Loan Modification is ONLY A BANDAGE…CONSIDER A SHORT SALE!!
Performing a Short Sale should be the last action before letting a property fall into foreclosure. You should have already explored other workout options first such as loan modifications. Once it is clear that other options will not work for you, it is time to look seriously at doing a short sale. Do not delay; take action so that you will be left with enough time to complete a short sale prior to foreclosure.
How much time do I have before I get foreclosed upon once I am in default?
Well, good question. It depends on the individual banks involved as well as the State your property is located. Here in Nevada, you have 3 months and twenty days once a Notice of Default (the official filing a lender makes with the County Recorder) has been filed. After this time period, a Trustee Sale is often scheduled within 30 days. Your bank usually will usually get your property at the Trustee’s Sale. Technically, you are in default one day after you miss a payment, but it usually takes a couple of months before a Notice of Default is filed. The more time we have as real estate agents, to conduct a short sale, the better chance you have, just make certain you have exhausted other options prior to attempting the short sale.
Why do you keep saying I need to try other alternatives to a short sale PRIOR to listing my home as a short sale?
A short sale is simply another workout option to a bank, just as a loan modification, forbearance or refinance, and as far as the bank is concerned, the least desirable. A bank would always prefer to do a loan mod instead of a short sale. Once you start a short sale and try another workout option, the bank will suspend the short sale in favor of the other option, leaving the listing agent, and buyers with offers on the property and anyone else involved in a transaction, in a lurch. It will take at least 30 days to get an answer on a loan mod. By that time, all the data and offers on a short sale will be obsolete. The bank will request all new paperwork to re-initiate the short sale. Bottom line is you can only do one workout option at a time.
Will banks let anyone who is behind do a short sale?
Not necessarily. A bank usually requires a hardship. Examples of hardship are job loss, pay cuts and underemployment, mortgage payments that have escalated beyond what a borrower can now pay, job transfer, an increase of the monthly obligations of the borrower such as having additional dependants to support. Normally, a person would simply sell to get out of this financial hardship but under current market conditions, that is simply usually impossible as many people are under water in their mortgages.
If I file a bankruptcy, how would that affect the ability for me to sell my home on a short sale?
Filing for bankruptcy during your short sale will only delay the sale. You will need to seek court approval to sell the home. In some cases, it could take 3 or more months to get a court date and may jeopardize the short sale.
Should I continue to pay my mortgage while attempting a short sale?
As a REALTOR, I cannot advise someone not to pay their mortgage. That is up to you. My job is to get the home under contract, negotiate with your lien holders to approve a short payoff, and get the home successfully closed.
Do I have to be behind on my payments to do a short sale?
Usually, yes. It does depend on the bank. Some won’t even look at a short sale application without being behind, others simply want an applicant to be behind prior to the home closing, so as long as one payment is missed prior to a short sale approval letter being issued they’re fine with it.
Can I do my own short sale?
Very unlikely, banks prefer a third party such as a professional REALTOR to be involved.
Who else should I talk to about doing a short sale?
A good real estate attorney as well as a CPA should be consulted as well. There are tax ramifications and potential deficiencies that may result from a short sale. REALTORs cannot give professional advice in these areas.
I think I need to do a short sale on the home in which I live. How long can I stay there?
You probably should begin to prepare to leave and not plan on trying to time it perfectly so you can stay right up until foreclosure. For one, most homes are more difficult to sell with owners or tenants present. They usually limit the showing times, do not keep the property in prime show condition, and frequently intimidate buyers who “feel guilty” about the sellers situation preventing them to focus on the real task of evaluating the home for themselves. As a REALTOR I’m able to guide you on the State statutes governing foreclosures. I will also be in contact with your lender and should know when a foreclosure is imminent.
I have tenants, how does this affect them?
You should be honest with them, and depending on their lease, they may have to move out early to accommodate a buyer who wants to occupy right away or most certainly, if the home is foreclosed. A lease would have to be honored by the new buyer, but that buyer might simply choose not to move forward with making an offer if there is a tenant. You need a buyer more than you need a tenant, so find an equitable solution!
I am going to vacate the property. Do I have to maintain the property?
The best looking homes normally sell the quickest. If you can afford to maintain basic utilities that will generally aid my ability to sell the home.
What are some of the things you will need to know in order to help me with my Short Sale?
I will need to know all of the liens against a property. Most important will be the number of banks involved. Please inform me if you have been paying your home owner association dues. Other liens might include property taxes, IRS tax liens, mechanic’s liens, child support judgments, SID/LID assessments, sewer, water, trash bills, etc. Avoid unnecessary liens such as inexpensive HOA (home owner association) dues. Keep paying them if possible. In Nevada, HOA’s are in a first lien position which means they get paid even before the banks do! The more liens that are filed against a property, the more difficult it is to successfully close a short sale. A lien holding bank allows only so much of the proceeds of the sale to pay off closing costs, liens etc. If the costs are too high, the bank will tell the REALTOR to find more money. That may mean, getting a buyer to pay a higher purchase price. If the buyer in this situation isn’t unwilling, the deal will die, which is bad news for the seller.
