Category Archives: SELLER RESOURCES

California Home Prices Finally Rise, According to California Association of Realtors

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California home prices in March recorded their first year-over-year price increase for 16 months, the California Association of Realtors reported Monday.

March’s median price for a resale home reached $286,550 , which signified a 1.6 percent increase from March 2011′s pricing.

Even the Inland Empire, where analysts often say the economy is straggling behind its coastal neighbors, saw prices strengthen.

Inland Empire median prices climbed 3.9 percent over March of last year levels to $179,500, with most of the increase being generated by higher prices in Riverside County.

The question, of course, is whether the March data is the beginning of a trend in rebounding prices, or just a one-month break from falling

prices.

“I’d like to see what happens in the next three or four months,” said Ontario-based agent Victor Quiroz, noting that he sees markets in the western end of San Bernardino County “crawling back.”

Quiroz works for The Mulhearn Group’s office of Prudential California Realty and said he is cautiously optimistic the past month’s jump in California housing prices may signal a stronger market through the summer.

But one month’s worth of numbers is not enough to say any development is a trend, and the threat of a “shadow inventory” of soon-to-be foreclosed homes continues to haunt housing markets.

RealtyTrac, an Irvine-based foreclosure listing firm has reported U.S. foreclosures during the first three months of this year hit their lowest point since the end of 2007.

The Irvine-based firm cautioned, however, that their analysts expect another wave offoreclosures as banks finish reforms of faulty foreclosure proceedings and attempt to relieve themselves of non-paying mortgages.

The prospect of additional foreclosures or short sales is a concern to people like Darrell Gomez, a real estate agent at Rancho Cucamonga-based G5 Realty Group, who expects that many people who are struggling to stay in their homes will not be successful.

“(Loan) modifications aren’t really helping anybody. It’s a temporary Band-Aid,” Gomez said.

But even as the many area homeowners continue to struggle, houses are selling in the region.

Inland Empire sales volumes for March rose 1.7 percent on a year-over-year basis, even as statewide sales volumes fell 2.3 percent.

The Realtors’ numbers, which do not include newly-built homes, also show the San Bernardino and Riverside counties have a little less than four months’ worth of resale homes on the market.

In March 2011, Realtors reported about five months’ worth of inventory.

Less inventory generally means higher prices, and Gomez said buyers snapping up inland homes tend to be investors stockpiling properties at the low end of the market as well as traditional buyers seeking bargains.

“A lot of these people are trying to piggyback on these lowrates,” he said.

As of Thursday, the national average rate for a 30-year fixed mortgage was only 3.88 percent, according to Freddie Mac.

Darryl Spellacy, owner of San Bernardino-based Spellacy and Associates Realtors, said the idea of a “shadow inventory” is still something to be concerned about, but also doubts banks will unleash a torrent of foreclosures.

“I think the banks have realized it’s crazy to do a foreclosure. It’s better to do a short sale,” Spellacy said.

A short sale takes place when a home is sold for less than the amount of money a homeowner owes on his or her mortgage.

Banks would be wiserto pursue short sales since the process allows someone to live in the house, rather than leave an abandoned house to the mercy of thieves and transients, Spellacy said.

On the whole, Spellacy said he thinks the San Bernardino market has reached bottom and is ready to rebound, given that it’s possible to spend less on a mortgage payment than rent.

One of Spellacy’s listings, a three-bedroom home on Dogwood Street in northeastern San Bernardino, is on the market for $115,000 and a buyer could end up with monthly payments around $800.

An average three-bedroom apartment in the San Bernardino area would rent for nearly $1,200 per month, according to the USC Casden Forecast.

 

 

 

Source:  Andrew Edwards San Bernardino County Sun, Calif.

An Insight Into The Real Estate Los Angeles: Sellers’ Gain

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It would quite astonishing to see a dichotomy throughout almost everything in Are generally and the same applies to its real estate. Real estate property Los Angeles tops the national foreclosures list as well as unemployment is just about 10%. But if are wondering by investing in these conditions you will be able to easily grab a nice inexpensive cope, better have next thoughts! There are several good reasons in Los Angeles that will support an incredible demand in the real estate directory the state. Let’s look at a couple of them.

