short sales
Information For Buyers and Sellers Regarding Short Sales
July 6, 2010 by Sharron · Leave a Comment
Most people do not understand the process of short sales, it is important whether working with buyers and sellers on a short sale that you explain what a short sale is, how is works and how long you could potentially wait for a successful short sale.
This information below is very useful and I recommend that all of my clients read up on short sales so they know what they are getting into with regards to time that is takes to get a definate answer from the bank and understanding what a short sale is.
Q: What is a short sale?
A. With real estate prices currently at 2005 levels, many homeowners find themselves needing to sell, BUT discover they owe more than the homes current value. Reason’s for selling can vary from a job transfer, to a homeowner no longer able to make mortgage payments due to job loss, recent divorce, business failure, or a Sub-prime ARM reset.
If the reason for selling can be documented and attributed to a distressed situation, a homeowner may qualify for debt forgiveness. To do so, requires the homeowner to prove that they do not have, or will not have the money now or in the near future to pay back the difference between the homes value and the mortgage balance.
Q: How is the process initiated?
A: Before any conversation with the lender, the home is listed for sale. While the home is listed for sale, the homeowner and their agent should prepare a “short sale” packet, including the seller’s financials and a “hardship letter”. Upon receipt of an offer, the seller can sign off on the terms of sale, but terms are not official without the lender’s approval.
The sale status now becomes Pending: Back-Up Offers Requested, as most lenders will require listing agents to submit all offers until approved by the lender. In the meantime, the short sale packet is place in a que and awaits review by the lender. An initial response from the lender usually takes between one to three months, but can take longer as we have all discovered.
Q: When does the bank become involved?
A: Lenders typically do not talk to the seller or listing agent until there is a purchase offer in hand. The list price may be far less than the bank is willing to initially accept, which could cause confusion with the buyer.
When a purchase offer is received by the lender, a Broker’s Price Opinion is ordered, and the lender assigns a negotiator to work with the lender, investor (eg. FNMA) and the buyer to help them come to terms. Once the lender approves a price, they send an approval letter with an end date by which the transaction must close.
The timeframe for an inspection and financing contingency typically begin upon lender approval. Because of the lengthy wait, or because of negotiations involving the lender’s higher BPO, it is not unusual for the first buyer to walk away. Many agents have found that the price the lender is willing to accept, decreases as the foreclosure date draws closer.
It is the BUYER’S agent’s job to research the seller’s financial situation to determine the likelihood of the bank accepting the desired price. It is essential to explain the process to both buyers and sellers to manage expectations and eliminate last minute confusion.
It’s important to know that lenders will negotiate, so start an offer below your walk away price. Today, lenders are beginning to realize that losses are greater with a foreclosure, than with a short sale. Because of the large number of pending foreclosures, lenders are more inclined to work with interested buyers before the process reaches foreclosure.
Q: Do most short sale require the buyer to skip an inspection?
A: Because homes in distressed situations are often not cared for, it is highly recommended to get an inspection. The inspection can be done upon mutual acceptance with the seller, to avoid waiting the 1-5 months for lender approval. Obviously this could put the $400-$500 at risk, should the transaction not close.
Should the inspection uncover needed repairs, you may find that the seller is not in a position to make those repairs. In this case, it may be possible to re-negotiate the price with the lender, but it is more likely that that the investment in an inspection will do little more than alert the buyer as to the condition the home and what items need to be addressed in the future.
Q: Some say that only 10% of the short sales come to sale and the rest become bank owned. Is this a realistic success ratio?
A: Short Sale Buyers need to be flexible!!! They are wise to look at other options while waiting on the lender response. And because of this, the numbers are skewed because so many short sale buyers walk away when they find a better opportunity. When worked properly, your success ratio will dramatically increase.
short sales
Buyers Beware: What you Need to Know if Buying a Foreclosure Property in Buffalo Grove Illinois
June 1, 2010 by Sharron · Leave a Comment
This is my first post in my New Series regarding Foreclosed and Short Sale Homes in the Northwest Suburbs of Illinois.
The Foreclosure Market in the Buffalo Grove area is about to become more active in the coming months and the opportunity is going to be available for savvy buyers. I know many people that are actively working with the lending institutions and have information prior to these Buffalo Grove Homes coming on the market.
The first thing you want to know is how to understand the Foreclosure Market which is different than the Short Sale Market.
Foreclosures Verses Short Sales
A Foreclosure is the legal process by which an owner’s right to a property is terminated, usually due to default. Typically it involves a forced sale of the property at public auction or the bank will list with an agent in what we know as a bank sale with the proceeds being applied to the mortgage debt. Bank Sales can typically close quickly once an offer has been accepted.
