Your Responsibilities In A Short Sale...What You Need To Know About Short Sales.

Time and time again, we try to remind individuals that a Short Sale is a regular sale with the exception being that the seller also has a financing contingency.  The key to a successful Short Sale is to give your situation the best opportunity to succeed.  As a Short Sale agent, our responsibilities are to set your home sale up for approval by having a complete and proven Short Sale package.  This is one of the most important things for you to examine when choosing an agent to represent you.  Don't think it matters?  Our most recent Short Sale received an approval in a WEEK!  It is extremely important to have a detailed package as well as a marketing plan in place to help sell the bank that a Short Sale is the best option.

As a homeowner, you also have responsibilities that are very important to the success of your sale.  During our first meeting, we will try and get every piece of paper that needs to be submitted to the bank - usually 2 months of bank statements, last two pay stubs, last years tax return, and last two months of all retirement and savings accounts.  But along the way, the banks may throw a curve ball at us and ask for some other form to be filled out.  This is where your responsiveness is critical to the time-line that the banks need. 

Every conversation I have with the bank starts with them asking me if the homeowner is still in the property.  There are two sets of people you will need to please in this transaction...the bank and the buyer.  To best satisfy both parties, you need to keep the property in normal operating order.

This process can be simplified with a little bit of planning and patience.  If you are considering a short sale, there are a couple things that you will want to keep in mind:

• Be Honest - disclose all liens on the property including tax liens.
• Be Flexible - Keep the buyers happy and if they need to stop by to see the home again...let them. 
• Understand The Banks Position - Most 2nd Trusts will take 10% as a payoff...don't simply expect them to give up everything. 
• Make Your Home Shine - We want the buyer to anticipate the closing the entire time we wait to hear from the bank.
• Be Diligent - Sign papers on time and get them back in ASAP.  Each day late can delay the decision and increase the loss the bank will be deliberating on.
• Take Care Of The Property - Just cause it sells "As-Is" does not mean you should rip out the appliances or let the house fall apart.

Hire an agent who knows what they are doing, have an open mind to listen to the bank, and gather all your documents together to make the process streamlined.  It is not a lot of work, but if you prepare up front, your success rate can be significantly increased.

Jimmy Mulhern

http://www.HowToAvoidForeclosureInVirginia.com

Short Sales - What Is A Short Sale?

I wanted to address the common misconception of who qualifies for a short sale.  Many homeowners think that a short sale is about people going into foreclosure or buying homes that they could not handle - that is very far from the truth.  In fact, most people in a short sale situation now are the ones who could handle the storm, but the individuals who defaulted dragged the values down so low that the rest of us are left to clean up the damage.  A short sale is simply a sale in which the mortgage outstanding is higher than the sales price on the home.  A successful short sale must include these three key ingredients:

1. Financial Hardship - This is very broad and can be the result of many things.  Our website has a list of all the acceptable forms of hardship, but the most common are job loss/transfer, divorce, adjustable mortgage, loss in wages, or illness/death of a spouse.  Simply unhappy about your homes value is not acceptable.

2. Monthly Shortage - A bank or investor will not be too quick to accept your request to have your debt forgiven if they see that you are still showing a positive monthly inflow.  If you are asking for a short sale but pulling in $1,000 more each month than your expenses, then why would the bank accept your short sale.  However, if you have been transferred and now you have to find housing in your new job location, then you do not have extra money and thus would qualify.

3. Insolvency - Simply put, are your assets greater than your liabilities.  Now most people are worried about their retirement and 401k - in most cases these are not counted in a short sale since most bankruptcy laws protect them from creditors.  But if you have a significant amount of money saved or invested...even as a "Rainy Day" fund...then this is something that the bank will attach their debts to.  Think about it this way, if you have $100,000 in the bank but are asking the investor to forgive $75,000 you owe them, how likely do you think they would do that?

Qualifying is the first step.  Getting your home sold and in the proper hands is another.  Before we list a short sale, our main priority is to make sure that you understand what is going to take place during the transaction.  We have attorneys that we use to professionally negotiate on our clients short sales - this is part of our service that we offer to give our clients the best opportunity to successfully close their short sale.  Make sure that you have that option at your disposal when you speak to an agent about a short sale.   

