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Short Sales New England

8 Reasons Why You Will Not Buy My Short Sale Listing

by Bill Gassett on May 5, 2011 · 56 comments

Short Sale Problems

One of the grossly misunderstood topics in Real Estate is the short sale transaction. There are a large number of Realtors who unfortunately do not possess the knowledge to properly educate their clients on what should be expected of them when trying to make a short sale purchase.

The problem is further exacerbated because there are an inordinate amount of Realtors who are now listing short sales who have no business doing so!

Having poor seller representation in a short sale is far worse than a traditional sale because the home owner is relying on this person to help them navigate out of a financially difficult time.  Without a short sale approval the most likely outcome is a foreclosure which is the very thing a seller was trying to avoid by going the short sale route.

As the volume of short sales has grown so has the amount of Realtors who are looking to cash in. Money all too often gets in the way of sound decision making.

The code of ethics in Real Estate clearly states that you should not get involved in a type of Real Estate transaction in which you have no expertise.

This is the reason why there will be short sale lawsuits against Realtors! When I am representing a seller in a short sale and receive an offer from a buyer’s agent, most of the time the offer will have significant changes that need to be made in order to protect the seller’s interest.

Below are 8 reasons why you will more than likely NOT be buying one of my clients short sales if you don’t agree to modify your offer:

Low ball short sale offer ~ If you think a short sale is an automatic invitation to submit a ridiculous offer to the seller you might as well not even bother. The majority of the time you will see my short sales priced right at market value or even slightly below market.

The property is already a bargain to begin with. Both buyer’s and seller’s need to understand that once a short sale offer is submitted to the lender they will be sending out either an appraiser or Real Estate agent to do a broker price opinion (BPO). The contract price needs to be within reasonable proximity to market value or the offer will be rejected.

Inappropriate escrow funds ~ In Massachusetts the typical deposit when buying a home is $1000 at the offer and a balance of 5% upon signing a purchase and sale agreement, as we are a two contract state. These figures are of course negotiable but don’t expect you are going to be putting up two nickels the seller can rub together. The whole point of having escrow funds is to ensure a buyer does not walk away from the transaction. You need to have enough funds to prevent that from being easy to do.

Doing a home inspection after short sale approval ~ This is not in the slightest bit negotiable. A buyer will do their home inspection up front in the normal time frame for doing an inspection which is typically 7-10 days from the offer being accepted. Do you really think we are going to wait a significant amount of time to get short sale approval and then you are going to be able to walk because you don’t like the the fact there are no GFI plugs in the bathroom or the water heater is at the end of it’s life expectancy? Sorry friend it does not work that way.

Short Sale Success Massachusetts

If you are buying a short sale and are worrying about losing $400-500 you shouldn’t be looking at one. Additionally, if there are issues from a home inspection you can negotiate a possible credit. Once short sale approval comes the lender doesn’t want to hear about any problems.

As a buyer the other thing to consider is the fact that you would be out of the market for months when you could have discovered an issue that might cause you not to move forward without waiting all that time.

Leaving the purchase and sale signing date until after short sale approval ~ You are either going to purchase the home or you aren’t. We will not be waiting until after short sale approval to have a contract in place. Everything will be negotiated and agreed to up front.

Not getting a financing commitment right away ~ If you are going to purchase one of my short sale listings you will apply and get your financing before short sale approval. When the lender approves the short sale they will more than likely ask for a 30 day closing. We will NOT be waiting to find out if you are able to get financing that quickly or if at all!

Submitting an unrealistic closing date ~ Short sales should really be called “long sales” because most of the time they take longer to complete than a traditional sale. If you are buying a short sale you need to take this into consideration. If you are not committed to waiting then don’t get involved with a short sale. My short sales on average take about 90 days for short sale approval. The closing date should read “30 days from short sale approval”. You can not put an exact date when we don’t know when it will be!

Not agreeing to wait 90 days for short sale approval ~ The buyer we will be looking for is going to be committed to the property. If you think that you are going to find your self restless 5 weeks later because we don’t have an approval yet then a short sale is not right for you. Don’t forget you are purchasing a home that is probably a pretty decent value. It is worth the wait! It clearly would not be in the best interest of the seller if a buyer bailed on the transaction a month or two in and they had to start the process all over again.

