If you having trouble keeping up with the mortgage payments and could potentially lose your home to foreclosure, then it might seem like a smart move to sell your home to a family member. That way, they can get a good deal on your home, you can continue to live there and pay cheap rent, and, once you are back on your feet, you can purchase the home back from them without worrying about the rising market price. It sounds like the perfect solution right? However, unfortunately, in most instances, it will not work.

Problems with the Lending Company

One of the reasons why short selling to a family member will, in most instances not work is because short sales must be approved by your lending company. If your lending company discovers who the buyer is, they will not be too pleased in letting this happen. Why not? Well, first of all, because it could come off as fraud or a scam. After all, in a short sale, the lending company is not making any money – they are losing money on their investment – and thus they will not be too happy to know that you and your family could be benefiting from the transaction.

But what if it is an honest deal? Well, if this is the case, your best bet is to speak to a certified Wisconsin short sale agent who can help determine if this will work in your case. In some instances, for example, if the offer is high enough that the banks cannot say no, then the short sale transaction may be accepted. However, you will need to get professional help in order to avoid being denied, or worse, being accused of real estate fraud.

Emotional Problems with Short Sales in WI

Another thing to consider when it comes to short selling a home to a family member is that often the entire burden of the home is passed on to your family. This does not only include the new mortgage, but also any additional taxes and fees that you, the short sale seller, has been able to pass on. There is a lot more to consider in a Wisconsin short sale than just the price of the house.

Finally, although family should always come first, it’s never a good idea to mix family with business. And, when you are dealing with real estate, it can often get messy when these two combine. What happens if your family has trouble keeping up to the mortgage? What happens if you cannot afford the rent or if something major goes wrong and there is a fight about who is supposed to pay for the cost of the damage? The real estate game is a slippery one and can often cause family feuds that could easily be avoided.

Furthermore, there is nothing worse than feeling like you owe your parents or your brother something huge. Holidays are often put on hold in order to make additional household payments and there is always a feeling of pressure and guilt, no matter how relaxed you think the transaction is. When you are paying a loan back to the bank, there is no emotional connection and thus, you often feel freer to spend your money as you see fit. With family and a WI short sale, this is not the case anymore.

In today’s fast paced world, we all want everything now! Although there are only a few things in life we have to wait for, these things are often worth the wait. This is the case when it comes to real estate transactions. Although some real estate transactions will go off without a hitch and the contracts can be signed within a matter of days, this is usually not the case when it comes to Wisconsin short sale transactions.

What can you expect when it comes to time and a short sale?

On average, WI short sales will take anywhere from 60-120 days to complete. However, this is a rough estimate and, as more and more families look for short sales as an option, you can expect the wait period to continue to lengthen.

Reasons for the Lengthy Short Sale Transaction Period

So what’s taking so long? One of the reasons you can expect a long wait period when it comes to Wisconsin short sales is simply because of the current real estate market. According to the National Association of Realtors, over 50% of properties sold are short sale or REO properties. Furthermore, in Wisconsin alone, there are over 30,000 foreclosed filings on homes, many of which could qualify for a short sale. What this means from a lending point of view is that there are so many different short sale packages coming in each day that is can take a while to get to all of them. For the short sale seller and the short sale buyer, there is nothing to do but wait.

Another reason for the long wait in Wisconsin short sale transactions is because there is a lot of paperwork and organization involved in the process. And, finally, short sales take so long because there are so many steps involved. Below is a timeline for the typical short sale process in WI.

A Break Down of the Short Sale Transaction Timeline

First of all, you will need to get authorization on file with the lender. This can take around 2 days. Next you and your real estate short sale agent will need to compile all the short sale documentation which can take anywhere from 7 to 14 days. You can expect another 3 to 7 days for the short sale package to be filed by the lender and another 10 to 14 days for your package to be assigned to a negotiator in the lending company.  These are only the first steps involved.

Next the BPO will need to be ordered and scheduled which will take anywhere from 19 to 30 days to do. The BPO will need to be sent to the negotiator who will then be in touch with the short sale agent about the negotiation or approval of the short sale. All of this can take between 30 to 45 days to complete.  And thus, your grand total for the transaction process is between 70 and 107 days to complete the entire process.

