Because of the tough times, there are indeed homeowners who find themselves with a mortgage they can no longer afford to pay. What makes an already sad situation even sadder is the declining value of their homes. For some, a foreclosure looks inevitable but for others, there is a Florida short sale.

In real estate, you can actually sell your home for an amount less than what you owe in mortgage. The best thing of all is that this sale is lender approved and there is even a big chance you will not need to pay the difference and your entire mortgage debt may be forgiven. If you are wondering why lenders do this, the answer is simple. They know, from a business standpoint, they could lose less compared to a foreclosure.

Win-Win Situation for All

If you look at how a short sale transaction is set up, you will realize that everybody comes out a winner. As mentioned earlier, sellers and lenders will find a short sale to be logical. For buyers it is the same thing. No one can argue that buyers of short sale properties get to enjoy owning a home at a significantly reduced price. This is because you can take into consideration the current value of the home and the mortgage debt and make an offer which the seller and the lender cannot resist. To shorten the transaction, buyers should come armed with complete documentation to prove their financial credibility and their offer is more than sufficient and reasonable.

Safeguard Your Interest

Just like any foreclosure alternative, there are certainly negative consequences to a short sale. But to minimize or lessen the impact, you should take the following steps:

1. Get Everything in Writing – Be sure that all agreements are documented and signed in order to prevent any miscommunication or misunderstanding. In particular, you should clarify with the lender the elimination of your entire debt. In many cases, a lender agrees to not file a deficiency judgment and make sure such promise is in black and white. This may not be available in all circumstances.
2. Protect Credit Score – You can ask your lender how they would report the short sale transaction. There are instances when a lender will simply put down “debt is satisfied”. While there are times when they would indicate “settled for less than amount owed”, which could make a negative impact on your score.
3. Get Professional Assistance – A short sale can become quite technical and you would need the help of a team of professionals which include a tax lawyer and a short sale Realtor.

For many homeowners, the thought of living in a home whose value has declined is indeed frustrating. If you add a huge mortgage balance, you get a situation wherein the owner starts considering a strategic default. Experts on this subject have argued that such an option is actually a business decision but Fannie Mae does not agree.

The mortgage financing giant announced last June its new policies involving homeowners who choose to walk away from their mortgage obligations instead of working with their lenders to come up with a solution to prevent foreclosure. The said homeowners, who are actually capable of paying their mortgage balance or decided to default on their workout alternative, will no longer be eligible for a mortgage loan backed by Fannie Mae. The ban will be for seven years from the foreclosure date.

According to Fannie Mae, the new policies were put in place to stress the value of working with your lenders and discouraging strategic defaults. When a borrower walks away, it will not only bad for him or her but also for the community. On the other hand, distressed borrowers who make an effort to stop foreclosure and work with their lenders will more likely be considered for a Fannie Mae mortgage loan at a shorter time.

Aside from the loan ban, borrowers who choose a strategic default will also face legal suits for deficiency judgments. Last July, Fannie Mae instructed servicers to monitor delinquencies and recommend borrowers who deserve to be pursued for deficiency judgments. Distressed homeowners are actually being encouraged to look at several options or foreclosure alternatives such as deed in lieu of foreclosure, loan modification and short sale.

If you have an underwater mortgage, meaning you owe more in mortgage than the value of your home, and no longer capable of paying your monthly mortgage dues, then a Florida short sale is the logical option. It will result to less damage to your credit rating and your entire mortgage debt could be eliminated, if your lender decides to forgive the balance.

http://www.fanniemae.com/newsreleases/2010/5071.jhtml?p=Media&s=News+Releases

It is a fact there are plenty of homeowners with underwater mortgages who are trying their best to stop foreclosure with a Florida short sale. Their decision to go with a short sale is actually a smart one since the benefits outweigh the disadvantages.

Since one of the key components of a short sale involves finding a buyer, you should expect tough competition. The only way to attract buyer interest is by using effective tactics such as:

1. Staging your home – Many distressed homeowners fail to see the importance of making their homes presentable, thinking their unfortunate situation will excuse them from not making any effort. You have to put yourself in the buyer’s shoes and look at your home through their eyes. Remove clutter, paint the walls, trim the hedges, fix windows and doors, update your kitchen and if you can, strip the wallpaper. You will be surprised at how much more attractive your home will look by doing these things and you need not even spend much.

