Short Sale
Advice on avoiding the pitfalls of short sales.
Foreclosure Crisis Slowing Sales
The foreclosure mess is making it harder for banks to sell properties. ForeclosureRadar, which tracks foreclosures in five Western states, says the number of properties coming to auction in Arizona, California, and Nevada has declined by more than 30 percent.
Investors are backing away from sales because they fear that the properties they buy will be tied up in an investigation, says Sean O’Toole, CEO of Foreclosure Radar.
O’Toole believes the problem is short-lived and ultimately will be settled in favor of the banks. “The fear that has been created in based more in hype than in law,” he says.
Source: CNNMoney.com, Les Christie (11/29/2010)
Short Sale Schemes
This real estate scheme usually happens when the borrower owes more on the property than the current value. The borrower then pretends they have a financial hardship and can not make any more payments. Someone, an accomplice, who is working with the borrower submits a low offer to buy the property. The lender agrees with the short sale not knowing that it was all a set-up. The property is usually resold immediately for the actual value for a profit. If you suspect real estate fraud you can make a report with stopfraud.gov.
photo credit: TheTruthAbout…
When Should You Use a Short-Sale Negotiator?
Short sales abound, but many real estate sales associates do not possess the time, training, or temperament to process this type of transaction. In particular, many sales associates would rather use the time that would be lost processing paperwork to instead pursue marketing, lead generation, and other more productive activities.
Rather than distract themselves from their core tasks, sales associates handling a short-sale listing can benefit from the involvement of a short-sale negotiator, but they must be careful to adhere to rules on agency relationships, insurance, and compensation.
Home owners may choose their own negotiator, although they often do not have the expertise to select the best professional; selling sales associates may retain a negotiator as part of their team, or this individual may be an independent contractor that they hire; or the buyer’s sales associate may bring in the negotiator, although this may lead to agency issues since the buyer’s sales associate then begins to represent the seller.
In any case, it is critical for listing and selling sales associates to be certain of their Errors & Omissions policies, which may or may not cover these activities. They also must take care to address how the negotiator will be paid — out of commissions that have been earned or as a separate or negotiated fee.
Source: Realty Times, Bob Hunt (05/25/10)
National Association of Realtors Resource to Reduce Short Sale Stress
According to the most recent REALTORS® Confidence Index, buyers continue to be discouraged with the extended short sale process, which frequently results in foreclosures that could have been prevented.
New resources from the National Association of REALTORS® aim to help REALTORS® and consumers successfully navigate the short sale process to help more home owners avoid foreclosure.
“Our members report that short sales are often riddled with delays and red tape,” said NAR President Vicki Cox Golder. “NAR has worked tirelessly to provide REALTORS® with the resources they need to navigate short sale transactions, as well as provide guidance on helpful government programs designed for home owners facing the process.”
On April 5, 2010, the U.S. government will implement the Home Affordable Foreclosure Alternatives Program (HAFA). Part of the Home Affordable Modification Program, HAFA helps home owners who are unable to retain their home under HAMP by simplifying and streamlining the use of short sales and deeds-in-lieu of foreclosures. Home owners must meet certain requirements to participate, and incentive payments are provided to home owners and servicers.
To help REALTORS® understand HAFA and its guidelines, NAR has released a brochure about the Home Affordable Foreclosure Alternatives Program and additional resources online, including government forms and guidelines, a video explaining the new federal guidelines, and frequently asked questions.
Designed to help REALTORS® explain the new program to home owners, NAR’s HAFA resources explain how the program aims to streamline short sales and, in the process, save more families from foreclosure.
“The new guidelines and incentives as part of HAFA are a crucial step towards reducing problems with the short-sale process, and REALTORS® are ready to help make this new program a success,” said Golder.
In addition to its resources on HAFA, NAR launched a Short Sales and Foreclosures (SFR) Certification Program in August 2009. The SFR program is offered by the Real Estate Buyer’s Agent Council of NAR and includes training on how to manage short-sale, foreclosure, and real-estate owned transactions.
