John Benson Philadelphia Broker/Owner - Short Sale Specialist

There is nothing new to those of us that list short sales about being surprised, right? I mean, we can have all of our documentation signed, get a quick offer, package it up neatly and BAM! Get surprising news that affects our success.

I was recently processing a short sale along with a few others I was working on and I had a pretty good feeling it would work out in the end. Let me state that we initially were trying to sell it without the need of a short sale, but the subsequent offers changed that approach.

So after compiling all of the paperwork and information, we tried initiating the sale in Equator (an online system some lenders use to facilitate a short sale and the process). Our attempts were thwarted stating the file already has been initiated. After conversing with my seller, it appeared the short sale lender initiated it in an attempt to process a deed in lieu. Nonetheless, it took about 2 weeks to straighten out and eventually the property was released to me in the system. I proceed to enter all of the information only waiting on title. I typically order title immediately, but this moved so fast we didn’t have the report back in time. Upon receiving the report I noticed a 2^nd mortgage on the property that the seller did not mention. It actually seemed strange to me, as it was an open-end mortgage.

After investigating, it was a PHFA HEMAP loan to the borrower to help the borrower catch up on past due mortgage payments. The borrower (seller) thought it was government help and did not understand it was a lien against the property. Of course, not only will the property sell less than the 1^st mortgage, now we have to get the 1^st lien holder to accept a payout to the 2^nd lien holder (PHFA). Ultimately, since I am already in the middle of submitting for 1^st lien approval, I submit with a total payoff of the 2^nd. Don’t you know the 1^st lien holder counters at a higher price and removes the pay out to the 2^nd??? So what to do now? I am attempting to process a reduced payoff to PHFA for the HEMAP loan. I mean, the likelihood they will see any money at all is slim (should it go to sheriff sale). Apparently the HEMAP program shockingly (sarcasm) is no longer accepting applications and has run out of funds. Which leads me to this million dollar question: How does the government expect the average person to be financially responsible when they can’t? Talk about a lack of leading by example.

If anyone has experience with a short sale involving a PHFA HEMAP, I’d love to hear about it. To be continued…

Is A Short Sale for You?

A short sale, in brief, is when the homeowner's market value is less than the amount owed on the mortgage when selling a property. Thus, the homeowner would not be able to clear the lien unless an agreement is reached wth the lender to accept less than the amount owed as "paid in full" to remove the lien.

So, the question remains, Is A Short Sale for You?

I am not a lawyer, so I must state that any personal advice should be obtained by consulting a real estate lawyer familiar with short sales, bankruptcies, and foreclosures.

Most people considering a short sale are delinquent on their mortgage payments. A short sale is simply an exit plan for the homeowner. It can be an alternative to a foreclosure or a deed in lieu of foreclosure. It is widely believed that a short sale has a less negative impact on the borrower, thus enabling the borrower to re-establish himself/herself financially. Below are some examples of situations I've experienced when borrower's elected to try a short sale:

• Delinquent on mortgage payments and unable to obtain a loan modification or bring the loan current
• In the beginning stages of the foreclosure process (a complaint was filed)
• In the latter stages of the foreclosure process (judgment in foreclosure - sheriff sale date scheduled)
• Relocating and unable to sell home and pay off note due to property value depreciation
• Divorce - unable to sell home and clear mortgage balance
• Death of borrower or financial contributor to household income
• Incarceration - of borrower or financial contributor (note - lenders will not approve short sale if borrower is charged in real estate fraud or schemes)
• Loss of job
• Strategic Sale - value drops so low it does not make financial sense for borrower to stay in property (obviously, most banks will not approve a short sale for this reason. A financial hardship must be demonstrated, however it may depend on the area the house resides and if that market area is in a seriously declining market. Some lenders may just want o take what they can get in that situation.

There are a number of benefits for choosing a short sale over other options. Some of those are:

• No outstanding balance owed by you in form of deficiency judgment or other pay back note (not a guaranty; must read short sale agreement to ensure this)
• Peace of mind - Many homeowners feel better about a proactive approach to the situation and lenders actually prefer it
• Helps adjust the housing market and better public perception than a foreclosure
• Possible tax benefit (check with tax attorney or CPA)
• Less harmful to the borrower's credit - much easier to repair credit from a short sale than other alternatives

If you are thinking of walking away from the mortgage of your property or a deed in lieu of foreclosure, you may want to consider a short sale. At least schedule a consultation with an agent experienced in short sales before making your final decision.

Today is a tough real estate market, right? In fact, yesterday was pretty tough and the day before. And I'm pretty sure tomorrow will be as well. Listing inventory rises, prices are coming down, sellers can't afford to lower prices and buyers can't afford to pay more for a home. This can only mean it is pretty darn hard to sell a house today.

Sellers must ask themselves "How can I set my property apart from the others"? This is where Gia from Restore-Decor Design House based out of the Philadelphia, PA area tells sellers to "Set the Stage"!

As a listing agent, I need to set myself apart from the competition. Of course, selling a property is much more than throwing it on the MLS these days, so I sought out the proper people to team up with and increase the value I bring to a listing. Being part of the RE/MAX system provides me all of the needed technology and marketing tools I need, and I am currently a member of the I.R.E.S. (International Real Estate Specialist) network to promote local properties internationally. I quickly realized I needed an interior designer to help me guide my clients to get their properties in showroom condition.

