THINKING OF BUYING A SHORT SALE?

SPEEDING UP THE SHORT SALE PROCESS MAY BE IMMINENT….

Can you believe it? After years of extended wait times for short sales to be resolved, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, will require both agencies to give short-sale buyers a final decision within 60 days. This is supposed to go into effect starting June 15^th of this year. (In a short sale, a lender agrees to accept less than the balance on a mortgage.)  But this regulation will only affect those homes with a Fannie Mae or Freddie Mac loan.

Another key part of the regulation will be that Fannie and Freddie must also respond to initial requests for a short sale within 30 days of receiving the buyer’s submission. 

In the Chicagoland area, at one time short sales composed over 50% of homes on the market.   

The number is constantly changing.

And many short sales sit on the market a long time because potential buyers don’t want to wait months for a decision from the bank and then end up not getting the home because they couldn’t come to terms with the bank.

The number of foreclosures  on the market have dropped as the number of short sales have risen.  This is because lenders favor short sales because they are less costly and more efficient than foreclosures. The homeowners never know how long the process will take or how badly their credit will be hurt.  Short sales are known for being easier on credit scores than foreclosures.

BUYING REAL ESTATE PURELY FOR INVESTMENT PURPOSES

So you just got your bank statement and the interest you received on your money made you sick. You might as well keep the cash under your mattress.  You’ve tried investing in the stock market but sometimes you win and sometimes you lose.  Kind of like Las Vegas.  You’re looking for something a little more secure.  Time to ask yourself this question… are you willing to put in a little effort for a better return?  Possibly put up with some annoyances to see your money grow faster?  If you’re ready for a change, consider investing in real estate and becoming a landlord.  The prices have never been better. The ratios have never been so good.  About 6 years ago, investors would have been happy just to have a small monthly loss and would have never dreamed of seeing a positive cash flow from a rental investment.  Investors were thinking of the future and selling properties that appreciated in value when retirement was upon them. 

   At this point in time, investors are in the unique position of being able to take advantage of both a positive cash flow and property appreciation for the future.  Here are some deals I have helped investors with recently….

DUPLEX IN SOUTH ELGIN – PURCHASE PRICE $107k - $1200 IN REPAIRS – TOTAL INVESTMENT $108,200. Rented in 1 day for $1495.00.   PROPERTY TAXES & INSURANCE OF $5700 PER YEAR.  POSITIVE CASH FLOW OF  $1020 per month which is 11% return.  All that PLUS a tax write off of depreciated value on property and being able to sell the property later when retirement in imminent.

Also… there are so many condos for sale.  I just sold one for $54K.  The property taxes and insurance are $2500 year.  The association is $275 a month. It needed about $8K in work… total investment of $62K.  Rent for this condo will be $895 month.  Positive cash flow of  $4824 year or  approximately 8% on investment.

Here’s another one…. Single family home sold for $150K needing $16,500 in repairs.  Total investment of $166500.  Property taxes and insurance are $7200 year.  After repairs and updates, the property rents in one week for $1875 month.  The positive cash flow is a little over 9% per year.

Here’s my point.  The deals are out there.  You can get more for your money but the investment will require a little more work than putting it in the bank and forgetting it or investing in the stock market.  The risk is minimal if you plan wisely.  I can help you determine what the property would rent for in advance of the purchase.  I can show you rental market times in black and white.  But you DO have to be the landlord. And some people just can’t stand the thought of that.  Or I can help you find a management company to manage the property… but that service has a price attached.   However I think you should think long and hard about this option before disgarding it.  The market is bottoming out and these opportunities will not be available forever.  Please call me (or text or email me) to go out and see some of these opportunities.

Or just call and say HELLO.     While you’re at it, check out my new website at www.helenmazur.com

Schaumburg short sales, Bartlett short sales, Arlington Heights short sales, SHORT SALES EVERYWHERE! What is a SHORT SALE, REALLY?

Short sales are exactly the opposite of what their name says. They do not take a “short” amount of time to complete… they take quite a long time. In fact, no two short sales are alike because banks handle them each differently and there are no set of rules for banks to follow.

A short sale begins when the owner needs to sell the property and the property is valued at less than what is owed to the bank. And the owner does not have the money to pay the difference to the bank of the property’s value (purchase price) from the actual amount owed to the bank. Sometimes the difference can be as little as 10K or more than 100K. In a short sale, the owner is asking the bank to sell the home “short”…. Short of the cash needed to pay off the loan. And asking the bank to forgive the remaining balance of the loan. The bank can either accept or reject this request.

It starts with a hardship of some sort. The loss of a job, a family illness, even a job transfer. The owner needs to sell the home but the home is worth less than what is owed. And the owner would have to bring money to the closing table to make it a “normal” sale. Money the owner does not have. So the owner starts out by listing the home with an agent and the agent knows in advance that it will be a short sale. The home begins at the market price. If it doesn’t sell, the price is lowered. It continues to be lowered because the owner needs to sell because he can’t afford the mortgage or he is leaving the area. And because the owner doesn't make one penny from the sale of the home, he doesn't care what offer he accepts. He just wants out. So the price of the home is lowered until an offer is received. Now here’s the tough part for some buyers to understand. Although the bank has to approve the sale and approve the price… the bank had absolutely no input in the setting of the price. The bank doesn’t even know the house is on sale until the owner presents an offer. Most of the time, the offer is very much below what is owed on the property. And sometimes it is too low for the bank to even consider. Yes.. even though the buyer offers the list price of the home, it is often too low for the bank to consider.

Because everyone’s home is worth less today than 3-4-5-6-7 years ago, the bank is very busy with these types of requests. Sometimes the bank can take 4 months, 5 months, 6 months, and even 9 months to answer the buyer. In the end, the anser is sometimes a yes and sometimes it’s a no. There’s no way to rush the bank to answer. The bank is not a person. It's just a bunch of employees following guidelines and trying to keep their jobs.

So, as a buyer, you must decide if making an offer on a short sale is right for you. Once the owner accepts your offer, the paperwork is sent to the bank and months will pass without a response. If you have this extra time to wait, that’s fine. But if you want an immediate answer, a short sale is not for you. This is something only you can decide. There are some great prices on short sales out there. But what’s on the listing sheet is not necessarily the price at which you will be allowed to purchase the home. The bank could say no… or make a counteroffer.

If you have more questions about short sales, please don’t hesitate to ask. Over 60% of the homes on the market are short sales!!!

   If you or anyone you know might be considering a short sale, you should discuss it with a real estate professional before making a decision.  I've helped many people who thought they would have to sell their home get refinancing at a lower rate instead. Right now there are programs out there to allow refinancing even if the current value of the home is less than the current mortgage.

   Visit my website or call me for more information at 847-757-6267. I've been a realtor for 11 years and if I can help you save your home, I will. Visit my website to search for short sales, regular sales and foreclosures .... www.helenmazur.com