Are you having trouble paying your mortgage? Is there a chance your home may go into foreclosure? If so, you may be a good candidate for a short sale. This is when a property is sold for less than the balance owed on the mortgage—it can be a win-win for many sellers who want to avoid foreclosure and lenders who want to cut their losses as much as possible. When deciding if this is a feasible option for you, it can be very helpful to enlist the help of a certified short sale expert.
It’s important to be aware that a short sale may not entirely save your credit score. While it can be better than having a foreclosure on your record, a short sale will still be recorded as a not “paid as agreed” account and factor into your FICO score.
When proceeding with a short sale, it’s important to determine whether if it will cancel all the remaining debt on the mortgage or not. There are two elements of a mortgage: 1) Your promise to pay the lender and 2) the lien on your property. So when you can’t pay your lender, they have the right to sell the property to pay off the loan. When a lender approves a short sale, they agree to release the lien on the property but may not necessarily cancel the seller’s obligation to repay the balance of the loan. You’ll need to enlist the help of a professional to get through all the fine print and ensure that the lender does not reserve their right to collect the remaining debt balance. The key to this part of the process is to find out in advance if your lender will let you off the hook for the rest of the mortgage payments and to get their answer in writing.
At this point, you should be able to decide if a short sale is the best option for you. If it is, then start looking for a certified short sale expert right away so that you can get the property on the market as soon as possible.
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Navigating a short sale can be complex and confusing, which is why it’s imperative to have a professional in your corner. If you’re looking for property in the desert cities, be sure to seek a Palm Springs area short sale expert so that you can benefit from their local expertise. They will have information about comparables in the area and can help prepare you for the intricacies of such a transaction.
Here is our part one of our basic roadmap series for preparing yourself to buy a short sale property. Good luck!
1. Identify potential properties. Start by researching pre-foreclosures in the area and letting your Palm Springs area short sale expert know what you’re looking for. You can also search online, peruse courthouse listings and look for legal advertisements.
2. Identify candidates. Once you’ve identified some properties that you’re interested in, try to figure out how much debt exists and what the actual value of the property is. If the debt is high, it could be a good candidate for a short sell. On the flip side, if the owner has a lot of equity, the lender may prefer to foreclose on the property and try to sell it for a price closer to the actual value.
3. Schedule viewings. Find out when the properties are being shown and start looking. Check the property thoroughly and try to gauge its condition as best as possible so that you can get an idea of what repairs and renovations may costs. Be realistic—if there is too much to fix, it might not be a good fit for you.
4. Perform your research. Have your real estate professional find out what the property is truly worth and try to figure out what your potential for profit would be if you resell it later on. Get estimates from local contractors and vendors to determine how much any repairs and renovations you want to make will cost so that you can factor that into your budget as well as your potential profit margin.
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Take it from our Palm Springs area short sale expert, as sweet as a short sale deal can be, there are some common mistakes that many buyers make, no matter how many warnings you give them. While discounted foreclosures can change the game on your hunt for a dream house, there are some potentially expensive items to look out for and seriously consider.
Read on for three of the most common short sale mistakes that our Palm Springs area short sale expert warns against.
- Bypassing the home inspection. This is one of the most important things you can do on both a foreclosed or short sale property. Hire a seasoned home inspector with good references and local expertise to examine the property you are considering buying. Ask lots of questions, and whenever the inspector finds a problem or issue, ask what they think the repair may cost. Then go home and do some research online and even call local repair specialists to get quotes. It’s very easy to underestimate how much repairs can cost. Keep in mind that, with short sales, some prospective buyers hire a home inspector before they even make an offer.
- Ignoring damage. If you notice large scale issues, such as leaks in the roof, sloping floors or cracks in the walls around doors and windows, you may need to hire a structural engineer to come in and do an assessment and make recommendations on what is imperative to repair. Issues such as termite damage or mold can end up being extremely costly and even dangerous to the health of your family. Spare no expense to determine if the home you are looking at is at risk for these issues.
- Ignoring property issues. Most of the time, those who have had their property foreclosed are very upset and frustrated about their situation. Unfortunately, some of these former owners unleash their anger on the property and actually spend time destroying aspects of the home. On the flip side, if a property has been abandoned for a time period, there could be issues of neglect, or worse, squatters living on the property for months on end, causing damage that no one has any knowledge about and creating filthy conditions that may be difficult to clean up. Again, this is where hiring professionals to evaluate the property can truly save you money in the long run.
