Steps | realestateroadkillusa.com

Having to step away from owning a home is not easy for anyone, regardless of the circumstances that created the situation. In order to avoid the worst case scenarios, such as foreclosure or bankruptcy, homeowners might consider the selling their home using the short sale system.

While going forward with a decision to short sell your home can be time consuming, there are several steps that can make the entire process less stressful, such as:

1. Before you sell, have an independent real estate assessment done on your home. This will give you a true starting point for determining what your home is currently worth.

2. Hire a realtor that is familiar with the short sale process. Try to find out how successful he/she has been in the past with short sales. Ask if his/her rates are negotiable.

3. Calculate all of the costs involved in selling your home, including realtor’s fees, closing costs, etc.

4. Determine the price of homes similar to yours in the area. How does your home’s value compare?

5. Based on your home’s current value and your outstanding mortgage, will there be a financial shortfall if you sell? (if not, lenders will not accept a short sale request)

6. Draft a Hardship Letter to your lender regarding your inability to continue with the mortgage payments. Let them know that you are considering moving ahead with a short sale and would like their approval. At this point, they may have alternate suggestions to help with the situation such as lowering the cost of the loan.

7. Lenders will usually have forms for you to fill out if they are considering allowing a short sale on your property. Give the lender all the information required make a decision on your request. This could include:

* three actual properties sold in nearby district

* three current listed properties in nearby district

* the condition of your property and if repairs are required, estimated costs

* Brokers Price Opinion (BPO) on the exterior, or drive-by evaluation of the home, and the interior BPO done by the lender.

8. Be aware that selling your home on a short sale will most likely affect your credit score in a negative way. Be sure you understand the recourse, if any, from the lender regarding the difference between the final sale price of the home and the amount of the mortgage prior to the short sale proceeding. Will the lender require a repayment of the difference between how much is owing, and what the net results of the home sale will achieve?

If all of the steps required successfully produce an offer that is adequate, sell the home and make sure there are no loose ends on the part of any participant in this deal.

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Nov 23 2010

Learn the 8 Critical Steps to Real Estate Short Sale Success

Posted by Usual in Lender Approved Short Sales, tags: Critical, Estate, learn, Real, Sale, Short, Steps, success

Learn the 8 Critical Steps to Real Estate Short Sale Success

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Learn the 8 Critical Steps to Real Estate Short Sale Success

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5 Steps To A Successful Short Sale

Posted by Usual in Lender Approved Short Sales, tags: Sale, Short, Steps, Successful

Short sales have the potential of being long, complicated and frustrating. However, if you take the time to plan and focus on the steps you need to take to make it successful then a short sale can end up being a great deal of all parties involved. One of the most important things to remember when going into a short sale is to be patient. It can take sixty to ninety days to get a short sale going, but if the right deal comes around it can be well worth the wait. Before you decide to go ahead with a short sale whether you are the buyer, lender, or property owner, always make sure you have expert assistance so that everything runs smoothly. Short sales can be tricky especially if you are not familiar with buying and selling property.

Step one to a successful short sale is contacting the lender. This should be done as soon as possible because it can take a lengthy amount of time to get the lenders approval. Quite often a lender will not even look at your case until you have an offer to negotiate. It is still important to contact the lender first thing, to make sure you know exactly what they will require before looking at your sale. Sometimes they will have a list for you of all the forms they will need to look at your short sale, and to negotiate a decision. Since this process can take awhile it is smart to have everything ready to go when the time comes to present your short sale to the lender.

Step two to a successful short sale is marketing. Market your property, and find some potential buyers. This can be tricky because the sale must still be approved by the lender. This can act for or against you in marketing. Some buyers will not want to wait for the lenders approval, but some will be enticed by the possibility of a great deal and want to wait it out. The best way to market your property is to work on pricing, staging. Staging includes making the home look attractive to the potential buyers, highlighting the best attributes of the property and making it look better than the competing properties around it. Pricing can be tricky, use the help of a professional to make sure you choose the right asking price to attract buyers without giving your property away.

Step three to a successful short sale is negotiating the agreement. This can take a little while because it is sometimes hard to find a buyer willing to wait the for the lender and pay the asking price. Usually short sale properties sell for less than the typical home in a given market. This can be because of the long wait included in a short sale, and usually because the owner of the property is usually in danger of foreclosure. Most likely the owner wants to get rid of the house as quickly as possible so the price goes down to speed up the process. Once you find a buyer and negotiate an agreement it is time to move onto step four.

