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Short Sale Listings In Ny

When you are having difficulty paying your mortgage on time every month it can be a scary situation. When do you know if a short sale is the best option for you? Here in New York, where I hold my broker’s license, Mahopac Real Estate has seen an exploding number of short sales. However, short sales are not for everyone. Let’s talk about the process and what you need to qualify. Short Sale Listings In Ny

Why would any bank or mortgage holder agree to a short sale? Because, banks are not in the business of owning and managing real estate. They are in the business of lending money and having real estate owned (REO) on their books negatively affects their credit rating with the Federal Reserve, hindering them from borrowing money and at a good rate. Moreover, it is less costly for a bank to accept less than originally agreed upon than to incur the expenses of selling the home at auction or worse, not being able to sell the home at auction and having to hold on to the property until it sells on the open market. Believe me, the last thing they want to do is foreclose.

How does a short sale affect your credit? Someone online once made a perfect analogy to explain the difference between how a short sale affects your credit versus how a foreclosure affects your credit. She said that one is like getting hit by a car while the other is like getting hit by a mac truck. Some say that there is no difference between the two, as far as credit is concerned. In my experience, you can recover a lot quicker from having a short sale on your credit report compared to a foreclosure. Some people have reported drops of 200 points after the former and a 300 point drop after the latter. Even if the point drop is about the same, other people have reported being able to purchase a home again two years after a short sale, whereas, after a foreclosure you can forget about buying another home for at least 7 years.

If you owe more than your home is worth, many people think right away that a short sale is an option for them. Just because you owe more than your home is worth is not reason enough. More importantly the bank must see that you are experiencing a financial hardship and are unable to pay the monthly payment amount. If you are on time with your payments, it is unlikely that the mortgage holder will grant you permission to sell the home for less than you owe and pardon you of the amount not covered by the sale. They would rather you continue to make the monthly payments.

Now, you have decided that a short sale is the best option for you, you have proved your financial hardship and the mortgage holder allows you to pursue a short sale. You then must go through the same process of selling your home as anyone else. You preferably list with an agent or broker, as opposed to selling on your own, since your situation needs more special attention and expertise than normal. Short Sale Listings In Ny

Keep in mind that you are still expected to make your mortgage payments during the “for sale” period and the short sale process can take 6 months to a year. Congress is working to pass legislation to force the banks to respond in a more timely fashion but as for now the process is still a long one and requires a ton of patience.

Once you have found a buyer, you must then go back to the bank and see if they will accept the amount that was agreed upon between you and the buyer. In a short sale situation, things get tricky because you are now, effectively, negotiating with two other parties, not just a buyer. The bank will then send someone out to obtain a BPO, or broker’s price opinion. They will base their decision on this BPO and whether they believe they are getting a fair price for your home. Obviously, the bank is already losing on the deal because they are accepting less than they were promised, so they definitely do not want to lose more on the deal by accepting less than the current market value.

One advantage, if any, to take away from this situation is that you do not have to worry about paying the broker’s commission or bank fee. The price that the bank accepts from the buyer will cover all expenses and fees. While in negotiations with the bank and the buyer, the bank will often give the broker a number that they have to walk away with after the commission and all fees have been covered. Short Sale Listings In Ny

“Following Up” is your key to short sale success! Following up on every aspect of your short sale is one of the most crucial parts of a short sale.  If there was one thing that, above all, needed to be done well in order to ensure success, it would be following up.  Because a short sale has several different pieces that all come together at various points in time, it follows that there are many people and parties to follow up with as you work through the process.

Who are you following up with?

When working on a short sale, there are three main parties that you are involved with: the lender(s), the homeowner, and the buyer’s real estate agent.  At different points throughout the short sale process, you may need to follow up with one, two, or all three of these parties at the same time.  In the beginning it will primarily be the homeowner, however as the short sale continues to move along, you’ll be following up more heavily with the lender and buyer’s agent to keep the buyer in the loop with the status of the short sale.

The Three Parties…
You will be in direct contact with the homeowner to obtain the documents to send to the lender and you’ll also need to be in touch with them when it comes time to drop the list price on their home as well as when it comes time to close on their property.  It is also very important to stay in contact with the homeowner to keep them updated on the status of the short sale negotiations.

