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Short
Sales
Brickell Miami
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There are
more and more
Short Sale
popping up all
over
Lenders are
taking a lot
less than
expected on
money owed.
Foreclosures are
expensive for
lenders and its
something they
would rather
not deal with.
We have been
able to
negotiate with
lenders to sell
a home for less
then the amount
owed.
If you’re
looking at
purchasing a
home or looking
for a short
sale property ?
We
can assist you
in finding/negations and
get you
financing for
the purchase.
specializing in
Short Sale In
Miami Brickell
area
Let’s go over
your scenario to
see what your
options are
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What
is a
Short
Sale?
A
short
sale
is
when
a
lender
accepts
a
discount
on a
mortgage
to
avoid
a
possible
foreclosure
auction
or
bankruptcy.
Instead
of
buying
from
a
seller,
you
are
purchasing
the
property
directly
from
the
lender
for
a
discount.
For
example:
A
homeowner,
who
is
facing
foreclosure,
has
an
existing
first
mortgage
of
$300,000.
You
write
an
offer
to
the
lender
for
$220,000,
which
is
accepted
as
full
payment
for
the
loan.
This
is a
short
sale.
Why
are
they
willing
to
take
such
a
discount?
Several
reasons.
First
of
all,
banks
do
not
like
excess
inventory
and
bad
loans
on
their
books;
therefore,
if
they
see
an
opportunity
where
they
can
sell
the
property
without
a
huge
loss,
they
will
do
it.
Secondly,
lenders
know
they
could
lose
a
lot
more
money
if
the
property
goes
to
auction.
There
are
so
many
fees
involved
if
the
property
goes
to
auction,
that
they
would
be
better
off
taking
the
discount
beforehand
and
be
finished
with
the
headache
of
it
all.
At
the
time
of
this
writing,
foreclosures
are
at
an
all
time
high,
which
basically
translates
into
more
opportunities
for
you.
Since
foreclosures
are
increasing,
this
is
the
perfect
time
to
jump
into
this
because
there
will
be
more
and
more
lenders
discounting
properties.
It
is
safe
to
say
that
most
lenders
will
accept
a
short
sale,
however,
you
may
come
across
one
or
two
lenders
who
will
not
discount.
If
the
numbers
work
out
for
the
lender
they
will
do
it.
It
is
best
to
do a
short
sale
when
the
property
is
in
the
pre-foreclosure
state.
Yes,
you
can
perform
a
short
sale
when
the
bank
owns
the
property,
however
your
profits
will
more
than
likely
be
smaller.
There
are
two
stages
within
pre-foreclosure.
The
first
stage
being
those
individuals
who
are
behind
on
payments
and
the
second
stage
are
those
who
are
behind
on
payments
with
a
notice
of
default.
In
order
for
this
to
work
properly
and
for
you
to
successfully
get
a
short
sale,
you
must
find
the
homeowners
who
are
in
the
second
stage
of
pre-foreclosure
or
more
than
3
payments
behind
on
their
mortgage.
Once
the
notice
of
default
has
been
recorded,
banks
become
motivated
as
well,
so
you
are
more
likely
to
get
a
discount.
Until
that
time,
very
rarely
will
a
bank
ever
discount
a
mortgage
that
soon.
Why
would
they?
The
homeowners
still
have
time
to
cure
the
loan
and
make
up
the
back
payments.
It
does
not
matter
what
type
of
house
or
condition
it's
in,
all
mortgages
can
be
discounted.
The
best
properties
to
perform
a
short
sale
on
are
the
houses
that
need
lots
of
work
and
repairs
because
lenders
will
give
you
a
bigger
discount
if
they
see
they
are
"don't
wanters".
Properties
that
are
over
leveraged
are
also
prime
candidates.
Most
rookie
investors
who
see
a
house
over
leveraged
with
an
upside-down
mortgage
may
think
there
is
no
hope
for
this
property.
On
the
other
hand,
this
is a
sweet
deal
to
the
savvy
investor.
Properties
with
large
2nd
mortgages
are
also
treated
as
gold
because
the
2nd
mortgage
is
wiped
out
at
the
foreclosure
auction.
Lenders
with
a
2nd
and
3rd
mortgage
position
would
rather
have
something
than
nothing.
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How
Short
Sales
work
Short
Sales
are
one
of
the
most
effective
techniques
for
discounting
loans
in
real
estate.
Short
sales
create
huge
investment
opportunities
and
are
a
must
if
you
want
to
be
competitive
in
this
market.
One
of
the
most
important
steps
in
the
short
sales
process
is
getting
the
deed.
