Mike Klijanowicz is an experienced Short Sale real estate agent who services communities in and around the Greater Baltimore and Harford County, Maryland areas and will travel to other areas surrounding those counties in Maryland to assist sellers going through the short sale process. Mike Klijanowicz is an expert real estate short sale specialist agent who has the right network of contacts and systems in place to get your short sale real estate transaction on your Baltimore or Harford County home closed quickly! If you are in a situation where you are contemplating selling your Baltimore or Harford County home going through a short sale transaction with your lender or know anyone else who is in that situation, Mike wants you to know that he is here as a FREE resource for you and your referrals! All you have to do is CONTACT MIKE KLIJANOWICZ TODAY to set up your 150% FREE IN PERSON IN HOME CONSULTATION! The three most important things that you need to know about short sales are:
- You are NOT alone if you are in a position where you owe more on your home than it is worth in today’s real estate market. Thousands of other Americans are in the same situation as you.
- In most cases, Banks, lenders, and third parties would prefer to complete a short sale transaction instead of forcing another foreclosure onto their balance sheets. It costs them more money to hire attorneys to foreclose on you and also to maintain and repair and hold the property until it can be resold. Often they know they will get much less if the home goes to foreclosure.
- YOU HAVE A LOCAL TOP PRODUCING REAL ESTATE AGENT WHO IS A SHORT SALE SPECIALIST OFFERING YOU HELP WITH YOUR SHORT SALE TRANSACTION FOR FREE!
WHAT IS A SHORT SALE?
Short sales are a relatively new phenomenon in real estate transactions. A few short years ago, no one really knew what a short sale was. However, now in today’s real estate marketplace short sales are much more common. When banks, lenders, and third parties agree to complete a short sale transaction in real estate, it means that they are agreeing to accept less than the total amount due of the mortgage that is owed on the property. Unfortunately, there is no uniform procedure for how to handle a short sale at this time and every lender has different criteria that a home seller must prepare and submit in order to complete the short sale transaction. Many home sellers think that the short sale process is fairly short and simple as the name implies, but there is nothing SHORT about short sales. However, if you are vigilant and do everything your lender, experienced short sale real estate agent, and legal professionals advise you to do, you will greatly increase the chances of your short sale offer being accepted. It is important to mention that many real estate professionals do not understand the short sale process and how to successfully execute a short sale transaction, so make certain that you are choosing a real estate agent who has experience with short sales and that they have a plan in place to ensure that you are getting the best chance you can to get your short sale offer to your lender accepted. Mike has a licensed loan mitigation company who has attorneys on staff that works with mostly all of his short sale clients. So, if you decide to work with them, you will get an attorney to work for you that you can also access to answer any of your legal questions that you may have throughout the process.
WHAT ARE THE STEPS INVOLVED WITH SHORT SALES?
Although all banks, lenders, and third parties have varying requirements and may demand that the home seller submit a wide array of documentation, the following steps listed below will give you a good general idea of what you can expect:
- CALL THE LOSS MITIGATION COMPANY FIRST BEFORE YOU DO ANYTHING! – You want to make sure that your lender will agree to allow you to complete a short sale. It is extremely important to do EVERYTHING EXACTLY as they say in order to expedite the process. I strongly recommend that you CONTACT THE LOSS MITIGATION COMPANY FIRST before you even think about listing your home. They will help you determine if your lender(s) is going to be willing to allow you to participate in the short sale process. If you don’t qualify or are not eligible then it is a waste of time to list your property for sale.
- LIST YOUR PROPERTY AS SOON AS POSSIBLE! – You need to hire a real estate agent, sign a listing agreement, and list your property ASAP! I do not treat my short sale clients any differently than my other clients and they receive the same marketing materials that all of my other non distressed clients receive even though I am taking a risk that the banks may or may not pay all of my commission. I know you are saying to yourself, "but I don’t have any money to pay the real estate agents commission?" Don’t worry about that, read the section below that explains how you can hire a real estate agent even if you can’t pay them when selling your home through a short sale! Make sure that you price your home competitively, but don’t go to the extreme and list it for $1 either. Your lender is going to want as much money as they can possibly get for the property and the idea is that you want to try to get it as close to fair market value as you can. However, if you can’t get it when you price it at fair market value then you need to start reducing the property until you get an accepted offer from a buyer. If you are in a desperate situation and are extremely delinquent with your mortgage than you need to be more aggressive to get an offer as fast as possible. However, note that just because you sign an offer from a buyer does not mean that the bank will not stop foreclosure proceedings.
