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What Is A Short Sale and How Do I Qualify?

A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens’ full amounts, whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt.

Short sales are one of the most complex of all real estate transactions because there are so many parties involved. In a short sale there is the buyer and seller, the seller’s lender(s) servicing companies, the actual owner of the mortgage or investor, private mortgage insurance company and the government (if a Fannie Mae or Freddie Mac loan). In most cases, the investor is not the lien holder from whom you receive your monthly mortgage statement. All of these parties must be in an agreement before the buyer and seller is able to sell the property.

Most lenders will approve a short sale contingent upon the homeowner’s hardship or reason for selling. Without a hardship, then a lender will be reluctant to approve a short sale transaction. Below are some most common hardships:

  • Loss of Income
  • Divorce
  • Job Transfer
  • Illness of Borrower
  • Illness in Family
  • Unemployment
  • Death of a Family Member
  • Loss of Renters/Tenants
  • Payment Adjustment
  • Excessive Use of Credit

If you are experiencing one or more of these hardships above, then we can get your lender to accept a short sale once we locate a buyer for your property.

Some homeowners may choose to work with an agent who is a good friend, family member, or a neighborhood agent who markets themselves to gain additional listings, to conduct their Arizona short sale transaction. Statistically, only a small percentage of Realtors nationwide are successful with short sale negotiations. Like working with the best heart surgeon at a hospital, it is crucial you work with a seasoned and proved professional.

Our extensive experience and the relationships we’ve established enable us to provide effective representation and short sale negotiations on your behalf. We don’t just send your file and hope it gets approved. We identify and contact the investor(s) directly to identify their wants and needs before submitting the short sale package.

Therefore, in addition to getting your Phoenix short sale approved, we negotiate with the investor to get you full release of all future deficiencies on the unpaid principal balance. We offer a FREE CONFIDENTIAL, NO OBLIGATION consultation to discuss your short sale options in total privacy.

Give us a call TODAY at 480-213-5251 or visit your web site for additional information about the short sale process: www.AZ-Short-Sale.com

Short Sales Rise, More Banks View it as a Better Option

Banks are more willing to agree to a sale at a lower cost than a home owner’s mortgage balance in order to avoid having the property fall into foreclosure, which can be more costly for a lender.

In the fourth quarter of 2011, there were more than 88,000 short sales, a rise of 15 percent compared to a year prior. In all, short sales made up 10 percent of all home sales sold in the fourth quarter, according to recent data released by RealtyTrac.

On the other hand, bank-owned homes dropped 12 percent year-over-year (to 116,000), making up 13 percent of all home sales during the fourth quarter.

The average short sale in the fourth quarter sold for $184,221, according to RealtyTrac. The average foreclosure, on the other hand, sold for $149,686.

Banks are now more willing to do short sales and that trend will likely “show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans,” said RealtyTrac CEO Brandon Moore.

Meanwhile, during the fourth quarter, 24 percent of homes sold — nearly one in four — were in some stage of foreclosure, either already bank-owned or already winding through the process, RealtyTrac reports. The number is slightly down compared to a year prior when foreclosures accounted for 26 percent of all home sales, RealtyTrac reports.

However, Moore says he expects foreclosure sales to rise this year, “particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months.”

The number of Phoenix short sales listing is currently 8,237 listings as compared to Phoenix REO listing at 1,567. The number of short sales in Phoenix sold in the month of February was 2,004 homes as compared to 1,662 REO properties. Phoenix short sales homes are on the rise and they will continue to be more popular with the banks in the future.

4 Keys To Successfully Buying A Phoenix Short Sale

The real estate market in Phoenix, Arizona has become very competitive over the last year. Home buyers and investors are taking advantage of the historically low real estate prices (50% discount in most situations). With the complexity of the short sale transaction, increasing demand and tight mortgage lending standards can make purchasing a property difficult in Phoenix.

There is no way around the tight mortgage lending requirements (he who has the gold makes the rules) but there are different strategies for purchasing short sales and beating the competition. When there is an offer on a short sale where the listing agent is currently negotiating the offer with the banks, the MLS listing will show “Active With Contingency”. Due to the increased competition in the market a lot of buyers are submitting multiple offer and wait to see which short sale is approved first. These buyers are only planning to purchase one property and will have to cancel the other offers.

This means “opportunity” for you to get your offer in as a back-up offer and if the first buyer cancels their transaction, then you will be first in line to purchase the property, without any competition. This is a great strategy since about 50% of all short sales with go through several buyers before it actually closes.

I have purchased a few investment properties this way and I have help a lot of my buyer clients purchase properties using the same strategy. If you are having difficulty getting your offers accepts or under contract, then give us a call and we can help you get your dream home!!

Furthermore, you could be the buyer that is submitting multiple offer (as long as the seller’s are aware) and wait until the first offer is accepted. The short sale contract give a buyer the option to cancel their offer at any time; therefore, your earnest money deposit is fully protected. You should also add additional language to your offer to make sure the seller fully understands this concept.

Also, try making your offer the “Purple Cow” that stands out over and above all the other buyers. You necessarily don’t have to pay more than fair market value but you could offer terms like a larger earnest money deposit, a 5 day inspection period, no seller concessions or a 20 to 15 days closing (you will want to check with your lender). These terms will make your offer stand out over and above the other buyers.

We can guarantee we can help you purchase a great property! Give us a call TODAY!! 480-213-5251

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