Last week I got an email from a gentleman who currently has his home on the market and is looking at a foreclosure square in the face.  He has fallen behind by a few months on his mortgage, and feels that he might be unable to meet his financial obligations going forward.  He found me on the web and asked if I would be interested in talking to him about Louisville short sales and whether or not I would be interested in helping him sell his house.

All of which brings up the question:  If your home is listed with an agent, and you are facing a foreclosure or short sale, when should you consider changing agents?

That’s a hard question to answer, but some cases are pretty clear cut.  If a short sale is a possibility, then making sure you have the right agent at the forefront is of utmost importance.  If you hired poorly, then you may have some questions to ask yourself.  Who is doing the bulk of the work?  If you are dealing with the bank more than your agent, it may be time to switch, if your contract allows it.  Also, if it seems that you know more about Louisville short sales than your agent, it may be time to switch.  Finally, if your agent is pricing your short sale aggressively, and seems content to stick a sign in the yard and simply wait and hope for something magical to happen, it may be time to switch.  Again, check the listing contract you signed to make sure you can fire your agent, but if you can, a switch may be in order.

Last night, a woman called to discuss her upcoming move to Louisville and which houses she might want to look at when she visited next.  Her stated preference was to look only at Louisville short sales, homes where the seller owed more on the house than they will get back by selling.  Her thinking was that those homes offered the best deals and values, so she wants to go looking only for short sales.

Some of the homes currently being offered as a short sale are really good buys.  Some of the homes being sold in a more conventional method, not a short sale, are also really good buys.  Most homes that are being sold below market, or that appear to be really good buys, are going to need some work to get them into great condition that a buyer might want.  That is true whether or not it is a short sale or not.

Remember, a short sale only means the owner owes more on the home than the home will sell for, so they won’t be able to fully repay the mortgage.  It does not necessarily have anything to do with market prices.  The home owner may have simply gotten too many second mortgages, or refinanced several times, or bought the home with no money down, and now the home hasn’t appreciated enough to pay off all of the loans associated with the house.

So at the end of the conversation with the caller, I told her that, yes, some short sales are good buys.  Some aren’t.  But you have to judge the home by the normal requirements you need in a home, not whether or not it is a short sale.

When clients of mine get to the point where they realize that they can no longer afford to keep their home, one of the most frequent questions I get is “What is going to happen to my credit if I do a short sale?”  There is no good answer here, except the truth.  A short sale most likely will punish your credit score.  But often, not as badly as a foreclosure.

Most likely, by the time someone asks me about Louisville short sales, they are already behind on their payments, which means that their credit is already being affected.  Delinquent payments will show up and drop your credit score before you even enter into the process of a short sale.  Once you complete the process, and the bank has agreed to your short sale request, they will still most likely make a note of some sort on your credit scores.  So overall, you could expect to see your credit score drop by 20o points or so overall, with a fair portion of that reflecting your late payments.  In contract, a foreclosure can drop your credit scores by much more and last much longer on credit reports.

If you can get out in front of this, and talk to your Realtor and bank before you fall behind, you can sometimes still work out a short sale, and the damage to your credit score will be much less.

If you’d like more information on Louisville Short Sales or short sales in general, please make sure to visit my website and I’ll be happy to answer your questions.

Many investors, usually beginning real estate investors, often ask whether or not purchasing a short sale would necessarily make a good investment.

Many of the homes that are coming back on to the market as Louisville short sales are homes that we These homes were often purchased using 100% financing and have adjustable rate mortgages. An experienced investor will tell you that an investment property should be purchased for no more then 65-70% of it’s repaired value.

Many of the loans going through a short sale are FHA backed. FHA insures to 82% of appraised value. The 82% is well above the commonly used 65-70% threshold. So does a short sale make a good investment? The answer is not over the short term, but can over the long term.

If you have any questions or need help with a short sale please contact me via my Naples Florida Short Sales website by clicking the link. You can also contact me via the form at the bottom of this blog.
Your Naples Florida Short Sales Expert,

Louisville Short Sales Series

Frequently when I am meeting with a home seller about their Louisville real estate, I get asked about a deficiency judgement.  For many home owners, they don’t know all of the information out there, and the process can be scary enough when you know what you are getting into, but if there are terms and situations  you don’t know of, it can be really frightening.

So what is a deficiency judgement?  It is the difference between what you can sell your house for, and what you owe the bank for your mortgage. For example, let’s say you owe $200,000 on your house, but the market is slow, and after paying all the commissions and fees, you’ll only have $150,000 to pay the bank for your mortgage.  That means the bank is looking at losing $50,000.  Sometimes the bank will pursue that money, which is called the deficiency judgement. The good news is that most short sale experts can work with the bank to get the amount reduced or maybe even forgiven completely.

Obviously, there are also a few exceptions to the rule and you shouldn’t make any assumptions about your personal situation without first talking to a qualified Realtor.  If you need more information on Louisville short sales or need to list your home for sale, please visit my Louisville Short Sales website and drop me a line. I’ll be happy to answer your questions or put you in touch with a short sale expert in your area.

