How Does A Lender Profit From A Short Sale?

A Quick Definition:

A Short Sale in the real estate industry refers to a situation where the homeowner sells a property for less than the loan balance. The lender will take what the property sells for and the homeowner can avoid foreclosure in its entirety and subsequently both, the Homeowner and the Lender have a win-win situation

With the rising number of foreclosures happening all around the nation, homeowners are looking for effective ways to avoid losing their homes to a foreclosure and avoid the deficiency that may incur with the sale of the property.

Moreover, it is not just the homeowners who are affected by this difficult situation of foreclosure, but also the lenders that have to bear a loss in their portfolios with a non-performing asset.

But exactly how the lender profits from a short sale?

In general terms, the lender is free from any maintenance and details in selling the property. It is an arduous task for them to take possession on a property in a foreclosure and prepare it for the market by performing various maintenance repairs, problems with vandalism and general maintenance costs.

Their loss thereby incurred is minimal by accepting a short sale rather than taking it all the way to foreclosure. As they are aware that the entire procedure of a foreclosure is also very demanding both in terms of money, time and labor, and by simply approving to the short sale of a property.. the lender can ensure that it saves them a lot of money and time.

Not to take in consideration the hiring of local attorney with high charging fees.

In short, by compromising on part of its due balance, the lender is basically saving a lot of its expenses that it would have to spend otherwise.

In some cases. .. Just the simple organization and execution of the property foreclosure auction could cost a lender as much as $30,000 plus for each property that forecloses and becomes a REO. That is not a sensible investment from their part and in way, they are simply forced in accepting the short sale.

But the question remains. .

Or let’s say. .

What’s The Million Dollar Question?

Why are lenders so SLOWWWWWW in collaborating with distressed homeowners and the ready to help real estate agents standing by to facilitate the transaction?

Why?, WHY?. WHY?

I asked myself that question many times.

There is no definitive answer. .

I simply concluded that Lenders are from Venus and Short Sale Agents are from Mars

Any property SOLD as a short sale, it means selling it at a value less than what the homeowner owed to the lender organization for the mortgage under question, I can understand their reluctance from this point of view. . I would not want to accept any short sale either… . when it means that I’m losing money at the conclusion.

But, when you add the repercussions of a foreclosure. .a short sale is definitely the better option for the lender.

Benefitting the homeowner is in my opinion a non-planned occurrence that just comes because with the fact and not because they want to “ASSSIST” a distressed homeowner.

Ultimately, I believe it’s a combination of a lot of factors, some of them:

Mortgage Insurance: There is no incentive while a PMI is paying for the homeowner’s missed mortgage payments.

Servicing Fees: There is no incentive for the middle man that gets paid in a monthly basis to elongate the short sale procedure. .there is more money if it takes them a year to HELP approve a short sale vs. .only 60 days!

Disorganization: I can understand that short sales surprised everyone. .

One year later, they should have re-grouped and put contingency plans.

Two years later? . .OK, come on guys. . People are asking for more short sales. .hire and train more people please

Three Years Later? Who is in charge here? . .You’re fired!

Four Years Later? Do you really need the Government to intervene on what you should be doing from the very beginning?

• Homeowner misses mortgage payment. . Established hardship
  
• Lender orders a REAL APPRAISAL not a $35 BPO to determine value. .(you know, we are not talking about a couch here.. it’s a house and houses cost a lot of money!! helloooo? McFly!)
  
• Listing Agent is given a proposed accepted NET HUD-1 allowing them to market as they see fit.
  
• Property gets SOLD and everyone benefits!
  

As the American dream takes newer turns, so are our efforts to help realize them. You can expect that is only natural for anyone to dream of a home, where one can live with their loved ones and cherish all their experiences that little by little is accumulated each day.

The most important thing is that we; as Real Estate Agents must help preserve that American Dream.

We can do it collectively one homeowner at a time.

I only wish that lenders acknowledge the long term benefits for the role that all real estate agents play on this.

We can start by proclaiming. .

“The American dream is not a Rental Home!”

A special thanks to my beautiful daughter for her modeling role “Playing with Cherry Blossoms”

www.Short-Sales-Expert.com

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Our buyer agents who are involved in assisting you in buying a home are very aware of the process of transferring ownership of properties and how important that is to all the participants. Expect every step of the process to be recorded and formalized through the use of various real estate forms culminating in the “closing” that is often staged at a local Settlement Company.

From all the forms and documents that a seller and a buyer must agree and sign, nothing will give them greater joy than the much anticipated “offer to purchase real estate contract”. Once home sellers receive an “offer to purchase” and agree to the terms, the property buyer and the seller become involved in a promise that will ultimately lead to the transfer of the property.

The offer to purchase real estate contract form is very important, not just because it could signify the start of the sale of the property, but also because this piece of paper will have a marked effect on the lifestyle of the new buyer and the seller. The offer to purchase will indicate the price which the buyer is willing to pay for the property, the conditions of the contract and will also outline how the money will be paid. This includes the proposed down payment, type of loan to be obtained and conditions of the contract.

As real estate agents we are well versed in presenting the right UPDATED
REAL ESTATE FORMS that must be signed between a property buyer and a property seller.

The ready to use offer to purchase forms are only as good its users understanding and guidance. Under no circumstance a real estate agent, broker o facilitator in the sale of a property can change the verbiage or “scratch” conditions already outlined based on local ordinances and laws. Any change to a contract that changes its integrity must be done under the supervision of an attorney to protect all parties involved.

Our agents are trained in making sure not to step over the line when it comes to contracts. We utilize Village Settlements in Gaithersburg Maryland as our choice of professionals that help us complete our sales. When there is a change that could jeopardize the integrity of the contract and the sale of a property, we have at our disposal attorneys like Michael C Hollman to help us bring an acceptable contract that could enforce any agreed upon changes protecting all parties.

We now invite you to see an actual settlement conducted by the principal attorney James E. Savitz in Villages Settlements Gaithersburg

Incidentally, most of our closings take place with Village Settlements unless the principal (Property Buyer or Property Seller ) elect their own company and attorney based on their own rights outlined by law.

Herboso & Associates is proud to be associated with Village Settlements and their help just enhances the quality of services we provide for all our clients.

Here are Twenty Great Reasons why Village Settlements, Inc. should conduct your real estate settlement…

A sample of our services. . .

As soon as you call Fernando Herboso, broker of Herboso & Associates LLC and you are considering selling your property. . This will be our introduction video to bring you just a hint of the quality of our services. .

Thank You!

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How to Avoid a Deficiency Judgment?

As you probably aware a deficiency judgment is something that looms over the head of anyone that has experienced a foreclosure, a deed in lieu of foreclosure and/or a short sale.

This is certainly not the law in every scenario, different states have different laws and you should be able to check on this quickly by consulting the office of your state’s attorney general or anyone that is experienced in distressed properties.

Read the Rest Here

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Because the Real Estate industry is becoming more challenging every day, we seek professionals that understand the industry and are committed to stay ahead of the game At Herboso & Associates llc , we not only provide the best service, but we also have an excellent system in place to produce income for you.
Call Fernando Herboso for a confidential interview @240-426-5754