There are two apparently attractive options for buyers scoping out a deal. One type is the "short sale," where sellers have made an agreement with their lender to sell the home for less than they still owe on the mortgage. The second type is the REO (bank-owned) home, which has fallen back into the hands of the lender after the sellers defaulted.
While these properties may be appealingly priced, buyers need stomach and smarts to take proper advantage. If you're considering a short sale purchase, focus only on those with a price pre-approved by the lender. Otherwise, you may be wasting precious time in negotiations that may still ultimately fail.
Also seek out foreclosures that are protected by the Cash For Keys program, which offers the current (or former) owners a cash incentive to prevent them from neglecting the property before vacating it. Either way, inspections are crucial, especially if the house has been vacant for some time. Talk to your agent about having the utilities temporarily reconnected for the inspection, so you're sure all is in working order.
And finally, don't focus on the asking price alone. Location in a declining neighborhood or extreme maintenance and repair issues will eclipse any perceived value in a low price. Great homes are out there at bargain prices, but let an agent guide you through potential pitfalls.
Showing posts with label short sale. Show all posts
Showing posts with label short sale. Show all posts
1/11/10
Myth Busting
When a homeowner faces default on their mortgage, there may be two options: foreclosure or short sale. Foreclosure can be devastating, both emotionally and financially. A short sale, or one in which the lender accepts a selling price less than the amount owed, is a better option for both the lender and the homeowner.
Regrettably, nearly seven out of ten homeowners proceed through foreclosure without ever listing their home for sale. This is due largely to perceived myths about the process, and we need to put a few of these misconceptions to rest.
First, homeowners assume the bank would rather foreclose than accept a short sale. Not true - foreclosure is often more costly for the lender, and short sales often sell for more than foreclosed listings. The banks are trying anything possible, within reason, to avoid the foreclosure process.
Next, homeowners believe there is a stigma attached to short sale listings, and that buyers have no interest in such properties. Not true - to the contrary, many smart buyers are specifically seeking out such offerings for the value they present compared to traditional listings.
Finally, homeowners often assume that there's not enough time to close a short sale before foreclosure is final. Not true - foreclosure is a lengthy process and there is time to negotiate a better result, but you need to start today.
Regrettably, nearly seven out of ten homeowners proceed through foreclosure without ever listing their home for sale. This is due largely to perceived myths about the process, and we need to put a few of these misconceptions to rest.
First, homeowners assume the bank would rather foreclose than accept a short sale. Not true - foreclosure is often more costly for the lender, and short sales often sell for more than foreclosed listings. The banks are trying anything possible, within reason, to avoid the foreclosure process.
Next, homeowners believe there is a stigma attached to short sale listings, and that buyers have no interest in such properties. Not true - to the contrary, many smart buyers are specifically seeking out such offerings for the value they present compared to traditional listings.
Finally, homeowners often assume that there's not enough time to close a short sale before foreclosure is final. Not true - foreclosure is a lengthy process and there is time to negotiate a better result, but you need to start today.
11/20/09
When Less Is More
If you are a homeowner who can no longer make your monthly mortgage payments, you still have opportunities to avoid foreclosure and the damage it would do to your credit. Although more complicated and more challenging, a "short sale" may prove to be the best alternative.
If you are unfamiliar with the term, a "short sale" can happen when your mortgage lender agrees to let you sell the home for less than you still owe on it, forgiving the difference. Why would a lender settle for such a sale? Quite simply, the lender may determine that they will still receive a higher amount of the remaining balance through a short sale than they would through the very costly and time-consuming process of foreclosure.
Why would a homeowner agree to sell the home for less than its value? As already mentioned, a short sale keeps you out of foreclosure and reduces the damage to your credit (and subsequent ability to purchase another home).
In the middle is the real estate agent, helping the sellers, the lenders, and the buyers navigate the complexities of the transaction to reach a satisfactory conclusion for all involved. Homeowners can trust their representative to be honest and to provide a fair assessment of value for all parties. You can trust your agent to be your advisor and champion during difficult times.
If you are unfamiliar with the term, a "short sale" can happen when your mortgage lender agrees to let you sell the home for less than you still owe on it, forgiving the difference. Why would a lender settle for such a sale? Quite simply, the lender may determine that they will still receive a higher amount of the remaining balance through a short sale than they would through the very costly and time-consuming process of foreclosure.
