Brad Officer, Short Sale Realtor in Jacksonville FL
In 2014 - Florida is still 34% BELOW peak real estate values
How to Short Sale your Jacksonville FL area home in 2014:
Know your options before you short sale:
- Understand loan modifications: Loan modification has been a complete disaster for years! Many of our short sale clients attempted a modification first, but were denied due to the mortgage being too high compared with the current value of the home, having too little income, having too much income, etc. It's a very frustrating process which usually leaves the home owners months behind on a mortgage and still owing much more than the home is worth. Interesting point on Loan Modifications: I get calls routinely from clients who have received a loan modification with a higher payment and a higher balance......That's not a good deal!
- Short Sale: If you need to move and the home is worth less than you owe: Short Sale! You will need a very good short sale specialist REALTOR who has specialized knowledge and processes needed to complete short sales. (We also highly recommend you have legal counsel, we work with several local short sale attorneys in Jacksonville and Ponte Vedra that will provide you short sale services, but you can use any attorney that you please).
- Deed in Lieu of Foreclosure: This is your last, best bet before a Foreclosure. Most often your bank will require you to attempt a Short Sale for some period of time before they will entertain a Deed in Lieu. Good luck getting a deed in lieu completed.....there seems to be more red tape in this than short selling and loan modification.
- Foreclosure: At some point of not making payments long enough (could be years!), the bank will move forward with their right to legally take the home back through Foreclosure. If you get "served" papers, you are in foreclosure but not out of luck. You still have time to sell the home... the average time it takes in Florida is 850+ days, that's average as of late 2013 stats. This time period of being in foreclosure is called Pre-foreclosure. The house is not truly a "foreclosure" until after the bank has taken back the house, again about 2 years AFTER you get "served" papers on average. However, you shouldn't walk away or wait any longer to get the home on the market. The quicker we can get involved and get the home under contract with a new buyer, the faster we can stall a Foreclosure by completing a Fast short sale.
How to Qualify for a Short Sale
Over 40% of FLORIDA home owners with mortgages are still upside down. That's the latest stats as of September, 2013. Qualifying for a short sale has gotten much easier in 2014. The banks have finally started agreeing that people need out of these heavily underwater mortgages in Florida. These tend to be the only true qualifications for a short sale:
- Seller Hardship: The Seller must have a hardship caused by one of the EXAMPLES below. The banks want this in a typed, dated, and signed letter submitted with the sales contract. (A hardship letter).
Examples of a Hardship for Short Sale:
The following is a non-exclusive list of hardships that a Lender or Lien holder may take into account when deciding whether to accept a short sale:
- Loss of Income
- Reduction of Income
- Divorce or Separation
- Medical Emergency / Sudden Illness
- Death of Spouse or Death of Co-borrower
- Short or Long Term Disability
- Adjustable Rate Mortgage Reset
- Failed business
- Job Relocation
- Military Duty
- Medical bills
Documents your bank will require in a Short Sale Package:
- Hardship Letter
- 2 Most recent bank statements
- Recent pay stubs
- Listing Agreement with a real estate office
- HUD-1 Net sheet
- 6 month profit and loss statement - or something that will show your expenses
The bank needs the above items to verify your position of needing relief. As it turns out, it is harder to get out of a mortgage than it was to get into one! Don't get frustrated, just remember there is a good amount of paperwork push involved and the attorneys office can help you with this.
Steps to Short Sale your Jacksonville, FL House:
- Contact Brad: I can answer many questions regarding the process. We, RE/MAX, fill out the listing agreement with you, the Seller. I give you the list of what is needed for the short sale and you start getting together the paperwork. Your bank will require you to work with a Realtor to list the property for sale as a short sale, why not work with one of the top short sale realtors in Jacksonville fl?
- Short Sale Attorney: You get a free short sale consultation with a real estate attorney specializing in short sales. The attorney will go over your individual situation and give you a professional opinion on your ability to short sale and the potential outcomes of the short sale. Why I require a Jacksonville Short Sale Attorney.
- Marketing the Property: We start marketing the property for sale. This period will take time even with a low price. Keep the home looking incredible and the yard in top shape for curb appeal. We are competing to sell the home against all the other short sales and bank owned homes so it's important to understand that we still must attract a buyer.
- Under Contract: We get an offer that is realistic and believe the bank will accept: We sign the contract including an addendum stating the contract is contingent to the lien holder's approval.
- TIME: It takes months for the offer to get approved and closed. Most banks are hitting 60-120 days or more to give us an Approval and Clear to Close letter. Don't try to reason as to why yours should/will close faster.....It won't. Banks are flooded with short sale contracts and are struggling to handle the volume.
- Closing: We finally got the approval, we are now at the closing table. The closing happens and you walk away with nothing from the sale. All fees, realtor fees, attorney fees, closing fees, etc are paid from the proceeds of the sale. What is left over is given to your lien holders.
