How To Sell A San Mateo Home You Cant Afford


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How to sell a San Mateo home you can't afford is a webinar given by Raymond Stoklosa and Rebecca Williamson of The RayChel Realty Group in San Mateo. Raymond and Rebecca explained to San Mateo home owners what they can expect during the short sale process, who is involved with a short sale, what Realtors can and can't do to help and how to increase their chances of getting an approved short sale.

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How To Sell A San Mateo Home You Cant Afford

  1. 1. How to Sell a Home You Can’t Afford Thanks for joining tonight’s webinar. We will begin shortly. To download the slides, please visit Tonight’s Speaker Raymond Stoklosa Managing Broker and Co-Owner The RayChel Realty Group Phone: (650) 655-2500 The RayChel Realty Group
  2. 2. Questions During the Webinar Short sale experts are available to answer questions throughout the presentation This is an interactive learning environment. You will get the most value from this program by having your specific questions answered. The only dumb question is the one you don’t ask The RayChel Realty Group
  3. 3. Questions During the Webinar You may type questions in at any time during the presentation – Question box on your screen The RayChel Realty Group
  4. 4. How to Sell a Home You Can’t Afford Presented by Raymond Stoklosa Managing Broker and Co-Owner The RayChel Realty Group Phone: (650) 655-2500 The RayChel Realty Group
  5. 5. Purpose and Goals of This Evening’s Webinar Purpose Share our Passion for Your Education Goals Increase your awareness about your options when you can no longer afford your home Show what you can expect and what your lender expects from you Educate and empower home owners in ways that improve their lives The RayChel Realty Group
  6. 6. Life Got Hard? Have you hit a pothole on the road of life? Is your home worth less than you owe the bank? Does the month last longer than your money? Is your monthly mortgage payment unaffordable? The RayChel Realty Group
  7. 7. Can’t Afford Your Home? If you can’t afford your mortgage payment, here are your options… Refinance – replace existing with a better loan Loan Modification – loan terms adjusted Forbearance – suspended payments The RayChel Realty Group
  8. 8. Can’t Afford Your Home? If you can’t afford your mortgage payment and selling is your only option, here are the possibilities… Short Sale – Sell for less than amount owed Deed in Lieu – Transfer to Bank Foreclosure – Home sold at public auction Bankruptcy – Court reorganization plan stays foreclosure The RayChel Realty Group
  9. 9. Primary Benefit of Short Sale Seller Avoids Foreclosure • Ineligible FNMA for 5 years • Shows on Credit for 10 years • Foreclosure could mean loss of security clearance • Current & future employment in jeopardy The RayChel Realty Group
  10. 10. Short Sale Myths • Bank is desperate to dump nonperforming assets • Bank has no choice but to capitulate to demands of buyers and needs of sellers The RayChel Realty Group
  11. 11. Short Sale Apt Solution or Wishful Thinking? The RayChel Realty Group
  12. 12. What is a Short Sale? • Arms Length - FMV – Sale to Buyer Subject to Lender Approval Lender Agrees to Accept Less than Amount Owed Usually Considers the Debt Repaid in Full Seller Receives No Money The RayChel Realty Group
  13. 13. Who is Eligible? Eligibility of Seller is… • Completely Up To Lender • Rules Vary Lender/Loss Mitigators • Each Lender Sets Own Rules The RayChel Realty Group
  14. 14. Getting an Approved Short Sale Single Factor Common to All Approved Short Sales is… Hardship The RayChel Realty Group
  15. 15. What is a Genuine Hardship? • Job Loss • Serious Illness • Divorce • Involuntary Relocation that Depletes Homeowner’s Assets • Cannot Pay New Loan Payment – ARM Adjustment The RayChel Realty Group
  16. 16. What is Not a Hardship? Personal Preferences • Home Worth Less than Borrower Paid • Borrower Does Not Want Home • Borrower Does Not Want to Make Payments • Borrower Wants to Buy Another Home The RayChel Realty Group
  17. 17. Who May Not Qualify? Show Stoppers… • Homes with Substantial Equity • Homeowners with Significant Assets or Income • Homeowners with 2nd Homes or Rentals • Homeowners in Bankruptcy • Home Loan is Government Insured • Investors The RayChel Realty Group
  18. 18. General Rule Borrower Must Be Delinquent Before Lender Will Approve – or even consider – a Short Sale. The RayChel Realty Group
