I thought the exact same thing you did when you read this. This is crazy. I just received an email this morning with the same title as this blog and I had to write about it. It is unfortunate that so many people are uneducated when it comes to short sales because for 7 out of 10 people this, is a reality.

Lets take a few steps back and think about this. Lets say you purchased your home in 2004 for a $200k. In todays market in 2011 this home this more then likely worth anywhere from 40%-60% of what is was worth when you purchased it. Lets go in the middle and say 50%, which is $100k. So you are paying a mortgage on a house that you owe $100k more then it is worth.

The reason a person buys real estate is to hopefully to make a profit when they sell, if there wasn’t, everyone would just rent. It’s easier to rent…. you don’t have to take care of repairs and you don’t have to pay the HOA. Unfortunately you don’t make any money when you’re renting, much in the same way that you don’t make any money by paying a mortgage that MIGHT get back to your original balance in the next decade or two.

So by you paying your mortgage on a home that you’re $100k upside down on or your LTV (loan to value) is at 100% basically what your doing is paying rent but still have all the hassles of repairs, HOA, etc.  The average rate of appreciation for a home in a NORMAL market is 4%-6% let go right in the middle and say 5%. This means if the market turns tomorrow which is HIGHLY unlikely your home would appreciate 5% annually. On a $100k house that is $5k a year. How many years will it take for your house to be worth what you paid for it? Ready, 20 years and you still have not made any money off of the property. In an essence you just rented a property for 20 years.

Does that make any sense? A short sale can put you in a much better situation.  You can short sale your current home rent a very similar home for half of what your mortgage was before. Rent for 12-24 months while you work on building your credit back to where it was and then purchase the same house you paid $200k for close to half that. Then you own a home again and can start fresh without being upside down. It just makes sense.

If you own a home with negative equity or know of someone with negative equity, please contact me at kyle@kylewylogerealestate.com for a free, no obligation consultation to discuss your options according to your individual personal and financial circumstances.  Consultationsare 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

Kyle Wyloge

Momentum Brokers

480-745-1543

kyle@kylewylogerealestate.com

www.MyArizonaShortSale.com

Source:

http://tinyurl.com/5tud8tm

Regardless of what anyone may tell you, a foreclosure, short sale, loan modification or deed-in-lieu of foreclosure can all have a negative impact on your credit. There is, however, a difference in the severity of the damage between them.  The difference between a foreclosure and a short sale to your credit and financial situation can be huge.  A foreclosure will show on your credit as a foreclosure/repossession whereas a short sale will show as pre-foreclosure in redemption status, settled or even as a completely satisfied account.  A foreclosure can prevent you from purchasing a home for 5-7 years whereas new Fannie Mae and Freddie Mac guidelines have changed the seasoning of a short sale to 2 years – which means you can purchase a home much sooner.

Foreclosures also generally have a more severe impact on your FICO score.  Due to the high number of missed payments many people accrue over the course of their foreclosure, most people report a drop of 200-300 points in their score.  If you are proactive about short selling your home, you can reduce this number by acting quickly to get your home on the market and sold.  Most people who complete a short sale report a drop of 80-120 points in their credit score and some have been able to fully recover in as little as 12-18 months.

The short sale process is far more discrete than a foreclosure.  Your friends, family and neighbors do not need to know you are doing a short sale on your property and your property will be marketed like any other home for sale.  When the property closes escrow, you will move out and move on with your life.  When your home is facing foreclosure, the bank generally posts a notice of trustee sale on your property.  If the property does go to foreclosure and you or a tenant is living in the home there will be an eviction process followed by a listing – where it is generally marketed as a bank owned or foreclosure property.

A short sale allows you to get out of a home that is causing you a financial hardship and rid you of the debt associated with negative equity without facing foreclosure.  We highly recommend that if you are considering a short sale you meet with a professional as soon as possible to reduce the impact on your credit and begin the negotiations with your lender.  Best Wishes!

If you own a home with negative equity or know of someone with negative equity, please contact me at kyle@kylewylogerealestate.com for a free, no obligation consultation to discuss your options according to your individual personal and financial circumstances.  Consultationsare 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

Kyle Wyloge

RE/MAX Infinity

602.790.2588

kyle@kylewylogerealestate.com

www.myarizonashortsale.com

Did you know that less than 28% of short sales successfully close?  Because many Realtors are not experienced in negotiating with lenders and do not have the time necessary to commit to such a difficult transaction over two thirds of short sales still do not close!  Will you wish you had chosen a professional instead of your Uncle Joe the part time Realtor when your home goes to foreclosure?  Be sure to choose someone with the pricing, marketing, negotiating and closing experience it takes to get your short sale approved and closed!  With MyArizonaShortSale.com, you work with ALL of the vital parties to a short sale transaction – including a full time negotiator with over 250 closed short sales and a Realtor with valuable pricing knowledge due to their experience listing bank owned property.

