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Home Page > Finance > Real Estate > Easy Steps to Short Sale Success

Easy Steps to Short Sale Success

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Posted: Nov 02, 2009 |Comments: 0
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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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KeysToFlorida.com is by far the most advanced Palm Beach real estate website. Visit its pages (rich in listings!) for info about the local areas and property types, including Palm Beach’s Hampton Condos For Sale.

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What are the steps of a short sale ?
I was denied a Hamp mod due to NPV caculations. My lender will not explain these terms to me. They said they cannot help me. I need to short sale and get out. Can u please help me
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Anyone have success stories of buying these kind of homes? Please share!!

I’m a part time new (8 months) realtor in CA. I have sold two homes. One home a regular sale and the other bank owned.

Bank Owned: Clients put 20% down, paid closing, and 20 day escrow, and attached FICOS, and proof of funds, $5K under asking price.

My new clients have put in five offers Corona area with 10% down, closing, 30 day escrow and back up financials and we have been outbidded by others everytime!

Any ADVICE? HELP

Learn the 8 Critical Steps to Real Estate Short Sale Success

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Home Page > Education > Learn the 8 Critical Steps to Real Estate Short Sale 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

By: BG Thomas

About the Author

Copyright 2010 Paul Hanson, Axcess Real Estate Services, PayNothingShortSale.com. Paul Hanson has over 12 years in real estate
including mortgage financing. He has helped hundreds of clients with all of their real estate needs including selling, buying and
financing, not to mention, guiding buyers and sellers in negotiating difficult short sale, probate and bank-owned property transactions.
He engages clients with a no nonsense approach to find the best possible solution for their particular situation as he outlines in his
website at www.PayNothingShortSale.com.

(ArticlesBase SC #3080614)

Article Source: http://www.articlesbase.com/ - Learn the 8 Critical Steps to Real Estate Short Sale Success

The Short Sale Solution

So, what exactly is a short sale? Put simply, a short sale
is the sale of a home in which the amount owed to the
lender(s) is more than the amount that the home can be sold
for. Instead of the home owner having to bring in money to
complete the sale, the sale is completed through negotiations
with the existing lender(s) and the lender(s) agree to accept
less than the full amount owed to satisfy the debt and allow it
to be paid off “short.”

Put even more simply, a short sale is a real estate
transaction that requires an approval from the lender - period.
It’s not some complicated legal process that requires paying an
attorney. As a matter of fact, watch out for that trick!!
Now don’t get me wrong. Short sales are most definitely a
different animal than a regular real estate transaction because
once you stop making your mortgage payments, the clock
starts ticking and the hangman starts preparing his noose.
You’ll get one shot to do a successful short sale. If your
agent is inexperienced at short sales, makes mistakes, gives
up, slacks off, drops the ball, or simply doesn’t know how to
negotiate with banks, you’ll wind up being foreclosed on and
believe me, you do not want to go through a foreclosure.
A foreclosure will devastate your credit. Your credit score
can be lowered by as much as 300-400 points (or more) and
you’ll be hounded day and night by your lender. Even worse,
you’ll have difficulty getting credit cards, auto loans or even
renting a home or an apartment for the next 7 years.
Your home will be repossessed by the bank and the bank
will sell your home, either at auction, or more likely through a
real estate agent, with a large sign out front that says “Bank
Foreclosure”.

Here’s something important you need to know about
short sales, depending on whether the loan on your home is a
“purchase money” loan or whether you did a “cash out”
refinance after your purchase, you either have a “non
recourse” or a “recourse” loan. This makes a BIG difference as
to whether or not your lender can go after you to repay your
debt, even after your home has been foreclosed on.

A non-recourse loan is…
A loan agreement under which the collateral securing a loan is
the ultimate source of repayment, and the lender cannot hold
the borrower personally liable in the event of a default. The
lender can seize (and sell) the collateral but cannot seize nonpledged
asset or property.

A recourse loan is…
A loan agreement under which a borrower gives an undertaking
to repay a debt even if the funded asset (acquired with the loan
proceeds) cannot be liquidated to cover the loan amount. In case
of a default, the lender can seize and sell the funded asset as
well as the borrower’s un-pledged assets or properties.
That recourse loan sounds scary huh? They can be. The
great news is, I can help you either way but the steps are
different. Now, if you want to see really scary, just ask the next
real estate agent you meet claiming to be a short sale expert if
he or she can explain the difference between the two.
So, I applaud you now for doing your home work and not
simply trusting this process to the first of many typical real
estate agents who are likely to come along promising help.
While I’m at it, you should also be wary of the many
unscrupulous companies operating now that actually
encourage you to go through foreclosure so you can live in
your home a few more months without paying your mortgage.
These companies prey on people who are vulnerable and
unaware of the foreclosure and mortgage laws.
They even charge you a hefty fee for the privilege of
getting foreclosed on! This is financial suicide, and it is totally
unnecessary because…

Your lender does not want to foreclose on your home.
It’s true. They would much rather have you stay in your
home and continue making your payments, or have you sell it
and get it off their books, even if it requires them taking a
financial loss. Remember, banks are in the lending business,
not the real estate business, which brings me to my next
point: It makes absolutely zero difference whether your lender is
Indymac, Wells Fargo, Chase, Countrywide / Bank of America,
Downey Savings, CITI, Chevy Chase, Washington Mutual,
Wachovia, World Savings, First Franklin, Flagstar, GMAC,
Greenpoint, Homecomings, HSBC, Irwin, Novastar, Option
One, Aurora, Deutsche Bank…

I’ve worked with them all and they all work the same – if
you submit a sensible offer and a clean package and have the
systems and resources in place to consistently and
continuously follow up on the file, it will get accepted and your
home will be sold “short.” You’ll pay nothing. You’ll owe
nothing. You’ll avoid having a foreclosure on your credit report
and you’ll survive to fight another day!

