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Brian Liberto

Newport Beach Updated Real Estate Listing. Short Sales Newport Beach - Foreclosure Information Newport Beach. Newport Beach Homes for Sale.

Short Sales vs. REO Real Estate Libertoproperties - Presented By Brian Liberto

When your homebuyers look for their next home, they may find a short sale or REO that meets their needs. From the beginning of 2007 to the end of 2008, the number of short sales doubled and, during 2009, they doubled again. Many homebuyers are inclined to shy away from a short sale or REO because they don't know what is involved in these transactions. They can sometimes purchase a short-sale property or REO at an attractive price, as you know, so let's look at how to explain to them what a short sale is, what an REO is, and how best to approach them.
The Short Sale
Explain first that the proceeds from a short sale do not, and cannot, cover all the remaining loan balances and other financial obligations secured by the home because the home's market value is less than the remaining loan balances.
For the seller, a short sale is often a more attractive alternative than a foreclosure, since a successful short sale may have less of an impact on the seller's credit report than a foreclosure. Under current Fannie Mae regulations, a short sale may enable them to qualify to buy a house again sooner, in as little as 2 years, than if they had gone through a foreclosure, which would be 7 years before they would be eligible again.
The home seller would sell their home for less than the loan amount in a short sale and they would not receive any money at the time of the sale. Selling a home in a short sale requires the approval of their lender. In addition, if there are any other loans against the seller's home, like a home equity loan or line of credit, all lenders must agree to the sale.
Your homebuyers should understand, though, that there are challenges in buying a short sale property. The process can require a lot of time and careful negotiation because there may be many parties who may have a claim on the property.1 Your homebuyers should be committed to working with you and their Mortgage Loan Officer to be sure they have the best professional assistance available.2
The Uncertain Asking Price
One of the related problems in a short sale: The asking price is, in fact, a guess at what the process of negotiations among the lenders and lien holders will require, and that cannot be known with precision until the negotiations have been completed. This means an offer tendered at the first asking price may be turned down, or used as the basis to begin negotiations towards a final price and this is difficult for many homebuyers to understand.
Bank of America is developing a proactive approach in which the lenders, the lienholders and the mortgage insurance provider (if any) work together to arrive at a reasonable asking price for the property before a homebuyer actually makes an offer. It typically is very close to the current market value of the home, and will help guide the potential homebuyer in deciding what to offer. Thus, it helps to clarify and streamline the purchase process. In any case, if a homebuyer remembers that a short sale requires a price that is as close as possible to the property's current market value, that value can generally be used as a guide when deciding what to offer.
The federal government has proposed a similar approach as part of the recently announced Home Affordable Foreclosure Alternatives Program (HAFA). [See]
The Purchase of an REO
If a property fails to sell at the foreclosure sale on the courthouse steps, the lender then owns the property ("REO" means "real estate owned") and its marketing is usually turned over to a real estate professional.
In an REO transaction, the asking price is clear, and your homebuyer must simply take the steps and supply the information required by the lender. In this case, the bank may or may not have discounted the price in order to clear the property from its books. There is a chance, therefore, that your homebuyer might get a lower price with an REO, but that price may be offset by the needed repair and rehabilitation of the property if it has stood empty for some time.


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About Brian Liberto

Brian Liberto represents the coast’s finest properties with an exceptional skill for innovative technology..He has a clear understanding of the mindset of luxury home buyers and sellers and undoubtedly meets their expectations. For sellers, today’s technology allows us to reach millions of qualified prospective buyers and sellers world-wide in real time. Nearly 87% of home buyers initiate their home search on the internet. We utlize technology via Facebook, Twitter, Zillow, Realtytrac, and Utube to sell your home today. We turn Browers into Buyers ! Our commitment: provide our clientele with the best in real estate representation & marketing services. Whether buying or selling, we strive to make the entire experience rewarding by exceeding your expectations & providing an extraordinary result