Vicky Chrisner

This post is a continuation of a series on Short Sales. To see the previous posts, visit: http://therealestatewhisperer.blogspot.com/2009/07/short-sale-anything-but-short.html

Since the homeowner is the one who initiates the short sale process, let's look in more detail at the selling side. In this post, I will talk about who should and should not consider a short sale; and WHEN they should take action.

Why consider a short sale? Anyone who thinks they may end up allowing a home to go into foreclosure should seriously consider this option.

• CREDIT: With a short sale, your credit is damaged, but not nearly as badly as it would be if the home went into foreclosure.
• LIVING SITUATION: With a short sale, you are not evicted (like you could be if your home was foreclosed), and you look like a better prospective tenant to future landlords if your credit shows a short sale, rather than a foreclosure and eviction, on your record.
• PRIDE: You are cutting your losses and controlling the damage....making the best of an otherwise uncomfortable situation. Your neighbors and co-workers probably already know you owe more than your house is worth - so do they... but you're showing them that you are the kind of person that works with everyone involved to find a satisfactory resolution; that you are responsible.
• SECURITY CLEARANCES/JOB REQUIREMENTS: Especially true in the Washington DC Market, many people have security clearances required for their jobs. In these cases, foreclosures can be very difficult to explain, and short sales are are considered much more favorably, especially when they are coupled with a true hardship (see below). Foreclosures can put your current or future job options in jeopardy.
• DEBT FORGIVENESS/AVOID BANKRUPTSY: In most cases, you can negotiate debt forgiveness as part of the package; and therefore, do not have to worry later about collection activities, which otherwise could force you into bankruptsy to protect the assets you do have.

Why should an owner NOT consider a short sale?

• NOT ENOUGH TIME/LENDER WON'T AGREE: If any of lenders advises the owner that there is not time before the foreclosure, or that for other reasons they will not work with the owner in a short sale process (this is increasingly rare, but it happens).
• TOO COSTLY: If the homeowner has so many layers of liens and mortgages against the property that professionals are telling you that it is not likely to be approved and/or they will only attempt it with a large, non refundable deposit or fee. (Small non-refundable fees are reasonable, especially if your case is a complicated one. A small fee is a couple hundred dollars - not thousands.)
• DON'T NEED TO: When the owner CAN continue to make payments as agreed for the duration of the loan; even if it is uncomfortable. Or, when the owner would prefer a loan modification and the lender has indicated a willingness to work with the owner for a loan modification.

A short sale should be the last alternative to a foreclosure, not a knee jerk reaction to falling real estate values and overleveraged homes. With each short sale request, the lender will require a "hardship letter". This is a letter that explains why you, as the homeowner, have a hardship and why they, as the lender, should work with you and forgive part of your debt.

Hardships include:

• Involuntary job loss or unexpected loss of substantial income that prevents you from making payments or from making the full payment.
• Involuntary change in family situation due to death, divorce or other unexpected changes, like becoming the Octo-mom.
• Involuntary relocation (i.e. military relocation).
• Medical situation/disability that either results in a decrease of income, and significant increase of expenses, or the need to move elsewhere, or a combination of these things.
• You could never afford the mortgage in the first place, and you can show that by the continual use of your savings (which is rapidly declining or depleated) and credit lines (which are rapidly increasing or maxed out) to pay the mortgage.

What is NOT a hardship:

• You pulled all the equity out of your home to purchase another piece of real estate which you still own, free and clear from any liens or mortgages. (Cure: sell that second property and pay down your current mortgage; or sell the primary property and take a mortgage on the second property to pay the deficit on the first property.)
• You like going out to dinner every night and shopping at the best stores and that makes it hard to pay your mortgage...besides mom said you can live with her for free.
• You don't really want to work anymore.
• The value of your property declined, like everyone else's, and you don't think you should have to suffer that loss.

While it is true that in some (non-recourse) states, like Nevada, you may still get a short sale approved even if you do not have a hardship.... most of the time, banks are looking for your sob story here. Give it to them.

When do you throw in the towel?

Going through this process is very difficult emotionally. Let's face it, when you started this journey, you had a very different outcome in mind. This was to be your home; or the investment that was going to solve your future financial woes. Now, those dreams are not being realized and you're suffering a very real financial loss and that goes hand and hand with emotional loss.... not to mention that this hardship is generally because of another hardship (like job loss or divorce). Given that, you are likely to go through all five stages of grief:

• Denial (we can do this);
• Anger (if the real estate agent/lender/spouse/child/etc. hadn't...fill in the blank.... I wouldn't be in this situation);
• Bargaining (maybe if we...);
• Depression (it's hopeless);
• Acceptance (OK, let's move on).

You should call the a real estate agent and perhaps an attorney or financial advisor when you are in the "bargaining" stage, assuming (at that time) that you are still current on your mortgage. That's when we can help you examine options. Talk to consultants that you trust, who have your best interest at heart and who are not charging you for their advice at this stage of the game. Be wary of their interests - if they get paid only if you do one thing, expect them to want you to do that one thing; especially if they are pushing you very hard rather than trying to help you. For example, respect a real estate agent who asks you if you've attempted to have your loan modified so you can stay in the home.

