Navigating Short Sales: What to Do When the Sale Price Leaves You Short

If you’re thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won’t cover your total mortgage obligation and closing costs, and you don’t have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as:

  • Refinancing your loan at a lower interest rate
  • Providing a different payment plan to help you get caught up
  • Providing a forbearance period if your situation is temporary

When a loan modification still isn’t enough to relieve your financial problems, a short sale could be your best option if

  • Your property is worth less than the total mortgage you owe on it.
  • You have a financial hardship, such as a job loss or major medical bills.
  • You have contacted your lender and it is willing to entertain a short sale.

2. Hire a qualified team. The first step to a short sale is to hire a qualified real estate professional* and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won’t try to take advantage of your situation or pressure you to do something that isn’t in your best interest.

A qualified real estate professional can:

  • Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).
  • Help you set an appropriate listing price for your home, market the home, and get it sold.
  • Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
  • Ease the process of working with your lender or lenders.
  • Negotiate the contract with the buyers.
  • Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

3. Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale “package” that accompanies any offer typically must include

  • A hardship letter detailing your financial situation and why you need the short sale
  • A copy of the purchase contract and listing agreement
  • Proof of your income and assets
  • Copies of your federal income tax returns for the past two years

4. Prepare buyers for a lengthy waiting period. Even if you’re well organized and have all the documents in place, be prepared for a long process. Waiting for your lender’s review of the short-sale package can take several weeks to months. Some experts say:

  • If you have only one mortgage, the review can take about two months.
  • With a first and second mortgage with the same lender, the review can take about three months.
  • With two or more mortgages with different lenders, it can take four months or longer.

When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender’s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

5. Don’t expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

  • You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can’t pay back the balance, talk with your real estate attorney about your options.
  • Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.
  • Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.

 

Reprinted from REALTOR® magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®.

Copyright 2008. All rights reserved.

For a printable version of this, click here.

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Published in: on October 27, 2009 at 1:31 pm  Leave a Comment  
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Think of my dad

My dad is my hero. I am who and what I am mostly because of his influence. I hate the thought of pandering religion, but if you are a religious person, no matter the persuasion, could you just pray for my dad? I recently found out that he has these blood clots in his leg and in his lungs. The most scary part of it has passed with some time in the hospital and medication to help dissolve them before they turn either into another heart attack or into a stroke. He lives about 3,000 miles away and I can’t do anything about any of this. Do you know how frustrating it is to listen to him tell me all of this and know that there isn’t a bloody thing I can do? So anyway, this is why I haven’t been so keen on posting this week. Sorry I’m not my normal entertaining self. I kind of like sitting in my little pity pot for now. It’s dark and warm in here.

I appreciate your thoughts.

Humbly,

Bren

Published in: on October 23, 2009 at 8:58 am  Leave a Comment  

Stupid Oklahoma Laws

Nope, I don’t feel up to actually writing something witty or thought provoking tonight. Hell, I haven’t been up to it for the last three nights. So I was goofing off and found a list of stupid state laws that are still on the books. Well, except the tattoo one, it was repealed. Yay for me!

