Denice Thompson Neddo

When to consider a Short Sale?

When is the best time to consider a short sale?

Deciding to Short Sale your property is usually considered an option after homeowners have exhausted their savings, spent weeks or months trying to get a loan modification and after a Notice of Trustees Sale (in Clark County) has been filed. I meet people weekly who are at the end of their available options in a foreclosure action and are just beginning the short sale process 30 to 60 days in advance of a foreclosure sale. Reviewing their history gives me the opportunity to consider what would have been a better strategy to addressing financial hardship.

The best time to consider a short sale on your property occurs prior to dipping into your savings to make your monthly mortgage payment. It should be a part of a designed strategy that preserves your financial resources and protects your credit to the extent possible. Good planning in the face of financial hardship pays big dividends.

First and foremost you must determine if keeping your house long term is even feasible! Your house payment should be no more than 31% of your gross monthly income. Total up your monthly consumer debt payments and your mortgage(s) and that should be no more than 45% of your gross monthly income. If your debt is exceeding those ratios then we need to make a plan. Short Sale? Let's see.

If lowering your monthly mortgage payment by extending the term to 40 years and lowering the interest to 2% brings you into line, a loan modification may be an option. If that doesn't meet the ratios you will likely not qualify for the loan modification plans available. I can help with the calculations.

If you own more than 90% of what the house will sell for and you are upside down on the gross income ratios, short selling is a good option. The question of when to make this decision is, again, before you start making payments from your savings rather than your paycheck.

This is a difficult and confronting conversation to have with yourself or your significant other but ultimately can save you tens of thousands of dollars. Waiting until a short sale is your last option prior to bankruptcy or foreclosure will likely rob you of resources and savings you worked years to build up.

If you are having trouble having this conversation seek experienced professionals to assist you.

Denice Neddo is a CERTIFIED SHORT SALE SPECIALIST, working with home owners and sellers in Clark County, Washington and Multnomah County Oregon (The Portland Metro Area)

For more information, visit http://www.GetFreeForeclosureInfo.com

Home Service Checklist

Prevent major repairs by creating a maintenance plan for your house. Protect your home's value!

*Remember to disconnect all power cords, or shut off power and gas before you clean, service or repair any system that is connected to electricity or gas.

Monthly

Drain 2 gallons of water from your water heater to remove sediment from the bottom of the tank

Replace the carbon filter cartridge (water filter)

Test your smoke alarms

Inspect your fire extinguisher

In winter, check your chimney for criesote build up

Vacuum the elements on baseboard and/or wall heaters

Change the filter in your forced air furnace

In summer check the air filter in the vents or central system

Check circuit breakers and fuses, call an electician if you have a circuit that continually trips

Fall

Cover your window air conditioning unit

Seal the attic fan iwth an airtight cover

Check fireplace damper, make sure it opens and closes correctly, clean if necessary

Clean the wood stove or inside of the fireplace

Check chimney for bird nests and cracks

Shut off water to outside faucets, drain water lines, insulate hose bibs

Remove leaves and debris from gutters and downspouts

Remove all debris and leaves from outside condensing unit (heat pump,etc.)

Check weather strippin around windows and doors

Check foundation vents, some require styrofoam covers, others may need vents cleaned to provide circulation

Inspect inside faucets, hose bibs, and toilet shutoff valves for leaks

Yearly

Clean smoke alarms and change batteries

Completely drain the water heater flush out scale and sediment

Check sludge level in septic tank, call to have pumped if necessary

Lubricate the fan on your forced air furnace

Clean the room air conditioners and heaters

Check driveway and sidewalks for cracks

Check fences and gates for sturdiness and functionality

Inspect the flashing on the roof edges, vents and chimney

Check caulking around tubs, showers, sinks and toilets

Every 3 Years

Have your furnace professionally serviced

Inspect floors for damage, cracks, and where materials form seams

Replace warn carpets

Paint interior rooms

Discard contents of fire extinguishers and have refilled

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27 Tips You Should Know To Get Your Home Sold Fast and For Top Dollar

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".....you have to sell your present home at exactly the right time in order to avoid either the financial burden of owning two homes or, just as bad, the dilemma of having no place to live during the gap between closings."

