What is a Short Sale?

This week's topic is a very sobering one: short sales.

For a variety of reasons, it is possible that the total debt on your home may be more than what the home is worth. Most of the time, this isn't a problem because time is the solution. Depending on how much you owe, just wait it out and the value of your home goes up.

Problem solved, but that could take years.

That solution does not work for everyone though, because some folks are stuck in a situation where they absolutely have to sell their house. This can happen for many reasons, some good and some not so good: relocation, financial hardship, divorce, death, illness, or anything at all.

The result is that you may have to move, but you can't sell your house and make enough on the sale to pay the closing costs.

So what do you do?

One option is to do nothing and not make your mortgage payment. That's a worst-case scenario because it impacts your credit rating more severely than anything else possibly can.

Another option is something called a "short sale." This is when you fess up to the lender, let them know about your hardship and ask if they would please accept less money than you owe.

Of course, the lender doesn't want to do that, but they also don't want to pay all the costs of foreclosing on a home, repairing any defects, placing it on the market, and getting the best price they can in what may be a market already overstressed with excess inventory.

Lenders absolutely hate to foreclose, so they may be willing to consider a short sale. Not always. A short sale involves a lot of paperwork, time and effort and it is best if you have a real estate agent or someone knowledgeable to help guide you through the process and give moral support. A lot of stress is involved.

The first step is to contact the Loan Service Department of your lender. That number will be in the documentation you receive about making your payment. Use the phone and the mail. Keep copies. The lender will ask you to submit a financial statement. They want to know that you really don't have the financial assets to repay the loan after you sell the home. That's just the beginning, assuming they give a tentative agreement.

Your real estate agent still has to put the home on the market, find a buyer, and get a bona fide offer. Once that has been accomplished, you submit all contracts and paperwork to your lender for a decision. This takes a while because there are several decision makers involved.

Your lender isn't usually your lender. They just service the loan for your actual lender, called the investor. Your paperwork is submitted to the investor for a decision.

Assuming you have mortgage insurance on the loan, they are
another decision maker in the process. Mortgage insurance covers lenders in the case of loan defaults. That way they can justify making high LTV (loan-to-value) loans.

If the investor and the insurer both agree, your short sale is approved, and you can sell you home.

A short sale is basically a "forgiveness of debt." That counts as income and you have to declare it to the IRS.

This is obviously a very complex situation. Talk to your Realtor, be forthcoming about your state of affairs, connect with your lender, and work together to make this work for you.

The Usual Suspects

I'm not going to talk about Real Estate in this week's article. No talk of homes, commercial properties or land. Instead, this week's topics will be one of the best things about selling real estate: people! Nice people!

Today, I was having lunch with the publisher of this paper, and a group of friends I like to call "The Usual Suspects, (although UNusual might be more accurate!). This group of sage friends afford me insights to the area that I couldn't possibly get from any other source. They live the seacoast. They are the seacoast. I'm a fortunate soul to be able to be in their circle. I was introduced to this bunch as a result of being active in the local real estate business.

Often, during our conversations, we compare notes on various things in our lives: good restaurants, various service providers, exceptional businesses and business owners, and so on.

It occurred to me after today's "summit meeting" that one of the things I enjoy the most about my business is getting the opportunity to introduce people to the seacoast, my seacoast. You see, when people are moving to the area they don't have a clue where to go for a great breakfast, pizza, massage, cocktails, fine dining... nothing! Without good recommendations, getting to know the area would be a long, tedious, trial-and-error process. So I'm pleased to give my clients referrals to my favorite things in the coast.

Let me share some with you...

When I think of the seacoast, I think of food, great food, casual food, seafood. The seacoast has no shortage of great places to dine.

My preferred spot for fine dining is right in Hampton. Bonta is a welcoming restaurant where the owner has instilled a culture of excellence in his entire staff. The menu is varied and everything is superb. The clientele is as friendly as the staff. Great food, great service, great clientele. How can you go wrong?

When I want a great casual lunch and I'm in the mood for chowder, I head up the coast to Petey's in Rye. Never a disappointment. Great fried seafood, and always a fun crowd. The Old Salt is a Hampton landmark, and the food and staff are consistently solid. Have a hankerin' for Chinese food? The Ocean Wok is the place to go in Hampton. If sushi is more your style, head to Sakura in downtown Portsmouth.

Need a gym or personal trainer? I personally recommend Synergy in Exeter and Penny Matel, with whom I've worked out for seven years. The seacoast boasts some of the finest doctors and specialists in New England. I'm happy to share personal recommendations and those of my trusted clients and friends. If you need to get a kink worked out with a good massage, call Judy Harrington.