DEFINATELY call a real estate agent no later than when you realize you can not make the next mortgage payment. The further behind you are in your payments the harder it is to have a successful short sale, and you may have eliminated other options at that time, too.

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In the next posts, we'll talk more about the selling side - about what the ingredients are for a successful short sale, and about about the role of the real estate agent, attorney or third party negotiator in the short sale process. Then, we'll talk about the buying side, and what risks buyers have and the countermeasures they should take to reduce risks. Stay tuned to: www.TheRealEstateWhisperer.blogspot.com !

If you are wondering if you should consider a short sale, call me. I am happy to provide a free consultation any time.

Vicky Chrisner, Keller Williams Realty

Ofc: 703-669-3142

Email: VChrisner@KW.com

www.VickyChrisner.com

Delta Associates is a well respected authority within the housing market, but their reports are rarely public, until now. MRIS (The Metropolitan Regional Information System), which is the local multiple listing service, now offers reports to the public through their web site each quarter. (www.MRIS.com)

The video below explains how to view some of the information, offering highlights from the 2nd quarter reports for 2009.


The Washington DC metropolitan area includes Northern Virginia, most of Maryland, and the panhandle of West Virginia, and (of course) DC.

For more specific information or assistance interpretting what this data means to you - as a potential home buyer, home seller, renter or property owner - please don't hesitate to contact me. I am happy to be a resource for you!

First Friday events are held in downtown Leesburg on the first Friday of each month. On these nights, 35 different specialty shops and businesses stay open until 9:30 offering various types of entertainment.
Each month, scheduled entertainment is posted at http://www.firstfriday.com/. The entertainment varies, but usually includes many choices for art galleries, live music, wine tastings and more.

In August, my husband and I went and took the kids (ages 3 and 6). We grabbed a light dinner at the historic Georgetown Cafe and headed to the Last Ham Standing, a regulary scheduled monthly improv comedy show at Tally Ho Theatre...and yes, it is family friendly. It was hysterical... although I admit that my children kept waiting for the movie to come on. (They really didn't understand why we were in a movie theatre and not watching a movie!)

September promises to be great fun! While window shopping and antiquing, help yourself to the refreshments offered at the various shops, register to win a free makeover, and enjoy all the entertainment, much of it free.

You'll enjoy one or more of the many musical performances (anything from award winning pop vocalists to local favorite acoustic quitarists, or a classical piano trio, a punk rock band, a Latin American band and much more). Loudoun, well known for it's wines, won't disappoint...wine tastings are offered all throughout the downtown area. Whether trying wines from around the world or sticking with local favorites, there is something for everyone to enjoy.

For those with refined tastes, take in the museum or the art gallery display or a lecture and book signing. If you're looking for something a little more unique, stop in and visit Esoterica for a tarrot card or palm reading. Or, join the Yoga Happy Hour for a little yoga practice combined with beer tastings! Of course, Tally Ho is also offering their Last Comic Standing show - which promises to be great every month!
Come on down and enjoy all that the town has to offer! You won't be disappointed. In fact, there's so much to do, I bet you can't do it all. But, once you try it, you'll want to come back time and time again to check just one more item off your list! So, will YOU "Meet Me Downtown"?

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PS - A hint from a local: join the Facebook Fan pages of the businesses you might want to check out. Not only will you get more info on their scheduled events, but many times Facebook Fans get special discounts!

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A native of Northern Virginia, and professional real estate consultant, I am always ready to share information with you about the local area and/or the real estate market. Don't hesitate to contact me anytime! The Following Information is made available for your use; please enjoy:

Learn more about living in Loudoun at www.LivingInLoCo.blogspot.com.

For information about our real estate market, visit: www.TheRealEstateWhisperer.blogspot.com

To learn about, to search homes for sale, including foreclosures, short sales and more, visit: www.VickyChrisner.com

Last, but not least, if you are thinking of selling your home ANYWHERE in the Northern Virginia area, you can locate a tool which will email you (automatically) a report of sales IN YOUR NEIGHBORHOOD, the report is update monthly with no extra efforts or requests... the tool (Market Snapshot) is available on my home page.