If you are facing a short sale, make sure that you speak with an agent who can help you understand the process and has a system in place.  Each short sale is unique, so even agents who have closed short sales can not guarantee that yours will close.  What matters most is the package that is sent to the bank and how your sale is negotiated that gives you the best shot.  Visit our website or give us a call for more information.

Jimmy Mulhern

http://www.HowToAvoidForeclosureInVirginia.com

Short Sale Sample Letter - What does the bank want NEED to hear?

One of the most important ingredients to a successful short sale is the right verbiage in the Hardship Letter.  This single piece of paper carries significant weight with the Loss Mitigators of any bank.  Although it does not prove the necessity of the short sale, it outlines the sellers state of mind and the reasons why a short sale is the best option.  The key points that you will need to articulate are:

• What your hardship is
• Why you need to move or can no longer pay the mortgage
• That this is the last resort

Below is a copy of a sample letter that we use from the Certified Distressed Property Institute.  Remember, this is simply a guideline and should be tailored to your personal situation.  It should be written by the homeowner, but your agent can assist in making sure the key points are mentioned.  You need to sell the bank the idea that a short sale is in their best interest.

Date:

Lender:

Attn: Loss Mitigation

RE: Hardship Letter - (Property Address) Account Number

To Whom It May Concern:

I purchased my home in 2004 and we had the income at the time to support the mortgage.In early 2006, my mother was diagnosed with Alzheimer's Disease and needed to be put in a nursing home which was very expensive. She later passed away in November 2006 and my husband  lost his job and has since taken a significance cut in pay. We love our home and do not want to lose it but we have come to terms with the fact that we cannot afford to keep it.

This left me with the financial burden of paying the mortgage. I make $35,000 annually and Ihave exhausted all of my savings, IRAs and my children's college funds in which I used to keepthe mortgage payments current until May 2007.

In May 2007, 1 was no longer able to make payments and inquired about partial payments, payment plans, and refinance; I was denied on all accounts. In July 2007, I put the house up for sale with ( Your Agent's Name and Brokerage Firm) who specializes in pre-foreclosure properties and short sales.

My financial situation cannot sustain a home mortgage of nearly $2800 per month. I want tosell the home, avoid foreclosure and salvage my credit. I know that a foreclosure on my recordwill affect me for years to come, I would ask that you please assist me in avoiding this.

Since the house has been on the market this is the only offer that we have received. Please accept this offer as payment in full. My Realtor will continue to market the house and if we receive any other offer they will be forwarded to you immediately.

I deeply appreciate your help and understanding in this matter. If you have any questions, orneed anything further from me, please contact my agent or me personally.

Whatever references you make toward your financial situation must be supported by your financial documents that you will be required to provide. Make the letter personal - it has to have your voice and passion in it.  Keep it short and sweet and make the points relevant.

If you need help at all, reach out to an agent in your area that works short sales.  They are different transactions and not all agents can or want to handle them.

Jimmy Mulhern

http://www.HowToAvoidForeclosureInVirginia.com

Let's face it - we can not count on our Government to fix the issues we face!

That's not a political statement - it's a contradiction to think that Government oversight is going to promote growth in any industry.  Is it better to have 2 or 3 companies who provide a service or product extremely well, or open it up to 20 companies that provide marginal service and make major mistakes?  You may be getting a better price, but are the results really what's best for you?

Our next two closings are both having appraisal issues...again.  The funny thing, it is for two different reasons - the closing we have where we represent the buyer appraised for $80k more than we paid, and our listing appraisal came in $20k below our sales price - and in both situations our clients are upset!

Why would a buyer whose purchase appraised $80k over what they paid for it be upset?  How about the fact that the appraiser had the wrong sq. ft. for their home, used comps that had finishes that were missing in the report, and even had the wrong transfer prices.  Do you think the home is worth what that appraiser says it is even with all those major errors?  The home should have appraised at their contract price, no doubt about that, even though they were trying to get it for a lower price.  However, with the errors in the report already, even an adjustment by the appraiser would second guess the actual value.

