Should I try to do a short sale or a deed in lieu, or should I let the bank foreclose on my house?  This is a question I got yesterday.  In this market this is a question that you may be asking yourself?  Many are unable or financially unwilling to continue to make mortgage payments on a property that is upside down, and there are only three options:  do a short sale (if the fair market value is less than the mortgage balance), let the bank foreclose, or get the bank to take a deed in lieu of foreclosure.

Short Sale Procedures

A short sale is a sale of your home for less than the mortgage balance, and your bank must agree to the sales price because they will take a loss.  I wrote in an earlier article on the Short Sale process, “Banks only accept a loss and approve a short sale if certain conditions are met.  Sequim short sales require that sellers complete an  extensive application, and they must persuade the bank that they have little or no assets to their name, no financial resources from any other source, and their income must be insufficient to continue to make the full mortgage payments.  The sellers have to provide written third party proof with bank statements, tax returns, and often a great deal of additional documents.”

The short sale process is uncertain, because you have to list your home for sale, hope a buyer will make an offer, and hope the bank will accept that price.  All of that could take six months or a year or two years.  It’s quite unpredictable.

Short Sale or Foreclosure

The foreclosure process is quite involved and takes a minimum of 6 months and more often 12 months.  As a Realtor I don’t list foreclosures, but I do act as a Foreclosure Buyer’s Agent, and in that capacity I owe my clients full disclosure on the state of the foreclosure market and the risks inherent in buying a foreclosure.  The process to foreclose a property is a statutory process in Washington [RCW 61.24].  When I was still practicing real estate law, I created a detailed checklist for the foreclosure process, and as you can see from this foreclosure process checklist, it is quite detailed and cannot be compromised.  [Read my article entitled  The Truth About Foreclosures and the foreclosure process.]

Short Sale Process is Slow

The short sale process is very slow and uncertain.  The foreclosure process is painful, too.  The deed in lieu of foreclosure may be the best option for a homeowner if your bank will accept the deed.  Not all will accept a deed in lieu, but if you have time and you have a beautiful home in a beautiful area, you may want to start the process of listing your home and trying to do a short sale early.

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Getting Sequim short sales approved is about as likely as winning the lottery.  Well, not quite, but trying to get Sequim short sales approved is not for the feint of heart.  Why is a listing that clearly states it is a short sale such a risky and uncertain proposition for buyers?  I’ll give you the short answer.  [This article does not apply to large short sale markets like Las Vegas and Phoenix where short sales occur every day.]

Sequim Short Sales

Sequim Short Sales

A short sale is a sale in which the lender takes a loss.  In other words, the bank takes less than what is owed on the balance of the mortgage because the house is upside down.  In a short sale the sellers always net zero, and could end up owing the bank for the loss, unless the bank agrees to let them off the hook.  There may also be tax owed on the amount forgiven under the IRS Code, although congress has temporarily waived that crazy provision.

Sequim Short Sales

Banks only accept a loss and approve a short sale if certain conditions are met.  Sequim short sales require that sellers complete an  extensive application, and they must persuade the bank that they have little or no assets to their name, no financial resources from any other source, and their income must be insufficient to continue to make the full mortgage payments.  The sellers have to provide written third party proof with bank statements, tax returns, and often a great deal of additional documents.

When a home is listed as a short sale, it is the Realtor and their client who come up with a number out of thin air.  Granted, it should be a number that is below FMV if they want to get it sold, and in this market that may mean the listing price is below the balance of the mortgage, or at least that the net proceeds for the bank after selling costs would mean they take a loss.

But banks do not pre-approve short sales, so the listing price for a short sale is just a price with the hope that the bank will approve the sale and take a loss.  It doesn’t take a rocket scientist to know that is a risky proposition, especially when banks are routinely rejecting deals and others are taking months to even respond.  Most buyers will not sit around for months waiting for a bank to respond, especially when the answer is often no.

Sequim short sales are risky propositions, because buyers have absolutely no way of knowing whether the price they agree upon with the seller (mutual acceptance price) will be approved by the bank, and the banks will NOT give us any indication of how long it will take them to make a decision.  [In Las Vegas, for example, banks have worked out organized systems for handling large numbers of shorts sales, but such systems are not in place on the Olympic Peninsula.]

This doesn’t mean that you should strike all Sequim short sales off your list.  It does mean that you should seriously try to find a house where you can submit an offer and get a response within a couple of days.  Those are not Sequim short sales.

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How to do a short sale, that is the question.  Homes that were bought at the peak of the market in 2005 or 2006 and mortgaged with a maximum loan to value ratio may be underwater, meaning that the FMV (fair market value) may be less than the current balance of the mortgage.  In order to sell the home, the price will have to be reduced to the FMV, and that will require the bank’s cooperation.  The bank will have to agree to accept a loss in order to facilitate the sale.  But most people and Realtors are wondering how to do a short sale.

How do Do a Short Sale

How to do a Short Sale in this Market

In this short video on how to do a short sale, you can take a look at the online short sale engine that helps organize and manage all of the documentation needed to coordinate a short sale with all of the parties involved.  Simply go to Short Sales Online.