Los Angeles has, debatably the best weather in the United States, turning it into an extremely attractive place for people and hence real estate agents. It is it is 300 days of 70degree the sun’s rays that make people really like this place. Also,

Los Angeles has solid regional industries proven with entertainment and defense leading the field. Despite the high being out of work levels, the main industries aren’t in the peril like other areas of the country! Entertainment in Los Angeles has in truth picked up its rate in the real estate list.

Conversing of the culture regarding Los Angeles, it is generally based on the image. However there lies a lot of substance behind the idea, at the end of the day that purely depends on how you will perceive it on their own. The culture involving hipness asks for impressive things and so it supports a heightened demand for homes throughout Los Angeles. This way, the real estate Los Angeles is greatly influenced by its applicable culture. Yet another belief that shoots up the Los Angeles real estate listing would be the availability of lucrative work opportunities. The city is a personal megapolis offering several lucrative business opportunities, jobs, purchases than any other place within just 2,000 a long way! The household incomes listed below are on an average $125,000 and it is these earnings levels and lifestyle that demand good price levels for in tangible estate.

The final thing that many real estate agents lender on to enhance their real estate property opportunities in Los Angeles is cheap money; however Los Angeles might be adjoining the drain fiscally as a nation, even so the mortgage amounts usually are ridiculously cheap nowadays. The low rates prevailing create a heavy interest in good homes within Los Angeles.

With so many elements at work, when the home foreclosures come down the conduit, real estate agents witness a superior demand for homes within Los Angeles. Despite the a number of problems they are going through (such as the fact that this demand is relatively smaller than what it was 2-3 years ago), the real estate Los Angeles remains moving. Also, the banks don’t have to undercut the market in order to move their home foreclosures thus enabling the crooks to market and sell their particular properties at a price just below the market price! Compared to the other cities and counties of the U.S, the real estate listing of Los Angeles is significantly tougher. For instance, it is quite very easy to obtain and sell some sort of 1200-1500 square foot home together with 2 bedrooms and also a bath within the variety of $700,000-$800,000 and this may be known as a fair good deal!

 

 

 

Posted on January 25, 2012 by MariFBrown

Short Sales and Deficiencies in California

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This is not news, but it IS critical for any Seller thinking about listing their home as a Short Sale in California in 2012. Remember the MOST critical thing..the Debt Forgiveness Act expires on 12/31/2012. Will it be extended? Most likely. However..do you want to take that chance? Read on for a recap of our anti-deficiency law, 580e. It’s a fantastic protection for Short Sale Sellers in California!

One of the first things my Short Sale Clients ask me is, “How does the Deficiency work?” What they mean as a Short Sale Seller is, “Am I going to be sued for the deficiency by my Lender?

In a word, “no!”

The year of 2011 saw a very spescific change to the anti-deficiency law for the state of California. Section 580e of the California Code of Civil Procedure came into effect on Jan. 1. This law generally prohibited a FIRST TRUST DEED LENDER from obtaining a deficiency judgment. This law applied to 1-4 residential units.

Then on July 15, 2011 a bill was introduced that greatly broadened the powers of section 580e.

Now section 580e covers many types of mortgage loans for 1-4 residential units, including..

  • Purchase Money
  • Rate and term refinance
  • Cash-out refinance,
  • Owner occupied
  • Rental
  • Second home or vacation home

(This Law has it’s exceptions! Other types of liens such as judgment liens, tax liens, or HOA liens are NOT exempt from deficiency pursuit by the note holders!)

WOW! Lots of encouragement from the Government to do a Short Sale instead of a Foreclosure.

So..you are protected from the second lien holder pursuit as well now. Your Lender may NOT..