2. Being available at all times – Among the things buyers hate the most is difficulties reaching the seller. You should be available to answer questions and accommodate drop-ins. Of course, setting up an open house will make you better prepared but you can never tell when a buyer will suddenly appear and make an offer you cannot resist.

3. Being open to negotiations – You have to remember it is a buyer’s market, meaning buyers have the upper hand. You should always have wiggle room when deciding on a list price, for example. This is also applicable to the other sales details. Do not be too quick to say no especially if what the buyer is asking sounds reasonable.

4. Doing research – Potential buyers are more likely to make an offer if you know what you are talking about. Do not leave everything to your Realtor since there would be instances when the buyer would direct the question to you. Know as much as you can about your home, your community and even the current market conditions. This will surely impress the buyer and help him make an informed decision.

5. Work with Everyone – Although you might think your Florida short sale Realtor is the only one on your side, you should still make an effort to be accommodating to every person involved in the process including the lender, appraisers, lawyers, inspectors, etc.

A lot of homeowners with underwater mortgages consider short sale as the perfect solution to their problem but, because of the many myths circulating about this foreclosure alternative, most end up losing their home. If you are considering a Florida short sale and would like to get the facts straight about this transaction, you should check out the most common myths about it.

1. It is embarrassing to list your home as a short sale. At this point in your life, you need to overcome feelings of embarrassment especially if you know your decision will benefit you better at the end of the day. You should realize that by doing this you are actually protecting your financial future.

2. There are few buyers interested in short sale. You have to realize that buyers would rather look at a property which has not fallen into neglect. Although a short sale transaction can be a lengthy process, it only takes a good short sale Realtor to explain to the buyer what is involved and give reassurance at the same time.

3. Time is too short for a short sale. The only way you can say this is if you actually tried to short sell your home. What is important is for you to start the process and with the right negotiation; you might just be able to stop foreclosure in the nick of time. Again, the key is to take action at once!

4. Short sales are usually not approved. If you read the newspaper or listen to the news, you should know short sales are fast becoming the option for underwater homeowners especially in states hit hardest by the mortgage meltdown. Their popularity is based on the fact that they are very effective in preventing foreclosure. To improve your chances, hire a team of short sale professionals.

As soon as you discovered you are about to miss your mortgage payments, you should consider making a plan of action. It does not really need to be complicated or too detailed as long as your objective to stop foreclosure in Florida is attained. If you are one of those unfortunate homeowners who owe more in terms of mortgage compared to your home’s market value, then your options are certainly limited and would most likely include a short sale.

Before you choose which option will benefit you most in the long run, you need to take the first three steps which can certainly prevent foreclosure.

Step 1: Accept Your Situation –There is nothing more powerful than facing your problems head on. If you acknowledge your situation, you will likely be open to more ideas, solutions and suggestions. On the other hand, if you deny you have a problem, you will have a tough time coming up with a solution because you do not want to think you are in trouble and will surely find it difficult to look at possible answers.

Step 2: Hire Professional Help – As soon as you acknowledge you have a problem, you will benefit from hiring a professional such as a short sale Realtor. These experts certainly have the know-how, experience and skills required to increase your chances of getting out of this mess with less bruises and scratches. By working with a professional, you can be sure time will not be wasted and you will also understand what is happening, allowing you to make quick yet informed decisions.

Step 3: Take Action – After drafting your options, together with your Realtor, you will have to move as quickly as possible. Again, you are racing against time and you need to work hard and give your best to stop foreclosure. If you dilly-dally or wait for things to get better, you might lose the one opportunity you have to stop foreclosure in Florida.

The decline in home prices in Florida has resulted in thousands of homeowners having underwater mortgages. If this is your first time hearing about this then you might also not be aware that, at present, short sales in Florida are fast becoming the most popular option to prevent foreclosure. In a typical short sale, the lender agrees to accept an amount from the borrower/homeowner even if it is less than what it owed. At the same time, the lender is allowing the purchase of the property by another buyer.

