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Archive for November, 2009

The Five Steps To A Successful Short Sale

The Five Steps to a Successful Short Sale

Regardless of whether you are a home owner attempting to get out from under a crushing mortgage payment or a Realtor attempting to assist that home owner you’ll need to understand all the steps necessary to get a short sale accomplished.

The short sale process can be long and complicated. The following steps are the most common steps required by most lenders to facilitate a short sale. The length of time to obtain an approval on a short sale request has risen significantly over the past twelve months. Some lenders are actively telling us that they need ninety days to review a short sale request.

One of the challenges of putting a short sale together whether you are a property owner or a Realtor is that many buyers are unwilling to wait sixty or ninety days to find out whether or not they’ve been able to purchase a home. There are many properties on the market for sale for a buyer to choose from without having to wait so we have to entice a buyer to hang in on the transaction.

An additional complication occurs when the home owner has more than one mortgage against the property. There may be a second mortgage that the home owner took out at the time of purchase or there may be a home equity loan or line of credit the owner used to make some improvement or any other lien against the property.

Requesting a short sale in a nut shell is finding a buyer negotiating an offer on the home contacting the lender obtaining all the documents the lender requires for approval and then staying in contact with the lender until they approve deny or counter your proposal.

As I stress in every article I write about short sales have an expert assist you with this process. Seek the advice of an attorney Realtor accountant and any other professional you might require to insure the process is done correctly and to insure you’re making the appropriate decision for your situation.

Step 1: Contact Your Lender for Information

Most lenders will not approve a short sale until there is an actual offer to negotiate. Banks and mortgage services are typically understaffed and very busy trying to work out situations with other clients who already have offers on their properties. They don’t have the time and resources to analyze every possibility.

However since short sale approvals are taking considerable periods of time it makes sense to find out who you need to speak with and what the lender requires the owner or Realtor to supply. In most cases the lender has a “short sale” package that includes a list of all the forms the lender requires.

Step 2: Market Your Property and Find a Buyer

Marketing a property that requires a short sale may also be a challenge for several reasons. First you must notify any potential buyers that any offer must be approved by your lender. This will scare some buyers away from your home because they don’t want to wait for someone else to approve the sale. This will attract some investors who believe they can “steal” the home because they’ve seen on late night television that banks will accept almost any offer. This is simply not true. Although they may get a very good price they are not likely to “steal” the home in the current environment.

The components of marketing any property successfully include pricing staging and marketing. Staging is simply presenting your property in the best possible light in order to attract buyers to offer on your property rather than competing properties. Pricing entails carefully selecting the correct asking price in order to attract potential buyers. There are methods to selecting correct price positions based on recent sales and competing properties for sale.

Step 3: Negotiating an Agreement

The typical home requiring a short sale sells for a bit less than other properties. The primary reason for this anomaly is that the buyer must have a reason to go through the pain of purchasing a home through a short sale. Historically short sale properties sold to investors because they were the few with the fortitude to wait weeks to months to find out whether or not the sale would actually go through.

Imagine the stress of moving to a new home and perhaps a new school district. Consider the stress on your family. Now add to that stress the idea that unlike most real estate transactions where a buyer knows within a day or two whether or not the owner will accept the offer the buyer may have to wait several months for an answer. Worse if the lender accepts the buyers offer the buyer needs to be prepared to settle and move quickly.

Most buyers who are selling another home need to plan their move very carefully. They can’t rely on the hope that this transaction will settle. They need to be out of their home by a certain date and need a place to move. If they have a sixty day window to move from their home and they won’t find out a response about the short sale from the lender for fortyfive days that gives them little or no time to find another home should this transaction fall through.

Because short sale transactions are typically limited to investors and those who do not “have” to move by a certain date the pool of potential buyers is smaller than for that of other homes. Enticing buyers to purchase a short sale home over one that doesn’t have the same challenges often requires some consideration in price.

If you’re an owner is this situation you may be offended at selling your property slightly below market but please consider that the lender won’t allow you to receive any proceeds anyway so you’re not taking that direct loss.