  19. 19. It’s a Numbers Game • Lender Makes a Financial Decision Strictly the “Bottom Line” More now, less later • Avoids Expense of Foreclosure Uncollected interest and penalties Attorney’s Fees Trustee’s Fees • Eliminates Non-Performing Loan Non-Performing loans are Liabilities • REO Inventory Unaffected Avoid Carrying Costs Opportunity Loss The RayChel Realty Group
  20. 20. Who are the Initial Players? Homeowner Home- Servicer owner’s REALTOR® Initial participants Buyer’s Buyer REALTOR ® The RayChel Realty Group
  21. 21. Who are the Players? Homeowner Junior Home- Lien owner’s Holders REALTOR® Private Mortgage Short sale Buyer’s Insurance participants REALTOR® Company Investor Buyer Servicer The RayChel Realty Group
  22. 22. All Parties Must Be Aligned • Seller/Borrower - Debtor • Lender – Made the Loan • Servicer – Collection Service • Investor – Owns Loan • Mortgage Insurer – Insures lender/investor loss • Junior Lien Holders – Other creditors • Real Estate Agents – Authorized 3rd party The RayChel Realty Group
  23. 23. Seller’s Final Position In the end, the Seller… • Avoids Foreclosure • Eliminates a Financial Burden • Salvage Credit Rating • Receives No Money • Loses Property Voluntarily • Vacates Property • Moves on with Life The RayChel Realty Group
  24. 24. Uncertain Outcome • Most Short Sales are Not Attainable Seller Cannot Demonstrate Hardship Price NOT Acceptable to Lender or Investor The RayChel Realty Group
  25. 25. Challenges of Short Sales • High Failure Rate • Lengthy Processing Time • Paperwork Intensive • Lenders Unfamiliar with Local Market • Lenders Overwhelmed • Seller’s In-Difference • Real Estate Agents Ill Informed • Real Estate Agents Not Proactive • Recovery Demand Unacceptable • Foreclosure Date Too Near The RayChel Realty Group
  26. 26. Potential Tax Consequences Federal Government passed law in 2007 Directing IRS NOT to include the mortgage debt forgiven by the lender as income, however… Applies only to purchase loans Does not apply to debt on cash-out refi’s Does not apply to 2nd homes Dollar Limitation $1 Million for married couples filing separately $2 Million for married couples filing jointly Seek Professional Tax Advice! The RayChel Realty Group
  27. 27. Pitfalls of Secondary Debt • Typically, Junior Lien Holders do not forgive the unpaid debt. Accept partial payment Then, sell the unpaid debt to Collection Agency Junior Loans are normally recourse debt Collection Agency pursues the seller • Negotiate a Release for Full Satisfaction of Debt The RayChel Realty Group
  28. 28. Beware of Schemers and Predators • Money Up Front “Problem Solvers” • Illegal Kick Backs Seller cannot receive money “under-the-table” • HUD-1 Must Account for all Funds • Lender Fraud is a Felony The RayChel Realty Group
  29. 29. Nothing Short About Short Sale The Only Thing Short About a Short Sale is the Lender is Short Changed! Short Sales are… Complicated Legally Complex Technically Difficult And, They Are Doable. The RayChel Realty Group
  30. 30. Special Word About Investor Sales Home Equity Sales Contract Law Special Contract required when… • Buyer is an Investor • Property Being Sold is Residential 1 - 4 Units • Owner Currently Occupies the Property • Notice of Default (NOD) has Been Recorded The RayChel Realty Group
  31. 31. Seller Has Legal Rights Upon Recording Notice of Default • 5 Day Cancellation Period Seller may cancel • 2 Year Contract Rescission Period Rescission for any unconscionable acts • No Waiver by Seller Any waiver is void • No Limitation on Damages Limiting investors liability is void The RayChel Realty Group
  32. 32. Why Short Sales Derail… • Seller cannot document hardship • Seller will not agree to approval conditions • Seller will not sign promissory note • Seller will not make property accessible for showing • Lender and/or Junior Lien Holders will not approve The RayChel Realty Group
  33. 33. Why Short Sales Derail • Investor will not approve • Mortgage Insurer will not approve • Buyer unable to get financing • Property has clouds on title • List price is too high or too low The RayChel Realty Group
  34. 34. Keys to Short Sale Success • Be Engaged • Respect the Process • Be Mindful of the Details • Send Complete Short Sale Package • Respond in Timely Manner • Set Realistic Expectations • Retain Professional Representation The RayChel Realty Group
  35. 35. Technology Tools You Can Use at Home The RayChel Realty Group
  36. 36. The RayChel Realty Group
  37. 37. Home Value – Find out what homes in your neighborhood have sold for The RayChel Realty Group
  38. 38. Ask a Real Esate Question The RayChel Realty Group
  39. 39. Help Us Spread the Word “Classes” Tab for a Class Schedule The RayChel Realty Group
  40. 40. Free Conversation Raymond Stoklosa Chela Stoklosa Rebecca Williamson Managing Broker and Owner Agent and Owner Agent Phone: (650) 655-2500 The RayChel Realty Group