Real Estate Information

Even beautiful homes are sold short.  In particular, the one in this information involved negotiating with a guarantor, which saved the day.   At first, I tried to sell the house for enough to cover the loan and commissions.   In spite of my best efforts, there were few showings.  So we had to reduce the price. 

Federal legislation in 2007 allows a homeowner to pay less than what is owed on their mortgage and not pay income tax on the “short” amount due the bank, under certain situations. 

To get a short sale approved, you have to find every way to negotiate, and do not give up with the first “no.”  Look at the seller’s monthly mortgage statement to see if there is a mortgage insurance premium.  If so, there is a guarantor that will take some of the loss on this loan.  Even if there no mortgage insurance premium on the monthly statement, the lender may have bought mortgage insurance and the premium is being paid by the lender, typically covered by a higher interest rate charged to the borrower in return for a “no pmi” loan.

The loan I was negotiating had a guarantor, i.e. the bank was not going to take the loss, the mortgage insurance company was, and the guarantor would be the company that was “short” so I contacted the guarantor and negotiated with the loss mitigation expert there.  When the guarantor said they would approve the sale, the bank had to go along with it.  If at first you do not succeed, try and try again.  If the bank turns you down, see if there is a guarantor, or at least a supervisor to review the decision.

For a more detailed discussion on this topic, please go to http://shortsalesr.us/featured/short-sale-with-a-guarantor/

As a first time homebuyer, you might not know that your lender will require you to obtain homeowners insurance when you buy your first home.  You will be required to insure your home continuously until the mortgage is paid off. 

When you purchase homeowners insurance, you buy a package that combines several types of insurance into a single policy.  You can purchase additional coverages and riders also.  There are a lot of choices, so you should have an insurance agent explain the policy in detail to ensure it offers adequate protection for all of your needs.

First time homebuyers need to be advised that they should purchase a policy which includes replacement cost coverage.  Replacement cost is the amount it would take to replace or repair your home with materials of similar kind and quality, without deducting for depreciation. 

A first time homebuyer should shop around when purchasing homeowners insurance.  It is possible to get different rates from different agencies.

For a more detailed discussion on this topic, please go to http://solonglandlord.com/steps-for-first-time-home-buyers-to-take/homeowners-insurance-for-first-time-homebuyers.

A short sale is all about helping people who have had hardship’; not the wealthy who want to reallocate their loss.  Short sales can be done on investor owned property as well as owner occupied property.  But, there has to be a financial reason why the owner cannot pay the rest of what is owed to the bank. 

The way you express that is in the hardship letter.    Some seminars give you a list of hardships, but do not limit your thinking to a simple list.  Anything that causes a change in the financial condition from when the loan was taken out which results in the inability to pay the monthly payments and the impossibility of bringing the rest of the money owed to the closing of the sale is a financial hardship.   

The owner should write it personally, with enough detail that the loss mitigation negotiator can feel the pain.  The letter needs to describe what has happened to create the financial setback.  You need explain why, in vivid detail, so that a hardened loss mitigation negotiator who reads these letters all day long can feel sympathetic to your client. 

Do not stop with the description of the problem.  Explain what you have done to try to eliminate the problem, deal with it, or make it better.   You do not want the negotiator to just see that your client has fallen down, you want to describe the efforts to get back up again.

At the end of the letter, tell the negotiator that the owner wants to sell the house so that they can pay back as much of the debt as possible.  The hardship letter has to be signed by the seller, and preferably by both sellers.

This should be on top of the short sale package, setting the stage for why this owner deserves to be allowed to pay less than what is owed to the bank.   It is probably the most important document in the entire package, so give it the attention it deserves.

For a more detailed discussion on this topic, please go to http://shortsalesr.us/short-sale-dos-and-donts/do-a-compelling-hardship-letter/

After all the looking, the offer, the contract, inspections, getting a mortgage, finally you are going to close on your first home. What happens at closing? It can seem very daunting especially to the first time home buyer.  However, if the closing has been properly prepared, you will sign a number of documents and celebrate the purchase of your first home.

