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Seller Resources

How to Get an Offer on Your Home

  1. Price it right. Set a price at the lower end of your property’s realistic price range.

  2. Prepare for visitors. Get your house market ready at least two weeks before you begin showing it.

  3. Be flexible about showings. It’s often disruptive to have a house ready to show at the spur of the moment. But the more amenable you can be about letting people see your home, the sooner you’ll find a buyer.

  4. Anticipate the offers. Decide in advance what price and terms you’ll find acceptable.

  5. Don’t refuse to drop the price. If your home has been on the market for more than 30 days without an offer, you should be prepared to at least consider lowering your asking price.

Does Moving Up Make Sense?

These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, it’s a sign that you may be ready to move.

  1. Have you built substantial equity in your current home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.

  2. Has your income or financial situation improved? If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.

  3. Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job or live in a better school district.

  4. Are there reasons why you can’t remodel or add on? Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.

  5. Are you comfortable moving in the current housing market? If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home.

  6. Are interest rates attractive? A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.

Short Sale Short Sale vs. Foreclosure

Both a “foreclosure” and a “short sale” will have a negative impact on your credit. However, there is a difference in the severity of the damage between a foreclosure and a short sale.

A foreclosure will show on your credit as a foreclosure/repossession whereas a short sale will show as pre-foreclosure in redemption status or settled.

A foreclosure can prevent you from purchasing a home for 5-7 years whereas new Fannie Mae and Freddie Mac guidelines have changed the seasoning of a short sale to 2 years – which means you can purchase a home much sooner.

Foreclosures also generally have a more severe impact on your FICO score.

The short sale process is also far more discrete than a foreclosure. Your friends, family and neighbors do not need to know you are doing a short sale on your property and your property will be marketed like any other home for sale. When the property closes escrow you will move out and move on with your life. When your home is facing foreclosure the bank generally posts a notice of trustee sale on your property. If the property does goes to foreclosure and you or a tenant is living in the home there will be an eviction process followed by a listing – where it is generally marketed as a bank owned or foreclosure property.

A short sale allows you to get out of a home that is causing you a financial hardship without having to face foreclosure. We highly recommend that if you are considering a short sale you meet with a Real Estate Professional as soon as possible to reduce the impact on your credit and begin the negotiations with your lender.

Advantages of a Short Advantages of a Short Sale Transaction Transaction

  • Possibility of avoiding eviction.
  • Provide relief in a difficult time.
  • Possibility to post-pone the trustee sale.
  • Protecting your credit from less damage.
  • Take charge over the foreclosure process.
  • It is better to work with the lender than to ignore lender.
  • Avoidance of having a foreclosure on your credit history.
  • Presenting a solution to the lender and negotiating favorable terms.
  • Create for yourself the less burden of a bad credit making it less difficult to rent or buy.
  • Helping to minimize your debt obligations as a Short Sale transaction is less expensive than a foreclosure.
  • The homeowner is potentially saved from foreclosure, and can start rebuilding towards credit recovery.
  • With a Short Sale you might have the ability to save your credit from reflecting a ‘foreclosure’ as to having a ‘settled debt’ or other verbiage.
  • Have a REALTOR counsel you through the process and represent you with negotiations with the lender.

Frequently Asked Questions from Homeowners/Sellers About Short Sales

What's a Short Sale? Simply put, a short sale is used to describe the sale of a home in which the homeowner owes the bank more than the home is worth. The bank agrees to allow the home to be sold for less than what is owed (AKA "Short Sale").

Fundamentally, a Short Sale is a bank authorized alternative to foreclosure. It is not an alternative to a sale The basic idea is that instead of getting foreclosed on, you sell your property at a price and terms and conditions satisfactory to you and your lender. This can usually take place under the following conditions:

Will I qualify for a Short Sale? If you are experiencing financial difficulty of any kind, you may be a prime candidate for a Short Sale. You must prove that a hardship exists. The lender must be willing to accept the short sale proceeds as full settlement of the debt.

There are 2 main qualifications for a good Short Sale candidate…

  1. A good Short Sale candidate is a homeowner who is behind on their mortgage payment and is unable to keep up with all of their monthly obligations. Some of the reasons for falling behind on their mortgage payment may include sudden change in monthly household income, loss of job, divorce, and more.
  2. A good Short Sale candidate also has no equity in their home. They are not able to sell their home and pay off all of the outstanding loans that are secured against their property.