You will notice that most of the waiting time occurs due to the lending company, BPO and negotiation process and, unfortunately, there really is no way to speed this up. It all depends of the efficiently and the availability of your lending company at the time of your short sale transaction.

One of the most common questions that families have when it comes to the short sale Wisconsin process is what they should do with their mortgage in the meantime. A WI short sale transaction can take anywhere from 3 to 4 months to actually complete. Should you be making your mortgage payments or should you just stop? This is not something that can be answered easily because there is no right answer set in stone. However, it’s important to understand what is at stake if you do completely stop with your mortgage payments during a WI short sale transaction and what this could mean in the long run.

For many short sale sellers the choice whether to continue with the payments is not even a viable one as the debt and the bills are simply too much without even trying to make the payments. Other short sale sellers may have a little extra money that could go towards the mortgage- the question is whether or not it should.

Saving your Money during a Short Sale WI Process

The first reason why stopping payments on your current mortgage could be a good move is because you can put that money towards something else, such as the funds to move elsewhere or pay for a deposit on a rental home. If you have credit card debt or other large debts that are damaging your credit, you could also put the acquired mortgage money towards lowering these debts.

Accepting Defeat during a Wisconsin Short Sale

Another reason why many people stop paying the mortgage when negotiating a short sale is simply because it is not their house anymore. If they are struggling to make payments and have been warned that foreclosure is in the near future, it may seem fruitless to even try. If the short sale does not go through and you know that foreclosure is the only other alternative, it might be best to save your money to start over again.

Providing Incentive for the Banks to Make a Decision

Finally, those who are in true default and are not paying their mortgage may take the top priority spots in the lending company lineup and thus, the short sale transaction may be sped up. By not paying the mortgage, you are actually speeding up your short sale in WI transaction and providing the lender with an incentive to accept the short sale offer. However, while you are not paying your mortgage, you will be incurring a poor credit rating in the process.

Keep in mind that choosing to continue to make payments during a short sale or stopping these payments  is something that every individual must decide on his own and will come down to your personal financial situation and what is best for you. Understanding the pros and cons on each side will allow you to make the right decision. To see a list of the pros to short selling, see the blog titled Continuing Payments When Negotiating a WI Short Sale. And, keep in mind that there are always two sides to every decision in life. The big question is – which is right for you?

When it comes to whether or not you should continue with your mortgage payments during the process of a short sale, there is no clear right or wrong answer. No one can tell you what you should do and no one, except perhaps a lawyer, should offer you this legal advice. Instead, outlined below are some of the advantages to keeping up with your mortgage payments during a Wisconsin short sale transaction. See next week’s blog – Stopping Payments When Negotiating a WI Short Sale – to read the other side of the story and make a more informed decision.

First of all, not everyone can afford to make this choice. It is important that you do not let other parts of your life suffer when trying to continue with your mortgage payments during a WI short sale. If you can, make sure your family is supplied with food, clothing and the basic living essentials. Make sure the electricity is paid, that the car insurance is up to date and that there is fuel in the car to get to work. If there is money left over, then putting it towards your mortgage can offer some serious advantages in the long run. They are outlined below:

Keeping Your Credit and Future in Order during a Wisconsin Short Sale

One of the biggest advantages to continuing to make payments is that you will be able to qualify to purchase a new home right away. If you have kept your payments up to date and have not been classified as a ‘delinquent’ then you will be able to immediately buy another home after a short sale. For some families, this can be a big incentive to continue with their payments.

Another big advantage to continuing your payment is that you will be able to protect your credit rating. Every time you miss a mortgage payment, your credit rating will go down which can result in higher interest rates and stricter loan terms in the future. Although undergoing a short sale in WI will drop your FICO rating a little bit, it will not nearly be as substantial if you continue with your payments during the waiting process.

Peace of Mind in Continuing Payments during a WI Short Sale

Although this is not true with everyone, many people find that continuing with their mortgage payments gives them a peace of mind and a sense of pride that they have not completely given up and accepted defeat. Understand that in a short sale, you are not accepting defeat- you are simply choosing the better alternative to a foreclosure. However, for some, this payment will help them sleep better at night.

Finally, perhaps the biggest advantage of continuing your mortgage payment is that, if the short sale is not accepted by your lending company, you do not have to necessarily give up your home. Furthermore, if the deal falls through, you can continue to list your home and hope for another short sale offer in the future without worrying about the lending company foreclosing right away.