Retrieved from “http://www.articlesbase.com/education-articles/learn-the-8-critical-steps-to-real-estate-short-sale-success-3080614.html”

(ArticlesBase SC #3080614)

BG Thomas -
About the Author:

Copyright 2010 Paul Hanson, Axcess Real Estate Services, PayNothingShortSale.com. Paul Hanson has over 12 years in real estate
including mortgage financing. He has helped hundreds of clients with all of their real estate needs including selling, buying and
financing, not to mention, guiding buyers and sellers in negotiating difficult short sale, probate and bank-owned property transactions.
He engages clients with a no nonsense approach to find the best possible solution for their particular situation as he outlines in his
website at www.PayNothingShortSale.com.

]]>

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Article Tags:
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Getting a short sale approved may seem like a long shot, but it’s not as hard as the banks make it seem. Sure, there’s a good bit of waiting involved and not everyone gets a green light from their lender. But there are things you can do to get your short sale application moving faster and increase your chances of getting approved. Read on for some short sale tips that can make all the difference between a successful short sale and a foreclosure.

Make your paperwork complete

Short sales, just like any foreclosure prevention plan, entail a fair bit of paperwork. And while sellers used to get away with incomplete documents, new rules now require you to present them all up front. This helps the bank process short sale applications faster and reduces the volume of applications. Before starting, get a list of short sale requirements from your lender and double-check your package to make sure everything you need is in.

Write a convincing hardship letter

The hardship letter is one of the most vital elements in a short sale. A good hardship letter makes sense out of the bank statements you’ve submitted and convinces your lender that a short sale is really your best option. Make it brief but detailed; most agents don’t want to spend more than a couple of minutes on a letter. State your main idea within the first paragraph and make sure you can back up each claim with solid evidence.

Hire a short sale attorney

An experienced lawyer can give you valuable tips on planning your short sale and getting short sale approval from your bank. They can also help you with legal issues such as lending fraud and credit report errors. An attorney with short sale experience will also have useful connections with the bank, which can get your application to the top of the file faster. At the very least, you’ll save hours of phone time trying to get to the bank’s short sale office.

Do your research

Approach your lender with a solid idea of how the short sale process works and what you have to offer. Start by looking up property values in your area and comparing them with your own; that way, all your lender has to do is confirm it to see that your home cannot sell for enough to cover your unpaid balance. A short sale agent can draw up a list of comparable property values for you, which you can attach to your short sale application.

If you are a Real Estate Professional, you are hurting yourself by not pursuing short sale opportunities. If you had a previous client in trouble, would you be able to serve them? Would you just walk away and hope you find another client who isn’t in trouble? If you are looking to stay in Real Estate, you’d better take the time to know how to deal with homeowners in trouble or you will be throwing away good commission dollars and decreasing your customer base you worked so hard earning.

Many analysts have predicted that short sales will only last until 2011, but the fact is it will be much longer. With limited help provided by the government and the economy failing to create enough jobs, more and more people will lose their homes. Look at how long it’s taken to deal with sub-prime defaults, which started in 2005 and still count for a large part of today’s foreclosure inventory in 2010.

Following are the short sale trends as of Dec 2009, heading into 2010, which will explain the challenges short sales in 2010:

Trend #1 – Can’t Pay Me Now, Then Pay Me Later…..Lenders are scrutinizing reasons for hardships and predicting future financial status

In order to prevent short sale approvals for homeowners who may really not be in trouble, lenders have been scrutinizing the reasons provided in a short sale submission. If you broke your leg and you missed a few months of work that caused you to be behind, but your ability to continue earning income when you recover shows to the lender you really don’t have a real enough hardship to approve a short sale.

Trend #2 Junior Lien holders get paid $3000 by the Senior Lien holder regardless of how much debt is owed

In most transactions when there are multiple lien holders and the first mortgage lender forecloses, Junior lien holders understand that they will receive nothing. Junior lien holders know this but also don’t want to give up their hand that easily. Don’t expect Junior lien holders to lay down so easily. In fact, short sale deals have died because the Junior lien holder wanted more than $3000, even when the first and second lenders where the same company!

Trend #3 Junior Lien holders gets borrowers to continue paying on payment plan

Junior lien holders are asking for a promissory note from the borrower if they want them to release the lien from their property and give up their rights to deficiency. The thought is that they will get $3000, and even if the borrower makes a few payments from the promissory note, it is still more money in their pocket. The payment plan is very reasonable with a long payment term with a very low rate.

Trend #4 Commission adjustments

The maximum lenders have been allowing on commissions is 3% for each agent involved. A full 6% commission is supposed to be allowed by FNMA backed loans but lenders may still scrutinize these commissions. In fact, the amount of commissions will most likely be affected if they are not able to recover enough money from a short sale offer. Be aware that if a deal has two separate agents from the same office, the commissions may be reduced.

Trend #5 Strict compliance of title companies for short sale transactions

Every short sale transaction will need title insurance and there has been concern from title companies that a lender will take back an approval if the title company is not able to comply with their closing practices. If any mistakes are made by the title company, they would be paying out money on any future claims.

Trend #6 Homeowners will continue to face foreclosure

This is an obvious trend, but the 24+ billion adjustable mortgages this year will add more inventory to the housing market. Values will continue to decline and lenders will be pressured to allow more short sale approvals to prevent additional inventory hitting the market and reducing the values of their REOs in the market.

Full Article Resourse:  www.whbsolutions.com/blog/

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