If you need your property to SELL FAST for whatever reason, or get out of your monthly mortgage payments; there are many conventional and unconventional options available for you. Although these options are able to help many sellers in a wide variety of situations, no one solution is perfect – they all have their positive and negative features. It is highly recommended that you are aware of them and seek outside professional assistance when deciding which route is best for you and your family.

Below is a brief overview of ALL conventional and unconventional options that are available to those who need to sell fast – not just the ones that the average real estate agent knows about. For more information on any of the programs below contact us; check out the supplemental articles to the right or contact your local real estate professional.

1. Conventional Sale

Putting your home for sale on the market is by far the most common solution for owners looking to sell their property fast. The seller can either do this on his own or hire a local real estate agent to assist him in the transaction. Whichever route he chooses to take, the owner is looking for someone with cash or approved for a mortgage loan to purchase his property for a certain price. In a good housing market, the home should sell within an acceptable amount of time in which the seller is able to walk away from the home while retaining most of his equity in cash. However, in a down market, houses can sit for months, declining property values can eat away at the seller’s equity and real estate commissions, and closing costs as well as other expenses can make selling a home pricey.

Here is an example to demonstrate the true cost of selling your home. The figures below are estimates based on a home that is listed for $100,000.

Sales Price Discount at 3% of the list price:
$3000
Realtor Commissions at 6% of the list price:
$6,000
Closing Costs at 2.25% of the list price:
$2250
Monthly Payments while the home is being marketed (Average time on market is about 90 days):
$2250 ($750 x 3 months)
Repairs requested by the buyer after a home inspection:
$1000
Adding up the numbers above, the total cost to sell is about $14,500. So, with a list price of $100,000 the seller can expect to net $85,500. If your loan to the mortgage company is more than what you expect to net, then you probably need to look for another option for your home to sell fast.

2. Investor Purchase

This is another conventional sale where an investor will come and make a cash offer for your home – many times in its current condition. Many homeowners think this is the best way to sell their home fast and solve their problems. This is rarely the case. The vast majority of investors follow a formula where they purchase homes at 65% of current market value minus any repairs that may be needed.

For instance, a home valued at $100,000 that needs $5000 in repairs. An investor will offer 65% of $100,000 – $5000 or $60,000. If you or your bank is going to need more than that, then you will need another option for your home to sell fast.

3. Renting Your Home

In a down economy or if you cannot sell fast, many people may choose to rent out their home until the market recovers and they can sell. This way, you are able to keep your home and find another residence while your monthly mortgage payments are covered. Keep in mind, renting takes time and can be expensive and demanding. You may have to pay an agent commission to help rent your home, cover any repairs needed to the property, and locate a property management company (usually a charge of 10% of the rent amount). If you would like more information on renting your home please contact us.

4. Short Sales

Short sales are technically not a way for homeowners to sell fast, but can be a real solution. Essentially, the bank agrees to accept an amount less than what the seller owes for the home. If a homeowner owes the bank $95,000, but the current market value of their home is only $85,000, the bank might allow the person to sell the home and pardon the remaining $10,000.

For sellers in a down real estate market trying to avoid foreclosure, short sales can be a resolution, yet carry significant consequences. Short sales take on average of 6 to 9 months to complete and have no guarantees of being successful. Also, in most cases the seller’s credit will be severely damaged enabling them to purchase another home through conventional methods for 2 to 7 yrs. Click here for our article explaining Short Sales in more detail.

5. Loan Modification

A loan modification is not considered a sale and is not a way for property owners to sell fast. However, this is a great conventional method that can give a seller relief from his monthly mortgage responsibility. If you are having trouble making your mortgage payments, many times the bank will drop your interest rate, move delinquent payments to the back of the loan, or use other methods to help you catch up and for the future. For home owners that have had recent financial difficulty or overwhelming mortgage payments due to high or increasing interest rates, a loan modification can help save a home from foreclosure and get the seller back on track. However, sometimes the banks may not allow a seller to modify his loan. In most cases, modifying your loan is a temporary solution to a bigger problem that will have many owners still looking to sell fast. For more information, click here to view our article explaining the loan modification process in more detail.