How to do a Short Sale Online

Getting a short sale done is no task for the uninitiated.  I kid you not, short sales are difficult to get done with all the paperwork required and all the coordination required over a period of weeks or months.  Many short sales fail, and there are a dozen reasons short sales fail.  If you have a home for sale in Sequim or Port Angeles, and it needs to be a short sale, email me for assistance.  I’d be glad to help answer your questions on how to do a short sale.

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If you have a home that you are selling and it must be a short sale (sold for less than the current mortgage balance), you need to have the right forms, the right application process, and an system that brings together every document and every party involved to get bank approval.  There is such a system, and Chuck Marunde is pleased to share that system with his clients, and other real estate agents, mortgage reps, and attorneys can also use this system online for their clients.

Short Sale System

Short Sale Bank Approval

Getting a short sale approved is no small task.  Anyone who has tried to get a short sale approved knows how difficult it can be (some would say “impossible”).  Banks have not, I repeat “have not,” been cooperative in getting a short sale approved even when it made very good financial common sense for the bank.  I have had short sale offers fail when it was obviously a best case scenario for the bank.  I had a listing in which the bank rejected a very reasonable offer, and today, 8 months later, the house has been abandoned, is run down and not maintained and soon the bank will have to go through a formal foreclosure.  Until they foreclose on it, they have no right to maintain it or protect their interests.  The seller was willing to cooperate with the bank in a short sale, but the bank was not.  The offer was $225,000 and the bank was owed $253,000 at the time.  At the Trustee’s Sale this home will most likely only bring the bank $100,000 to $150,000.  How smart was that?  These banks on the east coast or in the midwest are truly unequipped to handle short sales without a very good system that helps them make the right decisions.

Get Your Short Sale Done Online

One of the reasons banks have not been cooperative involves the chaotic nature of the current short sale and foreclosure market.  Banks and their loss mitigation departments have been completely unequipped to deal with foreclosures and short sales with this volume.  They have not had the short sale experts, nor the staff to even know how to develop systems to handle short sales.

Short Sale Online System

Leave it up to private entrepreneurs to develop a powerful online short sale engine that handles the entire short sale application process.  Watch this video to learn more about how to get your short sale done.  Encourage your Realtor or your attorney to use this short sale system.  Homeowners can also retain me.  For more information, simply email me at chuckmarunde@gmail.com.  Having practiced real estate law for 20 years I understand foreclosures and short sales, but this online short sale system is fantastic.  You can also learn more from the short sale website at Short Sales.

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If your home is either in foreclosure or will be soon, you can save yourself by immediately doing a short sale.  If you know someone who is in this situation, you will do them a favor by emailing them a link to this article.  This is the answer to a foreclosure that very few know about, and few have the tools I’m about to share with you.  (Read more about Foreclosures.)

What is a Short Sale?

Most people understand what a foreclosure is.  If payments are in default on the mortgage, the bank will foreclose.  But many people do not know what a short sale is.  A short sale is the sale of a home for less than the current balance of the mortgage.  Banks are agreeing to accept less than the balance of the mortgage balance when a home is sold at current fair market value (FMV) all around the country.

Short Sale Process

The short sale process has been chaotic at best, and a nightmare at worst.  Homeowners who want to sell their homes don’t know how to do a short sale, so they price their homes so they will net zero, but for many homes that is still over priced, which means the homes simply don’t sell and ultimately go into foreclosure.

Short Sale Listing

You might say, “Well, Realtors know how to do a short sale, so I’ll list my home with a Realtor.”  Nationwide very few Realtors know how to do a short sale.  The problem has been that there has not been a standard for the forms and information required by a bank, nor has there been a bank standard for the requirements to approve a short sale.

The result is that attempts to do a short sale have been frustrated by chaotic procedures around the country, inconsistencies in the process, differing standards among banks, loss mitigation departments without clear guidelines, and Realtors who have all but given up trying to get short sales through.

The Short Sale Solution

If you have a home you need to sell, and you expect to net zero anyway, and if it does not get sold fast you will end up in foreclosure, you ought to get serious about doing a short sale.  I recommend two things.

1.  Find a Realtor who understands how to market a home in this Internet marketing age, and who understands how to do a short sale; and

2.  Use the most powerful short sale engine in the U.S.  What is this short sale engine?  It is an entire online short sale software system that will help you organize and manage the entire short sale process from beginning to end.  It includes all the forms and letters, and allows each participant to log in and play their part.  That means your Realtor, your bank (and their loss mitigation department), the buyer, and an attorney (if you or your buyer have one) can all login and facilitation an efficient and quick short sale.

My associate is getting 85% of her short sales approved, which is unheard of across the country, and some of these transactions are getting approved within a matter of two weeks.  This is the single most powerful software to get a short sale approved.

You can use this short sale engine online now no matter where you live in the United States.  The database connects to banks around the country.  Go to Nationwide Short Sale Engine.  If you live in the Sequim or Port Angeles area, I recommend you hire me as your Realtor and we will use this short sale engine to get your home listed and sold quickly and get the short sale approved with your bank quickly.  You can go to SequimShortSales.com or PortAngelesShortSales.com.