In our listing, the seller requested that we get an appraisal before we listed the property to avoid any issues in a purchase appraisal.  This was in the begining of July - by the end of July we had a contract on the property and the buyers appraisal was done on the 7th of August.  The buyers appraiser valued the property $25k less than the appraiser we hired just one month before.  This property has a horse barn and 3 paddocks, so it is very unique to a certain buyer.  So when we compared the appraisals, we noticed that one appraiser valued the barn and paddocks at $50k and the other valued them at $30k - huh?  Did I mention the second appraiser did not even look in the barn?  Not only that, but he mentioned that our area is experiencing a price decline - what?  Our MLS system just reported an increase in prices of .5% and reported an upward trend in housing...yet this guys stated we are declining.  Not to mention that in a comp he valued a "Gourmet" kitchen to be worth $15k more than the Barn and fencing that our listing has.  Do you know what that gourmet kitchen has that we don't - granite counter tops!  You have got to be kidding me!

And you know what we have been told...there is nothing we can do about it.  Even when there are major discrepancies in the appraisal, we are told that we can not question their work.  Now that our Government makes banks outsource their appraisals to independent third parties so that a handful of companies do not get all the work, we get reports full of errors and omissions and are told to take our medicine like a man.  Funny, that sounds a lot like everything else that seems to be going on right now...

I am not trying to influence our appraisals...I just want to have the right information and hold the appraiser accountable for the data that they are using.  One would think that two individuals in the same field would value something like a barn relatively the same.  If they had a disagreement in value then the fact that a buyer was willing to pay a certain amount for it should tell them what the actual value of that item is worth.  Even if the appraisal is amended, does the buyer still feel like they are receiving a fair shake now?

Get it right the first time and we will not have to waste time covering up your mess!

Jimmy Mulhern

http://www.HomesInVirginia.net

Are Short Sales Getting Easier?

Maybe it is just me, but this past week I have had to deal with three banks and a housing authority on three short sale listings we are currently working.  I was amazed in the changes that have started taking place within the loss mitigation departments.  The individuals on the other end were actually courteous and helpful!

One of the banks even assigned a negotiator after we simply sent in our authorization form - and then sent me their name, direct phone line, and email address!  WOW - hopefully that is a sign of things to come...but we all know the truth...the answers all lie in the investor.

Short Sales are the market future, I have blogged about this before, because even if the defaults stop, people will still need to move in and out of our area.  I was amazed at how the operators understood their procedures, and were able to outline what exactly they needed from us.  Our Short Sale package is very detailed - but one bank told us they only want three things - Hardship letter, financial worksheet, and 1st trust mortgage statement.  Obviously this was a second trust situation, so it was necessary to get both the first and second on the same page.  But a year ago, they would not even talk to us without being late!

On another Short Sale, we are dealing with the VHDA - their representative was great.  She outlined their plan, told me the three items she needs, gave me her direct number and email, and told me that she "looks forward to resolving this" - a positive attitude for a tough situation.

Maybe we are turning a corner - The single most important thing is constant and effective communication.  We shall see what happens, but things seem to have started on the right foot.

Jimmy Mulhern

http://www.HowToAvoidForeclosureInVirginia.com

Are Short Sales Getting Easier?

Maybe it is just me, but this past week I have had to deal with three banks and a housing authority on three short sale listings we are currently working.  I was amazed in the changes that have started taking place within the loss mitigation departments.  The individuals on the other end were actually courteous and helpful!

One of the banks even assigned a negotiator after we simply sent in our authorization form - and then sent me their name, direct phone line, and email address!  WOW - hopefully that is a sign of things to come...but we all know the truth...the answers all lie in the investor.

Short Sales are the market future, I have blogged about this before, because even if the defaults stop, people will still need to move in and out of our area.  I was amazed at how the operators understood their procedures, and were able to outline what exactly they needed from us.  Our Short Sale package is very detailed - but one bank told us they only want three things - Hardship letter, financial worksheet, and 1st trust mortgage statement.  Obviously this was a second trust situation, so it was necessary to get both the first and second on the same page.  But a year ago, they would not even talk to us without being late!

On another Short Sale, we are dealing with the VHDA - their representative was great.  She outlined their plan, told me the three items she needs, gave me her direct number and email, and told me that she "looks forward to resolving this" - a positive attitude for a tough situation.

Maybe we are turning a corner - The single most important thing is constant and effective communication.  We shall see what happens, but things seem to have started on the right foot.

Jimmy Mulhern

http://www.HowToAvoidForeclosureInVirginia.com

Short Sale Agents In Virginia - What Matters Most In A Short Sale?