Step four to a successful short sale is putting a package together for the lender. This just means getting together all of the paperwork the lender requires. If you completed step one, then this should be quick and painless. It will make for a much quicker interaction with the lender if you have everything ready to go before you talk with them.

Step five to a successful short sale is to call your lender. Find out how the lender wants all of your information sent, and make sure they get it. Usually it is smart to both mail and e-mail the package to the lender, just to make sure that nothing is lost. At this point you wait…hopefully not for too long. You can bet on a counter proposal, usually the lender does not take the first proposal. Make you as the realtor you are warning your buyers of this ahead of time. Once you can reached a negotiation with the lender, then the sale can be completed.

This article was produced by Eric Badgley; specializing in Bellingham Foreclosures and Bellingham Short Sales. http://www.bellingham-realestate.net

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Jun 12 2010

The Five Steps to a Successful Short Sale

Posted by Usual in Lender Approved Short Sales, tags: Five, Sale, Short, Steps, Successful

The Five Steps to a Successful Short Sale

Regardless of whether you are a home owner attempting to get out from under a crushing mortgage payment, or a Realtor attempting to assist that home owner, you’ll need to understand all the steps necessary to get a short sale accomplished.

The short sale process can be long and complicated. The following steps are the most common steps required by most lenders to facilitate a short sale. The length of time to obtain an approval on a short sale request has risen significantly over the past twelve months. Some lenders are actively telling us that they need ninety days to review a short sale request.

One of the challenges of putting a short sale together, whether you are a property owner or a Realtor, is that many buyers are unwilling to wait sixty or ninety days to find out whether or not they’ve been able to purchase a home. There are many properties on the market for sale for a buyer to choose from without having to wait, so we have to entice a buyer to hang in on the transaction.

An additional complication occurs when the home owner has more than one mortgage against the property. There may be a second mortgage that the home owner took out at the time of purchase, or there may be a home equity loan or line of credit the owner used to make some improvement, or any other lien against the property.

Requesting a short sale, in a nut shell, is finding a buyer, negotiating an offer on the home, contacting the lender, obtaining all the documents the lender requires for approval, and then staying in contact with the lender until they approve, deny or counter your proposal.

As I stress in every article I write about short sales, have an expert assist you with this process. Seek the advice of an attorney, Realtor, accountant and any other professional you might require to insure the process is done correctly, and to insure you’re making the appropriate decision for your situation.

Step 1: Contact Your Lender for Information

Most lenders will not approve a short sale until there is an actual offer to negotiate. Banks and mortgage services are typically understaffed and very busy trying to work out situations with other clients who already have offers on their properties. They don’t have the time and resources to analyze every possibility.

However, since short sale approvals are taking considerable periods of time, it makes sense to find out who you need to speak with and what the lender requires the owner or Realtor to supply. In most cases, the lender has a “short sale” package that includes a list of all the forms the lender requires.

Step 2: Market Your Property and Find a Buyer

Marketing a property that requires a short sale may also be a challenge for several reasons. First, you must notify any potential buyers that any offer must be approved by your lender. This will scare some buyers away from your home because they don’t want to wait for someone else to approve the sale. This will attract some investors who believe they can “steal” the home, because they’ve seen on late night television that banks will accept almost any offer. This is simply not true. Although they may get a very good price, they are not likely to “steal” the home in the current environment.

The components of marketing any property successfully include pricing, staging and marketing. Staging is simply presenting your property in the best possible light in order to attract buyers to offer on your property rather than competing properties. Pricing entails carefully selecting the correct asking price in order to attract potential buyers. There are methods to selecting correct price positions based on recent sales and competing properties for sale.

Step 3: Negotiating an Agreement

The typical home requiring a short sale sells for a bit less than other properties. The primary reason for this anomaly is that the buyer must have a reason to go through the pain of purchasing a home through a short sale. Historically, short sale properties sold to investors because they were the few with the fortitude to wait weeks to months to find out whether or not the sale would actually go through.