  • Females are forbidden from doing their own hair without being licensed by the state.
  • Dogs must have a permit signed by the mayor in order to congregate in groups of three or more on private property.
  • Oklahoma will not tolerate anyone taking a bite out of another’s hamburger.
  • It is against the law to read a comic book while operating a motor vehicle.
  • It is illegal to have the hind legs of farm animals in your boots.
  • People who make “ugly faces” at dogs may be fined and/or jailed.
  • Cars must be tethered outside of public buildings.
  • Oral sex is a misdemeanor and is punishable by one year in jail and a $2,500 fine.
  • Anyone arrested for soliciting a hooker must have their name and picture shown on television.
  • It’s statutory rape for a man over 18 to have sex with a female under the age of 18, provided she’s a virgin. If she’s not a virgin, it is okay, but the said person must be over 16. If both parties are under 18, then the law does not apply.
  • Tattoos are banned. (Overturned in 2006)
  • No one may spit on a sidewalk.
  • It is illegal to wear your boots to bed.
  • It is illegal to have sex before you are married.
  • Fish may not be contained in fishbowls while on a public bus.
  • Tissues are not to be found in the back of one’s car.
  • It is illegal for the owner of a bar to allow anyone inside to pretend to have sex with a buffalo.
  • If you wear New York Jets clothing, you may be put in jail. (Ada)
  • If ones dog is run over by a car, the owner must pay for the dog’s disposal. (Bartlesville)
  • No person may own more than two adult cats. (Bartlesville)
  • It is illegal to cause “annoying vibrations” in the city limits. (Bartlesville)
  • Persons may not play catch on any city street. (Bartlesville)
  • Molesting an automobile is illegal. (Clinton)
  • It is unlawful to put any hypnotized person in a display window. (Hawthahorne)
  • Women may not gamble in the nude, in lingerie, or while wearing a towel. (Schulter )
  • You may not open a soda bottle without the supervision of a licensed engineer. (Tulsa)
  • Elephants are not to be taken into the downtown area. (Tulsa)
  • One’s mode of transportation must be tied up while not attended. (Wynona)
  • Mules may not drink out of bird baths. (Wynona)
  • Clothes may not be washed in bird baths. (Wynona)
  • It is illegal to tie a horse in front of city hall. (Yukon)
  • While passing another vehicle, you must honk your horn. (Yukon)
Published in: on October 20, 2009 at 6:26 pm  Leave a Comment  

Harvest of Homes 2009

Are you thinking of purchasing a new home or would you like to tour some new homes and see the latest trends in interior paint? Well, I for one will be at The Crossing at Skiatook this weekend. The floor plans all start with 3 bed/2 bath/2 car garage and the starting model is 1142 sq ft and starts at $110,900. Come see me!

Harvestannounce

Check out the map for all the featured homes, just make sure you come to #8 and visit me and my friend Robert Phillips. Robert is the New Home Specialist for Rausch Coleman Homes in Skiatook. He has my personal stamp of approval for not being one of those schmuck salesmen. He’s good people.

harvestmap2009

This is one of my favorite models with Rausch Coleman Homes. Seriously, if you are looking for new construction that won’t break the bank, come talk to me. I’ll be there all day tomorrow!

RC Crossing FloorPlan

 

Published in: on October 16, 2009 at 8:38 pm  Comments (2)  

Random Thought #1

Watching CSI and a guy commits suicide in front of another character. The guy that seen the act makes a comment about being the last eyes looked into and a thought occurred to me. If your eyes are the last eyes looked into before a desperate person takes their own life, it makes me wonder if the desperate person seen saw salvation in those eyes or if they saw damnation.

Published in: on October 15, 2009 at 9:42 pm  Leave a Comment  
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Who gets all that commission anyway?

Not me. Don’t get me wrong, I get some of it, but not nearly as much as you might think.

Are you thinking of selling your house and you just can’t get past the amount of money that you’ll have to pay a Realtor to do it? Without getting on my soapbox about the value of a Realtor and why it really is foolish not to hire one, I’d like to share with you why sometimes being in the real estate business really is a noble cause.

Here’s how that 6-7% of your selling price breaks down. These numbers are just commission, mind you, and do not reflect all the closing costs of title companies, attorneys, local and state governments (taxes and such), or any of the other fees and charges associated with closing on your home. We’re only talking about the commission. That money typically gets split four ways:

1) the listing Realtor

2) the listing Realtor’s broker

3) the selling Realtor

4) yep, you guessed it, the selling Realtor’s broker

Now, all parts are not exactly divided equally here either. So, for simple numbers, lets say I sell your home for $200,000 and charge a 6% commission and I say that I will split the commission with the selling Realtor for 3%.

$200,000      Sales Price       x      6%  Total Commission     =      $12,000

Now divide that in half between the Realtors. I get $6,000 and the selling Realtor gets $6,000.  But we forgot the brokers. Their take comes right off the top before I ever get to see a check with my name on it. Most brokers will take anywhere from 25-50% of the commission, based on the Realtors experience and profit share of the total business the office does. So we’ll say that both the listing broker and the selling broker are taking half, since this is pretty typical unless you are the office rock star and we won’t get into that as their businesses are managed very differently than the typical Realtor. So now my check is $3,000.

