A Brief Explanation of Foreclosures

These days, you can’t read the headlines without noticing that there are many foreclosed homes around the country.   Since it is so prevalent, we thought it would be best to offer a brief explanation of how the foreclosure process works.  First of all, a little clarification.  ”In foreclosure” is the process that leads up to being foreclosed.   In addition, we are offering an outline of the process, and the actual timeline will vary from bank to bank.  

As you know, there are monthly mortgage payments when you buy a house.  If you miss a month, you will get a notice reminding you that you missed a payment.  You will get a similar notice if you miss the next month as well.  If you miss another month, you’ll receive a stern notice.  The fourth or fifth month missed will net you a packet of legal documents that explain the foreclosure process to you.  You will also receive a notice of a Sheriff’s sale  that will take place two to three months out.  The bank that is owns your mortgage will most likely buy your house in the Sheriff’s sale.

Let’s break away from the timeline for a minute so I can explain something else.  Some people who’ve missed a month or two believe that if they resume their payments, they are no longer in the foreclosure process.  This is incorrect.  If you miss one payment, you are in the process.  The only way to get out is to be paid up in full.  Otherwise, you are still in the process of foreclosure.  Ok.  Back to the timeline.

After the Sheriff’s sale, you have a Right to Redemption period that lasts six months.  In the Right to Redemption period, if you repay your mortgage in full, then you get your house back.  Chances are, if you’ve missed a payment or two, you won’t be able to pay off your mortgage in full.  So, when the Right to Redemption period is over, and the mortgage hasn’t been repaid in full, the home is formally foreclosed.  

It helps to have an agent guide you in this process.  If you would like more information, please contact me at steven@stevenhong.com

A Brief Look at Short Sales

These days, in real estate, the term short sales is frequently heard.   What is a short sale, you may wonder.  Well, let me explain it to you by giving you an example.  Let’s say you bought a house two years ago with a mortgage of $200,000.  Let’s say you’ve paid of $5,000 of the mortgage.  I’m just using random numbers, so don’t worry about the math.  Fast-forward to now.  Your boss is offering you a job in California.  It’s more of an order, really, and you take it.  You have to sell your home, and it’s now worth $175,000 due to the recession.  So, after all the fees, you recoup $165,000.  You are still $30,000 short on your mortgage, and you don’t have the money or assets to pay down the mortgage.   This is a short sale.  You and your agent will have to enter into short sale negotiations with your bank.  

So.   How do you know if you are a candidate for a short sale?  First of all, you have to be experiencing a hardship.  The example I hypothesized above (relocation) is just one of 17 acceptable hardships.  Here’s the full list:

1. Loss of job
2. Business failure
3. Damage to property
4. Death of a spouse
5. Death of a family member
6. Severe Illness
7. Inheritance
8. Divorce
9. Mandatory job relocation
10. Medical bills
11. Military service
12. Payment Increase or mortgage adjustment
13. Insurance or tax increase
14. Reduced income
15. Separation
16. Too much debt
17. Incarceration

In addition to having one or more of the above, you must be financially insolvent.   As I said,  you cannot have any liquid cash or assets that could be used to pay down the mortgage.  

This is a brief summary of a short sale.  If you are in a situation like this, it’d would be helpful for you to contact an agent in order to help you with the process.  If you have any questions about short sales, feel free to contact me at steven@stevenhong.com.

How to Enjoy the Fruits of Your Labor

You’re selling your house.  It’s a big process, and you aren’t sure where to start.  You need to price it correctly; you  need to get it in tip-top shape for all the showings; you need to fix up a few things.  Now, many people think of the last item last.  In fact, many people put off the last item until after they have the house sold (on contigency, perhaps).  There are several reasons why people put off making the necessary updates and fixes to their house, e.g., buying new appliances, sealing the windows.  First of all, it’s time-consuming to fix up the house.  If the house doesn’t sell, it may seem for naught.  Secondly, it takes money.  Again, if the house doesn’t sell, it might feel like money that wasn’t well spent.  Why put in the time, effort, and energy if the house isn’t going to sell anyway, the thinking goes.

Think of it this way instead.  If you are going to put in new appliances and spruce up the house, shouldn’t you have some time to enjoy your freshened-up house before you sell it?  In addition, repairing the ceiling or putting in a new stove will attract buyers more readily than you telling them that you will get it down AFTER an offer is made on the house.  It’s far better for a potential buyer to see for him/herself how great the house is rather than how great the house could be.  Who knows?  Once you get the house all gussied up, you may fall in love with it all over again and not move after all.  

In the end, it’s a win-win situation for you to fix up your house before you put it on the market or in the early days of the selling process.  The possibilities are endless.

The Benefits of a Professional Opinion

Selling a house is time-consuming and hard work, especially in today’s market.  If you are thinking about selling your house, you might feel a little overwhelmed by it all.  That’s why it is helpful to have a professional by your side–one who can guide you every step of the way.  In this blog entry, I am going to give you a brief overview of how a realtor will help you sell your house.  This is just an overview, so if you would like to discuss it in more detail, feel free to contact me.  

Pre-listing:  This is the first meeting between sellers and agent.  This will be an interactive interview in which both sides get to discuss what they want and need from the relationship.

• Discuss and explain what are agency relationships.  
• Obtain a signed Agency Relationships in Real Estate Transactions form.
• Find out what the seller’s experctations are, as well as his/her wants, desires, motivation for moving, price, marketing plan, etc.  
• Find out what the sellers are looking for in an agent.  What is most important to the sellers?
• Discuss compensation in a real estate transaction, including the listing company’s policy for paying co-op agents.  This includes a discussion of the Code of Ethics Standard of Practice 1-12, Variable Commissions, etc. 
• What is the sellers’ position?  Are they first-time buyers?  Are they relocating, moving-up, or retiring?

Marketing Plan Presented

• Present a Comparative Market Analysis (CMA)
• Discuss the venues in which the sellers want to market.  Discuss the pros and cons of said marketing.  For the real estate agent, present a comprehensive marketing plan–including on-line marketing.

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