Imagine the stress of moving to a new home and perhaps a new school district. Consider the stress on your family. Now add to that stress the idea that unlike most real estate transactions, where a buyer knows within a day or two whether or not the owner will accept the offer, the buyer may have to wait several months for an answer. Worse, if the lender accepts the buyers offer, the buyer needs to be prepared to settle and move quickly.

Most buyers who are selling another home need to plan their move very carefully. They can’t rely on the hope that this transaction will settle. They need to be out of their home by a certain date and need a place to move. If they have a sixty day window to move from their home and they won’t find out a response about the short sale from the lender for forty-five days, that gives them little or no time to find another home should this transaction fall through.

Because short sale transactions are typically limited to investors and those who do not “have” to move by a certain date, the pool of potential buyers is smaller than for that of other homes. Enticing buyers to purchase a short sale home over one that doesn’t have the same challenges often requires some consideration in price.

If you’re an owner is this situation, you may be offended at selling your property slightly below market, but please consider that the lender won’t allow you to receive any proceeds anyway, so you’re not taking that direct loss.

An added complication is that many of the owners of homes requiring a short sale are in default on their mortgage or at risk of default. That means that the owner may have to get the home sold more quickly than the typical home in the area. If the Sheriff is locking the doors and auctioning the home in ninety days and the typical market time in a slow market in your area is six months, you need to be priced below the market in order to attract buyers to your property first.

Step 4: Put Together a Short Sale Package for Your Lender

Hopefully, by the time you receive an offer on your property, you’ll already have the full short sale package and you’ll have started filling it out. It is imperative to get this package to the lender as quickly as possible and then to follow up with the lender to make sure they received it and that they are processing it.

Whether you are the home owner, negotiating with the lender directly, or a Realtor or attorney attempting to work on behalf of the home owner, there is a lot of information that needs to be provided to the lender. Some of the information will have to be filled out by the home owner, because it directly involves the home owner’s financial situation. Some of the forms are better prepared by a Realtor, title insurance agent or attorney.

Although every lender is slightly different, the typical documents required in a short sale package include:

1. A Cover Letter

2. An authorization for the Realtor or attorney to speak with the lender

3. Seller’s Hardship Letter

4. Hardship Documentation - Copies of documentation related to owner’s hardship

5. Seller’s Financial Statement or Income, Expense and Asset Worksheet

6. W-2 forms for past two years

7. Two months pay stubs

8. Two to three months bank statements

9. Repair estimate for any necessary repairs to property

10. Agreement of Sale or Contract to purchase the property

11. Realtor’s competitive market analysis

12. Photos of the home (interior and exterior)

13. Seller Net Sheet

14. Payoff statements from any other lenders or liens against the property

15. Preliminary HUD 1 settlement sheet

Other forms that the lender may ask for include:

1. Title search of the property

2. Special forms

Step 5: Start Calling the Lender!

Remember that there are many people in the same situation across the nation. Lenders are swamped with phone calls and packages. When you complete the package, call and email the lender to determine the best method to get the package to the lender. My suggestion is to send it to them in two forms.

If the lender tells you they’d like the physical package by mail, then I would express the package in order to insure the package gets to the lender quickly and in order to insure it is delivered and can be tracked by who signed for it. I would additionally scan the entire package and email it to the same person to whom you expressed the package.

My goal is to insure they have the package and can begin working on it. If the lender asks the information to be faxed, which some are now doing, I would again both fax it and email it.

Expect a Counter Proposal

Hopefully the lender will simply accept the short sale proposal as written and allow the sale to be consummated. Don’t be surprised if the lender refuses the initial offer and makes a counter proposal. Should this happen, you may have to go back to the buyer and ask for more money in order to settle the transaction.

If you are a Realtor, you should be preparing your buyers to understand that this is a negotiation. The lender may accept the deal, or may counter.

Getting to Settlement

As with any transaction, title insurance must be ordered and settlement must be scheduled. In instances where an owner may be behind on their mortgage or may be considering a short sale, a wise move for either the Realtor or home owner would be to contact an attorney, title agent or escrow company to run a preliminary title search of the property. Make sure there are no other liens against the property.

Once a lender agrees to accept a short payoff, the owner needs to be ready to move quickly to complete the transaction.

Loren Keim is the author of several books including “Short Sales: Step by Step” and “How to Sell Your Home in ANY Market“.

