With such a high percentage of homes underwater, homeowners who find themselves needing to sell are left with only a few options. In many cases the dollar amounts needed to sell far exceed what most homeowners have available. This very fact is what I feel is actually going to help stabilize our market. Many are just opting not to sell at these price levels which is greatly reducing inventory in many local areas. The problem arises when a homeowner does not have this option available to them. Perhaps they are forced to relocate due to a job change, family change, or some other reason that leaves them no choice. One solution which many opt for are to lease their homes. While this may work for some, it may not for others. Many HOAs in our market place limitations on rental properties. That forces a seller/homeowner to find an alternative that will allow them to move on. The solution: “short sale”.

Since short sales have become so popular in the Atlanta market in recent years, most homeowners are aware of what they are. What they are not aware of are the many details that one involves. I just want to address one detail or issue that might have an impact on the number of short sales in our market in 2012.

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation was passed in 2007 and it generally allows taxpayers to exclude income from the discharge of debt on their principal residence. For full details on the Act please visit the IRS web page. Since we are not tax professionals, you must contact your CPA to find out more information and how it may apply to your specific situation. The point I would like to highlight is that without an extension on this act, short selling a primary residence after 2012 might have additional tax consequences that will have to be factored into a homeowners decision.

What this means for our market is that unless there is a move to extend this act by our government officials, we might see a flood of new short sale listings hit the market before the end of the year. If you find yourself in this position and would like more information, call us today at 678-250-4500.

The thing to remember is that no two short sales are exactly alike. There are many moving parts to a short sale and understanding how each piece impacts the deal is crucial to success. Here are some things to keep in mind when it comes to short sales.

1.) If you live in a condo or town home community, you must continue to pay your HOA dues. More and more lenders and investors are not willing to pay these expenses as part of the short sale. Further more, many HOAs have language that allows them to personally pursue you legally for back HOA dues. While some HOAs might take a settlement, getting a lender to pay them as part of the short sale might a huge roadblock in trying to navigate the short sale process.

2.) Have your financial documents in order and ready for your agent/attorney to submit to the lender. Many short sales drag out because these required documents are not submitted in a timely fashion or are not complete. All lenders have what are called gatekeepers that screen short sale requests for all required documents before the file actually moves along to the phase where someone that has authority to approve a short is actually assigned to your file. When lenders ask for 2 years of tax returns, make sure you have signed the signature pages. With most homeowners filing electronic tax returns, they never had to sign the signature pages. Every lender wants to see your signature on these documents. Also, when they ask for 2 months of back statements, be sure to include the most recent two months and include EVERY page even the blank ones. These statements are numbered and if page 8 of 8 is not included, that could delay moving along in the process.

3.) If you do not have one of the lender required documents for some reason, like a paystub because you are unemployed, provide a letter of explanation in place of why the requested document is missing.

These are just a few of the tips to follow when attempting a short sale. To learn more about the process of short sales, contact one of our short sale specialists today at 678-250-4500.

CitiMortgage

This is great news if you are a homeowner who is facing a hardship and has their mortgages through CitiBank or CitiMortgage. Any agent listed on the CitiMortgage letter will have completed a minimum of 3 short sales.

If you are someone you know is facing financial hardship, owes more than their home is worth, and needs to sell, please have them call us today at 678-250-4500. We have experience and success working with almost EVERY lender including Bank of America, Chase, CitiMortgage, SunTrust, BB&T, Regions, RBC, Wells Fargo, GMAC, and more.

What is not clear is whether this will apply in all 50-states or not. What is clear is that home values continue to fall according to the most recent Case Shiller Index (read report). Metro Atlanta home values have fallen back to 1999 levels which increases the chances that any homeowner who purchased in the last decade or took out some equity is probably under water.

If you or anyone you know is facing a financial hardship and owes more than their home is currently worth, please call us today at 678-250-4500 ext. 101.

