Oct

11

Long Island Short Sales

Filed Under Foreclosure Info, Sellers, Sellers & Buyers |

Long Island short sales are on the rise. The numbers are staggering. According to the Long Island Board Of Realtors, short sales will continue to rise and real estate agents will be scrambling to assist homeowners in danger of losing their homes to foreclosure.

However, in my travels as a professional real estate salesperson, I find that many homeowners do not know anything about “short sales”. A short sale occurs when the seller’s lender (the bank that holds the mortgage on the house) accepts a discounted pay off in order to release the existing mortgage. Basically, the bank agrees to take less than what is owed on the property and the homeowner is able to walk away from the property without having any further debt owed to the lender.

On Long Island, short sales are becoming increasingly “popular” with homeowners who cannot pay their mortgage due to mortgage resets on adjustable rate mortgages.

The main reason why short sales are the most viable loss mitigation alternative is because the effect on the homeowner’s credit is much less damaging than a foreclosure. On a FICO score, the average loss is 300 to 400 points when a homeowner goes through the process of foreclosure. However, if the homeowner chooses to negotiate a short sale, the drop in FICO score may only be 80 to 100 points, assuming their mortgage is the only debt they can’t pay.

The short sale “package” that many homeowners will need to submit to the bank will include a hardship letter written by the owner(s) which explains the circumstances surrounding their inability to pay the mortgage. The lender will also require an authorization form allowing the real estate agent and/or attorney for the seller, to speak to the bank and negotiate the sale approval. Additionally, the lender will want proof that the money coming into the household is insufficient to cover the mortgage, so W-2’s, bank statements, and check stubs will be required.

The agent you choose to assist you must have extensive knowledge of the short sale process. On Long Island, many real estate agents do not have the experience to successfully complete a short sale transaction. Many agents will just tie up a property in a long listing agreement, only to poorly advise the seller and ultimately pass the point at which a short sale will even be acceptable to the lender.

As a homeowner, it is imperative that certain objectives are met with regard to the conducting of a short sale. Since I consider these objectives privaleged information I will not list them here. If you are a homeowner and would like to discuss the process in depth, I am available at 631.831.9048.

For more information on Long Island foreclosures - click here.

(c) Copyright 2008 www.tommcgiveron.com

By Thomas McGiveron, Licensed Real Estate Salesperson



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2 Comments so far

  1. JACK HARTZELL on October 13, 2008 2:56 pm

    what are your thoughts about Realtors using a short sale negotiation service for 30% of listing commissions? Why would a realtor do short sales negotiations?

  2. tmcgllc on October 15, 2008 4:43 am

    That’s up to them to pay another company to negotiate. We use the services of www.diamondlawgroup.com - Basically the homeowner can choose to utilize their services - if they do not - we can still service the listing and negotiate the short sale with the bank, however we HIGHLY recommend the owners obtaining legal counsel through Diamond Law simply because they know what they’re doing and they’re highly accessible and professional AND - they do not charge me a 30% fee to “negotiate” and additionally, my client(s) pay nothing as well.

    Professional real estate agents who service short sale listings should be well-versed in the process and know what the bank(s) require. You follow the directions and heavily service the listing and you can provide people with great service - it’s not “easy” but it’s easier when you know what you’re doing. Thanks for the comment.