Definition of a Distressed Property:

1.  Property that is or will be in some stage of the foreclosure process.

2.  Property that is owned by a person or persons who is or are experiencing a reduction or loss of income. .

3.  Property on which the mortgages total an amount higher than the current value and an owner must sell.

There are many reasons why a property may fall into one of the categories above.  Some of the reasons are: 1.  SubPrime lending market began to show major signs of issues in 2005 and 06 - mortgage companies and lenders actually began closing and declaring insolvency at alarming rates.  2.  Rapid appreciation of the real estate market drove the creation of a new category of homeowner, the "investor"., 3.  Nat'l Assoc. of Realtors reported that in 2005, 4 in 10 or 40% of home purchases were investment or second homes.  4.  A boom in the condo and new construction markets.  5.  Many borrowers who may have the credit and income to refinance no longer have the equity in their properties due to the depreciation in their homes value.  5.  The decrease in number of lending institutions has decreased the number of options that buyers have making it difficult for those now buying a home to qualify for financing.  6.  Many areas of the country, homeowners who have to sell are competing with builder closeouts, REOs, and other distressed properties more that are driving down values.

You are now at a point where you will have to answer some tough questions.  The key is that these questions will allow you to quickly assess your individual needs and chart a course of action.

1.  Is your property already on the market -- with an agent?

2.  When was the property purchased?

3.  What was the original purchase price?

4.  Who is on the title?

5.  Who is on the mortgage?

6.  What kind of mortgage do you have?  Conventional, VA, FHA, and how many loans?

7.  Who is your lender?

8.  Are you living in the property?  If not, where are you living and is the property being maintained?

9.  What is the property condition?  What repairs are needed?

10.  If relocating, how soon do you have to move?

11.  How much do you owe?

12.  Are you up to date on your Condo or Homeowners' Assn. payments?

13. Do you owe back taxes or are there any liens on your property?

14. Have you considered or are you considering declaring bankruptcy?

15.  Are you current on all your mortgage payments and will you be able to remain current?  What lender correspondence have you received?

16.  What is the situation that caused you to miss or will cause you to miss your payments or (if no payments have been missed) why do you need to sell?

17.  What are your current payments including taxes and insurance?

18.  How much money are  you currently earning?

19.  What are your estimated monthly expenses?
 

20.  Do you hold any kind of security clearance?

When we meet, I will bring the necessary forms, along with any additional documents required in the state, and we will start the process reviewing your circumstances, reviewing all forms prior to being signed, along with a property checklist, loan information, etc.  This will start the negotiation process.  I look forward to meeting with you and discussing the options, advantages and disadvantages of these options. 

 ABOUT SHORT SALES:

 A short sale is when a bank allows a property to be sold for less than the amount that is owed on the mortgage.  Why would a bank accept a short sale?  The house is more likely to sell for a better price thru a "Certified Distressed Property Expert? than the bank would make if it delayed the process for the future and  the bank foreclosed on the property.  Banks are in the business of making money off loans, and not losing money from foreclosures.  In fact, banks do not like to own real estate because the property shows up on their records as a liability instead of as an asset.  The bank does not want to foreclose.

 WHAT DOES A SHORT SALE MEAN FOR A SELLER?

 When a seller is able to sell the house for more than the bank can sell it for, the bank will sometimes accept an offer for less than is owed to them.  In some cases, they will sometimes write off the difference depending on the sellers' hardship.  But, if a seller goes forward with foreclosure with no intervention from an experienced agent in this area, they could end up with a personal deficiency judgment for much more than they would have thru a shortsale.   A bank will only consider a short sale when they have a written offer from a willing, able buyer to purchase the property.  The first step of this process is to find a buyer for the home.  You do not have to be behind in your mortgage payments to request a short sale.  You do have to prove that your home can not be sold for what you owe.  There may be some negative effects for the seller, but far fewer negative effects than being foreclosed on or filing bankruptcy.  Each bank has a different policy for dealing with short sales.  A great end result is for the bank to forgive the deficiency.  A big difference between a short sale and a foreclosure is that in almost every foreclosure, the bank will pursue the homeowner for the deficiency.   And, then the most common solution to this problem is to file bankruptcy.  The best way to determine how this will effect you is to seek competent legal advice.