Short Sales and Loan Modifications

More often than not, when we first speak with a home owner about listing their property, even before we actually meet them at their home, the initial interview over the phone may go something like this:

Are you having trouble making your monthly mortgage payment?

How many months are you behind?

Are you upside down; do you owe more money than your home is worth?

What are your plans going forward as far as your living arrangements?

Times are tough – but you’re not alone and you do have a few options.

1).        A Short Sale -
In a nut shell, a Short Sale occurs when your mortgage company allows you to list your home for sale with a REALTOR® knowing the listed price, and the ultimate selling price, will be less than the mortgage balance.  In essence, the mortgage lender is agreeing upfront to accept less than they are owed for the outstanding balance of the loan.  In most cases, Banks would much rather accept this option than go through the expense of a Foreclosure Auction.  In Arizona, a foreclosure auction is actually called a Trustee Sale; regardless of what we call it, if the lender has to take the extra steps required by law to "sell" the house at auction,  it could cost the lender between $30,000 and $50,000!  Then, if no one buys the home at the auction, the lender now has ANOTHER home on their books that they now need to list and sell. 

Side Note:  Once the property is taken back and it is owned outright by the bank, the property is now referred to as a REO property - see more info about REOs below. 

A Short Sale allows you to Sell your home and get on with your life – and generally, once the Short Sale closes escrow, you will be totally Mortgage Debt Free!!

(NOTE: Of course, there are some restrictions and limitations depending on how the home is currently owned/titled and some individual lenders have other requirements that must be met too.  We recommend you check with your Accountant regarding any Tax liabilities and/or obtain legal advice before agreeing to do a Short Sale.)

If you decide to go with the Short Sale, once we obtain a solid offer from a qualified buyer, and you have had the opportunity to review and approve that offer, we will negotiate with your Bank on your behalf and will do all we can to get them to accept the offer and to forgive the difference between what you owe and what your home is currently worth (even if you have multiple mortgages on your home).  The best part is the Bank pays all closing costs including our Commissions!!

We have successfully assisted countless home owners (owners who thought they were trapped) by using this option! 

2).        A Loan Modification –

A loan modification (loan mod), may be helpful if you would like to continue living in the home and maintain ownership of the home.  That is the ultimate goal with a loan mod; keep you living in YOUR home; keep you paying the mortgage (at a reduced monthly payment); keep you as the titled owners of the property and avoid the Foreclosure Auction!   Negotiating a loan mod is not a "quick and easy" process - but you can do it yourself.  And when it is over and done with, it's a win-win for all parties.  We can coach you to a certian degree; at no charge.. However, if you feel you need professional help with the loan mod negotiations, be cautious with that.  Before you sign on the dotted line, make sure you understand what you are getting for your money.  We dont handle loan mod negotiations any longer, but we could refer you to some folks that can help you with that.  There is usually a one-time fee for their services. 

Real Estate Owned (REO)*

* As defined by Wikipedia, the free encyclopedia

Real estate owned, or REO, is a class of property owned by a lender, typically a bank, after an unsuccessful sale at a Trustee Sale (foreclosure auction).  The minimum opening bid in most foreclosure auctions equals the outstanding loan amount, the accrued interest and any other costs associated with the foreclosure sale including attorneys' fees.  The reason most properties do not sell at the Foreclosure auctions, is because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank. 

After an unsuccessful auction, the bank will go through the process of trying to sell the property on its own.  It will remove some of the liens and other expenses on the home and try to resell it to the public, either through future auctions or direct marketing through a REALTOR®.  Generally speaking, bank REO properties are in poor shape in terms of repairs and maintenance; however, real estate investors will often go after these properties as banks are not in the business of owning homes and so, in some cases, the low price can more than compensate for the condition of the property.

Once a property is REO, the bank or lender will try to get rid of the property by either selling it directly themselves or thru an established real estate broker.  Some larger banks have REO/asset management departments that will field bids and offers, oversee upkeep and handle sales. These banks typically have these searchable listings available on their websites.  

 If you have questions, or would like additional information about REOs, Short Sales or Loan Mods, or any of our other programs, please give us a call at 602-375-3300. 
Or take a moment to fill out the form below, and a trained member of our team will contact you right away; usually within 24 hours!  Thank you for your time.
  

Yours for Success!!
The EATON Team
 

Please contact The EATON team for all of your Real Estate needs.