Real Estate Blog from a Maryland Real Estate Investor & Agent; a blog where you will find investing, internet marketing Information, business advice, short sale and real estate deals. I guarantee it!
You have been hit so badly by the economic downturn. Your finances are not in a good shape. You’re having a hard time paying the mortgage on the house, and you are sure that in time the lender will start foreclosure proceedings against you. You want avoid that, but don’t know how. A short sale can help you avoid foreclosure. Do you have an idea what a short sale is? Do you know of any one who went through the short sale process?
I will define the term short sale, so you can make an informed decision on whether to go through with a short sale or not, but before that, let me take a step back and discuss your current situation. This is the common process everyone else went through before they decided that a short sale was in their best interest.
How you got to where you are now
You had to take a loan from a lending institution and your house was used to secure the loan. The loan is most likely for the house you are living in right now; or maybe for something else. You are going through financial hardships, and you have been unable to pay the monthly payment for the loan. You are also more than 60 days behind in payments. You are aware that the value of your property is less than the amount you owe the lender. The lender has been sending collection notices and could initiate foreclosure proceedings against you. You want to avoid a foreclosure. And honestly, your lender wants to avoid foreclosure too. But if they allow time to pass, your loan interest and penalties will increase, and the lenders loss due to your non-payment will also increase. You and the lender are in situation where both of you are losing.
A short sale benefits you and the lender
A short sale allows you and the lender to lessen your losses, keep this in mind because it is the most important reason for deciding to move forward with a short sale. Plus, you are the one who initiates the process to begin with. In a foreclosure, it is the lender who takes action. In most cases, the lender will find ways to avoid initiating a foreclosure. Why? Because a foreclosure process is lengthy and costly for the lender, and the lender does not receive any payments from you, only the deed to your house. One important detail you should be aware of is this -in a foreclosure, you will not be able to get a loan to buy a new home within 5 years, even if your financial situation has improved. In a short sale, you can buy a new house 2 years after. The cost to the lender is lesser, plus, you are able to pay part of the loan amount that you borrowed from the lender. You can negotiate the remaining balance of the loan with the lender. You are also able to avoid foreclosure, a word many financially challenged homeowners were not able to avoid.
How to start the short sale process
This course of action begins when you, the borrower decides that a short sale is the best option. You start the process by contacting a local Real Estate Agent to assist you by listing the property for sale on the Multiple Listing Service (MLS). Immediately the agent will contact your lender on your behalf to make them aware of your situation and the need for a short sale. This is done so that the agent can get the list of all the necessary documents your lender will require and also to find out what steps that your lender requires you follow in order to begin the short sale process. Having a professional real estate agent assisting you with this process will allow you to maximize your time with other pressing concerns. The real estate agent will represent you in negotiating the short sale with the lender and getting it approved; from listing the property and up to the point where your house is sold.
Now, please bear in mind that in a short sale, you will not receive any payment from the buyer of your house because all of the proceeds will be paid to the bank to pay for your loan. And that amount is usually less – or short of – the total amount you owe the lender. The short sale process is initiated to lessen everyone’s – you and the lenders’ – loss.
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Take a dose of the Short Sale pill from your local Realtor to relieve your Mortgage payment Headaches [4:23m]: Play Now | Play in Popup | Download (42)
Do you know a homeowner in financial distress? Do you think a short sale will be right for them?
Give this much thought. If you have questions, feel free to ask me and don’t forget to leave your comments and suggestions on my blog.
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News reports say that the real estate industry is at its lowest point now. The news is bad and seems to look bad for the next year and a half. This is how the news sums up the real estate industry:
Property values have gone down.
Housing inventory has gone up and there seems to be no takers.
Banks and other financial institutions have limited their exposure to property investment initiatives.
The three points paint a very grim picture which is discouraging and very depressing. But there are two sides to the news. Many people see the bad side which is obvious to all, and get overwhelmed by fear and then go into depression. The smarter few strive to find a silver lining in the bad news, and step up to the challenge to rise above the discouraging situation.
The silver lining in the bad news allows smart and tough real estate investors to set up a passive earning strategy for the long term. This strategy is rooted on the fact that hard economic times don’t last forever. Those who understand this fact have the determination to see things through, and will take a long term investment position for future profits and benefits.