  • Collect a deficiency
  • Have a borrower owe a deficiency
  • Request a deficiency judgment
  • Require a borrower to pay to get a short sale approved
  • Require a borrower to waive their rights

Tips:

Sellers: Although a Short Sale Lender cannot demand you contribute to get your short sale done, you may offer to pay something to get a deal to work.

Buyers: Carefully consider before you write your offer, HOW MUCH money a Lender is being asked to write off. Sometimes, if a Lender has to write off a huge deficiency, they COULD choose to not do a Short Sale and pursue their other options. Not a huge likelihood in California..but think about it.

 

 

 

Source: JANUARY 24, 2012 BY Kim Kelly

Incredible Investment Opportunity in Santa Monica! SHORT SALE! $1,295,000

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For Sale: 7BR/6BA Multi-FSanta Monica in Santa Monica, CA, $1,295,000

1044 Grant St.   Santa Monica, CA 90405

Just Listed $1,295,000 – SHORT SALE!

Triplex 3,754 Sq. Ft – Recently Updated

Great Investment or Owner-Occupied Opportunity! Private, Beautifully updated, modern retreat in the Sunset Park area of Santa Monica. This Custom designed, 2 story triplex features ebony stained hardwood floors, high-end updated kitchen, custom baths, and fireplace. Also has a large private patio and roof deck..perfect for entertaining! 2 additional units are both 2 stories with 2 bedrooms and 2 bathrooms including private entries, garden, fireplaces, and washer/dryer in each. The garage is currently rented at $600/month. Plenty of Parking!! This is a must see!! No rent control – great opportunity! Location is central to many restaurants, 3rd street promenade, Abbot Kinney, and more! Very Motivated Seller. Please do not disturb occupants!!

Please contact Rob Moradzadeh at (800)399-9659 Ext. 310 For More Information!

Please Do NOT Disturb Occupants!!

Foreclosure plague slowing: Filings fall 8% – Short Sales Great Alternative

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Foreclosures fell month-over-month but are still up nearly 20% compared with a year ago. Plus, Las Vegas wasn’t the worst-hit city in November.

By Les Christie, CNNMoney.com
Last Updated: December 10, 2009: 7:18 AM ET

NEW YORK (CNNMoney.com) — Foreclosure filings fell by 8% in November, making it the fourth consecutive month of improvement in the housing market.

There were 306,627 filings last month, according to RealtyTrac, an online marketer of foreclosed properties. That decline follows a 3% drop in October, 4% in September and 1% in August.

“Loan modifications and other foreclosure prevention efforts, along with the recently extended and expanded homebuyer tax credit, are keeping a lid on the most visible symptoms of the nation’s ailing housing market — foreclosures and home value depreciation,” RealtyTrac CEO James Saccacio said in a prepared statement.

However, while there are signs of improvement, the industry has yet to turn around: Foreclosure filings were still a lofty 18% above November 2008′s levels.

“This is providing a welcome respite for the real estate industry, but a full recovery will only come when unemployment recedes to normal, healthy levels and when availability of credit reaches a more rational balance between the extremes of the past few years,” Saccacio said.

Additionally, RealtyTrac spokesman Rick Sharga isn’t convinced the decline is a natural outgrowth of improved market conditions.

“I really don’t believe we’re looking at a trend that suggests the problem is going away,” he said. “Much of the drop was artificially induced.”

He attributes the stabilization to mandatory mediation programs that some states have introduced. For example, in Nevada, where filings have declined for three months in a row, lenders are required to go through mediation with borrowers before moving forward with foreclosure documents. In many cases, Sharga said, these programs just delay the inevitable.

But there has been some real help for turning the foreclosure tide. One factor has been a firming up of home prices. The S&P/Case-Shiller Home Price Index has reported five consecutive months of improved prices through September.

As a result of this mild upswing in prices, fewer homeowners owe more than what their homes are worth, a status known as being underwater. Zillow, the online appraisal service, reported recently that the proportion of underwater homeowners dropped to 21% at the end of September from 23% at the end of June.

