Short Sales
Short Sale Rodeo
April 8th, 2010 categories: Cincinnati Ohio, Real Estate News, Short Sales, West Chester Ohio
I remember reading an article by an author comparing today’s short sale environment to the “wild wild west”. It’s a good analogy. And while stories about the old west highlighted lawlessness and general lack of structure -all short sales follow some basic guidelines.
First let’s define a short sale for greater Cincinnati. If you were to put your property on the market today and the amount you owe on your mortgage(s) is greater than the sales price and your don’t have the money to make up the difference- then your sale will likely be referred as a short sale.
To date the concept of “loan modification” (= lender changes the terms of your mortgage(s) which lowers your monthly payments allowing you to remain in your home) has not had much impact on floundering property owners. So if you are facing a short sale- instead of thinking about the “wild wild west”-think rodeo. A lot of prep time, definitely a bumpy ride- but in the end you walk out of the ring and move on with your life.
The short sale rodeo takes some preparation- so think about the following:
- Hire qualified short sale Realtors (call or email if you need names)
- Complete the short sale package -the Realtors may have a generic package.
the package contains (among other things) detailed hardship letter, real estate contracts, income and assets, federal tax returns. - Know that the process takes time. New regulations (HAFA) are in effect but may take time to evolve- so any potential buyers may have to wait months for contract agreement from lender(s)- many get tired of waiting and move on. Very frustrating for sellers-who think their problems may be coming to an end.
- Remember a short sale may not solve your financial issues (article)
So saddle up, grab on and get ready for somewhat unpredictable ride -knowing that it will end (sometime). Just make sure that before you turn the “short sale bull” lose in the ring that you understand the short sale process and all its pitfalls and problems.
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Short Sales May Not be the End to Seller’s Problems
March 29th, 2010 categories: Foreclosures, Real Estate News, Short Sales
Recently RIS Media ran an article highlighting a problem Realtors have been dealing with for some time. Debt ridden homeowners have been pleading with their lenders to accept “short sale”deals assuming that once the property is sold- the debt problem disappears. And while short sales usually provides the first mortgage holder with money or the property as collateral-behind the scenes holders of the 2nd mortgages and home equity loans have been selling your debt in order to recoup more money.
So, in some cases, after the closing the sellers are pursued by the new note holders (of 2nd mortgage and home equity loans) and/or their collection agencies.
If you are in a “short sale” or “foreclosure” position- make sure to obtain legal advice- so you don’t end up with more debt than you planned.
Need help- call or email.
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Are You Ready to Purchase a “Short Sale”?
April 23rd, 2009 categories: Real Estate News, Short Sales
Today every consumer wants a great deal!
It’s a no brainer there. Whether you’re buying a car, flat screen TV, computer or piece of real estate- buyers want the best deal at the best terms.
Today many real estate buyers are narrowing their property search to “short sales” or “foreclosures” assuming great deals are waiting for them.
And while there are lots “short sale” properties for sale is Cincinnati, West Chester, Fairfield, Mason and surrounding areas – purchasing a “short sale” property can be rewarding-but only if buyers are prepared for the entire process. (Short Sales are properties which are still owned by seller, but require lender approval prior to accepting a contract)
Things to know about “Short Sales”
- The contract may or may not be handled in a timely manner by the lender- be prepared to wait-in some cases months and months- before approval is granted
- Many of the properties have several lenders (mortgage, 2nd mortgage and in some cases taxes) and all the secured lenders have to approve the deal- bottom line-more waiting.
- The seller may not be in a financial position to fix any problems that appear on home inspection report
- Your contract needs to have a time-frame defined when your purchase offer is ”null and void”- don’t tie yourself up for months on a deal that may never close.
Many lenders are beefing up their “short sale” departments and deals are happening-however there is no guarantee-so go into the deal with your eyes wide open.
Need more information on buying or selling “short sales” call or email.
Related Articles: Crucial Advice on Short Sales, Before You Buy a Short Sale
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Many Reasons Why Lenders Should Jump on Short Sales
April 17th, 2008 categories: Fairfield, Ohio, Mason Ohio, Real Estate News, Real Estate Selling, Short Sales, West Chester Ohio
This morning’s Wall Street Journal had an interesting article on “Why Lenders Are Leery of Short Sales“. 
