Real Estate Today

Things to know when dealing with Short Sales

Short Sales have become common in today's Real Estate Market.

What is a short sale?

A short sale is selling your home for less than what is owed.

Con's about purchasing a short sale:

Even though a seller agrees to your offer, it has to be approved by the lien holder(s). There is a great deal of consideration when the bank looks at what is called the "Hardship Package". In some cases it can take several days, weeks or even months depending upon what the seller has sent in to their lien holders (aka, banks).

Pro's about buying a short sale:

There are some amazing deals out there. Most buyer's will run from a short sale because of the stigma that most agents have about them. There is a lot of time and energy spent, but with banks now being more flexible, we recommend you do not write them off. Some homes that are selling for less than owed are already approved and negotiations are quick.

Short Sales

Short Sales have become common in today's Real Estate Market.

What is a short sale?

A short sale is selling your home for less than what is owed.

Con's about purchasing a short sale:

Even though a seller agrees to your offer, it has to be approved by the lien holder(s). There is a great deal of consideration when the bank looks at what is called the "Hardship Package". In some cases it can take several days, weeks or even months depending upon what the seller has sent in to their lien holders (aka, banks).

Pro's about buying a short sale:

There are some amazing deals out there. Most buyer's will run from a short sale because of the stigma that most agents have about them. There is a lot of time and energy spent, but with banks now being more flexible, we recommend you do not write them off. Some homes that are selling for less than owed are already approved and negotiations are quick.

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Real Estate Owned

Foreclosures

Real Estate agents have several terms for a foreclosure. Terms such as REO, Real Estate Owned and Bank Owned are very common and all mean foreclosure.

Can you prevent a foreclosure?

Yes, there are several options available to you to help avoid foreclosure. We recommend you call your bank and see what options they might be willing to provide, such as a loan modification in which the bank can help reduce the interest rate, principle or both. There are government programs such as make a home affordable. You can possibly do a deed in lieu foreclosure or even a short sale.

Should you hire a professional to help?

There is a lot of negative publicity for companies that try to help you modify your loan or provide you options. We recommend you avoid using a company and make the calls yourself. In the event that you should hire someone, make sure they do not charge any up-front fees. Be diligent and do your homework. Do not give your hard earned money away. A lot of companies will take your money and provide you with no service and do very little to help you. Get references and call them. Here is a free resource that may help you (makinghomeaffordable.gov), they have a free hotline and will answer your questions without asking you for any money.

What is the process for a foreclosure?

In California, the state allows both judicial and non-judicial foreclosures. 99% of foreclosures are done utilizing the non-judicial foreclosure process. What this means is it can take as little as 90 days for a bank to foreclose.

The non-judicial foreclosure process has a "power of sale" clause in the mortgage or lien contract. With the clause, the lender or their representative (trustee) may sale the home once the guidelines are met.

A notice of sale must be:

1. Recorded in the county where the property is located at least fourteen (14) days prior to the sale
2. Mailed certified with a return receipt requested, to the borrower at least twenty (20) days before the sale;
3. Posted on the property itself at least twenty (20) days before the sale
4. Posted in one (1) public place in the county where the property is to be sold.

The notice of sale must contain the time and location of the foreclosure sale with the property address, the trustee's name, address and phone number stating the property will be sold at auction.

 The borrower has up until five days before the foreclosure sell date to cure the default and stop the process.

What happens if the property does not sale at auction?

The property becomes the possession of the lien holder (bank) and in the event you have yet to move out, they will either offer you cash for keys or start the eviction process. In some rare cases they will negotiate a rental agreement for you to live in the home until the property is sold. It now becomes an asset of the banks (called Real Estate Owned "REO") and assisting to an asset manager. This is now where Real Estate agents will list the property for sale.

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Foreclosure market update

A lot of concern has been addressed around the issue of foreclosures and our economy. Is all the the news accurate? How much inventory is on the market currently compared to what is on the books? When is the moratorium going to be released?

Have we seen a decline in the banks inventory being put up for sale?

Currently there is more on the books than what is available for sale. Banks have recently began releasing more homes to the market but they are being allowed to flood the market with foreclosures up for sale. This ensures we stabilize the real estate market. This is causing multiple offers on homes. We have seen as many as 96 offers on one home. The average home in the 200k range is getting approximately 15 to 20 percent more than list price. Please do not think this is a market where you can offer thousands less and get your offer accepted. A few banks list the best price, and will counter with a best and final with multiple offers.

How much longer will we see foreclosures as a dominate source of inventory for sale?

We have many years left where the banks will have no choice but to foreclose on homes. Banks are being influenced to work with home owners and attempt to help them save their homes, but still there is only so much one can do. This problem stems from many years of offering bad loans to good people. It use to be if you knew how to sign your name and had a 580 fico score, you could get a home. Those days are long gone and let us hope they never return. There is still billions of dollars left in adjustable rate mortgages and hybrid loans coming due. There are always statistics showing a trend.

• 1 out of every 200 homes will be foreclosed upon. For a city like Washington, D.C., that translates to 3,000 Washingtonians losing their homes to foreclosure each year. – Mortgage Bankers Association
• Every three months, 250,000 new families enter into foreclosure.
  – Mortgage Bankers Association
• One child in every classroom in America is at risk of losing his/her home because their parents are unable to pay their mortgage. – Based on information from the Mortgage Bankers Association
• A slower real estate market can translate into falling prices and home values. As a result, homeowners who opted for adjustable rate mortgages may now find that as their mortgage rate adjusts higher, their home value is lower and therefore refinancing is no longer an option.
• Six in 10 homeowners wish they understood the terms and details of their mortgage better. – Freddie Mac/Roper poll of 2,031 U.S. homeowners, conducted 2005.
• More than 6 in 10 homeowners delinquent in their mortgage payments are not aware of services that mortgage lenders can offer to individuals having trouble with their mortgage. – Freddie Mac/Roper poll of 2,031 U.S. homeowners, conducted 2005.

We believe in educating

Please, do not think you are alone and that there are not options possibly available to you. If you have any questions please do not hesitate to call us. We do not charge, we do not offer loan modifications nor will we ever recommend any company to you. If you do not want to even give us your name, we do not care. We will help you any way we can. We believe in americans helping americans.

Note: All information provide is considered to be accurate, but not guaranteed