Scary Fact #1: Looking at just Manatee and
Scary Fact #2: 60% Of The Individuals Who Find Themselves In These Unfortunate Circumstances Do Absolutely Nothing To Try and Stop It!!
The numbers listed above mean almost 1 in 12 homes in this area may be foreclosed on in the next year. For every 100 homes out there, 8 of these face foreclosure, and 5 out of these 8 owners may not even make an attempt to stop the process! This may be because they are afraid or feel overwhelmed. So they just allow the house to go back to the bank and allow their credit to be hit with a foreclosure.
Interesting Fact #1: Here is a tidbit about the pre-foreclosure process that many people do not know. Real estate lenders lose a lot of money when they get a house back in foreclosure and for many different reasons. Because of this, many mortgage lenders would vastly prefer you do a short sale.
Some homeowners have a problem understanding this. For example, one woman I recently spoke with was very skeptical about the short sale process. She felt the lender would not take a $40,000 loss. She thought this number was an extreme loss to the bank. I told her that $40,000 is actually a very small amount to be forgiven in this process and I have worked with individuals who owe over $500,000 more than their property is worth!! She said the lenders must be crazy. Many people feel this way. Let me explain though, why the short sale process actually makes perfect sense.
A mortgage short sale, of course, is what occurs if you owe more on your property than it is currently worth. You decide you can't handle it anymore. In many cases, you stop making payments. During this time, we find a buyer and the buyer makes an offer that is less than what you owe. Now, the offer is presented to the lender (or lenders if you have multiple loans).
Here is where the professional negotiation comes into play. Put very simply, we explain to the lender in detail how we have professionally marketed the property. We help them understand that if they let the new buyer obtain the property, they will attain a higher “net price” than allowing the property to go into foreclosure. In other words, as a 3rd party who understands the local real estate market and the foreclosure process, we explain and show in detail why they are financially better off than if they just let the house go in foreclosure. If they allow the property to go to foreclosure, it costs more and so they “net” less. Yes, it’s true --- if they accept a short sale, they lose money on the loan --- but not as much as they do in a foreclosure.
Interesting Fact #2: The lender loses money either way, but they lose a lot less if you do a short sale. Here’s why…
They avoid getting your property back
They avoid having your house sit there vacant
They avoid having to fix up your house, if needed.
They avoid having to market your house
They avoid having to make the property tax payments
They avoid possible damage or vandalism to the property.
They avoid having the house sit there on the market
They avoid the costly legal and judicial fees associated with a foreclosure.
Interesting Fact #3: According to recent reports on different news stations, nationally, it costs a lender $58,000 on average to foreclose on a house because of all the expenses listed above. In
Again, it is by common sense that the mortgage company cannot expect a house to sell for more than its current market value. Thus, if the house goes through the foreclosure process, the lender is just going to sell your home. Banks are not in the business of owning real estate. They want to and will sell it immediately, most likely listing it with an agent for a month or so at a drastically reduced price. If it does not sell this way, they look to auction it off. This is the reason, that in the majority of cases, they receive much less money than we can sell a house for in the short sale process, and… they will end up losing, on average, another $72,000 for related fees! Does this help explain why many lenders are more than willing to do a short sale on a property --- and, more importantly, why you have options?
Yes, many lenders prefer short sales compared to foreclosures. In almost all cases, they end up losing a lot less money and with much less hassle. Can you also see now why lenders usually do not prefer a “Deed in Lieu of Foreclosure?” Simply put, they really don't want your house back. They have no desire to own your property. They want you to sell the house for them, and get as much money as you can. You transfer ownership and a buyer moves in and the house is never owned by the lender.
With all this being said, here is what can be done…
Positive Fact #1… Are you willing to be among those who make up the 40% and do something to avoid having a foreclosure on their credit? (Did I forget to mention that?) I explained the reasons lenders want to do a short sale, but neglected to tell you of your benefits. Yes, you avoid a foreclosure with the short sale process. While it is true that you are affecting your credit by not making payments now, avoiding a foreclosure will save added years of credit rebuilding for you. While being late on these payments does not look good on a credit report, the word “FORECLOSURE” looks much worse, and lasts much longer. That fact alone may make trying a short sale worth your time.
Don’t you feel that you at least owe it to yourself to look into the short sale process? Again, I would like to discuss this with you further. Again, my services have been recommended by attorneys, CPAs, and lenders. I have been asked to write articles for newspapers. However, most importantly, the majority of people that I meet with are referred to me my customers.
I take a different approach to this than almost all other agents out there. I try to offer real estate solutions for those of us who live in the “Real World.” It is not 2005 anymore and many agents are not catching on. We need to understand the current market and economy. There are solutions available to you.
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