Knoxville Homeowners Alternatives to Foreclosure Category
7 Advantages Short Sale VS Just Walking Away From Your Knoxville Home
A home owner thinking of a short sale recently asked us why they should short sale versus just walking away and letting their lender foreclose on the home. We gave them the normal answer: “It’s much better for your credit.”
That was the first thing that popped into our head. But, I knew there are more benefits to a home owner than simply better credit. So I put together the entire list and here they are.
1. The upside down debt is erased in most cases. If you are selling because of a financial hardship, then the upside down debt will be automatically erased in most cases. Is your loan is owned or insured by the following agencies: Fannie Mae, Freddie Mac, FHA, and or VA? If you are short selling because of a financial hardship, their policies state that your debt will be erased.
2. You are eligible to buy another home much sooner compared to a foreclosure. The most common loan program, Fannie Mae, stipulates that you can buy another home under their program in 2 years. FHA, a popular low down payment loan program stipulates that you can qualify for an FHA loan within 3 years.
3. No Cost To You. That is right. A short sale costs you nothing. All of the expenses are paid for by your lender. That includes the title insurance, any county taxes or fees on the sale, attorney fees, and the Real Estate Agent. If the lender foreclosed on the house and then tried to sell it, they would have to pay all the costs. So why not pay the costs with a short sale?
4. Your credit suffers less damage. Most people think that a short sale will be the kiss of death to their credit. That is the one big advantage of a short sale over a foreclosure.
Upon completion of the short sale, your credit score will drop between 50 and 100 points. However it will rebound fairly quickly. The other benefit is that you will have less debt. (A lot of debt hurts your credit score.) You will have a lower debt to income ratio, which will boost your credit.
In a couple of years your credit will be back to normal and you can buy another home. In addition, anything and everything bad on your credit can be fixed thru the dispute process.
5. You can often rent a comparable house for less than your former mortgage payment. In one example, a homeowner in foreclosure found a larger home. It even had a fenced backyard for their kid and a garage. Their prior mortgage payment was $1,500. They rented the nicer, bigger house for $850 a month.
6. You avoid the humiliation of a foreclosure.
7. You don’t have to pay rent during the short sale process. A short sale can take up to 6 or 9 months. Not all of them do. But, some do. If you aren’t concerned about your credit, then you can stop making your mortgage payments during the short sale. You can use the savings for the deposit on a rental.
Thinking about a short sale? I can help you short sale your property. Send me an e-mail at [email protected]. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 865-696-9002
Deficiency Judgment Can You Avoid Them On Investment Property Short Sales?
We were contacted by a Florida resident who had 3 rental cabins. They were upside down and the rental income had dropped off and they had run out of money to continue to pay the mortgages.
They were concerned about a deficiency judgment once we sold the properties on a short sale
I do know that you can usually short sale in Tennessee and get the lender to forgive you of the debt. However, there are other things you can do to avoid the deficiency problem.
First, work hard to convince your lender to waive the deficiency. Investment Property Short Sales are tougher because the lenders are more reluctant to waive the deficiency.
But, many lenders will waive it. Others will agree to waive it when you have presented financial statements that show you cannot afford the deficiency.
So I think that over half of the deficiencies will be waived by the lenders. Here is what you can do for the remaining ones. First, depend on incompetence on the lender’s part.
Most lenders don’t have enough staff to handle their delinquent debt. Even if they do have the right to a deficiency in most cases the only thing they will do is call you.
When they call, you simply tell them that you don’t have the money in your budget that month to pay them anything. Don’t say anything more than that and don’t lie to them.
(A lie can get you in legal trouble later on. You are better saying very little and hanging up the phone than lying.)
Most lenders won’t do anymore than “sic” the debt collectors on you. They hardly ever go to court or attempt to garnish your wages.
In my opinion, this will enable you to short sale 90% to 95% of all investment properties and avoid paying a deficiency. Here is what you should do if you fall into the unlucky 5-10%.
Hire a good lawyer. They can usually find a hole in their court case and get you out of paying the debt. These lenders are so disorganized that the often do not have all their paperwork in order.
