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Should I Consider Buying a Short Sale House?

bchandler — Tue, 08 Nov 2011 13:15:08 +0000

A short sale house is a house facing foreclosure for which the lending bank has agreed to accept less than is owed on the current mortgage from an interested buyer. If you’re thinking of making an offer on a house in short sale status, don’t be fooled by the term “short sale.” While an interested buyer may think that the home sale will take place within a short timeframe because both the owner and lender want to sell the home before it enters foreclosure, the term “short sale” actually refers to the sale price, which will be short of the amount of money owed on the current loan. Buying short sale houses can actually take longer than a traditional house sale, and the process can often be more stressful for both the buyer and seller.

The biggest advantage of buying short sale houses is that you will probably be paying less than market value for the home. The bank has already agreed to accept less than the seller owes on the home in order to avoid the hassles and costs of a foreclosure.

Buying short sale houses can be a good investment. A buyer with the means to purchase a short sale may be able to resell the house on the traditional real estate market for a profit, often in a relatively short time after making minimal to no improvements to the property.

Buying short sale houses often comes with more cons than pros. Although the current owners may still be occupying the house, foreclosure is imminent. Even if the house is sold on short sale they will receive no money from the sale, since the bank will be taking a loss. Because the owners are not motivated by making a profit on the sale, they often stop taking care of the house and the house is not prepared for sale the way one on the traditional market would be.

The major disadvantage to buying short sale houses is that the bank essentially controls the transaction and will be calling all the shots. As a buyer, you will have little leverage and will likely be unable to negotiate much with either the bank or the owners on the price or other terms of the sale. The home will be sold “as is” and you may be faced with cleaning up the property before moving in, including removing anything and everything left behind by people who just lost their home.

Is Buying a Short Sale House Right for You?

Short sale houses can, however, provide a golden opportunity to the right buyer under the right circumstances. Will your next home be a short sale house?

10 Questions to Ask Your Short Sale Agent

admin — Thu, 16 Jun 2011 14:04:53 +0000

Short sales have their consequences, but allows more control over the process, allows me to stay in the home longer, and may be less emotionally and financially devastating than the alternatives. Many real agent agents accept short sales, but are all “short sale specialists” the same? The answer is a resounding “no!” Here is why, along with some questions to ask a short sale agent.

Are you a licensed real estate agent and do you have experience in short sales? Short sales are not rocket science, but require an advanced level of skill that an inexperienced agent may not have. Everyone has to learn their craft somewhere, but you do not want an amateur or newbie handling selling your house. Your licensed agent should have at least three years experience in the business and several short sales under her belt.

Do you specialize in short sales? Short sales is a specialized field, so ideally your agent will concentrate his efforts in this area. If he does, he probably has the short sale packages on hand for several lenders, so he can get things started quickly.

Are you a full time or part time agent? Short sales require a lot of tedious follow up. Can a part time agent handle it and really sell this house?

What kind of training have you acquired? Training from National Association of Realtors® (NAR) or the Certified Distressed Property Institute is great background, although this does not substitute for experience.

What is your success rate in processing short sales? An experienced short sale agent will have this information readily available. The more short sales he has done, the better.

Do you process short sales yourself or do you have other resources in your company to handle that? You want to know if the agent himself, a lawyer or other agent on staff, or a third party vendor handles the negotiations. Some vendors hire unlicensed “loss mitigation specialists” for $11 an hour to handle a short sale, which may not instill confidence in you. You are hiring someone to persuade the bank to accept thousands less than your loan to sell this house, so you want your case in the hands of someone who is competent.

What is your experience with my lender in a short sale? A experienced agent has dealt with several banks and should know how one lender works vs. another.

Do you see any special issue in my case? An inexperienced agent might over or underestimate the situation. As you interview agents, make sure to note variations in perception.

When will my short sale close? The closing date varies for each case, but an experienced short sale specialist should be able to estimate if whether it will take six weeks or six months with your bank.

