Kevin & Spiro
Defining excellence in real estate
(415) 725-1911

Since the Marin County housing market starting shifting almost 2 years ago, we have helped many homeowners avoid foreclosure. Kevin was honored to have been featured in a San Francisco Chronicle article about saving a client from foreclosure: "This Agent Goes to Extraordinary Lengths for Client"

During this time, we've witnessed the immense stress the threat of foreclosure imposes and we've made a commitment to share our expertise, for free, with struggling homeowners. Some clients are able to stay in their homes with a loan modification, while others benefit from executing a short sale (a lender-approved sale at less than the loan balance).

Together, we can make every effort to avoid foreclosure and its devastating impact. The next move is yours! Contact us today. Kevin McGinnis (415) 725-1911 or Spiro Stratigos (415) 225-6412

A short sale can be an excellent solution for homeowners who must sell and owe more on their homes than they are worth. Unfortunately, a number of myths about short sales have developed, and it is important to understand the reality of this process should you find it meets your current needs.

Myth #1: The Bank Would Rather Foreclose than Bother with a Short Sale
This is one of the most common misconceptions. The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks, investors, and even the federal government have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. Overwhelmingly, banks receive more on their investment through a short sale than a foreclosure. The qualifications for a short sale include:

1. Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
2. Monthly Income Shortfall – “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
3. Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
   

Myth #2: You Must Be Behind on Your Mortgage to Negotiate a Short Sale
While this may have previously been the case, today some lenders are looking for verifiable hardship, monthly cash flow shortfall, or pending shortfall and insolvency.  

Myth #3: There is Not Enough Time to Negotiate a Short Sale Before My Foreclosure
This is a myth that probably hurts homeowners the most. Many do not realize that foreclosure is a process, and that there is time to make decisions that may result in better outcomes. The foreclosing party—in most cases a lender—can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate contract. For real estate professionals who understand foreclosures and short sales, there is time available until the foreclosure process is complete.

Myth #4: Listing My Home as a Short Sale is an Embarrassment
It is understandable to have reservations about letting the world know that you owe more on your home than it is worth. However, according to recent estimates, more than one out of eight homeowners in the U.S. is in the same situation. You are to be congratulated for admitting you need help, taking action, and finding a professional who can work with you toward a solution. With recent estimates showing 40-60% of U.S. sales will be short sales or foreclosures, you are not alone.

Myth #5: Short Sales are Impossible and Never Get Approved
This is a complete falsehood. Are short sales more difficult to execute? Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not, especially now that many banks are following the federal government's new program that streamlines the short sale process. Hiring a Realtor experienced in short sales can be critical to the end result.

Myth #6: Banks are Waiting on Another Bailout and Not Accepting Short Sales
You may have heard this, but the reality is that banks (and the U.S. government) are trying to do anything they can, within reason, to avoid foreclosing on properties. It is preposterous to believe they would deny a short sale in hopes that some future legislation would pass and pay them for losses. Today, more banks are aggressively pursuing short sales and working with agents who understand how to process them. Freddie Mac recently hosted a national training Webinar for real estate agents where they expressly stated the organizational goal of “eliminating distressed assets through modification or short sale.”

Myth #7: Buyers are Not Interested in Short Sale Properties
This is a myth that potential sellers hear all the time. Thankfully, this is just not true. In fact, many agents are getting calls from buyers who say they only want to look at foreclosure and short sales. For buyers, short sales and foreclosures have become synonymous with “good deals.” More specifically, international buyers are targeting these properties. Listing with an experienced agent who is educated in the short sale process will provide you with a great chance of quickly seeing an offer on your property.

The following are some of the most common mistakes agents and homeowners make when handling a short sale. To avoid these pitfalls, be sure to hire an agent with experience successfully closing short sales.

Pitfall #1: Your Property is Priced Incorrectly
This is the most common mistake made with all properties, and the most common reason a property doesn’t sell.
Solution: Price it right! I will go through a detailed listing price strategy with you, allowing you to see exactly where your property should be priced based on its current condition, sales in your area, and most importantly, how much time you have left to sell. Aggressive pricing is best in short sale situations.

Pitfall #2:  Your Short Sale Proposal is Incomplete
This is one of the most frequently seen causes for the rejection of short sales proposals. Most agents do not understand the short sale process and what your lender will be looking for.
Solution: Understand All Aspects of the Process
I understand the short sale process and am able to communicate effectively with both you and lenders to produce a complete and cohesive proposal.

Pitfall #3:  There has been Inadequate Follow-up and Communication
As your property goes through each stage of the short sale process, an agent can jeopardize the transaction by not properly communicating with everyone involved. As the homeowner, you may not know that your file has been delayed, and that you again may run out of time to close and avoid foreclosure.
Solution: Select an Agent With Experience
I have dealt successfully with many different lenders and I stay on top of the process so there are no unnecessary delays on our end.

Pitfall #4: There Isn’t Enough Time
It is critical that your agent understands the foreclosure laws in your area. They should be able to show you an estimated timeline for the process, from start to closing. In addition, they should know how to communicate with your lender. Certain information can be provided to lenders to postpone your foreclosure for weeks or months in order to negotiate a sale.
Solution: Provide Your Agent with Accurate Information
I will ask you for information as to exactly how many payments you have missed and any correspondence you have received from your lender. This allows me to understand your situation and work to improve it.

Pitfall #5: Your Deal is Not Submitted Properly
If you do not follow the directions you receive for submission, then you are expecting an over-worked, under-staffed department to go out of their way to handle your file. There is very little likelihood of this situation working out in your favor.
Solution: Follow Instructions Closely
If you are instructed to fax your file, fax it and send a backup copy in the mail. If you are instructed to mail two copies, mail two copies. When you reach the point of having a contract, all your information, and a completed proposal, you do not want your deal to fall apart because no one sees it.

Pitfall #6:  The Buyer’s Offer is Too Low
Many agents will encourage you to submit any offer that comes in. The reality is that a short sale is not the same as a fire sale. In order to have a legitimate chance of getting your deal approved, you must have an offer that is more attractive to the lender than a foreclosure.
Solution: Proper Negotiation
I will work with you to properly negotiate any offer that you receive to get ‘highest and best’ from each potential buyer. This ensures you are presenting the best possible solution to your lender.

Pitfall #7: The Buyer’s Contract is Not Strong Enough
Especially in our current economic climate, willingness to make an offer on a property does not mean that a buyer is truly qualified to purchase. The reality is that buyers need to be preapproved for financing, closing funds must be verified, and their ability to buy needs to be confirmed.
Solution: An Agent Familiar with Qualified Buyers
I am familiar with what must be verified in order to qualify a buyer to submit an offer on your property. Otherwise, these offers may have little chance of closing. Don’t risk this process with an uneducated agent who does not appreciate this aspect of short sales.

(Some of the above information is courtesy Certified Distressed Property Experts)