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Because your home may well be your largest asset, selling it is probably one of the most important decisions you will make in your life. To better understand the homeselling process, a guide has been prepared from current industry insider reports. Through these 27 tips you will discover how to protect and capitalize on your most important investment, reduce stress, be in control of your situation, and make the most profit possible.

1.Understand Why You Are Selling Your Home Your motivation to sell is the determining factor as to how you will approach the process. It affects everything from what you set your asking price at to how much time, money and effort you're willing to invest in order to prepare your home for sale. For example, if your goal is for a quick sale, this would determine one approach. If you want to maximize your profit, the sales process might take longer thus determining a different approach.

2. Keep the Reason(s) You are Selling to Yourself The reason(s) you are selling your home will affect the way you negotiate its sale. By keeping this to yourself you don't provide ammunition to your prospective buyers. For example, should they learn that you must move quickly, you could be placed at a disadvantage in the negotiation process. When asked, simply say that your housing needs have changed. Remember, the reason( s) you are selling is only for you to know .

3. Before Setting a Price - Do Your Homework When you set your price, you make buyers aware of the absolute maximum they have to pay for your home. As a seller, you will want to get a selling price as close to the list price as possible. If you start out by pricing too high you run the risk of not being taken seriously by buyers and their agents and pricing too low can result in selling for much less than you were hoping for. Setting Your Home's Sale Price If You Live in a Subdivision - If your home is comprised of similar or identical floor plans, built in the same period, simply look at recent sales in your neighborhood subdivision to give you a good idea of what your home is worth. If You Live in An Older Neighborhood - As neighborhoods change over time each home may be different in minor or substantial ways. Because of this you will probably find that there aren't many homes truly comparable to your own. In this case you may want to consider seeking a Realtor ® to help you with the pricing process. If You Decide to Sell On Your Own - A good way to establish a value is to look at homes that have sold in your neighborhood within the past 6 months, including those now on the market. This is how prospective buyers will assess the worth of your home. Also a trip to City Hall can provide you with home sale information in its public records, for most communities.

4. Do Some "Home Shopping" Yourself The best way to learn about your competition and discover what turns buyers off is to check out other open houses. Note floor plans, condition, appearance, size of lot, location and other features. Particularly note, not only the asking prices but what they are actually selling for. Remember, if you're serious about getting your home sold fast, don't price it higher than your neighbor's.

5. When Getting an Appraisal is a Benefit Sometimes a good appraisal can be a benefit in marketing your home. Getting an appraisal is a good way to let prospective buyers know that your home can be financed. However, an appraisal does cost money, has a limited life, and there's no guarantee you'll like the figure you hear.

6. Tax Assessments - What They Really Mean Some people think that tax assessments are a way of evaluating a home. The difficulty here is that assessments are based on a number of criteria that may not be related to property values, so they may not necessarily reflect your home's true value.

7. Deciding Upon a Realtor ® According to the National Association of Realtors, nearly two-thirds of the people surveyed who sell their own homes say they wouldn't do it again themselves. Primary reasons included setting a price, marketing handicaps, liability concerns, and time constraints. When deciding upon a Realtor ® , consider two or three. Be as wary of quotes that are too low as those that are too high. All Realtors ® are not the same! A professional Realtor ® knows the market and has information on past sales, current listings, a marketing plan, and will provide their background and references. Evaluate each candidate carefully on the basis of their experience, qualifications, enthusiasm and personality. Be sure you choose someone that you trust and feel confident that they will do a good job on your behalf. If you choose to sell on your own, you can still talk to a Realtor ® . Many are more than willing to help do-it-your-selfers with paperwork, contracts, etc. and should problems arise, you now have someone you can readily call upon.Remember, you want to sell fast for top dollar.

8. Ensure You Have Room to Negotiate Before settling on your asking price make sure you leave yourself enough room in which to bargain. For example, set your lowest and highest selling price. Then check your priorities to know if you'll price high to maximize your profit or price closer to market value if you want sell quickly.

