Top 7 Mistakes Sellers Make In Naperville Short Sales

Top 7 Mistakes Sellers Make In Naperville Short Sales

Many homeowners make mistakes during the short sale process when trying to sell their Naperville short sale home.  It is important to know how to avoid them in order to have a successful Naperville short sale:

1. Pricing the short sale too high or too low.

This is a standard mistake most homeowners make when handling their home sale, be it a traditional one or a short sale.  Some price too high, others too low – the key is to find that perfect price point.

Make sure your short sale property is priced just right by hiring an experienced Naperville short sale agent who can help you determine the best price for your home based on the current market conditions and comparable sales in your area.

The price of your short sale home should be attractive to all parties involved in the short sale: the lender, the buyer, the buyer’s agent, the buyer’s lender, and of course, you — the seller.

It may seem impossible to come up with a price that will be acceptable to all these parties, but it is possible. Coming up with the right price for a short sale listing is both an art and a science that has been mastered by experienced Naperville short sale agents.

2. Working with the wrong agent.

If you are hiring an agent who claims to be an expert in short sales, make sure to verify their experience by asking how many short sales he or she has successfully closed, and not just about those that he or she has listed.

If the agent has listings that have been on the market for 90 days or more without getting a single offer, this should be a red flag to you.

You want to work with a short sale agent who has at least two years of experience working with Naperville short sales and negotiating with lenders.

3. Bad Marketing Strategy.

If an agent tells you that pricing alone will sell your Naperville short sale property then proceeds to price your home too low, run away from this agent!  It is not true that pricing alone sells a short sale, let alone the lowest price.

Exposing your listing to the widest pool of potential buyers and using the best marketing methods will help you get offers on your short sale.

 4. Having Too Many Showing Restrictions.

If you have too many restrictions on showings and setting appointments (like no showings on Sundays), buyer’s agents will pass over your short sale listing for other listings without too many restrictions.

Your agent should make sure that your short sale home is always ready and available for showing any time a buyer’s agent calls in to request one.

 5. No Photographs or Bad Photographs.

Not putting photos of your short sale listing on the MLS is as bad as having bad photos. Both can turn off potential buyers.

A short sale without online photos gives potential buyers the impression that something is probably wrong with the property or the seller doesn’t care if the home sells or not.

On the other hand, bad photographs give buyers an impression that the home is not well-maintained or is falling apart. Online listings with the most photos are ranked the highest on most websites while those without photos drop to the bottom and are frequently overlooked by potential buyers.

6. Home is Not Well-Maintained or Not Staged Properly.

Just like any traditional listing, short sale sellers must make sure that their home is in good condition and is staged properly before putting it on the market.

A home that is full of clutter and has not been well-maintained will give buyers the impression that if the home was messy during showing, the owner might trash it before vacating it.

A home with uncut grass and in need of too many repairs will not be appealing to buyers. You can lower the price to attract bargain hunters and compensate for repairs, but this may not sit well with the lender. Banks usually will not accept a price reduction just because you want to avoid repairing damages in your home.

7. Waiting too Long to Act and Put the Home on the Market.

Sellers cannot afford to wait until they are facing foreclosure before they seek the help of an experienced Naperville short sale agent. Short sales are more complicated than traditional sales and take more time. The more time your short sale agent has to negotiate with the lender, the better chances of a successful short sale.

If you want to do a short sale, you need to give your short sale agent enough time to submit the short sale application to the bank.  Delays are a part of the short sale process – documents get lost and packages need to be re-faxed. Don’t wait until the last minute to submit your short sale package. Make sure the package you submit is complete and complies with all the requirements of the lender. Banks will not process your short sale if your documents are incomplete, causing longer delays and possible foreclosure.

These are just some of the most common mistakes sellers and their agents make while doing Naperville short sales. You can avoid most of these mistakes by making sure you work with only the best short sale agent in Naperville.

Call me, Teresa Ryan, a certified short sale expert, on 630-276-7575 today.  As a Broker/Owner of Ryan Hill Realty, I have the experience and tools to help you sell your Naperville short sale home.

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Teresa Ryan

Broker/Owner, CDPE

Ryan Hill Realty

1288 Rickert Dr Suite 300, Naperville, IL 60540

630-276-7575

TRyan@RyanHillRealty.com

How to Qualify For A Naperville Short Sale

How to Qualify For A Naperville Short Sale

If you are considering a Naperville short sale, make sure you have a complete understanding of the process and your lender’s requirements on how to qualify for a short sale. This will save you time and effort, allowing you to know if you qualify for a short sale to begin with.

