Posts Tagged ‘short sales’

Learn More About Reno NV Short Sales

Short Sales are becoming the normal Real Estate transactions in 2010. The trauma of facing the loss of one’s home is a paralyzing feeling. A homeowner with a situation of job transfer, job loss, divorce or any number of reasons need to face reality for Short Sales in Reno NV

Many government programs are just not working in favor of the homeowner. On Feb 18th the Obama Administration announced the Making Home Affordable (MHA) Program, a plan to stabilize the US housing market and offer assistance by reducing the mortgage payments to affordable levels and preventing foreclosure. This program did not help the masses the government thought it would. The qualifying factors reduced the number of homeowners that could enter the program.

What about Loan Modification? Get your paperwork ready. On June 1st the Treasury Departments new guidelines requires loan servicers to verify the homeowner’s income and financial hardship before placing them in the trial modification. Of the 1.2 million people who started the trial fewer than 300,000 have received permanent assistance.
Another 278,000 have washed out of the program because they failed on their payment plan or failed to send the proper paperwork. Paperwork has caused all sorts of problems for these rescue programs.

The HAFA Program takes effect on April 5, 2010 and sunsets on December 31, 2012.
This program will provide incentives along with a short sale or deed-in-lieu of foreclosure which is used to avoid foreclosure if the homeowner is eligible for modification under the HAMP program. This is a bail out for the homeowner as they would be clear of any judgments or future liability. This program also provides financial incentives for the borrower relocation assistance. A servicer may initiate foreclosure, but may not complete a foreclosure sale during the term of a fully executed Short Sale Agreement (while the borrower seeks to sell). Call a qualified Realtor to see if you meet the basic eligibility criteria for HAMP.

Now for the subject of investors buying short sales and flipping a Short Sales in Reno NV. Is the Seller at Risk? There are two schools of thought for investors flipping properties. The first, most agencies and brokers will steer far from this transaction, due to the complexity and the bad press. There are some attorneys and title companies that do handle this type of transaction. There are many challenges and legal hurtles that comes with this type of transaction besides the complications of a spread with the lender due to appraisals. Many transactions will fall out; however, the beauty of using an investor is the investor initiates the short sale and stays in the transaction until lender cooperation until the very end. The investor will step out of the transaction and the closing will take place with another buyer if there is no profit. In all, it doesn’t hurt to do these transactions which can be helpful in some cases but do come with complications. Most brokers and agents should not try this type of transaction. Any short sale can be very complex and lengthy regardless if an investor is involved or not.
On the investor’s side, it is the investors who will stay in the transaction until the end. In most short sales, buyers cannot seem to stay in the transaction which puts the sellers at risk for foreclosure. The buyers do not understand the lengthy and time consuming process so they walk from the deal. Obviously with any HAFA program there would be minimal spread for the investor. All in all short sales do try all parties’ patience. That is why so many buyers walk from short sales.

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Tips For Purchasing A Foreclosure Or Short Sale Home

The headlines are telling us that one in five mortgages is either behind or in default and for homebuyers today. This could be an indication to buy a house at a highly discounted price. Many Houston purchasers are buying houses in the Houston area at 20% discounts from the pre-housing meltdown levels by focusing on foreclosures or short-sales. Short sales are the practice of buying a home below the mortgage balance before it goes into foreclosure. This exercise of buying low and having a lot of immediate equity in your new home may not be as easy as it seems. Below are five factors to keep in mind when considering the purchase of a foreclosed property or pursuing a short sale.

1. Be sure to consider repairs – Foreclosures, also known as “bank-owned” or “REO” properties are often in need of substantial work. As an institutional owner, a bank just wants to get rid of the property for as much as they can, indifferent to repairs that are needed. Furthermore, the bank cannot provide a seller’s disclosure, which provides the purchasers with an insight as to problems with the house. The house may have foundation, roof, or HVAC problems that will need to be repaired. The costs of these repairs can often wipe out the perceived discount from the purchase price. This makes it especially important to negotiate an appropriate option period to allow for a thorough inspection of the home. Banks are typically less willing to make repairs than traditional sellers, so understand that if you can’t come to an agreement on remedies, you will be out your option money and the cost of your inspection.

2. Be wary of special provisions in the sales contract – Often, bank contract amendments require the purchaser to pay additional closing costs not found in a typical real estate transaction. These costs include additional title and recording fees which can amount to thousands of dollars. In many cases, these provisions can be negotiated so be sure your REALTOR is familiar with these provisions and thoroughly reviews the contract and any addendum.

3. Be prepared to wait – If you make an offer on a bank-owned property, the seller (the bank) is rarely prompt in providing responses to questions or contract offers. Loss Mitigation Representatives are the people who manage the process of the foreclosing on, and disposing of, bank-owned properties and are often overloaded with files. If you are purchasing a home through a short-sale transaction, you will definitely need to rent a stack of DVDs for the wait. Obtaining responses to contract offers on short sales can take a month or more.

4. Peel back the onion on special mortgage financing – You might see whether the bank or government agency (if the house is owned by Fannie Mae, Freddie Mac, or HUD) is willing to offer special financing incentives such as $100, or 3% down payments. Keep in mind that these lower down payments do not include your closing costs which, as referenced above, are often on the high end for a bank-owned property. In some cases the interest rates offered are also higher than current market rates. You should check with a BBB-accredited mortgage lender to compare mortgage options before making a decision.

5. Consider Location – While a property discounted from its pre-bubble price may seem like a great deal, you should consider the long-term prospects for the neighborhood. If one of every three houses in the neighborhood is a foreclosure or short sale, it will take years to work through that inventory, and even longer for prices to rebound. Furthermore, these neighborhoods often become over-weighted with rental properties. Stereotypically, renters do not care for their home as well as an owner occupant, so they may not be as worried about maintaining an immaculate yard or repairing the fence if it falls.

The current housing market is without a doubt a buyer’s market. As the inventory of unsold homes increases, prices fall. The astute home buyer can be a beneficiary of this situation if they have a good understanding of the local housing markets and the economics of buying a foreclosure. The assistance of a qualified REALTOR is worth its weight in gold when entertaining the notion of purchasing a distressed property.

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