Short Sales 101 – Episode 3 – How to Prepare for a Short Sale

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@properties, agent, broker, chicago, chicago short sale, condo, default, financing, foreclosure, home, homeowner, kevin van eck, Lending, loan, mortgage, property, real estate, real estate transaction, realtor, short sale, The Chicago Short Sale Team

If you’re considering a short sale, you’ve probably been emotionally drained. If you’re in default, you have most likely been receiving daily phone calls and numerous letters from your lender. Maybe you’ve had third party purchasers (with access to public data regarding pre-foreclosure status) reaching out to you, and you maybe have been contacted by real estate agents scanning those same databases.

Here is my advice, step-by-step:

1. Decide that you are not going to wait any longer, and you will take the situation by the reins. Decide that you are going to do everything you can in order to avoid foreclosure. By making this decision, you will control what happens instead of letting the process determine your future.
2. Find an experienced, competent, and highly-recommended real estate agent to represent you. Ask around (you don’t have to declare your situation), search online for exposure, reviews and professionalism, and most importantly: INTERVIEW THEM. Be sure you talk to at least two agents. Some basic questions to ask an agent can be found here. These do not include short sale specific questions, but those will follow on this very same blog shortly. But know that not all agents, regardless of overall real estate experience, are suited to handle a short sale transaction.
3. Find an experienced real estate attorney. When interviewing agents, be sure to ask who their recommended attorney partners are in terms of short sales. A very important thing to realize is that your uncle, the tax attorney, will not be your best selection for a real estate transaction, let alone a short sale. Find an attorney that specializes in short sale transactions, can clearly describe their experience, and is approachable. You must feel comfortable with your attorney as you are going to have many questions through the process.
4. Discuss the situation with your accountant or tax professional. Depending on the state, your property, and your financial condition, there may be tax consequences. Know about these before moving forward as they may be very impactful.
5. Prepare yourself for the short sale process. A great agent and/or attorney, experienced in short sales,will set candid expectations on how the process will run, what the pitfalls might be, and what the potential impact for you might be down the road. However, in all short sale scenarios you must prepare yourself to be patient, to be willing to provide all types of financial documentation, and to be comfortable asking questions of those representing you, including your attorney and real estate advisor.

This information is very basic, but it helps set a road map to move forward. Short sales are prevalent, and so no matter how large or small your community or real estate market are, there are sure to be great real estate professionals that specialize in short sales. In our next episode we’ll discuss, in more detail, how to choose the real estate professional you will decide to work with.

If you’re considering a Chicago short sale and you need more information feel free to reach out to me and we can help look at your options and prepare you for what’s ahead. I founded The Chicago Short Sale Team and we’re here, with empathy, experience, and dedication, to help Chicago homeowners in distress.

Short Sales 101 – Episode 2 – Why Short Sale?

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@properties, agent, broker, chicago, condos, default, financing, foreclosure, homeowner, kevin van eck, loan, mortgage, property, real estate, realtor, short sale

In the second episode of Short Sales 101 we address why you would contemplate a short sale. As we move forward, it’s important to remember that every homeowner’s situation is different, and we’ll be talking in generalities for much of this series. Every homeowner is different, every hardship varies, every lender handles things differently, and even within the same lending institution short sales are handled differently. The best advice always is to talk with an experienced short sale professional in your area.

WHAT TO DO BEFORE CONSIDERING A SHORT SALE?

A short sale is considered one of the final options prior to foreclosure. If a homeowner is having financial difficulties keeping current on their mortgage, or if they have already missed payments and are unable to catch up, there are a few options which they could pursue. The first is to contact your lender and let them know that you are having problems. There isn’t a reason why you wouldn’t want to be honest, and let them know that you are running into trouble. They may be able to offer you options such as a forbearance or a loan modification. These are the best options if you’d like to stay in the home. There are new HAMP guidelines that are coming out that open up the ability to refinance or modify your loan even if you’re underwater. One key site to check out through this is the Making Home Affordable site from the government. You can click through to it here. Beware of other websites claiming to be able to help and provide information. They’re most likely third-party services for which you would pay them to handle your request. More often than not, if you’re diligent, you can handle the requests of your lender for a modification yourself. If you’re looking at refinancing, contact your local mortgage or real estate professional and they’ll be able to point you in the right direction.

IF THAT DOESN’T WORK?

