Short sales have become common occurrences in many parts of California, yet for a homeowner facing mortgage difficulties or even foreclosure, there is a confusing assortment of information and dis-information.
Homeowners facing mortgage delinquency have a different sense of urgency once they become aware of the financial difficulty. Some have alarms go off in their heads when they miss the first mortgage payment, others ride along right up to the foreclosure sale date. The following tips should assist potential short sale sellers in their decision-making process:
Definition of a short sale seller: a homeowner who owes more money on the property than the property will net when sold.
Take a proactive approach: If you are "upside down" in your home's value, prompt and decisive action is key to solving your problem.
Knowledge: Understand what the tax, credit rating and financial consequences are if you sell or do nothing. Also understand what it takes if you DO decide to sell. That is why you have to consult a
Competent Realtor: Determine if the agent has knowledge or experience in handling short sales. Some agents do not handle short sales at all because of their difficulty. Friends and family who are licensed may or may not be the best choice. Examine each agent on his or her professional merits regarding short sales, not family ties. At the very least, they must have formal short sale training. Ask the agent what OTHER options might be open to you. If the only pitch the Realtor has is to list, you may be dealing with a "hammer" (see paragraph on attorneys below)
Do not play 'possum: Make at least one phone call to the lender and tell them you intend to sell. Foreclosure proceedings are more likely to happen to owners who do not communicate
Do all you can to maximize getting a good price for your home. Even if you are "losing" your home, getting it sold at a good price helps getting the approval process. That means keeping the home clean and presentable, even if you have no money to repair things. Cleanliness is free.
The short sale package: Probably the biggest chore in doing a short sale is furnishing the documents required by the lender for their approval. It's personal and sometimes painful. Do it anyway, and do it promptly.
Scam artists: Once a Notice of Default gets filed, a homeowner receives dozens of mail pieces, some pretty official looking, which can fool people into thinking they are meant to help. Be smart and pick out the ones you think really have information. That means eliminating anybody who wants you to quitclaim your deed to them "so they can make your payments for you". Red flags should go up if anybody asks for a large upfront payment to "stop the foreclosure". Remember, if it sounds too good to be true, it is.
Attorneys: Some law groups are good at getting results when it comes to loan modifications. Best find those by referral of homeowners who have been clients.
Before you pay any money or sign a contract, be sure that if you do not get an acceptable loan modification, you do not pay the full fee (a modest fee is reasonable since they have to put together a file). Any law group that asks $ 3500-4000 upfront without a guarantee should be seriously scrutinized. If you get an offer from a law group to file bankruptcy to stop the foreclosure, make sure that is your ONLY option before you sign up. Attorneys are people with a hammer looking for a nail. They only see one solution to your problem.
For more information on short sales and how to avoid real estate scams, contact Sylvia Jonathan at (714) 856-7003