Before choosing a Realtor make sure they can show you their results – we have approval letters and testimonials right here on our site.  When you choose to work with the professionals at MyArizonaShortSale.com, you are working with the best!

Common Reasons Short Sales Fails:

Lack of Ability and Knowledge
Aside from maybe a class, many realtors have no experience with short sales. It never occurred to them to learn about it until they took a class in order to cash in. We were doing shorts sales before everybody jumped on the bandwagon – and doing it successfully.

Lack of Experience
More than 90% of all licensed real estate agents had NEVER successfully completed a short sale prior to 2007 (source: MBA). No wonder so many short sales fall through.

Laziness
Too many realtors think that once they learned the basics of short sales, their learning curve stopped. Not true. This business changes every single day. True experts know this and constantly stay abreast of changes and improvements.

There are no shortcuts.

We can tell you first hand that there is no “quick” way to work through a short sale. They happen when they happen. We do our best to make it all work out as quickly as possible – by doing it the right way.

Lack of drive

We didn’t get into the short sale business to get rich. We did it to help good people get out of bad situations. We frequently have to sacrifice some or all of our commissions in order to complete a deal. Any “short sale expert” who isn’t willing to do this isn’t worth even calling.

Picking the wrong property

Not every home is a good a short sale candidate. When we meet with you, we’ll analyze your situation and tell you right away. If we can’t help you, we’ll help you find possible alternatives for keeping your home. Our closing percentage is very high because we’re so selective. We won’t waste your time if we can’t help.

They don’t know what to do.

This is more common than you think. A realtor who doesn’t know anything about short sales finds someone who does, who’s willing to talk him through it. Ask for proof of experience. We’ll be happy to show you plenty.

They don’t know the market.
Some “short sellers” seem to think that because your home is up for a short sale, or headed for foreclosure, then market trends don’t matter. Market trends are everything! How do you think we find an Arizona real estate investor to buy your home?

They don’t care.

Arizona Short sales require communication, constant attention and sometimes hourly follow-up. These are time-sensitive deals that can fall through the cracks at a moment’s notice! Make sure your short seller is really interested in you and selling your home.

They’re not the boss; you are.

Your realtor works for you. If you’re not getting what you expected when you expected it, fire the realtor. At ArizonaShortSale.com, we work every day to make sure that you receive every service you expected and a satisfactory outcome on your short sale.

If you own a home with negative equity or know of someone with negative equity, please contact me at kyle@kylewylogerealestate.com for a free, no obligation consultation to discuss your options according to your individual personal and financial circumstances.  Consultationsare 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

Kyle Wyloge

RE/MAX Infinity

602.790.2588

kyle@kylewylogerealestate.com

www.myarizonashortsale.com

It is important to be aware of foreclosure scams and foreclosure avoidance scams when seeking assistance with your situation. 

Here are a few things you can do to avoid foreclosure scams…

• DON’T SIGN any papers that you don’t fully understand, or you could make bad matters worse.
• DON’T SIGN any papers that you feel pressured into signing. Take your time.
• DON’T MAKE mortgage payments to anyone other than your lender.
• DON’T SIGN over the deed without some closure or agreement for your protection. Talk to your attorney or title company if you need help.
• DON’T EVER pay anyone who claims to stop foreclosure. You can stop the auction yourself. There are several foreclosure assistance programs all over to assist you for free.

MyArizonaShortSale.com never charges an upfront fee and you retain full control over your home.  We make sure that all of our clients fully understand the process and all paperwork before signing anything.  Please use the links below to view current information on foreclosure scams.  If you feel you have been the victim of a foreclosure scam call the mortgage Fraud Hotline at 1-800-4FRAUD8.

If you own a home with negative equity or know of someone with negative equity, please contact me at kyle@kylewylogerealestate.com for a free, no obligation consultation to discuss your options according to your individual personal and financial circumstances.  Consultations are 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

Kyle Wyloge

RE/MAX Infinity

602.790.2588

kyle@kylewylogerealestate.com

www.myarizonashortsale.com

If you are currently facing a financial hardship or you are in a situation which is causing you to miss payments or sell your home there are several ways that you can be proactive and make the process more simple and stress free.  These tips can help make the process easier for you:

Don’t procrastinate. If you are unable to pay your mortgage – even for only one month, contact your lender and make them aware of your situation.  You should also sit down, determine if this is a long term or temporary situation, and review all options available to you.  If you would like assistance in doing this, please feel free to contact us.  We can discuss all of your options for both staying in your home and selling it.

