New Jersey Short Sale Process
If you are reading this article, there is a good chance you were searching online for information regarding the New Jersey short sale process. Not only have we been on the forefront of short sale solutions for homeowners, but in the process and over the last 4 years of doing them in two states (FL / NJ), we have created countless relationships with lender reps, loan servicers, and those involved in the final decision of approving the deal. The following statement could be seen as a contradiction to some:
Short Sales can be viewed as one of the biggest real estate investment decisions of your life.
Now why would I consider a short sale an investment? Well, for one, if you are challenged with a hardship or are underwater on your mortgage, you are a great candidate for a short sale. From Day 1 of beginning the process, you will have to immediately stop paying your mortgage payments if you haven’t already done so. Banks simply aren’t incentivized to negotiate a short sale if you are proving that you are capable of paying. Typically a short sale takes an average of 6 months from start to finish. During those 6 months, and the inability to continue paying your mortgage, you can begin to save your money for relocation, paying bills, etc… Your own morals will tell you not to take your savings and go on a worldwide cruise…although you can if you really want.. Disposing of a home that has given you stress, hardship, and expendable cash limitations, the end result is like a 10,000 pound weight lifted off your shoulders.
Short sales are a tedious, time consuming, pain in the neck, mostly for the agent that is negotiating the sale for you. As a result of our experience, and established relationships, we offer clear solutions in this lengthy process. A short sale specialist with New Jersey Real Estate Guys will be able to assist in the entire process, educating you before the initial submission all the way to closing. It is important that you are aware of the process before jumping into it. Once you are detailed, a short sale seems like a no-brainer. Ok, you will lose some points on your credit score. But if you have a house to get out of and you are underwater or faced with a hardship, don’t you think dinging your credit is worth it? In the grand scheme of things, the answer is “probably”. With today’s mortgage qualification guidelines, once you short sale, you will likely not be approved for a new mortgage for about 2 years. With government making changes close to election time, I see this easing a bit. So if you do have plans to buy a home, you will need a co-signer, otherwise you can join the millions of other short sellers in renting, figuring out your next steps (which could be fun) and buying in a couple years when you are back on your feet or simply just ready for it.
First, you will need to hire a real estate agent. This is required as the bank will be sure you list your property with a brokerage. During the listing paperwork process, you will need to gather your 2 most recent tax returns, 2 most recent months of banks statements, paystubs, and be required to fill out a financial worksheet (similar to a mortgage application) and create a hardship letter, explaining why you are looking to short sale your home. The letter is very important and an agent with New Jersey Real Estate Guys can help you with New Jersey Short Sales, we are experienced, and we know what the banks are looking for.
Once all of this information is gathered, it is sent to the bank which creates a file for the sale and thrusts you into short sale mode. Once an offer is made and accepted, it goes to the bank for review and that is where the negotiations begin. Your real estate agent will typically make 3 calls per week to the bank to make sure they are on the ball. Unfortunately not many agents spend the time like this, but we do.. This is why we are so successful and are able to achieve favorable terms for the homeowner.
If your loan is insured by Fannie Mae or Freddie Mac, our first preference is applying for HAFA (Homes Affordable Foreclosure Alternative). This is the grand-daddy of short sale programs. It basically wipes the slate clean. It guarantees that your lender cannot ever come after you for a deficiency, it offers a payoff for any second mortgage or Home Equity Line on the home, and it also gives you a relocation cash incentive of up to $3,000. The bank is also agreeing not to take your checking or savings account reserves and using that as collateral. They are aware you need money to live. Keep in mind that if you are proactive in pursuing a short sale before you become TOO delinquent could potentially incentivize the bank to offer additional bonuses.
The final terms of the sale are pretty simple. The bank agrees to release you from debt and also agree to make any backed tax payments, HOA / Co-Op dues, attorney fees, real estate commissions, and all closing costs. The short sale process will not cost you a dime. If you live in a building where the monthly dues include cable, water, heat, etc.. you will need to continue to make those payments if you want your utilities and services. Once the terms are accepted by all parties, the buyer is allowed up to 45 days to close using their own funds or by obtaining a mortgage. If the terms grant you the $3,000 relocation incentive, this certified check is given to you at closing.