Home sellers have also grown more confident. The real estate Web sites Trulia and ZipRealty both reported that fewer home sellers are slashing their listing prices. Trulia said that 22% of homes currently on the market as of Dec. 1, 2009 had gone through at least one price cut, the lowest level since Trulia started tracking price reductions in April 2009.

ZipRealty said the average home in 27 markets it covers was discounted $23,953 in November, a 3% smaller discount than prevailed a month earlier.

Even with gain, there’s still pain

All those positive signs do not mean that there’s no foreclosure pain. RealtyTrac reported 76,701 homes were repossessed during the month, only a tad down from the 77,077 lost in October. For the year, there have been a total of 777,630 properties taken back by banks.

The “sand states” — Nevada, Florida, California and Arizona — continued to amass the largest numbers of foreclosure filings with Nevada the hardest hit state of all. One of every 119 households had a filing in November, nearly four times the national average of one for every 417.

Florida had one for every 165 households, California one for every 180, and Arizona one for every 186.

There was a bit of surprise among the worst hit cities. Las Vegas dropped out of the top spot it has occupied for the past four months. A 33% decline in filings to one for every 102 housing units put it in fifth place. Instead, Merced, Calif., took over the top spot with one filing for every 83 homes. Following Merced was Stockton, Calif., one for every 85; nearby Modesto, one for every 87; and Cape Coral, Fla., one for every 96. To top of page

$8,000 first time homebuyers tax credit extended

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NEW YORK (CNNMoney.com) — President Obama signed an extension and expansion of the first-time homebuyers tax credit on Friday.

The $8,000 credit was scheduled to lapse on Dec. 1 but will now be in effect through the end of June. Homebuyers must sign a contract before April 30 and close by June 30. The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.

The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers — those who have not owned a home in the past three years — still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.

“The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.

Who qualifies?

Nicholas provided four scenarios illustrating how the tax credit rules for existing homebuyers will apply:

• Harry owned a home in 2001 and 2002 but sold it to relocate for a job. He would qualify for the $8,000 first-time-buyer credit because he has not owned a home in the past three years.

• Sue purchased a home in 2004 and has lived there since. If she decides to buy a new home, she would qualify for the $6,500 tax credit because she has lived in the same residence for five consecutive years in the past eight.

• Jane purchased her home in 2002, lived there for five consecutive years before she rented it out in 2007. She would qualify because she was an owner/occupier for at least five consecutive years in the past eight.

• Mark purchased a home in 2006 and lived there for the past three years. He would not qualify because he is neither a first-time homebuyer nor someone who lived in the same primary residence for five consecutive years out of the past eight.

How it helps the economy

Legislators and industry experts expect that the credit will encourage buyers such as Jane and Sue to move up their purchase plans.

“This bill will shift demand from the second half of 2010 into the first half,” said Pat Newport, a real estate analyst with IHS Global Research. “As a result, home sales and prices will get a boost in the first half of 2010, with payback in the second.”

That’s not a bad thing, according to Bill Kilmer, vice president of advocacy for the National Association of Home Builders. It’s important to stabilize real estate markets quickly to help bring the economy out of its tailspin.

The original $8,000 tax credit appears to have helped accomplish that goal: Home prices have inched up the past few months, according to the S&P/Case-Shiller Home Price Index.

Would it have happened anyway?

But critics still see the program as being ineffectual because it rewards buyers who would have purchased a home anyway. Newport estimates that fewer than 400,000 of the 2 million who have claimed the original credit made their purchases solely because of the tax advantages.

Furthermore, buyers do not, in reality, receive the entire benefit. “The credit helped prices stabilize,” said Newport. “So the credit has been split between seller and buyer. The sellers are getting higher prices and buyers paying more than they would have without it.”

The housing industry, however, is pleased with the extension, although the credit has not been quite as effective as they hoped.

The industry thought the credit would provide a ripple effect, with sales to first timers triggering as many three additional “move-up” sales.

