A Buyers Guide To the Short Sale Process

With Las Vegas Home prices and interest rates at an all time low, it is a great time for buyers to start shopping around.  However, it is a different market than it was five years ago and terms like “foreclosure” and “short sales” are on the tip of every real estate agent’s tongue.  Short sales can be a great way to save money on a property in Las Vegas, but it could come with some bumps in the road.  As a buyer it is important to know what you are getting yourself into.

A short sale is a negotiated settlement in which a lender agrees to accept less than the amount owed to payoff a home loan as an alternative to foreclosure.  The result is that the bank and the seller don’t have to go through the foreclosure process and the buyer gets the property at a discount.

Sounds simple enough, right?  Well, unfortunately for the buyer, the short sale process does not mean what its name implies.  It is usally not a short process.  Once an offer is submitted it can take anywhere from 30 days to six months to get an acceptance from the bank to do the short sale.  Some banks, like Bank of America, have historically been a very difficult instution in appoving short sales. Some of our team’s agents however, have reported Bank of America speeding up their approvals with the implementation of their Equator system. Equator is an online portal agents and the bank use to upload and process short sale documents.  This is where having the right agent is critical. Their experience can go a long way in helping a buyer analyze which short sales may have a better chance of closing in a more reasonable time frame and which ones a buyer may want to avoid.

Now that you are aware that you may be in for a long haul, here are a few things to expect when going through the process.  First, your offer will be submitted to the bank, while financial statements will be sent to the bank on the seller’s behalf to establish the need for the seller to do a short sale.  Second, the bank will do an appraisal on the property.  Third, a negotiator will be assigned when all paper work on the seller and buyer’s side has been submitted.  The negotiator will go through all the paper work and make sure everything works out.  At this point the bank should have an idea of what they expect to get from the property.  They can either accept the offer, counter the offer or reject it. If approved, the bank will issue letter which allows the property to be transferred. At this point the escrow can continue in earnest.

Each bank may have a slightly different way of doing things.  As well, each bank may work on different time tables.  Some work more swiftly than others, while some take their time.  What is important is knowing that it is often not a quick process, but if you are willing to wait, you could pick up a gem. A buyer will also have the benefit of locking up a transaction rather than being forced to continually look to foreclosures, many of which are now multiple offers due to the lower foreclosure inventory currently available.

Additionally, if you are a Las Vegas homeowner and have any questions about selling your home as a short sale, feel free to give us a call for a free consultation at 702.376.0088 or complete our contact form.

This Las Vegas Condo for sale in Northwest Las Vegas is a short sale.  It is a three bedroom unit and is being offered at $89,500. Located in Adagio, this community comes complete with pool and a fitness center for your enjoyment.  This is a short sale. If you’re not familiar with how one of these deals work, please give us a call and we will walk you through the entire process to see if one is right for you.

If you’re an investor, you’ll love the fact that this property is a 3 bedroom, which are pretty hard to come by, and will appeal to renters who require more space than the average condominium has to offer. The condo has 1344 square feet, and also has a fireplace.

This property is in very nice condition, and is a terrific alternative to the heavy bidding going on in the current foreclosure market.

For information on this desirable property, please contact Paul Rowe or Tony Sena with Sena and Associates at 702-376-0088.

Many homeowners who purchased their Las Vegas Home between 2004 and 2007 are most likely upside down, unless they put a substantial amount down of at least 40%.  With home values dropping from a high of $315K in June 2006 to today’s average price of $140K can make selling your home very difficult and most likely will require you to sell it as a short sale.  Unfortunately, just because you want to sell your home does not mean the Bank/Lender is going to agree to take a loss without some type of hardship such as job relocation, job loss, divorce or death.  So depending on your financial situation, renting your home for the next 3-5 years could be an option to selling.

Giving the state of the economy, the Las Vegas Rental Market is doing well.  Many former homeowners are now becoming renters as they have lossed their home to foreclosure or sold it as a short sale.  For those that lost their home due to foreclosure will be unable to purchase a home for 5 years, making them an ideal long term renter.  Knowing that there is still a market for rentals, the next step is determining what your home could rent for based on what other homes have rented for in the area.  The rental price could be the determining factor on whether you can afford to rent your home out or if the negative cash flow is going to force you to sell your home.  The last thing you want to do is rent your home out knowing full well you are going to let it go in foreclosure as this is very unethical and could cause a hardship for the tenants when they are forced to vacate the property.

If you are in a position that is forcing you to sell or rent your Las Vegas Home, it is important to contact the right real estate agent.  Chances are, if you are going to sell your home, you will need a real estate agent that specializes in short sales and remember there could be legal and tax implications.  If you are going to rent your home, I would recommend having a Las Vegas Property Management Company handle the management of your property.