House Deals Everywhere
What is the silver lining in the bad news and what are these long term investment positions?
Buying property is more affordable than ever because property values have gone down. This means that setting up real estate investment requires lower capitalization. So now is the right time to invest in real estate and stock up on housing inventory you can sell later to others for a modest return.
Housing inventory has gone up, and this means that there very many houses for sale and very few takers. This is a buyers market. Real Estate Investors can purchase a house at a more affordable rate than ever before. The good side of this is – there are many houses to choose from. So you can take your pick on available houses and get them for a much better price.
Because banks and other financial institutions have limited their exposure to property investment initiatives, there is a need for other sources of funds so real estate development can continue. Real Estate Investors see opportunity in the low real estate values. The slowdown in housing construction and rehabs has also lowered the cost of materials. The economic downturn has lowered real estate development costs. For tough, smart and determined investors, now is the time to develop new real estate projects or rehab existing real estate projects. The scarcity of conventional financing from banks has opened opportunities for private individuals with excess capital to step into the space left vacant by banks and other financial institutions. This has created the opportunity for you to play the role of the bank, earn high interest rate of return on your money which is secured by real estate that is both at very conservative Loan to Values (LTV). Since investors are desperately looking for funds to finance their projects, you can expect a higher return on your investment now. The key is to find an investor whose investment strategy is in line with your overall investment goals to make your money work for you passively.
The banks aren't lending - You can become the bank
Opportunities in real estate investment are plenty even during these hard economic times. Determination, information and knowledge are needed to rise up from these challenges. Your mindset determines how you view the news and see opportunities in crisis.
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Now is the time to set up your passive income strategy through Real Estate Investment [4:52m]: Play Now | Play in Popup | Download (36)
So what do you think? Do you share the same view point or not?
Take time to share you views with me. Let’s compare notes and work together through these challenging times so we reach our goals.
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This is an announcement for a Single Family Residence I have listed For Sale in Bowie MD 20721 – Short Sale:
SHORT SALE deal. Submit AS IS offers for this Well maintained Single Family Home (Colonial) with 3Br/3Ba. Its a beautiful home with ceramic tiles in the kitchen & foyer. Totally updated from top to bottom, finished basement, Wood floors, storage shed, large backyard and more.
For complete information of this property directly from the MLS; Call 301-841-7593 for more information OR go to
This is an announcement for a Condo I have listed For Sale in Beltsville MD 20705 – Short Sale:
SHORT SALE deal. Submit AS IS offers for this Well maintained Condo with 2Br/1Ba on main level. Its a beautiful home with ceramic tiles in the kitchen & foyer. The community has a playground and an outdoor pool. All utilities are included in condo fee. Close to shopping, Univ of Maryland College Park & transportation.
For complete information of this property directly from the MLS. Call 301-841-7593 OR go to
This is an announcement for a Single Family Residence I have listed For Sale in Severn MD 21144 – Short Sale:
HOME SOLD AS IS. TOTALLY UPDATED FROM TOP TO BOTTOM IN 2005. CROWN MOULDING,DECK AND TOTALLY FINISHED BASEMENT WITH FAM RM,1/2 BATH AND 3RD BR. WOOD FLOORS ON MAIN LEVEL. MBR WOOD FL.WALK IN CLOSET&SUPER BATH. YOU MUST GO INSIDE IT IS BEAUTIFUL.PRICED WELL BELOW NEIGHBORHOOD.
For complete information of this property directly from the MLS; Call 301-841-7593 for more information OR go to
This is an announcement for a Rancher I have listed For Sale in Randallstown MD 21133 – Short Sale:
Submit AS IS offers for this Well maintained Rancher, 3 Br / 2 Ba on main level. Its a beautiful home, Hard wood flrs throughout main level, and fully finished basement with wall to wall carpet and additional rooms. Huge back yard with cement patio and shed. One bathroom on main floor needs little work.
For complete information of this property directly from the MLS; Call 301-841-7593 for more information OR go to
This is an announcement for a Condo I have listed For Sale in Bowie MD 20720 – Short Sale:
Home will be sold AS IS, bring offers! This beautiful condo in Glensford is perfect for those wanting stress-free living!Just come home to this 2 huge bedrooms, 2 full baths, separate living and dining rooms with beautiful cathedral ceilings, living room w/fireplace, an updated eat-in kitchen, deck, Fabulous!