That did not happen, according to Lawrence Yun, NAR’s chief economist.

“It did not have the chain reaction impact it was supposed to,” he said. “Instead, many first-timers turned to vacant, foreclosed or other distressed properties the sellers of which were unlikely to be move-up buyers.”

So, the tax credit helped prop up the low end of the market without having much impact on the rest of the spectrum. Expanding the benefit to existing homeowners should boost those segments. That should produce additional benefits, according to Yun.

“Preventing further price decline or even nudging prices up a bit stabilizes housing wealth, which makes homeowners more comfortable in their spending,” said Yun. “They’re more likely to go out to the stores or buy a new car. That provides a boost to the overall economy.” To top of page

By Les Christie, CNNMoney.com staff writer

November 6, 2009: 3:18 PM ET

Short Sale Q&A

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What is a real estate short sale?

 

A little-known alternative, once more commonly used in the real estate downturn of the early ’90s, is the “short sale,” which works like this: A homeowner falls behind on his or her mortgage payments, usually due to a job loss, rising debt payments, or both. Facing a situation in which the home value has fallen and cannot be sold for the amount of the mortgage owed, 360 Realty works out a deal with the lender to sell the home for whatever the market will bear. If the amount of the sale is for less than the amount owed on the mortgage, the lender gets the proceeds and discharges the remaining debt. 

Also known as a real estate short pay-off or a pre-foreclosure workout, a short sale is an agreement with a lender to accept less than the amount owed by a borrower via a sale of the property to a third party.

 

- What are the advantages of a short sale vs. a foreclosure? 

While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect their credit rating, at least short sellers avoid having a “debt discharged due to foreclosure” on their credit reports. Mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst result and will reduce your credit score by over 250 points. You could also have to wait up to several years to qualify for a mortgage at a reasonable rate. 

Short sales show up on a credit report as a “pre-foreclosure in redemption” status and can result in a credit score reduction of 100 points or less. After the sale, the mortgage may show up as “discharged.” People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 18 months. So, if buying a home is a future goal, then a short sale is the better option for many families.

- My mortgage payments are late and I maybe facing foreclosure. Is the Short Sale option available to me?

360 Realty understands as a homeowner unable to make your mortgage payment or dealing with the possibility of facing foreclosure can be a stressful experience and an emotionally painful time in your life. If you are currently behind on your mortgage payment – or predict that you will soon be unable to continue making your mortgage payments – you’re not alone: you do have an option. 

360 Realty will assist you to identify and implement the best possible Short Sale solution helping you to avoid foreclosure. After a thorough review of your situation by one of our Short Sale specialists, we will work your lender to come up with the appropriate solution. 360 Realty will diligently negotiate to secure a fair and equitable solution with your lender. 

 

Many distressed homeowners simply give up and give in to the foreclosure process, often without being fully aware of the Short Sale option available to them.

Many distressed homeowners simply give up and give in to the foreclosure process, often without being fully aware of the Short Sale option available to them.

- Will the Short Sale cost me anything?

There are no out of pocket fees associated with the short sales. The borrower’s current lender usually pays 360 Realty for the real estate services provided.

 

- What criteria must I meet to be considered in a “hardship” situation? 

Borrower will usually to prove a “hardship” and therefore unable to continue making payments on the mortgage. A hardship situation is one that is the result of some extenuating circumstance that forces the borrower into a position where they can no longer afford their mortgage payments. While every situation is different, some frequent examples of hardship include:

      Decrease in the value of the home

      Unemployment or loss of primary income source

      Inability to work due to health crisis

      Mounting medical expenses

      Employment relocation

      Failure of business

      Bankruptcy

      Death of spouse or significant other

      Divorce or separation

- What do I need to do to get started?

In addition to the homeowner proving hardship, lenders require a specific set of supporting financial documents to consider a short sale. Contact 360 Realty today and one of our specialists will help you get started.

 

- When should I begin the short sale process?

