Short Sale vs Foreclosure a short sale always wins

Short Sale vs. Foreclosure: A Short Sale Always Wins http://www.kcmblog.com/2011/10/04/short-sale-vs-foreclosure-a-short-sa... Blog What is KCM? Our Mission Contact Us Short Sale vs. Foreclosure: A Short Sale Always Wins by Christopher Reale on October 4, 2011 · 52 comments Tweet 350 Share 2268 Share 137 1 We are again honored to have Christopher Reale, Director of Short Sale Operations at Lepizzera and Laprocina Title and Escrow Services, as today’s guest blogger. He is an expert on the short sale process and will share his knowledge with us on a regular basis. – The KCM Crew Today’s ever changing real estate industry has brought upon some very challenging questions from our clients. We as counselors, want to put forth the best, non-emotional advice that we can, in hopes that we can help our clients and their families navigate the rough waters of the short sale process.1 of 8 6/26/2012 11:09 AM

Short Sale vs. Foreclosure: A Short Sale Always Wins http://www.kcmblog.com/2011/10/04/short-sale-vs-foreclosure-a-short-sa... The most prevalent question and one that continues to permeate the industry is: “Why should a seller go through the short sale process rather than letting their house be foreclosed upon?” While we cannot speak to every client circumstance, we can say one thing with complete conviction. In almost all instances in which a potential seller is contemplating whether they should short sell their house or let it go through the foreclosure process, a short sale is the better option. The following are examples to consider: Example A- Short Sale Mr. Smith owns a home in which he has a mortgage balance of $220,000 and a current market value of $150,000. Mr. Smith has elected to short sell his property. His Realtor successfully obtains a buyer who puts forth an offer price of $120,000 (80% current market value according to Realty Trac Foreclosure Report 5/26/2011). After reviewing the buyers offer and the financial hardship information from Mr. Smith, Mr Smith’s bank agrees to accept the short payoff of $120,000 which would leave a deficiency balance of $100,000. The transaction closes and is final. Mr. Smith then pulls his credit report 30 days after the transaction takes place. On the report he notices that the mortgage trade line states “Mortgage debt was settled for less than full” and the balance on the mortgage is $0. Mr. Smith is now on the road to financial recovery. Example B- Foreclosure For the ease of illustration we will use the same value and mortgage debt amounts as in Example A. However, Mr. Smith has elected to forgo the short sale process and let the bank foreclose on the property. The bank holding his mortgage facilitates the proper legal procedures to foreclose on the property, all of which are costly. Mr. Smith is notified and his property foreclosed upon of which is taken back by the bank to sell as an REO. Six months later, the bank finally sells Mr. Smith’s home only they sell it for $90,000 (60% of current market value according to Realty Trac Foreclosure report dated 5/26/2011). Remember, as a short sale, the home would have sold for $120,000 keeping the deficiency to $100,000. In addition to the deficiency now being $130,000, the bank has elected to add on legal costs of $15,000 and asset preservation costs of another $5000 for a total deficiency liability of $150,000. Mr. Smith pulls his credit report 30 days after being notified that the bank has sold his property and of his liability. On the report he notices that the mortgage trade line states “Foreclosure” and the balance is $150,000. Because of Mr Smith’s choice to choose foreclosure vs. short sale his road to financial recovery has taken a major detour. He not only has a foreclosure on his credit report but now has a much larger deficiency balance in which the bank, in most cases, will report on his credit report as a balance owed. The Best Option is Clear While the financial and credit advantages are clear when choosing a short sale over a foreclosure, other advantages are sometimes overlooked. The most important of all of them is maintaining the seller’s dignity and peace of mind. We have heard too many stories of families having to leave their homes because of a Sheriff’s order or some other type of legal action. The short sale process alleviates this negative social impact. The process puts the control back in the seller’s hands so that they can get back on the road to financial recovery and start providing for their families. In the battle of the two evils, a short sale always wins!!!2 of 8 6/26/2012 11:09 AM

Short Sale vs. Foreclosure: A Short Sale Always Wins http://www.kcmblog.com/2011/10/04/short-sale-vs-foreclosure-a-short-sa... 1 2268 350 Share Tweet About The Author Christopher Reale is the Director of Short Sale Operations at Lepizzera and Laprocina and is the Co-Founder of The LepLap Institute. Since 2007, Lepizzera and Laprocina has successfully negotiated over 2,500 short sale transactions. The LepLap Institute is the issuer of the Certified Distressed Property Lender™ (CDPL) designation. For more information, go to www.CDPLender.com.3 of 8 6/26/2012 11:09 AM