Or, they can find a situation where the lender broke Collection Law. In that case, the lender is usually more than happy to settle with you versus facing a lawsuit.
Thinking about a short sale? Send me an e-mail at [email protected] I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 865-696-9002
Short Sale Or Rent Your Home??
Just had a meeting with seller who bought their home in 2008 for $525,000 and did a 100% loan at the time. They have been trying to sell it for over a year now because of a job transfer.
The seller just wanted to payoff what he owed on the property wasn’t worried about making any money. The problem has been the home is only worth about $450,000 in today’s market
He didn’t think he would qualify for a short sale because he had a job. But he was living out of town while his family still lived here in Knoxville. But it was getting difficult maintaining two different house holds.
So we setup a time to meet and explore all of his options. We covered all of the aspects of a short sale with them. Both the positives and negatives of selling his home short. In this situation I told him it would be highly unlikely his lender would just let him walk away and forgive the debt. That they would most likely need to sign a promissory note for all or part of the short fall. But we have had success with promissory notes being at 0% interest and payments that would be affordable for him.
The other option we looked at was renting the property for a few years and waiting to see how soon the market would take to come back and get closer for him to a break even sale. Looking at the rental income he could get on the home it would be negative cash flow of about $300 per month. There was also the concern of the tenant trashing the home and not wanting to be a long distance landlord.
But what I explained to him we could hire a professional management company for him to screen the tenants. They would be responsible to making repairs that come up, collecting rent etc. I told him yes it would cost him some money each month but I felt it was a better solution for him than selling it on a short sale.
He agreed with me so we contacted a management company for him they found a very good tenant who wanted to rent it for two years. They where able to get more rental income than I thought so his 
negative income was only $175 per month.
This is the difference a trained professional with the CDPE designation can help sellers determine when they are facing tough times selling their home. Untrained Realtors don’t know what your options are in order to avoid foreclosure a CDPE can help you.
My team and I are the most qualified team of professional in the Knoxville market. We can help you determine your best option in order to avoid foreclosure at no cost to you. Call me at 865-696-9002 or email [email protected] and let’s talk about your situation.
How To Avoid Any Surprises When Selling A Knoxville Short Sale
Many agents and buyers are scared of short sales in Knoxville. Here is something that I do to make the short sale process easier for the home seller.
Before I start negotiations with your lender, I will order a complete title search. Here is why I do that. I want to know all the costs upfront, before I give the bank a number.
If I don’t do this, then the short sale lender will approve the short sale at a certain price. We can get to the closing table and discover there are unforeseen costs.
Then we have to go back and re-negotiate with the short sale lender. This can be tough because they already have a higher number in mind.
Sometimes you have to start the short sale negotiations all over again. That can delay the short sale by 2-3 months, if not longer.
This trips up many agents and causes them to bad mouth short sales. Extra costs can show up in the form of higher than expected Homeowner’s Association Dues, Property Taxes, and other costs.
The title company will do a complete title search. They will get an estimated payoff from the Homeowner’s Association, and estimate the payoff for the taxes.
Since I take this pre-caution I have found short sales to be easy and fun. Before you hire a short sale agent, ask them about the short sale process. If they don’t mention this step, then find another short sale agent.
Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at [email protected]. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 865-696-9002
Short Sales..Why Won't My Realtor Show Them To Me?
I was contacted the other day by a frustrated buyer who was interested in buying a short sale. She had an interesting question….
Here is Tamra’s question. “I am looking to buy a home. Some of the best priced properties are short sales. However, my agent won’t show me these homes.
She keeps on telling me the prices are lower than the lender will accept and that short sale never close. What should I do? I am really interested in these homes, especially at the price they are being offered at.”
Here was my answer. Tamra, you should talk to your agent and see what they dislike about short sales. Your agent may have had a bad experience with short sales in the past.
Short sales are a great way to purchase a home at a good price. They are tougher and take a lot longer than your average real estate transaction.
However, that doesn’t mean you shouldn’t consider them. Just be cautious with your search. Make sure the agent who has the house for sale has prior short sale experience.