Asking to take over the short sale because you are an investor ~ Sorry my friend if you are an investor please feel free to make a realistic offer but don’t think you are going to take over the negotiations with the lender. Don’t think you are going to make a low ball offer and the seller is going to accept it while you look for an end buyer to sell to and make a handsome profit. No I don’t think so! The seller hired me to complete the short sale. I don’t feel like defending myself in court on why I let an investor take over the obligations I was hired to perform.

Folks these are the kind of things that go on every day in short sales because seller’s do not do their home work in picking a short sale Realtor to work with. Don’t make that mistake. When you need to short sell your home do your research and hire a pro! These are all great reasons to reject short sale offers.

Who you work with to complete your short sale will have the greatest impact in helping you reach your financial goals. Completing a short sale remains a much better alternative than letting a property go to foreclosure for a number of reasons centered around credit and your ability to buy another property in the future.

I am successfully completing short sales through out the Metrowest Massachusetts area as well as parts of Worcester County. As of this writing in four years, knock on wood, I have a 100% success rate for short sale approval!

I work hand in hand with a local short sale Real Estate attorney who knows how to get short sales to the closing table!

If you are outside of the Metrowest Massachusetts area or even in another state and need to do a short sale please feel free to contact me and I will be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing! I have referred short sales to numerous Realtors all around the country.

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About the author: The above Real Estate information on 8 reasons why you will not buy my short sale listing was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 25+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.

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Home Affordable Foreclosure Alternatives (HAFA)

by Bill Gassett on November 5, 2010 · 4 comments

What is a HAFA Short Sale?

What is HAFA

Over the last four years or so I have been helping numerous sellers successfully complete a short sale in and around the Metrowest Massachusetts area. Short sales are not for the timid at heart and require quite a bit of knowledge of proper procedures in order to get to the closing table.

Lately I have been getting asked more often what exactly is the HAFA program as it relates to short sales. I figured I would give anyone thinking about possibly short selling their property and easy to understand explanation.

In a nutshell, HAFA stands for the Home Affordable Foreclosure Alternatives Program

The treasury department rolled out the HAFA program in 2009 but it did not go into effect until April of 2010.

A HAFA short sale provides incentives in connection with home owners who are  completing a short sale or a deed-in-lieu of foreclosure to avoid a foreclosure on a loan eligible for modification under the HAMP program.

So now you are probably wondering what in the world the HAMP program involves? HAMP stands for Home Affordable Mortgage Program. The HAMP program was put in place to help those home owners who have run into financial difficulty to modify or refinance their mortgage. The goal of the HAMP program was to make it easier for a borrower to continue to make their monthly mortgage payments and keep their home.

By most accounts the HAMP program has been regarded as a failure so far. There are staggering amounts of borrowers who have been rejected under the program and not allowed to refinance into a lower mortgage payment.

Personally, I have spoken with numerous folks who have tried to get their loan modified without success. The end result has been for these home owners to pursue a short sale. For more information on HAMP see the government website at home affordable mortgage program.

Now that you have the basic understanding of the Home Affordable Mortgage program let me continue with explaining the Home Affordable Foreclosure Alternatives Short Sale Program (HAFA) with some of the benefits to those involved.

Home Affordable Foreclosure Alternative Provisions

  • Requires borrowers to be fully released from future liability for the first mortgage debt. The home owner is not required to sign a promissory note and there is no deficiency judgment allowed. The borrower also does not have to contribute any cash either. This is obviously a huge part of the program for anyone completing a short sale! In fact this is the biggest reason why any seller would want to apply for a HAFA Short Sale if they qualify.
  • Provides a number of financial incentives including $3000 to the borrower for relocation assistance. You read that correctly. The seller can get a check for $3000!. Servicers can get $1500 to cover processing and administrative costs and investors can get up to $2000 when they allow up to$6000 in short sale proceeds to go to any 2nd or 3rd lien holders on a one for three matching basis.
  • Complements HAMP by providing a viable alternative for homeowners who are HAMP eligible but nevertheless unable to keep their home.
  • Uses the home owners financial and hardship information already collected in connection with consideration of a HAMP loan modification.
  • Allows home owners to receive pre-approved short sales terms before listing the property including the minimum acceptable sale price and/or net proceeds.
  • Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

HAFA also has been recently modified so that:

  • Those seeking a short sale must get an answer within 30 days.
  • Servicers are no longer required to verify a borrowers financial information.
  • Servicers are no longer required to determine if the Debt-to-Income (DTI) exceeds 31%.
  • Second lien holders no longer must accept 6% of the unpaid balance.