There are many variables due to specific lenders, particulars of the parties involved and the heavy influence of third party negotiators and/or the involved real estate agents. However, in general, this is the process:
* Regardless of the path taken to get to this point, the sellers eventually decide that attempting a short sale with their lender(s) is their best option. They ask a real estate agent to put it on the market.
* Because there is often a race against a clock to prevent foreclosure, agents see this as a firesale and will market the property agressively, at a price they hope will quickly attract buyers.
* An offer, or multiple offers, are received. The agent assists the sellers will reviewing and negotiating the contract, and is sure to include a contingency addendum that provides for "third party approval", namely approval of the lenders.
* An offer should be ratified.
* The listing agent and sellers put together the required information for the seller's lender, and forward the package to the bank. This package includes seller's financial information, bank statements, paystubs, tax returns, a "hardship letter" explaining how the seller got into this mess, and why they need help getting out of it, the ratified contract to purchase the home, a Comparable Market Analysis of the property estimating fair market value, and other things that may help to persuade the bank to approve this short sale.
* The bank receives the package, distributes it to the right department, and the file is assigned to a negotiator at the servicing bank.
* The negotiator reviews the package, and may return it in its entirety to the seller because it is incomplete or the seller does not meet the requirements to qualify. Or, the negotiator will move it to the next phase.
* A BPO (Brokers Price Opinion), appraisal, or both, are ordered for the property.
* Once received, the bank has a third party's impression of the fair market value of the property. The negotiator can "counter" the offer on the table (if they feel the ratified contract is too low), can reject it, or can recommend it for approval.
* Once the negotiator can recommend the package for approval, it is submitted for another layer of review, where it goes through a similar process. If it is not approved, then it will be sent back to the negotiator with instructions to counter or reject the offer on the table.
* This negotiating process may include negotiating the sales terms (usually price) and/or negotiating for additional payments from the seller, either at the table or over an extended period of time, post sale.
* There may be multiple layers of approval, especially if losses are significant for the bank. Also, many times the servicing bank is not the investor. So, once the servicing bank makes a recommendation for approval, the investor(s) will also need to make the same recommendation. They may or may not request additional BPOs or appraisals.
Each additional layer of review increases the time the process takes. Each thing that must be negotiated also increases time frames. Once the bank agrees to the short sale, a letter is sent to the seller outlining the terms of the sale that have been agreed to. Then, and only then, can settlement take place.
For buyers, this process is a big "hurry up and wait" experience, and then more rush to get to the closing table. Generally, banks require closing must happen inside of 30 days from the date of their approval.
Because of the time involved, many buyers fall out. They become disenchanted with the process and move on to another home. For this reason, many short sale listing agents prefer to have a few back up offers in place. The trick here is getting the back up offers to have the same price and terms as the original. Also, if primary buyers drop out because of lack of interest, you can be certain that secondary buyers are even less attached to the home.
In my next posts, I will break down concerns buyers and sellers face and how to minimize risks and make the most of these types of sales. Stay tuned to www.therealestatewhisperer.blogspot.com

With all the local summer camp options in Loudoun, it's nice for kids to try various activities. It keeps the summer interesting and keeps them constantly learning, sampling different activities that may (or may not) be of longer term interest to them. After horseback riding camp, I enrolled my 6 year old daughter (Rachael) in a Cheerleading Camp with DMB Sports, which was held at the National Conference Center on the east side of Leesburg.

The first day, Rachael was a little apprehensive since she didn't know anyone there, but she quickly made new friends, and found a few kids that she knew from other local activities. And, she fell in love with her camp staffers, especially Lauren who she said reminded her of me. (Isn't that sweet?)

The two weeks there were ones she'll remember for a long time. Each day, they'd swim. They played games and had many activities other than cheerleading. DMB is careful to make sure that having fun is more important than someone learning whatever cheer or whatever they are teaching that day. But, they did, of course, practice cheers and gymnastics. They learned some stunts - mostly what Rachael learned was she was scared to do stunts, but at least she was making an educated decision having had the opportunity to learn.

DMB also brings in a professional athlete to each camp, and Rachael got to meet Katie and Ana from the Washington Redskin Cheerleaders, and has a bring home souvenir with autographs. she was THRILLED. After that experience, she has decided she will be a cheerleader when she grows up. I doubt that she will, but if I can just get her to sit down with us and watch a football game, I'll be thrilled.

On the last day of camp, they had a cheer show. We really made Rachael feel special...grandma, two of her brothers, dad and I all came to see her show her stuff. It was a nice show, and I know that all the girls felt very good about having learned something that they could show off.

Rachael took one of the later camps in the year, but I will be looking forward to signing her up again next year. DMB offers many summer and holiday camp programs in eastern Loudoun County. Camps include Art Camp, Echo Camp and many various sports camps. Check them out online at http://www.dmbsportscamp.com/.

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On a scary note: Rachael was in the pool with other campers when a 6 year old little boy had a terrible accident. He was noticed at the bottom of the deep end of the pool. He was not breathing and had no pulse. Emergency services were called and he was revived poolside, and then taken to Loudoun Hospital, where they quickly transferred him to Fairfax Hospital. Each update I've received is positive, but it was very scary and the little boy was in the hospital for many days as they drained the water from his lungs. Throughout this, DMB communicated WELL with other parents. I do not know exactly what happened, it is so easy for an accident like this to take place with children.

PLEASE, make sure your children know their limits and do not succumb to peer pressure and venture to a deeper end of the pool. And, teach your children how to swim early, or keep them out of the pool all together. Teach them how to react when they fall into the pool. Not panicking can be the difference between life and death. Our children are just too precious.

My prayers continue to be with that little boy and his family. I'd like to think DMB for being so quick to respond, and so proactive about their communication with other parents.