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| REO and Short Sale Division |
REO and SHORT SALE INFORMATION FOR BANKS: LIST OF SERVICES WE PROVIDE:
- Buyer Representation
- Listing and Marketing REOs
- Occupancy Checks
- BPO’s
- Re-keys and Initial Services
- Repairs
- Utility and Billing Management
- Timely Status Reports
Call Us for Your Questions about REO and HUD Foreclosures!
What does REO Mean?
What is the difference between an REO property and a HUD property?
Will the banks make repairs on REO or HUD Foreclosures?
Will the banks negotiate?
"SHORT SALES"
Avoid Foreclosure! You May Qualify for a Short sale!
What is a “Short Sale?”
A Short Sale is typically executed to prevent a home from going into foreclosure, but the decision to proceed with a short sale is predicated on the most economic way for the bank to recover the amount owed on the property. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing as there are carrying costs that are associated with a foreclosure.
In real estate, a short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through the communication with a bank’s “loss mitigation” or workout department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt due. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Many Short sales leave a deficient balance for which the Mortgagor/Borrower is still liable.
Remember, extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower’s financial situation.
How will it benefit me as a homeowner?
For the homeowner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A Short Sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.
The Short Sale Process
Call the Lender and Have Your Listing Agreement Available
You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the "real estate short sale" or "work out" department, you want the supervisor's name, the name of the individual capable of making a decision.
You will also have to have a Listing Agreement with a trusted and experienced Real Estate Brokerage to list your property for sale on the open market. The executive REALTORS® of EGAP Real Estate are experienced and trusted Short Sale advisors that will walk with you hand and hand through the process:
Submit Letter of Authorization
Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, Title Company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:
· Property Address
· Loan Reference Number
· Your Name
· The Date
· Your Agent's Name & Contact Information
Preliminary Net Sheet
This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.
Hardship Letter
The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
Proof of Income and Assets
It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.
Copies of Bank Statements
If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it is probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
Comparative Market Analysis
Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a “Comparative Market Analysis” (CMA). Our trusted REALTORS® at EGAP Real Estate will prepare a CMA for you, which will show prices of similar homes:
· Active on the market
· Pending sales
· Solds from the past six months.
Purchase Agreement
When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement and the agent of your choice at EGAP Real Estate will assist you through a successful Short Sale closing.
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