Tuesday, November 2, 2010
by Don DeHanas, Associate Broker
I have worked with a large number of clients to date, helping them to avoid Foreclosure by short selling their home. Many of my clients have been military, or Government employees who have been relocated out of the area, and for one reason or another are unable to sell their homes. Often, the only recourse many homeowners have is either short sale or providing the mortgage company with a deed in lieu of foreclosure.
A short sale is a lengthy process by which the property owners mortgage company agrees to allow the owner to sell their home for less than the current mortgage. It allows the homeowner to avoid the pain and humiliation of Foreclosure as well as the devastating damage to their credit score A credit score can see a drop of as much as 250 points with a foreclosure. In some cases, as will military and Government employees who have security clearances, job-loss can occur with a foreclosure on a credit report.
There are possible drawbacks, however. The I.R.S. will see the debt forgiveness as income, and your lender may want to pursue a deficiency judgment, meaning that they may want that money back. I highly encourage anyone considering a short sale to consult with a lawyer and/or CPA. Each lender treats short sales a little differently, but this is an overview of what to expect.
Communicate with your Lender
Do not avoid communications with the lender. This will only make matters worse for you. In some cases the lender will be able to work with you on a “Mortgage Modification”, adjusting your payments to make them fit into your current budget, allowing you to stay in your home. This process, however, can be very tedious, and time consuming. Take plenty of notes and stay on top of correspondence. If this fails, consult a Realtor who has plenty of experience with short sales.
Locate an Experienced Full-Time Realtor
This costs you nothing, and anyone asking for up-front payment should be avoided. An experienced Realtor should have a history of successful transactions. Do not be afraid to ask for references. An experienced short sale Realtor also has a designation as a Certified Distressed Property Expert (CDPE), which provides them with the tools and knowledge to get the job done quickly. In the case of a Foreclosure, “time is not your friend”.
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Be Prepared to Provide Documentation
Your mortgage company is going to want to know your complete financial history. You will be asked to submit a financial worksheet, recent pay check stubs, recent bank statements, and in some cases the last two years of tax returns. You will also need to send a letter of explanation, called a “hardship letter”. Your Realtor should be able to help you with all of the documents.
Do Not Move!
Stay put until you get word from your Realtor. Maintain all of the utilities and continue to maintain the property. If a lender suspects the property is vacant, they will immediately seize the home and change the locks, making it difficult to sell. You will have plenty of time to make other living arrangements. Speaking of which, your Realtor will be able to assist you in locating a new home as well.
I can help you!
Call me! My advice and expertise is free to you. My primary goal is the keep you in your home if at all possible. When that is not possible I can guide you the entire way through the short sale process. Call me at 301-870-1717 x106 or e-mail at [email protected].
If you are interested in viewing homes for sale in the Southern Maryland Real Estate area visit Charles County Real Estate, or call DeHanas Real Estate Services at 301-870-1717.
