December 21, 2011

The Short on Short Sales: A Guide for Understanding the Process

With the state of the economy and most real estate markets, short sales seem to be the topic at large.  Here at the Rain, I've seen several posts come up about them.  Some some agents get them, some don't.  Some think that they are good potential deals, others try their best to avoid them!  One thing's for certain, a lot of people, agents and consumers alike, still have a lot of questions about them.
States have different laws concerning real estate.  If you're a seller that is in a short sale position, it's very important that you get with a knowledge, professional REALTOR® in your area today.  For agents, your Multiple Listing Service may have specific guidelines for listing and maintaining short sales, so if you've got one as a listing, find out what your MLS rules are for them.

What is a Short Sale?

The basic definition is it is a sale where the Purchase Price isn't enough to enable the Seller to pay for the costs of selling and the Seller is not able to pay in full all deeds of trust (mortgages) that are due and owing to one or more lenders, the Seller does not have sufficient liquid assets to pay the difference and the Lienholders have agreed to release/discharge their liens against the property for less than the total amount owed.

The Short Sale Process

The process is fairly simple, though it isn't easy and it definitely isn't Short!  A short sale can take anywhere from about a month to 4 months from OFFER to Lender Acceptance.  That doesn't include any marketing time.  So if you're a Seller or Listing Agent, hang tough!  If you're a buyer considering making an offer, don't be in a hurry.
As a seller/listing agent you need to get a few things together.  The listing agent is going to need an Authorization to Release Loan Information signed by ALL the people on the note, so that they can communicate directly with the lender.
From there, you need to start a short sale package.  Lenders vary as to what they want exactly and some may forward you a specific package.  But, in general, you'll have to supply the following:
  1. Hardship Letter: Very important.  This tells them why you can't pay the loan.  Here is a link to a good sample of a hardship letter.
  2. The last 2 months of bank statements and paycheck stubs
  3. The last 2 years of complete tax returns (w-2, 1099s, etc)
  4. Your listing contract.  Most lenders want the property listed with an agent.
  5. When you get an offer, the completed, signed Offer to Purchase on the property.
  6. An estimated HUD-1 sheet showing the net to the lender.

Things to Know

Things work differently with a Short Sale offer/listing.  This is true whether you're the buyer, seller or agents involved in the deal.  It's important to know a little of the 'in's and out's of short sales if you're going to be involved with them.
1. The Buy/Sell Contract is just an offer until the Lender approves of the short sale.  You should have a form explaining this to both parties.  In NC, we've just got a new form, the "Short Sale" Addendum that fully discloses that the contract is contingent up to the day of closing on the lender approving the short sale.
2. There is no guarantee of the LienHolder's Approval or Timeframe of Approval.  Again, this is spelled out in our new form.  The buyer can back out of the contract with no penalties (earnest money returned) up to the time that the Lender makes a formal written acceptance of the deal.
3. No Repairs.  If seller cannot pay their loan in full, they cannot make any repairs. Simple.
4. There may be other offers.  Even if you are the first one to make an offer and go 'under contract,' other offers may come in between the time of your contract and when the lender makes final approval.  Under NC Law, these offers must be presented to the lender for review and approval as well.
ADDED POINT:  Related to this is how a short sale appears in the MLS system.  The new addendum to our listing agreements clarifies this.  An agent must continue to market the home "For Sale" until such time as the Lender has made a written formal acceptance  of the offer/contract.  Now, as a listing agent, you should inform all people making offers when there are multiple offers on the table (There is nothing that makes this a legal requirement.  I think it's just good business).
5. The property may foreclose before final acceptance. Banks are slow.  And they also frequently have the problem of the left hand not knowing what the right hand is doing, which means that while one branch may be trying to work out a short sale solution, another part of the Lender's office is following through with the foreclosure process.
Short sales may be a lot of work, but they may also be the best chance for the Seller to get out of a bad situation.  For the buyer that has the ability to wait it out on the process, they can really get a good deal, often times better, in fact, than if the property was foreclosed and resold by the lender as a REO property.

December 13, 2011

Why Do I Need to Get Pre-Approved Before You Show Me The House?

Why Do I Need to Get Pre-Approved Before You Show Me The House?

This question has come up a number of times in recent weeks, so I thought I'd write about it here.

Some buyers today seem to really get offended if they are asked if they've spoken with a lender yet or if they've been pre-qualified for a mortgage for the dollar amount of the house that they are inquiring about.  What I usually get is a gruff, "No I haven't!  But I'm more than qualified to get a loan!  And I want to see this house TODAY!"