An added complication is that many of the owners of homes requiring a short sale are in default on their mortgage or at risk of default. That means that the owner may have to get the home sold more quickly than the typical home in the area. If the Sheriff is locking the doors and auctioning the home in ninety days and the typical market time in a slow market in your area is six months you need to be priced below the market in order to attract buyers to your property first.

Step 4: Put Together a Short Sale Package for Your Lender

Hopefully by the time you receive an offer on your property you’ll already have the full short sale package and you’ll have started filling it out. It is imperative to get this package to the lender as quickly as possible and then to follow up with the lender to make sure they received it and that they are processing it.

Whether you are the home owner negotiating with the lender directly or a Realtor or attorney attempting to work on behalf of the home owner there is a lot of information that needs to be provided to the lender. Some of the information will have to be filled out by the home owner because it directly involves the home owner’s financial situation. Some of the forms are better prepared by a Realtor title insurance agent or attorney.

Although every lender is slightly different the typical documents required in a short sale package include:

1. A Cover Letter

2. An authorization for the Realtor or attorney to speak with the lender

3. Seller’s Hardship Letter

4. Hardship Documentation Copies of documentation related to owner’s hardship

5. Seller’s Financial Statement or Income Expense and Asset Worksheet

6. W2 forms for past two years

7. Two months pay stubs

8. Two to three months bank statements

9. Repair estimate for any necessary repairs to property

10. Agreement of Sale or Contract to purchase the property

11. Realtor’s competitive market analysis

12. Photos of the home interior and exterior

13. Seller Net Sheet

14. Payoff statements from any other lenders or liens against the property

15. Preliminary HUD 1 settlement sheet

Other forms that the lender may ask for include:

1. Title search of the property

2. Special forms

Step 5: Start Calling the Lender!

Remember that there are many people in the same situation across the nation. Lenders are swamped with phone calls and packages. When you complete the package call and email the lender to determine the best method to get the package to the lender. My suggestion is to send it to them in two forms.

If the lender tells you they’d like the physical package by mail then I would express the package in order to insure the package gets to the lender quickly and in order to insure it is delivered and can be tracked by who signed for it. I would additionally scan the entire package and email it to the same person to whom you expressed the package.

My goal is to insure they have the package and can begin working on it. If the lender asks the information to be faxed which some are now doing I would again both fax it and email it.

Expect a Counter Proposal

Hopefully the lender will simply accept the short sale proposal as written and allow the sale to be consummated. Don’t be surprised if the lender refuses the initial offer and makes a counter proposal. Should this happen you may have to go back to the buyer and ask for more money in order to settle the transaction.

If you are a Realtor you should be preparing your buyers to understand that this is a negotiation. The lender may accept the deal or may counter.

Getting to Settlement

As with any transaction title insurance must be ordered and settlement must be scheduled. In instances where an owner may be behind on their mortgage or may be considering a short sale a wise move for either the Realtor or home owner would be to contact an attorney title agent or escrow company to run a preliminary title search of the property. Make sure there are no other liens against the property.

Once a lender agrees to accept a short payoff the owner needs to be ready to move quickly to complete the transaction.

Loren Keim is the author of several books including “Short Sales: Step by Step” and “How to Sell Your Home in ANY Market“.

Loren Keim Author of “How to Sell Your Home in Any Market” Author of “The Fundamentals of Commercial Real Estate” Author of “Short Sales: Step by Step

Visit Loren Keim on Amazon.com or at http://www.realestatesnextlevel.com

About the writer:nbsp;nbsp;Loren Keim is a national authority on real estate and the housing market. Keim is the author of several best selling howto books about real estate including How to Sell Your Home in Any Market The Fundamentals of Commercial Real Estate and Real Estate Prospecting: The Ultimate Resource and training systems for Realtors. Keim is also the editorinchief of Real Estate Investment Digest and Pennsylvania Farm Ranch Magazine and is a real estate broker and president of Century 21 Keim Realtors in Pennsylvania.As an authority on the housing and real estate market Keim performs an economic analysis and housing projections for Lehigh University’s Goodman Center in Bethlehem PA. Keim has appeared on television and radio programs to talk about the housing market and the recent real estate crisis and has been a speaker at national conventions.Keim’s publication Real Estate Investment Digest is read by tens of thousands of investors across the United States. Keim writes blogs for BrokerAgentSocial and ActiveRain.

