Minnesota Short Sales

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For the past two days I have attended a seminar on how to become a Certified Distressed Property Expert (CDPE). In short, this class and designation was designed to allow me to better assist my clients with selling their homes when they are looking at selling as a short-sale (when they owe more than the home is currently worth).  While the class was definitely informative, was also very sobering with the statistics that are before us. Currently in the United States, one of every seven homes are behind on their mortgage payments. Statistics show us when someone starts down the slippery slope of missing payments, they often never recover and end up in foreclosure. The percentage that do recover and are able to complete a loan modification are minimal and unfortunately, most of them often end with foreclosure as well.  What is really frustrating is seven out of ten (or seventy percent) of home owners go into foreclosure without visible intervention.

CHANGE IS HERE!

As an educated Certified Distressed Property Expert, I can help by first telling homeowners YOU HAVE OPTIONS!!! Foreclosure is not the only option that you are given.

First things first, you need to determine what you need to do. Here’s a quick list of some sample questions to consider:

1. Is this a home that is affordable in any way, shape or form? (If the mortgage payment was modified but the utility bills are still outrageous, that doesn’t help.)

2. Do you have a steady job?

3. Might you be able to do a loan modification or refinance? (careful here… you may spend $7,000 dollars to refinance and it only lowers your payments by $120. / month. That will take 58 months or nearly 5 years to recoup the fees, just to break even!)

4. Does the home have negative equity (owing more than the home is worth, if so how much)?

5. What does your total financial picture look like? (i.e. do you have a lot of debt that needs to be cleaned up?)

6. What do you want? (Really think about this one!!)

Most people are so used to being reactive at this point, they forget what they actually want. Some would like to keep their homes and others would like to just walk away and go live in a tiki hut on the Caribbean somewhere. However while we don’t always get what we want, I think it’s important to listen to that inner voice that tells us what we should or should not be doing. If it’s time to move on, listen to that… you have that voice for a reason.

If you are considering selling, it is important you work with an agent that is well versed with Short sales. Working with someone who is not familiar with them could end in a devastating result. Also, keep watching the blogs – I will put more information on as time goes on with things like “What is required to complete a short sale.”

Call me today if you are in the Minneapolis – Metro area, even if you just have questions. I am happy to help!

Bryan Sletten, CES, CDPE / 612-325-2489

Come and learn all about short sales and how they work.

I find most homeowners take the pride of home ownership very seriously as well as the commitment to pay for the home. When bad things happen to good people, it is always an unfortunate circumstance that can often prompt tough decisions that need to be made. So when is it a good time to consider a short sale?

Well, think about this. A few years ago, when prices were increasing by the day, if one hit hard times, it was no question you could sell and even turn a profit in most cases. It was really great! There were no worries about being stuck with a mortgage you couldn’t pay because the home would often sell before the next mortgage payment was due anyway. Then times changed. We are now in a global recession where prices are lower and unfortunately, continuing to go down in some markets by the day. So today when you hit hard times, the chances of selling and turning a profit are not as likely, matter of fact, the odds are that person may actually be upside down in their home value meaning they owe more than the home is now worth. This is when one may want to consider a short sale.

The most important thing is to do an independent study on your situation. If someone has one hundred thousand dollars sitting in the bank and they don’t want to touch it to make the payments because they know they’re upside down and don’t want to waste the money, that will not work. However, if someone has limited resources (in liquid accounts, NOT including retirement accounts), then they be a great candidate for a short sale because they simply do not have the means. So, as you can see, it all depends upon the situation.

If you would like to discuss your situation with me, please do not hesitate to call and ask. I will be happy to do so.

Many individuals may not fully understand what a short sale is. Let me explain for you. Let’s say you buy a home for $100,000. Now because of the economy, or many foreclosures in the area, you home is only worth $75,000. You have been making payments but because of interest and how loans are amortized you still owe $95,000. If you want to sell, typically you have to come up with the $20,000 plus closing costs to sell this home and satisfy the loan to the bank. In a short sale, if you have a hardship of some nature (i.e. job loss, cut in hours at work, unexpected emergency, etc.) that is causing you to be late on your payments, you may qualify for the bank to forgive that $20,000 debt and allow you to sell your home.

There are situations, however, where banks will agree to the short sale, so you can at least get out from underneath the debt of the entire home and carry the difference ($20,000) on payments for you on an unsecured loan (no collateral).

There are many options with a short sale and many scenarios can occur. It depends on the amount of money as well as the bank. However, if you are in a hardship situation, it may be a good idea to consult a professional of your options.