Too
many
times,
beginning
investors
will
skip
this
vital
step.
Why
do
we
want
to
get
the
deed
from
the
homeowner's)?
Because
all
too
often,
homeowners
change
their
minds,
or
want
to
back
out
of
deals
because
they
are
scared,
or
they
want
to
re-negotiate.
Without
the
deed,
they
can
back
out
of
the
potential
short
sale
even
after
you
have
spent
hours
working
on
their
property.
This
only
has
to
happen
once
and
I
guarantee
it
will
never
happen
again.
I
lost
$30,000
on
one
deal
because
I
failed
to
get
the
deed.
That
was
a
costly
mistake.
When
the
homeowner
signs
the
deed
over
to
you,
now
you
control
the
property
and
you
can
go
to
work
by
calling
the
bank.
There
is a
certain
process
for
calling
the
bank
when
your
doing
short
sales.
Banks
can
usually
tell
if
you've
never
done
this
before.
When
you
call
the
bank,
you
never
want
to
tell
them
you
are
an
investor.
This
one
of
the
biggest
mistakes
rookies
make
and
will
almost
always
result
in
the
lender
not
accepting
short
sales.
Therefore,
when
you
call
the
lender
to
request
the
short
sales
packet,
you
can
either
tell
them
you
are
the
buyer
or
you
represent
the
homeowner.
Sometimes
they
may
ask
if
you
are
a
real
estate
attorney.
Just
restate
what
you
told
them
before.
Then
you'll
want
to
request
the
"short
sales
packet"
or
"workout
packet".
When
the
packet
arrives
it
will
explain
exactly
what
you
need
to
make
this
short
sales
deal
successful.
The
lender
will
usually
request
a
hardship
letter.
A
hardship
letter
is
telling
the
lender
why
the
homeowners
are
not
making
their
mortgage
payments.
Sometimes
they
will
request
bank
statement,
pay
stubs,
income
statements,
and
so
on.
Be
prepared
to
send
them
everything
they
ask
for
because
if
you
don't
it
will
not
be
accepted.
They
will
almost
always
ask
for
a
HUD-1
and
a
real
estate
purchase
and
sales
agreement.
Do
not
waste
any
time!
Send
everything
the
lender
asks
for
back
ASAP.
It
usually
takes
3
weeks
or
more
to
get
an
answer
back
from
the
lender,
so
you
can't
afford
to
wait.
If
the
auction
is
approaching,
you
can
ask
to
extend
the
auction
which
in
most
cases
they
will,
if
they
know
it
is a
legitimate
offer.
Next
in
the
short
sales
process
is
the
BPO.
This
stands
for
Brokers
Price
Opinion.
Basically
a
real
estate
agent
will
come
out
and
give
their
opinion
on
what
the
house
is
worth.
The
key
to
short
sales
is
the
BPO.
You
want
to
try
everything
you
can
to
influence
the
BPO
to
come
in
as
low
as
you
can.
The
lower
the
better.
It
takes
a
few
times
to
get
good
at
this,
but
once
you
do,
I
guarantee
you
will
try
to
get
short
sales
on
every
real
estate
foreclosure
you
encounter.
You
will
also
receive
larger
profits
when
you
invest
in a
more
expensive
home.
This
is
because
you
are
able
to
get
bigger
discounts
from
the
lender
on
properties
over
$500,000.
The
great
thing
about
this
is
that
it
will
cost
you
about
the
same
no
matter
what
the
property
is
worth.
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What
is
Foreclosure?
Foreclosure
is
to
shut
out,
to
bar,
to
extinguish
a
mortgagor's
right
of
redeeming
a
mortgaged
estate.
It
is a
termination
of
all
rights
of
the
homeowner
covered
by a
mortgage.
Foreclosure
is a
process
in
which
the
estate
becomes
the
absolute
property
of
the
lending
institution.
Foreclosure
numbers
are
growing
daily.
Of
the
one
hundred
twenty
or
so
million
homes
in
America,
more
than
4%
or
roughly
4.8
million
of
them
are
facing
foreclosure.
Some
of
these
homeowners
are
able
to
work
their
way
out
of
foreclosure,
however,
according
to
MBA
there
were
about
500,000
homes
that
went
through
foreclosure
last
year.
Foreclosure
threatens
these
homeowners
because
they
are
late
or
seriously
behind
on
their
mortgage
payments.
The
Foreclosure
process
begins
when
the
homeowner
fails
to
make
payments
of
the
money
due
on
the
mortgage
at
the
appointed
time.