For complete information of this property directly from the MLS. Call 301-841-7593 OR go to
An Obama housing initiative that I can totally agree with
On November 30th 2009, the Treasury department came out with a new set of guidelines called “Home Affordable Foreclosure Alternatives – Short Sale and Deed-in-Lieu of Foreclosure” or HAFA for short. It is the new addition to the Home Affordable Modification Program (HAMP) (HAMP is meant to help homeowners get their loans modified but in my view the HAMP plan has not been successful because most lenders were unwilling to reduce the principal amount owed by the borrowers especially when home values have dropped significantly – now enough of my opinion on HAMP and back to HAFA the reason you are reading my blog post).
The scheduled effective date for HAFA is April 5, 2010 but smart servicers and lenders will be wise to implement the program before that time (with enough pressure from homeowners, I am sure the wise lenders will not wait till then, so learn as much as you can about HAFA and start calling your lender to task). Once HAFA is in full effect, homeowners will be accepted into the program as long as all the requirements are met and the paperwork is received on or before December 31, 2012 (Hence I have more than enough time to start working on providing you a solution as your Real Estate Agent especially if you reside in Maryland).
So what is HAFA proposing as the foreclosure alternatives for Homeowners?
Simply put, Treasury has proposed that lenders (and/or servicers) offer Short Sales or Deed-in-Lieu (DIL) as the alternatives to foreclosure for homeowners who are unable to be approved for a HAMP modification request, a HAMP modification was offered and not accepted by the homeowner, the homeowner falls out of a HAMP modification or the homeowner requests for a short sale or DIL. The HAFA program is meant to streamline the use of short sales and DIL by lenders and make the entire process a lot simpler and quicker!
The entire foreclosure process can be very stressful for homeowners; some get so depressed, that they do nothing about it. While others who are proactive sometimes end up being given the wrong advice or make decisions that are not well informed. If you are a homeowner dealing with this situation, you will have to make a decision on whether to get your property sold as a Short Sale usually at the discount approved by your lender, or give the property back to them as a Deed-In-Lieu of Foreclosure or just let them complete the Foreclosure. You need to decide which of these three options is the best for you both in the short and long term? Deciding which option to take might be tough especially if you do not know how each will affect your credit and ability to buy a home in the future.
Short Sale VS Foreclosure VS Deed-In-Lieu of Foreclosure
A short sale transaction occurs when a lender agrees to a discounted payoff on the loan balance, due to the financial hardship experienced by the homeowner and/or a decrease in the resale value of the property. A short sale is the best option if you are facing foreclosure because it is a lesser financial loss. You get to avoid foreclosure, reduce the adverse effects on your credit and increase your chances of getting a loan to buy a home within a shorter period of time.
Foreclosure occurs when a lender sells or gets back a parcel of real property, after the owner failed to conform to their mortgage or deed of trust agreements. The estate becomes the absolute property of the lender. The foreclosure process generally starts with a formal demand for payment in the form of a letter called Notice of Default (NOD) issued from the lender. It varies from state to state but in most cases the lender usually issues this notice when the homeowner has been 3 months irregular on their mortgage payments. The notice is typically a warning that they will sell your property if you do not make your payments current.
Deed in Lieu of Foreclosure is the alternative to a foreclosure. This is a settlement, which is voluntarily made, and in good faith in which the borrower surrenders their house to the lender and moves on with nothing owed. The main advantage for the borrower is that it immediately releases them from the debt associated with the defaulted loan. The borrower also avoids a painful and time consuming foreclosure. The main advantage for the lender is a reduction in the time and cost of repossessing the property. In most cases a lender will only accept a deed in lieu if there are no other liens attached to the property or these liens can be significantly reduced. The reason is because they do not want to be responsible for the other liens that are attached to the property; this is why most lenders will push for a foreclosure instead because it removes all junior liens.
Take a dose of the Short Sale pill from your local Realtor to relieve your Mortgage payment Headaches [4:23m]: Play Now | Play in Popup | Download (42)