In conclusion, you should be anything BUT afraid of the short sale process. We have assisted dozens of short sale homeowners and every one of them have a bittersweet ending. Sad to leave their home, but ultra relieved to be able to start fresh and get out of a difficult hardship. It is so important these days to work with an experienced agent. Every good quality agent has a good quality attorney. The attorney is directly linked in as part of our team as they take care of contractual details. If you or anyone you know are facing the decision as to whether or not to short sale your home, give us a call for a free consultation. You’ll be glad you did and I can assure you that you will hang up the phone with a sense of relief, that there is a brightening light at the end of the tunnel.
Scott Allan, founder of New Jersey Real Estate Guys and sales associate with Weichert Realtors can be reached directly at 877-688-7582.
Tenant Turnover? Don’t Forget the Carpet
Whenever an apartment or house tenant vacated the residence, a land lord has to complete some maintenance to get the place ready for the next tenant. Part of this is to make the place as appealing as possible, and another part is that some of these improvements are mandated by law. Laws vary by state, so check your state’s laws to make sure they have been followed.
Maintenance usually involves cleaning the whole location, including painting all the walls back to their original color (typically beige or white), washing the windows and mirrors, checking all the light fixtures, checking all the locks (or changing them if the previous resident did not return the key), and generally doing whatever needed to make sure the place looks nice. If there was damage to the ceiling or walls, the repair men fix the drywall and repaint it to look as new as possible.
One of the most common maintenance activities is carpet repair. Carpets are one of the most used items in a living space, as everyone walks on them. Furniture can place a heavy load on very small areas of carpet, permanently crushing the fibers. Spilled drinks, sauces, and inks all leave very visible marks on carpet, and new residents don’t like seeing other people’s messes. Pets can leave both a visible stain and an odor that’s hard to clean (lots of residences charge a pet fee so they can pay for the carpet replacement after the lease ends). Specific places, like doorways or entryways, gather the most damage and wear-and-tear.
For carpet repairs, the carpet company will send out a surveyor to examine the damage and determine if the carpet can be cleaned or must be replaced. This is a costly process either way, but many renter complexes have special deals and discounts due to the high amount of business. The company will replace or repair the carpet, and the renter complex maintenance men will prepare the apartment for the next resident. After that resident leaves, the process begins all over again.
Dallas Carpet Repair & Cleaning
6534 Trammel Drive
Dallas Texas 75214
Unlocking Your Equity and Using It Wisely
Financing investment property right now can be difficult, especially if investors are trying to use stated income loans, or have a number of properties on their credit reports. Lately, several our investors have found they can take advantage of their home equity at a very low rate, 3.99 - 4.25% at the time of this writing.
Warning: Investors should be responsible with their equity, HELOCs should be used to increase your wealth, not advance your lifestyle. It is important to keep in mind that even though you are tapping into “your equity”, you are still borrowing money. As with all real estate investments, equity isn’t fully realized until you sell. So before borrowing, you should analyze the numbers and make sure you will be profitable. If you are paying 4% for your HELOC you should be getting at least a 7% cash-on-cash return on the new investment. Cash-on-cash return is the ratio between the property’s cash flow and the amount of the initial investment in the form of a percentage.
Annual Cash Flow / Cash Invested
For example:
Let’s say you borrowed $40,000 at 4%, your monthly payment would be approximately $133.
You then take the $40,000 and use it as a down-payment on a $200,000 duplex. The duplex has a cash flow of $400 per month. Your cash-on-cash return would be 12%.
Pretty sweet huh? We have a ton of great deals that offer a strong cash-on-cash return like the example. I just got back from an exciting market that offers a 40% cash-on-cash return your first year!
Investors that have money and are able to put down 20% - 30% on deals are going to get some great buys. Call me to find out more.
Skyler Moore
YAERD.org Investor Relations & Project Management
Skyler [at] yaerd.org
312-265-8417
Tip For Your Next Real Estate Investment Build
Have you ever seen somebody’s sprinkler system on while it was raining? I see it all the time in Florida and it’s kind of depressing since we are in a drought.
Intro Cyber-Rain and their phenomenal “smart” sprinkler system. Unlike most sprinkler systems that are on a human adjusted timer for their watering, the Cyber-Rain system is linked up to Weather.com to get real time updates on the current weather. This system saves a substantial amount of water with most users reporting approximately 30-70% saving on their bills.
With the cost of system coming in at $349, your return on investment could come pretty quick if you have agreed to pay the water bill on your rental property.
This is definitely something you may want to consider on your next real estate investment build. I’m sure Mother Nature will thank you also.
Jeremy Quinn
YAERD.org Advisory Board Member
jeremy[at]yaerd.org
561-210-5636
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