Nothing delights me more than having someone call and tell me how well they were treated at Bonta, how much they loved the Sunday reggae on the deck at Saunders on Rye Harbor, how much they enjoyed the curry at The Carriage House.

As a newcomer to the coast, you could panic when you need service on your new home. Who do you call for a plumbing problem? What if you need and electrician or need some painting done? My clients know they can call me for an answer. And believe me, I'm happy to help.

Who would call an attorney they found in a phone book, or a financial planner or accountant for that matter? Personal referrals are a much safer bet in all cases.

Along those lines, I run my business primarily on referrals from clients and friends- in fact over 90% of my business year to year comes as a result of personal referral. It's the only way to go- people naturally like to share information on folks they've worked with that have provided them with an excellent level of service.

Which brings me back to my friends "the usual suspects". When we get together, you can be sure that the conversation always comes around to great service, and sharing recommendations.

Welcome to my seacoast!

The Secret To Selling Your Home Fast

Ahh... another catchy headline to grab your attention.

If there were one secret, everyone would do it, and then it wouldn't be a secret!

Instead, in a market like this, there are many things you can do to enhance the visibility and desirability of your home. Remember, when there are many more homes for sale than are selling, (a buyer's market), you have to make your home stand out above the crowd.

I have some things that will help, but as our president says.. "It's hard work". Are you up to the challenge?

Pricing: I'll get that point out of the way right off the bat, because I know you're sick of me talking about it. Simple fact in this market: If you overprice with the intention of reducing the price if it doesn't sell or to give yourself negotiating room, be prepared to wait and have your home on the market a long time. You won't even get to the negotiating stage, buyers will ignore your listing.

Marketing: This is where the rubber hits the road. You want to get the most eyeballs seeing your lovely home. In the past, a sign, a newspaper ad and MLS listing got the job done, but times have changed big time! Statistics show that over 80% of home buyers begin their search on the internet, so having a strong visibility there is key to success. Multiple web site exposure increases the chances that someone will see your home. The local MLS on the web and Realtor.com are a good start, but hardly the be all and end all for exposure.

Web Strategy: Realtor.com boasts more "web hits" than any other real estate related web site, so it makes sense to start there. If your home is on the NH MLS, the listing will show up there, but unless your Realtor has an "enhanced" or "showcase" package, (costs more money), your listing shows up with a basic description and no photos. Statistics (there's that word again) show that the listings that get the most views have multiple photos and some sort of video tour. It certainly makes sense then to make sure your home is highlighted or "showcased" then...

Many other websites that you might not think of are great tools for getting the word out on your home, simply for their size and number of "hits". Google, Yahoo, craigslist, Trulia, and AOL are some of those. Also, exposure on the web sites associated with the country's biggest newspapers are a great source of prospective buyers (many are relocating from other areas of the country). The Boston Globe, Wall Street Journal, New York Times, and Chicago Sun-Times all have great real estate sections that generate interested buyers. If that's the case, your home should be featured there, no?

Great Photos: Be sure that the photos of your property that show up on line enhance the listing. Many sellers have multiple photos, but showing small bedrooms in small fuzzy photos hardly create a "buy me" emotion to the prospective buyer. Multiple high quality, wide angle, large format photos are the key here.

High Definition Video Tours: There was a time when "virtual tours" were all the rage, but there are better options now to show off your home than those spinning claustrophobic tours... After all, they distort the image, the walls bend, and have no perspective. Many Realtors are now using a photo slide show with descriptive text, usually with larger photos. Some use actual video movies of your home, the yard, and maybe the surrounding area and attractions. These movies, widescreen and high definition, really are the coup-de-grace in this area. The catch: they're not cheap if done right, so you don't see a lot of them in use, but they can create a buying emotion stronger than any other photo method.

Home Staging: Ahhh... something you may not be aware of. A relatively new service employed on certain listings to maximize the salability of a home by de-cluttering, rearranging, and perhaps using new pieces as "props" to show your home to it's maximum potential. There are several home stagers in the area that I use to consult or work with interested sellers who want to "pull out all the stops" in the marketing of your home. By all means, check out Staged First Impressions, and tell Sue I asked you to contact her. Here's a staging professional that really "gets it"!

Remember- your home is a product that together we're trying to sell in a slow, or buyer's market. There is no room for the old "list and hope" methods. We have to work hard together to reach your goals. Call your agent today and "kick it up a notch".

Statistics courtesy of New England Real Estate Network, National Association of Realtors, and demographer Peter Francese. Used with permission.