Are you Thinking of Selling?

If you are one of the thousands of San Diego homeowners who are thinking of selling, please read the following information that can help you prevent scams:

•  Tips for a Short Sale Seller: As a seller attempting a short sale you want to be at the top of your game. To succeed, you don't have to only find a buyer for your home, but convince your mortgage lender to accept a loan payoff of less than what you owe. A short sale can be a long and arduous process, and yet, you have no guarantee of success. Read more || Hide
  • Hire a Realtor®: One of the best things you can do in a short sale is to hire a qualified REALTOR® to guide you through the process. A REALTOR® can represent you in finding a buyer and negotiating with your lender. Not all real estate agents are REALTOR®. The word REALTOR® is a trademark designation to destinguish that a real estate agent has, among other things, voluntarily pledged to abide by the strict code of professional ethics of the NATIONAL ASSOCIATION OF REALTORS® to protect and promote their clients interests.
    
    
  • Take a practive approach: When you're an "upside down" seller owing more on your mortgage than your property is worth, the prospect of selling short is likely to be upseting. You may have never expected that owing a piece of the American dream could turn into a nightmare. Despite the grim realities, selling in a short sale may get you of a bad situation. But it may take a commitment of time and effort on your part. Taking a proactive approach to your short sale may help you get out of that nightmare as quickly and painlessly as you can.
    
    
  • Knowledge is your friend: A short sale is a new experience for most homeowners, but knowledge is a key to success. You should know the pros and cons of a short sale, including the credit, tax, liability, and other potential consequences. You should also understand the overall short sale process--what you need to do, how long the process may take, and what common pitfalls may be. Your REALTOR® may be a great resource for information. Short Sale information is also available online, such as news articles, governmental websites, lender's websites, and short sale blogs. Be careful, however, as a lot of misinformation on short sales also floats in our midst.
    
    
  • Do your homework: As early in the game as possible, determine your lender's short sale requirements and whether you satisfy those requirements. If you have multiple loans or other interests secured by your property, you may have to get a short sale approval from all those creditors. Every lender is different. Not only that, but a lender's requirements may change over time. To approve a short sale, your lender may require that you demonstrate and document a true financial hardship, such as job loss, illness, disability, or death of co-owner. A decline in property value, absent more, may not be enough to demonstrate a financial hardship. Your lender may have other eligibility requirements, such as a current delinquency in mortgage payments, income verification, or property valuation. You should also determine how your lender intends to treat the shortfall (or the difference between your loan balance and the payoff amount). Your lender may forgive the debt, refuse to forgive the debt, require you to pay it, or say nothing at all about it.
    
    
  • Get a good price for your home: Getting a good sales price not only improves your chances of getting your short sale approved, but may also have other advantages. A better sales price reduces your shortfall which is the difference between your loan balance and payoff amount. Minimizing your shortfall may be advantegeous for possible repayment, tax, liability or other reasons. So do the best you can to improve your home's marketability. Even if you don't want to spend a lot of money for a short sale, you can still make yout home ready and available for showings by cleaning the house, getting rid off clutter, putting away personal items, making minor repairs, and doing yard work. Ask your REALTOR® for other suggestions to improve the marketability of your home.
    
    
  • Get a good buyer: Your ideal buyer may be someone who will wait patiently until your lender approves your short sale and, as soon as that occurs, the buyer will quickly perform to close the deal. These qualities are admittedly difficult to preescreen for, but do the best you can. Before entering into a sales contract with a prospective buyer, you may ask to verify his or her ability to buy, such as a loan prequalification or approval letterm credit report, and source of down payment and closing costs. You're better off asking upfront than to be surprised later in the process by your buyer's inability to obtain a loan or otherwise perform. You may also try to negotiate favorable contractual terms for your self such as meaningful good faith deposit from the buyer, a substantial down payment, and reasonable time frames for your buyer to inspect the property, obtain financing, and close the transaction.
    
    
  • Submit a complete short sale package: A short sale request typically involves a lot of paperwork. You may greatly expedite the approval process by providing your lender with a complete short sale package containing all the required information and documentation in an organized manner. Getting paperwork to the lender piecemeal is likely to cause delays.
    
    
  • Be patient but persistent: Once you've submitted your short sale request to your lender, waiting for a response may be one of the most frustrating aspects of a short sale. The short sale process can take a few weeks to a few months. Patience and persistence may help you get through that waiting process.
    
    
  • Avoid scam artists: Be wary of scam artists who prey on distressed homeowners hopping to dupe you out of your money and property. As one homeowner who fell victim to a foreclosure-rescue scam said, "When you're down and out, you'll believe anything." Watch out for the common signs of a scam, such as someone who asks for money upfront, asks for you to do something immediately without delay, or gives you an unqualified promise to stop foreclosure or other assurances. Also watch out for new types of scams that crop up everyday.