Immediately, foreclosure and short sale situations tend to be extremely time sensitive and consuming for negotiations. The sooner we can begin the negotiations with your lender, the greater the chances of a successful resolution. There is no need to wait until the lender sends you a notice of default or initiates formal foreclosure proceedings against you. Time is of the essence!

 

- What effect will a short sale vs. a foreclosure have on my credit?

While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect their credit rating, at least short sellers avoid having a “debt discharged due to foreclosure” on their credit reports. Mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst result and will reduce your credit score by over 250 points. You could also have to wait up to three years to qualify for a mortgage at a reasonable rate. 

Short sales show up on a credit report as a “pre-foreclosure in redemption” status and can result in a credit score reduction of 100 points or less. After the sale, the mortgage may show up as “discharged.” People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 18 months. So, if buying a home is a future goal, then a short sale is the better option for many families.

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- How long does a short sale typically take to process? May the process be expedited if I am facing foreclosure or an auction date has been set?

All short sale situations are unique and follow their own timeline. Typically a short sale is completed within one to four months from the time we have a complete short sale package ready to present to the lender. The timing depends on how fast we can begin negotiating with your lender. If you are imminently facing foreclosure or even if an auction date has already been set, the process can certainly be expedited and we may even have the lender postpone the auction date. Please contact us today for a free consultation with one of our Short Sale Specialists so that we can be of immediate assistance to you.

 

- Why would my lender agree to a short sale?

In most distressed mortgage situations, foreclosure is a last resort for all parties involved. The homeowner and the lender usually want to avoid foreclosure at all costs. That is why a short sale is advantageous to foreclosure and lenders are typically very motivated to pursue a short sale prior to foreclosure.

 A short sale gives the lender the ability to cut its losses upfront thereby avoiding the expense and time of a foreclosure and potentially greater losses. Lenders want to make loans; they do not want to be in the business of owning and managing real estate. Whether the lender chooses to go through with a foreclosure or agree to a short sale, they are taking a loss either way, but in many cases they would take less of a loss with a short sale and resolve the matter in a comparatively shorter time frame. In nearly every case, a short sale offers a significantly better return on the lender’s investment than a foreclosure does.

 

- What is your relationship with lenders? Why shouldn’t I negotiate with my lender directly?

360 Realty works as independent third-party short sale negotiator. Our experience and professionalism ensures homeowners and lenders that we will be the driving factor of the short sale process. 

We firmly believe that just as most borrowers use a professional to initially get into a mortgage, it is in their best interest to do so if they are in the unfortunate position that they need to get out of a mortgage. If proactive, you only get one shot to negotiate your way out of foreclosure through a short sale process, and while it is nearly impossible to negotiate with the lender yourself, it is highly unadvisable. Let our professional team represent you through the short sale process. 

Most lenders’ loss mitigation departments are understaffed, and the overworked loss mitigators are usually overloaded with all parties vying for their attention. Unfortunately, the loss mitigator can be very difficult to get a hold of, and when you finally do get through, you have very little time with which to make your case. Furthermore, the added stress of foreclosure in itself makes it difficult for a homeowner to effectively negotiate their way out of foreclosure. 

Because we work with all lenders and represent homeowners from all across the country, and since we specialize in loss mitigation, we understand how to collect, prepare, and effectively present the information that lenders require to seriously consider a loss mitigation solution such as a short sale. We have excellent working relationships with the lenders’ loss mitigation departments and we will leverage our network and expertise to help you solve your problem.

 

- Why should I use 360 Realty to help me?

Our expert short sale specialists are highly trained in this often complicated process. We operate in every state and have a comprehensive understanding of all the ins-and-outs and rules and regulations applicable to each foreclosure situation. It is this unique combination of industry-leading expertise, impeccable professionalism, and extraordinary customer attention which enables us to offer the highest level of service to our clients.

 

 

Short Sale vs. Deed-in-Lieu: What’s Your Best Choice?