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The first half of 2014 has seen a lot of real estate sales—and according to our local Palm Springs area short sale expert, the valley has seen many as well. What’s happening throughout the country is that a lot of buyers are purchasing homes at depressed price levels. According to the National Association of Realtors, short sale transactions made up between 45 and 50 percent of all home sales during February of this year.
While it sounds exciting and like something you can’t afford to miss, it’s important to be very careful while navigating a short sale, as they can be trickier than a normal home purchase. Often times, due to the common occurrence of complications, short sales can take longer than other transactions to close. If you are looking for homes in the Coachella Valley, a Palm Springs area short sale expert will be instrumental in the process and can make it much less stressful.
A short sale is when a home is sold for less than the amount of money owed on it. It’s often confused with a foreclosure, which is when you buy a property that is owned by the bank. As you can imagine, this can be an amazing deal for buyers. It can also help sellers avoid having a full foreclosure on their record. It can be tricky, however, as the lenders involved will need to approve the deal—and they will be taking less than the total amount that the owner needs to pay off their mortgage. In the flip side, if they don’t agree, they may receive no payment at all. Yet many times short sales move slower than molasses and can fall through altogether.
Finding a great short sale deal can take a lot of patience, luck and the help of a real estate professional with expertise in short sales. For best results, do your research and keep your eyes wide open.
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Sometimes it’s impossible to prepare for the challenges that life brings, which is why many families unfortunately find themselves owing more on their mortgages than their property is worth. In these cases, working with a short sale realtor may be the only way to avoid foreclosure.
A short sale is a very time-consuming transaction and can be a difficult one to navigate. To start the process, make sure you find a short sale realtor who will stay on top of all the details and has a lot of experience with these tricky transactions. Otherwise, you’ll be taking on a lot of stress and will subject yourself to some unpleasant consequences if everything isn’t done properly. Take the same amount of time you would allocate to hiring an agent to find your dream home in Indian Wells, if not more. Interview prospective realtors thoroughly and get referrals whenever you can.
Different states have laws that vary, so make sure to find out whether the lenders involved can go after you for the balance once a short sale is completed. If the lender agrees to waive the difference, you want to make sure this is clearly represented in the contract. You also may want to consider looking into the Home Affordable Foreclosure Alternatives program (HAFA) to see if this program can help you avoid paying the deficient balance.
Another reason why it helps so much to have a short sale realtor with strong expertise is that they can coordinate the transaction with the bank and help prepare you for what to expect from the process. When it comes to tax implications and protecting assets, it may behoove you to also hire an attorney or tax expert to ensure that you are doing everything correctly.
Last but not least, if you are considering a short sale, don’t stop paying HOA fees or other dues—they will continue to accumulate and can be a deal breaker when you find a buyer for your home in home in Indian Wells or another part of the region.
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If you’re considering buying a home, then it’s time to arm yourself with a game plan. Whether you’re interested in finding a beach house, a condo or luxury properties in La Quinta, there are some strategies you should put into place and information you should seek when preparing for such an important transaction.
The most important step on this checklist is to find a real estate professional that you trust and that has the right expertise for your transaction. Deciding to hire the right kind of broker, short sale realtor or other type of agent for the type of purchase you want to make is what will make the difference between a stressful transaction and one that moves forward smoothly and productively.
One of the next most important things is to get your credit score as high as possible. The higher it is, the lower both your down payment and monthly payments will be. Depending on the market, many experts say that to avoid paying huge fees and having to put down a sizeable down payment, you should probably strive for a credit score of 700 and above. While there are many qualified buyers in lower ranges, this is a good number to work towards. Pull your credit reports and dispute any discrepancies, and stop applying for new credit for about a year before you plan to start looking for that gorgeous beach house or luxury properties in La Quinta.
Next up on our checklist: seek a price range that’s within your financial comfort zone. Certain financiers require your monthly payments not to exceed between 28 and 31 percent of your monthly income. This is a good formula to work with when assessing the home you can afford—you should calculate the potential payments for a property in your price range and add in any increased expenses, such as insurance or HOA fees, and see if you can live with the difference.
Finally, start saving now. Most real estate professionals recommend saving around 20 percent of the intended price range for a down payment. Obviously, some lenders accept much less, but a larger down payment may be better for your future. Start saving now, even if you’re not in the market yet. When you do enter the marketplace, and if you’re working with a good short sale realtor, you may need to move faster than you thought when some incredible deal comes your way.