In many cases, the conventional options above can be extremely helpful; however, there are many home owners in unique situations who still need to sell fast. The unconventional options below can be helpful and applicable solutions because the buyer and seller are able to remove the bank from the process and work with one another directly.

8. Owner Finance

Owner financing is when the seller of a home agrees to lend all or part of the purchase price to the buyer. Whether there is an existing mortgage on the property or not, the owner is able to sell his home and the buyer is able to buy without having to go through a bank. Owner financing not only allows the homeowner to sell fast, it also allows him to save his credit, money, and equity. For more information contact us or click here for our article explaining owner financing in more detail.

9. Rent to Own and Lease Purchase

A Rent to own or lease purchase sale is a type of owner finance transaction that combines the basic elements of a rental agreement with an exclusive option to purchase the property at a later date. This is a cheaper option allowing a seller to rent out his property to a future buyer with less stress and responsibility. Many times, this method is the fastest way for a property to sell. For more information contact us or click here for our article explaining rent to own and lease purchase sales in more detail.

10. Mortgage Assignment

A mortgage assignment is when a seller transfers title to a buyer in exchange for the buyer to take over or “assume” the monthly payments. There are qualifying and non-qualifying assignments (meaning bank approved or non-bank approved) transactions, with non-qualifying assignments being the most common today. More often, the buyer is an investor that will agree to come in and start making mortgage payments on your behalf. For the seller that needs to sell fast, is not interested in making money on his home, would like to preserve his credit, and would like to just walk away from the property with the smallest amount of responsibility, a mortgage assignment is probably his best bet. Please contact us if you would like to receive more information about mortgage assignments and possibly having someone take over your monthly payments.

THIS INFORMATION ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD BE CONSTRUED AS SUCH. SHOULD YOU HAVE ANY QUESTIONS CONCERNING AN OWNER FINANCE TRANSACTION, ASSOCIATED RISKS, BENEFITS, OR OPTIONS ON HOW TO PROTECT YOURSELF, SEEK COMPETENT LEGAL ADVISE FROM AN ATTORNEY OF YOUR CHOICE.

By Karlos Knox

Short Sale updates for 2011:


1. Equator System – This is the automated system that B of A, GMAC and a few other Lenders are currently using. It’s an easy way to track your short sales if you are Short Sale savvy, but certainly it is not an easy program to work with. I do, however, like their automated task reminders. I don’t like that it is still dependent upon a knowledgeable negotiator and with this system, it is even harder to actually have personal contact with your negotiator. It IS an improvement, however.

Getting B of A employees to look in the library (if you can find the library) is next to impossible. They haven’t quite figured out that working with the same negotiator until the sale is complete is the fastest and most cost efficient/organized way to close a short sale. Why do you have to start over every time a buyer walks when they walk 50% of the time..heck even more? B of A needs to change their policy where one negotiator handles the file until it sells, or until it forecloses…period.
Getting B of A employees to look in the library (if you can find the library) is next to impossible. They haven’t quite figured out that working with the same negotiator until the sale is complete is the fastest and most cost efficient/organized way to close a short sale. Why do you have to start over every time a buyer walks when they walk 50% of the time..heck even more? B of A needs to change their policy where one negotiator handles the file until it sells, or until it forecloses…period.


2. HAFA – New Guidelines just came out about HAFA extending the time they have to approve or disapprove the short sale from ten days to 30. They have extended the time, they have taken away the 6% rule but remain at 6k total to junior lien holder. Investment or vacant properties are now elegible if the homeowner lived in the property within the last twelve months.) This must be documented. HAFA is still paying the homeowner relocation monies, up to $3,000. The trick for HAFA is to allow it to run alongside your Standard Short Sale and then ask upon acceptance, if the Seller can qualify for HAFA..sometimes this works. I had several close in 2010 with full relocation fees paid out to the Sellers, but it needs stream lining.

3. SB 931 in CA – Sellers are no longer responsible for ANY deficiency judgments on first mortgages starting Jan 1 2011. Primary or secondary homes with PML’s used to purchase them (Purchase Money Loans). This is a huge incentive for people to short sale and will decrease or eliminate most strategic foreclosures. Banks need to lessen the need for confirmed hardship. If the seller is going to walk, they will. I had short sales rejected because “they weren’t in financial hardship” Well, who cares, as long as Seller is willing to bring some cash to close and the home is maintained..it’s much better than letting it sit vacant and decomposing and dragging neighborhoods down.

