How long will a short sale take in Lansing, Michigan?

Oh boy…the million dollar question. How long will this short sale take?

It is called a short sale after all. One would think it would be a short process, right? Well, the real reason it is called a short sale is because the seller is going to be short on their payoff to the lender. This means that the amount they can sell the house for will not be enough to pay off the mortgage so the lender will have to agree to take less than what they are owed. And this process is anything but short.

In general a short sale is going to take anywhere from 30 days to 6 months. Or rare occasion it may take more or less time. There are some questions that you can ask up front as either a seller or a buyer to help get a handle of how long it may take. The length of the short sale depends on three things: 1) How fast the seller gets their paperwork to the bank 2) How skilled is the real estate agent who is handling the short sale 3) What bank it is and what loss mitigator (bank negotiator) you get assigned to

Short sales are a relatively new thing and the truth is that the industry is still becoming educated on how to handle them in a timely fashion. Before you get involved you should ask the real estate agents involved in the transaction how many successful short sales they have closed. If they answer is none or one or two, it may take a bit longer since they will have to become educated on the process and may not know what documentation will be required from the lender. You may also ask if they are CDPE certified (Certified Distress Property Expert). The next question to ask is, “Who is the lender?” The smaller local lenders tend to be quicker (I got a short sale approved with Commercial Bank in less than 24 hours) whereas the larger banks take a bit longer. Finally, as a buyer you should ask if the hardship package has already been completed. This is the complete package of the seller’s financial information that will need to be sent to the bank along with your offer. Knowing that it is already done can assure you that you are working with a seller who is getting their paperwork to the appropriate people in a timely manner.

Short sales can be a great option for sellers in distress and also for buyers looking for a good deal. As you consider a short sale just remember that you must have patience and be able to handle a little frustration but in the end if will be worth it for both parties.

DO I QUALIFY FOR A SHORT SALE IN THE LANSING, MI AREA?

FREE LIST OF SHORT SALES/DISTRESS SALES FOR SALE IN LANSING AREA

Photo Credit: http://www.flickr.com/photos/wwworks/

Short Sale in Lansing Area – The best of bad alternatives?

I have been re-energized about short sales as banks large and small are beginning to understand that short sales really are better for everyone involved. It has been said that the loss a bank will sustain with a full-blown foreclosure is about 60%, while a short sale averages just a 40% loss. So what are some the benefits to the homeowner?

1) No foreclosure on credit – Fannie and Freddie and any other government insured loan, such as FHA, has restrictions on how soon you can apply for a loan with a foreclosure – up to a 7 year wait – whereas there are currently no restrictions with a short sale. Which means you can apply for a new loan once your credit is repaired.
2) You have more control over the loss – in Michigan you can be on the hook for the loss in both a short sale and foreclosure, but you will have more control over the size of the loss with a short sale as you control how the property looks and what price to accept. Some banks, though fewer and fewer, will waive the deficiency with a short sale. Check with your attorney or CPA for tax and legal questions.
3) Nosey Neighbors – To the rest of the world it just looks like a regular sale
4) Security Clearances – You will not lose your security clearances with a short sale as you may with a foreclosure, especially important for those in security or military or other government position.

When chosing your real estate agent make sure to pick someone who specializes in short sales and has done a number of them in the past. Remember to get the appropriate legal and accounting advise as well.

Do you want to know if you are you candidate for a short sale? Fill out this simple form to find out.

Short Sales – Info for Sellers

You may have heard the term “short sale” floating around out there. So what does it mean to you as a seller? A short sale is a situation in which the amount that you can sell your property for will not be enough to pay off your mortgage and thus you negotiate with you lender to accept less than what they are owed as a full payoff on the mortgage. (By the way, if you live in Michigan you are in good company if you owe more than your house is worth – a full 40% of home owners are in the same spot)

This may seem like a pretty good idea if you are ready to move and are upsidedown on your house. But hold on a minute…not just anyone can do a short sale. Who is a good candidate for a short sale? Basically someone who has a hardship and will be unable to pay their mortgage if they do not sell the house…a job loss, transfer, divorce, things like that. If you are upsidedown on your house and have money in the bank, sorry, but this is not the deal for you. In addition to a hardship, your lender will want to look at your financial information. All of it… W-2s, paystubs, tax returns, bank accounts. They want to make sure you don’t have any money squirreled away or that you could actually have the means to come up with the deficit. And no transferring the money to mom and dad’s account right before the sale…they will check back for several years.