I just came across this post by another Realtor and it also highlights this exact point very well:

Be the Winning Bidder in a Multi-Offer Short Sale
via REALTOR.com® Blogs by Lisa Lyons on 3/2/11

Short sale homes can be great bargains for home buyers – but what happens if the home you love has multiple offers? How can you make sure your offer is the one accepted? Connecticut Realtor® Minna Reid, a short sale specialist, advises how you can come out the winner in a bidding war.
“Short sellers often have different needs than sellers in a regular sale. Some buyers mistakenly believe that all that matters is how much they offer. While the amount of your offer is important, it is not the single most important determining factor, nor do the sellers have any obligation to accept any offer simply based on its dollar amount. Here are a few tips to make your offer the strongest if you end up against competing buyers for the same short sale home:
• Have patience. Short sales take time. The more flexible you are willing to be, the better your offer looks to the seller. It will usually take a minimum of 30 days to get a short sale approved, sometimes longer. As a short sale listing agent, I frequently recommend the most patient buyer over the highest paying buyer.
• Be ready to move quickly. This may sound like a contradiction to the previous point, but after all the waiting is done and the approval arrives, everyone will need to hustle. Short selling lenders don’t give long for the parties to close. 30 days from approval is expected. Being able to close quickly gives you an advantage.
• Have the most desirable method of financing. Cash is always king, but certain financing is preferable to others. Given two identical offers on a short sale – one with conventional financing and one with FHA, the conventional will trump almost every time especially when the condition of the property is questionable and the sellers lack the funds to make repairs. Level of pre-approval also weighs heavily here. The further you’ve gotten with your financing, the better your offer looks.
• Have the right buyer’s agent. When my short sellers receive multiple offers on their properties, I always measure the level of the buyer agents short sale expertise when making my recommendation. Its easy for me to tell with a few choice question whether your buyers agent is experienced in short sales. I will frequently also pull the MLS statistics of your agent to see how many short sales they have been involved in. Why? Because I know this person will be advising you through the process. If they don’t know what they’re doing, I know the sale will likely fall apart at some point and I don’t want my sellers to end up having to start all over. Choose your agent carefully if you plan to pursue buying short sales.”

In fact, we saw the MLSs (both FMLS and GAMLS) that serve the Atlanta market update their systems to include descriptions specifically for short sales during the first quarter of 2010. Two new special circumstance categories were added that now include “potential short sale” or “approved short sale”. In addition, a new listing status category called “pending lender review” was also added. The Georgia Association of Realtors added a special stipulation to be included in short sale purchase and sale agreements. MLS sold data now includes a notation that the sale was “lender mitigated” to indicate that the mortgage holders were involved in approving the sale and terms.

2011 is just a few days old and signs that short sales will remain popular, if not expand, are all around us. The 2011 Georgia Association of Realtors has now swollen the short sale stipulation from a paragraph to an entirely separate form called a “short sale exhibit”. It also seems that every real estate agent remaining active in the business has also become a so-called “short-sale expert”.

The reasons 2011 will be big for the short sale is plain and simple. For most areas, real estate values have not started to appreciate which is leaving many homeowners still upside down on their homes. Predictions are that part of the Atlanta market may even continue to see some decline in values. Interests while still historical low, are expected to increase in 2011 and that may impact those with Home Equity Lines of Credit and Adjustable Rate Mortgages. We also have the looming expiration at the end of 2012 of the “The Mortgage Forgiveness Debt Relief Act and Debt Cancellation” that was passed in 2007. All of these factors will continue to result in a high number of short sale transactions.

The bottom line is this, if you are facing a situation where a short sale might be the only option to avoid foreclosure, be sure to contact an experienced short sale agent.

Short sales are very tricky but if handled correctly, they can be very beneficial to both the seller and the buyer. Even the neighborhood can benefit by avoiding having vacant foreclosed homes plague their neighborhood. While it is impossible to cover all the tips on purchasing a short sale in this post, the first and foremost important key to success is working with an agent who has a solid track record on closing short sales. Experienced agents will understand the process and understand how each bank operates since no two institutions handle short sales in the same way.

Common Tips:

1.) Find a full-time agent who has listed and sold a minimum of 5 short sales in 2010. Sign an exclusive buyer brokerage agency agreement to legally have this agent represent your interests in your home purchase. Ask this agent to print out the MLS/FMLS report showing the properties they have actually sold and closed on. Don’t take their word for it. Bottom line, many agents will not be honest. Ask to see the proof.

2.) If you are successful in tip #1, the remaining tips should be irrelevant because these will be items that your agent will take care of for you and recommended throughout the process.

3.) Find out how many mortgages there are outstanding on the home. Has the homeowner already missed payments? If not, you might want to think about moving on to another property since the success rate of short sales are significantly lower when the homeowner is not behind on payments.

4.) Find out if there are previous offers that have already been submitted to the bank? Is the listing agent just collecting offers? Ideally, you want to go under contract as the only contract with the seller and the only contract that will be submitted to the bank. Ultimately if other offers are received by the seller and they come in higher, the bank can reject your offer in order to take the higher one. You and your agent can protect your position by including a “right of first refusal” or including an “escalation clause” in the contract.

