For Sale by Owner, Foreclosure

Understanding The Foreclosure Process In Virginia And Maryland

WHAT IS FORECLOSURE?

Foreclosure is the legal process in which lenders take back a property that is securing a loan. Foreclosure happens if the borrower has not made a mortgage payment in approximately 3 to 6 months. The foreclosure process is slightly different in every state, but there are two main types of foreclosure: judicial and power of sale.

JUDICIAL FORECLOSURE

  • Lender files a suit in the court system
  • The court will send a letter demanding payment
  • You have 30 days to bring payment to court to avoid foreclosure (extensions are sometimes possible)
  • If you cannot pay, the lender can request the sale of your property by auction and you will be evicted.
  • Any contractors or banks with liens against the property can collect from the proceeds of the auction

NONJUDICIAL FORECLOSURE (POWER OF SALE)

  • Lender serves you with papers demanding payment
  • There is a waiting period during which you can submit payment
  • If you do not pay, your property will be transferred to a trustee
  • The trustee can sell your property to the lender at public auction
  • Any contractors or banks with liens against the property can collect from the proceeds of the auction

FORECLOSURE IN VA

Virginia is a “title theory” state, meaning that the property title remains in trust until the loan is made in full. In most cases, Virginia residential foreclosures are nonjudicial. This means that the lender doesn’t have to go through state courts to foreclose. However, there are also cases of judicial foreclosures. Most of the time, after foreclosure, there will be an auction and the property will be sold. Post-foreclosure redemption periods are rare, but they are possible, and deficiency judgments are permitted. The whole foreclosure process takes about 2-3 months.

FORECLOSURE IN MD

Maryland is a “lien theory” state, meaning that a property acts as security for the underlying loan. In most cases, Maryland residential foreclosures are judicial. This means that a state court issues the final judgement of foreclosure, after which the property will be sold with public notice. Court determined post-foreclosure redemption periods may be allowed, and deficiency judgments are permitted. The whole process takes about 2-3 months.

HOW TO AVOID A FORECLOSURE AUCTION

In some cases, you can avoid getting foreclosed and evicted. It is always worth a try. You can call your bank and attempt to negotiate, or you can work with a reputable real estate company like 8 Day Home Sale to sell your property for its cash value before the foreclosure process begins. If you’ve received notice of foreclosure, there is no time to waste. Get in contact with us today Maryland and Virginia residents for a no-obligation, no-pressure, fair cash offer on your home.

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For Sale by Owner, Foreclosure, Investing, Mortgages, Real Estate Investing, Sell Your House

5 Reasons Why Selling to a Cash Home Buyer Makes Sense

Is there anything better than cash in-hand? When it comes to selling your house, perhaps not. Selling your home to a cash home buyer or considering cash offers for homes can help you walk away from the closing table quite a bit richer than you were when you sat down. But what is a cash offer, and when is it smart to sell a home for cash?

What is a Cash Offer?

Cash offers for homes occur when a buyer offers a seller cash for the entire cost of the house instead of getting financing from a mortgage lender or other institutions.
Most home buyers must obtain some type of financing to afford purchasing the house, usually in the form of a mortgage. However, a cash home buyer will be able to purchase a home without a mortgage loan or other financial assistance. Cash offers are typically lower than the full market value of the house, but there is a good reason for this. First, cash offers are low risk, as sellers don’t have to worry about buyer financing falling through. Second, most of the reduction in the offer price is offset by the fact that the seller does not have to spend time, money, and resources on selling, upgrading, and negotiating the property.

How Common Is It to Sell a Home for Cash?

Cash offers are quite common. The most common scenarios where cash offers occur are from an investor or investment company interested in a property. In these cases, a homeowner can typically sell their house as-is. However, there are many reasons why a cash home buyer may be interested in your property.
Some home buyers have cash on hand, such as from the proceeds of selling their previous home. Cash buyers are also common in competitive seller markets where financing delays may cause the seller to accept a more enticing offer. This occurs because buyer who can pay cash have an advantage on buying a property over mortgage buyers.
Also, the property is a fixer-upper, a cash sale can help the homeowner sell their house as-is. Cash buyers are also commonly courted if the property is facing a foreclosure, since in these cases homeowners typically must close quickly.

