Luisa Rodriguez

Our team has just completed helping a client sell their home under the military expanded HAP (Homeowners Assistance Program). It is a program that is not well advertised and probably not well understood.

In the case of our clients, They purchased their home in June 2006 for $470,000. They bought using a conventional loan and put approximately $90,000 down. Since then, the value of their home plummeted to $300,000. Our clients still owed $352,000 . The service member had PCS'd to his new service station. However, his family remained behind in Woodbridge partly because they weren't sure what to do about the house. If they rented it out, they would be $900 in the red each month. It would appear that the only way they could sell it was through a short sale, but they didn't want to risk any potential adverse effects on their credit. Then they heard about the military HAP and decided to give it a try.

My clients submitted the application and were deemed eligible. In a little short of three months, they sold their home. The HAP paid the deficiency in the mortgage, paid closing costs including Realtor fees, and our clients even got back a better part of their down payment. Yes, with the military HAP, they were able to leave the settlement table with cash in their pockets.

For the military, this is the best alternative to a short sale for those that meet the eligibility criteria. If you have further questions on the military HAP, do not hesitate to contact us.

One of our most recent short sales came down to the wire. It all began back in MARCH when our client contacted us because his house was going to foreclosure. The AUCTION date was only about 10 days away. We knew we were facing an uphill battle, but for the sake of our client, we were going to give it a try.

We immediately put the townhouse on the market and within 2 days, I had multiple offers for the property. We took the highest and best offer and our professional short-sale negotiator presented it to the lender BB&T. Even though she was initially told NO, that BB&T would not postpone the foreclosure, through persistence and superior negotiating skills, she was ale to get them to agree to it in the end. The file sat with BB&T for several months, but they finally gave us the net amount that they required to approve the short sale. We thought we were in the clear and then we found out that the seller, our client, was behind on his HOA dues and there was an IRS lien on the property. In order to avoid the deal falling through, the buyer agreed to pay the HOA dues, but we still had the problem of the IRS lien. Per the lender, we only had about 20 days to resolve the IRS lien issue.

We would need the IRS to release the lien before we could move forward. My client had been on the phone with several IRS representatives but he was still not getting the information he needed. He was sent two different types of applications and was being given conflicting information. My client and I therefore made the 1.5 hour trip down to Richmond to see if we could speak with someone face-to-face. We stood outside the office door knocking and ringing the bell, and just when we thought we had just wasted our time, someone opened up. It turned out the very person who came out to help us, was the designated person that would actually be reviewing his file once the application was completed. She was extremely helpful, showed us exactly how to fill out the application and gave us tips on how to avoid any delays. Her usual timeline for completion was between 30-60 days. We needed it in less than 30. She did not promise anything, but we know that in the end having that face-to-face meeting was crucial since we got the approval for the release of the lien well within the 30 day time period.

When the short sale approval came in, the lender only gave us about 7 days to close. Since it was a cash deal, we set the closing day for two days later. On the day of settlement, the buyer walked. Because he had waited so long (about 6 months) for the approval to come through, during that time period, the market had cooled. He was an investor and he no longer would be making the profit he originally thought. How do you re-list a property, find a cash buyer, and get them to close in 5 days? My team members and I were on the phone contacting our network of investors to find someone that could make this happen. Just when we thought all was lost, we found the cash buyer and they accepted all the terms originally agreed to which is critical when dealing with short sales. Any change in terms, could kick the short sale process back to the beginning. We finally closed, but most importantly, my client, the seller, had a weight lifted off his shoulders. Having been unemployed for almost 2 years and struggling to make ends meet, they just needed some good news.

The lessons learned from this short sale transaction.

1. It is not over until it is over. As Realtors, we have to keep trying until the bitter end. It is more than just listing a property to get it sold; sometimes it is relying on your network of contacts to make something happen or just thinking outside the box.

2. Face-to-face meetings are still important. Emails are okay, phone calls are better, but a face-to-face meeting makes it personal. That person will always remember you if they had the chance to shake your hand and talk to you even if it was just for a couple of minutes.

3. When you are given a deadline, don't wait until the last minute. Try to close as early as possible so in case there are problems at settlement, you have sufficient time to resolve them.

My client's learned the hard way that it does. When we first started their home search, these clients had credit scores well over 750. They had an investment home and were on time on all their payments. With their income, they qualified just fine for a new loan for a primary residence even though they already had an investment property. In the process of making some offers for short sales and having those contracts fall through, they finally decided just to do a regular sale (that is about 6 months into this home search). We got the offer accepted. The home is beautiful. They were very excited. And then the loan officer pulled an updated credit report.

Their scores dropped about 180 points. Upon hearing this my heart sank. My client called me and told me, " I don't know what happened. We haven't made any big purchases, we haven't done anything other than a loan modification on the investment property." Come to find out, the loan modification was the reason their credit dropped. With the new scores, we could still get them into the house, but since their credit is reporting "partial payments," lenders don't want to touch it. We have not giving up and their loan officer is working hard to make something happen, but what was supposed to be an easy home purchase has now turned sour.

