Kristina Zack

Over the last several years a lot of buyers have bought homes, intending to live in them for many years, then something happened - maybe good, maybe bad, but regardless - they don't have a choice. Some owners have to move.

When most homeowners move, they sell their house. Usually, that's not a problem. For some people nowadays, it is a problem.

Because of the easy financing, rampant speculation, flipping, and sometimes fraud, home values skyrocketed most everywhere. That came to an end recently and values plummeted in some areas. Even when values are stable, sometimes there just isn't enough money in the property to pay off the mortgage, then pay all the selling costs and moving costs.

What happens then?

Default, sometimes bankruptcy, and maybe even foreclosure.

Or a short sale.

A short sale is when the lender agrees to accept a mortgage payoff that doesn't cover the outstanding loan.

Why do lenders accept short sales? Lenders almost always lose money when they foreclose on property. In many cases, they will lose less money through a short sale than they would by foreclosing on the home and selling it as a bank-owned property.

However, there are rules.

The borrower must experience a genuine financial hardship. Talk to customer service or the collection department and let them know what is going on. That way, knowledge of your hardship is communicated to the lender and becomes a part of their files. Keep your own communication log.

Eventually, you will have to document the hardship and your inability to deal with it financially by disclosing all your assets. Bank statements, stocks, bonds, tax returns, pay stubs -- the lender will want to see everything that may document that you are not hiding assets or income.

The lender will not make a commitment based solely on your hardship. You're also going to have to put your home on the market and sell it.

Once you sell the property, you have to supply additional documentation. When the property is listed, your real estate agent prepares a comparative market analysis. You're going to need that and you will need to supply a copy to the lender, along with your hardship letter, the documents mentioned above, a copy of the purchase agreement, and a "net sheet" showing how much you will net (or lose) from the sale of the home.

It may be that you actually want your real estate agent or some other professional such as an attorney to negotiate with your lender. If so, you need to prepare an authorization letter. That letter includes your name, property address, loan number, your representative's name, the date and your notarized signature. Your agent will know almost all of this and have the proper format.

Then your agent submits it all to your lender and...you wait.

Normally, your lender can't make the decision to accept a short sale on their own. Your mortgage has an investor. The investor gets a say-so.

If the deal "makes sense", they believe your hardship is genuine, and you do not own any other property -- you may get a "yes" decision. Your chances go up markedly if you have someone experienced negotiating for you.

Oh yes! If your lender does forgive part of your debt, there is something you should also know. Debt forgiveness is taxable income. The IRS will require you to pay taxes on that income.

The kitchen is a good place to start removing clutter, because it is an easy place to start.

First, get everything off the counters. Everything! Even the toaster. Put the toaster in a cabinet and take it out when you use it. Find a place where you can store everything in cabinets and drawers. Of course, you may notice that you do not have cabinet space to put everything. Clean them out. The dishes, pots and pans that rarely get used? Put them in a box and put that box in storage.

You see, homebuyers will open all your cabinets and drawers, especially in the kitchen. They want to be sure there is enough room for their "stuff." If your kitchen cabinets, pantries, and drawers look jammed full, it sends a negative message to the buyer and does not promote an image of plentiful storage space. The best way to do that is to have as much "empty space" as possible.

For that reason, if you have a "junk drawer," get rid of the junk. If you have a rarely used crock pot, put it in storage. Do this with every cabinet and drawer. Create open space.

If you have a large amount of foodstuffs crammed into the shelves or pantry, begin using them - especially canned goods. Canned goods are heavy and you don't want to be lugging them to a new house, anyway - or paying a mover to do so. Let what you have on the shelves determine your menus and use up as much as you can.

Beneath the sink is very critical, too. Make sure the area beneath the sink is as empty as possible, removing all extra cleaning supplies. You should scrub the area down as well, and determine if there are any tell-tale signs of water leaks that may cause a homebuyer to hesitate in buying your home.

Soo..what am I going to offer?

When you prepare an offer to purchase a home, you already know the seller's asking price. But what price are you going to offer and how do you come up with that figure?

Determining your offer price is a three-step process.

First, you look at recent sales of similar properties to come up with a price range. Then, you analyze additional data, such as the condition of the home, improvements made to the property, current market conditions, and the circumstances of the seller. This will help you settle on a price you think would be fair to pay for the home. Finally, depending on your negotiating style, you adjust your "fair" price and come up with what you want to put in your offer.

The first step in determining the price you are willing to offer is to look at the recent sales of similar homes. These are called "comparable sales." Comparable sales are recent sales of homes that compare closely to the one you are looking to purchase. Specifically, you want to compare prices of homes that are similar in square footage, number of bedrooms and bathrooms, garage space, lot size, and type of construction.

If the home you are interested in is part of a tract of homes, then you will most likely find some exact model matches to compare against one another.

There are three main sources of information on comparable sales, all of which are easily accessed by a real estate agent. It is somewhat more difficult for the general public to access this data, Two of the most obvious information sources are the public record and the Multiple Listing Service. Folks, Zillow.com does not count. The numbers on that website are so false, since it takes sales in the neighborhood (that do not compare to the property) and average them out. It can even be sales from YEARS ago.

Its important to determine the right price, because you do not want to overpay! Before you make ANY offer, request closed comparabes 3-6 months back.

Residing in Enfield. Ct. we normally do not get as much snow. On the other hand where I grew up in Torrington Ct, there is abundant snow. I only left the house to show homes on Saturday, but basically it has been snowing all weekend...and I am not complaining. It gives me a great chance to catch up on much needed work & tackle the laundry that has been hanging around.

I have this gold finch that has been coming to my window all year. I put up a bird feeder and many followed. I had tons of birds at my window all spring, summer and fall. I do not see many now, but the original bird..which I have now named "fatty" has gotten HUGE, and is the only finch left. When he flies up to my window, he will first sit on the ledge....then finally, after he has his energy back ( and breath) will jump over to the feeder and latch on. I looked out the window a few moments ago & there is fatty, courageously leaping to the feeder, in the windy, cold, snow. Thought I would share...enjoy!

A high credit score is one of the most important elements to the first time home buyer...or any home buyer these days. Home buyers with high credit scores are able to get the lowest interest rates on home mortgages. ( If you are holding out for that 4.5% interest rate you keep hearing about, a high credit score will be a MUST) As a first time home buyer, it is doubly important to have a high credit score.
Here are the basic tactics for getting a high credit score.

- Always pay your bills on time.
- Keep your credit card balances at zero, or at least very
low.
- Make more than the minimum monthly payments.
- Negotiate to remove negative items from your credit report.
- Borrow great credit from a relative or close friend which is known as Co-Borrowing. I would only recommend this as a last resort

If you are unsure what your credit report holds, go to www.freecreditreport.com, pull your credit, and see what your high balances are. Work on paying off the high balances or paying off any balances that are in collections. If you want a structured direction on what to do next, contact a Mortgage Consultant. If you need names, please feel free to contact me.