The Costs Of Owning A Home

Some home buyers especially firsttime home buyers think that a down payment is the only cost of buying a home. However they soon realize that their down payment is one of many costs that require cash or a check upfront. So how much should you expect to pay before closing on your new home?

Depending on the type of mortgage you choose you will probably make a down payment anywhere between zero and twenty percent of the purchase price of your home. This range is very large but the good news is that you get to choose what size down payment youll make in the very early stages of house hunting. You can talk with your home loan officer to find out what mortgage type is best for you and this decision will largely be based on how much money you can put towards a down payment.

Your down payment is usually the largest expense in buying a home but remember that it is not the only cost. There are several other expenses that can add up to be quite a bit of money. Usually these costs total anywhere from three to eight percent of the purchase price of your home.

When buying a home you should expect to pay for certain items and services throughout the home buying process. These expected costs are called buyer costs or buyer expenses. Some typical buyer costs include the inspections appraisal surveys title insurance escrow items attorney fees and mortgage fees credit report fees loan origination fees points interim interest and transfer fees to name a few. Also most home insurance companies require at least one months payment before the closing and some companies want the entire years payment upfront.

Some of the typical seller costs or seller expenses include the CL100 also called the termite inspection bond deed stamps the home warranty commission for both the listing real estate agent and the agent representing the buyer possible home repairs and accrued interest.

Since no two real estate transactions are the same you should get your buyers expenses confirmed before signing a contract. Its true that there are typical buyer costs and seller costs but its a good idea to get these in writing so that you know how much you’ll need to spend during the home buying process. Also be sure to talk with your real estate agent and your mortgage lender so that you can get an estimate of how much you should expect to pay when buying your new home.

About the writer:  Lee Keadle is a fulltime real estate agent in Charleston SC. He works with a team of three agents to give buyers and sellers the best services possible. You can search for new homes on our website at http://www.searchforcharlestonrealestate.com/newconstruction.php” /> http://www.searchforcharlestonrealestate.com/newconstruction.php

The Conroe Real Estate Market In Texas Remains Viable

With the majority of news on the national real estate market remaining gloomy one are in particular has bucked this trend. That is Conroe Texas where building permits have actually doubled over the past three years. While property sales have suffered some measure of decline in recent months compared to recent years this extraordinary rate of expansion has allowed the Conroe real estate market to absorb it and allow for property values to continue to increase across the board.

Poised for Another Market Boom

In fact recent figures that were made available show that the median price of a single family home in Conroe rose a full 5.6 over the same month in 2007. This brought the median price on these homes up from 195148 to 206140. With economist now predicting a possible turn around in the national economy beginning the first of the year post presidential elections it would appear that the city of Conroe Texas is poised for another real estate boom.

Deals on Distressed Properties

This means that now may be the time to buy. In fact independent speculators and property investors are buying up distressed properties in the greater Conroe area almost as fast as they are appearing on the market. Many of these entrepreneurs are finding that with a small investment and some strategic improvements they are able to turn a handy profit in the still active and viable Conroe real estate market.

Tighter Credit Requirements

Credit is harder to come by now and the times are past when a distressed property can be flipped as is without any work having been done on it. This means that if you are in the market for a distressed property in the Conroe area it is imperative that your credit be good to secure a loan and that you must be prepared to roll up your sleeves and do some work on the home prior to putting it back on the market for resale.

About the writer:  Article on Daniel Mummski. Find the latest details on Conroe Real Estate plus the best on Clear Lake Real Estate