Your home is now listed and active on the MLS. The agent has created a marketing plan and priced the home aggressively with in market value range. The offer and/or offers are coming in, you sit down with your agent and pick the offer that works the best. From there you submit the package below to start the process the bank.  

• Offer with all signatures
• Buyer Pre Approval Letter
• Copy of Buyer earnest check
• Buyer signed Short Sale Disclosure
• Seller Short Sale Package (already complete)
• Up to date financial Information from the seller
• HUD this is a form with all the numbers as related to the offer submitted

Off the file goes:

Once the lender has received all the information above they assign the file to a negociator. He or she  reviews all aspects of the file. All required paperwork must be complete without errors. 

Come on…You need what?

During the review process it’s not uncommon for the negociator to make request for additional information from both the seller and buyer. In most cases we’re asked to hurry up and produce the additional documents at lightning speed only to turn around and have the bank move at a snails pace. Unfortunately, it’s the nature of the business and it’s very important not  to get worked up about the requests and just keep moving forward.

Broker Price Opinion or BPO:

In most instances, once all the information above has been reviewed by the negociator, they order an opinion of price. They submit the opinion to the lender. From there, typically the process from BPO is 6 weeks to 3 months of waiting while the Loss Mitigation works  the file. You might wonder? What takes so long for the approval process to come? Most loss mitigators are working on hundreds,  if not more,  files at one time.

Hang on and why?

Often buyers become so frustrated with the wait they retreat. In most cases, if they only held on for a while longer the outcome could have been different. The benefit for the buyers to hang on is purchasing a great home at a very competitive price! It’s very important for a good buyers agent to coach their buyer clients as to exactly what they can expect in the short sale process. Buyers shouldn’t make any plans to move, and it’s very important to have a back up plan. Once the short sale approval comes the clock starts for the buyer and his or her financing. Most buyer financing is FHA, this processing can take 45 days to complete.

Next in this series:

Short Sale Approval to Closing.

Completion of the Short Sale Package:

The agent and the seller work close to assemble the proper paper work (short sale package) these documents must be filled out truthfully and complete. If the banks receive anything that’s not complete they could ignore or move the file to the bottom of the Short Sale pile.  I cannot stress enough the importance of concise and complete information when filling out the Short Sale package.

Occupying the home:

While your house is listed as a Short Sale your bank will send someone out to check the occupancy of the home. If they find the house is vacant they can Accelerate a foreclosure on the property. I suggest to remain in the home until the sale is complete.

Utilities and HOA Dues:

When selling a home via the Short Sale process it’s important keep utilities in place. It’s always better to show a home that has heat, electricity and water. The home owners responsibility is to pay all bills associated with the property. As an example, if the water bill or home owner association dues are not paid the home WILL NOT CLOSE. Banks will not pay these bills.

Deficiency Judgments, 1099s, and Short Sales:

If the lender moves forward and forecloses or allows a short sale you only have a few options, they will write off the dept or issue a 1099-C (cancellation of Dept) OR they will choose to pursue a Deficiency Judgement. It’s important the seller/s always consult their own attorney and/or accountant to review the possible ramifications of a short sale. Check out the Mortgage Forgiveness Dept Relief Act aka, HR 3648

Behind the scenes:

• Your agent should set the best price to get the home sold. It’s important not to come in to high or low and attempt to hit the sweet spot with the listing price. 
• Contact your bank and obtain an overview of their processes, correct contact numbers ect. Complete all the paperwork, take photos and implement the marketing plan.
• Receive and process all inquiries on the house. Set up showings, communicate with bank and seller all activity with listing. Review the pricing each month and implement a reduction if the home is getting no activity.

So you’ve consulted with your lender and possibly a non-profit home counselor and decided you want to proceed with the short sale. Where do you start?

1-Meet with a certified SFR real estate agent. They can assist with all questions related to the processes of the Short Sale. Ask the agent how many Short Sale transactions they’ve processed.

2. The agent should ask questions to make sure you would qualify for a possible Short Sale on your home. These types of transactions take dedication and patience from both the sellers and real estate agents. 

3. All lenders require a short sale package to be assembled that includes current financials, hardship letter, letter of authorization and W2′s to name a few. Again, your agent can assist you with this process.

4.  The Letter of Authorization gives your agent permission to talk to your bank and see exactly what needs to be done to get the ball rolling. Under the HAFA program some sellers could qualify for assistance with moving expenses ect..all lenders are different, the only way to know for sure  is to communicate with the bank.

5-Depending on your banks processes they could recommend you get the house listed and bring an offer first before anything else can be done or they order and estimate of value and share with the seller and agent what price they might be willing to except for the home.

Watch for my next blog. What happens next in the Short Sale Route for Sellers.

Considering a short sale and not sure where to start? You should speak to a non profit home counselor or a trusted real estate professional that has earned the National Association of REALTORS SFR Certification. 

Look out for the following:

• Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay – walk away!
• Beware of anyone who says they can “save” your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
• Never submit your mortgage payments to anyone other than your mortgage company without their approval

You would only want to consider a short sale if you know for certain you cannot afford your home and you see that foreclosure could happen if you don’t do something. It’s much better to have a short sale on your credit than a full blown foreclosure.  