Prioritize. After determining how you will proceed, prioritize your debts.  If you know you plan on staying in your home it is important to make sure you are not spending money that could be used to pay mortgage payments on other less important debts.  Recovering from missed or skipped mortgage payments is far more difficult than recovering from missed or skipped credit card payments.

Know your finances. Make sure you know what is coming in and out each month and budget accordingly.  Your lender will want to see an itemized list of all of your current income and expenses when they discuss your loan with you.

Know your rights and options. If you have questions about the process or your options feel free to use our website as a resource or contact us, along with a trusted tax professional and/or attorney to discuss any questions or issues you may have.

Do not lose your cool! You are not alone in this situation and you are certainly not without options.  Do not allow yourself to become overwhelmed or ignore the situation.  There is help available!

Develop a plan. Whether you choose to sell your home or make an arrangement with your bank, you should create a plan that extends during this process and well beyond.  This will include where you are moving to, how you will spend or save the money you have from missed payments, etc.  You will also want to decide how you will deal with your lender.

Do your research. Make sure that you know everything you possibly can about your options, the foreclosure process in Arizona and your lenders requirements.

Be prepared. Gather all of your financial information – a summary of income and expenses, bank statements, pay stubs, tax returns, mortgage statements, closing documents from when you purchased your home, a list of your reasons for hardship and any other documents you feel might play a role in working with your banking and have them ready before you contact your lender or someone to assist you with your sale.

Work with trusted professionals. If you need advice or assistance, make sure you are working with knowledgeable, experienced and trusted professionals – we would love to give you a referral should you need information outside of our scope of knowledge!

If you own a home with negative equity or know of someone with negative equity, please contact me at kyle@kylewylogerealestate.com for a free, no obligation consultation to discuss your options according to your individual personal and financial circumstances.  Consultations are 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

Kyle Wyloge

RE/MAX Infinity

602.790.2588

kyle@kylewylogerealestate.com

www.myarizonashortsale.com

Foreclosure is a losing proposition all the way around.

Families lose homes and injure their ability to borrow money for years to come, if not decades.

Lenders incur legal fees, real estate fees and property management fees as they wait for sales that will only partially recoup their original investments. Property values drop further in neighborhoods where foreclosures occur.

Vacant homes attract vandals and squatters. Ultimately, the entire community is destabilized. For these and other reasons, foreclosure should be a last resort and reducing the growing rate of foreclosures is the shared responsibility of homeowners, lenders, real estate professionals, community organizations and government.

The situation is critical and is about to become more so. The Mortgage Bankers Association reported last week that nearly 10 percent of homeowners were delinquent by at least one monthly payment on June 30 this year. Add those potential defaulters to the 2.3 million homes repossessed since the official onset of recession in December 2007 and you get a good idea of the problem we face.

A report from online real-estate number cruncher Zillow.com estimated that 41 percent of homeowners in the Tucson area were “underwater” – owing more on their homes than they are worth – as of June 30. University of Arizona law professor Brent T. White has gotten a lot of attention lately with his opinion that walking away from an “underwater” mortgage is often the rational decision to make, and is morally defensible. A banker and a real estate professional, understandably, disagreed with White at a forum last week, reported on by Arizona Daily Star real estate reporter Dale Quinn.

You don’t need an ethicist to settle this argument. Foreclosure is undeniably bad for all concerned and everybody has a stake in preventing it.

That means homeowners contemplating a “strategic default” on their obligations need to take a longer view. Being “underwater” is not a good enough reason to walk away. Lenders, facing the costs and losses of foreclosure, need to entice homeowners to stay by working a little harder to renegotiate mortgages, or by allowing them to sell for a loss in a short sale. The math alone should be convincing.

A recent study of 1.83 million home sales by economists at Harvard and MIT found that sales of foreclosed homes brought in 27 percent less than unforced sales. The report, to be published in the American Economic Review, said the loss is linked to the likelihood of deterioration, especially in neighborhoods where the risk of damage is highest. So, on top of the drop in market value, the cost of foreclosure and the maintenance costs while waiting for a sale, lenders face another 27 percent drop in what they recoup from a bad loan.

That’s a powerful incentive to work things out with the homeowners in order to complete a short sale.

