Short Sale Referral Flyer

 

Short Sale Productivity Coaching

Another Successful Short Sale

 

Chances are, you or someone you know in Maryland is facing the possibility of foreclosure. But you need to understand that you are not alone.

 

Today, 1 out of every 10 homeowners in America is behind on mortgage payments. These are tough and frustrating times. Now more than ever, it's important to identify your options. Foreclosure can be avoided, your credit can be saved, and your financial future can be salvaged.

 

Through my experience handling distressed properties at Keller Williams Realty Baltimore, I've found that homeowners today have more questions than answers about their circumstances. I have created this site to help you understand the possible solutions to foreclosure, as well as provide a detailed explanation of short sales, which may be the best course of action for some homeowners.

 

You may also have noticed that I'm offering you a FREE Report to explain your options and help you decide on a course of action. The idea of losing a home can be overwhelming, and I feel it is vital for you to have all the facts necessary to make an informed decision.

 

As an agent with the CDPE® Designation, I have a strong and unique appreciation of the factors affecting the market, and know that there are options available to you.

 

If you would like to know more about your options, please call me at 443-244-0051.

 

I am here to help … in any way I can.

 

Aaron Rice, CDPE, CLHMS, CRS, GRI, SHS

 

Luxury Market Update

What is a Distressed Property?

  1. Property that is in poor physical condition.

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

  3. Property owned by a person or persons who is or are experiencing a period of financial instability.

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

In any given market there is always a certain percentage of homes or homeowners who are distressed.

 

What is a Distressed Property Expert?

A licensed REALTOR® and foreclosure prevention expert who has been certified through a national program called the Distressed Property Institute. He has earned the prestigious Certified Distressed Property Expert (CDPE) designation, having completed extensive training in foreclosure avoidance and short sales. This is invaluable expertise to offer at a time when the area is ravaged by "distressed" homes in the foreclosure process. He is an advocate for the distressed property owner. Aaron understands your options, the urgency, the opportunities and most importantly, the process. He is a knowledgeable professional who has been helping homeowners find the best solutions to their financial crisis.

 

Aaron is:

  • Informed on issues and options
  • Knowledgeable of detailed processes and procedures
  • Your lifeline in a real estate crisis

    •  

    Time is of the essence

    Homeowners who are experiencing or expecting financial problems associated with a distressed property should obtain the services of a Certified Distressed Property Expert as early as possible. There may be options for those who act quickly.

     

    Top 12 Reasons To Avoid Foreclosure!

    1.) The homeowner will always have to disclose that they have had a foreclosure on any mortgage application and (many job applications) that you submit in the future and this can have an adverse affect on your future mortgage rates.

    *This is the only credit item that is asked specifically and does not rely on what is on an individuals credit report. There is no 7 year time limit on this item.


    2.) Credit scores will be lowered by 300+ points (per loan) and a foreclosure is the most devastating credit issue you can have in relation to future credit availability.


    3.) The homeowner will be ineligible for a government insured loan for 5 to 7 years (only 2 years in a short sale)

    *A Foreclosure is the one credit report item that is almost impossible to have repaired. 
     

    4.) Your lender can seek a deficiency judgment against you and collect for any amount they do not recuperate at bank sale.


    5.) Many employers run credit checks on prospective employees and foreclosure is one of the top items that will put a potential new hire in jeopardy.


    6.) Many current employers run credit checks and a foreclosure can put a current position in jeopardy.


    7.) Security clearances and government positions including but not limited to military and law enforcement can be jeopardized by a foreclosure.

    *Revocation of security clearance can result in job reassignment or loss.


    8.) The tax liability in a foreclosure may be much higher than in a property negotiated short sale since in most cases cancelled debt will be higher.


    9.) “As your Certified Distressed Property Expert (CDPE) I will explore every option with you and work towards a resolution.”

     

    10.) “While it may not seem like it now there will come a time where your current financial troubles will pass. You will feel much better knowing that you did everything you could to avoid this devastating financial consequence so many people face today.”

     

    11.) Protect and Preserve Homeownership.

     

    12.) Protect and preserve Homeowner Equity.


    What is a Short Sale?

    A short sale is a negotiation in which the homeowner qualifies and the mortgage company or companies accept less that the full balance of the loan at closing. A relatively new solution to a financial crisis, the short sale has been used successfully in Maryland and in Baltimore as one of the last options before foreclosure. With plummeting property values, this can save many people from foreclosure and even bankruptcy. More and more lenders are willing to consider short sales because they are much less costly than foreclosures.