There are potential tax and credit score consequences to both foreclosures and short sales.  Foreclosures are often done as non-judicial foreclosures, but banks are also doing judicial foreclosures to obtain a personal judgment, and short sales have potential taxes on the amount of the mortgage forgiven, although legislation may eliminate that issue.  For tax and other financial advice, I recommend you consult your tax account or see an attorney for legal advice.

Time is of the essence if your home is upside down or is approaching a foreclosure.  A short sale may be the best answer to get your home sold quickly.

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Finally, a short sale system that really works and helps sellers and buyers get transactions through in the least amount of time with all documentation required by the banks.  Chuck Marunde is pleased to announce the first online short sale engine for the State of Washington and the entire Northwest.  Chuck has been working with a group of short sale experts from Florida for about three years, and the final product is now complete and ready for buyers and sellers to use.  This is the first and only powerful online short sale engine in the entire Northwest and on the Olympic Peninsula and in Sequim and Port Angeles.  What does it do?

Short Sale Online System

This short sale engine solves a major nightmare for buyers and sellers.

For too long the process of getting a short sale through has been a nightmare, and many clients and their Realtors will say that is an understatement.  When a home’s fair market value is less than the balance of the mortgage on the home, the house is upside down, and if a buyer and seller can reach mutual acceptance on a fair price in the current market, it may mean the bank must accept less than the mortgage balance.  This is what we call a short sale.  But trying to get banks on the east coast (or anywhere) to cooperate on a short sale in Sequim or Port Angeles has been nearly impossible.  I’ve had several short sales go south simply because we could not get the bank to work with us on a short sale, and much of that had to do with documentation and the timely processing of all documentation by the responsible parties.

The state of the short sale market has been chaos–literally.

Banks have been ill-equipped to handle the massive volume of foreclosures and short sales, and their loss-mitigation departments were not staffed or trained to handle the defaults and short sale process.  In fact, there were no systems set up for handling large volumes of short sales, nor were there even standards upon which to make decisions regarding short sales.

While banks have been unequipped to handle short sales necessary to get houses sold in this recession, real estate agents have been thrown into the lion’s den in terms of trying to figure it out how to handle a short sale, with agents all over the country doing whatever they heard might work, sending in wrong documentation, insufficient backup documentation, and in many cases not knowing to whom to send the documents and requests to.

Finally, someone has created a short sales system that is being used effectively to complete short sale paperwork, assemble a professional package to submit to banks, and a system of organization and management of the entire process from beginning to end so that all parties involved (buyers, sellers, banks, their Realtors, and their attorneys) can log in to the online account to facilitate the transaction.  There has been nothing like this available until now, and Chuck Marunde is pleased to announce this launch of the areas first online Short Sales Engine.  The system includes:

1. Paperless Short Sale System
2. Online Short Sale Document Collection
3. Online Access For Parties Involved in a Short Sale
   
4. Valuation and BPO Reports
5. HUD-1 Calculation Tools and Forms
6. Internal and External Notes System
7. Fax and Email Packages Through The System
8. Professionaly Built Short Sale Package

If you are a buyer of a home that must be a short sale, contact Chuck Marunde.  As your buyer’s agent, he can use this Short Sales Engine to push your offer through to acceptance faster than anyone without this incredible system.

If you are a seller that must list and sell your home as a short sale, this is the system you need to accomplish what has been confusing to so many across the country.  Although previously Chuck has not been accepting listings that necessitated a short sale, Chuck is now accepting short sale listings because this system is so efficient.  This short sale system gives Chuck a huge advantage in getting a short sale through, and that advantage plays out in favor of his clients who list their property with him.  It doesn’t hurt that Chuck was a real estate attorney for 20 years and understands the foreclosure and short sale process from his own professional experience.

“I’m very pleased to finally have this short sale system up and running after three years of behind-the-scenes work with the most knowledgeable short sale experts in the country.  While I am rolling this system out for everyone in the State of Washington, I am pleased to make this announcement first to Sequim and Port Angeles residents right here,” says Chuck with obvious enthusiasm.  “I’m grateful to be able to bring something so needed and so beneficial to buyers and sellers on the Olympic Peninsula.  This online short sale tool is going to help a lot of people get their homes sold so much faster in cooperation with their banks.”

“Today I talked with one of my associates who is a Realtor and used this system to help one of her clients.  After completing the online documentation from the checklist, she hit the button that assembled the entire short sale package for the bank, creating a cover sheet, a table of contents, and all of the documentation and letters required by her client’s bank.  She said it was about an 80 page package.  She sent the package that was created within the Short Sale Engine while online directly to the designated point of contact at the loss mitigation department on a Friday.  That same afternoon, that bank employee called my associate and said, ‘I got your package and it is so professional.  Everything we need is there and labeled nicely.  Since you’ve given me everything I need to make a decision, let’s get this done right away.  I’d like to get this file off my desk.”

This short sale system works.

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