If you own a home with negative equity or know of someone with negative equity, please contact me at kyle@kylewylogerealestate.com for a free, no obligation consultation to discuss your options according to your individual personal and financial circumstances.  Consultations are 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

Kyle Wyloge

RE/MAX Infinity

602.790.2588

kyle@kylewylogerealestate.com

www.myarizonashortsale.com

As homeowner in Arizona who is upside down in your mortgage, it is likely you have thought about a short sale.  If you live in Phoenix, Glendale, Tempe, Chandler, Cave Creek, Scottsdale, Mesa and other surrounding areas, you may be facing foreclosure and don’t know where to turn or what to do. A qualified team of short sale experts can help you with your situation. All is not lost and there is an out!

For any number of reasons, people who never expected to have problems find themselves under water in their mortgage.  You may be months behind in your payments, and see absolutely no way out.  The Arizona short sale process is something you should consider; we have helped a considerable amount of people avoid foreclosure.  Foreclosure is not something you want on your credit and should be avoided!

Not all Phoenix real estate teams have experience in the short sale process.  Why does it matter?  An experienced team with extensive knowledge in the process can help make every detail and transaction easier and less stressful.  They know the system, and will market the property well enough in order to find the perfect buyer for your home.  Time is essence in avoiding foreclosure. You want to make certain you have experience on your side.

The term “short sale” simply means that your lender is willing to accept less than what is owed on your mortgage. Short sales are a lengthy process and do take time anywhere from 1 to 4 months. Once your Realtor helps you locate a qualified buyer, the lender will order an appraisal and if your offer is within the fair market value they will issue an approval letter.  If this occurs you avoid foreclosure – and the stigma that often goes along with it.  Your credit is still affected, but not completely ruined as it is with foreclosure.  You will most likely be able to purchase home in two years or less. As with a foreclosure it will be another 5-7 years before you will be able to purchase a home.

The government has even stepped in and is giving initiatives for homeowners facing foreclosure to follow through with a short sale. The HAFA (home affordable foreclosure alternatives) program allows borrowers to be fully released from future liability for the first mortgage debt. The HAFA program also provides financial incentives; Up to $3,000 for relocation assistance and also an additional $1,500 for service fees and secondary liens.

In order to qualify for a short sale, you will need to prove a financial hardship to your lender.  This could be divorce, loss of job, death in the family, health issues, surgery/medical bills, loss of hours etc.  A qualified short sale team can explain the process in-depth, so that you understand exactly how it works.  If you are facing the loss of your home, DO NOT STALL!  There is a limited time before foreclosure will take place! If you or anyone you know is facing foreclosure and or has negative equity in there home have them contact us at 480.289.4364 or log on to MyArizonaShortSale.com for a free no obligation consultation.

MYTH: I must stop making my mortgage payments before the bank will approve a short sale.

TRUTH: Although is does help you do not have to stop making payments on your home in order for the bank to approve a short sale.  What the bank needs to see is a solid reason why you are unable to continue making your monthly payments and/or must sell (loss of job, relocation, divorce, etc.).  Due to the current market conditions, the banks generally understand why the short sale is being requested – whether you have missed payments or not.

MYTH: If I am doing a short sale, I am in foreclosure or pre-foreclosure.

TRUTH: A short sale is simply requesting the bank to accept a total payoff of your loan for an amount less than what you owe.  You are only in foreclosure when you receive the foreclosure notice from the bank. The bank will continue with the foreclosure process all the way through the short sale process if you are missing payments. They do this just to save there backs

MYTH: I have a second mortgage or home equity line so I can’t do a short sale on my home.

TRUTH: The majority of people we work with have both a first and second or home equity line.  In this situation, the first mortgage generally approves an amount for the second and we negotiate between the two.  The second mortgage company is accustomed to taking a much lower payoff.

MYTH: I will receive some money back at closing.

TRUTH: When you sell your property as a short sale, you are not entitled to receive money back at closing because there is no equity in your property.

MYTH: The bank will not pay the commission for my real estate agent and/or the costs of listing the property with a real estate agent will be passed on to me.

TRUTH: A real estate agents commission is taken out of the banks proceeds at close of escrow.  There should never be an out of pocket expense for a seller who lists their home as a short sale with a real estate agent.

MYTH: Short sale homes are priced lower than other homes in my area.

TRUTH: Short Sales are priced in line with other comparable properties in your area.  Your mortgage company will do their own version of an appraisal of the property to make sure they are getting a fair payoff on the property.  Length of time on market, condition of the home and how quickly the Seller needs to close are all conditions that affect the price of every listing – short sales included.

