Should I Short Sale My Home?
WHAT IS A "SHORT SALE"? A Short sale happens when a lender agrees to accept less than the amount owed against the home because there is not enough equity to sell and pay all costs of the sale. www.TampaBayShortSales.com
Why choose Christian Bennett and his Short Sale Team?
· Sophisticated financial knowledge & FINE HOME SPECIALIST!!!
· Understand the lender’s language
· Accurate paperwork
· Experience & Reliable
· Legal knowledge
· Negotiation skills
· Strong supportive administration
· Knowledge of The Local Market
· High success rate
· Strong Relationships with lenders
· Avoid the time and frustration of tough negotiations with lenders
· Protecting Sellers from Foreclosure
Just some of the Lenders Christian Bennett and his team have a Strong Relationship with:
Bank Of America, Suntrust, WellsFargo, Chase, Wachovia, HSBC, Regions, Citibank, and more..
Navigating Short Sales: What to Do When the Sale Price Leaves You Short
If you're thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won't cover your total mortgage obligation and closing costs, and you don't have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.
1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as:
- Refinancing your loan at a lower interest rate
- Providing a different payment plan to help you get caught up
- Providing a forbearance period if your situation is temporary
When a loan modification still isn’t enough to relieve your financial problems, a short sale could be your best option if
- Your property is worth less than the total mortgage you owe on it.
- You have a financial hardship, such as a job loss or major medical bills.
- You have contacted your lender and it is willing to entertain a short sale.
2. Hire a qualified team. CHRISTIAN & SALLIE !! www.TAMPABAYSHORTSALES.com
The first step to a short sale is to hire a qualified real estate professional* and a real estate attorney who specialize in short sales. We will not try to take advantage of your situation or pressure you to do something that isn't in your best interest.
As a qualified real estate professionals we can:
- Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).
- Help you set an appropriate listing price for your home, market the home, and get it sold.
- Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
- Ease the process of working with your lender or lenders.
- Negotiate the contract with the buyers.
- Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.
3. Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale “package” that accompanies any offer typically must include
- A hardship letter detailing your financial situation and why you need the short sale
- A copy of the purchase contract and listing agreement
- Proof of your income and assets
- Copies of your federal income tax returns for the past two years
4. Prepare buyers for a lengthy waiting period. Even if you're well organized and have all the documents in place, be prepared for a long process. Waiting for your lender’s review of the short-sale package can take several weeks to months. Some experts say:
- If you have only one mortgage, the review can take about two months.
- With a first and second mortgage with the same lender, the review can take about three months.
- With two or more mortgages with different lenders, it can take four months or longer.
When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender’s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)
5. Don't expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:
- You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can’t pay back the balance, talk with your real estate attorney about your options.
- Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.
- Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.
Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.
Short Sales -Real Estate Pre-foreclosure
WHAT IS A "SHORT SALE"? A Short sale happens when a lender agrees to accept less than the amount owed against the home because there is not enough equity to sell and pay all costs of the sale.
DO YOU OWE MORE THEN YOUR HOME IS WORTH IN THIS CURRENT MARKET??? A SHORT SALE MAY HELP YOU!!!
Here is a Quick Introduction to Pre-Foreclosures or Short Sales as they are more commonly called:
To best explain the process of a short sale, an overview of the foreclosure procedure will give you insight to what is referred to as “Short Sale”.
In Florida, when a homeowner misses 3 mortgage payments, generally the lender will mail a letter to alert the homeowner that unless a payment is made, the home will fall into a “pre-foreclosure” status where foreclosure procedure is initiated. At this point, the lender files court action and records a notice of a pending lawsuit (Lis Pendens) against the borrower. The lender notifies the borrower and any other affected parties in person or in some cases by mail or publication. If the borrower does not respond to the court action within a specified amount of time, the county clerk can find the borrower in default and the lender can ask the court to make a final ruling. If the court rules against the borrower, the ruling will include the total amount owed to the lender and the foreclosure sale date. The borrower can stop the foreclosure up until the date of the sale by paying the total amount owed to the lender.
