Sweet Home Chicago

Deed in Lieu of Foreclosure - defined

I've said this before, but it should be repeated.   I'm not a lawyer, and I've never even played one on TV.  But in this unusual real estate market, I am learning very quickly about all the different ways that lenders and sellers can reconcile a mortgage agreement gone sour. 

Deed in Lieu of Foreclosure is when the homeowner basically throws up their hands before the foreclosure process even begins, or maybe during the early stages when they've missed some payments, and just hands over their home to the bank.  This skips the foreclosure process and allows the homeowner to just move out and get on with their life.  In some situations homeowner can negotiate the timing of when they will actually move out.  The one catch is that you've got to try selling the home before the bank is allowed to go forward with Deed in Lieu of Foreclosure.  I'm not sure why this is the case, but apparently that is the law.

I learned about this because I have two properties that I am trying to sell that may end up back in the bank's hands (via Deed in Lieu of Foreclosure) if I don't sell them within 6 months.  Both owners owe more to the bank than the properties are currently worth, so they are both short sales.  You can check out my archives for previous posts on short sales if you want more information on that.

Short Sale in Highland Park - 2206 Kipling 

Short Sale - Vacant Land on Westview in Des Plaines   

Contact your lawyer if you need more information about your particular situation.  Or, I know two lawyers with expertise in this area - give me a call for a referral: 847-226-5594

As always, if you know someone that is thinking about buying or selling a home, please have them give me a call.  To search for any property for sale in the Chicago area, go to my website.

Thank you for reading!

nsk

Short Sale Advice for Buyers

Most home buyers right now are looking for bargains.  And, there are plenty of them in the Chicago area - the North Shore is no exception.  The best bargains are "distressed" properties, here are the most common situations: 

• Bank-owned properties - These are homes that the banks had to foreclose,  and yes the North Shore is not exempt from foreclosures.
• Short sales -When the owner owes more to the bank than the property is worth on the current market it is a short sale.  The owner must either come to the closing with money to make up the difference, or they must prove to the bank that they have a hardship and cannot make up the difference.  If the seller cannot make up the difference, then the sales contract and all terms of the sale must be approved by the bank.  Since the banks really aren't in the real estate business, depending on the bank, the purchase process can be lengthy.
• Bankruptcy - The homeowner has declared bankruptcy and the sale of the home is being directed by the court system.

In general any distressed property will sell at a price below the market value.  This is particularly true in those cases where the property is not in good condition.  For short sales, the lower market value reflects the added inconvenience of purchasing a home that is a short sale, even if the home is in relatively good condition. 

If you are interested in purchasing a home that is going to be a short sale, here is what you need to know:

• The short sale process takes longer than a normal sale.  It  also takes longer than purchasing a bank-owned property or a home being sold for bankruptcy.  If you want to purchase a short sale, be prepared to WAIT between 30 - 120 days for the bank to approve the purchase.
• Do not wait until the bank approves the deal to do your own due diligence. You should have  home inspection immediately so that you can decide whether or not you want to go through with the purchase (usually these sales are for the property in "as is" condition).
• Ask if the homeowner's bank is offering special financing.  One bank that I am dealing with offers 4% mortgage rates to buyers that are purchasing their short sales.  Buyers still need to qualify with strong credit score and a downpayment.
• Hire a lawyer that has a successful track record with short sales.  You need a pro-active attorney that will work hard for you to make sure that the sale makes it to the closing table.  Some real estate lawyers just sit back to wait and see what happens with the bank - if your lawyer does this, the sale will most likely fall through.  Your lawyer needs to be in touch with the seller's lawyer and the bank to make sure that the process is moving forward.  The banks are inundated with short sales and foreclosures and it is very easy for these deals to fall through the cracks if at least one of the lawyers doesn't know how to work with the banks.
• Once the sale is approved, you will need to be ready to move quickly.  Typically, after the sale is approved, the bank will want the transaction to close within 30 days. This is another reason that you need a pro-active lawyer that can move quickly to make sure that nothing falls through the cracks.

I have a property for sale in Highland Park right now that is a short sale. This particular home is in great condition, and has had many updates.  Click here for more information on this home.

Thank you for reading.

nsk