What is a Deficiency Judgment? This is the legal ability of a bank to seek a judgment against you for the difference of what is owed and what the home is sold for. In Florida they have 1 year after the closing to seek the deficiency balance from you. This is a very - very good reason to use competent parties on your behalf, i.e., the listing REALTOR and the short sale attorney. With the right help, you can be sure to get the best representation both selling the house and best representation with negotiating with the bank. MOST of our clients get this potential deficiency balance waived! The bank waives their right to collect the balance in their terms for short sale approval - they do this IN WRITING.
Choosing a Short Sale Real Estate Agent to do your Short Sale
How to choose the right real estate agent for your short sale? Don't choose your best buddy, don't choose your mom's friend, don't choose anyone unless they have a TEAM of professionals that can complete the process and the sale. BEWARE! Most Jacksonville REALTORS do not want to do short sales. Most haven't done a short sale and have no idea how to go about it other than what they have "heard" from their office mates. From my experience, it takes time, persistence, and a large amount of specialized knowledge to make it all work. I did my first short sale in 2007 and have since put together a short sale team including a local attorney's office who works on your behalf to negotiate with the bank. We keep up with the ever changing world of Short Sales and keep perfecting our processes to better complete each sale. This cost you nothing and should give you ultimate peace of mind knowing you have a competent and professional team working on your behalf. Contact The Brad Officer Real Estate Team.
Buying another home after a Short Sale
BIG CHANGE JUST HAPPENED in AUGUST 2013: 1 year after short sale, you can qualify for an FHA loan. In Jacksonville the FHA Loan Limit is $304,750. That's a lot of purchase power in just 1 years time. UPDATE: This isn't quite as easy as the lenders would have you believe, but it is happening. The key is having a documented temporary hardship that caused the need to short sale. It's a little fuzzy, but yes the mortgage companies will give you a loan after a short sale.
Where to Live after a Short Sale
There are more houses than ever available for rent in Jacksonville and the surrounding areas. Many are vacant and never lived in. Many people I have worked with in the past end up in nicer houses that the ones they sold....for less money. Fairly easy to start the search, and you may consider looking on Craigslist.com. Keep your budget in check and don't be scared to negotiate the right rental terms. Save some cash, keep paying your bills on time, pay down any other debts, and get ready to buy a home in 1 year
Credit Hit after a Short Sale
Will your credit be affected by a Short Sale? Yes, absolutely. You can't get out that easy. Stop paying the mortgage = negative credit hit. Short Sale = negative credit hit. No way around it, but if you are reading this, you probably could care less at this point. The good news, your credit will bounce back if you keep paying all your other bills and debts on time. And it bounces back FAST.
Your Cost for doing a Short Sale
These are legitimate cost that you should plan for and expect:
- Attorney's fee: Your cash out of pocket for the Attorney's fee = ZERO! The major portion of the attorney's fee is paid by your lender.
- Repair items: I only do AS IS purchase agreements, however many times the buyers' lender will not give the buyer the mortgage unless an item is repaired. This happens in FHA and VA loans which are the majority of loans these days. You must be prepared to step in and pay for some repairs....just in case. Obviously, we do what we can to minimize this risk and expense.
- Contribution towards closing: Banks are getting more aggressive and are often asking sellers to contribute something towards closing. If you don't have it, you don't have it.
- REALTOR Fees & Closing Fees: All paid out of the sale price and not from your pocket.
- Home Owners Association back payments: If you haven't been paying HOA, be prepared to pay a negotiated pay off.
What to do while the house is For Sale
It's one of the worst real estate markets since the Great Depression, and the buyers in the market aren't getting a deal when buying your house...they are getting a house at today's market value. The buyers know this, and their real estate agent knows this. Your house must stand out in the crowd of homes on the market. Follow this items below and it's a good first step:
- Curb appeal! Lawn maintenance, plant flowers, water grass, clean, clean, clean.
- Power On! Do not turn your power off.
- CLEAN! Clean everything above and beyond your normal standards of clean.
- DeClutter! Spaces look larger when they aren't cluttered. Rent a storage unit if possible.
Will your neighbors know you are doing a Short Sale
Yes. Almost impossible to keep it hidden as anyone with a brain can figure it out. Realistically, many of your neighbors are most likely considering doing the same if they are upside down in the value of their homes. Also, it is noted in the MLS (Multiple Listing Service) that the sale is a Short Sale so every REALTOR and every potential buyer will know.....which ultimately will attract more buyers as they know they can buy the home for today's values.
Short Sale TIP: Don't wait! If you think you are in the position of needing to short sale your home, call us immediately and we can set up a free consultation at the attorney's office. If you wait and think the problem will go away, you may find yourself months down the road and facing Foreclosure.
Disclaimer: You should always consult with an attorney to know your legal rights and an accountant to understand your potential tax consequences.
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We look forward to working as your Short Sale real estate agent and Short Sale Realtor in Jacksonville FL.