- SUBMIT A LETTER OF AUTHORIZATION TO YOUR LENDER! – As part of the application paperwork that you fill out with the loss mitigation company you will complete an an authorization form that allows them to contact your banks, lenders, and other third parties on your behalf to discuss your situation and help them get the documentation that they need to get the process completed as fast as possible. If there is no Letter of Authorization they will not speak with the loss mitigation company or your Realtor.
- COMPLETE A PRELIMINARY NEW CLOSING STATEMENT FOR YOUR LENDER! – Once we receive an offer for your lender to consider then we will need to prepare a statement that they understand that shows them what kind of a loss they will be taking. I have excellent contacts at local title companies who will help us prepare this for you at NO COST TO YOU!
- PREPARE AND SUBMIT YOUR HARDSHIP LETTER! – Your lender will want you to explain exactly what your hardship is in writing and in detail. Whether you lost your job, got divorced, or lost a household family member, your bank, lender, or third party wants to know why you can’t pay them any longer and why you want them to take the loss that you do. A little hint here, the sadder the letter the better. The loss mitigation company will help you with this if you need them to help you.
- PROVIDE DOCUMENATION AND PROOF OF INCOME AND ASSETS! – Typically your lender is going to require that you submit a financial information form or worksheet (which the lender may provide to you or it may be on their website), two months of bank statements, two months of pay stubs from your job if you are still working, copies of your mortgage statements, and if you are self employed you may also need 2 years worth of tax returns or more proving your income. Basically you will need all of the same documentation you would need to provide in order to get a mortgage to buy a home.
- PROVIDE A COMPARATIVE MARKET ANALYSIS REPORT! – This is a report that your short sale real estate agent can provide as a courtesy to you for your lender to review. This report should contain similar properties in close proximity to your home that have SOLD within the past several months. It is also important to provide a copy of the dates of the price reductions and amounts of reductions if any were made along with a history of showings with feedback from other agents, so make sure you hire a real estate agent that utilizes a showing service that provides detailed showing feedback. If you are accepting an offer from a buyer for under what everyone else in your area is selling their homes for you had better be able to prove that you at the very least attempted to secure fair market value or the lender will most likely reject your short sale offer. However, most buyers are aggressive when pursuing short sales and any contract is better than no contract and most banks are at least countering the contracts that come in now instead of just flat out rejecting them like they used to a few short months ago.
- PROVIDE A COPY OF THE LISTING AGREEMENT! – Your lender will want a copy of the entire listing agreement that you signed with your real estate agent and their broker to review and place into their file system.
- PROVIDE A COPY OF THE EXECUTED SALES CONTRACT! – Your lender will want to have the entire copy of the sales contract that you entered into with your buyer. With a short sale it is EXTREMELY IMPORTANT to make certain that a short sale addendum is included in your sales contract between you and your buyer making the deal contingent on obtaining all third party approvals. Make sure to check with the loss mitigation company on whether your lender will accept electronic signatures or only "wet" signatures as each of their policies differ in this regard (MOST LIKELY THEY WILL ACCEPT ONLY ORIGINAL SIGNATURES). If a lender requires only "wet" signatures they need to have every page signed and initialed by hand.
- SUBMIT THE ENTIRE PACKAGE OF INFORMATION TO YOUR LENDER! - The loss mitigation company will submit all of the information that you have put together from the above list to your lender on your behalf. It is not uncommon to have to send this information more than once to your lender. Some prefer fax, some prefer scanned and emailed, and some prefer hard copies with original signatures through the mail, your real estate agent should be able to do all methods of delivery if you can’t. Once your lender receives the package the process will begin.
- LENDER WILL SEND APPRAISER OUT TO THE PROPERTY OR A BPO AGENT! – BPO stands for Broker Price Opinion. It is not an official appraisal, but is close to what an appraiser would complete. The difference between a BPO and an appraisal is that the BPO costs the bank a lot less. The purpose for your lender in doing this is so that they get an unbiased opinion as to the value of the home in today’s market. Sometimes it is an actual appraiser and sometimes it is just another real estate agent who works with the bank and completes BPO’s for them for a small fee. And sometimes they require multiple BPO's to be completed.
- LENDER WILL GIVE YOU AN ANSWER TO YOUR REQUEST! – There is no written rule here yet (Congress is still working on that and has been for years so we don't expect any answer on this anytime soon) for how long this may take or what the answer will be. Basically there are three different things that they can do: Accept the short sale offer, Reject the short sale offer, or Counter the short sale offer.