All short sale agents are not alike. For the best results, make sure to do your homework before you sign with a short sale agent to sell your house. Interview several agents to make certain that the person is equipped to efficiently handle your situation. While you might be willing to go with someone you like in a normal real estate situation, with a short sale, you need to go for the experience and the track record.

Would you give a new short sale agent a chance to practice on selling your house fast?

Are you ready to sell a home fast? Call us today at 1-888-835-4758 or have your client contact us to get an offer in hours from Express Homebuyers.

How to do a Short Sale of Your house

admin — Mon, 30 May 2011 13:20:05 +0000

When you can’t pay your mortgage and you owe more than your home is worth, a short sale may be the best way to sell your home. You may not want to lose your home, and the bank may not want to lose the additional money through foreclosure. If you have the time, the short sale process puts you in a position to recover your life.

How do you do a short sale

The short sale process has a number of steps you must follow precisely. Since the process is time consuming, you must be prepared to wait for each step to complete.

Establish hardship, which makes the case to the lender that you can’t pay
List and market the home, with the goal of obtaining a qualified offer
Prepare a package of documents and submit them to the bank
Wait for a short sale negotiator to be appointed to review the case
Submit to a short sale appraisal/BPO
Receive terms and conditions from the bank
Negotiate with all parties on terms and conditions.
Complete the closing process

Other help for housing woes

The many steps of short sale add a minimum of three to six months to the process of selling your house. Along the way, the bank can short-circuit the process at any point if it thinks your hardship is not severe enough or has hopes of making you pay to the original terms. Often, a real estate agent can help you prepare your case and negotiate for you throughout the process.

Some homeowners with loans secured through Fannie Mae or Freddie Mae may qualify for short sale help through the Making Home Affordable program. If the homeowner meets all the criteria and the lender agrees, the homeowner might walk away with $1,500 to help with relocation expenses and debt forgiveness of the balance.

What is your experience with short sales?

Are you ready to sell your home fast? Call us today at to get an offer in hours from Express Homebuyers. Are you ready to sell a home fast? Call us today at 1-888-835-4758 or have your client contact us to get an offer in hours from Express Homebuyers.

The Impact of Foreclosure and Short Sales on Your Credit Score

admin — Thu, 26 May 2011 14:26:08 +0000

If you are you are having financial problems that lead to foreclosure or short sale, your credit report will tell the story long after you have moved on. What is the impact? Is there a difference in the impact of foreclosure vs. a short sale when you sell your home?

Recently, FICO, the company that produces the credit score used by many lenders to evaluate creditworthiness, offered some surprising answers to these questions – and added some new insights as well.

Bad news for high scorers

First, FICO sees little difference between a foreclosure and short sale. In either case, the lender received less than the balance of the loan, so the defaulting homeowner might lose from 85 to 160 points from his credit score. Why the range? The steepness of the fall depends on what the score was to start out. High scores lost more points than ones that started out low. A high 780 score would lose the 160 points, while a mid-range score of 720 would lose 130-150 points, and the low score of 680 would lose “only” 85-105 points.

The same pattern of dinging high credit scores more heavily than low ones prevails with late payments too. When 30 days late, a high score might lose 90-110 points, plus an extra 20 if they were 90 days late. Low scorers are zapped 60-80 points whether they were late by 30 days or 90.

Here’s the kicker. A borrower with a high score will not recover from a late payment for three years in comparison to only nine months for a someone with a lower credit score.

This information seems at odds with the advice of most housing counselors to pursue a short sale rather than letting the house go into foreclosure. FICO says that someone who underwent a short sale would be better off only if the lender did not report the shortfall – a difference of only 35 points.

So, why pursue a short sale instead of a foreclosure?

When you go to sell a home, a short sale offers more control over the process. They may feel depressed that they have to give up the house, but they have more of a sense of closure on a bad situation. They can plan their future more easily than with a foreclosure.

