new rules will apply to every conventional mortgage held in the said government-sponsored enterprise’s portfolio. Loans bought for aid portfolio but eventually securitized and loans originally delivered to the Mortgage Backed Securities pool.

 

The new policies involve establishing the maximum required time to respond to short sale offers, requiring mortgage services to provide their borrowers with status updates especially during the evaluation process and eliminating the servicer’s need to look for an alternative solution before offering a response to the offer.

 

As for the new short sale timeline:

 

-          Countdown starts when the servicers receive the Borrowers Response Package inclusive of the short sale offer.

-          The servicer should be able to acknowledge the receipt of the package, notify the borrower of missing documents, and provide a response within 30 days.

-          Servicers are allotted 60 days maximum to evaluate the pre foreclosure sale offer. Fannie Mae must be notified if the original 30 day deadline will be exceeded.

 

Before, servicers have the option to consider if the borrower is qualified for a HAMP modification or other HAFA alternatives. The one caveat is the new guidelines allow the mortgage servicers to skip this step and proceed to the non-HAFA review without any HAMP evaluation.

 

Fannie Mae declared June 25 as the deadline for implementing the new guidelines/requirements and urged mortgage servicers to comply sooner, if possible.

 

What It Means for the Borrowers Considering a Short Sale

 

The new guideline will indeed speed things along and allow many distressed borrowers to avoid a foreclosure. The shorter timeline will also bode well for the housing industry in general as it could encourage short sale buying. A lot of buyers turn away from a short sale, because they can take too long to close. With these new rules in place, the risk of the buyer walking from the short sale transaction is reduced.

 

Of course, the entire short sale process can proceed without problems if all documents are in order. Hire a short sale Realtor to make sure documents are complete.

Florida Short Sales Finally Outpaces Foreclosures

 

It was bound to happen – Florida short sales overtaking foreclosure sales – as more and more lenders take the faster and less costly solution. According to anews report, short sales accounted for 23.9 percent of home purchases in January, the most recent month available, compared with 19.7 percent for sales of foreclosed homes, data compiled by Lender Processing Services, a Jacksonville, Florida-based company. A year earlier, 16.3 percent of transactions were short sales and 24.9 percent involved foreclosures.

For many, such news is certainly a welcome one considering that until now, there is still no end in sight when it comes to the housing crisis. With lenders obviously seeing the wisdom of short sales versus a foreclosure, it is highly likely a lot of homeowners with negative equity can finally heave a sigh of relief.

Keep in mind the housing market is currently having trouble addressing the billions of dollars lost, in terms of home equity. Lenders tried to clear this negative equity with options including foreclosure but as you can see, it did not work. Foreclosures, in particular, come with negative ramifications not only for your credit history but also for your neighbor and community.

On the other hand, A Florida short sale leaves the seller almost debt free, the previously unsalable home with a new owner and the lender with smaller losses. It would probably hurt the nearby properties but not as bad as foreclosures will.

Tip to Homeowners Considering a Florida Short Sale

Rushing to the lender and submitting an ill-prepared short sale proposal is tantamount to financial suicide. Even if lenders are keen on accepting short sales rather than proceed with a foreclosure, you should still convince them you are worth the trouble. Work with a Florida short sale Realtor to make sure your proposal will leave no doubt in the lender’s mind a short sale is indeed the answer.

The Realities of a Palm Beach Florida Short Sale

A lot of cash-strapped homeowners in Palm Beach certainly appreciate having the option to sell their home via a short sale. Of course, there are many facts about short sales you need to familiarize yourself with in order to truly understand the process involved and determine if it is indeed the answer you have been looking for.

 

Reality #1: Lenders approve Palm Beach short sales IF you convince them of your hardship.

 

In a short sale, the lender accepts an amount less than what is owed on the mortgage because of financial difficulties on the part of the homeowner. In many cases, the deficiency or difference between the mortgage balance and the short sale proceeds is even forgiven, resulting in the owner walking away virtually debt-free. The big requirement is you need to convince the lender you are deserving of the short sale.

 

Reality #2: Palm Beach Short sales take twice  even three times as long as regular home sale.

 

Even if you have all the proper documents, a very good hardship case and a qualified buyer, the short sale can still be lengthy and riddled with complication. It would be smart to find out first if your lender is willing to consider a short sale. If they are, you need to look for an experienced and knowledgeable short sale Realtor to help you out with the entire process. You will find your situation to be a lot more bearable with someone on your side.

 

Reality #3: Securing buyer interest is a must.

 

There are many instances when all aspects of the Palm Beach short sale are going smoothly and then just when the lender gives the go signal, the buyer is nowhere to be found. Such a scenario is hard to avoid as there are really no signs it may happen. You should consider putting safe guards in the form of a earnest money deposit to establish the person’s seriousness about the contract.

Winning the Short Sale Approval Waiting Game

For short sale buyers, one of the most challenging parts of the short sale process is the part when you wait to hear from the bank. It can drive anyone insane not knowing what lies ahead for you and your family. In order to avoid getting anxious during this critical period, consider doing the following:

 

·         Move On – there is no reason for you to stop doing the things you usually do just because of the wait. Continue with whatever you have before the owner submitted the short sale proposal. Use this time to do projects you have always wanted to start but never got around to. You will not only avoid feeling anxious all the time, but you also be productive.

 

·         Be Optimistic. Think about the reasons why you are willing to wait. It could be because of the bigger rooms, the great location or the amenities. Whatever it is, you know the wait is worth it.

 

·         Avoid hounding your short sale Realtor. You should not be calling your Realtor every hour, inquiring about the approval. The only reason why you should contact him is if you have to clarify something regarding the process.

 

·         Set a goal for each 30 days. Since a short sale takes an average of 90 days to get approved, you should probably consider setting goals or targets for each of the 30 days. It can be something as simple as exercising everyday or something more challenging such as learning to play a guitar or a new language. You will be surprised at the many options available.

 

The short sale approval waiting game is certainly tough to play, but with the right attitude and some imagination, you will not notice the days passing you by.