Lenders Participating in the HAFA Short Sale program

Home affordable Foreclosure alternative program

You may now be wondering if your lender is an active participant of the Home Affordable Foreclosure Alternatives Program. For a list of lenders who are participating in this short sale program see Lenders participating in HAFA. Please understand that if your lender is on the list it does not necessarily mean that you will be able to qualify for the HAFA short sale program. In order to qualify you MUST meet the HAFA guidelines.

Completing a short sale remains a much better option than letting a property go to foreclosure for a number of reasons centering around credit and your ability to buy another property in the future. The Home Affordable Foreclosure Alternatives program is something every seller should consider when short selling their home.

When considering your financial options it makes sense to see if you qualify for a HAFA Short Sale!

I am successfully completing short sales through out the Metrowest Massachusetts area as well as parts of Worcester County. As of this writing in almost five years, knock on wood, I have a 100% success rate for short sale approval!

I work hand in hand with a local short sale Real Estate attorney who knows how to get short sales done! I will admit there is some luck involved in my success rate but the team I have put together does a stellar job.

If you are outside of the Metrowest Massachusetts area or even in another state and need to do a short sale please feel free to contact me and I would be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing! I have referred short sales to other Realtors all around the country.

Other short sale articles worth a look:

 

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About the author: The above Real Estate information on Home Affordable Foreclosure Alternatives Program (HAFA) was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.

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Stopping a Foreclosure Via a Short Sale

by Bill Gassett on October 7, 2010 · 4 comments

Avoiding a Massachusetts Foreclosure

Avoiding Massachusetts foreclosure

Foreclosure is something that most people want to avoid at all costs. Nobody sets out to own a home and then see it taken back by the lender. Across the country this has become a common theme as ten’s of thousands of people are losing their homes due to an economy that has not been this poor since the great depression. Like other states, Massachusetts has their fair share of foreclosures.

In these tough economic times there are many contributing factors on why someone could fall victim to the inability to pay a mortgage. These include but are not limited to job loss, reduction in income, mounting credit card debt, an increase in mortgage payments, an illness, or a divorce.

In Massachusetts there are areas where property values have dropped 30% or more since the Real Estate market peaked in 2005. Some Massachusetts home owners have found themselves so under water that they just throw in the towel and walk away from the property lock stock and barrel.

In fact there are a percentage of borrowers that still have the ability to pay their mortgage yet decide they just do not want to own the home anymore.When a Massachusetts home owner can afford to pay their mortgage yet feels the need to abandon the home it is what’s known as a strategic foreclosure or default. Fannie Mae the giant mortgage backer for many loans has taken the initiative to come down hard on these folks walking away by not allowing them to procure financing for up to seven years!

People that decide to strategically default generally are looking at it as a business decision. The theory is that it will take years for their homes market value to recover to anywhere near where they paid. Instead they walk away from the property and start fresh.

What I have realized in talking to many people who have come under financial strain is that they don’t realize they have options besides letting the lender foreclose.

The alternative that I have been tremendously successful with is helping owners complete a short sale of their property. In a Massachusetts short sale the lender allows a home owner who owes more than their home is worth to take less than the amount owed at closing.

You may be thinking why would a lender want to allow a short sale? There are a number of reasons, most importantly the cost involved for the lender proceeding with a foreclosure. The mortgage holder when all is said and done can easily spend $40,000-$50,000 going through a foreclosure. A short sale can save the lender money they would otherwise lose. With a short sale there is a buyer in place and on many occasions the owner is still in the home maintaining the property until closing.