Other items your REALTOR will need to know.
The names and number of banks on your mortgage; the amount of your monthly payment; how much you owe on the property.
I hear that 2nd mortgages can really disrupt a short sale.
In our current real estate market in Nevada, where homeowners are so far under water, most 2nd mortgage holders have little hope to recover much of the money they lent. We rarely see 2nd mortgage initiate foreclosure proceedings as they will probably receive no money from the foreclosure. Negotiations are crucial with them in order to have them cooperate, even though they have little financial incentive.
How is the REALTOR paid and what are the costs to do a short sale?
REALTORS are paid from the proceeds of the sale by the seller’s bank. All costs such as taxes, commissions, escrow fees etc. are taken off the top. The selling bank will cap the fees. If the sale price is insufficient to cover the fees and still net the bank what it feels the property is worth, it will not approve the sale. Sometimes banks want a seller to contribute money or some other form of consideration (usually in the form of a promissory note). If you have equity in another property, they may look to have you access that equity if they determine they need more money to approve the sale. You will have to determine on your own whether or not it makes sense. In any event, you will not know what they will require until you are in negotiations with your bank.
What if the buyer wants me to contribute to their closing costs?
As your REALTOR I will write in the contract that any seller concessions are subject to the approval of the lien holding bank. If they approve the closing costs, you’re set. If they don’t approve and more money is needed, you will either have to get the buyer lower their demand for costs or you might want to contribute out of pocket if you can afford it. Remember, that you will be walking away from a very large debt and if kicking in some money to make the deal happen, you may want to consider it.
What is a deficiency?
The deficiency amount is equal to the complete amount of indebtedness including all late fees, attorney costs, expenses (if applicable) less the amount received by the lender from the sale (net proceeds after closing costs). The goal of the short sale negotiations in addition to the approval is to obtain a full release from the bank in that they will not pursue a deficiency.
I refinanced recently and pulled out some equity.
This is where you may be most vulnerable for a bank to pursue a deficiency. There is a difference between the debt to purchase or improve a property, and the debt pulled out and simply spent. The latter form is often treated just like credit card debt and a bank may consider obtaining a judgment for that debt. It is critical you consult an attorney as well as a tax professional familiar with short sales if this situation applies to you. You always want to minimize your obligations.
Why not just let my home go into foreclosure if I am going to still have potential liabilities?
Several reasons: first, an approved short sale, properly negotiated and reviewed by an attorney, usually means that the debt is satisfied. Banks will generally report that the debt was paid short of what was owed, but it will show as paid. Second, it is preferable to avoid a foreclosure on your record. Fannie Mae has indicated that it will be possible to obtain a loan from them after two years while a foreclosure is five years. Your goal is to satisfy your debt obligations even though you are facing a financial hardship. Doing nothing is usually more destructive.
Are you tired of the bank not responding or cooperating with you and your attempt to do a loan modification?
Is your home worth much less than what you paid for it and you want out?
If after reviewing all of your options you have decided that you need to get your property sold to avoid any further hardships or to avoid Foreclosure, a Short Sale may be the best solution for you. It is not going to be an easy decision selecting an agent to assist you with the Short Sale of your property. If you want to simply list your property you can choose just about any real estate agent with a license; however, if your want to GET IT SOLD you need an experienced full service agent who specializes in Short Sales that works with a large nationally and internationally recognized company.
I SOLD over 30 Short Sales in 2010, which in many instances there was a scheduled foreclosure date that I either had postponed or extended. From the initial contact with the Bank, pricing the property correctly, negotiating the purchase agreement, submitting the necessary documentation, working directly with the Bank’s Short Sale Negotiator to getting the Short Sale approved. You have my word; I will be committed to getting your property SOLD!
I have a proven Short Sale marketing strategy that will get your property sold! As a result, I Sell Greater than 95% of my Short Sale Listings, which often Sell within 90 Days. I have a Full Time Short Sale Negotiator with Strong Relationships with Bank Negotiators and has Proven Short Sale Contract Negotiations. In addition I offer more than 25 Marketing Services in order to expose your property to the greatest number of buyers, including Worldwide Advertising on several websites, Magazine Advertising and Print Advertising.
Whether you are in town or out of state, I ask you come to our office for a no-obligation Interview. It will take less than an hour of your time and will include helpful information in regards to Loan Modifications, the Foreclosure Process, Short Sales, as well as an updated “Free Market Analysis” of your property. I am so confident in our Short Sale marketing strategy, that I encourage you to interview several other agents!
I’m available 7 days a week, please go to the contact me link, enter your contact information, and briefly explain your situation.
I’m sure I can help!!