If you don’t qualify for a refinance or for a loan modification, make sure you keep the heap of documents you provided at the ready. It’s probably time to discuss a short sale. We stated at the top that a short sale should be the last option prior to foreclosure. It’s important to make clear that a short sale is far better for a homeowner than a foreclosure, and this is where we get to the meat of the title of this post.

You may want to short sale over letting your property drop into foreclosure for these reasons:

• The impact on your credit, whether you’re already in default or not, may be far less than that of a foreclosure
• In a foreclosure, your lender may be able to come after you in the future for the deficiency (the difference between what they net on the sale of your home, and what the mortgage balance had been). With a short sale, you may be able to obtain a deficiency waiver. This not only releases the lien on the property, but the lender will release you from all future liability related to the loan. This means that they will not be able to pursue you in the future for the deficiency or any other judgment related to your loan on the property.
• The ability to purchase a home again sooner if you short sale, rather than foreclose. In some cases, you may be able to purchase again in two years after a short sale, whereas with a foreclosure you may not be able to purchase for at least seven years.
• Depending on your lender, your financial state, and government programs that are available, you may be eligible for a relocation fee from the sale of your home. Two examples are the HAFA program and Bank of America’s Cooperative Short Sale program. Each one allows funds to be paid to the seller at closing for relocation. Additionally, the foreclosure process is halted during this time and there is typically a deficiency waiver given through these programs.

WHAT DO I NEED TO PURSUE?

We’ll touch on this heavily in the next post in Short Sales 101, but most lenders require documentation that shows a hardship. Before they agree to lose thousands, and sometimes hundreds of thousands of dollars in a short sale, they want to make sure that it’s justified. Something will have had to have changed in a homeowner’s life in order to justify a short sale. Whether it’s medical bills, loss of job or loss of income, divorce, or something else, there needs to be a reason why you are currently not paying your mortgage or will soon be unable to continue paying your mortgage. More on the justification and documentation to come…

TALK WITH A PROFESSIONAL

Remember, it’s great to search the web and read blogs, articles, and lenders’ websites. But nothing is as helpful as talking with a local, experienced, short sale professional. If you feel like you’re not getting the answers you want, or you want a second opinion, interview two or three. It’s important you are working with someone who you trust and who you believe will represent you appropriately.

If you’re in the Chicago area, and you’re having difficulty staying current, feel free to contact us at The Chicago Short Sale Team. We’re experienced and we treat our clients with confidentiality, honesty, and compassion.

Chicago Townhome Pursues LEED Platinum Certification

LEED PLATINUM IS THE HIGHEST LEVEL of certification that the USGBC offers in their LEED points-based rating system. For the first time (that anyone is aware of), owners of a Chicago townhome are undergoing a full gut-rehab of their 25 year-old townhome. This is a huge undertaking, however, it goes to show that townhomes can be converted to energy-efficient and socially responsbile abodes. While the LEED Platinum certification is certainly an enormous feat to accomplish, as shown by the 140 page LEED for Homes document here, there are numerous things that townhome owners can do to take small steps to reduce the impact on the environment, and their wallets.

Read the Chicago Tribune article here. It will be interesting to see if other Chicago townhome owners are willing to take as large an undertaking as this in the future.

Short Sales 101 – Episode 1 – What is a Short Sale?

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@properties, agent, broker, chicago, condo, condos, foreclosure, homeowner, house, kevin van eck, mortgage, real estate, realtor, short sale

Short Sales 101

It’s an emotional subject, usually because the conversation surrounding a short sale is one of despair, embarrassment, and fatigue. But it’s a conversation that needs to be had, and it can be a life-changing event… for the better.

If you’ve Googled “Short Sale” (go ahead, try it), you first get Wikipedia, and then a slew of online articles, blogs, and general information regarding short sales. While there is a plethora of information on short sales on the web, there is an overwhelming amount of mis-information. Each week I talk with new clients and other real estate professionals, and I’m amazed at the bundle of wrong info and data that exists and proliferates. There are many well-versed and experienced professionals that deal with short sales, but there are just as many that don’t have experience and that are passing on incorrect information.

That being said, I’m going to start a blog series I’ve titled Short Sales 101 (creative, I know). Why am I qualified? To keep it short, I’ve taken nearly every class, seminar, and attended conferences. In 2008 I shadowed an agent who was already on top of the short sale process, and I began taking my own clients. I’ve worked with over 15 attorneys and short sale companies. But most importantly, I have immense first-hand experience of negotiating for clients. Most recently, in order to better serve the clients I represent, I’ve formed my own team, THE CHICAGO SHORT SALE TEAM.