Massachusetts Short sale vs loan modification

What about a loan modification instead of a short sale? There are also many people that I meet on a monthly basis that would love to stay in their home and not move at all but can’t afford to stay in the home without it becoming more affordable. There is usually some valid reason the home has become a financial burden such as a pay cut or job loss by one of the spouses. Home owners that wish to stay are often times requesting the lender modify the terms of their loan to make it more affordable.

The Obama Administration instituted a program called the Making Home Affordable Program which includes opportunities to modify or refinance your mortgage to make ones monthly payments more affordable. The problem is that the program has not been nearly successful as hoped. There are numerous folks who have tried to get loan modifications only to be turned away by their lender.

Some of the guidelines for the loan modification include the following:

  • Mortgages for single-family properties that are worth more than $729,750 are excluded from the provisions of the loan mod bill. For two families the amount is $934,200. For three families the amount is $1,129,250 and for four families the amount is $1,403,400.
  • Interest rates can be lowered to a minimum of 2 percent and then if necessary, the term of the loan can be extended to a maximum of 40 years.
  • The home must be the owners primary residence and verified as such with a tax return, credit report, and other documentation such as a utility bill. The home may not be an investor-owned property.
  • The home can not be vacant or be condemned.
  • Borrowers must provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to be qualified.
  • A Borrower who is in bankruptcy are not automatically eliminated from consideration for a modification in this program.
  • Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
  • Borrowers are only allowed to have their loans modified once and eligibility only applies for loans made on Jan. 1, 2009 or earlier.
  • Incentives are provided to extinguish second liens on loans modified under the Obama re-finance program.
  • Homeowners are eligible for up to $1,000 of principal reduction payments each year for up to five years.

There are many folks that I speak with who seemingly meet the above criteria yet are turned away for a loan modification forcing them into other alternatives. When a loan modification is not possible the next best alternative remains a short sale.

Massachusetts foreclosure notice

Stopping  a Massachusetts foreclosure should be the goal of any home owner who cares about their financial credit and the ability to get a loan in the future. The effects on ones credit from going through a foreclosure can be devastating!

Recently I have found a lot more home owners are getting foreclosure notices before they start thinking about a short sale. This of course makes it more difficult to get one done but certainly not impossible. In fact I have been involved in transactions where I have gotten the foreclosure postponed when the auction date was only two weeks away. This of course is not ideal. If you see financial problems ahead that you know are not going to change, you should really be actively thinking about initiating a short sale.

Once you become committed that you are going to short sale your Massachusetts home it is highly advisable that you work with a short sale specialist who is knowledgeable, honorable and someone you can trust! There are an abundance of Realtors that have begun to take short sale listings that have no experience what so ever completing a short sale transaction.

I would encourage you to do your home work when selecting a Massachusetts short sale Realtor to work with. Short sales are complex transactions that require an in depth knowledge. Some of the key considerations include short sale tax consequences and short sale debt removal. When you are trying to complete a short sale it is not advisable that you hire your mothers sisters boyfriends cousin because you heard they were a great person!

The success rate nationally is less than 30% for completing short sale. Don’t make this mistake – HIRE A PRO!

If you are needing to complete a  short sale of your home or condo in Ashland, Bellingham, Framingham, Franklin, Grafton, Holliston, Hopedale,  Medway, Mendon, Milford, Hopkinton, Southboro, Westboro, Natick, Northboro, Northbridge, Whitinsville, Upton, Uxbridge, Shrewsbury, Worcester, or Douglas Get in touch! I would love to interview for the chance to represent your best interests.

I am successfully completing short sales through out the Metrowest Massachusetts area. As of this writing over the last three plus years, knock on wood, I have a 100% success rate for short sale approval! I work hand in hand with a local short sale Real Estate attorney who knows how to get short sales done! I will admit there is some luck involved in my success rate but the team I have put together does a stellar job.

If you are outside of the Metrowest Massachusetts area or even in another state and need to do a short sale please feel free to contact me and I would be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing! I have referred short sales to other Realtors all around the country.

_________________________________________________________________

About the author: The above Real Estate information on stopping a Massachusetts foreclosure via a short sale was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.

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