Short Sales are commonly known as pre-foreclosures and occur when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed. Although it can be a timely wait for answer from the bank on a Short Sale, once your offer has been signed by the seller and submitted to the bank, the buyer is in no competition with other buyers.
What You Don’t Know About Foreclosures
The Old Saying is what is too good to be true is usually the case. Foreclosed properties in the Buffalo Grove area are almost always priced 10% under value and the Banks are doing this to force multiple offers from buyers that will go way over the asking price. They will collect offers for at least a week on foreclosed homes from all buying parties before they will make a decision on which offer to accept. Unfortunately the Banks have different rules then the rest of us folks. So here is where the Buyer Beware comes in: If you are looking to purchase a Foreclosed Buffalo Grove home, do your homework! Work with an agent that knows the process and has a great team working on your behalf.
For more information on Short Sales and Foreclosures visit my website at www.NorthernIllinoisBankOwned.com. It goes over subjects such as:
The website has a ton of information that is useful for home buyers.
As a Buffalo Grove Realtor out of Coldwell Banker, I can help buyers and sellers with Homes in Buffalo Grove. If you need a real estate expert, look no further. The Sharron Kelley Team can help you with all of your needs. Contact me, Sharron Kelley at 847-465-3638 or email me at Sharron@NorthernIllinoisHomes.com. Visit my website www.NorthernIllinoisHomes.com for all of your real estate needs.
short sales
What Are the Lenders Doing to Real Estate Values in Buffalo Grove and Elsewhere
May 16, 2010 by Sharron · Leave a Comment
We all live in a different world today when it comes to selling homes in Buffalo Grove. As a Buffalo Grove Realtor it is not easy to explain the home selling process and new values of homes from where they were two years ago.
If you recently purchased real estate, then most likely the value of your home today is lower then what you paid for it. Short Sales and Foreclosures are now considered as home comparables by the lenders. The banks do not care that you may have put in $50,000 in recent improvements; they are just looking at numbers.
I recently had two lender appraisals done on two of the properties that I sold and both appraisals came in under what the buyers of these homes paid for them. Today we have two appraisals, the first one being from an appraiser and the second one from the underwriters at the bank. The underwriters are making the final decision in the loan committees.
Real Estate Values in Buffalo Grove are Determined by Appraisals
What is so very difficult for our Buffalo Grove Home sellers to understand is that if the bank decides to come back with a different home value then the buyer will only get the loan based on the what bank says and not the sale price.
In today’s Real Estate market the Buffalo Grove home buyers are not willing to pay over the appraised value made by the bank so we go back to the beginning. The sellers do not want to reduce the price and the buyers will not pay more.
In the End, the sellers have to agree if they want to sell their home. What the banks are not telling you is that they are now sitting on millions of foreclosures that will be coming on the market and the Commercial Real Estate Market is about to start a massive foreclosure process.
This is going to drive the residential housing market in Buffalo Grove and elsewhere for years to come, so if you want to sell your home; waiting is not going to be financially beneficial.
With Elections due to happen in the near future and new banks being built on every corner, maybe it is time for us to speak up. Our Money bailed out the banks and the control they now have over our lives and retirement funds is totally out of balance.
If you are would like to find out more information about your Northwest Suburban home in Illinois contact me your Buffalo Grove Realtor, Sharron Kelley at 847-465-3638 or email me at sharron@northernillinoishomes.com. For more real estate information visit my website at www.NorthernIllinoisHomes.com.
short sales
What is a Short Sale?
September 24, 2009 by Sharron · Leave a Comment
Over the past year there has been a lot has been said about short sales and the difference between the short sale process vs foreclosure. These are words that were hardly used before 2008 and now we hear them almost daily on the news, on line and in the newspapers. I found this very simple explanation in the attached article which I hope will be helpful to you. I am well versed in this process and have taken classes and have my CDPE certification. Please contact me if you need help, as I would be happy to explain this all to you. We have a team of professionals that can help save your credit.
short sales
Foreclosure and Short Sale Solutions with Loan Modifications
September 12, 2009 by Sharron · Leave a Comment
I just heard on the Today Show about a websitewww.makinghomeaffordable.gov that can help with loan modification and eligibility. If you are having trouble with a balloon loan or are in pre-foreclosure take a look at this site. Don’t let your homes become the next short sale or foreclosure on your block. I have a lot of helpful information about distressed properties, contact me, Sharron Kelley at 847-465-3638 or email me at Sharron@NorthernIllinoisHomes.com.
short sales
Great Article From The Administration Regarding Loan Modification
March 3, 2009 by Sharron · Leave a Comment
I was received this article from the White house on Loan Modification and it sounds like help is on the way. Don’t let your home or a friends homes become the next short sale or foreclosure in the neighborhood. Take a few minutes to read this article. You may not be in trouble, but you may be able to pass it on to a friend who is.