How long does it take to do a Short Sale?
There are several stages that are involved with the Short Sale process...

  1. The first stage requires working with you as the homeowner to get all of the required documentation that your bank will require us to send them. This stage shouldn’t take longer than a couple of days.

  2. (2) The second stage involves us preparing the listing paperwork and scheduling an appointment with you to see your home and prepare your home to be listed for sale. This stage only takes a few days as well.

  3. (3) The third stage entails us aggressively marketing your home for sale and producing a willing, ready, and able buyer. This stage can take as little as a few days or as long as a few months.

  4. (4) The fourth stage is the actual presentation of the offer to your bank. The actual negotiation/approval process can take as little as 2 weeks or as much as 3 months. On average most Short Sales take between 30-60 days from the date the offer is presented to the lender to the date of the Short Sale approval.

  5. (5) The fifth and last stage to the Short Sale process is the period of time between Short Sale approval from the bank and the buyer closing on the home. We prepare all of the buyers that we work with to be ready to close in as quickly as 3 weeks from the time of Short Sale approval. Often buyer’s will even close in as little as 10-14 days.

What if I don’t have money to pay the Realtor commissions?
While there is a small up front fee for our out of pocket marketing, you as the seller do not have pay the Realtor commissions.

Foreclosure vs. Short Sale

A Foreclosure in Arizona usually occurs in the form of a Trustee’s Sale. Because we have Deeds of Trust instead of Mortgages, when a Buyer borrows funds from a Lender, they agree to let the Lender SELL the home if they default. The party entrusted with this sale is a Trustee. When a property is taken back due to default, the Lender attempts to sell the property at a Trustee’s Sale to wholesale property investor/buyers. If the property does not sell, the Lender now becomes owner of the property and must attempt to sell it themselves as a Bank Owned (REO) property on the open market.

A Short Sale bypasses this step by allowing the Owner of the property to sell the property BEFORE the Trustee’s Sale takes place. The sale is contingent on the Lender’s approval of the terms and amount of the sale. Because the net dollar amount to the Lender in a Short Sale is usually higher than the net amount in a Trustee’s Sale or REO sale, they are usually more inclined to accept the offer and let the sale take place.

Are there any tax ramifications to a Short Sale?
You may have heard, "Don't do a short sale because you will get a 1099 and have to pay taxes on the difference between what you owed on your home and what you sold it for or the amount the bank wrote off." This is true, but this is not the whole story…

If you do a Short Sale you will receive a 1099 from your bank. This 1099 will be called a “1099-C.” The thing that most people don't know or don't tell you is that with a Foreclosure, you will also get a 1099. In the case of a Foreclosure the 1099 is called a “1099-A.”

So what's the difference between a 1099-C and a 1099-A? The 'C' stands for "Cancellation of Debt" and the 'A' stands for "Acquisition or Abandonment of Secured Property". The differences are much more than you get the 'C' with a Short Sale and the 'A' with a Foreclosure. It is important to know that while there are many differences, the tax consequences for the 'C' and the 'A' are the same. You may not even be required to pay taxes on the 'income' as shown on the 1099-C, but don't just assume that you won't have to pay.

Before making your final decision, first consult your CPA or Tax Preparer. We are not tax experts. Once again, consult a professional CPA or Tax Preparer before beginning the Short Sale process.

One more thing you should know is that in approximately 99% of the cases, the amount of the loss at Foreclosure is greater than that of a Short Sale. If you are going to receive a 1099 in either case, it is in your best interest to do a short sale instead of allowing your property to be sold for less at Foreclosure or as an REO (Real Estate Owned or Bank Owned Property). Now that you know this, don't allow rumors and incorrect information to influence an important decision in your life. Losing your home to Foreclosure is always the last resort and you should seriously look at all of your options before letting your home go to Foreclosure.

What is a deficiency? A deficiency results when a property is sold for less than the value of the loan on the property. A deficiency is the difference between the sales and loan amounts. The smaller the deficiency the more likely the bank will accept the terms of the short sale.

In many states, a homeowner may always be pursued legally for a deficiency balance. However, in many situations, this is not the case in Arizona. As outlined in Arizona Revised Statutes, Title 33, Chapter 6.1, a person may not be sued by his lender if the property is located on 2.5 acres or less and is a single family residence or duplex. This only applies if the decrease in value is not due to the homeowner's neglect.