4. Federal MARS Laws – Prohibiting anyone but the listing agent or an attorney from processing loan mods and now short sales in certain states as well as prohibiting any upfront fee collection. New disclosures are required on any websites, emails, sales contracts, and when and if approvals come in.

5. Promissory Notes and Cash Contributions - Due to the number of short sale requests the banks are constantly hiring new negotiators. Most of the new negotiators are asking for promissory notes and cash contributions from the sellers. In CALIF, the seller will have no deficiency pursuit if they choose to foreclose, so why would they agree to pay money out of their pocket, or agree to pay a promissory note? Best to have a Buyer that has agreed up front that they can and will throw in some cash at the time of Offer If the Lender is adamant that Seller pay a promissory note too, the notes are usually for ten or more years at 0% interest. Remember that the notes are unsecured and more often than not, can be negotiated for approx. 10% of the notes value AFTER you close your Short Sale.

6. Vacant properties – Letters are being sent out to many homeowners right now stating that the locks will be changed on vacant properties. This is to protect the lenders interest, secure the property, and make sure the old renters or current homeowners’ don’t remove attached fixtures etc. from the property. Be prepared to see these letters. Put Tenants in the properties..if possible.

7. Hardships – I have had many banks declining files due to lack of hardship or reserves being too high. This has a lot to do with inexperienced negotiators. Sellers must go over their finances and monthly Income/Loss ratio carefully. Usually, if the negotiator isn’t a complete novice, (that’s the catch), an approval will be forth coming because it is more cost effective to short sale than it is to Foreclose and becoming more so each year..however, Sellers may have to be prepared to add some cash..

8. Mortgage Insurance – A loan with MI takes longer than a normal short sale to receive a counter and in many cases the MI company wants a promissory note from the seller. Find out at Listing if there is MI attached to your loan (usually it’s attached to the 2nd)

So the bottom line is that Short Sales in California will increase in number and the numbers of closed Short Sales will also increase in 2011. Lenders and Agents are figuring out the system, and Agents that specialist in Short Sales and have done so for several years at the minimum, will be able to close the deals in less time which is advantageous to the Sellers AND the Lenders.

For personal Short Sale information, give me a call at 760-574-7676

Not all the real estate news for 2010 is doom and gloom. Sure, the foreclosures are predicted to continue and even increase in 2010, and stabilizing home values will depend on the area in which you live. These three trends to expect in 2010 should help balance out the increasing foreclosures and home values:
3. 99% of short sales do not go through to closing. The other 9% are those where the lender has ALREADY approved the short-sale amount. I only work with this type of short sale as all the parties concerned at least know where they stand in a relatively short period of time rather than wondering how long before an answer is received and how much the market could change upwards to downwards. La Quinta, Palm Desert,Rancho Mirage and Indian Wells offer many approved short-sales and these can be found on http://www.luxurydeserthomes.com/ .
We currently have an approved short sale that was originally listed for $2.595 million in the Tradition available for $1.5 million!

2. More Buyers in 2010 - Expectations are for more home purchases in 2010. With the Home Buyer tax credit (originally slated to end in November of 2009) extended until April 30, 2010, the next few months should find an increase in home purchases. Additionally, the tax credit now applies to some existing homeowners, and also to some higher income owners. The market will not only see new buyers purchasing a home, but some current home owners buying up as well. And, since the Fed has kept interest rates at the current all-time low, mortgage rates are another reason for well qualified buyers to jump into the market now!

1. Continued Buyer’s Market – With the large inventory of homes on the market today, the buyer is securely in the driver’s seat. Sellers must be on their toes and always trying to entice buyers into their "move-in-ready" homes. In this type of market, many owners will offer a price reduction on properties that have been on the for-sale list over 30 days. Well qualified buyers can negotiate with these owners for a lower price, can request contingencies, request credit clauses for worn out carpets and the like, ask the seller to share closing costs, and ask for a home warranty. Actually, that is just the beginning of the list of perks a buyer can request in this market!