Are you upside down on your house?
By Steve Levine
Happy fall, everyone. Looks like the marketplace is starting to stabilize, and toward the end of 2007 looks like it will pan out to be a more balanced marketplace than we've seen in a while. Just last week we had a several multiple off er situations on two of my new listings. As much as I hate those, I have to admit it was nice to see the buyers out there again.

I think the Buyers have come to the conclusion that the falling interest rates and the more affordable prices are finally temping enough to make a move. This seems to be signaling that we may have reached the bottom and are poised for action. Of course some will find themselves staying on the sidelines waiting for "who knows what" and likely they will start to realize that they may have missed the best chance in a decade to get into the real estate market.

I'm starting to work on a lot more on Short Sale opportunities. These are created when a Seller is "upside down" on their home, meaning that they owe more to the bank that it is worth in today's market. A "short sale" is done by getting the bank to

accept that lesser amount as a full discharge of the Seller's obligations. Sounds impossible, doesn't it? It's really not that hard sometimes.

The key premise is that ultimately, the bank doesn't want to own your home, they

want their money, and realistically, the main reason they're in this situation to begin with is at least partly their own fault. Over the last few years, the banks have just made things far more

easy then they

should. Full page ads, radio spots, TV commercials ... all tell the buyer how they can buy with "no money down, no income verification, no asset verification, bad credit, etc." In fact, many don't do just 0% down ... but are allowing buyers to purchase with a mortgage of up to 105% of the purchase price. Oh ... and did I mention they could do it on an interest only, negative amortization loan that could leave them owing thousands more than they borrowed?

Let's start with WHY a short sale is a useful tool. By far and away one of the worst things to deal with is a Foreclosure. That's far worse even than a Bankruptcy, in terms of its far-reaching impact on your life. If you owe $425,000 and the bank forecloses, they can sell it at public auction for much less. If they sell for $375,000 at auction, you not only have no house, but the bank can still go after you for the $50,000 shortfall as a deficiency judgment, and make your life miserable for years, even when you're long since out of the house. In the case of a short sale, we may find a buyer for $400K and get the bank to accept the $400K as a full discharge, without reflecting that as a negative on your credit report.

The process of a short sale using begins with a Realtor like myself who is very familiar with short sales. Often, this process will start with a mar- ket analysis or appraisal that establishes that the estimated sales price will not meet the amount of the payoff . Once that is in place, the rest is a matter of "teamwork." Since we may be seeing a bunch of these down the road, I had already put together a team of individuals who can work with homeowners to shepherd them through the process. Attorneys, lenders, contractors, and myself can all streamline the process and try to get the lender to understand that it would be better to accept a little less now, rather than wind up getting much less after a foreclosure.

If you have already received a Notice of Default (NOD) the

" loan may be in the hands of the collection department. Usually, those folks have no interest in anything anyway. They are merely outsourced people to call and try and intimidate you. What we want to do is get beyond them to the folks in the loan workout department (LWD). Unlike collections, the LWD has an interest in mitigating any loss to the lender, and is usually only too happy to work with you, as long as they know they're not being taken advantage of.

Providing the LWD with an off er from a ready, willing and able Buyer, in conjunction with a realistic appraisal of value, often yields magical results. Recently, for example, we had a lender accept 90% of the amount owed as a full discharge, and enabled the Seller to get out from under this mountain of debt with a clear conscience and a new lease on life.

Of course some lenders are still being incredibly stubborn and unresponsive, and those are the lenders who wind up owning properties again, which is such an incredible waste of time and energy.

If you think you may qualify for a short sale, drop me an e-mail at steve@stevelevine. com or call me at 508 735- 4663, and we can take a moment to chat about options.

Steve Levine is President of Steve Levine Inc., and an agent at REMAX First Choice specializing in Corporate Relocation. He's currently ranked as the #1 REMAX Agent in New England, and can be reached online at www.stevelevine.com.

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