  Copyright© 2010 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R). The information contained herein is believed to be accurate as of May 24, 2010. it is intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an attorney. Permissions is granted to C.A.R members only to reproduce this material for non-commercial purposes (personal use and to distribute to clients). C.A.R. members must reprint the material in its entirety but may add their own names and contact information where specified.




•  Avoiding Foreclosures Scams: The best approach for avoiding foreclosure-related scams can be described in two words: Get tough. Being easy-going may work in social settings, but it’s all wrong when you’re facing foreclosure. Scam artists will intentionally seek you out. They hope to take advantage of you when you are distressed about possibly loosing your home or unable to deal with the complicated issues surrounding foreclosures. As one homeowner who fell victim to a foreclosure-rescue scam said, “When you’re down and out you’ll believe anything.” As difficult as it is to face foreclosure, it will be a lot worse if you get mixed up with unscrupulous people. So get tough by vigilantly watching out for scams. Here are some things to watch out for: Read more || Hide
  • Appearing to be legitimate: Outwardly, scam artists do not appear or act dastardly. On the contrary, scam artists may look nice and clean-out, and they may seem to be kind, helpful, and trustworthy men and women. Scam artists often engage in “affinity marketing” which means they attempt to lure people by belonging to, or pretending to belong to, the same racial, religious, social or other groups as victims.
    
    
  • Asking for money upfront before providing any service: One of the tell-tale signs is of a possible scam is when someone makes a promise or representation, but asks you for money upfront before delivering on the promise. If you pay a scam artist, you’re unlikely to see either your money or that scam artist again.
    
    
  • Making unqualified promises: To lure you out of your money and home, a scam artist will often say whatever it is you want to hear in a very convincing manner. If you're facing foreclosure, the scam artist is likely to assure you that he or she can stop it, fix it, or make the problem go away. If it sounds too good to be true, it usually is.
    
    
  • Lacking credentials: With certain exceptions, someone who charges you a fee to negotiate with your lender on your behalf must be licensed with the California Department of Real Estate. You can do a quick “License Status Check” at www.dre.ca.gov. You should also conduct further investigations before doing business with someone, such as checking public records, the Better Business Bureau, and the Internet, asking for and verifying references, and going to the business address to see if it actually exists.
    
    
  • Asking for you to do something immediately without delay: Scam artists will push you to make quick decisions, often by making up fake deadlines. They don't want you to have a chance to mull things over, go over the paperwork, or discuss their scheme with your family, friends, lender, real estate agent, or anyone else.
    
    
  • Asking for your signature: Whenever you sign a document, make sure you know what you are signing. Do not sign unless you have a chance to read an review the document. Do not sign if a document has lines left blank. Do not let someone con you by saying something in the document doesn't matter or doesn't mean what it says.
    
    
  • Asking you to do something improper or illegal: Scam artists may ask you to participate in something improper or illegal. Proposing something a little improper may make their promises of stopping foreclosure more believable to you. Once you agree, you will be less likely to blow the whistle on the scam artist if you too are involved in the fraudulent scheme. Do not compromise your position by getting involved in anything underhanded.
    
    
  • Brushing aside your questions: To help smoke out scam artists, ask a lot of questions, even if you know the answers. Be leery of doing business with someone who brushes aside your questions or gives the wrong answers. Indeed, an excellent way to protect yourself against scams is to learn as much as you can about foreclosure-related matters. Because scams artists prey upon ignorance, the more you know about foreclosures, the less likely you’ll be duped.
    

  Copyright© 2010 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R). The information contained herein is believed to be accurate as of May 24, 2010. it is intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an attorney. Permissions is granted to C.A.R members only to reproduce this material for non-commercial purposes (personal use and to distribute to clients). C.A.R. members must reprint the material in its entirety but may add their own names and contact information where specified.