Here are some of the key factors that will make you qualified for a Naperville short sale:

Your home’s market value has decreased.

You can find out the actual market value of your home by consulting a certified Naperville short sale real estate agent for a Comparative Market Analysis (CMA). The agent will arrive at the current value of your home based on the prices of previously sold homes in the area that are comparable with yours, as well as prices of comparable active listings. The current value of your home should be less than your mortgage balance in order for a lender to approve the short sale.

Your mortgage is in or near default status.

There used to be a time when lenders would not approve a short sale if the borrower was current on his or her mortgage payments. Now, it is no longer necessary to be in a position of default or be behind on mortgage payments in order to qualify for a Naperville short sale.

You must have a valid hardship.

One of the requirements you need to submit to your lender is a hardship letter explaining why you can’t continue making your mortgage payments.

Examples of hardships that lenders consider valid are:

• Loss of employment
• Decrease in salary
• Divorce
• Death
• Medical emergency
• Bankruptcy

Examples of hardships that lenders DO NOT consider are:

• Buying another home
• Moving into an apartment
• Unhappy with the neighbors
• Pregnancy
• Bad investment decisions

You have no more assets.

Your lender will ask for your financial records like pay stubs, tax returns, and financial statements and verify your claim of hardship. If the lender finds out that you still have financial assets like money in a savings account, stocks, bonds, IRA accounts, or other property, the lender will not approve your short sale since they will think that you still have resources to pay for your mortgage. If the lender does approve the short sale, you may be asked to pay for the difference in the amount of the mortgage balance and the short sale price.

Every lender will have their own set of guidelines and requirements for short sales, but these are the four basic requirements that most lenders have for borrowers to qualify for a Naperville short sale.

If you need more information about how to do a Naperville short sale, visit www.RyanHillCanHelp.comTalk to me, a Certified Distressed Property Expert and Short Sale Agent, Teresa Ryan at 630-276-7575.  As a Broker/Owner of Ryan Hill Realty, I have the experience and tools to help you sell your Naperville short sale home.

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Teresa Ryan

Broker/Owner, CDPE

Ryan Hill Realty

1288 Rickert Dr Suite 300, Naperville, IL 60540

630-276-7575

TRyan@RyanHillRealty.com

Do I Need to Continue Paying Mortgage During a Naperville Short Sale?

Do I Need to Continue Paying Mortgage During a Naperville Short Sale?

When you consciously or knowingly stop making mortgage payments, this is called a strategic default. Many people believe that a strategic default can accelerate their Naperville short sale, but this is not always true.

Whether or not you continue to make mortgage payments and HOA dues is a personal decision that can only be made by the borrower — not the lender or real estate agent.

To help you make an informed decision, you need to understand both the advantages of continuing your mortgage payments as well as the consequences of late mortgage payments.

Late mortgage payments can negatively impact your credit score and, as a result, can also impact your ability to obtain a loan in the future.

Contrary to popular belief, you don’t have to default on your mortgage payments in order to qualify for a Naperville short sale. The Home Affordable Foreclosure Alternatives (HAFA) program has released new guidelines that allow borrowers who are current on their mortgage payments to do a short sale.

As for HOA dues, unpaid HOA fees can kill your short sale deal. Short sale lenders refuse to pay the seller’s unpaid HOA balance. They will usually contribute a small amount for HOA document and transfer fees, but that’s it. It’s better to continue paying your HOA dues even during a short sale.

There are many advantages if you continue to make your mortgage payments:

1. Protect your credit score.

Being current on your mortgage payments protects your credit score because late payments will not be reflected on your credit report. However, your credit score may still drop by a few points due to a short sale and the lender may still report your Naperville short sale as “settled less than full.”

2. Shorter waiting period for buying another home.

Depending on the type of loan, the waiting period to get a new home loan and buy another home is 2-3 years after the short sale was completed. Fannie Mae and FHA allows short sale sellers to obtain a new loan immediately after a short sale on the condition that the borrower was never late on mortgage payments, which is another advantage of being current on mortgage payments.

3. Cancel without penalty.

In the event that you fail to sell your home as a Naperville short sale or if the lender does not approve the buyer’s offer, you can cancel the listing without liability and keep your home.