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Homeowners facing foreclosure often have the option of selecting a short sale or a deed-in-lieu of foreclosure as a possible solution to their financial difficulties. But are they? Which is the best choice? Like most alternatives, both have their upsides and their downsides. Understanding these options is the only way to make a truly informed decision.

In a short sale, your lender takes the loss

When you decide to use a short sale to prevent foreclosure, you should understand that the sale must have the lender’s approval and that lenders don’t always agree. What the lender is doing when he accepts, is permitting you to sell your home for less than you owe him and taking the loss himself. If he does go along with the short sale, it will relieve you of the burden (arrearages) as well as the cost, emotional strain and embarrassment of a messy foreclosure procedure. On the upside, a short sale is far less destructive to your credit rating than a foreclosure, as it is supposed to be listed as a “settled debt” on your credit report. However, it is still harmful to your credit score and can reduce it by 200 points or more.

On the downside, the lender could always go after you to collect the difference between the short sale price and what you owed him by getting a deficiency judgment against you. However, more often than not, this doesn’t happen simply because he knows that there is no money to recover and that he will have to pay all the costs of the legal action.

deed-in-lieu may be your fastest way out

A deed-in-lieu of foreclosure is when you give your home back to your lender, take your losses and thereby prevent the foreclosure. Lenders will frequently accept this because it is a less expensive and time consuming process for him than a full foreclosure action. The upside is that a deed-in- lieu is a faster solution than a short sale and that it is more likely to be acceptable to the lender. The ramifications to your credit score are about the same as the short sale.

On the downside, if the lender eventually sells the home for a price that doesn’t pay off the original mortgage amount, he can get a deficiency judgment and try to collect it from you. Once again, however, he knows that you can’t get blood out of a stone and probably won’t proceed if there doesn’t appear to be any money to recover.

Select either Short Sale or Deed-in-Lieu as early on as possible

The sooner you act on either a short sale or a deed-in-lieu the better. Once the foreclosure process is activated, you will not be in a strong position to negotiate with your lender because payment arrearages, interest and penalties have piled up. He can hold you financially responsible for his losses and seek a deficiency judgment that will appear on your credit report even if you don’t have the money to pay it. In either case, however, avoiding foreclosure is always a better choice in terms of the effect on your credit.

 

You Need An Experienced Short Sale Agent!

How Will A Short Sale Affect My Credit?

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A short sale will negatively affect your credit, but not nearly as much as a foreclosure or deed-in-lieu ~ read this entire article for details on each alternative.

A short sale simply means that the amount of the mortgage balance owed is greater than the current market value of your home. Homeowners who are in financial difficulties and facing foreclosure often opt for a short sale in order to escape the foreclosure process. This is precisely the situation now across the United States where the sub prime adjustable rate mortgage mess has caused mass foreclosures and significantly reduced the value of real estate.

A short sale takes place when the lender agrees to accept less than the amount you owe him on your mortgage because you don’t have enough equity to sell the home and pay all the costs of the sale. And make no mistake, the lender must agree or you’re out of luck.

 

the effect on your credit report

You will suffer much more damage to your credit report with a foreclosure than you will with a short sale. It will also take considerably longer to restore your credit rating once your financial difficulties are resolved. In general, here’s what happens:

For a Foreclosure or Deed-In-Lieu of Foreclosure

- Expect about the same things to take place. Quite often this means a loss of between 200-280 points on your FICO score. A pre-foreclosure FICO of 675 could drop to as low as 395, essentially eliminating you from future credit approvals. It may be as long as three years before you can qualify for another home loan.

For a Short Sale

- Expect to suffer some credit score damage, but nowhere near as much. Loss of FICO points will be around 75-125 and your report will show it listed as a ‘pre-foreclosure in redemption’ which is far less negative. You will most probably be able to secure a new home loan in about a year and a half.

In any case, it is a good idea to consult with a lawyer, tax accountant (CPA) or a good real estate agent who is experienced with short sales. These professional may charge you a bit for their services, but failing to have the right counsel could end up costing you a sizable bundle. So don’t consider going it alone. Get the help you need.