9. Appearances Do Matter - Make them Count! Appearance is so critical that it would be unwise to ignore this when selling your home. The look and "feel" of your home will generate a greater emotional response than any other factor. Prospective buyers react to what they see, hear, feel, and smell even though you may have priced your home to sell. Apperance will help you get your home sold fast, and for top dollar.

10. Invite the Honest Opinions of Others The biggest mistake you can make at this point is to rely solely on your own judgment. Don't be shy about seeking the honest opinions of others. You need to be objective about your home's good points as well as bad. Fortunately, your Realtor ® will be unabashed about discussing what should be done to make your home more marketable.

11. Get it Spic n' Span Clean and Fix Everything, Even If It Seems Insignificant Scrub, scour, tidy up, straighten, get rid of the clutter, declare war on dust, repair squeaks, the light switch that doesn't work, and the tiny crack in the bathroom mirror because these can be deal-killers and you'll never know what turns buyers off. Remember, you're not just competing with other resale homes, but brand-new ones as well.Clean sells. Ans, you want to get your home sold fast, and for top dollar.

12. Allow Prospective Buyers to Visualize Themselves in Your Home The last thing you want prospective buyers to feel when viewing your home is that they may be intruding into someone's life. Avoid clutter such as too many knick-knacks, etc. Decorate in neutral colors, like white or beige and place a few carefully chosen items to add warmth and character. You can enhance the attractiveness of your home with a well-placed vase of flowers or potpourri in the bathroom. Home-decor magazines are great for tips.

13. Deal Killer Odors - Must Go! You may not realize but odd smells like traces of food, pets and smoking odors can kill deals quickly. If prospective buyers know you have a dog, or that you smoke, they'll start being aware of odors and seeing stains that may not even exist. Don't leave any clues.

14. Be a Smart Seller - Disclose Everything Smart sellers are proactive in disclosing all known defects to their buyers in writing. This can reduce liability and prevent law suits later on.

15. It's Better With More Prospects When you maximize your home's marketability, you will most likely attract more than one prospective buyer. It is much better to have several buyers because they will compete with each other; a single buyer will end up competing with you.

16. Keep Emotions in Check During Negotiations Let go of the emotion you've invested in your home. Be detached, using a business-like manner in your negotiations. You'll definitely have an advantage over those who get caught up emotionally in the situation.

17. Learn Why Your Buyer is Motivated The better you know your buyers the better you can use the negotiation process to your advantage. This allows you to control the pace and duration of the process. As a rule, buyers are looking to purchase the best affordable property for the least amount of money. Knowing what motivates them enables you to negotiate more effectively. For example, does your buyer need to move quickly. Armed with this information you are in a better position to bargain.

18. What the Buyer Can Really Pay As soon as possible, try to learn the amount of mortgage the buyer is qualified to carry and how much his/her down payment is. If their offer is low, ask their Realtor ® about the buyer's ability to pay what your home is worth.

19. When the Buyer Would Like to Close Quite often, when buyers would "like" to close is when they need to close. Knowledge of their deadlines for completing negotiations again creates a negotiating advantage for you.

20. Never Sign a Deal on Your Next Home Until You Sell Your Current Home Beware of closing on your new home while you're still making mortgage payments on the old one or you might end up becoming a seller who is eager (even desperate) for the first deal that comes along.

21. Moving Out Before You Sell Can Put You at a Disadvantage It has been proven that it's more difficult to sell a home that is vacant because it becomes forlorn looking, forgotten, no longer an appealing sight. Buyers start getting the message that you have another home and are probably motivated to sell. This could cost you thousands of dollars.

22. Deadlines Create A Serious Disadvantage Don't try to sell by a certain date. This adds unnecessary pressure and is a serious disadvantage in negotiations.

23. A Low Offer - Don't Take It Personally Invariably the initial offer is below what both you and the buyer knows he'll pay for your property. Don't be upset, evaluate the offer objectively. Ensure it spells out the offering price, sufficient deposit, amount of down payment, mortgage amount, a closing date and any special requests. This can simply provide a starting point from which you can negotiate.

