Considering a Short Sale? Here’s what you need to know.

 

Photo Source: http://www.gainesvilleshortsaleinfo.com/

In Atlanta’s real estate market today, short sales and foreclosures make up about half of all real estate transactions. In fact, short sales represent a significant portion of real estate sales activity in Atlanta and are becoming increasingly more common than foreclosures. Though they require a bit more red tape than a normal real estate sale, short sales can benefit all parties if they are all willing to make some sort of compromise.

First, let me explain what is a short sale anyway. When a homeowner sells a home for less than the amount of money owed on the mortgage of that home, that sale is called a short sale. Sometimes, you might hear people refer to it as pre-foreclosure. In most cases, the homeowner has fallen behind on mortgage payments and cannot afford to continue making mortgage payments on the home. Instead of waiting until the lender decides to repossess the property, the homeowner will petition to sell the house for less than the amount owed on the mortgage. In some cases, the lender will even forgive the portion of the mortgage loan not covered by the selling price. Even though foreclosures and short sales negatively affect seller’s credit score, the damage incurred from a short sale can be mitigated if the seller can convince the lender to report the debt as “paid in full.”

For the lender, short selling a property is a lot less hassle and a lot less paperwork than taking on a foreclosed property. They are just as tired of foreclosures as the rest of the population. A short sale transaction benefits them in that they don’t have to deal with selling a property that has been vacant for a while and most likely needs repairs. The lenders are the shot callers in the short sale process and are the ones who set the selling price.

It’s unfortunate for the sellers and the lenders that these homes are selling at depressed price levels. For buyers, it’s a deal. Even though a real estate short sale can still take months to have a decision made by a lender, buyers still get a deal on a property that will most often require less work than a foreclosure.

If you’re in the market for a home in the Atlanta area and are considering a short sale, here is a list of things you want to consider before you jump in head first.

Understand what you’re getting yourself into. Short sales take a while to close and can involve extra effort on the buyer’s part. Save yourself time and unnecessary stress by getting disclosures up front.

This is not a DIY project. As I mentioned before, short sales come with a lot of red tape. It’s imperative to work with a real estate agent on the Go Getter Team who knows the territory and is able to navigate you to a successful close.

Know the condition of the property. In a rush to get rid of the property, sellers may not always be so forthcoming with unfavorable information about the condition of the property. It’s important to have the property professionally inspected before you commit. The Go Getter Team has a list of knowledgeable real estate inspectors on our Preferred Service Providers List.

Be sure the sale has a prayer of closing. Since lenders generally approve of short sales based on the seller’s financial situation, the sadder the story, the better. Most lenders require a letter of hardship, proof of income and assets, a comparative market analysis and a list of liens to consider approval of a short sale.

Be realistic. If you are in a hurry to purchase a home, do not consider a short sale. It’s definitely a waiting game. If you do decide to go for the short sale home purchase, make a reasonable offer that the lender will actually entertain. Lastly, be realistic about where closing costs are coming from. In these cases, cash is the greatest financing alternative for buying a short sale in Atlanta.

What are the short sale tips you’d like to share?

 

Rent to Own a Home

You may be renting a home right now and thinking that you would like to own your own home someday. Many people choose homeownership for the permanency and security it provides for themselves and their loved ones. Homeownership offers the owner a number of personal and financial benefits like having pride in owning a home and income tax breaks. Besides, homeownership is often times a sound investment. For whatever reason, some people continue to rent despite the advantages of owning a home. Maybe they don’t have enough money for a down payment, or maybe they don’t qualify for a mortgage at the moment. Maybe they don’t understand homeownership and the idea intimidates them, or maybe they just haven’t decided to make the commitment. Well, did you know that you can rent to own a home? If any of the “maybe’s” above sound like you, then a rent-to-own home may be a good choice for you.

When a homeowner lists their property as a rent-to-own property and accepts an offer from a prospective tenant, they enter an agreement. In this agreement, the homeowner, who is now the landlord, and the tenant agree on leasing terms which include and are not limited to the duration of the lease and monthly payments. At this time, the homeowner takes the property off the market and the tenant pays an option consideration as compensation. The tenant has the option to purchase the property anytime during the lease or at the end of the lease depending on the agreement. The homeowner may also include the purchase price or pricing conditions in the agreement.

While you’re renting to own your property, you have time to build your credit score so that you may qualify for a mortgage loan. Per the agreement, a portion of the rent paid may be allocated to the purchase price of the home. Unlike renting without the option to purchase, your rent money can become investment money. Nevertheless, you could lose your investment if you cannot secure a mortgage loan or neglect to fulfill the terms of the agreement.

In the real estate industry, this rent-to-own option is referred to as a lease purchase and sometimes a lease option. There are subtle differences between the two, so be sure that you fully understand the type of property you’re considering and the terms of the agreement. Remember that this is your investment, so feel free to negotiate!

Here’s a tip for selling a home:

Get a Home Inspection

When you are looking to sell a home, one of the main things that you may want to consider is having a home inspection done. Though not one of the first thoughts on a seller’s mind, getting an independent home inspector to conduct a full inspection of your home will give you a head start on identifying issues with your home that may be found during a typical home sell. You may only have a few days to decide whether to make the repairs or adjust the asking price suitably when negotiating with the buyer. A pre-inspection can make you better prepared; you’ll be better prepared to brainstorm solutions that will satisfy you and the buyer. Plus, a re-inspection gives you more time to compare prices and treatment options from a variety of contractors.

 

By getting an inspection early, you’ll know what concerns and requests a buyer might have in advance. That allows you to set your asking price accordingly. Getting your home pre-inspected could help you avoid wasting money on unnecessary repairs. It could also help you avoid doing double-duty since the inspector can pinpoint problems and tell you exactly where the work is needed. When you are sure of the problems or repairs done on the house that you are selling, having someone look at the house professionally can help you identify things that you may have missed, and you are able to have a more profound look on what your potential buyer wants to see. The best part of it all is that you are saving money in the long run.