Facing a foreclosure or move involving a home that is upside down is nothing to take lightly.  Yet it has continued to amaze me the amount of listings that have been placed on the market with no real chance of closing.  The sellers have no idea that whom they have trusted their Short Sale with is hurting their chances of success and avoiding foreclosure.

When our team decided to learn about the proper procedures in a Short Sale, we knew the daunting task that laid before us.  Some agents were learning on the fly, and those who were committed continued to learn the proper way to list and sell Short Sales even though they had times of uncertainty.  Our path was a little different - we created a system first to increase our clients opportunity to successfully navigate their Short Sale.  We lost business because we were honest with our clients - I would rather tell you the truth then promise the world which I could not guarantee.  That client listed their home with an agent promising a Short Sale solution and advertised themselves as a successful Short Sale Agent...yet the home still sits on the market one year later with no promises of a positive solution.

So what matters most?  Our latest Short Sale Listing in Piedmont is priced at market value.  The home is in good shape, we are not trying to con a buyer.  Yet the first buyers that went through the home said they were looking at single family homes in this price range.  The agent you choose has to market the home for market value!  In this case, I have comps $35-$40k higher.  Do you think the bank will accept an offer that is not even close to market value?

Some agents look at Short Sales as gravy listings.  They get to place a sign in the yard which gives them an advertising opportunity while putting minimal work into listing the property.  For example - there are 32 Short Sale listings in Gainesville.  Only 15 of them have multiple pictures.  The first thing buyers look for is homes with multiple pictures - over 80% will not visit the home without them!  Yet these agents can not find the time to put in some extra photo's on the property? 

Part of getting the listing approved from the bank is to show them that the home was marketed to the fullest. 

When choosing your Short Sale Agent, make sure that they are just as committed to selling the home as you are.  Otherwise, you may be wasting precious time that you do not have.  Banks will come back two months after getting a contract if they feel that the home can sell for a higher price.  Use an agent who knows what they are doing - use a CDPE agent to help solve your housing problems.

Jimmy Mulhern - CDPE

http://www.HowToAvoidForeclosureInVirginia.com

I wanted to address the common misconception of who qualifies for a short sale.  Many homeowners think that a short sale is about people going into foreclosure or buying homes that they could not handle - that is very far from the truth.  In fact, most people in a short sale situation now are the ones who could handle the storm, but the individuals who defaulted dragged the values down so low that the rest of us are left to clean up the damage.  A short sale is simply a sale in which the mortgage outstanding is higher than the sales price on the home.  A successful short sale must include these three key ingredients:

1. Financial Hardship - This is very broad and can be the result of many things.  Our website has a list of all the acceptable forms of hardship, but the most common are job loss/transfer, divorce, adjustable mortgage, loss in wages, or illness/death of a spouse.  Simply unhappy about your homes value is not acceptable.

2. Monthly Shortage - A bank or investor will not be too quick to accept your request to have your debt forgiven if they see that you are still showing a positive monthly inflow.  If you are asking for a short sale but pulling in $1,000 more each month than your expenses, then why would the bank accept your short sale.  However, if you have been transferred and now you have to find housing in your new job location, then you do not have extra money and thus would qualify.

3. Insolvency - Simply put, are your assets greater than your liabilities.  Now most people are worried about their retirement and 401k - in most cases these are not counted in a short sale since most bankruptcy laws protect them from creditors.  But if you have a significant amount of money saved or invested...even as a "Rainy Day" fund...then this is something that the bank will attach their debts to.  Think about it this way, if you have $100,000 in the bank but are asking the investor to forgive $75,000 you owe them, how likely do you think they would do that?

Qualifying is the first step.  Getting your home sold and in the proper hands is another.  Before we list a short sale, our main priority is to make sure that you understand what is going to take place during the transaction.  We have attorneys that we use to professionally negotiate on our clients short sales - this is part of our service that we offer to give our clients the best opportunity to successfully close their short sale.  Make sure that you have that option at your disposal when you speak to an agent about a short sale.   

If you are facing a short sale, make sure that you speak with an agent who can help you understand the process and has a system in place.  Each short sale is unique, so even agents who have closed short sales can not guarantee that yours will close.  What matters most is the package that is sent to the bank and how your sale is negotiated that gives you the best shot.  Visit our website or give us a call for more information.

Jimmy Mulhern

http://www.HowToAvoidForeclosureInVirginia.com