Short Sale vs. Foreclosure: A Short Sale Always Wins http://www.kcmblog.com/2011/10/04/short-sale-vs-foreclosure-a-short-sa... 27 comments • Discussion Community " Banker • 9 months ago Option #3 the borrower realizes that they signed a contract and are financial responsible for that debt, and do whatever it takes to make their mortgage payment and keep up with their financial obligation that they agreed on. Your short sale properties are partially the reason the neighborhood is going down and values keep decreasing. Wake up..... All for a 3% commission. Shame on you, for encouraging people to do this. I understand that some need this relief, because of happenings in their lives. Once you give this option and borrower commits, the very next step is foreclosure even though that person may have been able to pull it together. But because they started the short sale process and now are late on their payments they have no where to go. Thank you Mr./Mrs. Agent. Your two options the banks lose. ok, fair..... But who is going to cover that difference in the end. I guarantee you that the bank wont. In the end. Banks are failing because of this. Our economy is going down the tube and YOU are encouraging it by telling people their option is to short their home or just give it back to the bank. Start trying to rebuild the situation instead of make it worse. Things you can do: 1) Hold seminars to keep borrowers in homes 2) Check all their financial & loan options, before even considering a short sale 3) Visit bank websites for ideas on how to keep their mortgage. (But all this wont make you a penny, so of course youll go straight to the short sale/ foreclosure avenue for 3% commission) 1 • Reply • Share › Jim • 2 months ago Great article. The advantages to short selling a home far outweigh foreclosing on a home. 0 • Reply • Share › Esther Bowen • 9 months ago Hi: This is great............ Thanks. Esther 0 • Reply • Share › Andy Newman • 9 months ago4 of 8 6/26/2012 11:09 AM

Short Sale vs. Foreclosure: A Short Sale Always Wins http://www.kcmblog.com/2011/10/04/short-sale-vs-foreclosure-a-short-sa... Previous post: Short Sales Picking Up Steam Next post: Picking the Right Agent is Crucial Search For Posts Popular Posts Short Sale vs Foreclosure – 10 Common Myths Busted Will Mortgage Forgiveness Debt Relief Act Be Extended? The Unspoken Appraisal Problem Everybody Calm Down! The Sky Is NOT Falling Home Prices: It’s About Supply & Demand New Single Family Homes: 2011 vs 2006 Another Positive Report for Real Estate Want More Articles? @KCMcrew on Twitter tonymaurer Experts Say Housing Prices Are5 of 8 6/26/2012 11:09 AM

Short Sale vs. Foreclosure: A Short Sale Always Wins http://www.kcmblog.com/2011/10/04/short-sale-vs-foreclosure-a-short-sa... About to Turn ~ kcmblog.com/2012 /06/26/exp… via @KCMcrew 4 hours ago reply retweet favorite CRSConnect Infographic: Under-35 Population Staying Home Not Buying One ht.ly/bL2Bw via @KCMcrew 3 days ago reply retweet favorite CDPE Which is Better: A Rental or Your Own Home? @KCMcrew pinterest.com/pin /2124433073… 4 days ago reply retweet favorite alexcharfen Great info from Steve Harney! #charfen @cdpe @KCMcrew Short Sales Skyrocketing bit.ly/LyWIvS 6 days ago reply retweet favorite HoulihanRE "Shadow Inventory" falls to levels not seen since 2008 according to this @KCMcrew article: ow.ly/bGo8B 7 days ago reply retweet favorite Join the conversation The SHI SHI (shē) n. the spiral adopted by Keeping Current Matters that symbolizes the continuous change of real estate and its current practices. The KCM Connect6 of 8 6/26/2012 11:09 AM

Short Sale vs. Foreclosure: A Short Sale Always Wins http://www.kcmblog.com/2011/10/04/short-sale-vs-foreclosure-a-short-sa... The KCM Crew Like 12,675 people like The KCM Crew. Belinda Vance Pati R-Allison Evan John John Margot Jonathan October 2011 M T W T F S S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 « Sep Nov » Archives June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 20117 of 8 6/26/2012 11:09 AM

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Short Sale vs Foreclosure a short sale always wins

by Damian Bruno on Jun 26, 2012

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