Posts Tagged ‘short sale’

Understanding Real Estate Short Sale

Saturday, August 15th, 2009

Foreclosure is a major problem in the real estate market nowadays with lots of people losing their jobs. A short sale can help a homeowner in foreclosure. When there is no hope that a homeowner can pay his or her mortgage payments, a real estate short sale may be a viable solution for the homeowner. You do not have to wait until you are late on your house payments to begin the short sale process. Learn about what is a short sale and consult a Realtor early about doing a short sale when you know that you might not be able to keep up with your house payments soon.

Understanding What a Short Sale is

A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the house sold. In a short sale, the bank or mortgage lender agrees to discount a mortgage balance because of an economic or financial hardship experienced by the mortgagor. This negotiation is all done by communication with a bank’s loss mitigation department.

How to Stop Foreclosure

A short sale is frequently done to stop the foreclosure process. Often a bank will allow a short sale if they believe that it will result in less financial loss than going through with the foreclosure process as there are carrying costs associated with a foreclosure. A short sale is often faster and more cost effective than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. The process does not wipe off the remaining balance unless the bank expressedly states it in writing.

Learning about Short Sale

There are lots of books written about short sale. Some books are for homeowners facing foreclosure. These books explain to them what a short sale is and how it can help them save their properties from foreclosure. There are also books for investors trying to take advantage of the foreclosure market. Foreclosed homes are often cheap so new home buyers and new real estate investors can buy them fairly easily. Examples of books on short sale are The Art of the Short Sale, Short sales: An Ethical Approach, Doctor Foreclosure: The Secret to a Successful Short Sale, and Short Sale: A Practical Approach.

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Don’t make a huge foreclosure mistake

Monday, August 3rd, 2009

More tips from Alex Speak: One of the biggest mistakes you can make after getting served with foreclosure papers is to do nothing, figuring you’ll ‘just let the house go’. Not only is it probable you’ll lose your home, but the bank will most likely get a deficiency judgment against you; that is, a judgment awarding the bank money for the difference between what you owe on the loan, and what the house sells for after foreclosure.

Do you owe a lot more than your house is worth? If so, you’re looking at a big deficiency judgment. Did you know that in many states adeficiency judgment is good up to 20 years? The bank’s going to be in your life for a long time. It can claim money from your bank accounts, take your income tax refunds, and dip into future assets you accumulate.

What should you do? Either hire a lawyer, or file an answer yourself. (a hardship letter is different from an answer’!) In answering a complaint, many lawyers ‘admit that the borrower (you) own the property, but deny all other allegations of the complaint’. In their answer, lawyers also typically raise certain defenses, such as, since the original note has been lost, and the plaintiff (the company suing you) doesn’t have a complete copy of the original note, the plaintiff cannot maintain the foreclosure action.

For adjustable rate mortgages with interest-only payment periods, or different payment options such as minimum payment, interest only, interest and principal, or have a prepayment penalty, many lawyers assert in their answer that the loan violated state unfair and deceptive trade practices laws because the originating lender didn’t explain to the borrower that negative amortization and payment shock would result from the structure of the loan.

Those same lawyers also file a written request for the court to refer the case to mediation. The biggest advantage to mediation is you get to sit down with a representative of your lender who has the authority to settle the case without foreclosure. Before going to mediation, you should know exactly which solutions are available to you. Find those solutions by making sure you do your homework and research all the options available.

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Short Sales – Why They Work

Thursday, April 30th, 2009

Short sales are often sold in their as is condition. Always have the home inspected before making an offer to assess it’s current condition. Short sales riches turbocharged is a must have system for investors that want to have a competitive advantage in this market.

Getting the homeowner to sign the option contract is one of the most important steps in the process of buying a short sale. The short sales riches turbocharged system is an amazing educational tool for investors to obtain discounted loans from the lenders. You must know this technique if you want to be competitive in today’s market.

Short sales riches turbocharged not only helps the investor, but also helps the homeowner sell quickly and the end buyer purchase a house at a great price. Keep in mind that short sales can be dicey, so it’s important to have an intimate understanding of the short sale process.