4. Peace of mind.

Being current on your mortgage payments will help you sleep better at night and avoid the stigma of being delinquent. Having one less thing to stress about makes it easier to deal with the complicated short sale process.

There are more advantages of being current on mortgage payments during a short sale. Although, there are instances when the homeowner could no longer continue making payments due to financial hardships or extenuating circumstances that are beyond their control.

If you plan on doing a Naperville short sale, make sure to work with an experienced Naperville short sale agent who has your best interests at heart and can help you arrive at an informed decision.

If you are ready to do a Naperville short sale call me, Teresa Ryan at 630-276-7575.  As a certified distressed property expert and Broker/Owner  of Ryan Hill Realty, I have the experience and tools to help you sell your Naperville short sale home.  Visit www.RyanHillCanHelp.com for more information on short sales and foreclosures.

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Teresa Ryan

Broker/Owner, CDPE

Ryan Hill Realty

1288 Rickert Dr Suite 300, Naperville, IL 60540

630-276-7575

TRyan@RyanHillRealty.com

What’s the Difference Between Naperville Short Sales and Foreclosure?

What’s the Difference Between Naperville Short Sales and Foreclosure?

When a homeowner fails to make his or her mortgage payments or becomes delinquent in their payments, the home is foreclosed upon. In a foreclosure, the lender assumes ownership of the home and evicts the delinquent borrower. The lender initiates the sale of the home at a foreclosure auction or a trustee sale.

A short sale is used by distressed homeowners as an alternative to foreclosure. If a homeowner owes more than the current market value of the home, a good option is to do a Naperville short sale. A short sale is initiated by the homeowner, unlike a foreclosure where the home is sold by the lender. In a short sale, the home is sold through a real estate agent specializing in short sales and is sold much like a traditional sale, except short sales involve more paperwork and parties than a traditional real estate transaction. As with any transaction, there are tax implications, please read the rules on www.irs.gov and speak with your lawyer before proceeding.

If the lender approves the short sale, the lender agrees to accept less than what is owed from the proceeds of the sale. In most circumstances, the borrower can walk away debt free — if the lender agrees to waive the difference of the loan balance and the proceeds from the short sale.

Benefits of a Naperville Short Sale Over a Foreclosure

• Impact on Credit Score. – Short sales and foreclosures both have a negative impact on the borrower’s credit score. However, short sales have a comparatively lesser impact on the credit score. A borrower’s credit score may drop from 50-150 points during a short sale and 200-400 points after foreclosure.
• Waiting Period to Buy a New Home – Borrowers have to wait 7 years after foreclosure before they can buy a new property. In a short sale, the borrower may be able to buy a new house at least a year after the short sale depending on the type of loan, the borrower’s eligibility and their unique situation.
• Mention in Future Loan Applications – It is mandatory for a foreclosure to be reported in future loan applications, which could have a negative impact to your loan application. A short sale does not necessarily have to be mentioned in future loan applications, which is more beneficial to borrowers who plan on buying a new property after a short sale.
• HAFA Eligibility – Homeowners who have gone through a short sale can still be eligible for the Home Affordable Foreclosure Alternatives (HAFA) Program, while those who have gone through foreclosures are not eligible for the HAFA program.

Although a short sale and a foreclosure both have a negative impact on one’s credit score, a short sale is still a better option than foreclosure. Short sales offer more advantages for distressed homeowners and help them recover their financial standing faster. If you want to know about Naperville short sales, visit www.RyanHillCanHelp.com.

If you are ready to do a Naperville short sale call me, TeresaRyan at 630-276-7575.  As an owner/broker of Ryan Hill Realty, I have the experience and tools to help you sell your Naperville short sale home.

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Teresa Ryan

Broker/Owner, CDPE

Ryan Hill Realty

1288 Rickert Dr Suite 300, Naperville, IL 60540

630-276-7575

TRyan@RyanHillRealty.com

How Does a Naperville Short Sale Affect the Seller’s Credit Score?

How Does a Naperville Short Sale Affect the Seller’s Credit Score?

How much impact does a Naperville short sale have on a seller’s credit score?

When you pay less than what is due on any debt, it stands to reason that your credit score will take a hit, especially when it comes to a mortgage. Both, a short sale and a foreclosure will negatively impact your credit score.

The term ‘short sale’ doesn't actually appear on your credit report.  It will, instead, appear as a mortgage that was ‘settled’ for less than the full balance.  Settled accounts, especially when it comes to a mortgage, are very negative.