Purchasing a home can be filled with excitement and anticipation for homeowners. It can also be a time where additional responsibilities are acquired. Having the assistance of a reliable and honest agent will make all the difference in when buying a home. One of the many things that can go unnoticed is taking precautions against obsolete and toxic building materials which may still be present in homes.

Citizens of Grand Rapids are pushing for continued use of new green, eco-friendly technologies. Green construction brings together many techniques which aim to reduce or eliminate the impacts in which physical structures have on the environment and health, especially when remodeling or re mediating older homes.

Asbestos

Used throughout the 20th century to insulate pipes, boilers and in roofing, asbestos gained recognition due to its resistance to heat and electrical conductivity. Homes built before 1980 should be aware that older homes may still harbor asbestos materials. In most situations, asbestos appears in roof shingles, dry wall, attic insulation, popcorn ceilings, joint compounds and electrical wires.

If asbestos is located, it must be left un-touched until a professional can provide a course of action. In many situations, the best action is no action. Asbestos that is disturbed or damaged due to age is known as “friable” asbestos. This is a concern because its toxic fibers can easily circulate and become inhaled. If asbestos removal is recommended, it should be performed by a licensed abatement contractor who is trained in handling asbestos materials. They must wear protective equipment such as masks and gloves to avoid any exposure.

Asbestos fibers are thin and strong, and when inhaled frequently, an individual can develop mesothelioma, a rare but severe lung ailment caused by asbestos exposure. Symptoms may not show up from 20 to 50 years after exposure. Manufacturers of asbestos obtained medical evidence of its corrosive qualities but continued shipping the substance anyways, leaving workers and homeowners exposed on a frequent basis. Thousands have fought this by attempting to receive mesothelioma compensation for their wrongful illness.

Green building is the consequence of a design that will increase energy efficiency, water and have a direct impact on your health and the environment. Implementing green methods of building can have positive environmental, health and economic benefits. These include: Conservation of natural resources, enhancement of air quality, energy sustainability, increase property value, improve quality of life, improvement of pulmonary/cardiac health and reduction of waste.

Green options such as cotton fiber, cellulose and lcynene should be given consideration as replacements to asbestos. Cotton fiber is quickly becoming a favorite for home builders and renovators. Made from recycled batted material, it is also treated to be fireproof. Research has demonstrated that the use of Eco-friendly insulation alternatives can reduce annual energy costs by 25 percent.

Most programmable thermostats come pre-programmed for typical heating and cooling needs. These settings can be easily adjusted to better suit your schedule. Many also feature a manual override that allows you to temporarily adjust temperatures without interfering with later programmed settings. Most models have a hold or vacation feature that allows you to adjust your home’s temperatures when you are gone for extended periods of time.

There are a few different types of programmable thermostats. When deciding which model to purchase, consider your family’s schedule and when you need the most flexibility.

1. 7-day: This model offers the most overall flexibility by allowing you to alter your settings separately for each day of the week.

2. 5-2 day: This model creates one setting for weekdays (Monday-Friday) and a different setting for weekends (Saturday and Sunday).

3. 5-1-1: This model allows you to create one setting for weekdays and two separate settings for Saturday and Sunday.

Estimated Cost Savings:
The initial cost of a programmable thermostat ranges anywhere from $25 to over $250. Generally, standard models come in at the lower end of that range ($25-$80). These models can usually accomplish most if not all desired settings. Because most programmable thermostats can be self-installed, there is no required installation cost. If you opt for a professional installation from an HVAC specialist, you can expect to pay between $100 and $400. According to the U.S. Department of Energy, installing a programmable thermostat and setting back temperatures 10-15% at least 8 hours a day, you can save an average of 10% off your heating and cooling bill every year, which provides a relatively quick payback period. Click here for Energy Star’s Programmable Thermostat Savings Calculator to see how much you could save.

Issues:
In heating mode, turning the temperature up and down on heat pumps can cause malfunction. Because of this, programmable thermostats do not work as well with heat pumps as they do with traditional furnaces. Keep your heat pump on a moderate setting to help save energy. For more information on what a heat pump is and how it can save energy, click here.

Many electric resistance systems (i.e. electric baseboard heating) utilize 120-volt or 240-volt circuits. There are not many programmable thermostats on the market that are compatible with this requirement. If you are looking to install a programmable thermostat with an electric resistance system, check packaging labels to make sure they are compatible or consider professional advice.

Steam heating and radiant floor heat have slow response times. In other words, it takes longer for these heating systems to react to settings than traditional furnaces. If you are installing a programmable thermostat with one of these systems, make sure you choose one that can track the performance of the heating system to know when to turn on and off to accommodate for the slower response time.

