Definition of Short Sale: A home that is being sold at a price where the net proceeds to the lender are less than the amount owed. For the lender to accept this, an owner has to have a genuine hardship that may result in the home being foreclosed upon. Before the lender would agree, the homeowner should first complete a hardship package to prove their current financial status. Completing this package can be quite difficult because there are a lot of things needed for submission. Some of these things are W2s, bank statements, hardship letter, and itemized expenses. However, before declaring hardship, sellers would need to seek help from a professional. Most people whom I meet with hardships have recently divorced, become unemployed, incurred high medical bills etc and all of them do not know where to turn for help.
Why Should I do Short Sale?
To maintain a great credit score, you need to pay all of your bills and other expenses on time and that includes mortgage payments. Missed mortgage payments will create a bad credit score, so you need to take immediate action once you find yourself in financial distress. One way is to do short sale. True enough that short sale can cause bad credit scores, but it won't be as bad as a foreclosure on your credit report. After foreclosure, it will take a longer period of time before you would be able purchase a new home, usually 3-7 years, which is the same for bankruptcy. When the seller does a short sale, the credit scores will drop due to bad payment history, but may be eligible for a new mortgage after 2 years. sellers can also add an explanation or short explanations to their credit reports about the low score. Did you also know that a foreclosure affects your credit FOREVER! You can qualify for a mortgage in a little as 2 years after a shortsale!
Think about your last credit application form, or even sometimes a job application. Did it ask "Have you ever had a foreclosure?" I bet it never said "Have you ever short-saled your home?"!! Credit is an important matter and therefore it requires consultation from an experienced professional.
How is Short Sale Done?
Due to current depression and buyers market, it can be quite difficult to sell your home immediately. Because time is important, you should consult a short sale expert about the sales trends in your community so that you will be able to adjust your price accordingly. A short sale listing expert does a lot more than fill out some forms, place your home on the MLS and stick a sign in your front yard. This expert understands the short sale process, what the lender requires as documentation, how to clear the 2nd mortgage, who to contact, etc. A short sale is a lot more involved than any regular listing and sale.
At this stage, do not worry about real estate commissions and other selling costs. The expert you hire will explain in more detail how these costs are ultimately paid by your lender - not you.
What Will Happen After Missed Mortgage Payments and Foreclosure?
Once you have started the ball rolling, you need to make the necessary preparations. Your shortsale expert will assist in notifying your lender and keeping them appraised of the situation.
After consecutive missed mortgage payments, your lender will make contact and demand payment. However, if you are unavailable or if you lack funds, the lender will start foreclosure proceedings. During this process, you need to record all contacts you make to the lender, dates, times, reason for call etc for future reference. Once you have these records, you need to give a copy to your short sale expert. Your expert will need this to contact the important people at the bank for negotiations. If a remedy is not found, your foreclosure will be published at the local newspaper and will eventually go to the sheriff's sale.
Your short sale expert should be able to extend the time you can remain in your home, assist with a loan modification, set up a short refi, or help sell on a short sale. Remember that the loss mitigators you are calling are human as well and should be spoken to respectfully. Your short sale expert is experienced with these communications. Let them make the calls, you are way too emotionally involved.
The above covers some of the vast subject of shortsales. If you require further information, please contact the author.
Nigel Chapman 515 321-8094 Nigel@RealEstateConcepts.net
Read all my blogs at www.DesMoinesBlogger.com
Nigel Chapman, Managing Partner, RE/MAX Real Estate Concepts, 550 36th Ave SW, Altoona, IA 50009. Each office independently owned and operated. Equal Housing Opportunity. Licensed to sell Real Estate in Iowa.
Our market is not as bad as Sacremento, but the sellers can be the same :)
If I could only find an agent who sees things my way," whined a wanna-be seller. First he tried to refinance, but the mortgage broker ran the comps and couldn't justify the value. Then he considered selling, but only if he could find an agent who truly understood the value of his home.
Harry, we'll call him, bought a home in Sacramento two years ago for around $300,000. Part of his problem was the ZIP code -- that area was, and still is, depressed. Harry, blinded by the falling market in Sacramento and feeling it affected everybody else in town but him, insisted he had enough equity to either refinance or sell.
I ran a map search for him that crossed ZIP codes and encompassed more desirable areas. The results were the same. His home was worth about $200,000. I delivered the news.
Harry exploded: "I see you came up with the two miserable comps the mortgage broker found." He demanded that I use a different formula, the one that exists in Harry's head. The thing is I found a few dozen comparable sales, and they all pointed to the same hard, cold, cruel number.
In the old days -- like 5 years ago -- appraisers would throw out the foreclosure and short sale comps from an appraisal. But the truth is today those depressed sales are what comprise the market. Foreclosures affect the neighborhood. They make up the market values of nearby homes. As I explained to Harry, even if we found a buyer willing to pay Harry's inflated price, that buyer's lender would never appraise that home at the higher value.
It's not a conspiracy, Harry. The problem is you paid too much for the home when you bought it and values all around you have declined. Harry's not too happy with me right now. Oh, well.
