Short Sale Caveats for Realtors

Hi Folks,
   Welcome to your weekend !

   The "Wild West". This conjures up thoughts of lawless times and renegades going from town to town and old fashioned "Shoot-em ups". When using the terms "Wild West" to describe Short Sales, this should indicate that dangers abound, and everyone, including Realtors, must be wary.

   Sarah Stelmok writes on Truliablog.com that listing a short sale is a "little like venturing into the wild, wild west", and says that there's only "a little order, lots of imposters, and laws are broken without much penalty."

   Stelmok outlines 3 primary things agents should know about Short Sales in her story, titled, "3 Things Agents Should Know About Short Sales":

1. "Market Value Matters" - Short sales sell for market value, says Stelmok, and adds that a bank will "typically agree to a short sale if the numbers make sense".

2. "Only Real Hardships Get the Help" - "Strategic default is never a good idea", Stelmok says, and adds that banks actually analyze hardships that are reported by a seller, and ones that are acceptable are financial/economic issues, "medical issues, divorce, disability, significant loss of income, death, unemployment, and relocation."

3. "Laws are local" - Since there are currently no national short sale laws, Stelmok says that it's important to "know your state’s foreclosure laws",

   As Stelmok summarizes, "This type of transaction is constantly evolving; however there are a few things that remain the same, and that every agent needs to know when working with short sales."

   What's your experience with Short Sales? Do you have any tips from the trenches (or should I say, from the Wild West?)?

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #shortsales #foreclosure #realtor #strategicdefault #marketvalue #agent #laws #hardship

Short Sale Requirements For Sellers and Buyers

Hi Folks,

   My apologies for the late post, but I am recovering from a week filled with Strep throat and a high-fever. Thankfully, I have done a sizable amount of my homework upfront, and was able to get this out to you as quickly as humanly possible.

   A comprehensive discussion on the topic of short sales must straddle both sides of the transaction - both sellers and buyers. Today, we will look at some requirements of both sides of Short Sales.

   In a recent article by Greta Guest for the Detroit Free Press titled, "Shortsales, longwaits: Buyers and sellers find process frustrating", Guest says that what you need to qualify in terms of paperwork and forms can "vary by lender".

   The three things Guest says that a homeowner would need to qualify for a short sale (according to the Certified Distressed Property Expert website) are:

* To show Financial hardship: Prove that "there is a situation causing you to have trouble affording your mortgage."
* To show Monthly income shortfall: Prove to a lender that "you cannot afford, or soon will not be able to afford your mortgage."
* To show Insolvency: "The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage."

   Now, let's discuss what needs to be done for those buying a short-sale.

   Jan Green, a Realtor with RE/MAX Excalibur in Scottsdale, AZ, who has processed short sales both on the listing side and purchase side, says that she counsels the buyers about short sales first, and says, "make sure they are pre-qualified; and what their time frame for closing is; do they have a house to sell?".

   Joseph Lam, a Real Estate Broker and a short sale listing specialist with Keller Williams Realty in San Jose, CA, who has been guiding sellers and buyers to get the transaction thru (approved) by the short sale lender, says that "Like any buyer in today's market, the buyer needs to get pre-approved for a home loan first." Lam names one of the requirements as verification of the buyer's downpayment (bank statement, etc.).

   Robyn Love, an agent and an investor with IRCA, who has done short sales on her own and with another negotiation service, also concurs that the "Buyers need to have been qualified from a bank" along with a downpayment. Green, Lam, and Love all add that patience is golden. These deals can take time !

   On the patience factor, Love says that Short sales, "especially when first listed, take several months to be approved.", and when an offer comes, the bank, "may or may not take their offer if it is too low." Love also adds that sometimes "if the foreclosure is months away, the bank won't move fast.", but, "If it's around the corner, the approval is faster."

   Some tips for Buying a Short Sale:

   Love says that usually, the bank is looking to minimize their loss, so a "low ball offer with no low comps or repairs will most likely be rejected.". She also says that pictures of repairs and low comps "help the bank make a decision".

   Green advises that when purchasing a short sale, to "garner all information as to the likelihood of a short sale closing before even putting" a buyer in her car.

   Additionally, Green says that she also interviews the listing agent before showing a short sale, and she asks, "if he/she has collected financial data, hardship letter, has seller consulted an attorney and CPA, does the seller have a true hardship (they might just be "trying" a short sale). "...what is the listing agent's experience in short sales."

   In Summary, short sales are wild-cards for now, until real legislation actually sticks..and yes, "HAFA" (Home Affordable Foreclosure Alternatives), we are talking about you !!

   Comments? Questions? Venting? (Venting allowed within respectable limits)

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Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #ShortSale #foreclosure #HAFA #hardship #insolvency #homeowner #prequalified #downpayment #comps