Notice of Sale / Auction
The sale date is typically 20-35 days after the court ruling, but this may vary depending on the individual court. The clerk of court issues a notice of sale containing the location, date, and time of the sale. The notice is published once a week for two weeks, with the second notice appearing at least five days before the sale. Within 10 days of the sale, the clerk transfers ownership to the winning bidder if no one disputes the sale. In most instances, a borrower has no right of redemption after the certificate of sale is issued. At this point, the homeowner has lost his/her home to foreclosure, their credit will show a foreclosure for the nest 10 years and the foreclosure does NOT mean the homeowner is free and clear of the debt that is owed. The entire process from the time the homeowner misses the first payment to the day of the auction is typically about five months.
The Short Sale
The Short Sale is when the lender, prior to the home being auctioned off, agrees to a lesser amount than it is owed, and agrees to accept this amount without further action to the homeowner. This is easier said than done. The lender must be convinced that the homeowner has done due diligence in trying to sell the home, he/she must show they can’t afford the payments and have a reason satisfactory to the lender. Financials must be prepared on behalf of the homeowner, contracts, bank statements and various other documents as is required specifically by each lender. If the lender agrees to the amount proposed in the short package, then the sale is made at the lesser price, the foreclosure is avoided and the remainder of the unpaid mortgage balance is excused by the lender. This acceptance of an amount which is less than what is owed the lender constitutes the “Short Sale”.
How is the Seller's Credit Affected?
According to David Steep, division manager at Vitek Mortgage, sellers will take a bigger hit on their credit report by going through foreclosure or giving the lender a deed-in-lieu of foreclosure. Steep says the points lost on a FICO score are as follows:
Foreclosure or Deed-in-Lieu of Foreclosure
Both of these solutions affect credit the same. Sellers will take a hit of 250 to 280 points. This means if a seller's FICO score before foreclosure was 680, it could dip as low as 400.
The affect of a short sale on a seller's credit report is much less damaging. The ding on credit will show up as a pre-foreclosure in redemption status, Steep says, which will result in a loss of 80 to 100 points. This means a short sale with a previous FICO of 680 will see it fall to 580 to 600.
There are generally three options that the homeowner can take when faced with a foreclosure:
Refinance – It may be possible to refinance your home. Yes, the interest rates are probably higher than what you are currently paying, but if you can afford the higher payments, you may be able to refinance your mortgage to pay off the foreclosure, existing debts and even end up with cash.
Bankruptcy – Once the lender files the “Lis Pendens”, homeowners will most likely receive offers to help you file bankruptcy. But would this help you in the long run? Bankruptcy is not a cure-all that will save your home; it will only postpone the inevitable. Be aware that if you file bankruptcy, your home could still go to auction, thus resulting in both a bankruptcy and foreclosure against your personal credit. Bankruptcy delays the foreclosure because a lender can’t auction the home until the bankruptcy debts with creditors is resolved. Bottom line is, if you don’t pay the mortgage, you don’t keep your home; otherwise everyone would file bankruptcy, stop paying the mortgage and live mortgage free for the rest of their lives.
Option 3 (SHORT SALE)
Sell Your Home – Many people in foreclosure cannot refinance. The good news is that up until the day of the home auction, you have the power to sell and avoid the foreclosure. I, Christian Bennett, have a team of professionals, a network of investors and specific buyers who are looking for homes at wholesale prices. With my combined resources I can offer you a service commitment that most likely prevents your home from going to auction and thus avoiding foreclosure altogether.
SELLERS AND BUYERS(investors) PLEASE CONTACT ME TO SEE HOW I CAN HELP YOU.
Delivering a World Class Experience. . . One Client at a Time
Some information provided by: ValueShortSales,Inc
Short sales are rising as banks start to shun foreclosures
Short sales are rising as banks start to shun foreclosures
Homes in some stage of foreclosure accounted for nearly one in four homes sales during the fourth quarter, according to RealtyTrac.
