What is a short sale? Should we be wary of one?

In a short sale, a buyer pays less than the amount a seller owes the lender.
There are more cases of ’short selling’ in markets where home values are dropping.
Typically, when a homeowner can’t pay his mortgage because he has suffered some sort of hardship — loss of a job or divorce for example — he simply sells his home.  But when home values are dropping, this can be a problem. In some cases, a homeowner might find he owes more on his mortgage than his home will sell for.  In these cases, lenders will sometimes accept less than the amount owed on the home, assuming the homeowner doesn’t have other assets that can be sold to make up the difference. The lender then doesn’t have to go to the expense of selling the house at auction.
The question you have to ask yourself is: Are you really getting a great deal?
If the house was purchased at the peak of rising home values, then the homeowner might have paid a premium price for the property.  If values are dropping today, the lender may only be able to discount the property to current market values.  So in that case, you wouldn’t really be getting a bargain at all.
You’ll have to know what similar houses in the market are selling for to find out if you are getting a good deal.
Find out how long the home has been on the market and make sure you get good inspections.  A seller who is in financial trouble often can’t keep up with repairs.  You’ll want to have a good idea what has been neglected. Short sales are tricky legal propositions.  You’ll want to make sure you have an  attorney experienced in this sort of sale.  You will also want to know who the lender or lenders are and remember the lender will be looking for a better deal than a short sale will offer so the lender probably will not instantly agree.

If you are looking to avoid foreclosure, call us to find out what we can do to help you with selling your home.

Tags: home selling, selling price, short sale

What are the Stages of the Foreclosure Process?

The first stage in the foreclosure process is Preforeclosure
This is when the bank files the foreclosure lawsuit. In some states, its called the Notice of Default and in other states, it’s called a Lis Pendis. The bank can file the foreclosure lawsuit when the borrower becomes 3 payments behind.

During this period, the borrower has options to solve their situation:
- They can pay off the lender in full.
- They can bring the loan current for all of the past due payments and attorneys fees due.
- They can do a workout with the lender to negotiate a repayment plan, loan modification of forbearance.
- They can sell the house and move
- They can sell the house to an investor and lease it back
- They can refinance the home with an equity lender.
- If they owe more than the home will sell for, they can do a short sale with the lender. This stage only occurs in a judicial state, It does not occur in a non-judicial state.

The 2nd Stage in the foreclosure process is the Auction or Trustee Sale
- This is where the bank brings the property to public auction.
- The sale date is set by a hearing 3-4 weeks before the actual auction occurs.
- The homeowner has the right to attend the hearing and request an extension to get the home sold. Most of the homeowners we work with that attend this hearing can buy themselves an additional 3 days for a total of 60 days.
- 95% of the homes that go to auction go back to the bank as an REO.

The 3rd stage in the foreclosure process is the REO stage
- REO stands for Real Estate Owned. This usually costs the bank anywhere from 35,000 -50,000 to take a home back in foreclosure. This is the 3rd and last stage of the foreclosure process in a judicial state. The property becomes an REO if the property does not sell to a third party bidder at the auction.

Foreclosure Timeline
The time line for a foreclosure dictates the options you have. The longer you wait to deal with the problem the less options you have.

30-90 Days late
Many more options – including saving your home – than folks know about, and many are not very painful.

90 Days +
The absolute best options and opportunities to save your home lessen and are much more restrictive. This also diminishes some of the sales opportunities.

Attorneys letters – Lis pendens
Several easy solutions are no longer available.

Sheriff notice
We can still salvage your credit and possibly your equity, but every day you allow to go by reduces your options.

Sheriff sale and foreclosure!!
A foreclosure will be on your credit report for at least 7 YEARS. But, worse than that, PUBLIC RECORDS will show this legal action for the statutory period of a judgment in New Jersey! The bank will file a deficiency judgment that must be satisfied before you can buy another house. This does NOT happen with the other options we can employ for you. With foreclosure, your credit is devastated. The reduction in your credit score is more then 2 or 3 times what it is for some other options. That means higher interest rates AND higher purchase prices for almost anything you want to buy.

Short Sale Instead of Sheriff Sale
We can assist you with bringing your credit back to a level for you to again own your own home much sooner than you think. The government is responding to the housing crisis by offering legitimate mortgage options so people don’t have to resort to subprime mortgages and predatory lenders anymore.

Are you behind on your payments? See what your option are at http://www.i-teamhomes.com/foreclosure.htm or call us at 609-417-1084. Don’t lose your home unnecessarily.

Tags: distressed home owners, distressed owners, distressed property, foreclosure, short sale, short sales

NJAR® ENCOURAGES CONSUMERS TO EXPLORE SHORT SALES AS AN ALTERNATIVE TO FORECLOSURE

For Immediate Release:
February 18, 2009

(Edison, NJ) In today’s unsteady economy, many homeowners experiencing financial difficulty have turned to a short sale as a means of avoiding a foreclosure. In many cases, sellers who cannot keep up with their mortgage payments strike a deal with their lender to sell the home and payoff less than the total amount due on the loan. In some cases, the lender forgives the outstanding debt. A short sale can occur in any real estate transaction where the purchase price is less than the amount required to pay off the liens on the real property, such as mortgages, judgments, taxes, homeowner or condominium association fees, assessments, as well as closing costs including but not limited to brokerage commissions, realty transfer fee, and attorney’s fees.

There are key advantages to pursuing a short sale over a foreclosure. Depending on how the lender reports the loan, short sales can appear on your credit report as “pre-foreclosure in redemption,” not as “debt discharged due to foreclosure.” Thus, people who come to an agreement on a short sale with their lender do far less damage to their credit rating than those who go through a foreclosure. Additionally, a benefit to a short sale is that borrowers will generally face a shorter waiting period before they can obtain another mortgage.

“In general, a short sale can be much faster and less expensive than a foreclosure,” said 2009 NJAR^® President Diane Dilzell, CRS, e-PRO. “Troubled homeowners should remember that a short sale is not a cure-all but the ramifications are less harmful to their long-term financial well-being.”

Homeowners who are having difficulty making their mortgage payments and who may be considering a short sale must generally meet three qualifying criteria: they must be behind on their payments, be able to prove a legitimate hardship, and have little or no equity in their home.

Sellers should be aware that a short sale is a complex transaction and can take several months to complete. A short sale also requires several parties to come to an agreement on negotiated terms. In addition, different lending institutions have different policies. Some lenders may agree to forgive the difference between what they are owed, while others may require repayment of the deficiency. If your lender “writes off” any portion of the amount owed it may be reported as taxable income. Therefore, sellers should always seek the advice of an attorney or tax professional.

Dilzell noted that a REALTOR^® is a valuable resource to home sellers considering a short sale. REALTORS^® can help consumers navigate the short sale process, as well as facilitate communication between interested parties.

“REALTORS^® don’t just sell houses; we work to help people to afford to stay in their homes. In the end, we want troubled homeowners to know that a foreclosure might not necessarily be their only option. Whether it’s a refinanced loan or a short sale, resources are available to homeowners having difficulty making their payments,” concluded Dilzell.

Tags: foreclosure, homes for sale, listing your home, selling your home, short sale