Want to sell your home but you owe more than what it's worth?
Are you trying to sell your home by taking what you owe + Realtor Fees?
I speak to homeowners daily that just want to get out but don't know of a solution. The hard reality is that most homeowners today have zero equity and have a loss on their property if they bought recently. It takes 8 to 10% appreciation to "break even" on the sale of a home in our area.
PUNCHING UP THE NUMBERS AND NOT SEEING THE MATH WORK NO MATTER HOW YOU TRY? The answer just might be a SHORT SALE!
What is a Short Sale?
- Homeowner sells for less than what is owed on the loan.
- Lender accepts the amount as payment.
- Seller escapes foreclosure, but receives no funds.
- Lender does not report foreclosure to credit bureau.
In a short sale, a financially insolvent homeowner who is facing foreclosure sells his home for less than the value of his loan. The lender accepts the sale as payment in full for the loan. A short sale gives a homeowner a way out of foreclosure and is usually financially advantageous for lenders. We call this a WIN-WIN.
The seller won't get any money out of the deal, but they will avoid the emotional turmoil of foreclosure. This is fair. If the lender is losing money, the seller shouldn't be making money.
The seller won't have "foreclosure" on his credit report but it will show all the missed mortgage payments.
- Foreclosure is an automatic 100-120 point hit to a credit rating and stays on the report for 7-10 years.
- Lender could report the short sale in a number of different ways. There could be a 40-50 point hit for the short sale. (NOT AS BAD AS FORECLOSURE!)
So what is Foreclosure?
A legal process in which a lender takes the title or forces the sale of a property as a result of the borrower's failure to comply with the terms and conditions of the mortgage. The timeline for foreclosure will vary from state to state and from lender to lender. However, the process can begin with the homeowner's first missed payment. If the homeowner doesn't send a payment or make payment arrangements 16-30 days after the first missed payment, the lender will begin adding late charges. In an attempt to collect, the lender may call the homeowner and send collection letters. Approximately 45-60 days after the missed payment, if no other payments or payment arrangements were made, the lender will notify the homeowner the loan is in default. Usually the homeowner will have 30 days to send the missed loan payments plus late fees to avoid foreclosure.
After about 90-105 days, the lender will send the homeowner a Notice of Intent to Foreclose. This notice initiates the legal proceedings of foreclosure and is usually publicized at the courthouse and in the newspaper.
ILLINOIS FORECLOSURE TIMELINE
- Missed payment occurs (30 days past due)
- Lender refers to Collections Dept. (30 to 90 days past due)
- Lender refers to Loss Mitigation Dept. (90-120 days past due)
- Lender files a "Lis Pendens" which means "Legal Action against Property".
- Pre-foreclosure/Redemption Period (6-7 months)
- Sheriff's Sale
- Eviction of Previous Owner (30 days after auction)
- On average in Illinois a Foreclosure takes 11 months to a year.
Depending on the state, the home will be offered usually at auction after 150-415 days. Again depending on the state, after the home has been offered at auction, it may go into a redemption period. In the redemption period, the homeowner can buy back his home if he can pay the lender the entire loan plus additional fees that have accrued. Not all states have a redemption period.
The home becomes Real Estate Owned (REO) by the lender if it doesn't sell at auction.
3 Myths and Truths about Foreclosure
- Myth 1 Lenders want to foreclose on delinquent homeowners. Truth is lenders are in the business of loaning, not owning!
- Myth 2 Financially distressed sellers have worked through their options with their lenders. Truth is "financially distressed" means "stressed". These sellers may not realize there are positive options, and they could be avoiding creditors that could help.
- Myth 3 Short Sales are hard. Truth is they just take more time than a usual real estate sale. Patience and knowledge are the key. Not all Realtors are up on short sales - so be sure you've got one that knows what they are doing.
Do you Qualify?
Facing foreclosure does not automatically make someone a good candidate for a short sale. If a homeowner has money or assets elsewhere, the lender will not be interested in negotiating a short sale. Remember a short sale will usually cost the lender less than a foreclosure, but the lender is still losing lots of money.
The homeowner should be able to demonstrate a hardship that caused him to miss his payments. This information will be added to the short sale proposal. The homeowner will write a note about what happened and will compile the supporting documentation. If the homeowner's loan rate adjusted, obtain copies of the loan statements. If the homeowner encountered medical issues, gather copies of those bills. If a spouse died, include a copy of the death certificate.
Basically the homeowner must be financially insolvent. The homeowner must have no means of meeting the loan obligation and must have no other options. A short sale is not for people who simply regret bad financial decisions.
Lets talk and see if I can help you! (847)230-7324 or EMAIL LynSims@remax.net EVERYTHING IS TOTALLY CONFIDENTIAL!
Need a Short Sale Specialist?
Want to purchase a REO property? Need a list of Foreclosures in your area?
Lyn Sims at RE/MAX Suburban (847)230-7324
Website: www.LynSims.net
Lyn is a 20+ year veteran who works the Northwest Suburban Chicago areas of Schaumburg, Hoffman Estates, Elk Grove Village, Palatine, Medinah, Itasca, Carol Stream, Bartlett, Bloomingdale, Hanover Park, Streamwood, Elgin, South Elgin, St. Charles.
"Blog Dog"©2008 Lyn Sims
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