     

    Top 16 Seller Benefits of a Short Sale:

    1. No additional funds required at closing
    2. Lender pays real estate commissions
    3. Avoid foreclosure and many times a judgment
    4. Preserve credit
    5. Commission and fees paid by lender. No cost to seller.
    6. Does not go against your credit
    7. Negotiated settlement
    8. No attorney fee
    9. Seller's peace of mind
    10. Buy again in 2 years
    11. Liens Negotiated
    12. Stay in the property longer
    13. Smoother transition
    14. Avoid foreclosure on your credit
    15. May avoid bankruptcy
    16. Less worry

    A short sale requires a Certified Distressed Property Expert who understands the complexity of this process and the extensive documentation required. The success of a short sale depends on the knowledge and ability to work closely with lenders, banks, accountants, attorneys and REALTORS®. The short sale is one of the most important aspects of real estate in today's market.

    • Act now to prevent possible foreclosure! Call Aaron Rice at 443-244-0051. He can help.

    Not All Real Estate Agents Are Qualified Short Sale Experts!
     

    Top 10 questions to ask your real estate agent before

    you sign on the dotted line…

    1.Can my real estate agent explain the short sale process to me?
     
    2.How do I know if my property will qualify for a short sale?
     
    3.Does my real estate agent know what information I will need to provide to the lending institution?
     
    4.Does my real estate agent know what “hardship” categories qualify me as a short sale candidate with the lending institution?
     
    5.Does my real estate agent know how to create an effective short sale strategy?
     
    6.Does my real estate agent have prior experience and specialize in working with homeowners and lending institutions to create a short sale transaction.
     
    7.Does my real estate agent know how to market my home since efficient timing is essential.
     
    8.Does your real estate agent know how to price your home?
     
    9.Does your real estate agent have a pricing/marketing campaign for 14/30/45days?
     
    10.How do you know if you are really comfortable with the real estate agent the you are selecting?
     
    Why Aaron Rice?
    Aaron has been successfully selling real estate in Baltimore, Maryland for more thab 9 years. He knows the challenges facing buyers and sellers, particularly in today's difficult market place.

    The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

    If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.

    The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

    This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

    More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17.

    The following are the most commonly asked questions and answers about The Mortgage Forgiveness Debt Relief Act and debt cancellation:

    What is Cancellation of Debt?
    If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

    Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.

    Is Cancellation of Debt income always taxable?
    Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:

    • Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.
    • Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
    • Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.
    • Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.
    • Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.

    These exceptions are discussed in detail in Publication 4681.

    What is the Mortgage Forgiveness Debt Relief Act of 2007?
    The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007 (see News Release IR-2008-17). Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.

    What does exclusion of income mean?
    Normally, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain cancelled debt on your principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

    Does the Mortgage Forgiveness Debt Relief Act apply to all forgiven or cancelled debts?
    No. The Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes. In addition, the debt must be secured by the home. This is known as qualified principal residence indebtedness. The maximum amount you can treat as qualified principal residence indebtedness is $2 million or $1 million if married filing
    separately.

    Does the Mortgage Forgiveness Debt Relief Act apply to debt incurred to refinance a home?
    Debt used to refinance your home qualifies for this exclusion, but only to the extent that the principal balance of the old mortgage, immediately before the refinancing, would have qualified. For more information, including an example, see Publication 4681.

    How long is this special relief in effect?
    It applies to qualified principal residence indebtedness forgiven in calendar years 2007 through 2012.

    Is there a limit on the amount of forgiven qualified principal residence indebtedness that can be excluded from income?
    The maximum amount you can treat as qualified principal residence indebtedness is $2 million ($1 million if married filing separately for the tax year), at the time the loan was forgiven. If the balance was greater, see the instructions to Form 982 and the detailed example in Publication 4681.

    If the forgiven debt is excluded from income, do I have to report it on my tax return?
    Yes. The amount of debt forgiven must be reported on Form 982 and this form must be attached to your tax return.

    Do I have to complete the entire Form 982?
    No. Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment), is used for other purposes in addition to reporting the exclusion of forgiveness of qualified principal residence indebtedness. If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as the result of foreclosure on your principal residence, you only need to complete lines 1e and 2. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2, and 10b. Attach the Form 982 to your tax return.

    Where can I get this form?
    If you use a computer to fill out your return, check your tax-preparation software. You can also download the form at IRS.gov, or call 1-800-829-3676. If you call to order, please allow 7-10 days for delivery.

    How do I know or find out how much debt was forgiven?
    Your lender should send a Form 1099-C, Cancellation of Debt, by February 2, 2009. The amount of debt forgiven or cancelled will be shown in box 2. If this debt is all qualified principal residence indebtedness, the amount shown in box 2 will generally be the amount that you enter on lines 2 and 10b, if applicable, on Form 982.

    Can I exclude debt forgiven on my second home, credit card or car loans?
    Not under this provision. Only cancelled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion. See Publication 4681 for further details.

    If part of the forgiven debt doesn't qualify for exclusion from income under this provision, is it possible that it may qualify for exclusion under a different provision?
    Yes. The forgiven debt may qualify under the insolvency exclusion. Normally, you are not required to include forgiven debts in income to the extent that you are insolvent. You are insolvent when your total liabilities exceed your total assets. The forgiven debt may also qualify for exclusion if the debt was discharged in a Title 11 bankruptcy proceeding or if the debt is qualified farm indebtedness or qualified real property business indebtedness. If you believe you qualify for any of these exceptions, see the instructions for Form 982. Publication 4681 discusses each of these exceptions and includes examples.