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Purchasing property can be one of the most important things you do in your life. Whether you’re working with a listing agent or a short sale realtor, it’s important to find someone you are comfortable working with. Whether you’re looking for real estate in Indio, La Quinta or Rancho Mirage, you need to work with someone who can give you advice regarding which neighborhoods to live in, help you vet your best financing options and provide resources for anything else you are uncertain of.
To find the best agent to work with, assess their prior experience. If you know someone who used a particular short sale realtor, broker or any other real estate professional that they were extremely happy with, seek out their contact information. If they are local to the area you want to live in, then by all means, take a meeting as soon as you can.
If you don’t know someone off the top of your head who recently bought a home in the area you’re considering, then start asking around. Seek recommendations from those you trust, such as friends, family and co-workers—you never know who they might know. If you’re living in Los Angeles but are interested in buying real estate in Indio, Palm Springs or the surrounding areas, then ask the agent you worked with to find your current home for a referral to a local agent in the new area you’re considering.
Buying property is an incredibly important and oftentimes complicated transaction to execute. It’s essential to take your time to find the right agent to work with. If you’re meeting with them blind, then ask for references and interview them about their experience and qualifications. Who knows—you may find someone who’ll be able to help you with other transactions down the line. It’s a critical working relationship to develop, so make sure you weigh your options and do your research.
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Kim Kelly is an expert short sale Realtor!
The short sale enterprise can be a bit complex. Since it involves the bank, a buyer and a seller, there are probably a few other players involved, including a seller broker, appraiser, and a few who represent the bank’s interests. With so many cards stacked, it only makes sense for a buyer to retain the services of a short sale realtor.
A short sale transaction requires significant expertise and some insight into how each involved party thinks. The buyer typically attempts to push a low ball offer, which means persuading the bank to get the loan off its books at the lowest price possible. This sounds like it can still be simple but when the seller still has any financial ability to influence the sale, that’s where it can get more complicated—and where a short sale realtor becomes invaluable.
Again, whether you’re looking for homes for sale in Palm Springs or any other part of the state, it’s important to work with a realtor with vast expertise, especially in regards to short sales—you want an experienced Agent who CLOSES their short sales. Ideally, you want someone who is familiar with different lenders, is connected in the area and has negotiation skills that transcend normal real estate transactions.
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Negotiations are KEY to closing your short sale!
Short Sales are made up of many different components. We all know about the stacks of documents, the necessity of an experienced List Agent..and what else? Who exactly do you meet during the process of a Short Sale?
List Agent: Critical. Choose an experienced Agent that CLOSES their short sales. Certified is great, familiar with the different Lenders and their different MO’s is also required.
Buyer’s Agent: I LOVE when my Buyers’ agent understands short sales and can explain it to their Buyers. I keep my buyers’ agents updated, but if they don’t understand the process, it’s often a moot point.
Customer Service Rep: First level of contact for yoru Lender. You can call them, and you can bet I will be!
Equator: The online Customer Service Rep. This system keeps us all honest. It creates an online record of what documents have been asked for and received and any correspondence your List Agent has had with your negotiator.
Negotiator: The person that actually gets your file and starts reviewing it to see if any docs are missing. There are several levels of negotiators. Each level gets you a little closer to the Investor.
Investor: Once the negotiator decides the file is complete, it is passed to the Investors to either counter it or accept it.
Closing Representative: This is your contact that sends your List Agent the Approval Letter. If you need an extension on your close date or a buyer substitution, you hope this person is competent!
Remember that the entity you write your mortgage check to is called your “Servicer.” The entity that actually decides on the net amount they are going to write off in your note is called the “Investor”.
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The Debt Forgiveness that people with Foreclosures and Short Sales on their Primary and investment proerties 
have been enjoying since 2007 expires the end of 2012. What’s going to happen? It’s an unknown. It would seem that the Debt Forgiveness would be extended since it is one of the primary reasons that people have been able to re-organize and get back on their feet.
But..there is NOTHING logical about the Lenders I we know all too well from working Short Sales for the pasat 4, almost 5 years. If they see that it will affect their own bottom lines, I suspect it will be extended. In the mean time, be sure you get your Short Sales closed by 12/31 of this year.
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Are you having trouble paying your mortgage? Is there a chance your home may go into foreclosure? If so, you may be a good candidate for a short sale. This is when a property is sold for less than the balance owed on the mortgage—it can be a win-win for many sellers who want to avoid foreclosure and lenders who want to cut their losses as much as possible. When deciding if this is a feasible option for you, it can be very helpful to enlist the help of a certified short sale expert.