Louisville Ky Short Sales Series

As more and more homes in Louisville are being sold as short sales, one frequent question I get is  “How long does a short sale take?”  After fielding this question numerous times, I can state my belief that most people are really asking “How long will it take the bank to respond to the offer?”  Most people seem to forget, or dismiss, the reality that even after the bank moves slowly to answer the offer, everything else that takes place for a normal real estate transaction must still take place.

So the real answer to the question “How long will my Louisville short sale take?” depends almost entirely upon who the mortgage holder is.  Some investors and banks move quicker than others, and will actively work with real estate agents to make the deal work smoothly.  Others won’t.  That is why one of the first questions I ask a potential client when they contact me in regards to a possible short sale in Louisville is “Who holds your mortgage?”

If you’d like more information on Louisville Short Sales or short sales in general, please make sure to visit my website and I’ll be happy to answer your questions.

As a member of several real estate virtual communities, I have heard the same version of this story over and over, and thought that maybe a few people in the Louisville real estate market could benefit from this cautionary Louisville short sales story.  Here is a simplified version of the story I referenced:

Recently, as part of a BPO (Broker Price Option), I ran into the owner of the property, and she started up a conversation with me.  She was talking about having fallen on hard times, and how she wasn’t having very many showings on her property, and how badly she needed to sell to avoid foreclosure.  She told me her Louisville home had been on the market for months, and she hadn’t had one showing.  When she told me the asking price was $145,000, I immediately knew the home was overpriced.  Not just overpriced, but way overpriced.

When I got back to the office to put pencil to paper and come up with a estimate of what the property might bring on the market for the bank ordered BPO, I saw where the huge discrepancy came from, between the asking price and what I felt was the likely selling price of the home, $99,000!  Other homes in the same neighborhood, same size and same condition, were all selling right around $100,000.  Why in the world would they be asking such more than market conditions would allow?

To answer that question, I had to look at the tax assessment of the property.  It appears that instead of running a competent CMA, the listing agent had simply looked at the tax assessment, from a few years back, and simply listed the home at that number.  This homeowner is going to lose her home because the agent didn’t take the time to prepare a proper CMA.

Unfortunately this  homeowner isn’t alone. I can’t tell you how many short sale experts I run into that don’t know how to price a property properly. A lot of agents will simply list the property for the amount the homeowner owes on the loan, plus 6% commission.  How much sense does that make?  If the home seller isn’t going to have any trouble selling the home for more than what they owe, it’s not a short sale!

There is no secret to pricing a property for a short sale.  It’s no different from a fair market sale. You have  to price the property based on what other similar homes in the area are selling for. The bank knows exactly what your home is worth. They aren’t going to work with you if it is priced way above or way below a realistic market value. They have too much on their plate to mess with homeowners who don’t appear to be taking the process seriously.

If you’d like more information on Louisville Short Sales or short sales in general, please make sure to visit my website and I’ll be happy to answer your questions.

Recently I mentioned that I had a listing appointment with someone who had responded to my marketing through my blogs and website.  When I met with them, they were behind on their mortgage and were thinking of simply letting the bank foreclose on their house. They wanted to know why they should try a short sale instead of letting  the bank take the home back.  After all a short sale can take several months to complete.  What was in it for them?  Why make the effort?

I pointed out that if all of the necessary steps were taken, and a successful short sale was completed, it is usually much better for the homeowner’s credit scores, and also a possible route to skipping out on a deficiency judgement.  If the homeowners are simply unwilling, or unable to work through the necessary paperwork, then the Louisville short sale simply won’t take place.

If you’d like more information on Louisville Short Sales or short sales in general, please make sure to visit my website and I’ll be happy to answer your questions.

I have an appointment coming up with a homeowner who has fallen behind on their mortgage. They have  asked me if their bank will agree to a short sale.

The answer depends on the situation and sometimes which bank their mortgage is with. Banks use short sales to avoid the foreclosure process. The foreclosure process takes longer and can cost banks far more money then the loss they write off as a result of a short sale. There are however several criteria that must be met before the bank will approve a short sale.  So I will need to collect more info from these home sellers to see if a Louisville Short Sale will be the best path for them to take.

If you’d like more information on Louisville Short Sales or short sales in general, please make sure to visit my website and I’ll be happy to answer your questions.

Frequently, on a listing appointments, I run into home owners who owe as much on their house as the likely sales price.  And the question invariably comes up, “What is a short sale?”

A short sale in Louisville has nothing to do with being a quick sale.  The process is not short!  A short sale occurs when a homeowner needs to sell their home and owes more then it is currently worth.  With some luck, and a lot of work,the bank  agrees to accept less then what is owed as payment, in order to avoid a foreclosure, which can take even longer and cost the bank quite a bit more.

If you’d like more information on Louisville Short Sales or short sales in general, please make sure to visit my website and I’ll be happy to answer your questions.