Short sales in the Hemet - San Jacinto Valley, CA are a complex sale of residential real estate where the net proceeds from the sale of the home are insufficient to cover the sellers mortgage obligations as well as the closing costs that may include, but not be limited to, property taxes, transfer taxes and real estate commissions. Many homeowners in the Hemet - San Jacinto Valley, CA
What really makes a real estate transaction a short sale is all of the above AND the seller is unable or unwilling to cover the difference. Short Sales go by different names in different parts of the country, including Selling Short, Short Payoff, Pre-Foreclosure and Upside Down. While the information shared in this article may be mostly universal to real estate everywhere, the article is focused on the local nuances of the Hemet - San Jacinto Real Estate market in Southern California.
THE HEMET - SAN JACINTO, CA HOMEOWNER
Short sales are not for every homeowner. Not all will qualify for a number of various reasons and not all have the mental mindset to sell their home short, in the Hemet - San Jacinto Valley.
Without being judgmental, it is a known fact that many homeowners feel betrayed and hurt when they realize they are losing their family home to the foreclosure process. Many will lash out at anyone connected with the lender, as that often makes the most convenient and accessible target for their anger and frustration with a very imperfect system. In some cases, homeowners have already lashed out to the extreme and burnt bridges with the lender, through abusive conversation and even threats. This homeowner will typically not be a good candidate for a short sale, as it will require one heck of a sales job to the lender that this is a family that needs compassion.
The ideal candidate for a short sale will be in some form of default - it does not mean that they have to have a Notice of Default (NOD) served on them, only that they are behind in their payments. Now times have changed with Short Sales and today, occasionally a homeowner can sell short and NOT be delinquent on their mortgage if their hardship is genuine enough...but don't go to the bank on that one. My thought has always been, if I put my lender hat on, why would I want to give you a discount when you are current. I would feel as if I have too much to do, and am losing too much money with those who are delinquent and that is where I would need to focus my attention...but I am told they do happen.
Of course the ideal candidate for a short sale is facing some sort of financial hardship and will be able to document a compelling hardship letter. I recently published a separate post on this topic that should be read: AND WHAT IS HARDSHIP?
Finally the Hemet - San Jacinto homeowner should consider all of their options before selecting a short sale as their answer to their financial problems. I'll list alternatives here - but to explain each in detail is a whole other series of articles. Alternative to Short Sales include:
Repayment Plan
Loan Modification
Partial Claim (FHA Only)
Forbearance
Reinstatement
Deed in Liu
Bankruptcy
These options should be considered carefully, not only with a REALTOR® but your attorney and tax professional as well. A REALTOR® is not licensed to provide either legal or financial advice and what the ramifications may be...which is why we always recommend that you consult with outside professionals of your own choice.
THE HEMET - SAN JACINTO REAL ESTATE AGENT
The local Hemet - San Jacinto Real Estate market has many locally qualified REALTORS that are more than competent to handle a local short sale listing and negotiation. As mentioned in the above paragraph, your local REALTOR® will be an excellent resource for all things related to real estate but should not be asked for their opinion on legal or tax matters...instead consult with professionals of your own choosing who are licensed to discuss and offer advice in those fields.
I cannot emphasize this enough.
The first responsibility of the homeowners listing agent is to educate the homeowner on the process and make certain that they have explored the various alternatives to a short sale, as mentioned above.
The local Hemet - San Jacinto Real estate agent will be the best professional to help determine a fair marketing price for your home. Prior to your first meeting they should perform a basic Comparative Market Analysis (CMA) to show the range for which your home should sell for in the current market. Once an offer is received and a package is assembled your agent will also be doing a more in-depth report known as a Broker Price Opinion (BPO) offering a true picture of the value of your home, that now includes the condition and special features that were unknown at the time of the initial CMA.
Marketing the home for sale is of course a key element of the local listing agents responsibilities. Much of the best marketing is local networking with other agents in the local market.
Once offers start coming in, the listing agent will be responsible for gathering the offers and presenting them to you, the seller with recommendations -exposing the pros and cons of each offer. Only you, the homeowner can accept or deny any one offer...but only one offer at a time can be accepted. Negotiating the offer with the buyers' agent is a very important task that can set the stage for success or failure.
