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Are you behind on your mortgage payments or worried that you may fall behind on your payments soon? You may not know it, but you do have options beyond losing your home to foreclosure. The information below is designed to help you learn more about your alternatives and make informed decisions about your next steps. For a private consultation, please feel free to contact us. We are certified Distressed Property Experts and we can help.
Facing foreclosure? Here are some resources for you.
Many people who lose their home to foreclosure do so without knowing and reviewing other alternatives. If you are at risk of losing your home, here are some things you can do to learn more about your options: #1: First and foremost, talk to your lender right away. You and your lender may be able to work out an alternative to foreclosure. #2: Educate yourself. The Dane County Housing Authority provides some useful online materials, including: The Wisconsin Realtors Association also provides a useful web site, http://www.wisconsinforeclosurekit.org/, that offers a number of useful articles and resources covering the foreclosure process. #3: Talk to an attorney. The Lawyer Referral and Information Service (608/257-4666) can put you in touch with an attorney who handles cases like yours. #4: Talk to a reputable credit counselor. A credit counselor can be another useful resource as you consider your options and work to get yourself on stable ground. Kevin Weier from Credit Coach is familiar with foreclosures, short sales and how they can impact your credit history and credit score. #5: Consult with a Realtor who specializes in short sales. Your Realtor can help you determine whether or not your home will qualify for a short sale. The following provides more information on the short sale process.
What is a short sale?
You are "short" on your property if the amount you owe on your mortgage, combined with commission and closing costs, is higher than the current market value of your home. A "short sale" occurs when you negotiate with your lender to accept less than the full balance of your loan at closing. When a new buyer closes on your home, your property is "sold short".
Do you qualify for a short sale?
You can qualify for a short sale if you are able to demonstrate to your lender one or more of the following: - financial hardship,
- negative cash flow where monthly expenses exceed monthly income, or
- evidence of future loss and insolvency
What qualifies as financial hardship?
Any of the following is a qualifying reason for financial hardship, and therefore, a qualifying reason for a short sale: - A mortgage adjustment or loan payment increase
- Separation or divorce
- Job loss
- Reduced income
- Excessive debt
- Death of a spouse or family member
- Severe illness
- Involuntary job relocation
- Business failure (for the small business owner)
- Damage to property
- Inheritance (for heirs receiving ownership of property)
- Military service
- Tax or insurance increase
- Incarceration
Why a lender will accept a short sale
Lenders are in the business of finance, not real estate. They're not designed to own a portfolio of properties. There are many good reasons why a bank will accept a short sale over foreclosure. Here are just a few: #1: Legal fees. Foreclosure requires attorney fees that can be avoided through a short sale. #2: The declining market. In a declining market, a property loses value for every month it does not sell. A short sale allows a property to be sold more quickly and at a higher market value. #3: Holding costs. Holding costs for lender-owned properties add up quickly. These costs include taxes, insurance, utilities, maintenance, management, and other costs. #4: Repairs. In some cases lenders end up owning properties that are in need of significant maintenance and repair. Some owners who are losing their home to foreclosure neglect or intentionally damage their home. There are many good reasons for lenders to choose a short sale over foreclosure. Despite these reasons, many short sales are not successful and end with the lender owning the property.
Why some short sales fail
Short sales have been in the news a lot lately, and by now you've read and heard stories about many short sales failing. Here are some reasons why many short sales do not succeed: #1: Improper pricing. First and foremost, a short sale needs a willing buyer and an accepted offer. A short sale property needs to be priced to sell, without giving away the farm. #2: An incomplete or improperly submitted proposal package. Once an offer is accepted, the seller needs to submit a proposal package to the lender for its review. The proposal package includes multiple documents and dozens of pages. If the package is incomplete or improperly submitted, it can delay the approval process and cause the sale to run out of time before the sheriff's sale. An experienced Realtor is essential to avoid these mistakes. #3: Inadequate follow-up. Once the proposal package is submitted effective communication with the lender is critical. If the listing team is not proactively communicating with the lender and helping to move the short sale through the approval process, delays can occur, causing the seller to run out of time or the buyer to walk away from the transaction. #4: Failure to negotiate all liens. A successful short sale requires that all debts that are liens against the property are satisfied. This requires the agreement of each and every creditor/lien holder and usually requires at least partial payment of the debt. Failure to identify which liens to negotiate can derail a short sale at the 11th hour.
How we get your home sold
Do you need to sell before your lender takes possession? We have a group of short sale experts who will work with you to get the job done. Our goal in serving you is to involve the right experts at the right time to ensure you do not encounter the 4 pitfalls listed above. #1: We have a team of three Realtors who have achieved Certified Distressed Property Expert designation. The three of us work together to effectively price and market your home. We also ensure you have the right paperwork in place for the packet that is submitted to your lender. #2: Our short sale facilitators assist in submitting your short sale packet and work with your lender once the packet has been submitted. Our facilitators come from Homestead Title. The Homestead Title team works with your lender to keep the short sale moving forward. If issues arise during the approval process, our facilitators work to get them addressed quickly. And, Homestead Title ensures there are no 11th hour surprises. All lien holders are identified early in the process. #3: We provide you with the services of an attorney of your choice. The attorney's job is to protect your best interests as we facilitate the sale with the lender. A short sale can be complicated. That's why we use the team approach by involving the right experts at the right times throughout the process. Please feel free to contact us to arrange for a confidential consultation. You are bound to have a lot of questions, and we'll help you get them answered.
About us
This information is provided courtesy of Dan Miller, Shawn Kriewaldt, Chris Venden and Christy Jackson of Keller Williams Realty and DaneCountyMarket.com. For more information, please contact: Don't forget: if you're buying or selling, whether your timeline is 3 months or 3 years, we can help.
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