Tony Eltora's 4th Annual Christmas Jam - Dec 18, 2011

The public is invited to the 4th Annual Christmas Jam by Tony Eltora and the Hickory Music Factory.  This year's event will be held at the newly renovated Main Cellar Club behind Market on the Main.  It's an "all ages" event and the goal of the Christmas Jam is to raise money to help provide music lessons for kids of all ages that might not otherwise be able to afford it.

November 30, 2011

Conover NC Christmas in the Park 2011

Christmas in the Park 2011 - Conover NC Event

Looking for the 2012 Event? Click Here

The City of Conover is hosting its annual Christmas in the Park event this Tuesday, Dec 6, 2011 at the Downtown Park.  Come out and Enjoy some Holiday Fun with the Conover Community.  Hayrides begin at 5pm, then singing by area Children choirs followed by Lighting of the tree and SANTA CLAUS on a fire truck!  Free coffee and cider provided by the Conover Fire Department

November 22, 2011

Short Sales Are Distressed Sales! Please Prepare Your Buyers

Short Sales Are Distressed Sales! Please Prepare Your Buyers

Like many agents around the country these days, short sale listings are becoming a large portion of my business.  I have listed and sold many of them over the last few years.  Admittedly, I had a leg up on most agents, as I've been engaged in short sale negotiating for the past 10 years, before most others even knew what a short sale was!

November 14, 2011

The Green Room Presents A Christmas Carol Dec 2, 2011 - Newton NC Event

The Green Room Community Theatre Presentation of Charles Dickens, 
A Christmas Carol Opens Dec 2, 2011

Come out to the Old Post Office Playhouse in historic downtown Newton, NC to watch the beloved Dickens classic of Ebenezer Scrooge's discovery of the true meaning of Christmas over the course of one very eventful evening!

November 08, 2011

Hickory NC Event: Annual Christmas Tree Lighting

Hickory NC Holiday Happenings!

The annual Hickory Christmas Tree Lighting Ceremony will be on November 18, 2011 starting at 6pm in Union Square.  The official lighting will be at 6:30p.

Live music by Rick Cline and Noel Freidline, and as always, be on the lookout for Santa Claus!

Hickory NC Event - Christmas in the Valley 2011

Hickory NC Holiday Happenings!

Christmas in the Valley 2011 - Dec 2-4

It's time to find that unique or handcrafted gift for that special someone and to decorate your home in style with the latest holiday decor!

November 03, 2011

"Homeland: A Salute to Our Veterans" Dinner and Show - November 10, 2011 - Hiddenite NC Event

"Homeland: A Salute to Our Veterans" Dinner and Show - November 10, 2011 - Hiddenite NC Event

On Thursday, November 10, 2011, the Hiddenite Center 
will be hosting a new Veteran's Day Program,
"Homeland: A Salute to Our Veterans" a multimedia program 
by the Stony Point Community Choir

October 31, 2011

Catawba County NC Hazardous Waste Collection Day - November 5, 2011

Catawba County NC Hazardous Waste Collection Day - November 5, 2011

Looking for the most current day?  Click HERE

This Saturday, November 5, 2011, Catawba County will be holding their
Bi-Annual hazardous waste collection day.

October 17, 2011

Will Refinancing Underwater Loans Help Ease the Foreclosure Crisis?

Will Refinancing Underwater Loans Help Ease the Foreclosure Crisis?

This morning, I read an article on RISMEDIA, Executive Action to Ease Foreclosure Crisis?  The basic summary of the post is that the President has the authority to change the rules to allow "responsible" homeowners to refinance their homes at today's low interest rates and also to basically compel the lenders to do the refinance.  It would only help homeowners that aren't currently behind on their payments and the premise is that it would help stem the tide of foreclosures by stopping those considering strategic defaults.  By reducing their monthly payments, it would also increase their spendable money, thereby helping the economy.  Unfortunately, it's far too short-sighted in it's approach.

August 29, 2011

Newton Conover Auditorium Welcomes The Duhks - October 6, 2011

Tickets are on sale for members starting Today
for The Duhks October 6, 2011 Concert
at the Newton Conover Auditorium.

August 25, 2011

5 Tips for Maintaining Your Garage

Visit for more articles like this.