When they go to buy another home, they should be able to do so in 24 months at a good interest rate. This assumes that they have kept their payments current after the short sale.

Though most analysts claim that either default impacts the report the same, there is a difference by state as to the impact. Borrowers from some states have reported hits up to 300 points from foreclosures and 100 points from short sales.

With a short sale, the homeowner remains with the property until closing, just as in a normal sale. As a result, the home is not left vacant for long periods of time, which keeps the property values intact and reduces neighborhood vacancy rates. The lender does have to maintain the property or see the value further lessened by vandalism and theft.

Banks benefit too

The lender accepts less than loan value with a short sale, but is spared the extra legal costs of pursuing a foreclosure in court. According the Joint Economic Committee of Congress, the average foreclosure costs $77,935 while preventing a foreclosure runs $3,300; the figures for the cost of a short sale are not given, but the major costs include processing and loss on the loan, without the court costs and property maintenance.

Though both short sale and foreclosures have roughly the same impact on credit scores, a short sale has many advantages both to the seller and the lender when selling a home. Since short sales are a remedy that costs lenders less than foreclosure, some lenders may look more kindly on short sales. As short sale is considered by some to be the best way to help our country get past the housing crisis; a time may come when this philosophy might be reflected in the scores themselves.

Have you experienced a short sale or foreclosure? If so, what advice can you offer based upon your experience?
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Are you ready to sell your home fast? Call us today at 1-888-835-4758 or contact us to sell a home in hours from Express Homebuyers.

New Home Buyer Credit Will Bring You Short Sale Buyers – But Will It Help?

Abby Johnson — Fri, 27 Nov 2009 08:25:05 +0000

If you are trying to sell your home at short sale, the extended, expanded home buyer tax credit could be your best friend. Short sales are ideally a great way to help you prevent foreclosure. They offer you the chance to have a little more say in the selling of your home, offer you more chances to plan your future, and offer you better closure to the situation. The banks have been quick to say, “It’s not about you! It’s about us. We’ll have to think it over. We’re short staffed. We need those documents again.” The result is that short sales can take a long time – 60 days, 90 days, 6 months, keep counting!

The former first-time home buyer credit is now simply the “home buyer credit.” It is up to $8,000 for first-time buyers and up to $6,500 for certain repeat buyers. In either case, the deadline is April 30, 2010 for signing a contact and June 30, 2010 to close. The extra seven months give new life to short sales. As long as a buyer has a contract in place by April 30, even if the closing does not occur till 11:59 pm, on June 30, the short sale buyer can claim the credit.

There is no guarantee as to how long a short sale will take to close, but if your buyer starts the process, you should have no problem. The probability of success will decrease the closer time gets to the April 30^th deadline.

As it happens, there are may soon be incentives that will make short sales faster. First, the government is now trying to promote short sales through the Making Home Affordable program. That news is several months old, but the Treasury has been promising to release new incentives for lenders and sellers. That should happen soon.

Second, lenders, starting with Bank of America, are beginning to implement a revamped short sale portal designed to centralize and streamline short sale processing. Many of the 17 lenders that use the Equator (formerly REOTrans.com) program are expected to get on board.

If banks have any sense, they will embrace short sales and try to resolve as many as possible in the wake of continuing foreclosures. That is not a done deal, however, as lenders and servicers are overwhelmed. Trying to selling your home at short sale could still be a prolonged process that results in refusals by the bank to accept your deal. As the weeks and months drag on, you can find yourself under mounting mortgage pressure.

The Home Owner Credit offers you a chance to get a buyer; the extended time increases the likelihood the paperwork will go through, but there is still no certainty.

Can’t Wait It Out?

Express Homebuyers offers an alternative. We will buy your home and guarantee completion of the process within a couple weeks. We tell you up front what we will pay; if you agree, you are on the way to a quick resolution. We even offer you a $2,500 upfront advance you can plan your fresh start. Call us at 1-877-804-5252 or check out our Express Homebuyers website for more details.