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Posts Tagged ‘westchester short sale real estate agent’

In some markets, people who only borrowed 80% of their home’s value are waking up to the fact that they actually have no equity. It is happening in all communities- Yonkers, Yorktown, Scarsdale, Somers, White Plains, Wappinger Falls, you name it. No demographic, neighborhood or school district is immune from the ripple effect of the declining economy. And if your mortgage adjusts, you lose your job, or any one of a dozen other unfortunate things, you may feel that you are in a dire situation. When the market was hot, people who had problems sold or refinanced rather easily. Problem solved. Not so easy in this climate.

Financial problems cause terrible stress. People that feel that they are trapped in a house they can’t sell because of a high mortgage balance can feel helpless and defeated. My observation is that the stress and worry are actually worse than the shortage of money. The worst thing to do is retreat, withdraw or give up. This doesn’t mean you have scream “Geronimo” and beat your chest. If you take small steps to help yourself you’ll be OK.  There are solutions if you are “upside down” or have negative equity. Help yourself- my most successful short sale clients were always proactive. Here are some things you can do:

  • First, communicate with your lender. You’ll feel better that you are being proactive, and the lender will know that you aren’t going off the grid.
  • Get help from a professional. List the home with a real estate agent who specializes in short sales. I’ll opine on how to find that agent later.
  • Get educated. Google short sales. Go to the library. Understand the process. Taking the mystery away will settle your mind.
  • Your hardship package should be treated like an extra credit project that you have to pass in order to not flunk out of school. Get the documents they request, fill out the forms and write that hardship letter. The better the package, the better  the chance for a fast approval on the short sale. Don’t put anything off, and ask your agent for help if you need it.

Now- on choosing an agent for your short sale:

  • The agent has to be full-time, with a documented track record,  and references.
  • Ask the agent directly how many homes they have sold in the past year, and how many short sales they’ve closed.
  • Make sure they document their claims and if they can provide references.
  • DON’T EVER let the agent obfuscate your questions by deflecting them and blathering about their company, office or sales team. You want to know how many sales/short sales THEY’VE done.
  • Have the agent explain their plan to sell the house. The plan has to make sense. Do they negotiate directly with the lender, or do they have a 3rd party do it? Where will they advertise? What is their opinion of a starting price, and how do they justify that price?
  • If you are not comfortable with the broker or agent, do not list with them.

Once you’ve listed the house on the market with an agent who is a good, full- time short sale specialist, pay attention to how many showings get scheduled. If you aren’t getting 1-2 showings a week, it may be time to lower the price. Bear in mind, too, that the house will have to be marketed as a short sale. There are two reasons: first, short sales have to be disclosed in most locales. Second, pre-foreclosures attract more buyers because people are looking for bargains. Since your bottom line is the same no matter what the final price, you should not be reluctant  to lower the price if so advised.

Making the house easy to show is crucial. Be as accommodating as you can be, and only reject showing requests in rare cases of emergency.  In many markets, there are 10 or 20 houses just like yours. If you are in Mahopac and the buyers are coming up from New Rochelle and you don’t allow a showing on a given day, they may not try to reschedule because of all the other options out there. People can’t buy what they don’t see. So, if there is a legitimate contagious illness or emergency, don’t do the showing. Friends visiting, a child’s birthday party, dinner, or a furnace being repaired are no reason to deny a showing. The stakes are too high.

Once an offer does come in make sure that your package for the lender has everything they ask for- bank statements, letters of explanation, disclosures filled out neatly, everything completed. Once your package in in review, the lender will send someone out to do either an appraisal or BPO(broker price opinion) to verify that the home’s value is indeed lower than the loan and in line with the offer.

At that point, you are off to the races. Typically, lenders give the buyer 30 days to close or the file has to be approved again. Make sure that the short sale terms, upon acceptance, are in writing and that you have, in writing, a release from the loan once the deal is closed. At that point you can, thankfully, start packing. That day is the first day of the rest of your life.

J. Philip Faranda is Westchester’s Premier Short Sale REALTOR. Find out more at www.NYShortSaleTeam.com
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Predatory lending is an insidious practice. Those that make a short term profit at the expense of another person’s financial health are criminals. Of course, they know little of the damage they cause, but those of us who try and pick up the pieces know that harm all too well.

I was called to meet with an elderly couple in White Plains, and a family friend was also present. I thought little of it in the beginning, but as I came to learn of their circumstances, I understood that the friend was there to ensure that they wouldn’t get hurt again. About a year earlier, a mortgage person convinced them to refinance their home with an option-ARM, which is a very exotic product intended as a short term loan for investors. I am sure the loan officer made a healthy commission, but these people belonged in this loan as much as Stevie Wonder belonged behind the wheel of a Ferrari.