July 15, 2011

The 4 Factors of Selling A House

The 4 Factors of Selling A House

No matter how you choose to try to get your home sold, whether you go the For Sale By Owner route or you decide to hire a REALTOR® to help you market and sell your property, there are always four factors that will determine whether or not you have a successful sale.  If one factor is lacking, the other factors must "make up" for it or you likely won't have a sale at all.

April 23, 2011

You Told Me More in an Hour...

You Told Me More in an Hour...

I've been working the expired listing market pretty heavy the last six months or so, and I've met with many sellers that have been unsuccessful in getting their property sold. In the Hickory NC real estate market, like most other markets around the United States, it's a bit tougher market to sell a property and, as a seller, you have to be fully aware of this and prepared to do what you need to in order to give your property the best chance to sell in a reasonable time frame.

March 16, 2011

Do NC Home Sellers Have to Disclose Property Defects

Do North Carolina home sellers have to disclose property defects?

This question comes up a lot, both from sellers and buyers.  Sellers may know of a condition that may affect the sale of their house and fear that it will cause problems.  Buyers, especially those that have bought a house and then find a major issue, often feel that the seller has misrepresented the property to them.

So, do NC sellers have to disclose all that they know about the property?  The short answer is No, they do not.

March 15, 2011

The New NC Offer to Purchase: A Buyer's Perspective

Continuing my series on the new 2011 REALTOR NC offer to purchase contract, today, we're looking at it from the buyer's perspective.  For full details on the new contract, you can read my post on all the changes in this new form.  For an overview of the seller's perspective, you can my post on that one.

So, how does the changes affect buyers?  Well, if you've never bought anything before, it really doesn't, as you've nothing else to compare it.  But, if you've purchased something in the recent past, you may be a bit surprised at some of the changes.

March 02, 2011

Your House Didn't Sell. What do You do Now?

You hired an agent, got your house on the market and waited on the big day when a good offer comes in on your property and you can move on.  Except, that day never came and your listing expired.  What do you do now?

March 01, 2011

The New NC Offer to Purchase: A Seller Perspective

In my last post on the new North Carolina Offer to Purchase form, Big Changes to the NC Offer to Purchase Contract, we went over the biggest changes compared to the old contract.  Of course, if you've never bought or sold any property in NC before, then it's all new anyway.  But, if you have, then there is a lot of NEW in the new contract.

So how do all these changes affect a seller in a deal?

February 28, 2011

It's Only A Deal If You Buy

In the past couple of years, how many times, as agents, has a buyer said to you, "I'm looking for deal!"  Hey, in the current market, with the national media spewing all the negative they can muster on the housing industry, everybody is looking for a deal now, right?

January 17, 2011

Big Changes to NC Offer to Purchase Contract

As of January 1st, 2011, North Carolina has a completely different REALTOR/NCBAR Association approved offer to purchase and contract.  If you've currently been looking for a home to buy, made offers before or bought houses in the past, be prepared for some BIG changes to the way purchases are handled in NC.

Big Changes to NC Offer to Purchase ContractSo, What's so Different? 

The biggest change is the fact that there are NO CONTINGENCY CAUSES anymore.  None.  Nada.  The old contract had a loan contingency, repair contingency and just about anything else that you could imagine.  If you, or the property, didn't meet a contingency, hey, no problem!  Drop out, collect your earnest money deposit and move on.

Not anymore.  Now, we have a Due Diligence Period that replaces all contingencies.  You have until this due diligence period expires (whatever timeframe is agreed between the parties) to get a) all inspections done b) your loan in order c) any repairs done (if needed/required/asked for and d) pretty much anything else.

The buyer also has to put down a Due Diligence Fee.  This is not an earnest money deposit (which can also be included), but rather a nonrefundable fee made out to the seller (vs. escrow).  It is the sellers' money as soon as the contract is finalized (all parties have signed).

During this Due Diligence Period, as stated, the buyer has to get everything in order that they want/need in order to close.  During this period, the buyer can back out of the purchase for ANY reason or NO reason.

There are several other changes to the contract as well, all of which aims to do away with any of the "grey" areas from previous purchase contracts, though none of them are as drastic as the removal of all contingency clauses and the addition of the due diligence period.

In later posts, we'll go over in more detail how the changes affect each side, buyer and seller.  Bottomline, I think this purchase offer is far better than any before it, but the changes are going to take some time to sink in and it's going to be the wild west out there for awhile concerning offers on these new forms.

You can download a sample contract from the NC Realtors Association website for review.  Got questions? 
Ask away!  I'll be happy to answer them.

Hickory NC Homes © 2014 - Designed by, Plugins By