Should I sell or buy myself (FSBO)
With payment defaults and resulting foreclosures, the mainstream news will have you believe the mortgage industry is somewhere between a state of major reform and the tipping point of colossal failure. Realistically it’s somewhere in between, but that’s not a very newsworthy view.
Markets are cyclical in nature. The stock market demonstrates this with such redundancy; the terms Bear and Bull are associated with buyer or seller purchasing conditions rather than animals, on Wall Street.
The mortgage industry experienced unprecedented growth from 2000-2005 as interest rates dipped to historical lows and the number of new program types swelled, which reduced qualification standards, which afforded home ownership to a huge new pool of people. More money in the market caused more demand which caused higher home values or prices…nonetheless everyone could run with Bulls. Today, many of those newly entitled borrowers are fighting the Bears.
Many of the people clamoring that this down cycle is solely due to the predatory nature of the mortgage industry also probably keep news of Paris Hilton's latest dealings in their feed readers. It makes great front page news but the predatory aspect of the mortgage industry has been around far longer than the past five years. Listen to me, The XBroker, playing down the predatory nature of the mortgage beasts...whoda thunk it.
In any case, the unfortunate action of foreclosure is being levied against a record number of consumers for a myriad of reasons, mainly the sharp increase in monthly payment requirements due to short term ARM’s and the overall relative ignorance of consumers when it comes to personal financial planning...and you can sprinkle on some grievous mortgage professional conduct.
Regardless of why one is facing foreclosure, its water under the bridge at that point...you can’t change the past but you can address the future. So, what can one do that is facing foreclosure?
Stay in close contact with the lender
Silence is deadly when you go delinquent on your mortgage payments. Open and honest communication will get you a lot further towards getting a lender to work with you than ignoring the situation. Lenders are not in the business of repossessing property, it’s an expensive process that consumes their resources and tarnishes their portfolio. Internal employees, attorneys, real estate professionals, and contractors are all cost outlays a lender would rather not have to spend.
If you’re going to be late on your mortgage payment, some pro-active measures will go a long way. Prepare by having an articulate plan ready to demonstrate your financial shortcomings are short term.
Don’t Dwell in Denial
If you’re in over your head with no relief in sight, market the home for sale. This is no time to be trying to fetch top dollar, price the home to move, preferably ~15% below market value. If you don’t have this type of equity in the house, there are plenty of investors out there who’ve taken Carlton Sheets or some other overpriced real estate riches seminar and understand how to consummate a ‘short-sale’. You’ll probably receive two tons of mail from individual investors looking to engage you under these exact terms. Many investors will offer you some sort of cash benefit to work with them, which is better than a fat ugly ‘I8’ on your credit bureau and little else to show. Swallow your pride, recognize the circumstances you’re in, and make the best of a bad situation.
Certain investors may even agree to lease the home back to you under a lease option to purchase strategy. Ask if they’ll buy the home from the bank under short sale terms, and then lease the home back to you with an option to purchase it back from them within a specific time frame, usually ~2 years. Be prepared to articulately demonstrate that you’re not a deadbeat, just in a short term bind. Words aren’t enough, go the extra mile and document how you got into this situation and how you plan to get out. Unfortunately the buy back price and other terms won’t be friendly, but beggars can’t be choosers…at least you don’t have to vacate the premises.
Know Your Property
There are plenty of on line tools and resources out there that yield similar if not identical information that a real estate professional would use to research and market your house. Zillow, e-Appraisal, Trulia etc contain enough data to create a knowledgeable compelling marketing piece for a potential buyer. The traditional Realtor 6% commission (equity) whack likely doesn’t fit into the budget if you’re staring at a foreclosure, so prepare to do some homework and late night candle burning. A little extra work here will go a long way towards sounding like a person who is in a temporary pinch rather than desperate (sharks smell blood). Whatever you do, prepare, prepare, prepare. For more information check out: http://blog.xbroker.org
For any comments or concerns send an email to: wikirealestate@gmail.com