Mary Lou Fuss
Home Builders Warranty Corporation
Mary Lou:
Was nice meeting you yesterday, twice. I look forward to meeting with you early next week. I promised some more information on short sales. Please let me outline my thoughts.
Acheiving a successful short sale is one of the most critical financial challanges you can undertake. Handled correctly, you can walk away with little impact on your credit and no lingering debts. Handled incorrectly, you can suffer up to 10 years and trash your credit for years.
Obviously, you want the best most experienced Realtor working diligently for you.
I work with several Realtors who handle short sales, but feel that one has a great understanding and success rate than any others. His name is Brian E Vickers, P.A. His number is: 292-8775.
I have seen Brian successfully save sellers $100,000 in debt by knowing how to deal with the banks. He understands their mind set and is able to move them along to a successful conclusion. He is currently working to remove $1,000,000 in debt from an investor.
Attached to this email is a short explanation on how short sales can be of benefit to a seller.
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Benefits of Short Sales: For the Sellers
A FRESH START!
· Banks hate foreclosures, they affect their ability to lend money to other clients. It can reduce the amount the bank can lend by a multiple of the loan amount in default.
· Why would a lender sell a property at a below-market price with special terms? The answer is pure economics. A short sale allows the lender to avoid a number of the costs they typically incur during the foreclosure process, such as attorney’s fees, eviction costs, property damage, insurance, utilities property management, taxes and the costs of listing with a real estate agent.
· You as a home owners should avoid foreclosures because it haunts your credit for up to 10 years. It will drop credit scores by 250 points making all financing more expensive.
o It can take 3 years or more to be able to qualify for reasonable interest rates after a foreclosure.
o Banks will get a judgment against you and may collect in the future.
· Depending upon how it is handled and the sales price there could be no affect on your credit for doing a short sale. A good short sale expert is key.
o Short sales can take off 100 points from your credit score. (A much better outcome than foreclosure)
o Recovery time on a short sale is considerable less than a foreclosure. You can qualify for the best rates in as little as 18 months.
o The home owner may be able to walk away without a default judgment on their credit.
While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect your credit rating, at least short sellers avoid having a "debt discharged due to foreclosure" on their credit reports.
Short sales show up on a credit report as a "pre-foreclosure in redemption" status and can result in a credit score reduction of 100 points or less. After the sale, the mortgage may show up as "discharged."
If buying a home is a future goal, then a short sale is the better option for many.
A good real estate agent is key to making the short sale work. He or she must have experience and the ability to speak in terms the lender understands. The more experience a Realtor has, the better the job he or she can do for the Seller.
Homeowners cannot simply decide that they want to
unload a home with a short sale; the lender must agree to it. For that to happen, you need to have a strong experience advocate on your side.
Short sales are handled by the bank’s loss mitigation department or its equivalent. Banks don’t advertise these deals so experience cutting through the red tape is essential to success.
· Banks may say no several times before they agree to the price.
o The Realtor must justify the lower sales price.
o An appraisal showing why the lower price is justified may be necessary.
o Sales trends, list prices and newspaper articles may help with getting the price down.
o Showing progressively lower list price may help the bank agree to the lower price.
o Having bids for work needed on the property may help the Realtor justify the lower price to the bank.
· One of the most difficult challenges is finding the bank executive with the power to sell the property.
· The bank will want to see proof that the seller can’t pay the mortgage.
o There are ways to legally help the seller protect some or all of their assets.
o A land trust may be of help.
o Annuities are generally protected.
You are not alone!
With 1,000 foreclosures in the month of May and June 2007 and more on the way. There are over 14,000 options arms about to reset to higher interest rates meaning more short sales and defaults are on the horizon. The number of home owners or investors who are behind on payments or about to fall behind must far exceed the level of foreclosures making the potential pool very large. In addition:
· The home owners don’t care how much the home sells for since they get nothing anyway.
· Listing the home and continually dropping the price until the bank agrees, seems the surest way to beat a downward spiraling market. If you can justify lower prices, you can get the bank to agree to the lower price..
· With credit restoration, you can be back in the market in as little as 18 months!
Once you decide to a short sale, the bleeding stops immediately!
A short sale may be the best option to protect your future credit and get your credit healing faster than any other option.