If you have any questions about the short sale process, feel free to contact Paul Rowe at 702.376.0088.  If you are thinking about renting your Las Vegas Home and are in need of Property Management Services, feel free to contact Tony Sena at 702.376.7379.

I am sure you hear many Las Vegas Real Estate Agents calling themselves a Short Sale Specialist.  Short Sales have become very prevalent in the Las Vegas Real Estate Market as many homeowners now owe more than their home is worth.  With the rapid decrease in home values, Las Vegas Real Estate Agents are trying to capitalize on this niche by calling themselves a Short Sale Specialist.  So what makes a real estate agent a short sale specialist?  Is it a few successful short sale transactions or maybe listing a few short sales?

Unfortunately that’s not the case.  Short Sales require a real estate agent that is experienced in marketing the home, obtaining an offer at or near market value, negotiating with the lender or lenders on the sellers behalf, coordinating with other lien holders and at the same time, keeping the buyer’s agent informed so their buyer doesn’t walk away due to the length of the transaction.  Some might say it isn’t necessary to obtain an offer at market value but if you are representing the seller, it is definitely in their best interest to get the highest offer possible.  This could be the difference in the Lender requiring the seller to hold an unsecured note or not.

Knowing the intricacy of the short sale process, Paul Rowe with Team Sena can be definitely called a Las Vegas Short Sale Specialist.  Paul’s entire responsibility is to represent our clients on the sale of their homes even though they owe more on the home than it’s worth.  He explains the entire short sale process and the importance of consulting with an Accountant and/or Real Estate Attorney in regards to the legal and tax implications of a short sale transaction.  He has been handling short sales for Team Sena for over a year now and has had great success.

If you are thinking of selling your Las Vegas Home and you owe more than it is worth, give Paul Rowe with Team Sena a call at 702.376.0088 or complete the contact form to the right.  If you have questions about the short sale process, check out our “Frequently Asked Questions on Short Sales“.  Don’t wait till it’s too late, call us today!

Many Las Vegas homeowners are upside down or behind on their mortgage payments.  We receive several questions from our clients about how they can avoid foreclosure by doing a loan modification or short sale.

While the politics, procedures, and guidelines for a successful Las Vegas loan modification literally change every day, per our short sale / loan modification attorney, there are still some basic fundamentals that you can be aware of.

As Las Vegas short sale specialists, we work closely with a local law firm to ensure our clients’ individual cases are handled by a legal expert who is bound by law to protect their financial interests vs the bank’s.

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Las Vegas Loan Modification FAQ

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What is a Loan Modification?

A loan modification is simply a restructuring of the current loan terms between the borrower and the lender.  Lower interest rates, longer term, principal reduction, or a principal forbearance are a few examples of how a loan modification can help a homeowner lower their monthly mortgage payment.

Why would agree to a loan modification?

The main purpose of a loan modification is to reach a mutually beneficial agreement between a lender and borrower that prevents foreclosure or future payment defaults.  With the rapid decrease in Las Vegas property values, prolonged sale times due to an over abundance of listing inventory, and the tightening up of mortgage guidelines for new purchases, lenders that acquire properties through foreclosure stand to lose significantly more money than potentially working out a new payment arrangement with a current borrower.

How do I qualify for a Las Vegas loan modification?

This is slightly a tricky question, so please refer to the legal disclaimer below.

The Making Home Affordable Modification program is a government sponsored loan modification plan that was designed to help up to 9 million American homeowners avoid foreclosure by reducing their monthly mortgage payments to something more affordable for a five year term.

To qualify for the Obama Modification Plan, you need to live in the home you are modifying, the balance cannot be more than $729,750 for a single unit, there has to be a significant hardship, and the possibility of foreclosure has to be imminent.  Since this is such a new program, the various servicers, lenders, and other financial institutions are still learning how to adjust with the guidelines.

Qualifying for any other form of a loan modification that does not fall under the Making Home Affordable guidelines requires a negotiation process between the borrower, investors, and generally a servicer who may act as the middle filter.  Since the lender / servicer’s main priority is to protect their investor’s financial interests, it is important to be familiar with any violations in the real estate or mortgage contract that potentially contributed towards your current financial hardship.

To answer this question more specifically, qualifying for a loan modification is a process that involves proving to the lender / servicer that you have the ability to make future mortgage payments on time based on a calculation of  a new rate, term, principal amount, and your income, assets, and employment.

We are finding that equity, or the amount a home is underwater, does impact a lender / servicer’s decision as to whether or not they would approve a borrower for a loan modification or short sale.

Do I need to be  late on my mortgage to qualify for a loan modification?

No, under the Making Home Affordable Modification Program, the guidelines state the a borrower does not have to be late on their mortgage to qualify for a loan modification.  If your lender has forced you to go 90 days past due before they are willing to start the modification negotiation process, it is important to speak with an attorney about your legal recourse.