    I lost money on the foreclosure of my home. Can I claim a loss on my tax return?
    No. Losses from the sale or foreclosure of personal property are not deductible.

    If I sold my home at a loss and the remaining loan is forgiven, does this constitute a cancellation of debt?
    Yes. To the extent that a loan from a lender is not fully satisfied and a lender cancels the unsatisfied debt, you have cancellation of indebtedness income. If the amount forgiven or canceled is $600 or more, the lender must generally issue Form 1099-C, Cancellation of Debt, showing the amount of debt canceled. However, you may be able to exclude part or all of this income if the debt was qualified principal residence indebtedness, you were insolvent immediately before the discharge, or if the debt was canceled in a title 11 bankruptcy case. An exclusion is also available for the cancellation of certain nonbusiness debts of a qualified individual as a result of a disaster in a Midwestern disaster area. See Form 982 for details.

    If the remaining balance owed on my mortgage loan that I was personally liable for was canceled after my foreclosure, may I still exclude the canceled debt from income under the qualified principal residence exclusion, even though I no longer own my residence?
    Yes, as long as the canceled debt was qualified principal residence indebtedness. See Example 2 on page 13 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments.

    Will I receive notification of cancellation of debt from my lender?
    Yes. Lenders are required to send Form 1099-C, Cancellation of Debt, when they cancel any debt of $600 or more. The amount cancelled will be in box 2 of the form.

    What if I disagree with the amount in box 2?
    Contact your lender to work out any discrepancies and have the lender issue a corrected Form 1099-C.

    How do I report the forgiveness of debt that is excluded from gross income?
    (1) Check the appropriate box under line 1 on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to indicate the type of discharge of indebtedness and enter the amount of the discharged debt excluded from gross income on line 2. Any remaining canceled debt must be included as income on your tax return.

    (2) File Form 982 with your tax return.

    My student loan was cancelled; will this result in taxable income?
    In some cases, yes. Your student loan cancellation will not result in taxable income if you agreed to a loan provision requiring you to work in a certain profession for a specified period of time, and you fulfilled this obligation.

    Are there other conditions I should know about to exclude the cancellation of student debt?
    Yes, your student loan must have been made by:

    (a) the federal government, or a state or local government or subdivision;

    (b) a tax-exempt public benefit corporation which has control of a state, county or municipal hospital where the employees are considered public employees; or

    (c) a school which has a program to encourage students to work in underserved occupations or areas, and has an agreement with one of the above to fund the program, under the direction of a governmental unit or a charitable or educational organization.

    Can I exclude cancellation of credit card debt?
    In some cases, yes. Nonbusiness credit card debt cancellation can be excluded from income if the cancellation occurred in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See the examples in Publication 4681.

    How do I know if I was insolvent?
    You are insolvent when your total debts exceed the total fair market value of all of your assets. Assets include everything you own, e.g., your car, house, condominium, furniture, life insurance policies, stocks, other investments, or your pension and other retirement accounts.

    How should I report the information and items needed to prove insolvency?
    Use Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to exclude canceled debt from income to the extent you were insolvent immediately before the cancellation. You were insolvent to the extent that your liabilities exceeded the fair market value of your assets immediately before the cancellation.

    To claim this exclusion, you must attach Form 982 to your federal income tax return. Check box 1b on Form 982, and, on line 2, include the smaller of the amount of the debt canceled or the amount by which you were insolvent immediately prior to the cancellation. You must also reduce your tax attributes in Part II of Form 982.

    My car was repossessed and I received a 1099-C; can I exclude this amount on my tax return?
    Only if the cancellation happened in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See Publication 4681 for examples.

    Are there any publications I can read for more information?
    Yes.
    (1) Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) is new and addresses in a single document the tax consequences of cancellation of debt issues.

    (2) See the IRS news release IR-2008-17 with additional questions and answers on IRS.gov.


    Page Last Reviewed or Updated: May 19, 2009

    Luxury Market Update

    More Marylanders fall behind on mortgage

    Survey shows 130,000 homeowners are at least 30 days late

    By the numbers
    132,000 Md. borrowers at least one month behind on their mortgages in the spring

    12.4 the percentage of Md. borrowers who were behind

    7.25 the percentage of Md. borrowers who were "seriously delinquent"

    13th Maryland's rank nationwide for its share of "seriously delinquent" borrowers

    83 the percentage increase in Md. prime borrowers in trouble

    Source: Mortgage Bankers Association

    Copyright © 2009, The Baltimore Sun

    Another Successful Short Sale

    The Distressed Property Institute Reaches Historic Milestone: 10,000 Members Nationwide

    CDPE leads the way in foreclosure avoidance education, becoming the fastest growing designation in real estate industry history.

