Short Sales – Why, How and Other Tips

Why consider a short-sale?  A short-sale can limit your future liability due to the fact that you cannot close on a short-sale without each lenders/investors’ approval. Once approved regardless if a 1^st, 2^nd or 3^rd… you have a meeting of the minds and all parties will sign off to the discounts. Keep in mind a lender might request the borrower participate in the loss. We will do our best to mitigate or negate this from happening.

Mindset

• Make your decisions on facts not fiction. Once you believe something is true you will start making choices based on this reality. If it is false you most likely will be heading down the wrong path.
•  Start with your personal goals and end-result in mind.
•  What about my credit? (See below – position yourself for the future). 
• What about my tax liability? (Meet with your tax professional). 
• Sooner is better then later – Live in the NOW! I know these can be tough decisions; however, choices need to be made. The longer you wait will only reduce your options over time. 
• You will deal with financial and emotional stress – most people will be uncomfortable with this situation.

 Position yourself for the future

Save your money – create reserves.

• Bigger down payment.
• Prepare for possible slightly higher interest rate.
• Active pristine credit lines – 4 minimum.
• Limit the negative credit to one event – work to keep all other trade lines/credit in good standing.
• Lenders will look at your past credit history as well.
• Document why you needed to short-sale.
• Dispute all negative credit – Most bad credit drops off after 7 years other then judgments, tax liens and bankruptcies.
• Keep balances on all credit cards under 50% when nearing purchase time. Only current reported balance matters.
• 6 months prior to purchase order all 3 credit reports – Equifax, Trans Union, Experian.
• (My FICO.com) — $15.95 per company
• You can negotiate the removal of bad credit – get it in writing! Do not pay off very old small issues as it will be logged as a new late payment. You may be better off just leaving it alone.
• Bucket Profile concept – You are compared to others in the same credit profile. This is incentive to keep you in good standing from this point forward. The better you look compared to the others in your category the higher your score.

Options and solutions

Based on your goals and the end-result you desire, work your plan of attack.

You can:    

• Stay in your present property and continue to make present payments.
• Negotiate with the bank for a reduction in interest rate or more desirable lending program.
• Refinance.
• Short-sale, Deed in Lieu, Foreclosure, Bankruptcy.
• Buy a new/resale home at today’s market price.
• Rent your home to another and move.
• Rent a house for a while until your situation changes.
• Sell your present property.
• Work to sell and rent back your present property from the new owners.

Pricing your home for sale –  Must be priced to sell at market- it will minimize your downside and not waster your time.

We must consider all variables – Comps, Withdrawn, Expired, and especially present and future competition.  The activity on your property will let you know if it is priced for sale. No/low activity means you must reduce the price immediately. The millions of dollars we spend on marketing are worthless when we are not priced for sale.   

Prudential Americana Group, REALTORS has opened a full service Short Sale Division. We are here to help you save time, money, to provide you piece of mind, and to insure your or your client’s needs are met.  If you have any questions, please feel free to contact Allison Wax or Jennifer Schneider in our Short Sale Division at (702) 318-4042.