To complete a short sale, you will only need to remember three important things:

1. You Must Be Able to Prove Hardship – In the first place, the reason why the bank will agree to accept a short sale is because of your financial situation. You must be able to prove you are no longer capable of meeting your mortgage obligations by providing documents such as income tax returns, W2 forms, bank statements, unemployment compensation and list of all assets and liabilities. Of course, there is also the hardship letter which summarizes your present finances.

2. You Must Give the Lender a Valid/Reasonable Offer – Proving you are having financial difficulties is not enough. Most lenders will only acknowledge your short sale proposal if it comes with a signed sales contract as well as proof of buyer financing.

3. You Must Have a Good Short Sale Realtor – It is very crucial you have a good short sale Realtor at your side to check whether you have submitted the right documents. Aside from this, your agent will also be responsible for dealing with the buyer, making sure the process is understood. A good Realtor should realize the importance of his role in making the proposal a success. He or she should always be available to answer all questions, whether asked by you, the lender or buyer. Your Realtor should be able to follow up and check the status of the proposal regularly in order to avoid any problems or issues from blowing out of proportion.

The waiting period is obviously the most difficult part and you should be very patient. If you have done your homework and made sure the buyer understands his or her as well, then you have nothing to be worried about, especially if you have an expert in short sales in Florida beside you.

If you read the news, you should not be surprised why a lot of real estate experts are referring to the current year as the, “year for short sale”. After all, data recorded by top real estate tracking firms revealed the Naples Florida short sale is increasingly becoming popular among distressed homeowners particularly those with underwater mortgages.

Buying a property via short sale will certainly mean a lot of money saved. So, if you are on the lookout for serious savings, make sure you know what to do:

1. Searching for Short Sale Properties. For convenience, check out listings. You have to look for certain words which indicate that the property is being sold via short sale. Terms such as pre approved by bank or subject to bank approval are just some of the examples.

2. Work with a professional. Unlike traditional home sales, short sales can be quite complicated and technical. It would certainly be a good idea to hire a short sale Realtor and have peace of mind, knowing you have representation throughout the process.

3. Conduct a home inspection. Since you are most likely buying the property “as is”, it would be smart to find out if there are structural damages or other defects which the seller failed to disclose. You can now base your buying decision on the inspection report since it will give you a clear picture of what you are buying.

4. Check mortgage balance and liens. Together with your short sale Realtor, find out how much the seller owes in mortgage debt as well as if there are other liens tied to the property. All information you gathered can help you make informed decisions with regard to making an offer or negotiating the other terms of the sale.

5. Make a Complete Offer. You should keep in mind that at the end of the day, it is the lender’s approval you are seeking. There are actually three possible outcomes. Your short sale proposal can be rejected, accepted or countered. For this reason, you need to make sure your proposal will leave no doubt to the lender’s mind that a short sale is the best solution. Make sure your offer includes cover letter, short sale purchase agreement signed by the seller, seller’s hardship letter and other financial documents of the seller which proves hardship claim.

Facing the possibility of losing your home to foreclosure and choosing to short sell as a solution is indeed a big task especially if you decide to do it alone. If you think about what lies ahead, you should seriously think about hiring a Florida short sale Realtor.

There are many advantages to hiring a professional to help you out. They include the following:

Expertise and Skill – It will take a certain amount of short sale knowledge to ensure a smooth transaction. You may not know it but a short sale can be tricky especially if you consider the many financial documents you have to prepare as part of requirements to get approved. Realtors also possess certain skills particularly required in dealing with the buyer and lender. If you want things to go smoothly, you will certainly need these qualities.

Experience – You cannot deny hiring a Florida short sale Realtor will work to your advantage since they have the necessary experience which will come in handy when problems with your proposal arise. Also, such experience will increase the chances of your proposal getting approved by the lender since it will be well-prepared, complete and most of all, believable.

