Have you ever gone to an open house and you hear the realtor mention that the house is on short sale? If you aren’t familiar with real estate terms, “short sale” can sound like a positive thing, but unfortunately, it’s not. A house that is on short sale can, in fact, take months longer to buy than a house that is simply for sale or for lease with an option to buy. For a realtor, this type of house can be harder to sell, depending on their clients, so the way they handle a short sale or present the house on short sale can make or break the deal. Here are a few things your realtor should avoid when dealing with a short sale.
Make sure you are familiar with the short sale process; do not go into it blind.
Do not submit an offer that is too low or buyer financing that is not strong enough.
Do not pay any upfront fees for someone to facilitate a short sale.
Do not be unaware of how to approach business cases to lenders.
Do not expect the process to be much shorter than is realistic.
Make sure you are confident with your realtor and that you can trust him/her to get you through the short sale process securely. With an increase in short sales this year, both home buyers and home sellers should look into the process to avoid any confusion in the future.
As a realtor for EXIT Realty in Santa Clarita, Chris Gabledon not only provides traditional real estate services such as helping people buy or sell a home but, in the down economy, helps troubled homeowners by processing short sales and loan modifications, as well. In troubled times, it is best that you turn to professionals like Mr. Gabledon, who can help go over your options with you and objectively figure out the best course of action for you to take, such as the Home Affordable Modification Program (HAMP).
What is the Home Affordable Modification Program? The U.S. government program “provides eligible homeowners the opportunity to modify their mortgages to make them more affordable” with the goal of lowering the monthly mortgage payment to less than 31 percent of the household’s total income. In other words, homeowners that can no longer afford to make monthly loan payments may qualify for a loan modification. Enacted in February 2009, the program has since been modified earlier this year with expanded flexibility:
for mortgage servicers and originators to assist more unemployed homeowners and to help more people who owe more on their mortgage than their home is worth because their local markets saw large declines in home values.
In order to make the home loan modification permanent, struggling homeowners must take these steps:
Find out if you qualify to participate in the free home loan modification program. Complete this questionnaire on the Making Home Affordablewebsite to determine whether you are eligible or not.
Follow up with your mortgage lender to make sure that they received the Initial Package and if additional paperwork is needed.
Complete the trial period of the loan modification by following the payment requirements and providing any additional documentation in a timely manner.
Once you successfully complete the trial period and all paperwork has been received on time, your home loan modification will become permanent.
During this down economy, millions of homeowners have suddenly found themselves behind on their mortgage payments and vulnerable to scam artists that make promises they cannot keep. While the federal government did create the Home Affordable Modification Program to help these troubled homeowners, scam artists are doing their best to get to uninformed and desperate homeowners first. The federal government has setup a toll-free number, the Homeowner’s HOPE™ Hotline, at 1-888-995-HOPE (4673), providing information about the Making Home Affordable Program. They have created a video, “How You Can Avoid Foreclosure Scams“, providing a list of things to look out for so that you can avoid becoming prey to scam artists.
Tips to avoid scams
Beware of anyone who asks you to pay a fee in exchange for a counseling service or modification of a delinquent loan.
Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their homes. Recognize and avoid common scams.
Beware of people who pressure you to sign papers immediately, or who try to convince you that they can “save” your home if you sign or transfer over the deed to your house.
Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
Never make a mortgage payment to anyone other than your mortgage company without their approval.
Remember, even though you maybe months behind on your mortgage and are at risk for foreclosure, you are not without answers. However, applying for a home loan modification maybe a daunting and overwhelming task for you to take on by yourself. Chris Gabledon of EXIT Realty can help ease the application process for you, making sure you only have to go through it once.
No doubt, since the economy began tumbling in the last quarter of 2007, much of the news we heard about the realty market shifted from the rise in property values and property-flipping by liquid investors to the alarming number of mortgages that have gone “under water”. Highlighted in Michael Moore’s 2009 documentary, “Capitalism: A Love Story“, were the foreclosures and evictions of families from their long-time homes. Some families, however, managed to escape foreclosure by undergoing a short sale.
What is a short sale, anyway? According to Wikipedia:
A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.
If the definition had some “lawyerese”, here are the highlights:
Mortgage to date + proceeds from sale < balance owed on property’s loan
Selling the property at a loss is better than nothing
Avoids foreclosure, large fees for the bank, and poorer credit scores for the borrowers
Borrowers may still have an obligation to pay the loan
If you find that conducting a short sale is in your best interests, this is how it’s done. Using the services of a realtor may ease the process:
Verify the value of your property.
Add up all the costs of selling the property.
Determine the amount owed against the property.
Subtract the total amount owing against the property from the estimated proceeds from the sale.
Contact the lender or lenders.
Ask the lender what its procedures are for a short sale.
According to the Department of Commerce, December saw a 4% drop in new home starts, while 2009 was the worst year in home starts in decades. However, the outlook for 2010 is much more positive, as the department has seen that builders in 2010 have pulled 11% more permits for home starts than last month. Builders are forecasting that 2010 will offer a more favorable climate for housing construction and sales as a result of a recovering economy and declining unemployment.
Chris Gabledon, Realtor for EXIT Realty
Chris Gabledon, realtor for EXIT Realty SCV, looks forward to serving prospective home buyers in the coming year. A realtor in the Santa Clarita Valley since 1998, he provides services such as helping buyers and sellers with real estate transactions, and processing short sales, loan modifications, relocations, and guidance in navigating the real estate market. If you are looking for a company that can help you buy or sell property in a timely manner, or are looking for alternatives to foreclosure, look no further than Chris Gabledon!
Chris Gabledon, Realtor for EXIT Realty SCV
23734 Valencia Blvd., Suite 307
Valencia, CA 91355
Ph: 661.254.3948 Ext. 213
chrisgabledon [AT] aol [DOT] com
Lic. #01227710
Have you ever gone to an open house and you hear the realtor mention that the house is on short sale? If you aren’t familiar with real estate terms, “short sale” can sound like a positive thing, but unfortunately, it’s not. A house that is on short sale can, in fact, take months longer to buy than a house that is simply for sale or for lease with an option to buy. For a realtor, this type of house can be harder to sell, depending on their clients, so the way they handle a short sale or present the house on short sale can make or break the deal. Here are a few things your realtor should avoid when dealing with a short sale.
Make sure you are familiar with the short sale process; do not go into it blind.
