Real Estate Short Sales
With 2 million adjustable rate mortgages forecast to reset at higher rates this month, are you ready to help homeowners in our market area who will face foreclosure over the next few years?
In the next five years, 1.4 million Americans will see their mortgage payments more than double. And to date, half a million homeowners are 90-days behind on their payments."~ Money Magazine
•· One out of every 3 foreclosures are in California and Florida.
•· In 2007-2008 2 Trillion dollars in ARMs will reset higher 10-20% of bank loans are short sales
•· Home sales are down .02% and the number of homes for sale is up 5% (9.6 month supply) - The biggest inventory in 16 years. ~ The National Association of Realtors
What is a Short Sale - When a lender accepts less than what is currently owed on a mortgage and the net proceeds are not enough to cover the mortgage, closing costs, transfer taxes, and broker's commissions.
Caution! This is an administrative challenge! Put a team together to handle the administrative process...Don't Do It Alone! Caution! You are NOT an Attorney, You are NOT a CPA, You are NOT a Tax Advisor, You are NOT a Processor, You are Realtor....The short sale process works, but is complicated, time-consuming and uncertain. Do not practice law. If you are not careful, or do not have experience with short sales you might just want to collect a referral fee and refer any short sale opportunity you may have to a Realtor that has the experience with short sales. You do not want to end up in a law suit. A short sale isn't available to any frustrated seller. If the home owner has enough liquid assets to cover the mortgage a short sale will not work. A homeowner must submit W-2 forms to the lenders, bank statements, two years of tax returns and other documents, including a hardship letter that explains why they can't pay the full amount of their loans.
In a traditional listing Realtors help their clients list, market, and sell their home to a buyer. In the case of a short sale transaction, the agent or broker not only lists, markets and sells the home, but the Realtor also negotiates on behalf of their clients and finds out whether the lenders will accept the short sale. The broker/agent is paid a commission by the lender, not the seller. Many banks won't agree to a short sale until the seller presents a signed contract from a potential buyer. Every short sale is handled differently by the lenders, and the lenders criteria for a short sale changes from week to week. Lenders do not want the home; they are not in the business to own homes. The average foreclosure costs the lenders $58,000.
Why would a home owner want to consider a short sale as opposed to a foreclosure? A foreclosure will affect a person's credit score by 150-250 points as opposed to a short sale only affecting ones credit score from 40-80 points. People can recover much more quickly from a short sale rather than a foreclosure.
As a Realtor You Can:
· Help owners try to avoid foreclosure and eviction.
•· Help to minimize credit damages.
•· Counsel the owner through the process.
•· Act as the liaison between the owner and the lender and between the other Broker/Agent to ensure all parties work together toward a successful Solution
•· Provide relief during a difficult time. By Kristin Stampini
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