Help your client avoid foreclosure

By
Real Estate Broker Owner with Century21 At the Shore
I recently attended a seminar sponsored by the "REBAC", Foreclosure Opportunities for Buyer-Clients. As a strong listing agent I turned everything that I heard in the seminar toward listing home in pre-foreclosure status and helping my seller clients avoid foreclosure. I did learn that even if you are a buyer Representative, a buyer agent, purchase an unlisted property, if you educate, advise or even help the seller it is considered "implied agency". As we learned this all of my group, the other 6 agents at my table, all said, "why not list the house". The first step would be to get the seller to agree to give you permission to contact their lender. You should have the seller sign a letter addressed to the lender stating that they have permission to release information on their loan to you. If the seller has only lived in the home a short time,  if the seller bought in a hig market, if the seller has an ARM, if the seller has a negative amortization loan, if the seller did not invest a down payment at time of purchase then you might have a situation where the seller owes more than the home is worth in todays market.Next step would be to do comps and determine the value of the home. Once you know how much the seller needs to clear title and what the value of the home is, the work is just beginning. you want to draft a Contract of Sale and make sure that it is subject to lenders approval of a short sale. Armed with the amount the seller needs to satisfy the debt and the current value of the home you make contact with the LMS (Loss Mitigation Specialist) for the bank. You need to request a "short sale" package. A short sale occurs when the lender decides that it is in their best interests to sell the property for less than the mortgage balance owed on it. A distinctive feature of short sales is that the agent is typically compensated by means of a fee negotiated with the lender, not by the consumers. The short sale package will have the instructions from the lender and a list of documents the lender will want to see in order to make a decision on the short sale. The lender will probably have an appraisal done on the property. It is very important that the seller does not abandon the property during this process. It is best to get other professionals involved in this situation. Recommend that the seller hires an attorney, one that is knowledgeable in foreclosures and in dealing with banks on short sales. You also might want to get a Title Company involved in this transaction and have the buyers attorney run title, lien and judgement searches. It is very important to determine if any other encumbrances are against the property. Council the buyer that the process that takes place in order for the bank to decide on the short sale could take time. Be prepared for the lender to want additional paperwork signed by all parties. The lender might even want their own Contract of Sale or Addendums signed by the parties. Hopefully the seller and the buyer have retained a lawyer and any additional paperwork can be reviewed by the lawyers. Once everything is supplied to the lender you just need to sit back and wait on the lender. keep involved and get regular updates from te lender or the lawyers if they are now communicating with the lender. Many of these short sales do end up with a closing of title. Some of them don't work out. Keep your buyers and sellers informed. Give them regular updates and make sure that everyone is still on track. Good luck.
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Additional Information

Century 21 At The Shore Realty is a tradational Brokerage offering Residential, Commercial, Investment & Foreclosure Opportunities, New Construction, Fine Homes & Estates and Adult Lifestyle Homes at the Jersey Shore. If you need to BUY, SELL or RENT call the 'SHORE TEAM"