- IF ACCEPTED PROCEED TO CLOSING AND FOLLOW ALL LENDER INSTRUCTIONS! – Once it is accepted then the deal will continue like a normal transaction and the buyer will have the periods of time agreed to in the contract to fulfill their contingencies in reference to the home inspection, financing, appraisal, other inspections, etc. Typically your lender will also require the closing to be concluded by a certain definitive date or the short sale acceptance will expire. Normally this is within a 30-45 day period of time from the date of approval by the lender, but the sooner the better. The lenders approval terms that they send will be the terms that govern when the settlement has to occur and what the fees are that they will accept.
- IT’S CLOSING TIME! – If all goes as planned and the short sale is accepted by your lender, the buyer is happy with their home inspection, the buyers appraisal comes back at least for the purchase price, the buyers loan is approved and funded, etc. then you will proceed to settlement like you would in a normal transaction and will sign all of the necessary paperwork that your lender and the buyers new lender requires and you will be finished with your transaction.
HOW CAN YOU HIRE A REAL ESTATE AGENT IF YOU CAN’T PAY THEM?
Most banks, lenders, and third parties understand that if you are going through a short sale transaction you will obviously not have enough money to pay the real estate agents fees and commissions involved and most of the time the lender agrees to pay ALL of the real estate agents commissions who are involved with the transaction including the buyer’s agent too! Why do the banks do this you may wonder? Well the long and short of it is that it is against the servicing guide of Fannie Mae policy’s to reduce the commission on a pre-foreclosure, so they will generally honor the fee you agreed to in your listing agreement. And do not worry, ALL of the agents and brokers involved in your transaction should be signing an agreement stating that they fully understand that they are taking a risk with their commissions, because at the end of the transaction it is entirely up to the lender to decide how much they will be paying the agents/brokers involved. So the agents/brokers involved know what they are getting involved with up front at the beginning of the transaction.
QUICK LIST OF DOCUMENTS THAT A SHORT SELLER WILL NEED:
- Hardship Letter
- Letters of Authorization
- Financial Information form
- 2 Months of Bank Statements
- Last 2 Pay stubs
- Copies of mortgage statements
- If self employed, last 2 years of tax statements
- Complete Listing Agreement
- Comparative Market Analysis report
- Complete Contract of Sale
- HUD-1 showing the loss to lender
- History of Listing and price reductions
- Pre-Approval Letter from Buyer or verification of funds if cash buyer
- Copy of deposit check(s) from buyer
QUICK TIPS IF YOU ARE A BUYER PURCHASING A SHORT SALE! – If you are a first time home buyer or an investor thinking about purchasing a short sale in Baltimore or Harford County Maryland see the quick tips below:
- Be prepared to WAIT! – Short sales can take anywhere from 3 months (if they have been pre-approved) to as long as 9-12 months to complete!
- Put down a minimal deposit up front and then put a second deposit down only upon lender approval of the short sale!
- Make sure that all contingencies (your inspection, appraisal, and financing timeframes) all start upon lender or third party approval so you don’t waste money if the sale isn’t approved!
- Be aggressive, but not too aggressive with your offer! – There is nothing worse than waiting 6 months on an offer that was too aggressive only to have the bank say NO!
- Understand that the seller is most likely not going to be completing any repairs to the property as a result of inspection defects since they are not making any money from the sale of the home. Basically you should plan on buying the home in AS-IS WHERE-IS condition.
IF YOU ARE CONTEMPLATING GOING THROUGH A SHORT SALE TRANSACTION OR HAVE ANY QUESTIONS ABOUT THE SHORT SALE PROCESS, I INVITE YOU TO CONTACT ME DIRECTLY AND I’LL BE HAPPY TO ANSWER ANY OF YOUR QUESTIONS THAT I CAN OR ARRANGE AN APPOINTMENT TO VISIT, AT A TIME CONVENIENT FOR YOU, ABSOLUTELY FREE WITH NO OBILIGATION, TO DISCUSS ALL OF YOUR SHORT SALE OPTIONS IN PERSON IN THE CONVENIENCE OF YOUR OWN HOME! If you are not in a short sale position but know someone who is, feel free to share this information with them!
DISCLAIMER: Mike Klijanowicz is not a licensed attorney and cannot give legal advice. If you have any legal questions you should ALWAYS consult an attorney. Mike Klijanowicz is not a licensed accountant or tax professional and cannot give legal tax advice. If you have any tax questions your should ALWAYS consult an accountant or tax professional. If you do not have an attorney or tax professional, Mike Klijanowicz can refer you to some.
IMPORTANT NOTICE: Cummings & Co. Realtors is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.