Why would a homeowner agree to sell the home for less than its value? As already mentioned, a short sale keeps you out of foreclosure and reduces the damage to your credit (and subsequent ability to purchase another home).
In the middle is the real estate agent, helping the sellers, the lenders, and the buyers navigate the complexities of the transaction to reach a satisfactory conclusion for all involved. Homeowners can trust their representative to be honest and to provide a fair assessment of value for all parties. You can trust your agent to be your advisor and champion during difficult times.
10/26/09
Beyond The Lousy Loans
Yes, it's true, many lenders in recent years have written sub-prime mortgages that could only be expected to default. However, foreclosure is nothing new, and there are myriad reasons that a homeowner might be facing dire straits.
Challenges might include economic hardship due to job loss, bad health or divorce, or payments that jumped too high after a rate adjustment, or simply increased cost of living outpacing income.
Whatever the reasons, the best way to avoid foreclosure is to be well educated and prepared before making a home purchase, and anticipating worst-case scenarios before choosing the loan that is right for you.
If default appears inevitable, know that there is help available, with a "short sale" being the last resort for resolution. Such a transaction is called "short," because the home is sold for less than the amount remaining on the mortgage, and the lender willingly accepts some of the loss.
If you're facing foreclosure, contact your lender's loss mitigation department immediately. While you are in the midst of negotiations, keep a log of all phone calls - the date, time, contact person and discussion. Lenders are overwhelmed right now, so be patient and don't expect an immediate answer.
Whether it's a loan adjustment or short sale, there is a solution to the problem. Your lender and your real estate agent are here to help.
Challenges might include economic hardship due to job loss, bad health or divorce, or payments that jumped too high after a rate adjustment, or simply increased cost of living outpacing income.
Whatever the reasons, the best way to avoid foreclosure is to be well educated and prepared before making a home purchase, and anticipating worst-case scenarios before choosing the loan that is right for you.
If default appears inevitable, know that there is help available, with a "short sale" being the last resort for resolution. Such a transaction is called "short," because the home is sold for less than the amount remaining on the mortgage, and the lender willingly accepts some of the loss.
If you're facing foreclosure, contact your lender's loss mitigation department immediately. While you are in the midst of negotiations, keep a log of all phone calls - the date, time, contact person and discussion. Lenders are overwhelmed right now, so be patient and don't expect an immediate answer.
Whether it's a loan adjustment or short sale, there is a solution to the problem. Your lender and your real estate agent are here to help.
6/4/09
Short Sales
In areas where home prices have significantly declined, some owners find themselves strapped with mortgages that total more than their home’s value. When options such as extending the term of the loan or negotiating a lower interest rate have been exhausted, then a short sale may provide the solution.
However, short sales are complicated, requiring approval from a number of parties, so you need the representation of a professional to make sure the transaction moves quickly. You can have more than half of the paperwork done before that first offer even comes in.
Most lenders require an application package to be completed by the sellers, including a financial worksheet, as well as a letter of hardship explaining why the owners cannot continue to pay the mortgage. The real estate agent can also help with other aspects of the required paperwork, which should be assembled before the property is listed.
While the bank may be willing in such cases to accept less than the mortgage balance, the buyer's offer must still reflect a fair price under current market conditions, so be sure to consult with an agent in order to arrive at a reasonable price that will be accepted by all parties, including the lender.
Short sales may not be easy, but they do provide an "exit strategy" for homeowners most in need of a solution.
However, short sales are complicated, requiring approval from a number of parties, so you need the representation of a professional to make sure the transaction moves quickly. You can have more than half of the paperwork done before that first offer even comes in.
Most lenders require an application package to be completed by the sellers, including a financial worksheet, as well as a letter of hardship explaining why the owners cannot continue to pay the mortgage. The real estate agent can also help with other aspects of the required paperwork, which should be assembled before the property is listed.
While the bank may be willing in such cases to accept less than the mortgage balance, the buyer's offer must still reflect a fair price under current market conditions, so be sure to consult with an agent in order to arrive at a reasonable price that will be accepted by all parties, including the lender.
Short sales may not be easy, but they do provide an "exit strategy" for homeowners most in need of a solution.
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