This is Episode 1, and since I’ve already taken your time, this is a quick and easy one.

WHAT IS A SHORT SALE?

A short sale occurs when a lender agrees to accept less than the amount owed to payoff a loan as an alternative to foreclosure. This typically happens when an owner must sell, for various reasons, and the property value is less than the amount owed on the loan. The sellers do not have the financial resources to make up the difference by bringing funds to close the transaction, so the short payoff is negotiated with, and accepted by, the seller’s lender(s).

In later posts we’ll talk about eligibility, average timelines, repercussions, and how to interview and select a short sale professional with whom to team up. Each owner’s situation is different, and each situation has it’s own emotional burden. But it’s important to reach out to a local real estate professional for help early in order to avoid the devastating effects of foreclosure.

Stay tuned for next the episode…

Time to Service and Clean your HVAC!

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@properties, chicago, condos, HVAC, kevin van eck, Lake Effect Real Estate, maintenance, real estate, single family homes, townhomes, Townhomeshop

It’s something we rarely think of as we switch our HVAC from cooling to heating in the Fall, but if you haven’t had a tune-up and cleaning yet, make sure you get one before your furnace is running through the Winter! Without stating the obvious, Chicago Winters are tough enough; make sure you don’t lose your furnace during one.

From a real estate agent perspective, we see it all the time during inspections where there is no documentation of regular maintenance and no sign that the furnace has been cleaned or serviced. While furnaces can last 15 years (and often much longer), this requires regular preventative maintenance.

It’s recommended that the HVAC system is serviced by a professional when the seasons change from Spring to Summer and again from Fall to Winter. Ensure that when you have this done it is either documented on the furnace (often times the servicer will leave a sticker and log on the furnace) or that you keep any work order or receipt. This will help provide a potential buyer comfort, and possible eliminate you having to reduce the price or give a credit when you sell your property (or, worse yet, having to replace the furnace).

Definitely have your HVAC serviced by a professional to ensure you stay warm in the winter and protect your money, and in the meantime check out one of my older posts regarding winterizing your HVAC: Winterizing Tips

Don’t Miss Out On the Sale!

Take Advantage of the Opportunity in Front of Us

We are in the most opportune time for new homeowners to purchase. You’ve been hearing it for the last year or so, and you will continue to hear it. For those that are ready, willing, and able to purchase a new home the keys to making a great decision are here. We have continuously record-low mortgage rates and pricing is at it’s lowest point in Chicago real estate since 2002 (S&P). As Brian Buffini, renown real estate speaker is screaming from his podium, “We’re having a sale!”

Fear of the Future

Based on what we’ve seen over the last 4-5 years since the beginning of the decline in real estate values, it’s easy to understand that many are afraid of homeownership, and the potential loss that many homeowners that bought in the bubble are experiencing now. But if home-buyers do the research, team up with a real estate professional, and make smart decisions based on what their individual situation is, there shouldn’t be fear. There should be an excitement to take advantage of the aforementioned “Sale”! Take a look at the Forbes article here outlining the financial benefits of buying over renting, even in a slowly-growing economy. But also read how the time to buy isn’t right for everyone. That’s why it’s important to work with professionals you trust, and be sure to buy within your means.

We’re On Sale!

With the decline in property values, the $350,000 condo you wanted, in the neighborhood you want to be in, may now be within reach. With the number of distressed properties on the market increasing, both for short sales and the looming foreclosure inventory, the deals are numerous. Of course, with each of these situations you want to be sure to team up with a real estate professional in your area to outline what each of these types of transactions entail, but the opportunity for instant equity is out there.

For those looking to “trade up”, that is, outgrowing your current home and looking for a newer or larger home, the same opportunities apply. Sure, you may be taking a hit on your current home, you may have lost the perceived equity you had in 2006, but remember that the larger or newer home is on sale as well. If you’re purchasing a more expensive property that was hit by the same “housing crisis hammer” on a percentage basis, you’re “saving” more on your purchase than what you’re “losing” on the sale.

Cheap Money!