The lender is the primary party that you’ll be following up on from the beginning to the end.  From the initial call right up through closing you’ll be on the phone with the lender, always following up on your most recent fax, email or phone call.  Depending on which lender it is that you’re dealing with, you may be following up with any number of different employees throughout the course of the short sale.  You may find yourself calling customer service representatives, loss mitigators, set-up representatives, managers or supervisors, and occasionally collections.

When trying to reach someone directly, always be alert to the possibility that the person you are trying to reach is not the correct person to be speaking to.  It is quite possible that you received some misinformation and have been trying to reach the wrong mitigator.  Remember, you are dealing with employees that could care less or perhaps are completely clueless.  There have been a few instances where I was given a name and told that that a particular person was the assigned loss mitigator.  After three weeks of leaving multiple messages, I hadn’t heard a peep from the “supposed” mitigator.  In need of a definitive update, I called the loss mitigation department and spoke to a different person who told me that the file had been assigned to someone else.

Be prepared to do that yourself.  If you go a couple of weeks without hearing back from the person in question, try calling and speaking to the department of which your designated party belongs  to and clarify the situation.  If you speak to someone different, chances are they will clear up some misinformation that you had received prior.  Keep digging, and you will get to the right person.  And while there are some important matters to attend to regarding the homeowner and real estate agent, the lender is who you’ll spend 80% of your follow up time with.

Another important party to follow up with is the buyer’s agent.  They need to be updated on a constant basis, and it will greatly benefit you if they are well versed in short sales, because then they will understand the nature of the situation they are involved in and be able to reassure their client to be patient.  The success of the short sale, and its 100% conclusion, is based largely on the buyer cooperating and sticking around, and so you’ll want to make sure that you set their expectations very clearly from the beginning!
How to keep everyone updated without having to make follow up calls every single day….
The best way I found to cut down having to make follow up calls every day is an online short sale management tool called managemyshortsale.com. This has taken a huge weight of my shoulders because it allows me to keep everyone in the loop on what the status of my short sale negotiations.  As soon as I speak to the foreclosing lender and I update the account it automatically sends an email notification to every party involved in the short sale process (Homeowner, Buyers Agent, Attorney, Mortgage Broker, etc).

View more articles about the preforeclosure industry and investing in real estate at http://www.realestatebusinessmentors.com

Visit www.AskBobLachance.com for any short sale bank negotiating questions.

Find Minneapolis Foreclosures Fast. This FREE Foreclosure Finder map-search tool makes it easy to find and buy any foreclosed property (REO Listings or bank-owned) in the Twin Cities. * Add your profile and you’ll also get FREE unlimited access to the Search-Saver feature and Favorites. * With Search-Saver, you can save searches and receive email notification whenever new listings hit the market. * With Favorites, you can save as many listings as you like for future reference. You can also email your Favorites, all at once, to a buyer agent a co-buyer, or a friend. www.minneapolisforeclosurefinder.com Courtesy of Chris Deutsch and EXIT Lakes Realty. We help home buyers and investors find MLS and pre-MLS foreclosed homes. Caveat We are required to mention we are not The Minneapolis MLS. The listings you will see on our website come from the RMLS of Minnesota. Only Realtors and licensed real estate agents have access to the Realtor MLS, but all the listings you will see are MLS listings.

First of all, “yes” some short sales take long to sell and “yes” some short sale listings can be frustrating.  But let me tell you this; not all are created equal! With a little patience and a little creativity you can overcome some of the shortcomings of listing pre-foreclosure/short sale properties and make a lot of money by helping homeowners get out from underneath the huge burden of debt and stress they are under.

Let’s deconstruct three of the biggest short sale myths:

Reduced commissions
They take too long
Too hard to close

1.  Reduced Commissions

Yes, it’s true when it comes to a short sale; the lender is in the driver’s seat.  And since they hate to lose money they tend to reduce the amount of commissions by an average of 1%, meaning that if your area pays out 6%, they will only approve 5%, which will be split by both the agents involved in the transaction.

You know what I say to that?  Who cares! Be creative! Did you know that there are 7 additional profit centers that can offset your 1% cut in commission?  Let’s take a look at what they are:

A “Loss Mitigation Fee” via the Lender
A “Loss Mitigation Fee” via the Buyer
A “Loss Mitigation Fee” via the Attorney or Title Company.
A “Loss Mitigation Fee” via the Seller
Referral fee from a listing agent (for doing the loss mitigation work on their short sale).
Buy it as an investment (buy and hold or buy and flip).
Any combination of all of the above!!