What if I am already in foreclosure?

Foreclosure can be postponed while a loan modification is attempted, but it is vital to file the proper paperwork as soon as possible.

What if I have assets, can I still get approved for a loan modification?

Since most lenders weigh their decision for a loan modification based on the threat of imminent foreclosure, having a significant amount of available capital does not strengthen your case.  However, there are several other factors that can be taken into consideration, including monthly budget, lender or RESPA violations, employment and income.

Will the lender require an appraisal or inspection?

Yes, the lender may require that your property is inspected to determine the livable condition as well as the market value.

Can I do a loan modification on my own?

Yes, it is possible to work out a solution directly with your lender / servicer that lowers your monthly payment.  Just be aware of any hidden language in the new contract that requires you to sign away your legal rights to litigation.  Other things to pay close attention to are the terms of the new loan, whether or not your mortgage becomes a recourse vs non-recourse loan, if there are any balloon payments 15 – 20 years out, and the difference between a lower rate vs a longer term.  There are literally hundreds of details that can mean the difference between the perception of a lower payment vs an actual fair loan modification.

What if I have already failed on my own, is there still hope with the help of an attorney?

Yes, most homeowners or real estate professionals are not well versed in real estate / mortgage contract law.  Actually,  most of the loss mitigation consultants or case managers at these large financial institutions are still learning the process.  Knowing your legal rights, how to write a hardship letter, and who makes the final decision can give you a significant advantage for a successful loan workout.

A complete forensic loan audit may uncover several lender violations that your bank may not want to address court.

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*Legal Disclaimer – Please keep in mind that we are a real estate company that specializes in listing and marketing Las Vegas short sales.  Since there are several legal logistics and details that apply to each individual scenario, we refer our short sale clients to a trusted local law firm that understands real estate / mortgage contract law.  As a result of our trusted relationship, they have offered to give our clients free consultations to answer any personal  loan modification or short sale questions.

Please contact us @ 702-376-0088 for more information.  Since they do place first priority on homeowners who need immediate help, we’d like to please ask for your cooperation and to contact us to see if we can answer some basic questions and get you set up prior to meeting with them.  We will respect your privacy and understand how sensitive every one’s individual situation can be.

Las Vegas short sales have always been around but in general were pretty rare. Usually, someone would endure a personal or professional hardship and had to sell their home. Perhaps the home had depreciated a bit and factoring in selling costs, the homeowner found they were unable to cover these costs. The homeowner would then contact their Realtor and assuming they could find a qualified Realtor, they would work with their bank and the bank might take a small loss to avoid taking the home in a foreclosure. Back in those days however, exotic mortgage products were not the norm. Recently, we have had mortgages such as interest-only, Alt-A, negative amortization loans, as well as having a 2nd even 3rd mortgages against the house which allowed a normally unqualified buyer to purchase a home. The negotiation with the bank was a little more straight-forward back then. Fast forward to 2009 where depreciation on real estate is rampant and whole regions have been has seen home prices down 30-50%, unprecedented since the Great Depression, when one considers the breadth of scale.

The first step is to accurately and HONESTLY take a look at your finances. Set up a place in a corner of the house; pull out your bills and a blank sheet of paper. Write out your all your monthly obligations as well as your gross monthly income. If you are under and it isn’t going to change just by modifying your lifestyle, you have some hard decisions to make. You’ll have to justify your situation as a hardship which will prevent you from recovering in the eyes of your bank. A Realtor proficient in short sales will be able to guide you with this process.

Talk with your lender and if they can modify your loan in a way that makes sense both near-term and long-term, that might make sense for you. Be very aware of how they will want to address the issue of future equity in your home when hopefully, prices might actually increase. Also, keep mind there is always a time crunch. Banks do not move fast except when agreeing to accept your money! The clock is ticking against foreclosure. When you’re going to be behind or certainly when you’re already behind, you cannot afford to spend all your time trying to do a loan modification and then not leave any time to attempt a short sale.

Next talk to a CPA or tax professional that is familiar with the tax ramifications of doing a short sale as well as being responsible for any potential deficiencies against your mortgage loss. If the CPA advises you that a short sale makes sense from their prospective, you can begin start scouting for a qualified Realtor.

The good news is that the entire industry is seeing the benefits of doing a short sale instead of foreclosure. Banks avoid having to take the property back in foreclosure. The home is only going to sell for what the market will bear anyway, so why they would want to go through the extra expense of having to own the home and re-sell it is baffling. The new bank generating the loan (if they didn’t pay cash) now has a new customer. The buyer got a great deal, and I am quite sure most of the neighbors are happy about having a viable owner as opposed to a distressed one.

Please check my next blog article when I will give you industry insider techniques to interview and select the right Realtor to successfully manage your short sale.