Only once an offer has been accepted can the listing agent put together an entire short sale package that includes all of the documents gathered up to this point. The package is assembled and presented in such a way as to stand out form the crowd of other packages on the negotiators desk. In addition to the documents that you, the homeowner, have gathered and submitted to your REALTOR®, he has also gathered Title Reports, Tax Statements, HOA statements if applicable and prepared the Short Sale Package...which may exceed 100 pages when all is said and done.
THE BUYERS AGENT
When considering offers, strong consideration will be given to the agent representing the buyer. Does he or she have an existing relationship with your listing agent? Local Hemet - San Jacinto agents have probably done business together in the past and certainly hope to do business together again in the future. The likelihood of a San Diego or Orange County agent ever doing business with your local listing agent again are minimal and therefore the level of cooperation may not be as high as when two local agents work together.
The Buyers agent is responsible for putting together a fair offer on behalf of their clients and negotiating the best set of circumstances possible to close the transaction. The buyers agent knows though that the ultimate decision lies with the lender and therefore needs to make certain that the bank has enough to accept...or at least a place to stat negotiating from.
Perhaps the most important job the buyers agent has in not getting an offer presented and accepted by the seller but to keep the buyer on the line during what may be a lengthy process.
Communication is the key for all parties - for the buyers' agent they must communicate at least weekly with the listing agent as well as their buyer - keeping everyone informed every step of the way. Communication comes in various modes and includes emails and phone conversations.
The buyers' agent must make certain that their buyer is well educated to the short sale process and not going to get cold feet and go elsewhere 2 or 3 weeks after the offer is accepted...or even 2 or 3 months. Buying a short sale is a long arduous road that one needs to be prepared to travel on if they want to achieve success - so the right local agent can be paramount to success.
THE SELLERS NEGOTIATOR
Remember that sellers are different and each has their own way of conducting business. With many, a negotiator is assigned when the file comes in and the same person is responsible for closing the file. With other lenders, the entire process is an assembly line - one person takes in the file and holds it until it is complete then passes it on to another negotiator who will look at the economic sense of the proposed sale and then another may actually do the negotiating.
What makes a negotiator easy or difficult to work with depends on many factors, the least of which is never the mindset of the individual negotiator assigned to your offer. The negotiator has many variables to consider, including:
The BPO
Repair Costs
Holding Costs
Seller Financial Position
If a Loan Servicing Company, they need to consider:
The Flexibility of the Investor Backing the Loan
PMI (Private Mortgage Insurance) company input
A lender is a second position
It is imperative to be prepared for delays - these never go as quick as all parties would like them to. When it is all said and done there are only three alternatives:
The Short Sale is Accepted; or
The Short Sale is Rejected; or
The Short Sale is Countered...which is usually the first outcome.
THINGS TO REMEMBER
It is important that anyone contemplating a short sale, in the Hemet - San Jacinto Valley...or anywhere else for that matter, remember that no two lenders do things the same and given identical circumstances it is very possible to have tow completely different outcomes.
When negotiating a short sale, the negotiations are with the Loss Mitigation Dept (again different lenders have different names) and not the Foreclosure Dept. The Foreclosure Dept has one goal - get the property back in the quickest time. While the Loss Mitigation dept has the goal of stopping foreclosures and saving what they can from the mortgages and a quick guaranteed sale is more often than not more advantageous than a long drawn out foreclosure that may sit empty on the market for months longer. When a short sale is accepted it is imperative that your agent receive confirmation from the loss Mitigation Department that the Foreclosure Dept has been notified and that the Foreclosure Dept has stopped the foreclosure process and postponed the auction process.
PARTING WORDS OF CAUTION
As a homeowner it is easy to feel as if your back is against the wall with few if any options. Know, that based on the changes to your credit report that many predators are aware of your situation and may come looking to take advantage. Please be careful of the slick advertising with promises that sound too good to be true. When talking with REALTORS, talk with the ones who have a vested interest in your community and won't disappear into the night when things go wrong. Don't consider hiring an agent who will take your file and assign it to a 3rd party negotiator. Hire an agent that can do the whole job - please proceed with caution if you ever consider using a 3rd party negotiator or anyone from outside the Hemet - San Jacinto Valley. What can they do for you that can't be done locally?
Short Sales are not for everyone. At best, they are a painful process. At the Excellence in Real Estate Team at Allison James Estates and Homes we know that our job is not to be a prêt of the problem but to be a part of the solution. And yes, we do believe that we can make a difference. So for more information on your Hemet - San Jacinto Short Sale, please call the author, John Occhi on his cell phone, at 951-443-6259.
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