Any delinquent payments leading up to a short sale will remain on your credit report for seven years from the original date you let your mortgage go delinquent.  If you were consistently on time with your payments, the mortgage will remain on your credit report for 7 years from the date it was reported or paid.

I strongly recommend that you find out and understand exactly how your lender will report your short sale, foreclosure or deed in lieu of foreclosure to the credit reporting agencies and if they will sell the remaining debt to a collection reporting agency.

The impact on your credit score will depend on how your mortgage was closed and reported on your credit history, and your FICO score prior to the short sale (or the starting score). The higher the starting score, the longer it will take for it to fully recover.

Let’s say you have a good starting credit score of 780, it will take your FICO score around 7 years to fully recover. This is true for both short sales and foreclosures. However, if the starting FICO score was lower, the short sale seller’s score can fully recover in a shorter period of time.

Distressed homeowners with a FICO score around 680 can recover their scores in around 3 years, which is less than half of the amount of waiting time than those who had higher FICO scores prior to the Naperville short sale.

The number of days you were late on your mortgage, or what we call mortgage delinquency, also greatly affects your credit score, dropping by 50-250 points.

Here is a table showing the impact of mortgage delinquency on the credit score. The second table shows the time it takes to fully recover based on the starting FICO score:

If these figures alarm you or make you feel hopeless, don’t be! There is still hope of rebuilding your credit after a Naperville short sale.

Here are some things you can do to rebuild your credit:

• Pay all your bills in full and on time. – This includes your credit card bills, utility bills, monthly phone and internet charges, etc. Although they are not required to do so, you can request these companies you make your payments to report to the credit bureaus that you have made your payments in full and on time. They will do it if asked. Credit bureaus give more weight to credit card payments than utility payments but if you are working on rebuilding your credit, nothing is too small or too big. Every single payment you make in full and on time counts.
• Don’t close your existing credit card accounts. – Keep your credit cards open as this will lower your debt to credit ratio and improve your credit score as you pay off your balances. Avoid opening a new credit line.
• Try applying for a secured credit card. – If your credit card accounts have closed after a Naperville short sale, you can try applying for a secured credit card. This is a good way to rebuild your credit score as well as control your spending since the amount of money you deposit acts as a self-imposed credit limit as well as collateral.

Although a Naperville short sale can greatly affect your credit score, you still have a chance at rebuilding your credit. Use the waiting period wisely, whether 7 years or less, as a time to do these things that will help you improve and rebuild your credit score and save for a new home so you can get another chance at homeownership after a Naperville short sale.

If you are ready to do a Naperville short sale, call me, Teresa Ryan at 630-276-7575.  As Broker/Owner of Ryan Hill Realty – www.RyanHillRealty.com, I have the experience and tools to help you sell your Naperville short sale home.

If you have already gone through a short sale, The Federal Housing Administration’s recent Back To Work Program could be the answer if you want to apply for a home loan again in a shorter period of time.  Talk to me, Teresa Ryan, or talk to a member of my certified expert team to see if you are eligible, call us today.

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Teresa Ryan

Broker/Owner, CDPE

Ryan Hill Realty

1288 Rickert Dr Suite 300, Naperville, IL 60540

630-276-7575

TRyan@RyanHillRealty.com

Can a Seller Rent Back Their Home After a Naperville IL Short Sale?

Can a Seller Rent Back Their Home After a Naperville IL Short Sale?

In most cases, the short answer is ‘No’.  When you start your paperwork with the lender, they will have all parties sign an Addendum stating that the Seller must vacate the property at or prior to the close of escrow. It will also specifically state that the buyer will not enter into a rental agreement with the Seller after escrow closes.  An important agreement you will receive is the Arm’s Length Agreement (ALA), please go over this agreement with your lawyer and real estate agent to make sure that you understand all the terms and conditions it contains.

Once a buyer has purchased a home in a Naperville IL short sale, it's his or her right to do with it as he or she pleases. The rights of ownership of a short sale home are the same as they would be after a traditional sale, with a few exceptions.

It is the buyer’s decision to live in the home, resell it, or rent it out to whomever the buyer prefers, including petition the lender to allow them to rent to the former owner. However, the final decision is up to the lender.

If the Buyer and the Seller are not family or related in any way, and wish to pursue this line of action, both parties must disclose their intention to the lender (with the help of lawyers) prior to signing the Addendum or any agreement for that matter, to try and negotiate these terms.  A full disclosure to your lender is essential.  Failing to do so and renting back to a Seller is considered fraudulent and could rescind the short sale after closing.