But wait, there’s more. Now uncle Sam want’s his part, so lets take another third off and I’m down to $2,000. And then there’s the office fees, the licensing fees, the professional memberships (National Association of Realtors, State Associations and Local Associations), continuing education that is required and the gas to get us where we need to go.

After all that, then we get to feed our family and pay the bills.

Published in: on October 15, 2009 at 5:40 pm  Leave a Comment  
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Ack! Technology is supposed to be my friend!

I have been working diligently to 1) find a blog program that is easy for me to use and 2) convenient. Well, 50% is good, right? Typically, I am very tech savvy. Ask anyone that really knows me. But for the last several months, I have been trying to figure out wordpress. It has an app for my blackberry which is why I chose it. It’s convenient to blog from my phone since the phone is ALWAYS within reach. I break out in nervous sweats if I am too far from my phone. Hell, I even take it to the bathroom with me. Now THAT’S obsession! But wordpress is proving to be my nemesis. I’ve created pages and written blog posts and played around with the site and I still can’t get it to RSS to my webpage. GRRR! There has got to be an easier way to do this! If (when) I find it, I will blog it for other KW Realtors to get help from this.

Published in: on October 14, 2009 at 6:50 pm  Leave a Comment  
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What to look for in a Realtor

Here is a list of things to consider when trying to decide on a Realtor.

1) Someone local. BEFORE you choose a Realtor, ask them where they operate their business. I am licensed in the State of Oklahoma and technically, I can help you buy and sell anywhere within this state. But just because I can, does not mean that I am an expert of every inch of every county. And just because someone offices from one location does not mean that they are not an expert in another location nearby. Ask, you may be surprised by how much your Realtor really does know about the community.

2) Someone you are comfortable with. Remember, you may be working with this person for several months.

3) Someone who doesn’t have a billion clients to serve besides you. We all want to get our questions answered in a timely fashion, but if your Realtor is running around trying to serve too many people, how much time are they going to have to dedicate to your needs?

4) Someone who will communicate well with you. Find a Realtor you can contact in several different ways. Email, text messaging, phone calls, etc. There are just too many different ways to get your needs met and your Realtor should be able to meet those needs. Just remember, Realtors are people too. Please don’t call after 8pm unless it’s an emergency or you have an appointment. Realtors have families, personal responsibilities, errands and hobbies too.

5) Someone who is tech savvy. Top Realtors utilize technology  to help them stay informed and to communicate with their clients. E-mail, smart phones, electronic newsletters, websites, digital photography and video allow agents to share properties that they’ve previewed, provide feedback and keep clients updated on developments.

6) Someone with character, has integrity, rapport, and is trustworthy! Remember, you may be working with this person for some time and you want to be compatible. Choose someone with passion, creativity, enthusiasm. Talk to more than one Realtor. You may like more than one but choose the one that you think will do the best job for your money.

Purchasing a home or selling your home should be about you. As personable as your Realtor may be, they are providing a service for you. Choose wisely.

Published in: on October 14, 2009 at 3:05 pm  Leave a Comment  
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Hurray! I figured it out!

Ok, on the subject of posting your blog from wordpress to your KW website… Here’s how to do it:

1) Log into KW.com

2) Under “Home” click on “Agent Website Administration”

3) Go to 3.10 (on the left) by clicking on “3.0 Add Your Content” and then on “3.10 eAgentC Blog and RSS Feeds”

4) Either create a new feed (if you haven’t created a blog before) or click on “edit” next to your current blog if you want to replace it with this wordpress blog.

5) Name your blog and fill in all the boxes with the appropriate information.

6) In the box that says “RSS Feed URL”, enter your wordpress address. Mine is https://brentatro.wordpress.com, but at the end of that you NEED to add /?feed=RSS2 so that the entire entry should look something similar to: “http://yourblognamehere.wordpress.com/?feed=rss2″

When you have it all entered. Click on “Preview Site” (its the orange box on the left) and then find your blog link and see what the page looks like. I hope this helps. If you need additional help, you can always call me at 918-829-2127 and I’ll be glad to try to figure it out with you.

I’m just tickled I was able to figure it out.

Published in: on October 14, 2009 at 2:11 pm  Comments (5)  
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