If you owe more than your
Orange County, California house is worth and can't afford your
payments, you might be able to sell it for less than you
owe -- without having to pay the lender the difference. If
you can no longer make your mortgage payments and your
home is upside down, a foreclosure may not be your
only option. A Short Sale is a sale of a
home in which the market price is less than what is still
owed on the home. It is a procedure sometimes agreed
to by banks and mortgage lenders who often prefer to take
a small loss, rather then going through a lengthy and
costly foreclosure process. If you have been considering a
short sale, or if you have been looking for help with one,
you have come to the right place!. To assist you, you will need an experienced real estate team of
short sale experts,
including a licensed Realtor and professional negotiator. To help with a short
sale or if you are facing foreclosure, continue reading to see how I can
be of assistance!
short sale update - 2016
A HAFA short
sale is part of the Home Affordable Foreclosure
Alternatives program, which was created in 2009 by US
Government. If you qualify for a HAFA short sale, you can
receive $10,000 in moving assistance funds (up from
$3,000). Read more about this type of sale in my Short
Sale Questions and Answers section below.
Be on the alert for foreclosure rescue scams
and loan modification scams!
Doing a short sale
of your home is a serious matter. Many of my clients have come to me
only after trying to do a loan modification. In many
cases, they have paid a large sum of money to a
modification firm and have received no results! There are
many scammers out there so beware!
not pay an advance fee to a firm that claims
that they will help you modify your mortgage!
you are facing financial difficulties, it is very important
to stay informed - Here are a
couple of links on foreclosure rescue or loan
are also several freeresources for distressed
with a HUD-approved housing counselor at no charge -
Hope Hotline - (888) 995-HOPE
are your options?
you are losing your home due to income or job loss,
divorce, or other cause and you are either facing
foreclosure or considering a short sale, what are your
Refinance - If you qualify, one of your best options may be a Home
Affordable Refinance. You can read more about it here: MakingHomeAffordable.gov
workout - Ask your lender to spread out the back
payments and fees over a fixed number of upcoming
payments, or ask for a loan modification, where they
will forgive back payments or recast the loan into a
new one with a fixed rate (Note: See waning on
loan modification scams above. Do not pay a third
party to do a loan mod for you - Work only with your
and bring cash to closing - This one is difficult
for most people because it involves cashing out an
IRA, 401K, or savings account to pay off back fees and
the loan balance, but it may be a solution for some
in Lieu (of foreclosure) - In this scenario, the
homeowner trades the deed to the lender in exchange
for a guarantee that the lender will cancel the note
and forgive the debt.
sale - You sell your home for less than the amount
owed, in cooperation with the lender(s) who forgive
all of the options above, I would always advise you to
consult with an attorney, tax advisor, or financial
advisor. Real Estate agents (like myself) are not
qualified to offer advice on tax, financial, or legal
Short sale may be a win-win
The seller gets out of the mortgage
liability without facing bankruptcy.
The buyer gets the home at a reduced
The lender agrees to a loss it
considers minimal without going through a foreclosure and
being saddled with an un-salable property.
the seller, there is less credit damage and you may be
able to qualify for a home loan sooner than if you
foreclosed on the property.
While it may seem surprising
that lenders would agree to accept less than what they are
owed, they benefit by not having to go through the process of
foreclosing on the borrower and then having to put the
property on the market. A market saturated with foreclosures
can cost lenders billions -- and as much as $50,000 or more, per
a short sale?
are many reasons why home owners will
consider doing one. If you purchased a home at the
top of the market or with an ARM (Adjustable Rate
Mortgage) or zero down loan, the mortgage payments, association dues, property
taxes, and insurance payments may no longer be
affordable for you. In some
cases it may be better to cut your losses by
selling the home and saving those payments
instead. If you have been saying " I need to
do a short sale of my Orange County home" or " I am considering a
short sale" it may be for some of the reasons
home has an adjustable rate mortgage with payments
that are no longer affordable
loss due to job layoff, illness, etc
modifications did not produce the desired results
avoid a full foreclosure which may be far more harmful
to your credit
Short Sale process
are several steps required to initiate the short sale
process and to list your home. These include signing a
standard listing agreement which authorizes me
to market and sell the home. There may be a few
additional forms to sign, including an addendum that explains your rights as the
seller and informs you about other details or possible
consequences of the sale.
There are also several
items you will need to provide to me or my negotiator to allow us to speak with the lender on
your behalf and to justify the necessity for selling
your home. Many of these items are listed below. I will perform all of the
necessary steps to market your home including taking
photos, putting your home on the MLS (Multiple Listing
Service), putting up a yard sign, and installing a lock
box so agents can show your home.
that are typically needed from you to start the process:
may not include all items that take place or be asked to be
completed by the bank. It’s
intended to be an average
list of items that may be required to complete a transaction.
