San Diego Short Sale Blog

To see the video answer to this and other foreclosure prevention questions, be sure to check out our Short Sale Video FAQs page.

What is life like after a short sale? That’s a great question because so many people do a short sale, and it takes either four months or a year depending on their agent.

So what happens next? Commonly, most of our clients have had pretty good credit except for their mortgages. That means that they’ve kept credit cards, car payments, etc. current, and it was just their mortgage that really got out of control or behind because of adjustments, taxes, impounds, and so on.

What we’ve seen is that they normally take a credit hit of about 10%. So if they had an 800 FICO, now they’re down to 720; 700, down to 630. That’s what we’ve seen. The best part is, because a short sale shows as a settled debt, not a foreclosure, after six months, most of our clients’ credit scores have actually come back up to a really nice level.

Many of our sellers do rent for the short term, normally that two-year window until they find out if they want to own again. Sometimes they just need to put down a little bit more of a deposit when they rent for that first year because the landlord gets concerned. Landlords think, “You’ve just sold a house. Why should I rent to you?” So sometimes it’s just a little more of a deposit. But clients who’ve done the short sale, the number one thing I hear from them is, “I wish I would have done it sooner.”

Real Estate Insight Team agents are experts in all facets of the short sale process, from inception through closing and beyond. Contact us today to find out how a short sale could work for you.

To see the video answer to this and other foreclosure prevention questions, be sure to check out our Short Sale Video FAQs page.

What does it cost to short sell your home? That’s a great question because everyone gets concerned. They say, “Okay, I’m selling my home, I’m upside down or underwater $200,000. How do I pay commissions and closing costs or credits if the buyers request me to fix that oven that’s been broken for six months?”

Fortunately for sellers, we have good news: there are no costs to the seller in a short sale. There are actually now some laws that the sellers can’t even contribute money if they wanted to on the second lien holder, a practice that was so common in 2009 and 2010. The seconds now have to participate and do the short sale without any contributions from the seller.

If you are having trouble with your mortgage and need to short sell your home, contact Real Estate Insight Team. Our specialists will get your home listed and sold as soon as possible so that you can move on with your life.

To see the video answer to this and other foreclosure prevention questions, be sure to check out our Short Sale Video FAQs page.

To qualify for a short sale has actually become easier in 2013. In the mid-1990s, to do a short sale, you only qualified for three reasons: death, divorce, or disability. Now with the Department of Justice settlement, the banks are looking at your overall picture, including non-owner occupied properties, which previously were not so easy to get done as a short sale.

And the banks are looking at you. You don’t have to be delinquent. Previously, they wanted you to be delinquent or they wouldn’t even help you. Now you can stay current, and I’ve had many sellers sell their home as a short sale and buy a new home 30, 60, or 90 days after closing on their current short sale.

What if I have a second mortgage with a different institution?

If you have a second mortgage with a different institution, we still negotiate or settle that debt the same as we do with the first lien holder. I’ve had many transactions where we’ve been able to pay off the first mortgage in full. The negative equity—where we were negative or upside down—was on that $100,000 or $200,000 line of credit.

We are still able to settle that for anywhere from $3,000 or 10% of the balance. Thanks to our team’s top-notch negotiation skills and recent policy changes that facilitate foreclosure prevention alternatives across the board, we are consistently able to settle that debt and successfully complete a short sale.

I have a foreclosure sell date. Is it too late for me to short sell?

Even if you have a sell date for a foreclosure, it is not too late to do a short sale. The banks will always commence the foreclosure process, but they do want to find solutions. The common problem is a lack of communication between you, the seller, and the banks; so they don’t know that you might want to try to do a short sale.

By working with an agent who can communicate with the bank, we can actually get them to postpone that sale date to give us time to secure a buyer. Even the banks prefer short sales, as they take a smaller loss versus a foreclosure.

Have questions about qualifying for a short sale that we haven’t addressed? Contact Real Estate Insight Team for a confidential consultation.

To see the video answer to this and other foreclosure prevention questions, be sure to check out our Short Sale Video FAQs page.

There have been a lot of incentives to short sell your home. When we started this five years ago, the only incentive was that you were allowed to do a short sale. In the last year, several of the banks—not just banks, but banks, lenders, and servicers—have been participating in HAFA, which allows you to receive up to $3,000 for successfully completing a short sale.

Some of the lenders have found that the foreclosures have cost them so much money in holding these properties and maintaining them that it was actually better to help the seller with cash incentives. Real Estate Insight Team has recently closed two transactions where our sellers received $3,000 from HAFA and up to $30,000 as an incentive. Admittedly, that’s been pretty rare. Out of the hundreds of short sales we handle, I’ve had only two people get $30,000, so it’s not a common occurrence.

As of May 18, 2012, Bank of America is also offering incentives from $3,000 up to $30,000. The banks have just found that it’s better to give the seller an incentive to help them relocate instead of foreclosing on them and giving them an incentive to relocate after the fact. Contact Real Estate Insight Team to find out more about short sale relocation incentives.

To see the video answer to this and other foreclosure prevention questions, be sure to check out our Short Sale Video FAQs page.

What makes Real Estate Insight Team so successful at short sales?

What makes Real Estate Insight Team so much more successful than other teams in the short sale arena specifically is the relationships that we’ve developed with all the top lenders and servicers. We work really hard at establishing great relationships and keeping the lines of communication open between homeowners and their lenders.