Loren Keim Author of “How to Sell Your Home in Any Market” Author of “The Fundamentals of Commercial Real Estate” Author of “Short Sales: Step by Step”

Visit Loren Keim on Amazon.com or at http://www.realestatesnextlevel.com

Loren Keim is a national authority on real estate and the housing market. Keim is the author of several best selling how-to books about real estate, including How to Sell Your Home in Any Market, The Fundamentals of Commercial Real Estate and Real Estate Prospecting: The Ultimate Resource, and training systems for Realtors. Keim is also the editor-in-chief of Real Estate Investment Digest and Pennsylvania Farm & Ranch Magazine, and is a real estate broker and president of Century 21 Keim Realtors in Pennsylvania.

As an authority on the housing and real estate market, Keim performs an economic analysis and housing projections for Lehigh University’s Goodman Center in Bethlehem, PA. Keim has appeared on television and radio programs to talk about the housing market and the recent real estate crisis, and has been a speaker at national conventions.

Keim’s publication, Real Estate Investment Digest, is read by tens of thousands of investors across the United States. Keim writes blogs for BrokerAgentSocial and ActiveRain.

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Jan 10 2010

Short Sale Approval: Steps for Working with Mortgage Lenders

Posted by Usual in Lender Approved Short Sales, tags: Approval, Lenders, Mortgage, Sale, Short, Steps, Working

Short sale approval occurs when banks allow borrowers to sell their property for less than the balance due on the mortgage note. The primary goal of short sales is to minimize lenders’ financial losses and prevent the property from falling into foreclosure.

Short sale approval is based on many factors and varies by lender. Unified criteria include: properties cannot be in foreclosure; borrowers owe more than the home is worth; and borrowers cannot own assets which can be used to satisfy the mortgage note.

The biggest mistake borrowers make is procrastinating about contacting their lender when they become delinquent with payment. This usually stems from embarrassment or fear. Believe it or not, lenders do not want your property. They are in business to make money, not manage properties. Most are willing to work with borrowers and devise a plan that is beneficial to both you and the lender.

The short sale process typically takes between four to nine months. Much depends on the bank’s caseload, number of lenders involved, and ability to locate a buyer. The process becomes more burdensome when borrowers hold a second or third mortgage against the real estate.

Borrowers will work with a loss mitigator assigned through their lender. Mitigators do not make final decisions on short sale approval, but can be instrumental in helping obtain a successful outcome.

Loss mitigators are overwhelmed with work. They are oftentimes verbally abused by frustrated, stressed-out borrowers. If you want an edge on obtaining short sale approval, be nice to your mitigator. Organize financial records and provide requested information in a timely fashion. Take time to thank the person for assisting you through this difficult process. As they say, you catch more flies with honey.

Banks generally require borrowers to submit a short sale packet consisting of a variety of financial documents. Expect to provide bank, credit card and investment statements, previous years’ tax returns, tax or creditor liens, list of income and expenses, spousal or child support orders, and property tax and homeowners’ insurance receipts.

Lenders oftentimes request borrowers to submit a short sale hardship letter outlining events which caused them to become delinquent. The hardship letter is a crucial element toward obtaining short sale approval. It should be crafted with care and include dates of events which took place. Events might include loss of employment, death of a spouse or child, divorce, or chronic illness.

Many banks require borrowers to have a sales contract in hand before authorizing short sale approval. Others grant time to list the property through a realtor to locate a buyer. Borrowers can save time and money by selling to real estate investors.

Today, investors are particularly interested in foreclosure and short sale real estate because these properties are sold below market value. Use the Internet to locate investors in your area or ask friends, family, realtors and banks for referrals. Some investors purchase real estate across the nation, so if you are unable to locate a local investor look for nationwide investors.

Investors oftentimes purchase distressed properties with cash in order to obtain a lower purchase price. Everyone knows cash is king and lenders are generally more receptive to working with buyers who have cash in hand.

Simon Volkov is a real estate investor with a penchant for helping borrowers who are struggling to maintain their mortgage payments. Simon has helped hundreds of homeowners obtain short sale approval and is called upon by local realtors and real estate lawyers to assist in short sale negotiations.

Simon is the author of the wildly popular “Short Sale Hardship Letter eBook Course“: a no-nonsense guide detailing how to write a short sale hardship letter and increase your chances of approval ten-fold. If you need to sell your house fast and want positive results, visit www.SimonVolkov.com now.

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