Short Sales for REALTOR®s

Short Sales for
REALTOR®s
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Fred Krawczyk
REALTOR®, Broker, SFR
Short Sale Specialist
Tel: (317) 294-4425
Email: [email protected]
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Home Ownership
w/Financing (Loan)
Note &
Mortgage
“ Sell a House – Buy a Home – Foreclosure Specialist”
Deed
© 2007 F.C. Tucker Company, Inc.
What Is Foreclosure?
… a process … not an event … ~ 9 Months
• Law Suit filed against the
homeowner by their Lender
because the homeowner has
defaulted on their loan payments.
• The Lender hires a law firm
located in the same state as the
property.
• Sheriff Sale – Bank Owned,
HUD, VA
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Legal Matters
1. Foreclosure Judgment
2. Deficiency Judgment (Collections)
3. Bankruptcy (Financial vs. Ownership)
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
What Are My Client’s Options?
when Facing Foreclosure
1. Loan Modification
2. Short Sale
3. Deed in Lieu
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Short Sale
• Negotiation Process from which the
Lender (Creditors) agree to take
less than what is owed against the
house to release their lien.
• Reduced payoff of Jr. liens (2nd
Mortgage, HOA, Credit Cards …)
• Keep a foreclosure judgment off
Credit Report
• Waive Deficiency Judgment
• 1099 Taxable Income
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Why Do Lenders Short Sale?
Their Business is Money … Not Real Estate
• Loss of Loan Payments (+12 months)
• Attorney Fees
• Property Holding Cost (Bank Owned)
• Prevent Ownership Liability (Bank Owned)
• Have to Keep Money Reserve w/ Loan Default
** A synthetic CDO is a complex financial security used to
speculate or manage the risk that an obligation will not be
paid
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Successful Short Sale
1. Seller Cooperation
2. Find a Qualified Buyer
3. Lender (Creditor) Negotiation
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Selling a Short Sale
1. Condition
2. Location
3. Price
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Short Sale Process
1. List The House
2. Get Offer w/Qualified Buyer
3. Submit Short Sale Package to Lender
4. Lender Negotiation / Accept / Counter
5. Get Buyer to Closing (30 days)
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Example Short Sale Properties
120 Days – Bank of America
45 Days – Wells Fargo
240 Days – Citizens
70 Days – HSBC
“ Sell a House – Buy a Home – Foreclosure Specialist”
45 Days – Bank of America
100 Days – Harris Bank
© 2007 F.C. Tucker Company, Inc.
Retail vs. Short Sale vs. REO
Hybrid Transaction
• Lender doesn’t own the property / but controls the sale
• Lender Approves the HUD1 Settlement Statement
• Short Sale Addendum (3rd Party Approval)
• Lender won’t do repairs but may secure and winterize
the property (Protection of Collateral)
• Contract Law Seller and Buyer
• Presenting multiple offers to the Lender
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Servicer (Lender) vs. Investor
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Short Sale Management
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
FHA Preforeclosure Program
ELIGIBILITY
1. The property must be owner-occupied, no “walk-a
ways” or investment properties. Exceptions: when
it is verifiable that the need to vacate was related
to the cause of default (job loss, transfer,
divorce, death), and the subject property was not
purchased as rental investment, or used as a
rental for more than 18 months.
2. The Mortgagor must be 31 days or more
delinquent at the time of the Preforeclosure Sale
closing.
3. The Mortgagor must provide documentation
substantiating a reduction in income or an
increase in living expense, and documentation that
verifies the Mortgagors need to vacate the
property (if applicable).
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Buyer’s Agent Expectations
1. Set the Expectation with the Buyer Up Front
(90 Days Offer to Lender Response / AS-IS)
2. Reasonable / Clean Offer (Seller Concessions –
Home Warranty – Survey)
3. Pre-Approval / Proof of Funds
4. AS-IS
5. Hurry up and Wait (Time is of the Essence)
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Short Sale Approved
1. Short Sale Deadline (30 days)
2. Inspection / Appraisal
3. Earnest Money
4. Utilities (Buyer)
5. Loan Officer Management
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Renovation Loan / Repair Escrow
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.
Questions & Answers
“ Sell a House – Buy a Home – Foreclosure Specialist”
© 2007 F.C. Tucker Company, Inc.