Authorization letter to bank; this gives the bank
permission to talk with me or my negotiator
Listing agreement signed and forwarded to bank with
Comparative Market Analysis (a document that I prepare)
Hardship letter - Several paragraphs that explain
your circumstances and reason that you need to sell.
Two months pay stubs
Two months bank statements
Two years of W-2’s
Two years of tax returns
Payment coupon for home payment
lender may consider while
reviewing your request:
Do you have investment/rental properties
Do you have a savings account
Do you have a 401K
Are property taxes current
Are Homeowner Association dues current
Is your home loan a purchase money loan or
refinance with cash taken out?
Other income including child support, alimony,
we receive an offer:
I will submit the offer to my negotiator. This will then be forwarded to the lender
along with the rest of the package.
Once “opener” reviews comparables, appraisal
and Broker Price Opinion, it is forwarded to bank
Negotiator may request new seller financials
(updated from original submission)
Bank may request Buyer information to do a
background check on buyer.
Offer(s) then turned over to senior management at
bank. This process may take another month or two.
After senior management approves, the offer is
returned to the negotiator with the bank’s terms for
Buyer may or may not accept the bank’s terms and
buyer elects to not go forward, deposit monies should be
returned to the buyer.
If buyer accepts new terms, escrow is opened and
contingency periods will commence on bank’s acceptance
or leasing a home after a short sale
successfully sold your home in a short sale, so now
what? Most people prefer to stay in the same community
where they have lived for many years, where their kids
have gone to school, and where they have established
friendships. Your best bet is usually to lease or rent
a home for a while, until you are prepared to buy
again. This can be difficult however because of credit
challenges that may have resulted from the short sale,
missed mortgage payments, or from other financial
my team assists you by selling your home in a short
sale, we will also help you with your next move! We are leasing
experts who handle many more home
leases per year than the average real estate agent in
Orange County. We have the experience and know-how
to work with landlords and credit issues so that you
can find your next home!
strategy is to start shopping for leases with you while your
home is still on the market. For some of our clients, moving
out while the home is for sale and getting the former home
behind you, helps lift the emotional burden of the short sale.
For others, we will be happy to help with your new lease after
escrow begins, so that you can make a smooth transition when
your short sale closes. Either way, helping you find a new
home is a key part of what we do for you and for your family!
Sale Questions and Answers
will have many questions and I
have addressed some of them below. Please fell free to contact
me if you have additional questions. I will be happy to
discuss your situation by phone or in person.
a short sale?
sale” refers to a situation where your are selling your
home but you not have
enough equity to be able to sell the property, pay off liens
and cover selling expenses. In other words, there is more owed on the home
than what it can be sold for on the market. Lenders use the
term to describe this as a loan that is “upside down.”
While many sellers are potentially facing foreclosure, a
short sale may also be necessary for a seller who bought high and took
out a lot of equity and might be forced to sell due to a
divorce, illness, or job transfer.
handle the whole process?
I handle the
sale of your home and all negotiations with your lender(s). This
takes much of the worry out of the process for you. You are
still advised to consult with various professionals such as your
tax advisor, CPA, or financial advisor, as we cannot offer advice outside of
our area of expertise.
costs are there to me as the seller?
not have any out of pocket expenses. Real estate commissions and the
negotiator fees will be paid by the buyer and agents, not by
you. I will also list your home as being sold "as is,
where is, without warranty"'.
Buyers understand that you are going through a distress sale and
you will not be required to make home repairs or pay for closing
costs, home warranty, termite repairs, etc.
the short sale affect my credit?
Yes it will,
but typically less so than with a foreclosure. There is no concrete
rule since lenders act independently. In general, a short sale
could reduce your FICO scores by 75 to 125 points while a
foreclosure could reduce your FICO scores by over 200 points.
Also, a foreclosure remains on your credit history for seven
years. These are only estimates and actual impact to your credit
could vary widely. The bottom line is that it is impossible
to specify theexact number of points by which a short
sale or foreclosure will lower your credit score. You are always advised to consult with your
CPA, attorney, financial advisor, or lender for more specific
information on how your credit could be affected by the
about escrow fees, title, and other costs?
typically offers to pay a certain amount toward these costs. I
always send an addendum to the buyers and their agent to
inform them that you (the seller) will not be obligated to pay
any closing costs in excess of the lender contribution.
if I have more than one loan?
your situation to see if you will be short on all loans or
perhaps just the second or third. In some cases, the first
lender may receive full payoff, in which case you will just be
short on the second. In either case, my negotiator will
contact all of the lenders and work with them to negotiate
your sale. The second or third lenders understand that they
will receive nothing if the first lender forecloses. As such,
many of them are willing to negotiate a settlement and they
are generally willing to cooperate with the first lender in
selling your home.