Tips on Using a Programmable Thermostat:

• Adjust the temperature down in the winter and up in the summer to help save energy.
• Adjusting temperatures 10-15 degrees while you are gone for at least 8 hours helps maximize energy savings.
• Do not adjust your settings to extremes (90 degrees for heat and 40 degrees for cool). These extreme temperature settings will not result in quicker heating/cooling.
• If your home has multiple heating circuits, install a programmable thermostat for each zone.
• Programmable thermostats are ideal for families or individuals who are out of the house for long periods of time during the day (i.e. for work or school). Keep your schedule in mind when considering programmable thermostats.

Installation (Getting It Done):
Most programmable thermostats can easily be installed without professional assistance. Follow packaging labels and directions to ensure it is done properly. For best results, install the thermostat on an interior wall away from sources of heat and cooling (vents, doors, lamps, sunlight, etc.). Typically, programmable thermostats are installed in place of existing thermostats, so it is important to move any lamps or heat-generating appliances away from your current thermostat before installing a programmable one to allow it to function properly. Turn off the electricity when installing to avoid electric shocks. If you have any questions or would like a professional installation, contact your local HVAC specialist. Some thermostats contain a mercury tube, so be careful when installing the new one or removing an old one to avoid dangerous breakage.

Videos on This Topic:

Programmable Thermostats (4:18) – Sierra Club Green Homes – Programmable thermostats can be a great way to reduce heating and cooling costs as they regulate home heat by automatically changing temperatures at certain times of night or day as set by the homeowner. In this video from Sierra Club Green Homes, watch as Owen Bailey gives a step-by-step guide to simple installation.

How to Use a Programmable Thermostat (4:50) – Energy Star – Find out what to look for when purchasing a thermostat and how to program them to best suit your family’s comfort needs while reducing energy usage.

How to Install a Programmable Thermostat (2:47) – This Old House – In this video from This Old House, find out how to install a programmable thermostat into your home to start saving energy and money on heating and cooling costs today.

How to Program a Thermostat (5:12) – The Home Depot – By programming your thermostat to adjust according to your schedule, you can drastically reduce your energy usage by avoiding heating or cooling an empty house. In this video, find out what to keep in mind when purchasing your thermostat and get some tips and tricks on how to program it to suit your needs.

More Information On This Topic:

Energy Star – Programmable Thermostats

Energy Star – Programmable Thermostat Tool

Energy Star – Installing a Programmable Thermostat

Energy Star – Tips and Guidelines for Programmable Thermostats

Energy Star – Guide to Efficient Heating and Cooling

Energy Star – Buying Guide

U.S. Department of Energy – Thermostats and Control Systems

Proper placement of carbon monoxide detectors is important. If planning to install only one in the household, the Consumer Product Safety Commission (CPSC) recommends it be located near the sleeping area, where it can wake you if you are asleep. Additional detectors on every floor and in every bedroom of a home provide extra protection against CO poisoning. Depending on the model and manufacturer of your CO detector, technologies should be updated regularly (reference the manual) as detectors are constantly improving and becoming more efficient.

Steps to Reduce Exposure:
It is most important to make sure that combustion equipment is maintained and working properly. Vehicular use near buildings and homes should be carefully managed and monitored. Creating additional ventilation can be used as a temporary relief when high levels of CO are expected for short periods of time. The EPA has the following suggestions to help prevent and reduce exposure to carbon monoxide:

• Keep gas appliances properly adjusted.
• Consider purchasing a vented space heater when replacing an unvented one.
• Use proper fuel in kerosene space heaters.
• Install and use an exhaust fan vented to outdoors over gas stoves.
• Open flues when fireplaces are in use.
• Choose properly sized wood stoves that are certified to meet EPA emission standards. Make certain that the doors on all wood stoves fit tightly.
• Have a trained professional inspect, clean, and tune-up central heating system (furnaces, flues, and chimneys) annually. Repair any leaks promptly.
• Do not idle the car inside garage.
• Never use a generator inside homes, garages, crawlspaces, sheds, or similar areas.

Issues:
Err on the side of caution when it comes to carbon monoxide prevention. Take the extra steps to ensure your home is properly set up to vent all household combustion based appliances and systems. Set up the house with adequate CO detectors which will indicate if an issue is arising and test these systems regularly. Many of these CO detectors are battery powered. Follow the manufacturer’s guidelines on battery replacement. If guidelines provided here, and throughout the more information links found at the bottom of this page are followed to best of the homeowners abilities issues and risks should be minimized to a level that is safe and manageable.

Installation (Getting It Done):

Contact a local HVAC or home heating expert to have your home annually checked for proper ventilation of heating and other combustion based systems. Installing carbon monoxide detectors is a do-it-yourself project and detectors can be found in most hardware and some general stores. Make sure to test your detectors regularly and to have your home tested for proper ventilation regularly.

More Information on This Topic:

EPA – An Introduction to Indoor Air Quality: Carbon Monoxide

EPA – Protect Your Family and Yourself from Carbon Monoxide Poisoning

U.S. Consumer Product Safety Commission – Carbon Monoxide Questions & Answers

Center for Disease Control and Prevention – Carbon Monoxide Poisoning

U.S. Fire Administration – Carbon Monoxide

HomeSafe.com – Placement of Carbon Monoxide Detectors Important