24. Turn That Low Offer Around You can counter a low offer or even an offer that's just under your asking price. This lets the buyer know that the first offer isn't seen as being a serious one. Now you'll be negotiating only with buyers with serious offers.

25. Maybe the Buyer's Not Qualified If you feel an offer is inadequate, now is the time to make sure the buyer is qualified to carry the size of mortgage the deal requires. Inquire how they arrived at their figure, and suggest they compare your price to the prices of homes for sale in your neighborhood.

26. Ensure the Contract is Complete To avoid problems, ensure that all terms, costs and responsibilities are spelled out in the contract of sale. It should include such items as the date it was made, names of parties involved, address of property being sold, purchase price, where deposit monies will be held, date for loan approval, date and place of closing, type of deed, including any contingencies that remain to be settled and what personal property is included (or not) in the sale.

27. Resist Deviating From the Contract For example, if the buyer requests a move-in prior to closing, just say no. That you've been advised against it. Now is not the time to take any chances of the deal falling through.

As a short sale specialist I hear "What are the steps to a short sale?" "Why do short sales take so long?" These are the questions that I am asked each time the topic of short sale enters a conversation, which these days, is pretty often!

So here is how it works:

The Short Sale Process

1. Listing agent gathers all of the following paperwork from seller:

a. Loan statements
b. Bank statements showing their income
c. Paycheck stubs
d. Last year's tax return
e. W-2s for current year if taxes not field yet (or 2 yrs tax returns)
f. Hardship letter explaining why they must do a short sale
g. Profit and loss statement
h. Liability statement which is similar to a loan application
i. Letter authorizing the agent to talk to the bank about the sellers loan
j. Offer to purchase the property
k. HUD 1 showing what the net to the seller would be. (This document comes from an escrow officer at a title company).

If the agent negotiating for the sellers does not know how to instruct the escrow officer to do the HUD, the entire file can fail at any point during the process.

Basically, by providing all of this information to the bank, the seller is applying to get out of the loan, just as they applied to get the loan. They must qualify by the banks guidelines for the short sale. This huge pile of information called a short sale packet, if there is no offer the package is incomplete. The bank(s) will also want updated pay stubs and bank statements as the process progresses to make sure the homeowner truly cannot afford to make the payments.

2. All of this paperwork is submitted to the Loss Mitigation department at the bank. This department is different than the foreclosure department, and may not know anything about what the foreclosure department is working towards on this particular property. The first person to touch the file from the loss mitigation department is a customer service rrepresentative. This person uploads the file into the banks automated system. It can take -3-4 days for this to happen, (sometimes more depending on the bank) sometimes you have to call several times during the first week just to make sure that the file has been uploaded into the system. A few banks have gotten wise to how long this step is, and have made portals on the web for real estate agents to upload directly into the banks system. If the bank requires that you send the documents to them via fax, many times we hear that they don't have the file, that they are missing pages from the file, or that the file is not in the system so the file is re-faxed several times. This can take a few days to a few weeks. Without the customer service department changing the information in the banks system to notify the bank that a full short sale file is ready to be review, the real estate agane may have to start all over again.

3. Once they have the file, and it is uploaded into their system, it is reviewed for completeness. This can take another week or so, as the file is reviewed many times, by someone other than the initial customer service rep that uploaded the file in the first place. Once reviewed for completeness, the file is sent to a Level 1 negotiator. This negotiator looks over the file and makes sure that all of the documents in the short sale package are correct, current, and then they may ask the seller to provide more documents, documents that are not always requested in a basic package. The Level 1 negotiator can determine who the file goes to next depending on the end investor on a particular loan.

4. If the offer from the buyer looks good (and again this varies from bank to bank) they will move to the next level negotiator that will order the BPO (a BPO is a mini appraisal, the letters stand for Broker's Price Opinion) to determine value. This is a tricky step. I find that some of the banks use 3rd party firms to order the BPOs and the agents doing the BPOs sometimes turn out to be REO agents (REO stands for Real Estate Owned, meaning real estate owned by the bank) REO agents that will inflate the value of the house thinking that if the short sale does not go through, then they will get the listing when the bank forecloses on the property. This means more business and ultimately more money for that REO agent; this is not always the case, but something to be aware of.

