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Staying in your home during a short sale

August 21, 2010

Staying in your home during a short sale?

I meet a lot of sellers that are in need of my help with a short sale on their home and one of the most common questions I get is whether or not they should stay in the home during the short sale process. Often these sellers cannot afford the mortgage any longer but are able to afford a rental and are considering renting during the short sale term. In realty there really is no reason to leave the house unless the house is in such bad shape that it is not livable.

If you are able to stay in your home during the short sale process then you should. Most sellers during the short sale process who are not able to afford the mortgage are not making any mortgage payments, whatever money they have left over they should save and use it when it is time to move out. The saved up money will be used for moving expenses as well as a deposit on a rental unless living arrangements have been made with friends or family members.

What many sellers do not realize is that a short sale is like any other house sale except the bank has to approve the offer. The owner should maintain the home to the best of their ability and make it look presentable during showings just like any other sale.

Another reason why you should stay in your home during a short sale is because your lender would most likely prefer it. They know that if you are in the home any problems that happened will not go unattended. Loads of problems happen when a house is vacant such as vandalism or if a water pipe bursts and causes tens of thousands of dollars worth of damage to the house, mold issues, mice, rats etc. So if anything you are helping the sale and in essence helping the bank lose less than they already are. The less the house sells for the harder it will be to approve the short sale with the bank.

A vacant house is an attention grabber, if people in the area or even prospective buyers who have seen that house realize the house is empty all the time they may come by “unannounced” to look around or who knows what else. Many of these things can lower the value of the home and as I mentioned above, the lower the offer is for the house the harder it may be to get the short sale approved.

If you must vacate your home whether you are relocating or moving out of state and staying in the home during the short shale process is not possible, no one is going to force you to stay. If you do leave the area and not able to check on the house, if possible have someone check on it once a week. If you can afford to have the lawn cut during the summer then that will also help the whole process and appeal of the home.

How long does the short sale process take? The whole process from the day the house is listed until the short sale is approved and it is time to move out could be 6-9 months or more. If could be even less than that but a conservative timeframe is about 6 months. I just closed on a short sale that took 3.5 moths from the day the offer was submitted. It took less than 2 months to find the buyer so less than 6 months for the whole process.  If you do receive an offer on your home and if your agent and short sale attorney tell you that the process is going well you should then start consider looking at rentals or making other arrangements. Banks are not very flexible with a closing date. Once they approve the short sale they will want to close in 2-4 weeks.

If you need advice on a short sale or want to know if you qualify for a short sale please call me or email me at [email protected].

For more info on the short sale process please visit PutnamWestchesterShortSales.com

If you are a buyer and interesting in buying a short sale or foreclosure home please visit: Westchester Putnam Short Sale Listings

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How to buy a short sale

February 8, 2009

Buying a short sale in Putnam and Westchester County

 
In today’s real estate market it is a great time to buy a short sale. During a short sale, the owners of the home are selling their home for less than what they owe the bank. The asking price on short sales can be anywhere from 10% – 50% less than what the sellers owe on the mortgage. Read more about Short Sales.
 
The good thing about short sales is of course the price. Most short sale listings are priced at or under market value. The one thing to keep in mind when considering a short sale is that they typically sell for at asking price or only a little bit under asking. The reason is because the Realtor who listed the property did a market evaluation of the home and listed it for what the “market” says it is worth..or hopefully they did if they know how to do a short sale. The Realtor does not have to deal with seller objection to price compared to a house that is worth $400,000 but the seller wants to ask $450,000 or $475,000. So when you see a short sale, assume that price is a considerable discount compared to other properties on the market.
 

Bidding on a short sale:

 
Here comes the tricky part about short sales. Most banks do not hear “offers”, they are not in the business to keep calling agents back with counter offers, if a buyer wants to put an “offer” on a short sale typically you go right to contract on the home. The “offer” is presented to the agent who presents it to the seller and if it is a strong offer, under advisement from the agent the seller will accept the offer. The same holds true if the offer is low and the agent and seller feel it is a “low ball” offer, they will turn it down and it will never reach the bank who has the final say on the offer.
 
