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What is and what is not a “short sale”…..that is the question!

What is a Short Sale?

Well, you’ve asked the right person! My quick answer is…well, that depends! It depends on both the seller and the listing agent. I have my CDPE designation (Certified Distressed Property Expert), which means we attend rigorous and extended courses on what is and is not a short sale. Our job representing buyers that want to “play” in the short sale arena is two fold; 1) we must educate our clients to the pitfalls of a short sale and 2) tell them to put on their patience hats!

For our sellers we recommend you speak with your tax consultant and an attorney to fully understand the impact on your particular situation. Sellers should download the Arizona Dept. of Real Estate’s Short Sale Seller’s advisory by clicking here.

In 2007-2009 lenders and their investors were not prepared (or reluctant to recognize) for the volume of defaults. The banks also believed that could make more on a home by foreclosing rather than discounting their note. Over time it has been shown to the bank that on average, they net $35,000-$40,000 more per home through the short sale.

In the beginning, it was a very complicated, uncoordinated and timely process. It was not unheard of that it could take more than 9 months to a year or more to get a home to close. By 2010 the short sale system for most lenders has become streamlined and the staffing has changed from a foreclosure dept to focus on short sales.

My longest short sale transaction in 2009 was 7 months. I have just had two of my short sales (2010) approved that were entered into in May. One has closed in less than 90 days! Now that said, part of my qualification as a CDPE is to “interview” the listing agent with regard to their expertise and the true hardship of the seller. Many short sales will never close because the agent does not know how to prepare the package to be sent to the Investor (bank) or the Seller is not in a true hardship and just a victim of the market but has other assets. The bank will never approve that short sale and you can waste a lot of time waiting only to be denied.

The other issue on most short sales is that there is often two or more additional loans taken out and secured by the property. These investors are often asked to take $3,000 on a $50,000 note. As you can guess they are not quick to cooperate. Each property and each short sale needs to be understood, interviewed and have a very patient buyer through a frustrating process.

Now, aren’t you glad you asked! Sorry for the long answer. Please read below.

Below is the technical definition directly from our CDPE website.

What is a Short Sale?

A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved.

But to be technical, here’s a more official definition:

  • A homeowner is ‘short’ when the amount owed on his/her property is higher than current market value.
  • 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 then ‘sold short’ of the total value of the mortgage.

For homeowners to qualify for a short sale, they must fall into all of the following circumstances:

  • Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
  • Monthly Income Shortfall – In other words: “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
  • Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

This seems simple enough, but it is a complicated process that takes the expertise of experienced professionals. Together, you can identify all possible options and, when possible, a CDPE can assist you in the quick execution of a short sale transaction.

Questions? Call me anytime. Bill Cole, Re/Max Excalibur. 480-421-8116

“I wonder what they’re asking for that home?”

Ever seen a new sign pop up in your neighborhood or been driving in a new area and said “What do you think they want for that?”. Or perhaps you feel like you “don’t want to bother your Realtor” (honestly, it’s NO bother!). We love hearing “I’ve just found the house!”. Paaaleeezzzz….

Well, I have a great tool offered exclusively through Re/Max Excalibur. It’s called VoicePad.

VoicePad allows you to enter the house number while you sit in front of the home from your cell phone (or later at your home or office) and actually get the price of the home!

Have you ever called on the sign phone number and get the agent voicemail or worse yet the office receptionist that “can’t give you the price” so “let me take your information and have the listing agent call you right back”. “Right back” might be the next day or the next week and you can’t remember what house or where you were!

Not only will you get the price, but you will get all of the highlight information on the home like; beds, baths, and size, but you can set the system to send you an email notice on every home you call on! It’s a very cool system. I believe knowledge is power and armed with the information we can make educated decisions.

Contact me anytime for more information on this service or click here to get started today! Get out there and seize the power!

Questions? Call me anytime. Bill Cole, Re/Max Excalibur. 480-421-8116

info@foregolfproperties.com

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