Closing can occur anywhere, but it normally happens at the closing attorney’s office.  You will sign multiple copies of the the HUD statement.  You will also sign the loan documents for your mortgage, starting with the note that says you will pay back the loan, how much the loan is and the interest rate.  After the attorney reviews all the paperwork with you and you sign everything, you will give the attorney the certified check that you brought to pay your down payment and closing costs.  The closing attorney will give you copies of all the documents.

When everything is signed and all the lender requirements are satisfied, your lender will wire the money to the attorney for your mortgage.  Most of the time you will receive the keys to your new home, so you walk out of the closing with the keys to your first home. However, the home is not technically yours until the deed has been recorded at the courthouse, so some sellers, such as relocation companies and banks,  will not let you have the keys until after confirmation of the recording.

Once you complete this step, you are now a homeowner.   Congratulations!

For a more detailed discussion on this topic, please go to http://solonglandlord.com/steps-for-first-time-home-buyers-to-take/closing-the-purchase-of-your-first-home.

There are times when you should not do a short sale, or you need to do it carefully. If the seller has a home equity line of credit, it may be the only lifeline available to the family. If the seller can still withdraw any substantial amount of money from that line of credit, it may be the only thing keeping the family afloat while they look for another source of income. If you are not careful, you could ruin their chances for recovery.

Some Realtors submit the financial information to the lender early in the process, to see if the seller qualifies for a short sale. The seller’s financial information can be fed into a computerized review system to see if the seller qualifies for a short sale.  In some situations, the loss mitigation department will review the financial situation before you have an offer and determine that the seller qualifies for a short sale. This can shorten the review process once an offer is presented.

The last thing you want to do is to give the home equity lender a financial statement showing that the borrower no longer is able to qualify for the home equity line of credit.  So, if you are going to do the short sale, you have to time it right.

For a more detailed discussion on this topic, please go to http://shortsalesr.us/short-sale-dos-and-donts/dont-take-away-the-owners-lifeline/.

The old saying “Buy Low, Sell High” sure sounds like obvious advice.  But haven’t you heard Wall Street commentators talk about how hard it is to “time” the market?  The same is true for buying a home.  By the time you know when the market was at a “bottom”, it isn’t any more.   All of the signs indicate that once this market hits bottom, everyone is going to jump in, so that the bidding by buyers will make the prices go up rapidly.   And mortgage loan rates fluctuate, sometimes rapidly.  So how can a first time homebuyer tell when to buy real estate?  

There are two fundamental considerations, for all buyers:

-         Can you afford the home now?

-         Will you stay in it long enough to justify the initial costs?

First time homebuyers have two huge advantages right now:

-         You don’t have to sell another home first!

-          You can get up to $8,000 from the government!  Not a loan, but free money!

So, if you can buy now, should you?

-         Larger than usual inventory of homes for sale means more to choose between

-         Low interest rates mean you can get more home for the same money

-         A Buyers Market means you have more clout than in a Sellers Market

That adds up to making this an unusually good time to buy a home anywhere from Cary to Wake Forest or any other part of the Triangle in North Carolina.

For a more detailed disuccion on this topic, please go to http://solonglandlord.com/steps-for-first-time-home-buyers-to-take/should-first-time-homebuyers-buy-now.

A short sale may be your best alternative if you have financial trouble and a house that will not sell for enough money to pay off all the debts associated with the home, but it is not for everyone. It is not for people who do not have a financial crisis, because they will not qualify with their lender.

You need to evaluate the alternatives. You can let the bank foreclose. You might consider giving the bank a deed in lieu of foreclosure.  You can try a loan modification.

A short sale is not an easy process. You have to get the buyers to be patient, as the lenders may take a while to review the offer.  One oddity of this process is the real negotiation is done with the bank and lien holders. Normal negotiations in real estate sales are between the buyer and the seller.