What is an
"approved" short sale?
context of the current sale, the lender(s) have provided an
approval letter stating terms and conditions, along with an
expiration date. It is imperative that the deal is closed on
or before this date, or the approval expires. It is a
different matter for short sale listings that claim to be
"approved". Technically, they should be called a "previously approved short
sale" because it refers
to a situation in which the lender had agreed to all of the
terms, including price, real estate commissions, closing
costs, etc, with a previous buyer. Agents commonly use the
term "approved short sale" to let subsequent buyers
know what the lender(s) had previously agreed to. It does not
mean that they will automatically agree to these same terms
with a subsequent buyer. The lender(s) will usually start the
process all over with a new buyer, but at least the listing
agent has a benchmark of what might be expected from the
order to approve the short sale, how will my lender determine
fair market value of my home?
lender typically does an appraisal or BPO (Broker Price
Opinion). A BPO is usually done by a real estate agent who has
been hired to perform a valuation of the subject property
based on comparable sales.
long will the short sale take?
less than 60 days but sometimes longer, depending on how
may loans are on the property, the difficulty of negotiating
with various lenders, etc.
I am already in foreclosure or if my lender has assigned an
We will do
our best to obtain a postponement of the auction date by
notifying the lender that you are in the process of a short
sale. Generally speaking, they will be willing to work with
you, as they prefer a short sale to taking back a property
through foreclosure. The final decision is always up to the
lenders however, and we cannot guarantee that we can
stop foreclosure proceedings.
do a short sale while in foreclosure?
many cases, yes; especially if it is early in the process.
People often turn to a short sale while they are in the
pre-foreclosure stage. Once you are close to an auction date
it may be more difficult.
I do a short sale solely because my home has dropped in value?
No, you must
have a legitimate hardship like a divorce, job loss, loss or
reduction of income, illness, death of spouse, etc. A loss of
equity or drop in value alone is not considered
be a legitimate hardship.
is a HAFA short sale?
A HAFA short
sale is part of the Home Affordable Foreclosure
Alternatives program, which was created in 2009 by US Government
agencies to help improve the short sale process. You can read
more about a HAFA short sale here: HAFA
Some of the
borrowers to receive pre-approved short sale terms
borrowers to be fully released from future liability for
the first mortgage debt, and if a subordinate lender
received an incentive under HAFA, that debt is released as
up to $10,000 in moving costs for borrowers and up to
$10,000 to pay off subordinate liens (2nd loan holders)
are the qualifications for a HAFA short sale?
home must be your principle residence
loan must have originated before 2009
mortgage is delinquent or you are close to a default
unpaid principle balance is no more than $729,750 (higher
limits for mult-unit properties)
total monthly mortgage payment exceeds31% of gross income
you have additional questions on a HAFA short sale or any
other questions on Short Sales, please feel free to call me.
list your Orange County, CA home with Ron Denhaan and
Short sale experts in
Orange County, CA. If you have been considering a short sale, or if you
have been looking for a Realtor to assist you, here
are several reasons why you should consider my team to
list your home.
I use a
professional negotiator to expedite the
other agents who spend their time trying to personally
work with bank asset managers, I use a professional negotiator who has an exceptional track record of
successfully negotiating short sales. I do this at no
cost to you!
My high-technology tools
help get offers on your home and get it sold, quickly
of the first steps is to get offers on
your home. My technology tools and great photography
help ensure that we will attract buyers and get offers
on the table!
will not list your home with a "teaser"
are many reasons why a short sale can be a turn-off to
a buyer. One of the main reasons is often the
miss-leading "teaser" price. There are
reasons why many agents do this and it is explained in
detail on my all
about short sales page. Instead of a teaser
price, I will always list your home at fair market
value to help attract legitimate, qualified buyers.
There is little or no cost to
I will list your home for sale
in "as is, where is" condition, so that you
will not have to pay for repairs, termite damage, or
other closing costs.
I help you with your next move
If you need to find a
lease or rental after your home is sold, my team will be glad to help!
As one of the top home leasing teams in Orange County,
we will be able to help you find and apply for a home
in a price category that is comfortable for you and
have included several links to help keep you informed:
on the Home Affordable Foreclosure Avoidance short
free to contact me at any time to discuss your short
(or standard) home sale! I will be happy to discuss
with you and answer all of your questions. I will
be glad to help you with a short sale of your home in
Mission Viejo, Lake Forest, Dove Canyon, Rancho Santa
Margarita, Coto de Caza, Dana Point, Ladera Ranch, Talega,
Fullerton, Yorba Linda, Anaheim Hills, Laguna Niguel, Aliso
Viejo, Irvine, Brea, Orange, Anaheim, or any other area of Orange County, CA.
Orange County short sale specialist.
are always advised to consult with a real estate attorney and/or
their tax advisor or other professionals regarding potential promissory notes, taxes on forgiven debt amount and any other financial implications of a short sale.
They should also consider loan modifications and working with the lender as initial alternatives to
doing a short sale.