With today’s housing market still facing ongoing fluctuations, many homeowners are finding themselves scrambling to sell properties under challenging circumstances. Alas, a “short sale” solution may just do the trick!

Borrowers working to keep their credit history from being branded with the Scarlet F (“foreclosure”) have a number of options available – and if refinancing to a better rate or program, or consulting with an attorney to stall a potential foreclosure don’t prove successful, clients can try to negotiate a short sale with the bank.

A short sale is an agreement between a homeowner and bank allowing for the sale of a property for less than what’s owed on the mortgage. This new amount is accepted by the bank as payment in full, provided that the bank determines that the moderate loss is a preferable to a foreclosure.
Neither banks nor homeowners want to go through the foreclosure process. Foreclosures incur significant fees on the bank, and damage individual credit ratings for 8-10 years (whereas records of short sales only last for two years).

The primary advantage to selling short is that it allows the homeowner to retain some control of the transaction on the property (and the time they’ll move), instead of handing that control over to the bank or the county sheriff.

Depending on the lender, the process of negotiating a short sale can take anywhere from six weeks to nine months. Generally, the smaller the lender, the less time it will take to process the agreement. During that time, the homeowner will be attempting to sell the property to another active buyer.

Sidenote to Buyers: keep an eye out for these short sales! The current market is rife with homes being sold short, and between government incentives and Freddie Mac’s drive to sell, a first-time homebuyer can manage to find a great deal.

The state of the housing market has made the short sale an attractive option for lenders, sellers, and buyers. There have been so many short sales for the past four years that federal housing agencies will be required to rewrite guidelines over the next decade to compensate.

It can be difficult for a homeowner to accept that they’re unable to make payments on their home, but it’s important to remember that there are ways to cushion the blow. A short sale may sting, but it’s relatively less painful than a foreclosure, or having a sheriff visit with an eviction notice.

Don’t let pride or despair keep you from making the wisest choice on how to handle a bad loan debt. If you’re in a challenging financial circumstance and can’t make your mortgage payments, consider a short sale today.

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Buying a home could seem as daunting as slaying a dragon. If you’re a new homebuyer, you might be feeling overwhelmed by the home buying process. Navigating the vast array of details and paperwork can seem like an impossible mission. Luckily, though, a dedicated team of real estate experts is at the ready to help you purchase your first home.

Real Estate Agent
The real estate agent holds the keys—literally—to your dream home. A good agent will have access to a broad selection of homes (through the Multiple Listing Service, or MLS) that match the search criteria you give them. After they help you find the home you’ve always wanted, the real estate agent further functions as your advocate in the transaction, negotiating the price with the seller’s agent.

Since a real estate agent is somebody you work closely with, it’s important to know that you’ll work well together. Obtain referrals from family and friends who will know if their real estate agent contacts might be a good match.

Lender
Unless you’re paying cash for the home, you’ll need to obtain a mortgage to finance your investment. The lender helps you investigate, determine, and finalize everything related to the financial transaction. A lender evaluates your credit report, income, assets, debt, subject property, and financial history, and will help you obtain a customized loan program befitting your individual needs. Additionally, the lender will keep you updated on all developments as your financial information is evaluated by a processor, underwriter, and ultimately by the closing department.

Your lender is your key resource for all things related to the money. Do you have questions about anything relating to your loan, closing costs, or setting-up a real estate tax escrow account? The lender has the answers.

Appraiser
Every purchase on the housing market requires that a third party agent determine the current market value of a home. This agent is the appraiser. By looking at several different factors, including location, structural layout, and the condition of the building, the appraiser helps the lender determine the risk of the mortgage. The appraisal may directly affect the type of mortgage product a lender can deliver.

Real Estate Attorney
After you and your real estate agent have found the home you desire, and the lender has agreed to grant you a mortgage on the property, it’s time to close the deal. Your attorney will attend your closing and walk you through every document. They’ll also evaluate your sales contract and look for any “red flags” that could make you think twice about finalizing the purchase. Ask family or friends for recommendations. If you’re unable to find an attorney through these trustworthy channels, your PERL advisor is always happy to make a friendly referral.

Though these are the primary members of your homebuying team, you’ll also want to consult with your accountant, and friends and family—the people who you’ll be inviting over most often to enjoy your new home!

The process can seem daunting, but remember that your team is here to help you.

Good luck!

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