     

    Austin, Texas (Vocus/PRWEB ) August 13, 2009 -- The Distressed Property Institute, LLC today announced its nationwide member base has grown to more than 10,000 members, making its Certified Distressed Property Expert® designation the fastest growing designation in real estate industry history. CDPE training enables real estate professionals to better identify the solutions for, and meet the needs of troubled homeowners.

     

     "Our growth and continued expansion is humbling," said Alex Charfen, co-founder and CEO of the Institute. "Real estate agents, brokers, lenders, servicers and banks are realizing the difference that CDPEs can make to the millions of homeowners facing foreclosure today. CDPEs across the country are making a real, quantifiable difference in the current mortgage crisis."

     

    According to a recent member survey by the Institute, agents with the CDPE designation have been able to decrease short sale processing time by 50 percent. A short sale occurs when the lender accepts the selling price of the home, even if that is less than the borrower's mortgage balance.

     

    "News of the thousands of homeowners being saved is spreading quickly, and agents with the CDPE designation are now actively sought out by those in need," Charfen said. "To these homeowners, the designation means options, support and solutions."

     

    The survey also found that CDPEs have kept distressed homeowners in their homes more than twice as often as losing a home to foreclosure.

     

    "CDPEs have positively affected their local communities by providing effective solutions for distressed homeowners, helping to stabilize home values, and minimize the losses absorbed by lenders," Charfen continued. "In addition, their combined efforts have made a visible impact on the real estate market as a whole.

     

    "The CDPE network is growing by more than 1,000 members each month, and their impact is increasing exponentially. CDPEs play a critical role in solving the U.S. foreclosure crisis and accelerating our economic recovery."

     

    Numerous real estate industry icons have endorsed the CDPE training, including RE/MAX Co-founder and Chairman Dave Liniger. Recently, two of the industry’s most prominent real estate associations endorsed by the National Association of Realtors— the Asian Real Estate Association of America (AREAA) and the National Association of Hispanic Real Estate Professionals (NAHREP)—have endorsed the CDPE designation for their members.

     

    "The Institute and CDPEs nationwide will continue its efforts to find positive solutions for homeowners facing true financial hardships," Charfen said. "We won’t stop until we've solved the foreclosure crisis, one homeowner at a time."

     

    About the Distressed Property Institute, LLC

    The Distressed Property Institute trains real estate professionals to engage with and assist homeowners facing hardships. The Institute has developed a curriculum to provide the tools and knowledge to handle distressed properties, including short sales, deeds-in-lieu, mortgage modifications, forbearance, refinances, reinstatements and, if that fails, how to help homeowners through the foreclosure process. After completing a comprehensive on-site or online course, graduates are awarded the Certified Distressed Property Expert® Designation.

     

    About the CDPE Designation

    The CDPE Designation provides real estate industry professionals with detailed information on how to engage with and assist homeowners in distress. With more than 9,000 professionals trained across the United States, the CDPE is one of the fastest growing designations in real estate industry history. The CDPE designation has been endorsed by RE/MAX International and other major U.S.

    brokerages and industry icons, including: Dave Liniger, chairman and co-founder of RE/MAX; Howard Brinton, founder of STAR POWER® Systems; Bob Corcoran, founder of Corcoran Coaching and Consulting; Brian Buffini, founder of Buffini and Company; and David Knox, founder of Knox Productions.

     

    Liniger recently announced that more than 7,500 RE/MAX agents would receive the CDPE training in 2009.  Source: PRWeb August 13, 2009.

    Lenders have been flooded with pleas for help from homeowners during the foreclosure crisis. Policymakers often say it makes economic sense for a lender to modify the mortgages of distressed borrowers, lowering their monthly payments, because foreclosed homes yield even less money. In reality, lenders are modifying far fewer mortgages than expected.

    Top-10 Reasons To Send Your Short Sale Referrals To The Maryland Short Sale Team

     

    10. We are 100% compliant with the Protection of Homeowners in Foreclosure Act (PHIFA).
    9. We know which properties will qualify for a short sale and which ones won't.
    8. Our average short sale only takes 105-days from contract-to-successful settlement.
    7. We know how to create an effective short sale strategy.
    6. We have prior experience and specialize in working with homeowners and lending institutions to create a successful short sale transaction.
    5. We know how to market properties since efficient timing is essential.
    4. Since Jan 1, 2009 our average is 100.59% of list price Vs. sales price.
    3. Since Jan 1, 2009 our average days on market is 64.
    2. We know the Top-16 seller benefits of a short sale.
    1. We provide weekly status grams & online transaction management systems.

    Short Sale Referral Flyer

    Navigating Short Sales:

    What to Do When the

    Sale Price Leaves You Short

    If you're thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won't cover your total mortgage obligation and closing costs, and you don't have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

     

    1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as:

    Refinancing your loan at a lower interest rate

    Providing a different payment plan to help you get caught up

    Providing a forbearance period if your situation is temporary

    When a loan modification still isn’t enough to relieve your financial problems, a short sale could be your best option if

    Your property is worth less than the total mortgage you owe on it.