Dedication or Commitment – Keep in mind your Realtor’s job is to help you in every which way possible. They understand what you are going through and work hard to make sure you are given a fair chance to stop foreclosure. You will be provided with great advice and you can even consider him or her a shoulder to cry on when something goes wrong or circumstances become tough.

When you think about it, only good things will result from hiring a Florida short sale realtor. If you want to have a fighting chance, it is one of the things you should do. Of course, to protect your interest, you should make sure the Realtor you hire has a license to practice in the state.

Suggesting a positive outlook for the local housing market, foreclosure filings involving Tampa Bay and Florida homes for the month of July went down following the trend recorded nationally. Based on the RealtyTrac report, the number of homes entering some stage of foreclosure dropped by 8.7 percent compared to 9.7 percent of the previous year.

Meanwhile, in a report released by Core Logic, it was found that the number of short sale has increased by almost 300 percent to 400,000 since 2008 across the nation. Half of the short sale figures involved homes located at the four states hit hardest by the mortgage collapse, namely Florida, California, Texas and Arizona.

Possible Connection?

Considering the decline in foreclosure activity and increase in short sales recorded nationwide, one cannot help but assume that a lot of troubled homeowners are considering short sale as a serious solution to their mortgage woes.

And why not? Short sales still remain to be the only option which provides the homeowner with a way to walk away from foreclosure without owing their lender a single cent in some cases. Also, compared to foreclosure, it is the only one which will leave your credit score in a much better shape.

Are You Qualified?

If you would like to find out if a Florida short sale is for you, you should simply determine if you fit the requirements. For starters, you need to be in financial difficulty or hardship and must be able to support this claim by providing your lender with documents. Another requirement is you have a buyer with a reasonable offer and lastly, your home needs to be underwater or is valued at an amount less than what you owe in mortgage.

In case you are having trouble determining if you are qualified, you should contact a short sale Realtor. He or she will help you find out if a short sale is indeed the perfect solution for your particular situation. If you are qualified, your Realtor can also provide you with the proper assistance you need to prepare a proposal which the lender will have trouble saying no to.

http://tampabay.bizjournals.com/tampabay/stories/2010/08/09/daily47.html
http://www.loansafe.org/short-sale-highlights-from-core-logics-2010-report

A lot of homeowners in Jacksonville have opted to sell their homes via a short sale transaction in order to avoid foreclosure. One homeowner sold her home at half of what it was currently valued at and was relieved that the lender forgave almost $76,000 in mortgage debt. Obviously, the owner was thankful that she could start over a new chapter of her life without having a huge debt to worry about.

Distressed sales, which include both foreclosure and short sales, have increased dramatically since January 2008. For that period, only 10 percent of the total home sales activity involved distressed houses. But for the current year, based in the information gathered by the Northeast Florida Association of Realtors, it soared to 49 percent.

Effect of Distressed Sale on Median Prices
As the number of short sales and foreclosure sales grew, median sales prices have started to decline. This, of course, is understandable as distressed sales usually mean steeply-discounted real estate properties. As a result, the growing popularity of short sales and foreclosure sales will only serve to remind the public that market conditions have yet to stabilize. For sure, the days when it is possible to own a home with zero-down payment are long gone.

Effect on Realtors and Agents
In addition to this, it can also be observed how agents and Realtors have adapted to the changing needs of their clients. New skills are needed as well as a better understanding of what is involved in these distressed sales. Most are having a hard time handling such transactions but because of their need to make a living. Many have accepted the fact they need to make adjustments. In fact, national certifications are being given to those agents or Realtors who choose to become expert in short sale transactions.

Effect on Underwater Homeowners
As for homeowners looking for a way out of their mortgage problems, especially those who found themselves with more mortgage debt compared to their home’s market value, a short sale is the only option which will provide them with a better outcome. There would be less damage to their credit scores, no foreclosure entry on their credit history and most important, eliminated debt (i.e. if the lender agrees to waive their right to deficiency judgment).

Of course, all this is possible with a professional and reputable Florida short sale specialist by your side.

Reference: http://jacksonville.com/business/2010-08-08/story/first-coast-housing-market-battered-short-sales