Though a homeowner may not be pursued legally for a deficiency in certain situations, the forgiven debt may be taxable income. Homeowners are recommended to discuss this matter with a licensed accountant prior to pursuing a short sale.

Are there any credit consequences to a Short Sale?
This question is asked very frequently and has many different variables involved. The first thing to keep in mind is that the moment you go 30+ days behind on your mortgage payment, your bank has the right to report to all of the credit bureau’s that you are 30 days behind on your payments. When a late payment is reported to the three major credit bureaus, it does have a direct affect on your credit. After going through a Short Sale or a Foreclosure, most people have multiple 30, 60, and 90+ day late payments reporting on their credit report.

When the actual Short Sale is completed, most banks will report to your credit report that your account was “paid in full for less than the full amount.” Your credit report may also be marked as “settled.” It is important to keep in mind that each lender has a different way of reporting that a Short Sale was done, but this is the most common language that is seen. If your home were to go to Foreclosure you would most often see the bank report “Foreclosure” on your credit report.

It is difficult to gauge how much of a credit scoring affect a Short Sale has vs. a Foreclosure. Credit experts will agree that neither a Short Sale nor a Foreclosure is favorable to your credit or credit score, however, the impact of a Foreclosure is much worse. We strongly advise you to work with a Credit and Credit Scoring Expert for more specifics on this topic, and ways in which to improve your credit after the Short Sale is complete.

Why exactly would a bank agree to a Short Sale?
It is much more cost effective for a bank to do a Short Sale rather than Foreclose on a home. Banks are not interested in owning real estate. Banks make their money from receiving monthly mortgage payments. While banks will take a loss doing a Short Sale, they can often minimize their loss by as much as 10-20% over a Foreclosure.

Can the bank sue me or place a judgment against me for the difference between what I owe and what the home sells for? This is a good question that is best answered by a qualified Real Estate Attorney. What you should know is that Arizona is what most people refer to as a “Non-Judgment Deficiency” state. What this means is that generally speaking if the bank forecloses on your home, they cannot pursue you for a deficiency judgment. For more specifics on this topic, please refer to the Arizona Revised Statutes and consult a qualified Real Estate Attorney.

It is also important to know that most Home Equity Lines of Credit (HELOC) are not just secured to your home, they are also personally “backed” by you. What this means is that even though your HELOC bank may agree to do a Short Sale or Foreclose on your home, they still may attempt to collect on your account – even after the Short Sale or Foreclosure is complete.

I’m behind on my payments, how long until the bank forecloses on my home?
Most notes (the “I Owe You” document that you signed with the bank when you first qualified for your loan) give the bank the right to file the “foreclosure notice” or the “notice of default” as soon as you are 30 days behind on your mortgage. While the bank has the right to file the “foreclosure notice” or set the trustee sale date (the date your home will be foreclosed on) as little as 30 days after you miss your mortgage payment, they often will not do so until you are 90 days or more behind on your payments. The bank has the sole discretion on when they want to file the sale date and all banks make this decision differently and within different time parameters.

When the official “foreclosure notice” is filed (whether it is filed after you miss 1 mortgage payment or 3 mortgage payments), there is a 91 day period of time between the filing and the actual “foreclosure sale” or “trustee sale.”

When should we begin working on the Short Sale together?
Ideally we would like to begin working on your Short Sale as soon as you recognize that you are unable to keep up with your payments and will be falling 30+ days behind. The important thing for you to know and keep in mind is that the sooner we begin working with you on the short sale process, the more you increase your chance of a successful closing.

Short Sale Checklist – Information Needed From Borrower(s)

  1. Bank statements for all checking and savings accounts for all borrowers (3 months).

  2. W2’s from the past two years for all borrowers.

  3. Income tax returns from the past two years for all borrowers.

  4. Paycheck stubs for all borrowers – 2 months.

  5. Budget Statement Sheet – snap shot of total debts and total income.

  6. Hardship Letter – a letter to the lender that describes why the homeowner was/is unable to meet the loan obligation. The homeowner must write the hardship letter.