5.) Try and find out what the seller’s hardship really is and if they are cooperating with listing agent and bank in providing full financial disclosure. If not, your short sale purchase will likely be dead in the water as almost ALL banks and lenders will not process a short sale without all required financial information from the homeowner/borrower.

6.) Have your agent research the market, is the list price/contract price in line with area comps? Some listing agents will dump the price just to obtain a contract and stop a looming foreclosure. Banks and lenders will evaluate the market and base their decision on approval by taking into account the comparable sales. If your offer is too far below, either expect a counter offer from the bank or a total rejection.

7.) Has a foreclosure sale date been set for the property? If so, some banks have policies that do not allow the foreclosure process to stop. However, many will postpone to give the short sale or loss mitigation department time to evaluate an offer.

8.) Find out of any of the loans have private mortgage insurance. If so, you now have another party that must approve the short sale contingency. Most mortgage insurance companies are not as willing to allow a short sale without some contribution or future liability to the homeowner. This can kill a short sale transaction.

9.) Be prepared to risk some upfront money on items such as a home inspection. You need to be prepared to stick to your offer once submitted to the bank. Many buyer’s agents are too worried about having their clients spend the money upfront on inspections when in reality they should be preparing their clients that this is the cost of attempting to purchase a short sale. Most banks will not renegotiate the price after the offer/contract is submitted. It is better to go in with an appropriate price for the condition and how can you know the condition without having had an inspection???

10.) For Tip #10, I again go back to Tip #1 and reinforce the fact that it is crucial to your success to work with an experienced short sale specialist. Many agents are now attempting to work the short sale market for the very first time. I see it every day on the listing side when buyers have no idea that the reason they don’t stand a chance at purchasing that short sale home is because of the lack of short experience their agent possesses.

For more information, contact a North Atlanta short sale specialist now at: 678-250-4500.

Many homeowners have exhausted all possibilities such as depleting savings, IRAs, 401ks, and even possibly attempted loan modifications. In many cases, this only delays the inevitable. That is where a short sale enters the picture.

A short sale is a complicated process that results in a homeowner negotiating with their lenders in order to sell a home for less than what is owed or outstanding on their mortgage or other liens.

Homeowners often have many of the same questions when inquiring about short sales. I will attempt to answer a few of the more frequently asked questions that come up when we meet with sellers facing the reality that they need to avoid foreclosure and attempt a short sale.

Q.) What will a short sale cost me?

A.) The goal of the short sale is to have all the costs involved with the sale paid as part of the process. Basically, the lenders will reduce what they take to account for all the fees that need to be paid, including the real estate commission. I have personally successfully closed a short sale where the bank has taken more than a $600,000 loss and not held the owner liable for any deficiency.

Q.)What do the lenders require from a seller before agreeing to consider a short sale?

A.) Most lenders/banks will require that the seller/owner submit a full financial disclosure which includes tax returns, bank statements, paychecks, expense worksheets and hardship explanation. Almost all lenders will refuse to open a file for consideration until all documentation has been received.

Q.)How does a listing agent determine what the list price of the home should be?

A.)While there is no right answer to this question, our approach is to price a home by using all available comparable market data to price the home at a fair market price. Under pricing a short sale listing can backfire when the bank reviews the value and offer received.

If you are someone you know is facing a financial hardship, please call the Newman Property Group at 678-250-4500 right away!

Many factors will dictate the outcome of a potential short sale.  We are actively seeking new clients to assist through this process.  If you are facing a financial hardship and owe more than the current value of your home, a short sale might be an option.  Every call is completely confidential and totally free.

To make the best use of your initial consultation, you will want to have the following information readily available:

• Current lenders/mortgage holders.  The bank/institution who you make your payments to every month.
• Total amount owed on each loan.
• Type of loan/loans (Conventional, FHA, VA, Interest-Only, Home Equity Line of Credit, and so on)
• Were these loans taken out when you first purchased the property? Or are they refinanced loans?
• Investor on the loan if available.  (Fannie Mae, Freddie Mac, and so on.)
• Is there Mortgage Insurance on the loan?  If so, who is the mortgage insurance company?
• Are you current with your payments?
• If you are not current, have you received a notice of foreclosure?
• Type of hardship?  (Loss of job, illness, divorce, and so on)

Don’t worry if you are not able to answer all of these questions up front.  We will be able to assist you in locating any required additional information.

What are you waiting for?  Call 678-250-4500 now to get started.  To learn more, visit: Short Sales