5. Once the offer is reviewed by the bank, the BPO has been returned and the offer and the BPO are close enough in pricethat the bank feels the offer is good, or the offer fits into the formula they are using at the time, the offer is sent to end investor. This "End Investor" is to person or company that purchased the loan from the bank; usually it was sold to this end investor in a package of similar loans. These loan packages are bought and sold on Wall Street, and many are sold to Fannie Mae, and Freddie Mac, government backed companies. At this point, the offer is then reviewed by the end investor, or a loss mitigator from the end investor's company. Depending on the case load of this company or individual, this can take between 2 days and 2 months. Remember, just because the bank the seller makes payments to is listed as WXYZ Bank, (this bank may only be the loan servicer) the loan may have been sold to BCD Bank.

6. If Fannie or Freddie are the investor, the offer is totally scrutinized, they look at the value and determine if the price is within their guidelines, they actually have software that determines the fair market value (where their numbers come from, who knows). Fannie has their own staff that must look at all files and determine if they will accept the new offer or not.

7. If there is MI (mortgage insurance) then the mortgage insurance company will look at the offer and determine if they will accept the offer, based on the amount of loss they will incur.

8. Once everyone has agreed to the new offer, they will send a letter to the listing agent stating that they will accept the offer with a certain amount listed in the letter as net to the bank. If there is a second lender, the first will typically offer between $2000 and $3000 to the second lien holder. This is the point where things can get very difficult, as the second lien holder will go through all of the steps above, and review the offer and the short sale package just like the lender in first position did. If the second lender will not take the $2000 - $3000 offered them by the first lender, they can force the foreclosure or, more common; ask the buyer or seller or both to make a cash contribution to the second lien holder directly. Of course, if the seller could do this, they wouldn't be asking for a short sale. Sometimes the first or the second will ask the homeowner to take back an unsecured note payable over 15 to 20 years. If the seller refuses to take the note, then the house will go to foreclosure.

9. If the letter from the bank accepting the short sale is clean, meaning that there are no hidden meanings for the lender to come back to the seller at a future date and seek to collect some of the deficiency, and it states there is approval of the short sale by all parties, then you move to closing very quickly after that approval is received by the listing agent. Typically the bank will only give the buyer 30 days to close at the price they have agreed to. Some lenders state in the letter that if the transaction does not close in that 30 day period, they may demand a per diem of $75 to $150 to be paid to the first lender, if the buyer goes past the time. I have had very good luck in either closing the transaction in that 30 day window, or begging successfully to have the per diem waived. Some lenders however are sticklers, and depending on if the offer is the first offer (as many times the buyer will not stay in the transaction for this lengthy process) sometimes if the transaction has dragged on and on, the lender will simply sends the file to the foreclosure department.

Time Line
1- 1 to 2 weeks to a month
2- 1-to 2 weeks can be as long as a month
3- 3- 4 weeks
4- 1-2 weeks
5- 2 weeks
6- 2-3 weeks some faster some slower
7- 3 weeks additional time if Fannie or Freddie
8- MI 1-4 weeks, depending on the MI company
9- Second lender - usually done at the same time as the first, if the negotiator knows what they are doing they tell the first that the second has already agreed and tell the second that the first has already agreed
10- 3-5 days to get the letter, sometimes up to a week or two if the lender is understaffed

The typical timeline for a short sale from start to finish can be a quick as 60-90 days, and can take as long as 2 years, depending on the lender.

The steps to a short sale, are not necessiarily short, but if you know what to expect, it can make the process easier to wait through.

If you need to sell your house short, or if you are interested in buying a short sale house in the Portland, Oregon or Vancouver, Washington area contact Denice Neddo, Certified Short Sale Broker in Washington and Oregon 503-756-9759 or 360-607-4226 denice@deniceneddo.com