During the three months that ended December 31, homes that were either bank-owned or going through the foreclosure process accounted for 24% of all home sales, up from 20% in the previous quarter and down only slightly from a year earlier when foreclosures accounted for 26% of sales, RealtyTrac said.
In total, 204,080 distressed properties were purchased during the fourth quarter, down 2% from the year-ago quarter. For all of 2011, foreclosure-related sales were down 2% year-over year to 907,138, accounting for 23% of all home sales.
"Sales of foreclosures in the fourth quarter continued to be slowed by questions surrounding proper foreclosure paperwork and procedures," said Brandon Moore, chief executive officer of RealtyTrac, referring to the delays cause by the robo-signing scandal that broke in late 2010. "Even so, foreclosures accounted for nearly one in every four sales during the quarter and for the entire year."
"We expect to see foreclosure-related sales increase in 2012, particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months," said Brandon Moore, CEO of RealtyTrac.
Short sales on the rise
Short sales are starting to become the preferred method for banks to dispose of properties in default. In short sales, borrowers who owe more on their mortgages than their homes are worth agree with their bank to sell their homes at the lower market value. In return, the bank agrees to absorb the loss.
During the last quarter of 2011, there were more than 88,000 short sales, up 15% compared with a year earlier, according to RealtyTrac. Short sales comprised 10% of all homes sold during the quarter.
Meanwhile, sales of bank-owned homes fell 12% year-over-year to 116,000, comprising 13% of all sales during the quarter.
"That trend will likely show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans," said Moore.
Short sales have become a more attractive option since all parties agree on the terms, leading to fewer legal issues, said Daren Blomquist, RealtyTrac's director of marketing.
They also offer better returns. During the quarter, the average short sale sold for $184,221, while the average foreclosure sold for $149,686. And banks typically don't have to spend a mint maintaining a short sale home like they do a foreclosure, where they have to pay more in legal fees, property taxes, maintenance and insurance, said Blomquist.
Short sale deals also get completed more quickly. During the fourth quarter, it took an average of 308 days, to complete a short sale. Foreclosures, meanwhile, can take years to complete.
Quicker approvals mean fewer buyers get discouraged and withdraw their offers. Blomquist said some banks even pre-approve prices so deals close very fast.
Short sales already outnumber REO sales in several "bellwether markets," including Los Angeles and Phoenix, where, in both cities, they exceeded 20% of all sales.
Some lenders have even incentivized short sales in Florida and other hard-hit foreclosure states. They offer large cash rewards -- as much as $35,000 -- to delinquent borrowers in return for co-operating on these transactions.
Million-dollar foreclosures rise as rick walk away
Distressed properties continue to make up a large portion of the sales inventory in many housing markets. In Nevada, they accounted for 56% of all sales during the quarter, the highest percentage of any state.
Top 10 Home Buying Tips For Short Sales – A Guide To Understanding Short Sale Foreclosure Real Estate
byTodd Foust and Jennifer McNamara - Wed, Apr 8, 2009
Modern homebuyers will inevitably come across one or more properties currently classified as a short sale. A short sale is an attempt by the current owner to sell a home in lieu of the bank taking it back through foreclosure proceedings, thus partially salvaging their credit rating and lifting the burden of heavy mortgage debt. The entire short sale process hinges on the hope that the bank will take a loss now, approve the sale, and eliminate the costly process of foreclosing, clearing, and reselling a home. Obviously, this is a big hope on behalf of prospective homebuyers as well and they need to understand some things in order to lessen the chance for disappointment of unapproved short sales. This is what they should know:
1. Price is usually set by the agent & seller, not bank: The agent and seller often create a very low asking price in order to attract buyers. The bank is normally unaware of the asking price; however, the bank has the final say in what an acceptable offer will be. Since the bank has the power to ultimately accept or deny offers, their lack of price awareness often leads to the process taking longer than anticipated. The bottom line is that the buyer needs to remain positive and patient throughout the entire process, sometimes even for months.
