Contact Jason Stewart
888-67-JASON
We Do short sales for FREE! We charge nothing...but love referrals.
FAQ'S
"I owe more than my home is worth, what are my options?"
There are several, the most popular are Short sale and loan modification
"What is a short sale?"
When you sell a home that results in a negative balance and the bank pays (loses) that negative balance.
"How much would a short sale cost me?"
We charge nothing, the bank can ask you for a contribution though. If they do, you can choose to pay or foreclose.
"Will a short sale affect my credit?"
Yes, but a foreclosure is twice as bad.
"What is a loan modification?"
A modification of your rate and terms to fix or lower your payments. It usually doesn't change how much you owe on the property.
"How much will the loan mod cost?"
Call me first and I will give you tips on how to do it yourself for
free (just don't keep me a secret when your friends and family mention buying or selling). They can be time consuming and are often denied. If you would rather pay someone to do it I can refer you to someone, but I usually recommend you try yourself first.
"Will the loan mod affect my credit?"
Usually, but not always.
"How long before I can buy another home after a short sale or foreclosure?"
Short Sale 2 years. Foreclosure 3 years Minimum.
"I'm concerned about my credit, what should I do?"
Credit is important, so I make it easier for clients to make logical
decisions, by putting a price on their credit, then figuring out the
finacial gain (Immediate and over time) of each decision. If someone came to your door with a check in exchange for bad credit how much would it need to be for you to accept? Most people would be quick to trade a lower credit score for $10,000. I would for $50,000 easily. If we calculate a $100,000 financial benefit, you may not feel so bad about your temparary lower credit score. Your current car, credit card, insurance, and other payments typically don't change if your credit goes south, so it may not be as big a deal as you thought.
" I'm upside down on my house, can I buy another one?"
If you can qualify for both payments yes. If you're relocating, or
using a VA loan to buy, you can use market rent for the property you own as income. This makes it easier to qualify for both payments.
Contact us today to help you figure out the best option for you.
Documents required by lender to complete a short sale or Loan Mod.
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Letter of authorization from seller to lender giving agent permission to negotiate on the sellers behalf.
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Most recent two years tax returns
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Last two months bank statements
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last two months pay-stubs
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Hardship letter explaining the sellers situation.
Some key points to remember when selling your home as a short sale.
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Seller will get absolutely zero proceeds
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Seller must actively participate in completing the hardship package
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The seller may be required to sign a note or contribute cash for the short sale to be successful. This is optional as foreclosure is always an option.
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The seller must maintain the property during the marketing and escrow period
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There is no guarantee that the lender will accept a short sale
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The property may be lost to foreclosure
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Get professional advice from your tax or legal professional when performing a short sale.
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I do not charge my sellers to do a short sale.
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All the sellers costs will be totaled and added to the negative balance. Our goal is to have the bank pay that negative balance.
Good News about Short Sales
The Stewart Estates Team has a Short Sale Negotiation Dept. This means a team of short sale professionals will be working daily helping to get your short sale approved in an efficient manner. Our Short Sales are more than 50% more likely to get approved than the San Diego County Average. This means less chance of getting a foreclosure on your record.
Loan Modification
A loan modification is an adjustment to the rate and/or terms of an existing loan. If you want to keep your home a loan mod is a worth a shot. You will need to provide the bank with the same documents as a short sale. If you want to ty a loan mod, call me first so I can walk you through the process, and give you tips to increase your chances. This is a free service I provide in hopes of earning your referrals. I will not do it for you, as this would require me charging up front and they are often denied. I recommend trying yourself first, but if you absolutely want to pay a professional to do it for you, I can recommend a loan modifier to you. Keep in mind that modifying the loan most likely WILL NOT change the amount you owe, just the monthly payments.
14 possible options available to a borrower in a distressed situation.
1. Bankruptcy (consult your tax attorney)
2. Buy your next home while your credit is still good
3. Stay in your home and make payments in hope to stay afloat until the market improves
4. Stop making payments and let your home foreclose
5. Deed in lieu of foreclosure/ Quit claim Deed ( see definition)
6. Forbearance agreement
7. Hard money loan
8. Lease option
9. Loan modification
10. Rent the property
11. Sell (Pay the negative amount)
12. Sell (negotiate a plan to pay back all or a portion of the owed amount after the sale)
13. Sell (Short Sale: Have your Realtor Negotiate the bank to take the loss)
Short Sales
Jason Stewart, the Short Sale specialist.
“Should buyers seek Short Sale properties in San Diego?” By Jason Stewart
“What is a Short Sale?”
Short Definition: A short sale is an over emcumbered property.
A Short sale or short pay, is a property with no equity that the bank must take a financial loss, for the property to be sold. Example: A house worth $500,000 has a mortgage of $520,000 and will cost $30,000 in seller’s fees to sell, resulting in a negative balance of $50,000 at the close of escrow. If the owner must sell and has no way to pay the difference, then the bank has two choices 1) take the $50,000 loss or 2) let the house foreclose and own the property.