This blog is reprinted in it's entirety with the kind permission of Elizabeth Weintraub, a Broker Associate with Lyon Real Estate in Sacremento, CA. Elizabeth is an expert in her local media and writes an awesome blog which can be found at http://activerain.com/blogs/elizabethweintraub
If you are financially distressed and need to sell your home short, do not go to your local "listing specialist"! In this situation, you need a short sale expert - someone who understands the process and knows what will help your lender co-operate.
A short sale listing expertdoes a lot more than fill out some forms, place your home on the MLS and stick a sign in your front yard. This expert understands the short sale process, what documentation to send the 1st mortgage, how to clear the 2nd mortgage, who the loss mitigators are, etc etc. A short sale is a lot more involved than any regular listing and sale.
If you know a real estate agent, ask them what their short sale experience is. Have they received additional training? Do they keep a database of the loss mitigation contacts? Do they know the full shortsale and foreclosure procedure in your state? Do they know how a short sale can effect your credit compared to a foreclosure? I love my family doctor, but if I have a heart problem, I will see a heart expert - real estate should be the same.
In some areas, there are more distressed property sales than other sales! In some areas of Des Moines, appraisals are becoming difficult because the only recent sales are foreclosures! Perhaps you have a friend or family member that has experienced a short sale distress. Ask them if they would refer their agent.
The Internet can be a great source for an expert. Those of us that specialize in short sales love to blog about it. We are proud that we help people keep their homes instead of losing them! When we meet, I will consult with you and try to find a way to keep you in your home (if that is what you want). If we are unable to negotiate a short refi, loan mod etc, we can discuss shortsale. Did you also know that a foreclosure affects your credit FOREVER! You can qualify for a mortgage in a little as 2 years after a shortsale!
Some investors will prey on those unfortunate enough to be in financial distress. Many times, the investor is unable to negotiate the short sale and the homeowner ends up in foreclosure. Good short sale experts can also have investors. These investors are often able to step in at the last minute to stop your foreclosure. Please beware, not all investors are the same. Beware of foreclosure rescue scams - help really can be FREE.
If you are in the Des Moines Area, give me a call and I would love to help you save your home or at least your credit. If you are outside my area, please email me and I will refer you to your local specialist.
Nigel Chapman 515 321-8094 Nigel@RealEstateConcepts.net
Read all my blogs at www.DesMoinesBlogger.com
Nigel Chapman, Managing Partner, RE/MAX Real Estate Concepts, 550 36th Ave SW, Altoona, IA 50009. Each office independently owned and operated. Equal Housing Opportunity. Licensed to sell Real Estate in Iowa.
The year 2009 is great year for first time home buyers in the United States. This is because a new Housing and Recovery Act has been launched to aid the plummeting housing industry. This federal tax credit offers a great deal to first time home buyers because they can receive up to $8000 return in their real estate expenditure. This is a good opportunity for families who would like to settle down in their own homes.
What exactly does it do?
The $8000 Federal tax credit provides up to 10 percent tax credit from the total amount of real estate to be purchased. The $8000 is the maximum credit amount that a home buyer can avail. This $8000 federal tax credit for first time home buyers provides a full 10 percent credit or a maximum of $8000 upon purchase of real estate. This tax credit is available only when you purchase a house within the time between January 1, 2009 and December 1, 2009. The tax credit will be free as long as the buyer owns the purchased home for at least three years.
Who can avail the federal tax credit?
The government has specified that the $8000 Federal tax credit applies to first time home buyers only. The first time home buyer in the statement is defined as a person who has not owned or purchased real estate for the last three years. The first time home buyer is also required to live at the purchased home for three years or the credit will become repayable.
Is there an income limit to receive the federal tax credit?
There is a specific income requirement to receive the federal tax credit. The modified adjusted gross income or MAGI for married couples should only be under $150,000 per year. As for singles, or unmarried, the modified adjusted gross income should be under $75,000. However, if the modified adjusted gross income will exceed the specified, a home buyer can still avail a partial tax credit subject to conditions and an income maximum.
With the newly imposed housing and recovery act, a lot of families who do not own their own homes yet can seize this opportunity to purchase homes. The current condition of the housing industry makes it easier to purchase newly constructed homes at a low price due to increased supply yet little demand. Resale homes are also great buys in this buyers market. For families wanted the dream of home ownership, this is a great time to buy and claim the $8000 federal tax credit.
For a more complete set of Q&A's, please go to www.8000Dollars.com and complete the form. If you are in the Central Iowa / Des Moines area, please contact me for a personal consultation. For more home buying selling information go to www.NigelC.com
Nigel Chapman, Managing Partner, RE/MAX Real Estate Concepts, 550 36th Ave SW, Suite BB, Altoona, IA 50009. 515 321-8094. Nigel@RealEstateConcepts.net. Each office independently owned and operated. Licensed to sell Real Estate in Iowa
Experienced agents getting great results! Serving Altoona, Bondurant, Pleasant Hill, West Des Moines, Urbandale, Waukee, Des Moines, and surrounding Areas. If you are looking to buy or sell call me!
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