2. Loans owned by 1 bank usually better than 2: If the seller has loans owned by two different banks it is a lot more difficult to approve the short sale. This is something the agent or the buyer cannot control; it simply depends on the willingness of the bank or banks involved. While the reasons are beyond the scope of this guide, buyers should know that when the seller only has loan(s) with one bank the short sale often becomes more buyer-friendly. A savvy Realtor can let you know this type of information.
3. Lowball offers get slow or no response: Remember that the bank is typically unaware of the pricing during a short sale. When lowball offers stream into the bank they are often scoffed at and rejected, giving the prospected buyers little or no feedback. Surprisingly, it may also take painstakingly long to hear back even on good offers due to the high volume of transactions lenders are inundated with these days.
4. Agent must check comparables before submitting offer: The agent must be sure to check recent home sales in the area to give buyers a better idea of the properties that are selling. This will give the agent and the seller appropriate grounds for an asking price that will be more likely to be approved by the bank. Checking comparables will also give the buyer a better knowledge of what price homes in the neighborhood are selling for and ultimately make them a more informed homebuyer.
5. Don't hang your hat on the property: Short sales aren't necessarily "short." It can sometimes be a very long process. Don't get your hopes up for just one property, keep your options open and continue to actively look at multiple properties. Buyers must remain optimistic, the right property will come along. In most areas it is completely legal and risk-free to have multiple offers out at any given time with the proper contingencies.
6. Sellers with other properties or too strong of financials may not qualify for short sale and/or may be asked to pay the difference: Sellers that own more than a handful of properties or have an extremely large net worth will probably not be eligible for short sale. In some cases the seller will be asked to pay the difference of the sale. The seller might even need to sign a promisary note stating that they will pay back all or most of the debt. This has virtually no effect on the buyer as long as the seller cooperates.
7. "Approved" prices are quickest: It is important to remember that short sales are not always timely; however, making an offer on an "approved short sale" can be a quicker process. An "approved short sale" has a price that has already been given the green light by the bank. This could be due to the fact that another interested buyer made an offer that was approved, but didn't end up buying the property. These types of short sales are some of the most highly desirable.
8. Some banks look want strongest buyers, some want strongest offers: The bank has all the power in approving short sales. The bank can pick the most appealing buyer, which may mean different things to different banks. Some banks may prefer the buyers with large down payments while others just want the highest price regardless of down payment. Many buyers want to know if they will get a deeper discount for an all cash offer. This is very hard to predict and one will never really know until they make an offer. As long as the buyer is surrounded by a good team we would advise them to do just that.
9. Repairs are seldom done, credit is more frequent: If there are improvements that need to be made on a home, even if they are necessary to get a loan, it is often unlikely that they will be done. Typically there is some sort of credit issued and the buyer must take the responsibility of fixing anything that is broken.
10. When you get approval, must close on time: During a short sale there is no leniency with the closing escrow date as there often is in a traditional sale. During a short sale, exceptions are rarely made and the buyer must close on time. Because of this, it is important to take care of all loan paperwork immediately after opening escrow. We'd advise buyers to be extra prepared and try to have the loan finalized a few days in advance of the closing date. If there is going to be an issue that will prevent closing on time, a request for an extension will need to be made immediately. If the request is made early enough, many banks will grant an extension but don't just assume it will happen.
Short sales can be a great opportunity to find your new home at a competitive price. A Short sale could also be a major headache that lasts for months. It is important to have a good understanding of the factors that lead to a successful short sale to make it an enjoyable and profitable experience. We hope that these tips will help you to remain positive and optimistic throughout the process.
About the Author: Todd Foust is the chief marketing executive for the FOUST Team at C21 Discovery; one of the top-selling real estate teams in Southern California. He specializes in Orange and Los Angeles Counties and operates one of the area's most informative real estate websites. To contact him or learn more about Anaheim real estate , please visit FOUSTonline.com .
About the Auther: Jennifer McNamara works as a creative marketing contributor/manager for the FOUST Teams public relations division. She is a Southern California native and specializes in translating complicated real estate knowledge into user-friendly information for local homebuyers. Today's Local Market Conditions Report