Short Sale Insight Available From Boots-on-the-Ground Experts, And Just In Time
by Broderick Perkins
Thursday, August 09, 2012
Two new resources come to the rescue.
The first is free from the National Association of Exclusive Buyer Agents (NAEBA) and it comes with a title as long as it takes to complete a short sale: "Short Sales Are a Long Shot For America's Home Buyers - 51 Critical Things Buyers Need to Understand About Short Sales."
That's right - 51 critical items you can read while you are waiting the average 300 days or so it'll take for a short sale to close. You'll need every critical item.
The second is from a homeowner who learned her way through two short sales and lived to write about it. It's a $5 self-published ebook worth every penny, even if you are just following along with a real estate agent, attorney or other expert helping your through the short sale ordeal.
Jane Evers' "A Homeowner's Guide To Short Sales," (Stillwater Media, Inc., $4.95) delivers on the promise "Discover things you never thought you'd need to know."
Evers, an educator also learned in marketing, corporate communications and multimedia productions, penned the ebook after two short sales. Her motivation came during the short sale process when she was unable to find short sale resources from the distressed homeowner's point of view. So, she wrote the book on the subject.
In a short sale, the homeowner typically is "underwater," that is, the property is worth less than the mortgage, but the lender forgives a portion of the debt, provided a qualified buyer is available to purchase the property.
Short sales can leave a blemish on your credit report, but not as bad as the black mark left by a foreclosure or bankruptcy.
Short sale market
Short sales are big and getting bigger and, along with such market sector growth, unfortunately comes fraud. Information from both publications show you the short sale ropes and help you avoid getting ripped off.
According to RealtyTrac, short sales were up 25 percent from a year ago in the first quarter this year. They were also up 16 percent from the last quarter of 2011, revealing a rising tide.
At their highest quarterly level since the first quarter of 2009, short sales accounted for 12 percent of all sales during the first quarter, up from 10 percent of all sales in the previous quarter and 9 percent of all sales in the first quarter of 2011.
More short sales are coming to market for a few reasons.
First, provided the property is in good shape, they can be a real steal. Short sales sold for an average price of $175,461 in the first quarter, down 4 percent from the previous quarter and down 10 percent from the first quarter of 2011. The first quarter average price was the lowest short sale average price since RealtyTrac began tracking the data back in 2005.
RealtyTrac said the short sale average price was 21 percent below the average price of a non-foreclosure home, up from a 19 percent discount in the fourth quarter and a 16 percent discount in the first quarter of 2011.
Banks often see the deal as more advantageous to them than foreclosures, which come with carrying costs.
"More banks are now recognizing that treating the problem of delinquent mortgages with short sales rather than bank repossessions can help them minimize their losses and also avoid taking on more REOs, which they then have to manage, maintain and market for sale," said Brandon Moore, RealtlyTrac's CEO.
First quarter short sales took an average of 306 days to close, down from an average of 308 days in the previous quarter but still up from an average of 256 days in the first quarter of 2011.
"Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions," Moore said.
But a lot can go wrong when wrangling a nearly year-long sale.
In addition to bargain prices and greater lender cooperation, more homeowners are coming to market for a short sale because they were lured there by a scam artist making promises he or she has no intention of keeping.
Need-to-know short sale information
Here's a sample from NAEBA's list of 51 short sale facts that'll have you coming back for more - which is the idea. Get both publications and get in the know.
Many short sale contracts do not close. Short sales are complex transactions. The numbers are improving, but NAEBA members say only about half of homes listed as short sales eventually sell as short sales. In some markets the number is smaller. Failed short sales typically end up as foreclosure or renegotiated loans.
Hiring a "short sale negotiator" does not guarantee success. There's a cottage industry of companies claiming to specialize in short sale negotiations, but are often national companies unfamiliar with the local real estate market. Others are just crooks. Mortgage assistance fraud is outlawed, but so is bank robbery. There is no accreditation process for this industry and that makes it difficult to know who is a grifter and who isn't. Even an expert can't guaranteed a successful short sale.
Likewise, an incompetent, unprofessional or inexperienced listing agent can kill the deal. The large percentage of short sales and high turnover rate in real estate comes with the potential that you'll get partnered with a listing agent conducting his or her first or second short sale - if you don't do your homework. Buyers can't choose the listing agent, but when things appear to be bogged down the buyer can contact the listing agent's broker for assistance.
Short sale documents often don't obligate the lender to complete the transaction. Once the lender makes a decision, they typically will stick with it. However, before the deal is sealed, lenders will bail on you in a heartbeat if stronger offers come to the table early, especially if the lender can recoup more of their loan.
In some states, just when you thought the deal was behind you - after closing or just before - the lender can come after you with a deficiency judgment for the difference between the selling price and the mortgage balance. That could saddle you with debt you thought you'd seen the last of or kill the deal after protracted negotiations.
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