  7. Documentation of Hardship:

    1. Hospital / doctor bills.
    2. Unemployment
    3. Divorce
    4. Death certificate
    5. Other, etc..

  8. Monthly statement from the lender(s).

  9. Borrower’s Authorization Form – form that allows REALTOR to speak to lender on seller’s behalf.

Short Sale Tips

If you are currently facing a situation which is causing you to miss payments or sell your home there are several ways that you can be proactive! These tips will help you make it through the process:

Don't procrastinate. If you are unable to pay your mortgage – even for only one month, contact your lender and make them aware of your situation. You should also sit down and determine if this is a long term or temporary situation and review all options available to you. If you would like assistance in doing this, please feel free to contact us. We can discuss all of your options for both staying in your home and selling it.

Prioritize. After determining how you will proceed, prioritize your debts. If you know you plan on staying in your home it is important to make sure you are not spending money that could be used to pay mortgage payments on other less important debts. Recovering from missed or skipped mortgage payments is far more difficult than recovering from missed or skipped credit card payments.

Know your finances. Make sure you know what is coming in and out each month and budget accordingly. Your lender will want to see an itemized list of all of your current income and expenses when they discuss your loan with you.

Know your rights and options. If you have questions about the process or your options feel free to use our website as a resource or contact us, along with a trusted tax professional and/or attorney to discuss any questions or issues you may have.

Do not lose your cool! You are not alone in this situation and you are certainly not without options. Do not allow yourself to become overwhelmed or ignore the situation. There is help available!

Develop a plan. Whether you choose to sell your home or make an arrangement with your bank you should create a plan that extends during this process and well beyond. This will include where you are moving to, how you will spend or save the money you have from missed payments, etc. You will also want to decide how you will deal with your lender.

Do your research. Make sure that you know everything you possibly can about your options, the foreclosure process in Arizona and your lenders requirements.

Be prepared. Gather all of your financial information – a summary of income and expenses, bank statements, pay stubs, tax returns, mortgage statements, closing documents from when you purchased your home, a list of your reasons for hardship and any other documents you feel might play a role in working with your banking and have them ready before you contact your lender or someone to assist you with your sale.

Work with trusted professionals. If you need advice or assistance make sure you are working with knowledgeable, experienced and trusted professionals - we would love to give you a referral should you need information outside of our scope of knowledge!

Short Sale Terms

Bankruptcy: A legal alternative that allows the borrower to clear any debt obligations by restructuring the payment terms. A bankruptcy stops the foreclosure process until the bankruptcy process is completed or the court allows the lender to resume the foreclosure.

Deed in Lieu: Voluntary conveyance of title in exchange for a discharge of debt. The house must be free of other liens and must have clear title. In simple terms, the borrower agrees to transfer title of the property to the lender, who accepts the property in exchange for the total debt.

Deed of Trust: A legal document that dictates the terms of a loan used to buy a property and transfers the ownership of the property to a third party called a trustee until the loan has been paid in full.

Default: Occurs when the borrower does not meet its legal obligations according to the loan terms.

Forbearance: Under a forbearance agreement, the lender agrees to stop the foreclosure process and determines payment terms that, at a certain time, will bring the borrower current.

Foreclosure: A process in which a lender attempts to recover the amount owed on a defaulted loan. The lender has the option of selling the property or repossessing the property. The beginning of a foreclosure process starts after a borrower defaults on mortgage payments and the lender files a Notice of Default or Lis Pendens.

Lien: A legal claim on a property by a lender or other entity (called the lien holder) against the property owner that owes the money.

Lis Pendens (LIS): A publicly recorded notice of a pending lawsuit against a property owner that may affect the ownership of a property. This process is required in a few states to begin the foreclosure process if a borrower is in default.

Modification: A transaction in which a lender agrees to modify any or some of the terms of the mortgage. This is a process where an existing note is modified, but not cancelled. Changes may include: extending the term of the loan, changing the monthly payments, changing the interest rate, etc.

Notice of Default (NOD): A publicly recorded notice stating that a property owner is behind scheduled loan payments for a loan secured by a property. This process is required in a few states to begin the foreclosure process if a borrower is in default.

REO (Real Estate Owned): A class of property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction.

Reinstatement: Occurs when the property owner pays off the amount in default to bring the loan payments current in order to stop the foreclosure process and return to the original terms of a loan.

Short Sale: (Also called "Short Pay" or "Pay Off") A process in which a lender agrees to receive a lower amount of an owed debt in exchange for the sale of the property to a third party.

Maricopa Homes for Sale
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