We do everything in our power to prevent foreclosures. We had one home, for example, that was going to foreclose on Tuesday; we took the listing on Sunday, got it postponed on Monday, and had an offer the next Friday. 45 days later, we were able to close on a short sale that should have foreclosed just 48 hours after we took the listing. We were able to make this happen because the lenders know Real Estate Insight Team and our capacity to successfully complete short sale transactions. It really does come down to relationships.

Most agents are just starting to do their first short sales. The average agent has probably closed three to five short sales, while our team has closed over 400. We continually keep the lenders, buyers, and everyone involved on the same page, which is why we have such a high success record of closing. Everyone’s committed to making it happen.

Real Estate Insight Team agents understand the expectations, and we get to the finish line. We have a lot of buyers now who have been seeking us out because they’ve been outbid in REOs, or they’ve been in escrow on short sales that never went anywhere. Buyers are now being drawn to us because they know that we know how to get it done, just like the banks know that we know how to get it done. That’s why we’ve had such success.

Why do I still see other short sales go to foreclosure?

Short sales still go into foreclosure because the majority of real estate agents do not know how to properly process and work with the lenders to avoid foreclosure. It is very important to have a qualified buyer, to have money in escrow showing their commitment to the transaction, and to keep that buyer engaged. The short sale process can take 30, 60, 90 days or longer. The key to success is to keep open communication with the buyers and the buyers agent: it’s important that they know that the process could drag out as long as four months.

The banks have a short sale department, but they also have a foreclosure department; and they work concurrently. If the short sale works first, great. But if the short sale isn’t working, if the Realtor isn’t talking with the bank, the bank will and has foreclosed on a lot of properties for agents who weren’t keeping that communication up and running.

So there’s a lot of mistakes other agents make in not setting the proper expectations with the seller, with the lender, with the buyer, or with the buyer’s lender. There are a lot of moving parts in a short sale.

What’s made Real Estate Insight Team so successful is our experience from the hundreds of successful closed short sales. We keep everyone informed and set the expectations of how this process will work. If you are struggling to make your mortgage payments, there’s no time to waste. Let the experts of Real Estate Insight Team help you avoid foreclosure. Contact us today for a complimentary, confidential consultation.

To see the video answer to this and other foreclosure prevention questions, be sure to check out our Short Sale Video FAQs page.

Short sales are a viable option right now because the lenders are trying to be more cooperative and to reach out to the homeowners. Over the last three to five years, so many homeowners—in the millions—have fallen behind with the banks. Right now, there is an inventory in excess of one million homes that still need to come onto the market.

The banks have found that it’s actually to their benefit to reach out to help the seller or the homeowner settle this debt now versus foreclosing on them. That’s why it’s a viable option: because the banks are wanting to help you, the seller, find a solution to settle your debt.

What is the Mortgage Debt Relief Act and how does it benefit me as a homeowner?

The Mortgage Debt Relief Act (MDRA) was signed in December 2007. The act protects homeowners who are going through a short sale. If their bank does agree to settle the debt, that is a taxable event; but under the MDRA, no taxes are owed on the forgiven debt.

UPDATE: The act, set to expire on December 31, 2012, has been extended through 2013. This extension comes as good news to struggling homeowners, who can avoid tax penalties on short sales completed through 2013. Because the short sale process takes at least 90-120 days, it is important to start early.

What is the National Mortgage Settlement?

The National Mortgage Settlement, announced in February 2012, marks a historic agreement between the Department of Justice and 49 attorneys general across the United States to help with the housing crisis. A lot of sellers were complaining that the banks were foreclosing, that they weren’t giving proper timeframes, and that they weren’t following proper procedures to help them avoid foreclosure.

The Department of Justice has settled with the top five banks, which are most of the lenders that we all deal with on a normal basis. The settlement requires the banks to be more cooperative in timeframes. The timeframes of six to 12 months to do a short sale or a loan modification have all now been reduced to 30 to 45 days.

The National Mortgage Settlement has helped the banks become more accountable for their actions. Additionally, it has better positioned lenders to work with foreclosure prevention specialists to find solutions that will help homeowners either modify their loans or sell their underwater homes and move on with their lives.

Interested in taking advantage of these short sale-friendly policy changes? Contact Real Estate Insight Team to find out if a short sale is a viable option for you.

To see the video answer to this and other foreclosure prevention questions, be sure to check out our Short Sale Video FAQs page.

The short sale versus the foreclosure: this is one of the biggest questions we often get. I’ve had a lot of people say, “Let the house foreclose because the bank will pay me to leave.” That is true. If you do a foreclosure, someone will come and knock on your door. Either the investor who bought your house at the courthouse steps or the Realtor who’s been assigned the REO (the foreclosed property is real estate owned) will knock on the door and offer you a couple thousand dollars to leave the house.

The disadvantage? You don’t know when someone’s going to knock on your door and throw you out of your home.

By doing a short sale, you keep control. You’re in control of when you move, when you sell the property, and when we close escrow because we’re working with the buyer and with the lender.

More importantly, I’ve had many sellers who’ve short sold and stayed current on their mortgage payments and were able to buy as soon as 30 days after they closed the short sale. My other clients—we’ve been doing this for six years now—that short sold two or three years ago have already bought homes. They’re buying twice the home for half the price. Their lives have moved on. If you foreclose, it takes five years before you’ll have the opportunity to buy again. So that’s why a short sale is a better solution to work with your lender to avoid foreclosure. Real Estate Insight Team has helped over 400 homeowners avoid foreclosure. Contact us today to see how we can help you.