Once the offer is “accepted” by the seller, it then has to be submitted to the bank for approval. At this point you would put go to contract, sign the contract and put your deposit down, still not knowing if the bank accepted (approved) your “offer”.
 
The bank could take from 30-120 days to respond and if the bank feels the offer is too low they may take even longer to respond. Banks will not waste time responding to a low offer and will get back to the agent when they feel like it and that could take months. So a strong offer (at or very close to asking price) on a short sale is the 1st step to increase your chances of the bank approving the sale.
 
A lot of buyers think they can just throw out a low bid which is not the case and even if a “low” bid was accepted by the seller the bank still has an appraisal done and then they compare your offer to their appraisal and if it is too low, the deal is dead. So short sales are even harder to negotiate down on price than “normal’ listings, but keep in mind short sales are typically priced aggressively.
 

Bank approval of a short sale

 
If you have not heard back from the agent with an answer to your offer/contract in 2-3 weeks from the time the agent submitted your contract to the bank for approval, assume that the bank has not even considered your offer because it was too low and you will need to come up with a much higher offer. If the bank does accept the offer, be prepared to close in 30 days of acceptance or less or the bank will not approve the sale.
 
The last short sale I closed on had an asking price of $360,000 and my clients put in a bid of $350,000 and the bank approved it, and the seller owed the bank $675,000! Also keep in mind the agent must be skilled at doing short sales and know the correct info to present to the bank or the deal will never be accepted by the bank. I am a Certified Distressed Property Expert (CDPE) and have the skills and knowledge to handle short sales of any nature. There are only 1,000 CDPE’s in the US so if you can try to locate a CDPE in your area to help you with buying and more importantly if you are a homeowner, selling your home in a short sale.
 
If you have missed payments on your mortgage or will be soon and are facing foreclosure read my Foreclosure Prevention page to learn about alternatives to foreclosure and saving your credit.

Useful link:

View all Putnam Westchester Short Sale listings

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Westchester Putnam Short Sales

February 1, 2009

Short Sale

When a homeowner owes more on a property than it is currently worth a short sale is an option. When lenders agree to do a short sale it means the lender is accepting less than the total amount due. A short sale is an alternative to bankruptcy or foreclosure proceedings.

A short sale occurs when a negotiation is entered into with the homeowner’s mortgage company or companies to accept less than the full balance of the loan at closing.  A buyer closes on the property and the property is ‘sold short’. These negotiations are often done with a licensed Realtor on the homeowners behalf. In the past it was rare that a bank or lender would accept a short sale however due to overwhelming market changes lenders have become much more negotiable when it comes to these transactions.  Recent changes in policy within many organizations have made the chances of getting a short sale approved even higher!
 

Why would a lender accept a short sale?

One of the most common misconceptions that a very high percentage of homeowners have is that their lender is lying in waiting eager to jump out and take their home.  Nothing could be further from the truth.  Realty is that banks are in the business of lending money, not the real estate business, and they don’t want to own your house. 

In fact a foreclosure has far-reaching financial and regulatory consequences that most people are not aware of. The truth is that on average, it costs a lender $60,000 to $100,000 to foreclose and dispose of the average $200,000 property.  This doesn’t even take into account the opportunity cost the bank incurs by having assets tied up in the house.  A short sale is a sure thing for a bank and the bank keeps the property off their books.
 
In order to start the short sale process a homeowner will need to seek the services of a Realtor who works with banks on a regular basis helping homeowners. There are only 1000 Certified Distressed Property Experts (CDPE)  in the United States and a CDPE is one of the best chances a homeowner has to complete a successful short sale! There are NO FEES involved or costs to the homeowner, the bank pays all fees including closing costs, late fees and even attorney fees!
 
 
If you would like a no obligation free phone consultation about your options to help prevent your home from going into foreclosure call me at 914-403-4868 or email [email protected]
 
 
Westchester and Putnam Short Sale Properties.

 
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