Restore-Decor Design House has a Free Consultation service and a report card for sellers to make much needed changes on their own budget through their own efforts. For those sellers or homeowners that want professionals handling the coordination of an interior design or staging project, Restore-Decor has a la carte services to accommodate any customer's needs.

When taking a listing, my job is to get buyers to the property. In today's market, that can be extremely challenging. Our system incorporates Restore-Decor's expertise to "Set the Stage" and create eye-popping images of the property to attract buyers! Restore-Decor handles the staging and photos creating an incredible final result! It is amazing to me that sellers will detail a car when trying to sell, but will barely vacuum the carpet when showing the biggest investment they ever made! Staging is as important to the selling process as pictures and a flyer. Proper staging and design handled by the right company can really establish a property's presence on the market - particularly during tough selling markets. Once sellers open their minds to this concept, and realize it is money well spent, more properties will sell, the market will be better, and Everybody Wins!

I recently closed on a listing I had in Evesham Township, NJ and luckily had escaped what I call The Domino Effect. This is a phenom in real estate (okay, not quite a phenomenon but that adds to the effect) when one closing relies (or is contingent on) one or more other closings occurring. In my case, our closing depended on another house to close so the buyer had the funds from that property to purchase our listing. That buyer's house also needed another property to close, thus a domino effect is created. Of course, if either of the other properties failed to close, we could not close (a contingency in the agreement protects the buyer from default).

So why did we take this offer if it was so risky? My client had an attorney (whom I recommended) who also asked question us accepting the offer. 1st, offers are not easy to come by (particularly those sellers will actually accept in price). We had other offers, but the prices were not acceptable. 2nd, we evaluated the motivation of the buyer and, all things considering, the property seemed like a perfect fit for this particular buyer. 3rd, financial and qualifying standards (outside of needing his current property to close) were excellent. 4th, the other properties in the chain were already under contract with buyers. 5th, there was a 45 day closing period (not too long, yet enough time to get things done and determine any issues).

Another major factor in our decision-making was the fact that I knew the other agents handling the other closings. This was the most important factor for a successful close. Imagine, friday starting off Memorial Day weekend and you need 2 other properties to close for your sale to go through. As an agent (and seller), you better be prepared and on top of EVERYTHING! We were.

Throughout the entire process I had open communication with the other agents and followed the other transactions as if they were my own (mortgage commitment - check; inspections - check; appraisal - check; financials - check). The 1st property in the chain even needed to remove an underground oil tank and have soil samples! That agent was on top of it and everything went according to plan (though some sweating was involved). Our closing was the final closing of the day (2pm) and I was out by 3pm.

As a seller, be cautious of the Domino Effect, but putting your transaction in the hands of the right professionals (agents and attorneys) should yield a success story!

Who said listings aren't any fun? Here is a typical rundown of the listing process (very general terms):

1. Market the hell out of it.
2. Showcase it.
3. Get an offer and negotiate.
4. Come to terms and have a firm contract.
5. Get through a home inspection and appraisal.
6. Clear title.
7. Order municipal required certs! Ughhh

Many townships and municipalities have requirements when selling a home. Some townships require a use and occupancy certificate be obtained prior to closing. This certificate may require an inspection by the township (and every township has different criteria needing to be passed). Often, this can be overlooked by listing agents and sellers until it is too late!

HAVE A REMINDER SYSTEM

Of course, every agent should have a reminder system (many automated) regarding the ordering of certs and other items necessary to make a smooth closing. I use Google calendar and add my clients so they also know when items are due. This makes both of us accountable (of course, I am more accountable than they are). Instead of having a predetermined date for the township cert, I set a date following the initial listing date to contact the particular township regarding their requirements to sell a property. This way I know how much time I have to work with when ordering certs. Example: I recently had a fire certification in Evesham Township, NJ. They only perform inspections on Tuesdays and Thursdays. One can imagine how much notice is needed to have the inspector scheduled. Then you have to anticipate a failed inspection, so you will need more time prior to closing to perform the necessary repairs to schedule a re-inspection. Here are some questions sellers (and agents) should ask their municipality (typically licenses and inspections):

• Give the property address and confirm that property is within the boundaries for that municipality (sounds stupid, but some people find out when scheduling the inspection the property does not fall into those boundaries).
• Ask if the can be completed by the agent for seller
• Ask the costs (also ask about any expedited costs)
• Ask for a list of requirements that will be inspected (provide this list to the seller so the seller can have these items completed asap).
• Ask how much time is needed (and any cost) for a re-inspection should the inspections fail.
• Schedule early - an inspector's availability is different depending on the time of year. Don't wait to set up the inspection. If something fails (such as a heating system) then perhaps the same issue may be included in a home inspection report and as a seller's agent you can negotiate that to be completed.

Remember, sometimes hardwired smoke detectors will alarm when using the test button but may not be triggered when the inspector tests using liquid smoke - so leave yourself plenty of time prior to closing.

HAPPY SELLING EVERYONE!

EXAMPLE OF FIRE CERT REQUIREMENTS