A short sale transaction may be ideal for homeowners that cannot modify their loans and are unable to continue making payments. It is crucial that real estate professionals take the time to understand that these are real families on the verge of losing their home. While short sales are increasingly being utilized more in this declining market, it’s important for real estate professionals to understand the mechanics in the short sales riches turbocharged system.

Using the short sales riches turbocharged system enables investors to use a proven and effective process to simultaneously purchase and sell properties for a profit. Unfortunately, very few systems are offered to agents who want to specialize in short sales in their market. Many short sales are sold at huge discounts to value. It may be difficult to determine a price based on face value, so it often makes more sense to do a competitive analysis of surrounding properties to decide if it would be a good short sale. Short sales are very complicated and the outcome is not guaranteed. Banks are under no obligation to approve short sales and a lot of times the process will be time consuming, which requires a lot of patience. Which means it’s all the more imperative for realtors and investors to fully comprehend the short sales riches turbocharged system.

Short sales are not easy, especially when dealing with large banks. They take a lot of time and work, as well as cooperation from a number of interested parties, including the bank or lender, a home buyer, real estate agents, and you. Using the short sales riches turbocharged system will give you a proven process for profiting in short sales.

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Purchasing Real Estate Through Short Sales

Sunday, March 15th, 2009

A transaction in real estate that is becoming much more common in recent months is the short sale.  Simply put, the short sale as it applies to real estate is the seller’s lender accepting a payoff to release an existing mortgage.  The payoff accepted is less than the total amount due, and is counted as payment in full.  The property is question is usually in a pre-foreclosure state.  Because the short sale requires the seller’s lender to take less money for the property than the mortgage is for, the lender is not required to accept any offers that pertain to the short sale.

A seller does not need to be in default (to have stopped making mortgage payments) before a lender will consider a short sale.  A lender may consider a short sale if the seller is current on their payments but the value of the property has decreased.  The seller may owe more on the home than its current market value.  Discounted price, which in this case can be the present value, may actually bring the home’s price in line with the current market value, not below it.

Do the necessary research on the state of the property before you make an offer to purchase.  If you are working with an agent or lawyer, they can find out:

1.  Who is on the title
2.  Whether a foreclosure notice has been filed
3.  How much the seller owes the lender
It is important to know what is owed on the house before a good offer can be made.  The last thing you want to do as an investor is pay too much for a house involved in a short sale.

Two loans on the property presents its own set of problems.  The first mortgage lender’s position is the primary to the second mortgage lender, unless the second lender does not want to foreclose.   An example is if a seller owes $70,000 on a first mortgage and a $30,000 on a second mortgage. Making an offer based on the first alone will not gain cooperation from the second lender.  Both the first and second will have to be covered in the offer.

Since the time involved in a short sale transaction can take at least 4 to 6 months, finding a real estate agent or lawyer that has short sale experience is very important.  This individual can keep on top of all the details in the transaction and make sure that the transaction will close as timely as possible.

For the lender to agree to a short sale, the seller must provide a hardship letter to the lender.  The seller may also owe taxes on the amount of debt that has been forgiven by the lender.  Since the lender is accepting the payoff of the mortgage at a lower price, the seller generally will not get any concessions.

There is no short sale until the lender accepts the offers made by the seller or potential buyer.  If you are a buyer, the lender will want proof of funds for any offers made on the property.  If you are a buyer purchasing a short sale as investment property, make sure that you have a specific contact in the lender’s office to keep up with details of the sale.

A buyer/investor is buying the seller’s problems with a home.  Make sure that all inspections are done before the short sale closes.  After the sale closes, the property’s problems will become your problems.

While you can bee successful as a real estate investor buying properties through short sales, expect longer closing times and continually going back and forth with the seller, lender and buyer.

To learn about short sale buying, see the following website:

http://apps46995.ppc2008.hop.clickbank.net/ href=”http://apps46995.ppc2008.hop.clickbank.net/” target=”_top”>Click Here!

 

 

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