Archive for month June, 2008

Don’t Give Up on Your New Home!

Saturday, June 28th, 2008

Agents around the country are speculating that Lenders are making the housing downturn worse by taking months to make decisions on short sales and sticking to high internal target numbers.  As a result, buyers are abandoning short sale properties, which worsens the problem because it forces them to be sold in foreclosure sales that usually mean the lender receives less thany they would have gotten through a short sale.

This is why having an agent to manage the process is so important.  An experienced agent can:

  1. Keep the process moving with the lender so the file does not get lost or put on the back burner
  2. Keep in communication with the buyer and the buyer’s agent so they do not become impatient and walk away.
  3. Help the seller navigate the process without needing to deal directly with intimidating collection deparment tactics

These are just some of the reasons to work with me as your Agent, either as the buyer or the seller, makes sense and benefits you throughout the process.

What financial or credit liabilities will a seller have as a result of a short sale?

Tuesday, June 24th, 2008

Many lenders ask sellers to sign a promissory note for all or part of the difference between the proceeds of the short sale and the debt obligation as a condition to a short sale. In such cases, the note gives lenders the right to sue a seller and attach other assets if the note is not paid when due.

It’s particularly important to understand this distinction if you work in states such as California that have a nonrecourse mortgage. In such states, the lender cannot pursue a deficiency judgment against a seller for any deficiencies after a property is foreclosed. Because of this distinction, sellers who are already in default on a mortgage and do not have the resources to pay off a separate promissory note after a short sale might be better off letting the lender foreclose.

Tip: Having a portion of a loan forgiven may have an adverse affect on the seller’s credit. For example, it would be best to sign a lease on an apartment before your credit is further damaged.

If you work with a good Agent, they will know all this in advance, when you need to do a lease.  At the same time, DO NOT leave your house until the process is over – you may be there for some time, without worrying about monthly payments, and be ready when it is time to leave.

What are the seller’s options if a short sale is rejected by the lender?

Friday, June 20th, 2008

There are a variety of reasons a bank will reject a short sale – from too low a price to too many files on the loss mitigator’s desk. You can look for another buyer or even try resubmitting the same contract. “Banks don’t want to take properties back in foreclosure, so they are going to do everything they can to make it work,” says one lender. You also need to prepare your seller in advance for the possibility of foreclosure if a short sale fails.

It all depends on the quality of the Short Sale packet that is sent.  If the Agent does not do a complete Short Sale Packet, the Loss Mitigation department is going to look at it and immediately set it aside.  He does not have time to educate Agents.  He will move on to another file, and your house may end up going to foreclosure.

Tip: A short sale might be rejected if the loan is less than a year old. In such cases, the servicer that’s bought the loan can often require the original lender to buy it back.

This is why it is critical that you find an agent who specializes in Short Sales, there is just too much at stake to learn on the job.  Please give me a call and give me the chance to help you out.

Working with Buyers and Sellers in Short Sales

Monday, June 16th, 2008

As I have worked with Buyers and Sellers this year, I have come to realize something surprising to me.  Many of the people who wish to sell, or are in the process of selling, their house have overpriced them for the market because they have little to no equity.  This is because, when listing the house, the Listing Agent recommended putting the house for sale with a price high enough to cover the loans, the commissions, closing costs, and something for repairs.  The vast majority of people who contact me, unfortunately, have already lost 4-6 months with their houses on the market and no positive results – and now they face foreclosure.

Statistics from 2008 and projections for 2009 all show that we are headed for a record in the number of Short Sales in the marekt.  This is benefiting the general economy because the Sellers do not remain with debts or promissory notes to the banks, and the banks don’t pay the 15,000-20,000 average for each house going to foreclosure, and the economy does not continue its decline.

As the market changes, Real Estate is trying to change as well, but unfortunately many agents do not know or understand what a Short Sale is.  Let’s look at both sides of the coin:

Every day I see agents who took a 4 hour class in Short Sales and believe that it is enough to work in this field now, and list houses.  But Careful!  I would like to share with you some questions tht you need to ask the Agent who visits you, wanting to list your house, to really see if the knowledge they have about Real Estate and Short Sales is sufficient to truly help you.  If they can really keep you from losing months getting the process started, or worse, losing the possibility that the Lender will accept the Short Sale due to their inexperience and lack of knowledge in the field.

From the Buyer’s perspective, there are also very important considerations.  The agent must have the knowledge to advise them on the offer price, the time that a Short Sale can take, and how to place an offer that the lender will accept.  An inexperienced agent who does not have a clue needs help so that you, the Buyer, do not lose the house or get overly frustrated during the months that the transaction does not take place. 

I invite you to take a look at my web pages and download the questions to ask your agent that wants to help you with a Short Sale that you are selling or buying.  Or share your stories here of how agents tried to “help” you, and only made matters worse, by posting a comment.

How Long Does a Short Sale Take?

Thursday, June 12th, 2008

Although Lender response times vary, it can take at least two weeks or as long as 60 days to receive an approval of a short sale from a lender. That is why it is so important that all sides, the buyer, the seller, and the other agent, all understand and accept that time frame from the beginning.  Patience is the password. 

And things are worse right now.  Many lender’s Loss Mitigation departments and Workout departments are inundated with work.  Some have as much as a two-month backlog.  While buyers need to be prepared for longer turnaround times, however, they must also keep in mind that they will be walking in with equity.

 

Tip: Keep in mind that the purchase contract on a short-sale property is a legally binding agreement once the earnest money has been deposited. Without language in the contract stating that the lenders must approve the offer and release all liens on the property, the seller may face a legal problem for failing to execute the contract if the short sale is not approved.  This is a standard clause of our Short Sale addendum to protect the seller.  If you are talking to anyone else about short sales, ask them about this clause – it is one of the sure signs whether the agent really knows short sales or not.

Going National!

Tuesday, June 3rd, 2008

Seeing the way the Real Estate Market has changed lately, it pleases me greatly to tell you that I am not only helping Sellers in Georgia to sell their houses, but Nationwide as well.  The success of my blogs and my new web site has been incredible.  I have received emails and calls from people in various parts of the country looking for a professional to help them with short sales.

 

For instance, two weeks ago, a developer located in Salt Lake City called me.  He needed help with 20 properties in Colorado.  After doing an intense search and interviewing more than a dozen different Real Estate agents in Colorado with experience in Short Sales, we found the perfect agent for this transaction.  The developer in Salt Lake is very impressed with the rapidity and the knowledge we demonstrated, and has already started the Short Sale process in the majority of the properties.

 

Last week, I got an email from someone in California who owns a house in Buford, GA.  We are in the first stages of the process, but I know it will be another success story in a few months.

 

I want to remind you of something that, for me, is very important.  All those people who are experiencing financial problems have the right to be helped by a Real Estate professional – and one experienced in short sales.  I have an often repeated cliché here: Bad things also happen to good people.  And everyone has a right to a helping hand in unsettling times.

 

Let me know if I can help you, or someone you know, avoid financial chaos.  Or if you can think of any way I can help more people.  Please leave your comments and thoughts here on the Blog so they can help others too.