    You have a financial hardship, such as a job loss or major medical bills.

    You have contacted your lender and it is willing to entertain a short sale.

     

    2. Hire a qualified team. The first step to a short sale is to hire a qualified real estate professional* and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won't try to take advantage of your situation or pressure you to do something that isn't in your best interest.

    A qualified real estate professional can:

    Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).

    Help you set an appropriate listing price for your home, market the home, and get it sold.

    Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).

    Ease the process of working with your lender or lenders.

    Negotiate the contract with the buyers.

    Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

     

    3. Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale “package” that accompanies any offer typically must include

    A hardship letter detailing your financial situation and why you need the short sale

    A copy of the purchase contract and listing agreement

    Proof of your income and assets

    Copies of your federal income tax returns for the past two years

     

    4. Prepare buyers for a lengthy waiting period. Even if you're well organized and have all the documents in place, be prepared for a long process. Waiting for your lender’s review of the short-sale package can take several weeks to months. Some experts say:

    If you have only one mortgage, the review can take about two months.

    With a first and second mortgage with the same lender, the review can take about three months.

    With two or more mortgages with different lenders, it can take four months or longer.

    When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender’s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

     

    5. Don't expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

    You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can’t pay back the balance, talk with your real estate attorney about your options.

     

    Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.

     

    Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.

     

    Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.

    Free Report: How To Buy Pre-Foreclosures & Short Sales

     

    IMPORTANT INFORMATION FOR

    CO-OPERATING AGENTS AND POTENTIAL BUYERS

    PLEASE READ BEFORE WRITING OFFER

    It is expressly understood by all parties that the seller owes more than the amount of the contract and is unable to bring cash to closing therefore the sale will require the approval of the lender.

     

    Please note that the property will continue to be on the market in contract-kick-out-status

    (CNTG/KO) until the sellers lender accepts an offer. Only one offer will be submitted to lender for approval.

    The Following are some potential issues that can affect a short sale:

    1. After the lender receives the short sale packet, the lender may require at least 90 business days or more to approve the short sale. After approval, the sale must close within the lender approved time frame, typically 30 calendar days.

     

    2. The seller will receive no cash from this transaction. Any funds usually due the seller will be paid to the lender.

     

    3. The seller has no additional cash and will be unable to pay for any closing costs, such as the buyer's appraisal or a home warranty. Should the buyer desire a home warranty they are free to purchase one at closing.

    4. The seller may be unable to pay for maintaining the property. The property will remain in the current condition through closing; the seller will not be able to make any repairs to the property.

     

    5. The seller's broker will split the professional fee 50/50 with the buyer's broker. Please note that since the lender is taking less that what is owed to them in a short sale, the lender in some cases may negotiate a lower professional fee percentage.

     

    6. The sellers forgiven or cancelled debt may be taxable income. The seller should discuss this matter with a tax professional and legal counsel. This has no bearing on the buyer.

     

    7. In some cases the lender may pursue a deficiency judgment against the seller for any funds not collected at closing. The seller should discuss this matter with a tax professional and legal counsel. This has no bearing on the buyer.

     

    All properties are sold AS IS in their present condition. The seller will not make repairs or give any concessions for repairs. Buyers are encouraged to inspect the property prior to writing an offer to purchase. If the buyer conducts inspections during the inspection period and finds unacceptable conditions, the seller will not renegotiate the terms of the contract and will not make repairs. Please inspect or look over property thoroughly BEFORE making an offer. Furthermore, seller will not pay for termite treatment if active termites are found during the inspection period.

     

    We appreciate the opportunity to work with you on selling one of our listings. Many of our listings are pre-foreclosure properties; there are some things that are different about this type of transaction that we want to make you aware of. Please explain these items to your buyer and if you have any questions please call our office.

    • Our office is closed on weekends and government holidays. We do not return calls when the office is closed.
    • E-mail is the best way to reach us. We check our email several times a day. The e-mail address is: aaron@baltimorehometeam.com. Please include your email address, telephone numbers and fax number in any communication with us so we can respond to you quickly and get information sent to you in a readable manner. We prefer to use e-mail for contracts and related documents. However-if you have a written an offer, do not wait for our office to call you or email you - - send it! We are extremely busy and we can not always take or return your call. If you are scanning and e-mailing your offer, please make sure your scanner is set to Black and White and no larger than 150dpi.
    • The $3,000 earnest deposit must be in the form of a cashiers check or money order and must be hand delivered to our office within 24hrs of our office notifying you that your offer has been accepted.

    Agents representing themselves may not be entitled to a commission. If you are writing an offer for yourself, or your company, please be aware of this before sending us your offer.