This
may
be
due
to
several
reasons.
Unemployment,
divorce,
medical
challenges,
terms
of
the
loan,
sick
of
property
management,
and
even
death.
Foreclosure
is
applied
to
any
method
of
enforcing
payment
of
the
debt
secured
by a
mortgage,
by
taking
and
selling
the
estate.
Borrowers
and
lenders
now
face
a
challenging
situation.
Both
seek
a
compromise
that
permits
a
win-win
outcome.
The
borrower
to
keep
his
home
or
business,
the
lender
to
keep
receiving
mortgage
payments.
Foreclosure
proceedings
typically
start
with
a
formal
demand
for
payment
which
is
usually
a
letter
issued
from
the
lender.
This
letter
of
notice
is
referred
to
as a
Notice
of
Default
(NOD).
Depending
on
your
state,
the
lender
will
issue
this
notice
when
the
homeowner
has
been
3
months
delinquent
on
the
mortgage
payments.
Keep
in
mind
that
the
notice
is a
threat
to
sell
your
property,
terminate
all
your
rights
in
that
property
and
evict
you
from
the
premises.
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What is a Short
Sale?
How
Short Sales
work?
What is
Foreclosure?
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BRICKELL Miami Short
Sale Directory |
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Short Sale Option Explained
What's A Short Sale?
The so-called "short sale" of a home can be a viable alternative to foreclosure and will become more prevalent as millions of adjustable-rate mortgages reset over the next 18 months.
Short sales are an agreement between the lender and the property owner that allows a home to be sold for less than the amount owed. The lender makes the final decision in approving a short sale. Potential buyers need to understand a short-sale transaction before entering any purchase contract. While a buyer and seller may agree on the price, it's up to the lender to accept that price or not. It's a potential option based on the value of the property, the underlying fundamentals of what is owed and the anticipated marketing time. The lender has predetermined guidelines for the minimum amount they will take in the loan sale. When the sale proceeds do not satisfy the remaining balance, the after-sale balance is forgiven. The credit is then reported as satisfied for "less than full" amount.
Though short sales have been around for a long time, they have come to prominence lately because of the unprecedented increase in foreclosures. While short sales are by no means a slam dunk, lenders are more willing to negotiate with borrowers today who are in default on their mortgage payments.
Indicators show that in many areas, many of the short sales are investor-owned.
What the lender wants upfront is a hardship letter from the seller, a contract between a buyer and seller and an estimated settlement statement. The lender may counteroffer and you continue to negotiate. Remember, the last thing a lender wants to do is foreclose on a home. If a lender puts the house in foreclosure, it has to clean it up, paint it, replace the carpet, list it on the market, pay a broker's commission and other closing costs as well as maintain the property while it sits waiting for a buyer.
Many lenders are not prepared and not accustomed to short sales and that can be a challenge for real estate agents and their clients. Realtors need to Built a relationship with the bank on a short sale, when possible, they should meet with the loan officer and provide them with as much data as possible on the house and the market.
A short sale can benefit everyone involved in the transaction; financially troubled homeowners save the embarrassment and marred credit associated with a foreclosure. Investors and entry-level buyers have the opportunity to buy a home below market value. Lenders avoid the hassle and expense of seizing a home and putting it up for auction.
Short sales can occur before a home goes to foreclosure or during the foreclosure process.
Remember, lenders are not looking to bail out borrowers who simply overextended themselves during the recent real estate boom. In most cases, a lender will only consider a short sale if a borrower has clearly suffered a serious financial hardship that directly caused him or her to default on the mortgage. Short sales are a common practice within the mortgage industry and are determined on a case-by-case basis.
While banks still realize large losses on short sales, there are some benefits, including the elimination of foreclosure attorney fees and costs, the marketing costs should the property go to REO and any potential risk of damage or deterioration due to prolonged vacancy.
So far this year, 731,244 pre-foreclosures have been filed nationwide, Sacramento, California based Foreclosures.com reported. That translates to nearly 10 out of every 1,000 households in trouble with their mortgages.
A record $50 billion in adjustable-rate mortgages are poised to reset to higher rates this fall, according to Credit Suisse Group. The number of borrowers whose mortgage payments jump in October, November and December will be the second-highest ever for a quarter.
As far as short sales, those will continue to grow as folks with little or no equity realize they can't hold on. The problem is, most banks are not really discounting for investors yet on these properties.
Despite the current mortgage credit crunch, which is most pronounced in subprime borrowing, there remains significant favorable financial support for home buyers, especially in the FHA and VA and prime conventional conforming mortgage markets.
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