As the events of the last few years in the real estate industry show, people forget about the tremendous financial responsibility of purchasing a home at their peril. Here are a few tips for dealing
Does A Short Sale A Sweet Deal Make
A short sale is selling a South Jersey home for less than the amount the owner owes on their mortgage. In short, a short sale is a home in foreclosure. A short sale is a home owned by a bank (REO or real-estate owned property). Buying a short sale home is different from buying any home on the South Jersey market. Turning a South Jersey short sale into a sweet deal, requires patience and keeping your eyes wide open!
A short sale can be good for a South Jersey home buyer while helping the seller avoid a full foreclosure showing on their credit record. If the homeowner can convince the lender to report the debt as “paid in full” to credit bureaus, a South Jersey short sale can lessen the damage a short sale and a foreclosure can have on a seller’s credit score.
The short-sale process is complex and slow-moving and most short-sale deals fall through. Why? Because for short-sale deal to close, everyone who is owed money must either agree to take less money or no money at all.
If you're interested in turning a South Jersey short sale into a sweet deal, consider the following:
1. You must be patient. Be prepared for a long closing process. You must know what you’re getting into. Even under the best of circumstances, processing a short sale is slow, taking a long time to close. The long process may require extra effort on your part as the buyer. Ask for and push for disclosure on a South Jersey short sale before you set your sights on it.
2. Find a trustworthy and experienced South Jersey real estate professional to work with. Sam Lepore understands the areas in South Jersey and knows how short sales work. He is an experienced negotiator. Having Sam on your side increases your chances of closing a short-sale deal. Ask Sam to provide references on an REO or home that was in short sale in South Jersey.
A note of caution here. Stay away from those who tell you they can speed up the deal on the short sale. These people are “short-sale counselors” who negotiate a low price with the lender, charge the buyer a lot more money and then pocket the difference.
3. If the seller is in a financial bind, they may "take it out on" the home. They may also choose not to disclose serious maintenance problems with the home. Keep your eyes wide open and proceed with caution. Hire a great home inspector before you commit to closing the deal on a South Jersey short sale. Make sure you tag along for the inspection and ask lots of questions. Read How To Choose A Home Inspector For Your South Jersey Home.
If you’ve had the South Jersey short sale inspected by a qualified, certified home inspector, and the inspector has given you the thumbs up, have Sam speak to the real estate agent representing the seller to determine the status of the short sale.
4. Most lenders require these 4 things from the seller of a short sale:
Hardship letter– The seller must write a hardship letter. They must explain why they cannot continue making payments on their South Jersey home. The sadder the explanation, the better the seller’s chances are of the lender letting the debt slide.
Proof of income and assets– The seller must produce documents showing proof of income and assets. If the seller has money in the bank or in retirement funds, the chances of the lender letting the debt slide won’t happen. Income tax and bank statements for the past 2 years must be included in the seller's proof of income and assets documents. Again, if a seller is reluctant or unwilling to produce these documents, the short sale deal is less likely to close.
Comparative market analysis– A comparative market analysis is required from a short-sale seller. This document must include a list of comparable homes and a list of homes that have sold in the past 6 months. It must include a list of homes that have been on the market in the past 6 months that are ready to close. This is called a Broker Price Opinion. It shows that the price of the home has declined and that the home won’t sell for what the owner still owes to the mortgage company. It supports that the worth of the home is no more than the short-sale price.
List of liens– There may be more than one lien on the home. Find out how many there are on the home. A single mortgage lien is easy to resolve. If there are first, second and third mortgage liens on a home, reaching any deal becomes more complex and less likely to happen. Child support liens, state tax liens and homeowner association liens are closing-deal killers. If these liens on a short sale exist without solutions, walk away.
If the seller is not able to or happens to be unwilling to divulge this information, the short sale will not close.
Since a short sale doesn’t cover all of the amount owed on the mortgage or other liens against the South Jersey home, mortgage insurance may commence. Find out if the South Jersey home is covered by a mortgage insurance policy that doesn’t have to be paid off until the home has been in foreclosure for 150 days. If there is no response from the mortgage insurer, there is no approval.
A short sale is a very long waiting game. If you’re in a hurry to buy, don't consider a South Jersey short sale. Be realistic. Contact Sam Lepore today at (856) 297-6827. He will help you avoid getting involved in an extended negotiation on a South Jersey short sale that won’t go anywhere in the end.
Sam Lepore is a Realtor with Keller Williams in Moorestown, NJ. Call him today at 856.297.6827 ....