The way it works is that the interest rate is artificially low in the beginning period, and then the difference between the note rate and the market rate is added to the loan principle each month. If the ARM  (adjustable rate mortgage) rate is 2% and the market rate is 7%, that month’s 5% annual interest is the amount that the loan amount increases. The low payment literally cannibalizes equity. Investors like them because the teaser rate is low, and by the time the adjustable rate period is at hand the home is resold. Not so for a long term owner occupant. By the time I had gotten there, they had realized that tens of thousands of their equity had disappeared. Nobody explained this to them, or, if it was covered, it was sped through so quickly they didn’t know what hit them. To make matters worse, the loan had a prepayment penalty, which is incredibly rare in the state of New York.

The clients were understandably mistrustful of anyone who promised to help them, and it was only their friend’s presence that convinced them to work with me. For the entire period of the listing (it took almost 7 months from listing to closing) we never met alone once. There was always a friend or relative present.  I didn’t blame them, and I actually preferred it that way, because every new person that met me became an ally.

It was a tough sell: we had subordinate financing, a prepayment penalty, a very outdated house, and the sale price of comps was still high at that point because the market decline was in it’s infancy. Even if we brought an offer, there might be appraisal issues. They also had a large amount of personal belongings to move, a difficult task for elderly, infirmed people.

We did get an offer, and the work began on negotiating the short payoff. One piece of good luck came through when a local non-profit that the clients contacted on their own got the pre-payment penalty disallowed (another example of people doing something to help themselves rather than curl into a fetal position). In our process we have the buyers sign a conditional contract, contingent on bank approval of the short sale. These things can go on for months, and there is always a danger of the lender giving the buyer an “out” by countering at a higher price. After weeks and months of frustration and waiting, the buyers did become nervous. I spoke with their agent quite often, and much of the discussion was reassuring them that we were confident we would get the deal done.

The approval did come through, and with a rare caveat: an unsecured note of $30,000 would have to be paid back by my clients. The lender would allow them to sell and release the lien, but the bank  wanted another $30,000. The term was advantageously long and the rate low, so the monthly payment would be a fraction of a $30,000 car for example, but it was a post closing obligation.  This is exceedingly rare; we had little choice. It was either that or foreclose. The clients accepted the lender’s terms.

They are renting now, and their expenses are far more in line with their fixed income. The stress is alleviated, and in spite of the small compromise they had to make with the lender to make the deal work, their quality of life is far better. In a perfect world, I would hunt down the loan officer that put them in that option-ARM and make him pay back the $30,000.

J. Philip Faranda is Westchester’s Premier Short Sale REALTOR. Find out more at www.NYShortSaleTeam.com  

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The stereotypical view of people who face foreclosure is that they are irresponsible or unintelligent. But sometimes, they are good, intelligent professionals who have had bad things happen. My own older brother, a Cornell alum, lost his house in the early 90’s due to illness.

One couple I listed was in similarly bad circumstances. She was a nurse; he was incapacitated due to an incurable debilitating illness. They were certainly upside down after refinancing 2 years earlier to catch up when health and work issues crippled their finances. One week after they went on the market she told him she had a headache. Those were the last words she ever spoke.

The house was taken off the active market while the family grieved. It was a terrible, unexpected tragedy, and bitterly ironic, since she was the healthy one. Unfortunately, the house was off the market for the earlier summer and when it went back on the sub-prime crisis hit, thinning the herd of buyers and blowing a hole in the confidence of those that remained. Fortunately, that winter we got a buyer.

The loss mitigation process on this file was particularly difficult, because the original lender was insolvent. Then, when the buyer’s lender required a test of the underground oil tank, it failed. We needed to get another $10,000 from the lender to remediate, but that wouldn’t be issued until closing. The buyer agent and I called in ever favor we could from the oil tank company to do the work and get paid at closing. They were understandably reluctant. This closing was not a sure thing. Thanks to the good relationship the buyer agent had with the owner of the firm, the work was competed, allowing the borrower to get their mortgage cleared to close.

Last minute environmental issues, while rare, can send a regular tranaction into a tailspin. You can’t underestimate the havoc they cause in a short sale. Teamwork got this done, and my client was able to open a new chapter in his life and move on as best he could. In a way it was almost like an estate sale as well, because they were in sense taking the last step in burying a loved one.

A young newlywed couple bought the house.

J. Philip Faranda is Westchester’s Premier Short Sale REALTOR. Find out more at www.NYShortSaleTeam.com  

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