Real Estate Short Sales - What You Need to Know Now
Real Estate Short Sales - What You Need to Know Now
By Greg Jordan
Within the last year, the real estate short sale process has resembled a Lewis and Clark expedition - a trip into the unknown, not knowing where you were going to find yourself the very next day. And even though the process is becoming more clear, it is not getting easier.
The number of short sale attempts increases every day, driven by the equal and opposite forces of increasing mortgage payments, and falling home values, in the backdrop of a recession. Nationally, foreclosure filings have increased 97% since 2006, and median home sale prices continue to decline. Most experts expect these numbers to get worse through 2010.
Short sales are not new, but what is new is the super-sized scale that is overloading our financial and legal systems. A system that used to handle a rare short sale is now completely overwhelmed, slowed by bureaucracy, indecision, outdated policies, and a lack of leadership in the financial community.
What you need to know right now:
The short sale solution is not perfect, but it is one of the best overall solutions available
- Short sales help the seller. The seller can be forgiven their debt or a large part of it, and short sales are easier on the credit rating than a foreclosure. Forgiveness of the loan is not guaranteed - it depends on whether the bank or mortgage holder wants to get a judgment for the difference. However, the best thing for an investor or homeowner who cannot pay usually is to get out from underneath the property as quickly as possible.
- Short sales help banks recapture as much of the asset as possible, without taking ownership of a property.
- Short sales help the community. The community can avoid having another boarded up house in the neighborhood, and more quickly get someone in the house who is paying taxes.
- Short sales help real estate people earn something on these transactions, and put food on their table, although commissions and fees are generally less.
- Short sales help other investors or homeowners. More investors or homeowners will be able to afford a short sale property’s bargain price.
Lenders are becoming more responsive to this crisis
Until recently, lenders have not been willing to accept many short sales, preferring to demand what is owed and then take legal action. They seemed not to understand that yesterday’s solutions do not work in a market that has suddenly lost 10 years of appreciation. Slowly they have begun to offer mortgage assistance plans, automate their communications, hire and train more staff, and they are learning how to stop treating short sellers as though they were criminals.
Progress has been made, but there is a long way to go, particularly in providing credit for buyers. Be aware that there are great differences between banks in process, programs, and collaborative attitude.
Resources that can help
As usual, entrepreneurship flourishes even in a crisis, and people have created helpful services. There are a growing number of professionals who specialize in short sales. Be sure to find lawyers, real estate agents, and title companies, who have experience in this area, and who have contacts at the banks. Quality and price of the services vary from $400 to $3000 and above, depending on who they are and how much they do. Some require upfront money and some take their fees at the closing table. Get referrals, or use an internet search to find options for resources that you may need.
Lessons from interviews with short sale professionals
- Have patience - the system is really jammed right now and the backlog grows every day.
- The process itself is simple, but it is far from easy to implement. Be diligent with the paperwork.
- Engage experienced legal and professional help early in the pre- preforeclosure stage. You’ll need professional tax advice also. Find people who are experienced with short sales.
- Understand as much about this process as possible. You can save time, trouble and money by being knowledgeable.
- Everyone is learning this process together - including the banks.
- Make sure the offers submitted to buy the property are legitimate and close to market values. Nothing slows the system more than an insultingly low offer.
Greg Jordan is an author, trainer, and consultant. He was in senior leadership positions with two fortune 500 companies before beginning his own consulting practice. He has written on business topics, and led workshops and seminars on creating effective businesses.
For more information on short sales, you may be interested in Short Sales In Depth: Volume #1
For more information on the best free project, visit: http://www.getpaidforwebtime.com
Article Source: http://EzineArticles.com/?expert=Greg_Jordan
http://EzineArticles.com/?Real-Estate-Short-Sales—What-You-Need-to-Know-Now&id=1949796
