Real Estate Guidelines – Short Sales and Foreclosures

Real Estate Guidelines – Short Sales and Foreclosures….What Are They?

Most of my articles are usually related to marketing strategies, social media tips, and personal development.  However, with the currernt activity in the real estate market, I want to share some Real Estate Guidelines regarding Short Sales and Foreclosures.

People are always looking for a “quick deal” or a shortcut when it comes to buying and flipping real estate.  Be warned…do not take shortcuts in real estate purchases.

I will show you at the end of this article how to take advantage of shortcuts in your business so be watching closely for that information.

Here are some terms you should be familiar with if you are thinking about purchasing a home that involves foreclosure and short sales.

Foreclosure:  Occurs when the lender takes back a house because the homeowner has mot made mortgage payments. When this happens, the house becomes an REO (Real Estate Owned) lender property.

Short Sale:  Happens before the  
foreclosure takes place.  A                         
homeowner sells the property 
based on a listing
price arrived at by a comparative
market analysis of recent comparables
and the condition of the home.  In the end,
the lender agrees to accept less than
what is actually owed.

Short Sale Candidate:  A homeowner who is late, or will soon be late, on his or her mortgage payments.  The homeowner must be able to document the inability to make payments.

Recourse Loan:  The homeowner will retain personal liability for any deficiency after a sale or foreclosure, as the lender has “recourse” to the assets of the borrower to make up the deficiency.

Non-Recourse Loan:  This limits the lender to only the funds that are available from the security interest in the property.  The lender cannot force the borrower to repay any shortfall.

Double Close and Flip: Investors insist they will handle the short sale negotiations directly with the lender so the agent can concentrate on finding a buyer.  The result is the investor does a concurrent close, selling the property to another buyer at a higher price than the investor paid.

Strict Foreclosure:  The original form of foreclosure that requires the lender to file suit asking a court to order the borrower to pay the mortgage debt by a certain date or the lender will automatically gain full title to the property with no obligation to even sell the property.  This procedure is usually available only when the value of the property is less than the debt.

Judicial Foreclosure:  this is available in all states and involves the sale of the mortgaged property under supervision of the court.  Proceeds first go to satisfy the mortgage, second to other lienholders, and finally, to the mortgage/borrower.

Non-Judicial Foreclosure: States use measures which are not as strict as judicial, such as a trustee sale.

Cash for Keys:  A program used by lenders to pay the borrower to vacate a property in a timely manner without destroying the property. 

Deed in lieu of foreclosure: A process whereby the owner, with the approval of the lender, deeds the property to the lender to avoid foreclosure. Lenders are generally reluctant to accept a “deed in lieu” unless the title is free and clear of any other encumbrances junior to theirs and the owners execute an estoppel affidavit acknowledging that they are acting volitionally, with informed consent. 

Multiple Listings Service (MLS) A listing of properties from local real estate agents that consist of all homes available in an area. For-Sale-by-Owner properties are not listed in this database. 

Few other items of importance:

-A deed of trust has 3 parties involved: the borrower, the lender, and the trustee.  A mortgage only involves 2 parties: the borrower and the lender.

-Typically short sales take at least two and a half months to complete.

As a buyer, you should consider, in addition to basic inspections, inspections for meth, radon, mold, electrical, structual, and roof, if applicable.

 

I mentioned previously that you should not take “shortcuts” when purchasing real estate, but there is a way to take shortcuts in your business.

 

 

Click here for more information how you can get access to a system that can have a direct impact YOU and YOUR bank acccount in just 30 days.

 

If you received value from this post “Real Estate Guidelines – Short Sales and Foreclosures” please comment and share it with someone who will also recieve benefit from this information.

 

Make it a great day!

Sherry Starnes
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