SHORT SALES - WHAT YOU SHOULD KNOW AS A BUYER

If you have been shopping for a house in today's real estate market,

you have probably come across some "short sale" properties. 

When buyers hear "short sale" the common reaction is to turn and run,

 but if you are prepared, purchasing a short sale can be a great way to purchase

 an affordable home with lots of potential for building equity. 

Before you consider purchase a short sale,

there are some things you should know:

• Timing - Despite the name, the timeframe for closing on a short sale is not short.  The current mortgage holder could take months to decide if they will accept or deny your offer.  Patience is key when purchasing a short sale. 

• Pre-Approval - Most banks will not consider a short sale offer unless the potential buyer provides a pre-approval letter.  Having that ready to go could speed up the process and help your transaction move along more smoothly.

• Financing - There are many types of financing out there.  Some types of loans are not suitable for purchasing a short sale.  If the property needs work, as short sales often do, they may not qualify for some programs.  Programs such as Purchase Plus Improvement Loans (203K) or Rehab Loans are perfect for short sales. Make sure you speak with your lender about the possibility of purchasing a short sale to make sure your chosen loan program will work for a short sale property.  Because short sales often take longer than other sales, you may need to update your information with your lender occasionally in order to keep your pre-approval. 

• Cash Purchases - If you pay cash for a short sale, you will usually need to provide a Proof of Funds letter from your bank showing that you have the cash available for the purchase before you offer will be considered.  Having this ready to go can be helpful in improving your chances of having your offer accepted. 

• Inspections & Repairs - In most cases your Real Estate Agent can help you write your offer so you can wait until the short sale is approved to do your inspections.  While inspections are important so that you know what you are purchasing, keep in mind that most homeowners are trying to sell as a short sale because of a financial hardship and probably don't have money to make repairs.  In most cases, you will be purchasing the property  "as is". 

• Other Offers - In many cases, the bank who holds the current mortgage will continue to accept other offers while they are considering your offer.  An Real Estate Agent who is experience in short sales can help you try to avoid this situation. 

• Foreclosure - Many properties that are being sold as a short sale are heading for foreclosure.  In most cases, an offer on a short sale home does not stop the foreclosure process. 

Basically, purchasing a short sale property takes patience and organization. 

If you are well prepared, understand what you are getting into,

want to build some sweat equity and have lots of patience...

a short sale could be a perfect way for you to purchase a house at a great price! 

If you have questions about short sales, please call us at (207)784-3800

or click below to send us an e-mail.  

 

SHORT SALES - WHAT YOU SHOULD KNOW AS A SELLER

In today's Real Estate market,

Short Sales have become almost common place...

but most sellers are not sure what a Short Sale actually is

or how it could affect them 

A short sale is when the property owner owes more on their mortgage (or mortgages)

than what the property is worth in the current market. 

The lender who holds the mortgage had to agree to allow the property to be sold

for less than is owed on the mortgage. 

As a seller, what do you need to know

if you are considering trying to sell your home as a short sale? 

• Avoid Foreclosure - A short sale is a great way to avoid foreclosure.  Today more and more homeowners are facing foreclosure...you are not alone. 

• Patience - A short sale, regardless of the name, is not a quick process.   A lien holder could take months to approve or deny a short sale after you receive an offer.  Most lien holders will not even consider a short sale until you have an offer to send them.  If you are not willing to wait...a short sale is not right for you.

•  Experience - Choosing a Real Estate Agent who is experienced in short sales is key to a successful short sale.  The agent you choose to represent you should know what is needed for a short sale and also how to communicate with the lender.   Let your agent do the work.

•  Hardship -   In order to qualify for a short sale, you must show a financial hardship (such as a job loss, income reduction, divorce, illness etc..).  Most lenders require a hardship letter that explains your situation as well as copies of your tax returns, bank statements and pay stubs as well as additional documentation in order to make a decision on a short sale. 

•  Credit Score - A short sale can, and probably will, affect your credit score.  How much it will affect your score depends on how the lien holder reports to the credit bureaus.  It is usually less of an impact to your credit than a foreclosure.

•  Promissory Note - The lien holder could ask you, as the seller, to sign a promissory note for the deficiency between the sale price and what you owe on your mortgage if you have liquid assets.

•  Tax Implications - You, as a seller could be responsible for paying taxes on the amount of debt that is forgiven, however under the Mortgage Forgiveness Debt Relief Act of 2007, the debt forgiven on our primary residence may be excluded. 

Even though it may sound scary, a short sale is still a good option for many homeowners

 who can't keep up with their mortgage payments and can't sell their home for enough money to cover their current mortgage.  Is a short sale right for you? 

If you have questions about whether a short sale is right for you, please call us at (207)784-3800 or e-mail us by clicking below

 http://www.brendafontaine.com/buyer-short-sales.asp

What's the difference between a Short Sale & a Foreclosure?

Please enjoy this month's episode of Your Real Estate Solutions

This month's episode discusses Web based marketing when choosing a real estate agent (ranking of websites, unique visitors, linking domains, etc.) Dan Roux from Roux insurance in Lewiston discusses flood zones and their impact on homeowner's insurance. Kim Fowler discusses short sales. Mike Lepage, 2011 President of Maine Association of Realtors, gives advice for buyers in this market, which is getting recommendations working with your Realtor and lender and understand value.