If, on the rare occasion, the lender agrees in writing to allow the seller to rent back the house from the buyer, then the new owner needs to make sure that the previous homeowner, and now their tenant, is able to meet the monthly rental amount.  Keep in mind that the homeowner defaulted on their monthly payment to the lender to begin with and went into foreclosure.  

The best thing to do is for new owners to request for a credit report and verification of the tenant’s income. If the tenant can’t account for his or her money, then the new owners should think twice before signing a lease contract. If the credit report shows that he or she has been in arrears on debts that he or she should have paid.

If the new homeowner is satisfied that the seller is capable of making monthly rental payments, then the benefit of renting a Naperville IL short sale home to the former owner is mutually beneficial.  The home will start generating income immediately, and in the long term, the home will appreciate in value.

The best thing to do is to talk to your lender and check the fine print if there is any clause stating that the Naperville IL short sale seller is not allowed to purchase or rent back the home. If you really intend on renting back your short sale home, make sure to formally disclose it to your lender to avoid being accused of fraud and get their approval in writing.

Talk to an experienced Naperville short sale agent or call me, Teresa Ryan at 630-276-7575.  As a Broker/Owner of Ryan Hill Realty - www.RyanHillRealty.com, I have the experience and tools to help you sell your Naperville short sale home.

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Teresa Ryan

Broker/Owner, CDPE

Ryan Hill Realty

1288 Rickert Dr Suite 300, Naperville, IL 60540

630-276-7575

TRyan@RyanHillRealty.com

What's the First Step in A Naperville IL Short Sale?

What's the First Step in A Naperville IL Short Sale?

Before you ask your Naperville IL short sale agent to place your short sale listing into the MLS, it’s important to know the first step in the short sale process.

Don’t make the big mistake of other overly anxious sellers who skip the first step of the short sales process and immediately jump into accepting offers.  More often than not, this less-informed method only leads to more stress and anxiety.  Take the time to learn about the important first steps in the short sale process, and you will be in a stronger position to consider the right offers.

The first thing you should do, with the help of your short sale agent, is to identify what type of short sale you have.

The secret to identifying what kind of short sale you have lies with your lender and the type of mortgage loan on your home.

Here is a step-by-step checklist of the first things you should do in the short sale process:

• Contact your lender. Start by calling your lender’s customer service number and ask for the Loss Mitigation Department. Have your mortgage loan number ready.
• Request for the lender's authorization form. This will allow your Naperville IL short sale agent to speak to the lender on your behalf. Send back the signed authorization form to the lender as soon as you hire an agent. It takes up to 5 days for the lender to acknowledge your authorization letter, so don't delay.
• Ask your lender what type of loan you have. Find out if your bank owns the loan or if it is merely a servicer of the loan. If your bank is just the servicer, ask the bank who owns your loan.
• Depending on the type of loan, choose your type of short sale. Each short sale is different and if you choose the wrong type of short sale, you risk facing personal liability and losing out on possible relocation assistance funds.

Here are some of the different types of short sales based on the type of loan and the short sale seller’s personal situation:

• HAFA Short Sale - This is only available to sellers of a personal residence who are going through a severe financial hardship and have limited cash assets. The HAFA short sales aim to streamline the short sale process, release the seller from financial liability, and provide relocation assistance.
• Traditional Hardship Short Sale - The short sale seller’s hardship letter will be closely evaluated. Borrowers with loans that were originally purchase money loans have a better chance at a successful short sale.

Ask Teresa Ryan about these types of short sales in Naperville and the Chicago area market.

• Strategic Short Sale
• Fannie Mae Short Sale
• Freddie Mac Short Sale

These are just some of the several types of short sales. The best thing to do before proceeding with a Naperville IL short sale is to work with an experienced Naperville IL short sale agent who can help you navigate the short sales process.

If you are ready to do a Naperville short sale call me, Teresa Ryan at 630-276-7575. As a certified short sale agent and Broker/Owner of Ryan Hill Realty - www.RyanHillRealty.com, I have the experience and tools to help you sell your Naperville short sale home.

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Teresa Ryan

Broker/Owner, CDPE

Ryan Hill Realty

1288 Rickert Dr Suite 300, Naperville, IL 60540

630-276-7575

TRyan@RyanHillRealty.com