Where Do I Go After My Short Sale?

A pressing concern for anyone coming off of a short sale or foreclosure situation is where do I go now?

Even a Successful Short Sale means that the sellers cannot purchase a home for at least one year with certain FHA financing or two years with a conventional loan. In the meanwhile, short sale clients may find themselves searching for a place to live. Many turn to renting and it may be necessary to downsize significantly to help get back on your feet. Here are some tips to make the process a little easier.

Be Honest

The most important thing to do is be honest when searching for a rental home is to be honest about your situation. Almost all landlords will insist on getting a full background and credit check, which will turn up any of the late payments and other issues that precipitated the short sale. Being up-front about these issues will prevent surprises in the process that could derail your application.

Make your Application Appealing

Having another person with good credit and stable income on your application can make you much more desirable as a tenant. This person does not need to live with you, but will guarantee your rent. This only works if you have someone who is willing to cosign.

Putting down a large security deposit and pre-paying rent can also boost your chances of getting a place after a short sale.

Use a Professional

Many real estate agents choose not to work with renter clients, but agents that dedicate themselves to becoming experts in Rental Real Estate are a great resource to help find a rental that will understand your situation and advocate for you on your behalf. At Robert Chevez and Co, we have a dedicated property manager and team of rental agents who can advise you on your situation. A tenant agent is FREE or Low Cost to Renters seeking help as they are paid by listing agents. Call John at 703-939-7521 to see if we can help you.

Rent Direct from Owner

If you do choose to look for housing on your own, it may be helpful to steer clear of professionally managed or owned properties and instead opt to rent direct from an owner or landlord. While there is a certain level of risk with choosing this option, owners who deal directly with tenants are often more understanding of circumstances and may not require the background and credit checks that professionally represented properties will.

Find Temporary Housing

In the worst case scenario, it may be necessary to stay with family or friends temporarily while looking for more permanent housing. In an emergency, you can contact your local information line (in many locations, you can get a directory of social services by dialing 211 or 311) or HUD (US Department of Housing and Urban Development) at 800-955-2232 orwww.hud.gov/homeless/hmlsagen.cfm.

5 Tips To A Successful Short Sale

Short Sales are often the only way out for some sellers who owe more than their home is worth and can no longer afford to make their monthly payments.

While they can be a life-saver for struggling borrowers, short sales can be stressful and time consuming if not managed properly.

Choose a Short Sale Real Estate Agent

Not every agent is experienced in short sales. Even some agents who claim to have short-sale experience may only have closed a handful of short sale deals. With a transaction as complex and time-consuming as a short-sale, you want to know that your agent knows what he is doing and will stay on top of your deal for the duration. Rob has personally conducted over 150 short sales in his career, and our team has successfully managed over 400. The numbers speak for themselves.

Understand the Potential Consequences

Short Sales are not without consequence. Borrowers credit scores will be negatively impacted (though not nearly as much as in a foreclosure), and will be need to wait at least two years, and in some cases as long as seven before you will be able to purchase another home. You may also be left with a deficiency judgement to pay even years after your home sale.

In Virginia, a lender can get a deficiency judgment following a short sale. To avoid a deficiency judgment, the short sale agreement must expressly state that the lender waives its right to the deficiency. If the short sale agreement does not contain this waiver, the lender may file a lawsuit to obtain a deficiency judgment. Experienced short sale negotiators will be sure to get this waived.

Talk to a Lawyer

While Short Sale Real Estate Agents can guide you through the process of a short sale, there are some issues on which they are not able to advise. Those issues range from potential tax implications to protecting other assets the borrower may own if the lender tries to collect the loan balance later.

If you don’t understand the contract you are signing or the potential consequences of a short sale, consult a lawyer.

Keep up with HOA Dues

If you are thinking about short selling your home, don’t stop paying your homeowners-association dues. The fees can snowball and kill the sale, even if the buyer is willing to pay for the delinquent dues at closing.

In a regular sale or even with foreclosures, the seller or the bank pays any past dues owed to the HOA at closing so the buyer gets clear title of the property. But in a short sale, the seller’s lender wants to get every penny out of the transaction so it is crucial for the seller to stay current on HOA and condo dues.

Keep the Property Maintained

Many times homeowners or tenants will move out long before the short sale process is complete. It is important to keep the house in acceptable condition for the duration so it remains sellable. The interior, exterior, and yard need to be maintained, even if not perfectly, so that the house doesn’t totally look like a foreclosure.

At the same time, the house should not be in perfect condition and struggling homeowners who look to short sale their homes should not try to do much fixing up and improving before doing so. A thorough cleaning and decluttering while continuing to do some maintenance is enough. Not having the house in perfect condition can actually help the borrower during negotiations with the bank, as it can be used to justify a reasonable offer on the house.

If you are ready to begin the short sale process on your home, or just want to know more about whether or not a short sale is the best option for you, please contact Rob today at 703-587-0995.