     

    Your broker may be required to sign an agreement accepting a reduced professional fee prior to your offers acceptance Many sellers reserve the right to pay professional fees based off of the NET SALES PRICE if there are sellers assist, repair allowances, closing costs, etc. that will affect the net sales price. (eg Contract price - closing cost = net sales price). Your broker nay be required to sign an agreement accepting a reduced commission prior to your offers acceptance.

    • At the time you submit your offer, we will need the buyer’s proof of funds or a pre-approval letter from Lisa Marra at Wells Fargo Home Loans. Contact Lisa directly 410-598-2609 or lisa.r.marra@wellsfargo.com. The loan amount must be indicated in the letter from Lisa and a copy of the earnest deposit. Some sellers will not process your offer without it. Once pre-approved with the your buyer may use their lender of choice for financing, we will need the name of the lender, address, loan officer’s name, e-mail address phone and fax numbers. Please verify with the lender they can close by the date in the offer before submitting the offer.
    • Please remember that the sellers lender may require 90 business days or more to approve the short sale and respond to your offer. Even though you may write a deadline for acceptance, it most likely will not be met, so please inform your buyers of this. The time needed for a response varies greatly depending on which lender we are working with. We will keep you informed via email as much as possible.
    • If your offer is verbally accepted, the seller will require that the buyer sign special “Short Sale Disclosure" addendum. We fax or e-mail these addenda to you for your buyers review and signature. Please have your buyers sign immediately and return them to our office. The seller will not accept offers contingent upon the sale or closing of another property. The seller does not do owner-financing or do carry-backs. If buyer’s pre approval is contingent upon the sale of another property the offer will be rejected. We will be calling the buyers lender to confirm that they are pre approved with no contingencies.
    • The buyers may not make alterations or occupy the property prior to closing. NO EXCEPTIONS
    • As soon as the signed contract is received by us, they will be delivered to the seller for signatures. It may take up to a week or more to receive the signed contract back from the seller. We will do everything we can but keep in mind we are handling many properties at a time. We will get you the signed copies as soon as we receive them.
    • Many sellers in their addendum will require buyers to close at the title company of the seller’s choice. Short Sale closings are very different from regular closings and it is easier and more convenient if buyer and seller close at the same title company, even if it is not required by the seller. You are responsible for scheduling your buyer to close at the title company, please try to schedule it with the closer as soon as possible due to the high volume of properties the title company handles. Please let our office know the time and date of your closing as soon as it has been scheduled.
    • Since these properties are in the pre-foreclosure phase, inform your buyers that closing and title problems sometimes do occur and delay closings. If your buyers are going to be homeless after the scheduled closing day be sure they have a back up plan.
    • After property is under contract, buyer’s agent may give combo to appraiser of home inspector. Please be sure to notify our office of the date and time for the appraisal and inspection.
    • Any damage that occurs due to water being turned on with out the listing broker's permission, will be the responsibility of the buyer’s agent.
    • Make sure the buyers have arranged to transfer service into their names. If not there will be an interruption of services.
    • The property has been keyed to a master key system. Buyer should re-key the property immediately after procession to ensure safety and security of personal and real property.

    If you have any questions about anything we haven’t covered here, please give us a call or e-mail. Thank you for your assistance and we look forward to doing business with you.


    Baltimore Short Sale Team V-Tour
    Your Baltimore Real Estate Expert!

    As Certified Distressed Property Experts we deal with banks, loan servicer’s and asset managers who contact us on a daily basis to help determine the value of their assets. You can be sure that you’ve selected a firm with previous experience and expertise of local market trends. For more market trends visit www.BaltimoreMarketTrends.com

    Call the REALTOR® the banks call to sell their homes.

     Contact Aaron Rice today 443-244-0051.

    Our Client-First Philosophy

         There are many qualities and skills that go into being an excellent real estate professional - integrity, in-depth community and market knowledge, marketing savvy, effective negotiation skills and a high-quality professional network, all of which are hallmarks of how I work.

    That said, in my experience as a Baltimore real estate professional, I've also found that providing the very best service is essentially about putting my clients first. This means keeping myself accessible, being a good listener as well as a good communicator, and responding quickly to your needs.

    This "client first" philosophy has always been my approach and it requires me to continually improve my skills and ways of doing business. In addition, I've found that the latest technologies are enabling me to do everything I've always done, only much more quickly and efficiently. They've also helped me to extend the range of services I provide to my clients.

    So when you decide that you'd like to buy or sell a home in the Baltimore areas, please contact me.

     

    Are you facing a financial hardship?

