Short Sales and Foreclosures in Reno:

Are you thinking of doing a short sale in Reno or Sparks? Buying a foreclosure? I want to give you a better grip on this sometimes slippery topic.

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Short sales, foreclosures--everybody´s talking about it, many are afraid, some see opportunity. What do we do? Where do we go? What are we to believe?

I´ve been working on short sales for three years now, and have been selling foreclosures in Reno-Sparks since 2008. I got started in 2007 when a group of executives from a local Title company went to the office to warn us of the headaches attached to a short sale. Until that time, I was primarily a buyer´s agent. I saw that most agents didn´t want the hassle that came with a short sale; I buckled up and decided to pursue it.

Last year I closed 15 short sale listings—half of my total business.  (My first "successful" short sale was at Sparks. One year and three buyers later, it closed. I tasted blood.) On the other end, most of my buyers have bought foreclosed homes, mostly in the Reno area.  It´s a mixed feeling for being both a casualty (going through a short sale of my own) and a benefiting from this trend (as an agent).  But we really didn´t have a choice after the market tanked--it was just a matter of time when foreclosures and short sales in Sparks-Reno and the rest of Northern NV tumbled into the market.

 

Short sales is not for everyone. Personally, I wanted to cut my losses short—the mortgage payment was hurting me financially because I bought at the top of the market (lessons learned).  I also wanted to buy another home sooner than later--I didn´t want a foreclosure under my name. Going through one myself and talking to hundreds of people about their short sale concerns, I've learned to never judge people on their decision to keep their house--no matter how "illogical" the decision might be to others. Our house is a precious thing. But I only ask my client to put time and clear thinking to their decisions before making any moves.

I recently did an interview with Shayla Stitser ; Shayla talked about the pros and cons of doing a short sale and loan modifications. Here are some excerpts..

"RenoHomeBlog: when do you suggest people take the course of short sales?

Shayla: I am becoming a big fan of short sales over modifications because a person can turn around and buy a home with a new FHA loan as soon as one day after closing on the short sale. Of course, this is only an option if you maintainted (on time) payments to your lender, but I have seen several clients successfully do this. Obviously, if you can successfully short sale and then buy another home that is much more affordable, that is an ideal situation."

There are pros and cons in doing a short sale. The biggest advantage is you can buy a home sooner than if a foreclosure was under your name. The disadvantage is they have 6 years to go after you (banks).

Here are some Frequently Answered Questions:

Frequently Asked Questions:

Q: What is a short sale?

    A Short Sale occurs when a homeowner owes more on their property than the property is actually worth, but their bank agrees to accept less than what is owed as payment-in-full. In other words, the bank is willing to take a discounted pay-off in order to avoid the foreclosure process.

Q: Why are the banks willing to do a Short Sale?

    Because the alternative is foreclosure, and the foreclosure process is usually more expensive compared to Short Sale.

Q: What are the benefits for the homeowner in a Short Sale?

    The primary benefit to a homeowner who participates in a short sale is avoiding the devastating effects of a foreclosure on their credit. If the loan is VA guaranteed, the successful completion of the Short Sale protects their VA eligibility for future VA mortgage loans.                           

Q: What is the impact on the homeowner´s credit for doing a Short Sale?

    A Short Sale is reflected on the homeowner´s credit report as something to the effect of, "Discounted Payoff, Paid-in-full". A Short Sale is less damaging to the homeowner´s credit than a foreclosure or a deed-in-lieu of foreclosure.  *But recent reports tell us that the banks have the right to go after the difference in the home.

Q: Is a short sale supposed to be a painless alternative to foreclosure for anyone involved?

No. There are no painless alternatives. But it greatly helps that there is a better option than foreclosing your home.  But every seller has different needs.  Know that in a short sale banks can still go after you for the balance in your home.  There are pros and cons.

IMPORTANT THINGS TO KNOW: (some excerpts are from: Reno News & Review´s "6 dirty little secrets you need to know about home foreclosure):

No. 1:  Banks will not even talk to you until after you are late on payments.  If a homeowner has not yet defaulted on their loan, the bank has little motivation to approve the short sale.

No. 2:  A foreclosure incurs permanent debt.  Whereas, your mortgage was secured debt.  Personal debt is attached to your Social Security number.  One of the biggest mistakes a homeowner in trouble can make is to panic and think they will be evicted tomorrow--then use their credit cards to make their mortgage payments.  It is a short term fix that quickly turns into a nightmare.  Credit card debt is personal debt.

No. 3:  A short sale could be your only way out.  Because of the Mortgage Forgiveness Debt Relief Act of December 2007, homeowners can walk away from substantial debt on a primary residence. (update: if you have a second loan they have 6 years to run after you.)

No. 4:  Homeowners must prove that they do not have the money to make up the shortfall. This means sending in copies of all bank statements, tax returns, w-2s, and other supporting documents to verify that the homeowners is financially insolvent.

No. 5:  Hire an agent who really knows what he/she is doing.   Short sales are such a specialized branch of practice that most agents without this specific training and experience fail in their attempts at short sales.  If the short-sale package is not submitted with the right information on the right forms and in the right order, it goes into the tall stack of 100-plus files that are never going to get looked at or touched.

Reno Foreclosures and short sale Guide:

Contact Joe for a FREE personal consultation:

Email: jsalcedo@chaseinternational.com

Phone: 775-850-5900 ext. 136

Direct: 1800-279-0328 ext.300