I am not exactly sure how they got the loan modification approved but they did. They thought it would be a long shot. They were not in financial distress, but just thought it made financial sense to renegotiate the terms of the loan with the lender. They would be saving a few hundred dollars a month so if the lender agreed, why not? Unfortunately, they were misinformed. And although most loan modifications are done by individuals under financial distress, there is a large group of individuals who will try the loan modification as a way to negotiate with the bank an interest rate reduction. They see it as a refinance without the closing costs and without having to worry if the home will appraise. The truth is that it is not at all like a refinance. If you are in financial distress and the loan mod is the only way to go, then by all means go for it. However, if you are doing just fine and want to preserve your credit and/or buy a home anytime in the near future-DON'T DO IT.

Even though there are some ways to do the loan modification can be done with a limited impact on your credit, you really need to do your homework and negotiate how it is reported as part of the loan modification process. In my view, the potential risks are just too great.

El mes pasado junto con mi equipo hicimos el cierre de tres ventas cortas (venta cuando debe mas del valor de la casa). Estas propiedades le pertenecían a un mismo dueño. No eran su residencia primaria, pero eran sus propiedades de inversión. Este propietario, que le llamaremos "el vendedor," estaba al día con sus pagos mensuales en las tres propiedades. Voy a repetir lo anterior, EL VENDEDOR ESTAVA AL DIA CON TODOS SUS PAGOS MENSUALES. Cada propiedad se vendió en $150,000. pero el vendedor debía aproximadamente $300,000 en cada propiedad. Este vendedor pudo realizar ventas corta en estas propiedades.

Yo personalmente no negocie estas ventas cortas, pero utilicé los servicios de una negociadora profesional. Su conocimiento y su experiencia fueron vitales para que este negocio funcionara. Una vez más ella nos demostró que es posible hacer la venta corta de una propiedad sin caer en la ruina. Por esa razón, nosotros continuamos recordándoles a los posibles vendedores que "Por favor si pueden hacerlo, continúen haciendo sus pagos mensuales." Obviamente algunos propietarios no pueden hacerlo. Pero otros propietarios que están atravesando problemas económicos legítimos, en muchos casos pueden seguir haciendo sus pagos mensuales. Si usted se encuentra dentro de este último grupo, entonces es de mayor interés para usted el continuar haciendo sus pagos mensuales. Nosotros hemos visto una y otra vez que a algunas personas les dijeron que dejaran de hacer sus pagos mensuales. Estas personas arruinaron su crédito, y terminaron siendo embargadas y sin poder negociar los términos de la venta de su propiedad. Sin embargo en los tres casos que mencionaba al principio, la negociadora presento un caso fuerte describiendo los problemas económicos del propietario, esto ocasionó la rápida aprobación de las tres ventas cortas.

El otro punto importante aquí es que estas propiedades eran de inversión. Normalmente es difícil hacer una venta corta en este tipo de propiedades, por lo menos no sin una significante contribución económica de parte del propietario. Aun y cuando quien prestaba el dinero requirió una contribución económica del propietario, le permitió al comprador cubrir esa contribución. Tomando en cuenta que esto no siempre es permitido, "me quito el sombrero" ante la negociadora que logro que la entidad financiera estuviera de acuerdo. Y aun con la contribución económica que hizo, el comprador sin duda hizo un buen negocio con estas tres propiedades.

Exitosas ventas cortas como la que describimos se logran por el trabajo de profesionales (ya sean agentes de bienes y raíces o negociadores de ventas cortas) y su nivel de conocimiento y experiencia. Si usted está pensando en vender su casa o necesita hacer una venta corta, asegúrese de que quien está negociando la venta de su propiedad tiene la experiencia necesaria.

Individuals familiar with Alexandria City will know that Del Rayis a highly sought after area. Directly north of Del Ray there is a series of neighborhoods sandwiched between Del Ray and the business district known here as Crystal City. These neighborhoods inlcude St Elmo, Lynhaven, Hume Springs, and Beaumont. If you drive through this neighborhood you will see a mixture of older and in some cases run-down homes along side luxury townhomes and duplexes.

Change began in this area several years ago, but change continues. Driving down E Glebe Rd I noticed a brand new duplex that was just built. It looks like they are just now putting the finishing touches. Two lots over, my client purchased an older home. They have already started subdividing the lot to construct another duplex. Each unit will be around 2700 sq feet and the finish will be absolutely fabulous (at least from the plans that I was privy to). A few blocks north, there are other plans in the works to tear down two properties I just sold recently to allow for new construction. These new constructions are in addition to the renovations taking place of the 2 bedroom townhomes common in the area.

I typically direct my investor clients to this area because the return on investment is usually pretty good. The re-sale value of luxury homes is significantly higher than the value of purchasing the older run down homes. I recently sold a 2 level Luxury duplex about 2000 sq feet on E Reed Ave for $470,000 in the dead of winter. As the neighborhood continues to change, prices will go up. They have to since these areas are sandwhiched in between two highly priced areas. There is even talk of adding a metro stop at Potomac Yards (although that still would be many years away).

Bottom line: if you are looking to buy a home in an area that over time you can build some decent equity. This is it. Prices are not quite as high as Del Ray or Old Town Alexandria, but with time they will creep up close to that level as the neighborhood continues to change.