Your agent can ask them what short sales they have sold in the past. If they or the people working with them have a good track of working with the banks, then you should be ok.
Remember, not every short sale is going to be approved at the listing price. But, if they banks feel the price is fair, then they will accept the offer.
So go look at some of those short sales. With a little luck one of them will be the perfect home that meets exactly what you are looking for.
If you are interested in buying a short sale give me a call. They can be a very good value and as long as you understand the process it can be worth the wait. Call me at 865-696-9002 or email me [email protected]
Need Help With A Loan Modification?
Loan Modifications are tough. Lenders don’t want to reduce your payment or reduce the amount you owe.
Most loan modifications end in failure because the banks are so hard to work with. In a recent story in the news, a New Jersey Company is accused of defrauding homeowners out of thousands of dollars.
According to the story, one couple had more than $2,800 billed to their credit card but received no loan modification. Another customer paid more than $3,500 and received no assistance.
Your best bet for a successful loan modification is to negotiate it yourself. No one else is going to care as much as you. After all, whose house hangs in the balance?
We will help you get all the information together in order to complete the information you need for a loan modification. This is a free service that is offer to you it will cost you nothing maybe a few cups of coffee while we are meeting. Our goal is to help troubled Knoxville homeowners who may be facing foreclosure avoid it. You do have options and we are here to help you and make sure you understand all your options.
My first goal is to help you stay in your home if at all possible. The information you will need to do a successful loan modification is very similar to what you would need to do a short sale on you home. It is a packet of personal information about you and your situation. When it is put together properly and presented correctly to your lender we have had people be successful getting loan modifications. So if you want some help and want to take advantage of this service we offer to homeowners in the Knoxville Area. Contact me
Don’t lose your home to foreclosure call me at 865-696-9002 or email me [email protected]
Can You Get A Short Sale Closed In Knoxville?
Are short sales in Knoxville impossible? Well, short sales are not impossible. They just take time. Here is an example.
We were attempting a short sale on a property. The bank turned down an offer for $195,000 on the house.
Today it looks like an offer for 185k will be approved. Why is that? The first offer was submitted 4 months ago.
The bank did an appraisal. The appraiser thought the house was worth $265,000. The lender rejected the offer because it didn’t meet their guidelines.
We put the home back on the market and waited for another offer. The property values continued to decline. The next offer came in for $185,000 several months later.
The bank re-opened the short sale process and ordered a new appraisal. This appraiser thought the house was worth $197,000.
The bank approved the short sale offer. As you can see, short sales can get approved with a little luck, time, and persistence. With some luck, the bank will see that the short sale makes financial sense and approve it.
We’ve seen over 85% of our short sales sell, get approved, and close in 3-4 months. And that’s the first attempt at negotiations.
The majority of the remainder will get approved, but we will have to submit more offers.
Having trouble making your mortgage payments want to know your options? Let’s setup a time to meet and talk about your situation. You have solutions available to you other than foreclosure.
As a trained Realtor with the CDPE designation I can help you avoid foreclosure. My team and I help more homeowners than anyone else in the greater Knoxville area solve their housing crisis. We are up to date on all the different solutions and changes going on in the market place.
Our assistance to you is at no cost to you. Give me a call at 865-696-9002 or email me at [email protected]
Will I Owe Income Tax After I Sell My Knoxville Home On A Short Sale?
This is one of the first questions potential short sale sellers ask us. “I heard of something called “forgiveness of debt income and that it is taxable. How does that work?” they ask.
In most cases the answer is that a short sale will usually not cause you to owe income tax.
It used to be that you owed income tax on any forgiveness of debt.
When a lender decides to forgive all or a portion of a borrower’s debt, the forgiven amount is considered as income for the borrower and is liable to be taxed.
Here are the following ways you can qualify to short sale a property without any tax liability.
Short Sale of a Primary Residence. The Mortgage Forgiveness Debt Relief Act of 2007 (and it’s extension in the 2008 Federal Bailout) now allows you to short sale a primary residence without any tax liability.