Paul  Rowe is 5 year veteran of the Las Vegas real estate market, having seen both the incredible highs and now the lows of 2008 and 2o09.

Ok, you have been researching Las Vegas short sales on Google, Suze Orman, talking with friends etc. You know that you may have a way out of a dreadful situation and avoid foreclosure. You know you need to take action, but can you? Yes you can! Many people never get past the research phase because they are afraid to reach out and seek the help they need.

First, talk to your tax professional. If you don’t have one, get one! You need to know the ramifications of doing a short sale. You must get the facts on what potential tax liabilities you might owe and what strategies your tax professional can suggest to mitigate any tax burden.

For those of us who live in “deficiency” States such as Nevada where I live, you need to know if a lender can obtain a judgment against you for any portion of the debt that is lost during a short sale by a lender. Recent bills passed by Congress have made it much easier for homeowners doing short sales to avoid deficiencies.

Hire a Las Vegas Realtor who specializes or at the least has significant experience in short sales. The days of hiring Aunt Sallie or your girlfriend’s brother to be your Realtor because you want to do them a favor or because you’ll feel guilty at the next Thanksgiving Day dinner if you don’t, have been suspended during this horrible market for sellers. You need a professional who will know how to deal with the bank bureaucracies as well as run the real estate portion of a short sale.

Remember your Realtor has four phases to manage:

1. List the property.
2. Negotiate the settlement on your behalf with your bank(s).
3. Manage the offers and negotiate with potential buyers.
4. Manage a good portion of the escrow as there will be heavy coordination between the bank, the listing agent and title. If you’re a buyer’s agent, encourage your buyer to let the listing agent choose title, as they are the ones that have most of the information related to the transaction and are performing the negotiations with the bank.

Remember sellers, the key to moving on beyond your own research is seeking professionals who can help you. They have facts and experience necessary to guide you to your ultimate goal of a successful short sale.

Article written by Paul G. Rowe with Sena & Associates.  You can contact Sena & Associates at 702.376.0088 to set up a free consultation and we can discuss the short sale process.

If you have made the decision to sell your Las Vegas Home after looking at all other options such as Loan Modification than the next step is finding an experienced agent specializing in short sales.  Short Sales require a real estate agent to not only list your home, market your home but negotiate on your behalf with your lenders to accept an offer for less than you owe on your mortgage.  If you have a 1st Mortgage and a 2nd Mortgage it can be even more of a challenge, which is why your real estate agent needs to specialize in short sales.

When you interview perspective agents, make sure you ask them how many short sales they have sold in the last 6 months and how many where they actually represented the seller!  There is a difference in selling a short sale when you represent the buyer as opposed to representing the seller.  Make sure you ask them what you can expect during the process and what they will do to ensure you get your home sold!

You can contact Sena & Associates at 702.376.0088 to set up a free consultation and we can discuss the process of selling your Las Vegas Home.

Are you having a hard time making your payments on your Las Vegas Home because your interest rate adjusted causing your payment to increase hundreds of dollars a month?  You’re not alone as many Las Vegas Homeowners are facing the same dilemma.  Instead of letting your home foreclose you have a few options.

1. Contact your lender and see if you can adjust your payment
2. Refinance – New FHA Guidelines allow you to refinance your house up to 90% LTV (loan-to-value) on current market value
3. Short Sale

You can contact your lender to see if they will lower you payment but the chances of them lowering it any substantial amount is slim.  From what I have heard from my clients, they usually will lower the payment by $100 to $200 a month.

FHA has just updated their guidelines which will take effect on October 1st, 2008.  So if you are interested in this refinance option, you will have to wait till October 1st!

Your best option might be attempting to sell your Las Vegas Home as a short sale.  A Short Sale is a special transaction that allows you to sell your home – even when your mortgage debt is higher then the value of your home.  Lenders are motivated to approve short payoffs if it makes sense.  The foreclosure process for a lender is very costly, takes a long time, and exposes the property to vandalism, deterioration, and declining market values.

If you have never been late on your payments and have a true financial hardship or compelling reason to sell your home (relocation, loss of job, hospitalization, divorce) the bank will still consider a short sale of your property. YOU DO NOT HAVE TO BE LATE ON YOUR PAYMENTS TO SELL YOUR HOME AS A SHORT SALE!

We will need to present to the bank a short sale package. Most banks request the same documentation, yet there are some that may require their own forms filled out and different actions. We will provide you with a package to fill out complete with a check list of documents needed.

Typically short sales can take anywhere from 45 business days to 120 days to complete from the time the offer is received. Contrary to popular belief, short sales are any thing but short in time. The true name is a short payoff when the lender is taking less than the full balance of the loan.

If you are interested in selling your home as a short sale or have questions about the short sale process, feel free to contact us any time @ 702.376.0088 or visit us on our Las Vegas Short Sale website!