The “Loss Mitigation Fee” is a fee that we collect only when we successfully negotiate a short sale and have the foreclosing lender pay for all of the closing costs (the realtor commissions, attorney/title company fees, conveyance taxes, etc.).

2. It Takes Too Long

The average loss mitigator receives an average of 30 NEW files a day.  Not a week, not a month but a DAY!  That is part of the reason that short sales can take a while, but it isn’t the main reason.  The primary reason is because the majority of real estate agents submit short sale packages that are less than adequate and professional!  Meaning;

They are incomplete in terms of paperwork (entire documents are missing)
They are arranged poorly (Yes, that makes a difference!)
They are sent to the wrong person or department (happens very often)
They are incomplete in terms of information (i.e. the financial worksheet isn’t completely filled in)

Those and many more reasons cause short sales to get hung up.  Once again, take what the defense gives you.  If loss mitigators are overwhelmed, then the key is to put together a professional and presentable short sale package guaranteed to get your short sale offer reviewed and approved.

3.  They Are Too Hard to Close

With the right system they are not hard!  Let’s take a look at how to overcome the two biggest reasons why short sales blow up right before the closing.

Not managing expectations
This is a negotiating process.  Make sure you clearly communicate the process every step of the way to the buyer and the seller. We use an online short sale management tool called ManageMyShortSale.com to automatically keep everyone connected to the short sale process, which is updated in real time.
Many deals blow up because real estate agents fail to communicate to both the homeowner and the buyer the current status of the short sale and what to expect when they negotiate with the foreclosing lender(s).
Lack of qualified buyers

The key is not to have only one buyer but to have a pool of qualified buyers that are pre-approved.  The best buyers to keep an eye out for are those that are already pre-approved and that have funds in place to make an actual purchase.

The two easiest ways to do that are:
Start networking with every real estate agent that specializes in buyer’s representation. They are easy to find because it is in all of their advertisements.
Start working closely with every single mortgage broker or direct lender that you know, or that one of your fellow agents knows.

In conclusion, listing pre-foreclosure/short sale properties can take some time to close. However; in this market everyone needs to stick together and help one another out. By building the right network of real estate professionals, we can all ensure that our listings (short sales or not) do not sit out there without a buyer!

For more real estate industry news and loss mitigation blogs and videos visit www.RealEstateBusinessMentors.com or visit www.AskBobLachance.com for any short sale bank negotiating questions.

WHB is always trying to share the news and trends that are happening in the Housing Market that directly impact Short Sales and here we are again, giving you a pulse of what’s going on in our local market.

The past couple of weeks we have noticed a trend from our local market and from articles reporting home buying activities around the nation and that trend is the increase of buyers in the market. In our previous article we talked about how the stability of low mortgage rates and tax incentives have been a supporting factor to the continued and increasing number of buyers in today’s housing market. Well, after additional news reporting that housing tax credits, which were set to expire on November 2009, will continue into 2010, along with mortgage rates remaining fairly stable for the past 4 months, buyers have been coming out in droves to check out what the hurting housing market has to offer.

Homes that are requiring Bank Approval (Short Sale) have been getting multiple offers, over the listing price. Real Estate Owned (REO) properties are also seeing the same type of activity. Not only are there multiple offers being made on these types of distressed properties, but there have been many more investors coming in with an ALL CASH offers, which cripple any offer that requires traditional bank financing. It seems as if everyone out there is not ready to go out and look for that golden deal.

Maybe it is the impression that we are near or at the bottom of this housing crisis. As much as the government and media is trying to be positive about the economy, the number of foreclosures will sure increase in the next two years. With unemployment over 10% nationwide and the drop in consumer spending, there is sure to be a lot more people with a mortgage under water.

What this means to the Real Estate Agent looking to find short sale opportunities? – Not only is it very easy to find a short sale opportunity but finding a buyer is getting much easier! Something to keep in mind is that although you may have a lot more buyers lined up, you should pre-qualify each on and select the best buyer profile for your short sale transaction. Even if you have a buyer with the highest offer they may not be the best candidate for your short sale transaction because they may not want to wait 3 or 4 months to get the purchase transaction closed.