Marsha Dashiell's Real Estate Blog

Short Sale Process
Short sales are becoming even more common due to the huge increase in the number of foreclosures which are having an effect on home values across the nation. Due to the current subprime and anticipation of the more ARM resets, many people are considering short sales but are not clear on the short sale process and how it can be used to avoid foreclosure. A Short sale is basically a process which allows the borrower to sell the home for less than what is owed on the mortgage loan and allows the seller to avoid having their credit score hit with a foreclosure penalty. Although, there is still a penalty given for short sales, the time to buy a home is shortened with a short sale versus a foreclosure home. A foreclosure can stay on your credit report for up to 10 years while a short sale can range 3 to 5 years. Depending on when you plan to get short sale completed, the IRS may consider your debt forgiveness as taxable income.

The Short Sale Process for Sellers:

1.Contact the lender to discuss the chance of a short sale of the mortgaged property and determine the lender’s process for completing a short sale, successfully.
2.The borrower is to send a lender of hardship to the lender. The letter is to include all financial difficulties, in which the lender can research to validate the seller’s financial situation. Additional documents are to be included with the letter, including bank statements, investment accounts, paystubs and other financial records.
3.A lender will review the settlement package and consider forgiving the remaining loan balance and all expenses (property taxes, etc.), real estate commissions and other expenses associated when closing.
4.A BPO will be ordered by the mortgage lender to determine a Broker Priced Opinion (BPO) to examine the prices of the home in the market by looking at comparables.
5.The lender then will review the purchase agreement and determine if the real estate commission is acceptable.
Short sales can be quite lengthly and need a good real estate agent, a lender willing to work with you on the loan and a buyer.

Success Rate? Success rate can range from 6% to 50% depending on the lender holding the loan, how many loans are on the house and the Realtor’s experience. There are many factors involved in making a successful short sale. The Realtor has be prepared and present to the bank all the required documents to prove to the bank that the owner can no longer afford the house and also prove the home is worth less than the surrounding market.

Tips:

•Be ready for anything. A short sale can be finalized with the bank in 2 weeks or take as long as 5 months.
•If time is an issue. Stay away from short sales, they are unpredictable.
•Be aware that the owner is still living in the home and depending on their situation, they may take things from the home prior to closing. Make sure your realtor is on your side.
•Find out how many loan the borrower has on the home and how much they owe.
•Continue to take additional offers while the bank is reviewing an accepted offer to keep your options opened. The buyer may have an addendum that allows them to back out at any time.
•Consult an accountant, lawyer or real estate with your important decision in deciding on a short sale.
Short Sale Buyers
The Short Sale Process for Buyers:

1.Hire a Realtor to protect your best interests, especially when dealing with short sales.
2.Search for Short Sale Propeties
3.Make an offer on a short sale property and include a Short Sale Addendum which allows you to back out prior to and after a lender has sent written approval of the short sale. This way you can continue looking at homes if the short sale is taking too long or you can back out at any time if something better comes onto the the MLS.
4.Make escrow to start AFTER the lender has submitted written approval to your agent before getting your earnest money tied up in possibly many months into a limbo account.
5.Get an appraisal and home inspection AFTER the lender has approved your offer.
Tips:

•Many short sales fail because the mortgage company is unfamiliar with the local market. Don’t expect a quick answer as they research the comparable home sales.
•The lender may request the real estate agents reduce their commissions to minimize costs.
•The lender may demand the seller to sign a promissory note to pay back the short sale. If the seller refuses, it may sour the deal.
•The mortgage company does not want to own the property, that’s the last thing they want to do.
•Make sure to include an escape provision if the process takes longer than you want or a better property comes along.

In these times of so many foreclosures many people are left with the agonizing job of
trying to find housing that will allow their pets to stay with them. Many landlords and property management companies cringe at the idea of allowing a pet, but it doesn’t need to be that way!

There are plenty of us responsible pet owners out there! Sometimes even though people can find a rental that allows their pets, they have a hard time coming up with the funds for the pet deposit. The Placer SPCA has a new program for Placer County residents called, The SOS Fund.

“The SOS Fund was started in order to help with unanticipated one-time pet expenses, specifically to allow responsible pet owners to keep their pets in situations where there were unexpected emergencies,” said Placer CEO Leilani Vierra, “This can include funding for rental deposits, emergency veterinary care, or the fee for temporary boarding, as well as other necessary expenses related to pet care.”

To learn more about this program and all the other great services the Placer SPCA provides visit their website @

www.placerspca.org/

According to The Humane Society of the United States, the lack of pet-friendly housing is one of the top reasons people surrender their pets to shelters. (Taken from October 7th 2009 press release)

Another sad situation – when people loose their homes some of them just leave their pets behind. DON’T DO THIS! Your local SPCA is there to help you! Since this housing crisis has started I’ve rescued my cat Daisy, she was from a vacant house, was starving, declawed, and left to fend for herself. Last Christmas I also adopted a 13 year old dog named Blair, she had been surrendered to the Placer SPCA because her owners had to move from their house.