Today when a homeowner short sales a primary residence, they can file a simple form and the forgiven debt is no longer taxable.
The amount of forgiven mortgage debt allowed to be excluded from income tax is limited to $2 million per year.
Short Sale of a Non-Primary Residence: If the property you are selling is not a primary residence, then you may be eligible for tax relief if you are considered insolvent.
I don’t know the exact guidelines, but insolvent is usually considered when your total gross debts are more than your total gross assets. I’m sure a good tax professional can give you more information.
Click here to view the IRS’s website about the Mortgage Forgiveness Debt Relief Act and Debt Cancellation.
Click here to view the article on the IRS’s Website: Mortgage Workouts Now Tax-Free for Many Homeowners.
If you are having trouble making your mortgage payments you do have options other than foreclosure that won’t cost you a dime….Contact me for a free consultation let’s setup a time to talk about your situation and we can explore your options. Call me at 865-696-9002 or email me [email protected]
Rent Your Home Or Sell It On A Short Sale?
I received a call from an owner who used to live in Knoxville but was transferred because of his job. He couldn’t afford to sell his home at the time because he was upside down. He couldn’t afford to carry two households either. Here was his question to
me…
“Rick when I moved from Knoxville to Nashville because of my job transferred. I couldn’t afford to sell my Knoxville home because I was upside down. But I also didn’t want to do a short sale on the home. So I decided to rent it. Well the tenants moved out and trashed the place. I could rent the house out again, but I would have to spend several thousand dollars fixing it up first. What would you recommend that I do?” Chuck asked.
Here was our recommendation. That is a tough situation. You could fix up the house and rent it out again. But, you risk having the same thing happen all over again.
Here is the other problem. The amount you can charge for rent has gone down in most areas around Knoxville. This means you will probably have to write a check every month.
If you are able to rent it and cover all the costs, then I would recommend you keep the home.
Here is why I recommend that. If you can break even, then the house will be a good investment as the Knoxville real estate market recovers. However, you will always risk large unexpected costs like the one you are experiencing right now.
If it the rent does not cover all the costs, then more than likely you are in an area where the housing prices are still dropping. This means the burden will only get bigger as time progresses.
Hire a good property manager this time instead of taking care of it yourself. They will do a complete background check on the tenants. That way you limit the chances of something like that happening again. if you need some recommendations let me know an I can refer you to some good companies who can help you out.
Renting you home is just one way to avoid foreclosure if you are upside down on your home. If you are having troubles making your mortgage payments and want to know your options call me at 865-696-9002 or email me [email protected]
Wells Fargo Rule Changes Will Help Some Knoxville Homeowners
We have successfully closed many Knoxville Short Sales with Wells Fargo because they are prevalent lender in the Knoxville Area. There have been some changes recently if you have a Wells Fargo mortgage and they have already started the foreclosure process. If you have a short sale contract on your home you can get the sale stopped if you meet certain criteria.
DSNews reported new rules regarding Wells Fargo short sales when foreclosure is within 30 days. The bank’s new policy will allow for only one foreclosure postponement given the following criteria:
- Wells Fargo has an approved short sale sales contract in hand (if necessary, approvals from junior lien holders and mortgage insurers as well)
- buyer has proof of funds or is pre approved for financing; and
- the short sale can close within 30 days of the scheduled foreclosure sale.
Beyond these restrictions, Wells Fargo did note that investors may vary in what they allow, and some states require the courts to approve any delay.
If you find yourself against the clock with a Wells Fargo short sale, there is still hope. The bank expressed its willingness to address situations outside these qualifications on a case-by-case basis.
My team and I have the experience and the expertise to get foreclosure sale stopped when we have a pending short sale on one of our listings. Since we have worked with all the major lenders we have been able to establish relationships with many decision makers at these lenders.
If you are having trouble making your mortgage payments don’t wait until it is too late. You do have options available to you other than foreclosure. Let’s setup a time to talk over a cup of coffee and talk about your situation. Let me explain your options to you so you can make an informed decision. Call me at 865-696-9002 or email me [email protected]
