My reason for this is there are just too many foreclosures and short sales out there!!

I know this is a good thing for investors, but for regular buyers it is kind of turning out to be a bad thing. Why? Because most of the properties out there needs work and regular buyers are not willing to do the work. They want something they can just move right into.

Especially if they are FHA buyers. Who wants to deal with a 203K loan having to wait months for a contractor to do some work, the bank inspecting the work, then rinse and repeat a couple of times until the job is finished? Mostly no one and I don’t blame them!

What these buyers are failing to realize is that they are getting a good house at a great price. Most of these deals don’t need that much work. Just a little cosmetic repairs and voila! you will have a beautiful home.

Of course we investors are jumping at the opportunity to get to these homes for dirt cheap prices but I try to get regular buyers on these shorts and am having a difficult time.

They denied my first short sale offer of $110,000 without informing me at all. I did not know it was denied until February 2010. I gave them this much time because they always tell me they need 30 days for the negotiator to get back.

However, they never got back.

Anyway, once they informed me that it was denied due to an unacceptable offer, I countered at $120,000. Again this was in February. It took them about two weeks to tell me the file was in their system.

Now, the negotiator did get back to me on the 30th day after the file hit the system, and all she did was asked me what was the realtor’s commission and if there was a second.

I responded via email as she asked. It then took her 13 days to get back to me and when she did, it was another denial.

This wouldn’t have been so bad except the Sheriff Sale was on April 28th 2010 and she gave me the denial on April 26th.

Now if you ask me it seems like it was done that way intentionally.

I resubmitted another short sale offer for $135,000 on April 27th.

Then I had to go to the lawyer the next day (April 28th, the sale day) so he can write a letter where he and the owner gave me permission to postpone the sale.

I went down to Union County Sheriff’s Department and postponed it for two weeks. In NJ, you get either two 2 week adjournments or one 30 day adjournment.

Obviously I should have went for the 30 day adjournment because as I was calling on the counter, I was getting no where as the negotiator never even looked at it.

Everyone kept giving me the information on the $120,000 offer and I had to keep telling them there was a counter on the very next day.

Needless to say, I was told that they could not pause the foreclosure as the offer was given within 15 days of the sale date.

How is that so, if I’ve been doing this since February?

At any rate, the next sale date was today May 12, 2010 and again I had to go postpone it. This made the sale date May 26th. Now this even furthers the time frame from when I submitted the counter offer to the date of sale, but whatever.

I wasn’t going to even bother with the postponement but  did it anyway.

I am going to see what they have to say now. If they continue to be reluctant then I am just going to attend the auction and see if I can get something else.

Or, I may just wait till the property hits the REO list and get it from there for less.

I’ll keep you posted.

… I advise that you sell your home in a short sale rather than do a loan modification or a foreclosure. However, there is even a downfall to doing a short sale.

Here is what I decided. I am going to list the positives and negatives for each of the above options and I guess you can decide which works best for you.

LOAN MODIFICATION

Pros:

• You get to keep your home
• Your monthly mortgage payment will be lower

Cons:

• The bank usually asks for a substantial downpayment
• You will still owe the bank more than what the house is worth

FORECLOSURE

Pros:

• You will no longer have the bank hassling you about a payment
• You will no longer have to deal with obnoxious tenants (if applicable)

Cons:

• You will have a negative blemish on your credit
• You will have problems buying a home for at least 3 years

SHORT SALE

Pros:

• You can negotiate that an investor pays you to take over your home
• You will not have a foreclosure on your credit report

Cons:

• The bank can come after you for the balance that was written off due to the short sale
• You may have to pay taxes on the loss amount (loan amount minus short sale price=loss amount)

These are the pros and cons to each one and I guess it is up to you to decide what works best for your and your family’s needs.

When you find yourself in a tight situation such as foreclosure you really do not want to admit to yourself that the bank is indeed going to take your home.

Your emotional connection will not allow you to fathom the thought of strangers coming in and telling you that you have “x” amount of days to gather all of your belongings and find somewhere else to live.

Especially since your name is on the deed and the house is of such beauty.

pic courtesy of Rhansman

Who do these people think they are?

Well, unfortunately, these people work for the bank, who is the true deed holder, and they have every right to evict you once the judge signs the documents at the court house giving them the o.k. to take possession your property.
Once this happens, there is no turning back.

Very seldom will the bank contact you after the foreclosure and ask if you can help sell the home and that is usually only in very distressed areas.

A preforeclosure short sale can save you two things:

Embarrassment – If you sell the home before foreclosure, then there will be no public notifications that your home was taken away from you. You also will not come home to a big yellow notice on your front door for all your neighbors to see, telling you that you no longer have possession and you now have to vacate the premises.

Credit – When you are only in preforeclosure status the bank is notifying the creditors that you are late on your loan. We all know that having lates on your report are rectifiable in a matter of 12 months.

However, if the bank forecloses on the property, you now have a judgment on your report which basically tells creditors that you are not a good payer and they had to go to court for a judge to give them back what you were supposed to be purchasing.

This can take as long as seven years to come off your credit.

Not a good look.

Short sale your property and walk away with your head held high. You can recover from this with dignity.

This is because many times when you go to the MLS or you have your real estate agent check the MLS for properties, many of them say that the price is “subject to the lenders approval” or something along those lines.

What this means is, although the property is listed at a certain price, it is up to the bank to decide if they are going to sell it for such a price.

The good thing is that the price is way less (from 50 to 80 percent) of the original price. Therefore, you can purchase a home with lots of equity in it.

However, the bad thing about short sales is that the banks take their time to give you their approval.

This can sometimes kill the deal because if you are financing through the bank, and they give you an approval for the loan, that approval has an expiration date.

If you don’t close within two days that they give you an approval, they will start to look at your file again trying to see if something is wrong.

Now although your file may be tight, this can still open a can of worms that you don’t want open.

The best thing is to keep an open relationship with your mortgage broker and let them know the closing is contingent on the property’s bank’s approval.

Have you heard the great news?

Now when you give a short sale offer to the bank on a primary resident they have to give you the amount that they are willing to accept at the time the offer is presented.

This is great news because normally you find yourself in negotiations with a bank on a short sale for two to twelve months.

Years even, depending on the bank.

This is great for the owner of the property,  because they will know exactly if they need to make plans to vacate the premises on a high note or a low one.

I mean it can be a matter of exiting with a sheriff’s sale notice on the door telling them to get out within two weeks or having at least 30 days to find new habitation after selling their home at a discounted price.

If you are in the business of making money on short sales then you know that this means bigger pockets in quicker time.

No more wasting countless months and sometimes losing buyers because it took too long to get the approval and the investor moved on to another deal that didn’t take as long.

That’s right…

I am on my way to giving another short sale offer to a bank with the ease of mind knowing I will get an immediate yay or nay.

The reason banks even think about doing a short sale is because they do not want to foreclose on the home and have it on their books.  Therefore, they would rather take a small loss than lose 100% of the money they invested into the home.

It also saves them time of actually having to take full possession of the home after the foreclosure and pay all the fees that goes with it.

It is also wise to buy a short sale because the odds of the property being vandalized is much less because the owner usually still lives in the property as opposed to foreclosures that are usually broken into and stripped of anything valuable.

There is also the issue of bidding. When buying a foreclosure from a listing, you have to bid on the price either at an auction or through a realtor. If there is more than one person interested in the property, you have hope that your bid was the highest.

When buying short sales, you are the only one dealing with the bank directly and giving them your offer.