    4-Temporary Loan Relief Alternatives

    1. Forbearance is an agreement to temporarily let you pay less than the full amount of
    your mortgage payment, or pay nothing at all, during the forbearance period. Mortgage companies may consider forbearance when you can show that funds from a bonus, tax refund, or other source will let you bring the mortgage current at a specific time in the future.
    2. A reinstatement occurs when you pay your mortgage company the total amount you are behind, in a lump sum, by a specific date. This is often combined with forbearance.
    3. A repayment plan is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.
    4. A loan modification is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable. Common loan modifications include
    • Adding missed payments to the existing loan balance
    • Making an adjustable-rate mortgage into a fixed-rate mortgage
    • Extending the number of years you have to repay
    4-Permanent Loan Relief Alternatives
    1. Assumption permits a buyer who qualifies with the existing lender to take over your mortgage debt and pay the mortgage payments, even if the mortgage is non-assumable. As a result, you may be able to sell your property and avoid foreclosure.
    2. Short Sale If you can sell your house but the sale proceeds are less than the total amount you owe on your mortgage, your mortgage company may agree to a short payoff and then write off the portion of your mortgage that exceeds the net proceeds from the sale.
    3. Deed-In-Lieu of Foreclosure your mortgage company may agree to a deed-in-lieu of foreclosure if you agree to voluntarily transfer title of your property to your mortgage company in exchange for cancelation of your mortgage debt. In most cases, you must attempt to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option. This option may be unavailable if there are other liens on your home, such as judgments from other creditors, second mortgages, or tax liens.
    4. Foreclosure A legal process in which a lender takes the title or forces the sale of a property as a result of the borrower’s failure to comply with the terms and conditions of the mortgage.
     

    We believe that a Short Sale is the last option that a homeowner has before foreclosure.

    Preserving and protecting homeownership and homeowner equity is always the first priority.

    Legal & Tax Advice

    Sellers are advised to obtain legal advice regarding the advisability and terms of any short sale agreement with creditor(s) and professional tax advice regarding the tax implications of any such sale.
    This process will result in the loss of your home.
     
     

    1. Can my real estate agent explain the short sale process to me?

    Answer: The Baltimore Short Sale Team is a group of qualified short-sale real estate specialists. We can clearly and logically help evaluate your situation, explain in detail the short-sale process, and create a strategy.



    2. How do I know if my property will qualify for a Short Sale?

    Answer: The Baltimore Short Sale Team knows the specific guidelines and understands the short sale process so that your property can be accurately evaluated to address your specific situation.



    3. Does my real estate agent know what information I will need to provide to the lending institution?

    Answer: The Baltimore Short Sale Team will be able to ask the right questions and provide you with the appropriate paperwork to begin the process of creating a short sale package for the lending institution to review your current financial situation.



    4. Does my real estate agent know what “hardship” categories qualify me as a short-sale candidate with the lending institution?

    Answer: There are very specific categories that lenders consider as “qualified hardships.” The Baltimore Short Sale Team will be able to review your situation and inform you of the different types of hardships that most lenders consider “acceptable.”



    5. Does my real estate agent know how to create an effective short-sale strategy?

    Answer: A short sale will only be accepted by the lending institution if both your property and you meet the lending institution’s guidelines. With the knowledge and expertise of The Baltimore Short Sale Team, every effort will by made to ensure that you have all of the necessary elements documented to qualify for and complete a short sale.



    6. Does my real estate agent have prior experience and specialize in working with home owners and lending institutions to create a short-sale transaction?

    Answer: This type of transaction has become a real estate niche. The Baltimore Short Sale Team has specialized knowledge and understands the systems required to be successful. As REO Specialists we deal with banks, loan servicers and asset managers on a daily basis. You can be sure that you’ve selected a firm with previous experience and expertise.



    7. Does my real estate agent know how to market my home, since timing is essential?

    Answer: The Baltimore Short Sale Team has specialized tools for selling your home, including the MLS (Multiple Listing Service), cusomized websites, bus tours and caravans, open houses, market flyers and brochures. Again, because timing is so crucial, we know about advanced technological services and know how to apply them to the sale of your home. Our specialty advertising includes: toll-free hotlines, fax-on-demand marketing, and 24-hour access to information on your home.



    8. Does my real estate agent know how to price my home?

    Answer: The Baltimore Short Sale Team understands the current market conditions and how the market is affecting home sale prices. We will be able to back up our assertions with solid proof by obtaining a comparative market analysis to include three items: the listing and selling prices of homes in your area, a description of comparable homes, and the length of time the homes have been on the market. This gathered information will give you confidence that your home’s proposed market value is set at an accurate pricing range.



    9. Does your real estate agent have a pricing/marketing campaign for 14, 30, and 45days?

    Answer: If your home isn’t seeing much interest by prospective buyers after 14 days, the Baltimore Short Sale Team will promptly be able to provide you with a list of things being done on a regular basis to generate activity. We will provide you with a "Weekly Status Gram" communication vs. you having to continually request updates and make suggestions as to how to sell your home. The Baltimore Home Team has the professionalism and expertise in the short sale market.



