Distressed Properties in the Green Bay Area - Foreclosures & Short Sales
Green Bay Area Foreclosures for sale - Click here!
Buyers
Our current market conditions are full of opportunities for buyers to purchase and invest in real property. Over the past few months, I have gained additional information and knowledge regarding distressed property sales in the Green Bay area. If you are a potential purchaser looking for an investment or a new home, contact your foreclosure expert Patrick Austin to discuss your interest.
Thinking
of Making an Offer on a Short Sale? What You Need to Know
Are you looking to buy a new home? Are you thinking
that now's a great time to find bargains? That's true, but it pays to know a
little about the seller's situation before you make an offer.
If a home is being sold for below what the current
seller owes on the property—and the seller does not have other funds to make up
the difference at closing—the sale is considered a short sale. Many more home owners
are finding themselves in this situation due to a number of factors, including
job losses, aggressive borrowing against their home in the days of easy credit,
and declining home values in a slower real estate market.
A short sale is different from a foreclosure, which
is when the seller's lender has taken title of the home and is selling it
directly. Homeowners often try to accomplish a short sale in order to avoid
foreclosure. But a short sale holds many potential pitfalls for buyers. Know
the risks before you pursue a short-sale purchase.
You're a good candidate for a short-sale purchase
if:
- You're very patient. Even after you come to agreement with the seller to buy a short-sale
property, the seller’s lender (or lenders, if there is more than one
mortgage) has to approve the sale before you can close. When there is only
one mortgage, short-sale experts say lender approval typically takes about
two months. If there is more than one mortgage with different lenders, it
can take four months or longer for the lenders to approve the sale.
- Your financing is in order. Lenders like cash offers. But even if you can’t pay all cash for a
short-sale property, it’s important to show you are well qualified and
your financing is set. If you're preapproved, have a large down payment,
and can close at any time, your offer will be viewed more favorably than
that of a buyer whose financing is less secure.
- You don’t have any contingencies. If you have a home to sell before you can close on the
purchase of the short-sale property—or you need to be in your new home by
a certain time—a short sale may not be for you. Lenders like
no-contingency offers and flexible closing terms.
- Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But
a good real estate attorney who's knowledgeable about the short-sale
process will increase your chances getting an approved contract. Also, if
you want any provisions or very specialized language written into the
purchase contract, a real estate attorney is essential throughout the
negotiation.
- A qualified real estate professional.* You may have a close friend or relative in real estate, but if that
person doesn’t know anything about short sales, working with him or her
may hurt your chances of a successful closing. Interview a few
practitioners and ask them how many buyers they've represented in a short
sale and, of those, how many have successfully closed. A qualified real
estate professional will be able to show you short-sale homes, help
negotiate the purchase when you find the property you want to buy, and
smooth communications with the lender. (All MLSs permit, and some now
require, special notations to indicate that a listing is a short sale.
There also are certain phrases you can watch for, such as “lender approval
required.”)
- Title officer. It’s a good idea to have a title officer do an initial title search
on a short-sale property to see all the liens attached to the property. If
there are multiple lien holders (e.g., second or third mortgage or lines
of credit, real estate tax lien, mechanic’s lien, homeowners association
lien, etc.), it's much tougher to get that short sale contract to the
closing table. Any of the lien holders could put a kink in the process
even after you’ve waited for months for lender approval. If you don’t know
a title officer, your real estate attorney or real estate professional
should be able to recommend a few.
Some of the other risks faced by buyers of
short-sale properties include:
- Potential for rejection. Lenders want to minimize their losses as much as possible. If you
make an offer tremendously lower than the fair market value of the home,
chances are that your offer will be rejected and you’ll have wasted
months. Or the lender could make a counteroffer, which will lengthen the
process.
- Bad terms. Even when a lender approves a short sale, it could require that the
sellers sign a promissory note to repay the deficient amount of the loan,
which may not be acceptable to some financially desperate sellers. In that
case, the sellers may refuse to go through with the short sale. Lenders
also can change any of the terms of the contract that you’ve already
negotiated, which may not be agreeable to you.
- No repairs or repair credits. You will most likely be asked to take the property “as is.” Lenders
are already taking a loss on the property and may not agree to requests
for repair credits.
The risks of a short sale are considerable. But if
you have the time, patience, and iron will to see it through, a short sale can
be a win-win for you and the sellers.
*
Not all real estate practitioners are REALTORS®. A REALTOR® is a member of the
NATIONAL ASSOCIATION OF REALTORS® and is bound by NAR’s strict code of ethics.
Note: This article provides general information
only. Information is not provided as advice for a specific matter. Laws vary
from state to state. For advice on a specific matter, consult your attorney or
CPA.
Sellers - Maybe I can help!
In light of what is going on in our economy and in the local housing market, and with so many people facing foreclosure or finding themselves upside down in their mortgages, I have taken special training on helping homeowners in distress and thus received my SFR (Short Sale & Foreclosure Resource) certification. A foreclosed property in a neighborhood can have an extremely negative effect on the entire marketplace and one of my goals is to help homeowners avoid foreclosure completely.
One of the biggest problems according to all the statistics is that most people do not know of their options if they are facing a financial difficulty. One of the issues I've been trained in is explaining those strategies to the homeowners so they can make the best decision for their future.
If you know of anyone who may need some help, please give me a call. I assure you I will give them the finest professional service available.
Short Sales - What's needed from the Seller
Although all lenders have varying
requirements and may demand that a borrower submit a wide array of
documentation, the following steps will give you a pretty good idea of what to
expect.
- Call the Lender
You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the "real estate short sale" or "work out" department, you want the supervisor's name, the name of the individual capable of making a decision. - Proposal letter
- Submit Letter of Authorization
Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following: - Property Address
- Loan Reference Number
- Your Name
- The Date
- Your Agent's Name & Contact Information
- Preliminary Net Sheet (HUD-1)
This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale. - Hardship Letter(I’m sorry, Here are my circumstances,
I’ve exhausted all my options) & Proof of hardship i.e. medical bills,
unemployment
The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior. - Proof of Income and Assets/Liabilities(Amount of
monthly expenses)
It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving. - Copies of Bank Statements/W-2’s/pay stubs/tax returns
If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it's probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue. - Repair Estimates from contractors
- Comparative Market Analysis & Marketing strategies
Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes: - Active on the market
- Pending sales
- Solds from the past six months.
- Purchase Agreement & Listing Agreement
When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.