For a more detailed discussion on this topic, please go to http://shortsalesr.us/for-sellers/.

Referrals are the lifeblood of real estate agents. A referral is a recommendation, most valued when introduced by someone both the agent and client regard highly.   Having never bought a home, first time homebuyers might be most comfortable with this process, because they can rely on the experiences of friends they trust to help them find the right agent.

Referrals also come from other agents. In this case, a referral fee is paid to the referring agent if the lead results in the sale of a property.

If you are trying to find the right Realtor, ask a friend who has bought a house in Cary, Raleigh, Apex or anywhere else you want to live in the Triangle area of North Carolina.   If you are a first time homebuyer who is new to the area, find a Team that specializes in first time homebuyers so they can give you the extra care you deserve.

For a more detailed discussion on this topic, please go to http://solonglandlord.com/steps-for-first-time-home-buyers-to-take/referrals-benefit-first-time-homebuyers.

The relationship between Realtors and Lawyers is interesting.  Lawyers do not want Realtors intruding on their turf.  When a foreclosure proceeding is filed, it may be considered a lawsuit depending on the foreclosure procedures in your state.  Many foreclosures are done by a power of sale in the deed of trust, so it is just a series of notices and other requirements leading to a non-judicial foreclosure.  In other words, it is not a court proceeding.   However, in many states a foreclosure is a filing with the court, so it can be considered a legal proceeding or lawsuit.

In North Carolina, the Short Sale Addendum to the Listing Agreement says “If a foreclosure or other judicial proceeding is filed with respect to the Property, although Firm may continue to solicit and negotiate offers to purchase and contact, communicate with, obtain information from and supply information to Lienholders,  Firm may no longer negotiate the terms and conditions of a Short Sale with Lienholders, as such negotation would constitute the practice of law.”  Other states have similar interpretations of the line between what a Realtor can do and the practice of law. 

If you are not licensed as a lawyer in the state where the property is located and where the client lives, you need to know about the rulings that may restrict what you do in negotiations when a foreclosure has been filed.  One other pitfall to avoid is the regulations on debt counseling. If you charge the seller a fee that is not contingent on the closing of the sale, it can be argued that you are doing debt counseling.

How do you stay out of trouble?  Follow the wording in your forms.  How do you find the line?  Talk to your broker in charge.  You may also want to talk to an attorney, particularly if your firm has one on retainer. 

For a more detailed discussion on this topic, pelase go to http://shortsalesr.us/short-sale-dos-and-donts/dont-practice-law-unless-youre-a-lawyer/.

After you successfully get a contract, what is next?  As a first time homebuyer, the process will be new to you, and it can be stressful.  A good Buyers Agent can review the main steps and options with you before you go under contract.  The key areas are loan approval, repair negotiations, legal arrangements, utilities/insurance setup, and funding. 

As the buyer, you must stay on top of gaining loan approval, providing required information quickly, paying required bank fees, and keeping in touch with your lender.  Your agent will schedule the inspections called for by the contract and help you draft a repairs request.  You will need a closing attorney, who will review the contract, initiate a title search, order a survey (optional), work with you to schedule the closing meeting, work you’re your lender to properly record all related costs, conduct the closing meeting including explaining lots of documents, record the deed, answer questions, and an abundance of other services.  You will need to select a company to provide home owner’s insurance a couple weeks before closing, in order to allow the attorney and the insurance agent to communicate.  At least a week before closing you will need to contact appropriate utilities and arrange for the electric, water, gas, cable, and other services to be turned on in your name.

Think of moving from the point of signing the contract to a successful closing as a project, and select a Buyers Agent who will act as a good project manager – one with the communication skills, work ethic, and attention to detail to handle all the things that come up. 

For a more detailed discussion on this topic, please go to http://solonglandlord.com/steps-for-first-time-home-buyers-to-take/getting-a-first-time-homebuyer-from-contract-to-closing.