So what are the benefits to doing a short sale for you as the seller? A short sale will not be AS large of a hit on your credit as a full blown foreclosure.   It will still make your credit score go down.  This means that you may be able to buy another house in the future sooner (or lease a car, or get a credit card, or any of the other of a multitude of things your credit tends to affect these days) In the meantime (and I say this as a landlord myself) it may be easier to rent a place with a short sale on your credit versus a foreclosure.

Finally, while you will not net anything at closing, you also should not have to pay anything to do a short sale. Though are lots of companies that may try to collect a fee upfront. DON’T DO IT. Any reputable real estate company in this market will have an entire short sale department, or at least agents who have experience with short sales. Make sure to ask your agent about their experience with short sales, including their success rate and average turn time. You don’t want to be their guinea pig.

Short Sales – Info for Buyers

As a buyer in Michigan right now you have certainly been unable to avoid the multitude of foreclosure properties available for sale. But there is another type of sale that you may have seen cropping up as well. A short sale. So what is a short sale? And what does it mean to you as a buyer?

Strictly speaking a short sale is a sale in which the price the house is listed for will not be enough to pay off the mortgage. The seller will be “short” on their payoff amount. Unfortunately, that is about the only thing that is short in a short sale. This dauntingly long and frustrating process means that as a buyer, you could be waiting 3-6 months for an answer on your offer. And after the long wait there is no guarantee that it will be accepted. But why?

As a buyer in a short sale you are negotiating not only with the seller, but also with their lender. The seller will not get a dime at closing and thus their entire motivation rests in the fact that a short sale will not mess their credit as MUCH as a full blown foreclosure. The lender has to be convinced that if they do not complete a sale for less than what they are owed that they will get the property back as a foreclosure anyway. The two things that the lenders are looking at are: 1) Is the property really worth less than what the mortgage amount is 2) Can the seller truly not afford the monthly mortgage payments. It sounds simple enough, but in order to check these two facts the lender requires a mountain of paperwork including the sellers personal fiancingal information, appraisals, realtor price opinions and more. On top of all that the lenders are absolutely OVERWHELMED with the volume of short sale requests they are receiving. One employee at the bank may have 400 files they are working on. That is a LOT.

The long and short of it for you as a buyer is that you can get a great deal on a short sale, but make sure you are prepared for a long and grueling wait to get a response once you find a house you like.

Lansing Real Estate: Selling Your Upsidedown House

Do you owe more on your Lansing real estate than your house is worth?  If so, you join the ranks of 50% or more of homeowners in Michigan (not to mention 3 of this bloggers rental houses)  So what is one to do when you owe more than your house is worth and it comes time to sell?  Here are a few ideas.

1) Take out a personal line of credit to cover the deficit.   A first step would be the check with your mortgage company to see if they could offer you an unsecured line of credit.  If not, you may have more luck with smaller local banks so check with your local credit union to see what they can offer.

2) Savings – Of course you could always cover the deficit with money from your savings.  This might be a hard pill to swallow, but if you are buying something is a higher price range just think about how much more you would have had to pay for that house a few years ago.

3) Rent your current house – You could become a landlord.  If you aren’t into tenants and toilets you can always hire a local management company to cover the day to day issues.

4) Friends and Family – perhaps you could convince your friends or family for a personal loan.

5) Short Sale – A short sale is when the price you sell your house for is less than what you owe to your lender and your lender agrees to eat the defecit.  A couple of quick notes on this.  First,  you MUST have a hardship in order to do a short sale.  So if you have money in the bank, can continue to pay your mortgage, or any other options you are not a good candidate for a short sale.  Second, a short sale is anything but short.  Expect the process to take many many months.  Finally, your credit will suffer if you pursue this option.

6) Trade – Perhaps you could find someone to trade with.  Some builders are even considering trades to get their model homes occupied, so if you are moving from a smaller home into a much more expensive home you may check with local builders and Realtors to see if anyone would consider a trade.

7) Stay Put – Yes that’s right, a real estate agent telling you to stay put.  If you can swing the payment and are not bursting at the seams, it may make sense to stay where you are for the time being.