MYTH: I have a foreclosure date approaching so there is not enough time to do a short sale.

TRUTH: Because it is generally far more expensive for the bank to foreclosure on your home than to work with us on a short sale, we can postpone the sale on your home in most cases while we are marketing and/or negotiating your short sale.

Modern homebuyers will inevitably come across one or more properties currently classified as a short sale. A short sale is an attempt by the current owner to sell a home in lieu of the bank taking it back through foreclosure proceedings, thus partially salvaging their credit rating and lifting the burden of heavy mortgage debt. The entire short sale process hinges on the hope that the bank will take a loss now, approve the sale, and eliminate the costly process of foreclosing, clearing, and reselling a home. Obviously, this is a big hope on behalf of prospective homebuyers as well and they need to understand some things in order to lessen the chance for disappointment of unapproved short sales. This is what they should know:

1) Price is usually set by the agent & seller, not bank – The agent and seller often create a very low asking price in order to attract buyers. The bank is normally unaware of the asking price; however, the bank has the final say in what an acceptable offer will be. Since the bank has the power to ultimately accept or deny offers, their lack of price awareness often leads to the process taking longer than anticipated. The bottom line is that the buyer needs to remain positive and patient throughout the entire process, sometimes even for months.

2) Loans owned by 1 bank usually better than 2 – If the seller has loans owned by two different banks it is a lot more difficult to approve the short sale. This is something the agent or the buyer cannot control; it simply depends on the willingness of the bank or banks involved. While the reasons are beyond the scope of this guide, buyers should know that when the seller only has loan(s) with one bank the short sale often becomes more buyer-friendly. A savvy Realtor can let you know this type of information.

3) Agent must check comparables before submitting offer – The agent must be sure to check recent home sales in the area to give buyers a better idea of the properties that are selling. This will give the agent and the seller appropriate grounds for an asking price that will be more likely to be approved by the bank. Checking comparables will also give the buyer a better knowledge of what price homes in the neighborhood are selling for and ultimately make them a more informed homebuyer.

4) Don’t hang your hat on the property – Short sales aren’t necessarily “short.” It can sometimes be a very long process. Don’t get your hopes up for just one property, keep your options open and continue to actively look at multiple properties. Buyers must remain optimistic, the right property will come along. In most areas it is completely legal and risk-free to have multiple offers out at any given time with the proper contingencies.

5) Lowball offers get slow or no response – Remember that the bank is typically unaware of the pricing during a short sale. When lowball offers stream into the bank they are often scoffed at and rejected, giving the prospected buyers little or no feedback. Surprisingly, it may also take painstakingly long to hear back even on good offers due to the high volume of transactions lenders are inundated with these days.

6) Sellers with other properties or too strong of financials may not qualify for short sale and/or may be asked to pay the difference – Sellers that own more than a handful of properties or have an extremely large net worth will probably not be eligible for short sale. In some cases the seller will be asked to pay the difference of the sale. The seller might even need to sign a promissory note stating that they will pay back all or most of the debt. This has virtually no effect on the buyer as long as the seller cooperates.

7) “Approved” prices are quickest – It is important to remember that short sales are not always timely; however, making an offer on an “approved short sale” can be a quicker process. An “approved short sale” has a price that has already been given the green light by the bank. This could be due to the fact that another interested buyer made an offer that was approved, but didn’t end up buying the property. These types of short sales are some of the most highly desirable.

Some banks look want strongest buyers, some want strongest offers – The bank has all the power in approving short sales. The bank can pick the most appealing buyer, which may mean different things to different banks. Some banks may prefer the buyers with large down payments while others just want the highest price regardless of down payment. Many buyers want to know if they will get a deeper discount for an all cash offer. This is very hard to predict and one will never really know until they make an offer. As long as the buyer is surrounded by a good team we would advise them to do just that.

9) Repairs are seldom done, credit is more frequent – If there are improvements that need to be made on a home, even if they are necessary to get a loan, it is often unlikely that they will be done. Typically there is some sort of credit issued and the buyer must take the responsibility of fixing anything that is broken.

10) When you get approval, MUST close on time – During a short sale there is no leniency with the closing escrow date as there often is in a traditional sale. During a short sale, exceptions are rarely made and the buyer must close on time. Because of this, it is important to take care of all loan paperwork immediately after opening escrow. We’d advise buyers to be extra prepared and try to have the loan finalized a few days in advance of the closing date. If there is going to be an issue that will prevent closing on time, a request for an extension will need to be made immediately. If the request is made early enough, many banks will grant an extension but don’t just assume it will happen.