“Why wouldn’t the bank just own the property”
For a bank, mortgages are assets, while properties, are looked at as liabilities. The risks of property ownership for a bank are: high foreclosure costs, owning a possible depreciating property, liability for what happens on the property, and risk of vandalism. Usually the bank is out of state and doesn’t even have access to the property or know the area well.
“What’s the benefit of purchasing a short sale?”
Buyers can benefit from this increasing Short Sale market by having a Realtor successfully negotiate a short sale for them at a price under market value. Usually no equity means “no deal”, however a short sale investor seeks out properties with no equity.
Using the example above, the property is worth 500,000 but the bank may let it go for much less if they feel it is worth avoiding the before mentioned liabilities such as foreclosure costs and an un-kept home that will acquire less curb appeal each month the property is not sold.
"Who can qualify to buy a Short Sale?"
Anyone who can qualify for a loan (or pay cash) can buy a short sale. But Short sales are definitely not for everyone. I would not recommend them to people who become emotionally attached to a property, anyone who must have closing costs paid, termite work completed, repairs done or would like cosmetic improvements. I would definitely not recommend a Short Sale to anyone who has a deadline to buy. Short Sales are not guaranteed transactions, and you could find yourself in escrow for several months before even getting a yes or no from the bank. Often buyers spend money on inspections and appraisals, only to be turned down by the bank. I recommend short sales to investors or buyers who are strictly looking at the numbers and have no deadline to buy.
Keep in mind that most short sale listings are not worth putting an offer on for the following reasons. They are usually not approved and often won't be. Most agents will put a "teaser price" just to get a bogus offer to send to the bank. Banks usually won't negotiate unless the listing agent sends an offer. This teaser price usually hooks in buyers who don't have an experienced buyers agent working for them and thus is a marketing tool as well.
Short Sales VS Foreclosures, “which is the better investment?”
As a Realtor, I’m always looking out for my clients’ best interest. In 2005 and 2006, for many of my investor clients, short sales where often the best deals in the market while many bank owned properties surprisingly enough, seemed to be in fantasy land trying to recoup their losses. In 07 and 08 most of the best deals in all San Diego county communities were foreclosures. The banks just didn't get it and wouldn't approve short sales. Not to mention the escrows are quicker and smoother on foreclosures, and I would recommend them even to my first time home buyers. Both are often purchased in “as-is” condition, which will vary from new and immaculate, to barely livable so decide what type of challenge you’re ready to take on when investing.
In 2008 and now in 2009 The word is out about the great deals on foreclosures so there is a lot of competition. 8 out of 10 of the offers I write for buyers are for foreclosures, and usually once a buyer writes an offer for a short sale once, and it doesn't work out, they stay away from them. There are just more variables to make the deal not happen. I do warn my clients however to expect to sumbit 4-8 solid offers or more on foreclosures before you get an acceptance. The competition is fierce and some times frustrating. But would you rather have bought for twice as much 2-4 years ago and had no competition? It's well worth the hassle to buy in this market.
“The best deals are obviously short sales and foreclosures, right?”
This is a good question I will first answer with another question. Lets say the bank now owns that above mentioned home that is in worsening condition but the bank now owes say $580,000. Next door the same model, in great condition, is owned outright and the owner is retiring and moving to his Cancun based vacation home with his wife. They want to leave within 2 months. Who can comfortably sale for less the retiree or the bank?
At a ridiculously low purchase price of $430,000 the bank would have to take a loss of $180,000! Meanwhile, at the same sales price, the retiree adds about $400,000 tax-free dollars to his retirement fund. In this case the retiree would be more likely to sell at this super low price.
Good deals happen for all sorts of different reasons, so don’t limit yourself to only short sales or foreclosures. Your best bet is to hire an experienced, full time realtor who knows the market well and recognizes a good deal when it comes about. If you are interested in short sales, you must work with a Realtor who knows and understands short sales or you will be A) wasting your time and B) not getting as good a deal as you thought. A large majority of Realtors, even those who have been in the business for decades, have little if any understanding or experience with short sales. Many Realtors (sometimes by order of their broker) avoid short sales like the plague. They usually require 2 to 4 times as much time and effort, and after all that, the chances of successfully closing the deal are much slimmer than a regular transaction. Remember not all short sales and foreclosures are good deals some are actually overpriced. A short sale experienced Realtor can figure out if the short sale approval is likely if even possible.
Many listing agents take on short sale listings not knowing that there is no way a bank would approve the short sale on that property in the first place. Many buyers will put offers on these properties and waste money on inspections and appraisals. Again, this is why someone interested in short sales, needs a Realtor Who is trained and understands the short sale process. For more information on the short sale process, visit www.chulavistashortsales.com.
Definitions
Forbearance agreement
The lender reduces or suspends your loan for a certain period of time; usually up to 3 months
Deed in Lieu of Foreclosure
A Deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.
The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he would in a formal foreclosure. Advantages to a lender include a reduction in the time and cost of a repossession, and additional advantages if the borrower subsequently files for bankruptcy.
In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntary and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the current fair market value of the property exceeds the outstanding indebtedness of the borrower.
Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.
Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.
Retrieved from "http://en.wikipedia.org/wiki/Deed_in_lieu_of_foreclosure" Compliments of Jason Stewart your Real Estate Consultant for life.
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