Lansing Real Estate: Can a short sale help me avoid foreclosure?

Lots of homeowners in the Lansing area right now are struggling with tough choices about their mortgage. It has been reported that as many as half of Michigan homeowners are upside down in their mortgages. Something like an unexpected medical expense or divorce can throw a family into complete financial turmoil. In Lansing where so many people are upside down, life’s unexpected events can throw well-meaning people straight into foreclosure.

One option for a homeowner who is in default on their mortgage is to do a short sale on their property. This is a sale in which the mortgage company agrees to accept less than what is owed on the property. In order to qualify, a homeowner must have a verifiable hardship that affects their ability to pay back the mortgage. Simply being upside down does not qualify you to do a short sale. For those who qualify there are many advantages to doing a short sale over letting the house go to foreclosure. Some of the advantages of a successful short sale over a full-blown foreclosure include:

1) Not as damaging to credit, allowing a potential future home purchase to happen much sooner
2) Does not affect security clearances (a foreclosure can be viewed in the same way as a felony, depending on your level of clearance),
3) Does not affect current or future employment. Many employers or potential employers are now running credit checks. Since a short sale is not reported on a credit report it is not a challenge to employment
4) Possible to convince lender to give up right to pursue deficiency judgement. With foreclosure, the bank has the right to pursue a deficiency judgement. With a short sale it may be possible to convince the lender to give up this right.
5) Ability to control deficiency amount. Once the property goes to full-blown foreclosure you give up any right to control the property. In a short sale handled by an experienced agent the home is sold close to market value, in almost all cases this will result in a lower deficiency.

By the way, in a short sale closing the seller can NEVER walk away with a penny. That’s the bad news. The good news is that they bank pays all the costs of sale, so you also do not have to bring a penny to closing.

It is highly recommended that you seek the help of a CDPE (Certified Distress Property Expert) real estate agent to help you negotiate the short sale process. It is a very complex process and takes the help of an agent who has received special training. And in case you are wondering, yes, I am CDPE certified.

Please note that the bullet points above come from information from the CDPE distance learning class.

IF YOU ARE FACING FORECLOSURE OR IN FORECLOSURE, CLICK HERE TO FIND OUT HOW TO DO A SHORT SALE IN THE LANSING AREA

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Lansing Real Estate: Buying a Foreclosure

There is a lot of talk out there about foreclosure property within Lansing real estate. On one side of the coin people are talking about how horrible foreclosures are. And they are. No doubt. But a savvy buyer can turn this crazy market into real opportunity if they are not afraid to get a little dirty. So what follows is some tips and advice from one Realtor who is on the foreclosure front lines to potential foreclosure buyers.
1) Sweat Equity- Basically this is a nice way of saying that the house is going to need some work. Certainly there is the rare exception, but the vast majority of homes have some “deferred maintenance issues” which is Realtor-speak for nobody has been taking care of the regular home maintenance for quite some time. Remember that the foreclosure process itself is quite lengthy and by the time the bank puts it on the market, it easily could have been sitting empty for a year or more. That is a year or more of no one taking care of the lawn, running the plumbing, etc.

2) Inspection, inspection, inspection – While you should ALWAYS do a home inspection when you purchase a property, it becomes even more important when purchasing a foreclosure property.  Don’t be suprised if the bank requires that you pay $100-200 to “dewinterize” the property for the home inspection.  Basically this just means that they will hire someone to come out and get the utilities on, which includes pressurizing the plumbing system.

3) Negotiating – Best to defer to your agent on this one.  It is true that you know the bank is going to sell the house, don’t automatically assume that they are asking too much for the house.  Just as often as I see overpriced homes I see properties selling with multiple offers on the property and the price actually gets bid up.  Have your agent pull up recent sales from the neighborhood to see what homes are actually selling for.

4) Hire an expert – Buying a foreclosure can be quite a road to navigate, so it is especially advisable to hire a real estate agent who has been selling foreclosure properties.  Remember you can hire a buyer’s agent at no cost to you since the bank has already agreed to pay the commission!

FOR A FREE LIST OF FORECLOSURES CLICK HERE AND ENTER THE PRICE RANGE AND AREA YOU ARE SEARCHING