• Foreclosure or Short Sale: Owner’s facing foreclosure often wonder whether a “short sale” is a better alternative. The answer depends on who’s asking. Foreclosures and short sales affect different people differently, depending on their financial situations, priorities, goals, adversity towards risks, property conditions, market conditions and many other considerations. To answer that question for yourself, here are some of the major factors when choosing between foreclosure and short sale.
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  Factors	Foreclosure	Short Sale
  Definiton	If you defaul on your loan, foreclosure is the legal process that your lender may use to sell your property to satisfy the debt you owe.	A short sale is a sales transaction where the seller's lender voluntarily agrees to receive a loan payoff for less than what's owed.
  Credit	Foreclosure and short sale have the same negative impact on your FICO score, according to www.myfico.com. The derogatory item stays on your credit for 7 years, but your FICO score may begin to improve after 2 years if you keep your other credit obligations in good standing. Aside from your FICO score, whether foreclosure or short sale is better for your overall credit-worthiness depends on the purpose for which you're using your credit, such as mortgage loan, auto loan, credit card, apartment rental, or job application (see right column).	A short sale may be reflected in your credit as an account that is "not paid as agreed"or settled for less, and has the same negative impact as a foreclosure on your FICO score according to www.myfico.com. However, a short sale may be better than a foreclosure for obtaining a new mortgage loan under current Fannie Mae guidelines. According to Fannie Mae, only 2 years must lapse after a short sale for a borrower to show reestablishment credit, whereas 5 years must lapse after a foreclosure (or 3 years after foreclosure if the borrower has a hardship or other extenuating circumstance).
  Tax	1. Cancellation of Debt:Foreclosure may give rise to taxable income to you for cancellation of debt, which is roughly calculated as your loan balance minus your property's fair market value at foreclosure. Certain exceptions apply, such as bankruptcy, insolvency, forgiveness of a non-recourse loan (IRS), and a loan for purchasing or substantially improving your qualified principal residence. 2. Capital Gains: Foreclosure may also give rise to taxable income for capital gains, which is roughly calculated as your loan balance (or the property's fair market value) minus your original purchase price and major improvement costs. However, you generally do not have to pay taxes on capital gains uo to $250,000 (or $500,000for married couples filling joint returns) ifyou owned and used the property as your principal residence for at least 2 of the last 5 years.	1. Cancellation of Debt: As with foreclosure, a short sale may give rise to taxable income for cancellation of debt, but the cancellation is different. For a short sale, the cancellation of debt income is roughly your loan balance minus the sales price. Certain exceptions apply, such as bankruptcy, insolvency, and a loan for purchasing or substantially improving your qualified principal residence. 2. Capital Gains: As with foreclosure, a short sale may give rise to taxable income for capital gains, but the calculation is different. For a short sale, the capital gains calculation is roughly your selling price minus your original purchase price and major improvement costs. As with a foreclosure, you generally do not have to pay taxes on capital gains up to $250,000 (or $500,000 for married couples filling joint returns) if you owned and used the property as your principal residence for at least 2 of the last 5 years.
  Personal Liability	If your loan balance is more than the foreclosure sales price, you generally will not be personally liable for the difference under certain circumstances, such as if the lender forecloses non-judicially through a trustee's sale or if you have a purchase-money, owner-occupied loan for one-to-four residential units. Certain exceptions apply, such as loan fraud, intentional property damage, certain wiped-out junior liens, and FHA and VA loans.	If your loan balance is more than the sales price of your property, whether you'll be personally liable for the difference may depend on what you negotiate with your mortgage lender. Your lender may agree to forgive you for the shortfall, require you to repay the shortfall, or say nothing about the shortfall. If the lender agrees to forgive you for the short fall, make sure to get that agreement in writing and signed by the lender.
  Possession	You generally have the right to stay in your home during the foreclosure process which takes a minimum of about 4 or 5 months. If you do not leave after a trustee's sale of the property, the new owner may negotiate a cash-for-keys agreement with you, commence the eviction proceedings by serving you a 3-day notice to vacate, or take some other action.	You generally have the right to stay in your home until you close escrow on a short sale transaction. You may, however, be able to negotiate with your buyer for a longer or shorter stay.
  Personal Concerns	The foreclosure process does not take a much effort on your part, but the wait can be agonizing and stressful for certain people. Although non-judicial foreclosure takes a minimum of about 4 or 5 months, you generally cannot dictate how quickly the lender proceeds with each step of the foreclosure process. You may also feel unconfortable with what you may perceive as the shame or stigma associated with foreclosure, such as when a notice of trustee's sale is posted on your property or the sheriff comes to escort you and your family out of the property.	Doing a short sale may involve a lot of time, effort, and paperwork on your part to list and market your home, to get your lender's approval, and to consumate the sale with your buyer. Yet, during this process, you generally do not know whether you will suceed in closing your short sale transaction. Despite the hard work and uncertainty, you may prefer a short sale because it allows you to take a proactive approach to finalizing this chapter of your life so you can move on the next one as quickly as possible.
  Assistance	To assist you, a foreclosure consultant as defined under Cal. Civ. Code § 2945.45 must be registered with the California Department of Justice and bonded for $100,000. Real Estate licensees are generally exempt from this requirement. To check whether someone is property registered as a foreclosure consultant, call the California Attorney General's Office.	One big advantage o a short sale is you can hire a professional real estate agent to help you through what can otherwise be a complicated and dificult process. You may check whether someone is a real estate licensee at http://www2.dre.ca.gov/PublicASP/pplinfo.asp

  Copyright© 2010 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R). The information contained herein is believed to be accurate as of May 24, 2010. it is intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an attorney. Permissions is granted to C.A.R members only to reproduce this material for non-commercial purposes (personal use and to distribute to clients). C.A.R. members must reprint the material in its entirety but may add their own names and contact information where specified.