Know Where You’re At

NOTICE: Don’t get your credit score from anywhere else except myfico.com. 

 

You Need An Experienced Short Sale Agent!

Short Sell Your House – 7 Steps That Helped Avoid Foreclosure

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Short selling your home is not a decision you should make lightly. It is often a difficult and long process. If you are successful, the difference between what you sell the house for and what you owe on the house is forgiven. You’ll also avoid a foreclosure on your record.

Step 1 – Get Educated

You need to know your options when it comes to your home. If you want to keep your house, but can’t make the payments and you owe more than your home is worth, you may look into filing bankruptcy. This will stay the foreclosure process (not forever) and may allow you to stay in your home and repay your lender under different terms.

Deed in Lieu

If you owe more than the home is worth, this is not an option for you. Deed in Lieu means that you give up the house to the bank and walk away. Ie, you give up the deed instead of facing foreclosure.

Short Sale

If you owe more than your home is worth, and don’t want to declare bankruptcy or face foreclosure, then a short sale of your home is the best option. A short sale does have potential tax implications.

Step 2 – Get Some Help

This is probably the biggest tip I would give to people who want to sell their home in a short sale. FIND AN EXPERIENCED REAL ESTATE AGENT WHO HAS DONE A SHORT SALE BEFORE. Your real estate agent will be able to deal and negotiate with the mortgage company(ies) on your behalf. An experienced short sale agent will give you a much better chance of successfully short selling your home.

Because there is often so many different entities involved in a mortgage (1st mortgage, 2nd mortgage, the investor on the loan, etc) you really don’t want to do this on your own, with no experience. Plus, you’ll never have any out of pocket expenses to pay an agent, as everything is essentially paid by the lender.

WARNING! Just because an agent says they specialize in “short sales” does not mean they have actually successfully done one! There are many classes agents attend regarding short sales, but nothing compares to real world experience.

Step 3 – Get Started Now

The longer you wait to get started with the short sale process the less chance you have of success. Every state is different with their foreclosure process. You need to decide quickly to start the short sale process if you’re getting behind on your payments, or have already received a notice of default.

Step 4 – Follow Instructions Exactly

An experienced short sale agent will tell you what you need to do to get the house ready to sell. Don’t get too hung up about the price. If the agent wants to set a low price on the house, there is a reason behind that.

In my own short sale, we priced the house pretty low and got an offer very quickly. You need a buyer that is willing to stick around for a super long closing or changes to the agreement. In my case, it took almost 4 months from when we got the offer to when the closing took place. Don’t get hung up about the price, all you should care about is getting the place sold.

Step 5 – Know The Tax Implications

Congress recently passed and the president signed a law that likely releases you from any tax implications of a short sale.

Talk to a qualified tax attorney or CPA about this for your particular situation. Your real estate agent should know about this! A good agent will have a quality referral for you to handle the tax implications of your short sale.

Step 6 – Prepare to move quickly

Because your closing date may not be set in stone, you need to be prepared to leave your home quickly if needed. You do not want to end up like me and live in your office for 2 months! Trust me, it’s not fun!

A minimalist lifestyle is nothing to be ashamed of; in fact it should be venerated. Your possessions are just inanimate things; it’s the relationships in your life that really matter. OK, enough life advice! Sell anything you don’t need or haven’t used in the last 6 months on craigslist! The less you have to deal with on moving day the better.

Step 7 – Prepare yourself emotionally

If you are already in default, or have a foreclosure pending, this whole scenario and process of trying to short sell your home can be very emotionally draining.

You will receive solicitations from everyone and their mother. You may have people stop by your home while you are still there. It can be a very difficult process.

Make sure you have people in your life to talk to about your situation. You will need a support network to help through this time in your life. It will pass. And you are being proactive in seeking a short sale of your home. You are taking the right steps, and in time, everything will work out. I can’t promise it will be easy, but you will make it!

You Need An Experienced Short Sale Agent!