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Basking Ridge Real Estate – Questions and Answers
Submit questions here, I will do my best to answer them here on the blog or via email.
Q. How do I go about buying a foreclosure?
A. Realtors often only have access to foreclosures once they have been fully foreclosed and are owned by the bank. These are actually easy sales – they are listed in the MLS, they are typically offered at or under market value and you have an opportunity to inspect them (though you won’t get much from the seller in way of repairs, these are typically as-is sales).
You can also buy a foreclosure at auction – this is a little trickier – you have to watch the sheriff sale website or the newspaper for the schedule, often you have to bid without seeing the property, you may have to assume a lien (tax or otherwise), and you need to have 10% in cash on the day of the auction (or something similar … I have only been to one sheriff sale and it was more of an informational experience than anything else…) You wouldn’t need a Realtor for this type of purchase except maybe to act as an advisor or consultant.
Another option is to purchase a short sale. If you have the time to wait around for an approval these can be really good deals. They can be a real pain in the tush to get through, but as I said, they are often a really good deal.
Foreclosures and short sales are often in poor condition – the owners didn’t have money to pay the mortgage, they weren’t paying for repairs or upkeep either – again, if you can get a deal, that may not matter.
Let’s consider this too: in spite of the economy and the nose-dive the real estate industry took over the last five or six years, I still believe it’s a good long term investment. There are some really good deals out there that aren’t short sales or foreclosures. You can get a two bedroom two bath condo with garage and basement for around $225,000 in Basking Ridge. Search here for all available townhouses and condos in Basking Ridge, or here to see single family homes for sale in Basking Ridge.
Is this for an investment? You need to do the math – to see if it makes sense – knowing what you can get for rent, what the mortgage payment would be, maintenance… etc. And the fact that you’d be a land-lord, you’d want it to be conveniently located. There is a lot to think about.
I recently attended a Weichert sales meeting at which a local real estate attorney was a guest speaker. He was there to help us help our clients navigate through short sales. He is one of the only attorneys that I know of who has a dedicated staff member to communicate with the banks and keep on top of each transaction as it works its way through the myriad of steps at each bank.
If you are in a position where you think foreclosure is the only way out – please contact me first – I can put you in touch with the right resources to help you make that decision. A short sale may be right for you instead. If that is the case, it is imperative to get the house on the market as soon as possible since the first thing on the following list is an exectued contract of sale!
To move forward with an attorney’s support for a short sale, you will need to have the following documents:
- Copy of fully executed contract. Don’t worry if the negotiated sale price is lower than the amount of your mortgage.
- Hardship Letter. This is writted by you, detailing the hardship you are facing in keeping up with your mortgage payments
- Copy of the last two years tax returns
- Copy of the last three months pay stubs
- Copy of the lat two months of bank statements
- Written authorization for your attorney to contact the bank and negotiate the short sale
- HUD-1 Statement (the attorney will prepare this)
- Copy of the last two months mortgage statements (for the first and second loan if applicable)
- Copy of the listing agreement
- Complete list of all debts including monthly expenses
- Copy of your 401k and retirement plan(s) statements
- Market analysis prepared by your realtor
- Commission bills provided by your realtor for both the buyer and seller agent
- Back title: includes your deed, the survey and your title insurance policy
The sooner you have all of this information compiled and sent to your attorney, the better. If you want to contact the bank before hiring an attorney you can do that too – the department you want to contact is Loss Mitigation. I strongly recommend using an attorney with EXPERIENCE in this process – there are lots of phone calls required, things move very slowly and then all of a sudden very quickly. It is often difficult to stay on top of where things are in the process. Except for the initial fee, I believe the balance of of the attorney fees as well as the real estate commission will be calculated into the total debt that will be resolved by the short sale.
Information on this post was provided by Rafael J. Betancourt of Triarsi, Betancourt, Walsh & Wukovits, LLC a law firm in Cranford, NJ.
If you are considering a short sale, click here for an estimate of your home’s value in today’s market. This information, along with your mortgage history will help you determine the best course of action.