    10. How do I know if I am really comfortable with the real estate agent I am selecting?

    Answer: This is a great question to ask yourself. We have all had times where we went along with a decision because of pressure but knew it wasn’t the right choice. Ask yourself if you trust The Baltimore Short Sale Team and more importantly, if you feel confident in the way we conduct business. We are happy to provide references so that you can be educated with our skill level and expertise in selling your home as a short sale. You are dealing with a very emotional issue…selling your home. Make sure you are making good business decisions during this trying time. If you decide what we have to offer is not for you, then we'll walk away with no pressure. Fair enough?

     
    What Is A Short Sale?
    A short sale occurs when the net proceeds from the sale of a home are not enough to cover the sellers’ mortgage obligations and closing costs, such as property taxes, transfer taxes, and the real estate agent’s commission. A short sale is an alternative to foreclosure which may benefit both lender and borrower alike. The lender is getting paid back much of the money which it lent to the borrower as well as getting rid of the property. The borrower is getting out of their mortgage without having to go through foreclosure proceedings or expend any more money towards the home. Typically, the lender pays practically all sales costs, including repairs, escrow and title fees and realtor commissions.
     
    How Do I Know If A Short Sale On My Property Is Right For Me?
    Because of the current market conditions, mortgage lenders are more willing to work with borrowers faced with a financial hardship by agreeing to the short sale process. If you are faced with a hardship and are unable to meet your financial obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through the foreclosure process.
     
    If I Do A Short Sale, What Do I Have To Pay To Sell My Home?
    In most cases, you will pay literally no sales costs if your lender approves the Short Sale. The agent commissions, title and escrow fees, and even most repair expenses are paid by the lender as part of the Short Sale approval. In most cases, the amount the lender reduces the sellers’ payoff is considered to be “forgiveness of debt.” This amount is normally taxable. Only a tax professional can make this determination, but expect to receive a 1099 on the amount forgiven by the lender as income for you to be taxed on for the year in which you closed the property.
     
    How Do I Get Started On The Short Sale Process
    There are very specific categories that lenders consider “qualified hardships.” A short sale can only take place if both your property and you qualify. You will need to make sure you are working with an experienced short-sale transaction management team so that you will increase the odds of having your lender accept the proposed short sale with your first request. Not all lenders will accept a short sale. Experienced negotiation is the key.
     
    What “Hardship” Is Acceptable For A Lender?
    Below you will find a list of “hardships” that are frequently accepted by mortgage lenders:
    1. Job relocation
    2. Unemployment
    3. Significant income loss
    4. Divorce
    5. Separation
    6. Excessive medical bills
    7. Death of spouse
    8. Death of a family member
    9. Business failure
    10. Damage to property
    11. Incarceration
    12. Military service
    13. Adjustment in mortgage payment or unforeseen increase in living expenses
    Most mortgage companies or lenders require the hardship letter pursuant to a short sale. In the hardship letter, it is important to present the facts clearly, and above all else, be honest. The hardship letter must be able to prove the situation that caused you to fall behind on your payments and the excuse for falling behind must be legitimate and provable. A hardship is defined real and the mortgage company believes the loan is likely to become delinquent.
     
    Do My Mortgage Payments Need To Delinquent?
    Most lenders will turn down your request for a short sale if the seller is currently making the payments. The only time they will consider it a short sale, is when the seller’s payments are delinquent. This presents a particularly difficult dilemma for the seller. Sellers who keep their payments current are protecting their credit rating, but the lenders require delinquency to do a short sale transaction.
     
    I Have Two Loans; Can I Still Do A Short Sale Transaction?

    Yes. We will have to work with both lenders to put together a Short Sale transaction packet. Most sellers in this situation are usually successful at getting the two lenders to cooperate because neither lender wants to own another home through foreclosure.
     
    I Am Concerned About My Credit-How Will A Short Sale Effect My Credit?
    Late payments leading up to a Short Sale will negatively impact your credit.  Much depends on how the lender reports the Short Sale to credit rating agencies such as Experian. However, if your bank accepts a Short Sale and does not negatively report, the short sale will not in itself negatively impact your credit score. For sellers, the key advantage to selling in a short sale is avoiding foreclosure. A short sale does less damage to a person's credit report than a foreclosure. It’s also less detrimental than a “deed in lieu” (of foreclosure), in which a borrower gives the lender the keys to the house and stops paying the loan.
    Seller Homework
     

    List of Required Documentation For A Short Sale
    In order to complete a Short Sale request, your lender will typically ask you to complete a Hardship Package that will need the following included in it:
     
    •A Hardship Letter explaining cause of current financial situation.
    •Financial information (Monthly Financial Statement).
    •Last 2 years federal tax returns.
    •W-2’s
    •Last two months’ pay stubs.
    •Last two months’ bank statements.
    •If there is more than one mortgage or line of credit connected to this house, they will need
    information on all the mortgages.
    •If you are in Chapter 7 or Chapter 13 Bankruptcy Proceedings, a letter from the Federal
    Bankruptcy Trustee allowing the sale of the property is Mandatory. If you are discharged under
    Chapter 7 liquidation proceedings, a copy of the Discharge letter is mandatory.