It seems today that technology and changing times have made our society lazy. We have abbreviations and acronyms for all sorts of words and expressions that may leave our head’s spinning. Whether you will BRB or are MIA the world of abbreviations can lead to more confusion than simplicity. From TMI or LOL, from TBC to RSVP, from 24/7 to BYOB, etc. etc. etc there seems to be an acronym for everything. This has even transformed into the real estate world where you may feel like you need an English- Realtor dictionary just to dissect some of the common phrases.

If you are looking into a short sale in Wisconsin as an alternative to foreclosure, there are only two abbreviations that you need to be familiar with – BPO and CDPE.

What is BPO in a Wisconsin Short Sale?

BPO stands for Broker Price Opinion and is, essentially, the same thing as an appraisal. In a short sale transaction, the lending company will hire a broker company to appraise your home. This usually occurs after you have submitted the paperwork for the short sale. You can expect it to take a couple of weeks before a BPO is done on your house. This is because, in many instances, the lending company’s head office will not be located in the same area as your home and thus, the lending company will need to contact a brokerage agent in the Wisconsin area to see the value of the house. The broker company will then assess the house both inside and out in relation to several different factors to determine its current market value.

A BPO can affect you because it can determine whether the lending company will accept the offer of the short sale. Let’s say, for example, that a potential short sale buyer was offering $200,000 on your home. If the BPO comes back that the home is valued at $175,000, then the lending company may accept the short sale and simply ignore the difference. However, if the BPO is only $100,000, then you may have a harder time getting the lending company to accept the short sale. The closer the BPO is to the short sale offer, the better chance you will have of the short sale transaction going through.

What is a CDPE in a Short Sale?

Another abbreviation you will need to know is CDPE which stands for Certified Distressed Property Expert. A professionally trained CDPE is someone who can help you out with the short sale of your Wisconsin home. They are a trained real estate agent who specialize in short sales in WI.

When it comes to the short sale process, having an experienced professional on your side is by far the best move you can make. They are there to act as the middle man between the lending company and you. Instead of worrying about the approval process and the paperwork involved, you can concentrate on supporting your family while a CDPE handles the dirty work.  This will ensure the transaction is handled in an effective manner and approved ASAP.

Short sales in Wisconsin are becoming more and more common, especially with the number of potential foreclosed homes continues to rise. A short sale is an alternative to a house foreclosure on the real estate market that occurs when the lending company agrees to allow a house to sell on the market for less than what it owed on the mortgage. The difference is dropped and the original house owner (the short sale seller) is able to walk away without debt and without a ‘foreclosure’ mark on their credit report. However, when it comes to a short sale in WI, who is actually making the profit? We all know that someone must be benefiting from this transaction so where is the money going?

The Small Profiteers in a Short Sale in WI

The first person who is going to provide from a Wisconsin short sale is the lending company. Although they may be taking a small hit by accepting the sale of a house for a smaller amount than what it owed on the house, they are still making back their investment money and thus benefiting. In most instances, the money they have made from the interest incurred on the mortgage loan will  more than make up for the additional money that they may lose by allowing a short sale to go through. Furthermore, if the house is foreclosed, the lending company will have even more expenses on their hands and usually lose a large profit if the house does happen to sell again.

Another person who benefits from a short sale is the buyer in the short sale. Although they are paying for the house and inevitably going into debt and incurring a mortgage, many short sale buyers are using this home as investment property. In the end they are getting a great deal on a decent home and will be able to profit from it once the market picks up or once they determine what they want to do with the house.

Although the WI short sale seller will most likely not have to worry about additional taxes and fees for their house, the lending company or the new buyer will take on this responsibility. And thus, the Internal Revenue Service is still profiting from a short sale.

The Biggest Winner in Short Sale Transactions

However, perhaps the person who comes out on top is the original home owner. Although technically they are not pocketing any money, they are walking away from a very tough situation with hardly any damage done. Their credit report will not suffer as much as it would if they were go foreclose their home. Furthermore, they are not left with the emotional stress or shame that comes with a house foreclosure. And, finally, instead of worrying about what’s next, short sale sellers are able to walk away and start over. So, although there is no money involved in the transaction, the short sale seller will most certainly walk away with a bargain – their financial freedom.