Financing is more affordable than ever, with most mortgage products hovering around or below 4%. This Wall Street Journal article puts the math together. The question always comes up: “What if the market continues to drop?”. Put frankly, the market will probably continue to drop. That’s almost certain. Different statisticians, lending institutions, and real estate experts predict a further 5-10% drop in Chicago real estate values before we hit the theoretical bottom. What we don’t know is when we hit the bottom. All of these individuals that report on market values report in arrears, meaning that when we know we’ve hit bottom, we’re already on the way up. Timing housing values in this way is like trying to time the market. By the time we know a given stock has hit a high (or a low), it’s already on its way in another direction. In the same light, we can’t time interest rates. We don’t know how long they’ll stay this low, and we don’t know how quickly they will increase. We can guess, but again we’re trying to time the market.

Financing, and specifically the interest rate, have more influence on the affordability of homeownership than the actual purchase price. If we do the math, if you’re looking to spend about $2,000 a month on housing, you can purchase a $400,000 home with an interest rate of 4.5%. However, with a 1% increase in interest rates, up to 5.5%, and you’re still looking for a $2,000 a month payment, your purchase price ability has dropped 10% to $360,000. Again, interest rates affect your monthly payment and purchase price ability moreso than the actual purchase price.

Really?

Yes, really. If buying a home or making a move is something you’re considering, make contact with a real estate professional and look at the options in your market. But first, look at your own finances and determine what you’re able to pay on a monthly basis for housing. Then work backwards with your agent and lender to determine the right price point for you. Don’t miss the SALE! You will regret it if you do.

Other Experts

Here are some other links to articles from experts pushing the strength of homeownership:

Market Watch

JP Morgan Asset Management

New Listing from The Chicago Short Sale Team – $169,000

The Chicago Short Sale Team just listed a great home in the Dunning neighborhood of Chicago.

 

This gorgeous, brick Georgian home is an amazing opportunity. This single family home is on a full lot and features 2 bedrooms, and 1.1 baths. The living room, dining room and kitchen are all flooded with light during the day. The 2.5 car garage was built in 2002. Steps from Hiawatha park and the forest preserve. Don’t miss this short sale opportunity! See the full listing at 3435 N Pacific Slide Show.

 

 

If you know anyone who is looking to buy or sell real estate in Chicago, and specifically interested in a short sale, make sure you send them to The Chicago Short Sale Team. Email us at info@thechicagoshortsaleteam.com or call Kevin Van Eck at 312-208-1430

Home Affordability Changing?

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@properties, affordability, chicago, condos, financing, foreclosure, home buying, interest rates, kevin van eck, real estate

Based on the December Housing Scorecard from the Obama Administration, home affordability is stable. There are a few factors that could easily start to swing this, including rising mortgage rates and a restart in the foreclosure boom following the temporary hold because of lender procedural issues.

Check out this article from RIS Media highlighting the scorecard: http://rismedia.com/2010-12-26/december-housing-scorecard-shows-continued-home-affordability/

And, as always, be sure to consult with your local real estate professionals on current market conditions in your area!

The Chicago Short Sale Team Can Help!

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@properties, chicago, condo, default, foreclosure, kevin van eck, Lending, mortgage, real estate, short sale

The Chicago Short Sale Team Has Formed!

Over the last 18 months Kevin Van Eck and Zak Herman of @properties have been successfully closing short sale transactions. We’ve teamed up and along with our recommended vendors have started The Chicago Short Sale Team.

With our real estate experience and our short sale success, we know that we can continue to help homeowners in distress avoid the disaster of foreclosure. We have the resources, the contacts and the diligence to ensure as smooth of a transaction as possible, and we advocate for our clients on all fronts.

Please visit our temporary website at www.thechicagoshortsaleteam.com or search on Facebook for The Chicago Short Sale Team.

As with all of our business, referrals are the key, and we would love to help your friends, neighbors, co-workers, and family out of a bad situation. Have them contact us!

West Loop Developer Drops Prices!

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@properties, chicago, condos, lofts, price drops, real estate, VB1224, west loop

The developer of the VB1224 Lofts at 1224 W Van Buren in Chicago has dropped their pricing.
There are 20 units being marketed, with one bedroom loft units starting at $219,900. Garage parking is available based on the unit.
The great news is that all finishes are now standard, but buyers still have a wide variety of selections to choose from. The appliance package is upgraded Bosch, and the flooring selections include 4 inch planks. There is also special developer financing through the preferred lender.

Check out the building at http://www.vb1224.com/, but the new pricing is not updated on the site yet. Contact me for information or to set up an appointment!