ken@getyourphx.com
You need to get out of a bad situation, but you don’t want to foreclose on your home. You don’t want years of bad credit. But you know that you need to do something!
A lot of people are talking about short sales. A lot of people may try to sell you on doing them.
This article can help you make the decision whether to “go short.”
First, a couple definitions:
Foreclosure. If you have not paid your mortgage for more than three months, the bank can foreclose. They will give you notice to pay in full by a certain date. If you do not pay, someone else can buy your home or the bank will take it back.
Something to note: banks are going to lose money on both a short sale and a foreclosure. They will lose about 30% less on the short sale, if they are willing to negotiate. A good Realtor representing you will know this and will know how to keep the home from going to foreclosure. You won’t be able to keep the home, but at least the process can be shorter.
Short Sale. Basically, you get authorization from the bank to sell the home for less than you owe before it forecloses. You and your agent list the property. Once you get a reasonable offer, you go back to the bank and ask for their permission to sell at that price. This is where you need a quality agent –one who can get your property seen, set a reasonable price and coordinate with the bank for the quickest possible sale.
If you are at this point, please contact us at realestate@kenclarkforaz.com or leif@leifswanson.com.
Here are some more things that can help you with your decision:
1) What is Going on in the Market
The number of short sales that are selling has increased. Not only do they represent 40% of all homes for sale right now, the number of short sale homes that are actually selling are going up. If you look at the chart, below, you will notice that the percentage of short sale homes that are active is starting to go down in relation to the normal and foreclosed sales (REO).
2) Common Misconceptions
Some Realtors make a serious mistake when listing a short sale. They tell their clients that they will sell more quickly by listing the property at a very low price in the hopes of grabbing attention and buyers. The problem here is that the bank simply won’t go for it. They already have an idea of what they want to get for the property. If they don’t like the price, they could spend months deciding just to tell you “no,” and by then your home has gone to foreclosure.
You need a team that understands the market, KNOWS what is realistic and KNOWS how to make it through the process.
[There are other common mistakes that some Realtors make when interfacing with the bank.] We are happy to talk with you more in person and share our experiences.
3) Questions and Answers
Q: Will my credit suffer less from a short sale than from a foreclosure?
A: Foreclosure counts against your credit score more than a short sale does. A foreclosure takes longer for you to become eligible to buy a home again.
Q: Will I have to pay the Realtor’s commission if I sell? I can’t afford that.
A: A good agent will get their commission directly from the bank. Talk with us. We can make this happen.
Q: Are there are any up-front fees?
A: No and maybe yes. In some particularly complicated cases, we may team up with specialists who may charge between $250 and $1,000 to cover the extra staff time. However, just like those people who promised to reschedule borrowers’ debt and charged several thousand dollars, there are people who are playing the same game with short sales. Be wary of fees and promises of easy solutions!
Q: Why are Short Sales Moving now? Are banks moving faster now?
A: Not necessarily. It’s just that some real estate teams are more familiar with the process and are creating direct relationships with the decision makers. This is resulting in better odds of the file actually being reviewed and getting it approved. We’re almost to the point where 20% of the real estate people are responsible for 80% of the successful deals because of their knowledge, their systems, and their direct contacts. Certain teams are making things happen. I am involved with some of these successful teams now.
Q: What Should I Do?
- Ask friends, family members, and/or co-workers call us for a confidential appointment.
- We will see what options are available to help them.
- We work with specialty teams who are getting 75-90% approvals (!!) and are closing 10-30 files per month. Our teams have names and direct e-mails & phone numbers of upper managers at the banks (the managers say “yes” or “no,” not the low-level file handlers).
Disclaimer 1: No guarantees of success, but your chances of success will go up 200-300% by working with the right team. Isn’t it worth a try?
Disclaimer 2: Always talk with your tax specialist regarding tax liabilities with short sales, loan modifications, or foreclosures.