In articles posted to “thecincyblog” I have tried to educate consumers on: “Crucial Sort Sale Advice for the Greater Cincinnati Area“, “Foreclosure Assistance“, “How To Understand The Mortgage Mess” and “4 Truths About the Subprime Bailout“. And while the article in the Wall Street Journal fairly represents the lender’s point of view, I think it fails to address the failure of mortgage servicers and their investors to look at the “big picture” and act accordingly.
3 reasons Lenders should jump at short sales are:
- A bird in the hand is worth- what? Lenders who stall on short sales and ultimately lose the buyer(s) are not only losing money they are losing equity. The National Association of Realtors as well as any realtor will provide you with statistics indicating the longer a property remains on the market the lower the selling price.
- Empty properties cost the investors more than occupied properties. Homes that fail to complete the transaction during the “short sale” period may end up as vacant properties. As a former relocation company employee, I can tell you that empty homes are expensive to maintain and give birth to a host of problems which may be costly to repair.
- The short sale you ignore may impact other nearby properties that your investors currently “own”.
As an investor I am always reminded to cut my losses and move on- perhaps these investors should heed the same advice.
The servicing companies need to leverage the eyes, ears and noses on the ground. Many real estate brokerages have departments/ groups/individuals who are equipped to handle vacant and or damaged properties. Keeping the property in good shape will aid in a future sale and may provide the “neutral” resource to determine value.
Finally, the second mortgage/home equity investors need an incentive to stop holding “short sale” contracts hostage to 100% recovery of their investment. Many mortgage holders are willing to negotiate a reasonable deal only to have the contract fall apart due to 2nd (and in some cases 3rd, 4th…) lien holders balk at any deals.
What do you think about the current mortgage situation?
For more information call 513-300-4090 or send an email.
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Crucial Short Sale Advice for the Greater Cincinnati Area
December 12th, 2007 categories: Real Estate Buying, Real Estate News, Real Estate Selling, Short Sales
Clients and friends are calling and emailing me looking for “insider information” on foreclosed or short sale properties. In Ohio, the local Sheriff’s department handles the foreclosure auctions. As a buyer, you must be willing to attend a sheriff’s auction to bid on a foreclosed property then wait 30 days for the owner to either come up with the needed money to repurchase their home or vacate.
Prior to the foreclosure process, some sellers opt to work with their lender on what is called “Short Sale”. Short Sales are sales which net the lender(s) less than the full mortgage amount. As a buyer, you may get a great deal on a property- but you must have patience with the process and the extended time short sales require between contract acceptance and the actual closing. Buyers possessing knowledge of the “Short Sale” process will have greater luck negotiating with distressed sellers.
The “short sale” process begins when the seller is experiencing difficulty making mortgage payments and the potential sale price is less than the mortgage amount. The seller or their agent approaches the lender to determine if they are willing to settle for less -if and when a purchase contract is signed.
The lender’s “loan mitigation” department reviews the seller’s request and paperwork and agrees to review (this is not a guarantee of approval) a written purchase contract from a qualified buyer. As the lender, imagine $250,000 mortgage due with a probable sale price of $220,000. After property taxes, $5,000 and sales expenses estimated at $15,400 (total expenses = $20, 400+loss on sale of $30,000) the lender has to be willing to settle for $50,400 less than what is owed on the mortgage- or “short” $50,400. Not all lenders are willing to go this route.
As the purchaser, you execute a normal purchase contract which will have an addendum stating something to the effect “contingent upon seller’s lending approving short sale payoff.” You and the seller agree to all the terms and the contract is signed by all. Unfortunately the lender’s approval does not come in a matter of hours or days- it may be weeks or months.
Be patient! The average time for the lender to review and respond to contract may run as long as 12 weeks. Once the lender has approved the short sale contract, you need to get your inspections completed and be ready to close- usually within a two week time frame.
This scenario is based on the homeowner only having one lender negotiation to handle; the time frames could change when multiple lenders are involved. There is definitely some well priced properties available in today’s market as long as you are not short sighted about the complexities of the short sale process.
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