Is Working With a Cash Home Buyer a Good Choice for Me?

There are several advantages to accepting cash offers for homes. First, the average mortgage buyer takes 30-45 days to close, whereas a cash offer may take a week or two. Overall, in a competitive market, sellers will benefit from taking a cash home buyer offer over a mortgage buyer. Buyers with the fewest obstacles are the easiest and most profitable to deal with.
For years now, 8 Day Home Sale has been helping homeowners across Washington D.C., Virginia, Maryland, and Baltimore . We’ve helped every single one of our customers sell their home on their timeline, for cash. If this is something that appeals to you, read on for the five top reasons that selling to a cash homebuyer makes sense.

1. More Flexible and Faster Sale Process

Cash offers for homes are more attractive to sellers because there is no fall-through risk with the purchase and there is a faster closing time. A cash house buyer does not need to obtain a mortgage, as it is implied, they already have the cash for the purchase. Therefore, the mortgage application and approval process can be skipped.
Not having to secure a mortgage also means there is less of a chance that the financing falls through. A mortgage buyer can face financial difficulties, like an employment change or identify theft, which can ultimately derail a sale. Also, the underwriting process for a mortgage takes a month or more, and there is always the possibility that the deal will fall through due to the buyer’s inability to secure a loan during that time. Therefore, mortgage buyers are less reliable and certain.
When you sell a home for cash, there is no mortgage application, documentation, underwriting, or appraisal. There is need for the buyer to sort out the title policy and insurance, provide proof of funds, and sign closing documents, but that may only take a week, maybe two. A buyer with a cash offer will have to supply a seller with proof of funds, which automatically shows the buyer is ready and able to close quickly.
When you sell home for cash, you do not need to enlist a real estate agent. Therefore, you do not have to wait for them to take photos, list your home, or host open houses. A faster closing can put money into a seller’s pocket sooner.
And a closing in a cash offer only involves a settlement statement, title, deed, and a cashier’s check. There is reduced paperwork and lower overall closing costs since there are no lender fees or transactions needed.

2. No Improvements or Updates Needed

In a cash sale, you can typically sell the house as is. When your home is offered in an “as-is” condition, the buyer can take it or leave it. You do not need to agree to making repairs or upgrades to the home before a buyer agrees to sell it. As a result, there are usually only a few, if any, contingencies with cash offers for homes.

3. No Real Estate Fees

Cash offers for homes means not having to pay for a real estate agent’s commission. Typically, commission fees are around 6 percent, which can turn out to be a large sum of your selling price. Although a seller may be accepting less money from a cash home buyer than they would a mortgage buyer, a seller will be saving on improvements, bank fees, agent fees, and interest fees.

4. Avoid Most of the Nitty Gritty

During the home selling process, there are several steps that could go wrong. However, with a cash home buyer, a lot of those make or break steps can be avoided. The deal favors the seller, rather than the buyer, because the buyer knows they are getting a home as-is.

A buyer also does not need an appraisal, as would be required by a mortgage buyer’s lender. Home appraisals are needed by the mortgage lender and are considered part of the cost of buying a home. Therefore, a cash home buyer will usually skip this process. As such, a cash offer can help people sell homes quickly and eliminates the cost and time requires to get an appraisal.

Cash home buyers will end up paying some of the same fees. For example, in either case, a buyer needs to pay an earnest money deposit and pay transfer taxes, escrow fees, and closing cost. This is in addition to the homeowner’s responsibility of purchasing homeowner’s insurance, HOA fees (if applicable), and property taxes.

5. Helps to Avoid Foreclosure

If your home is going to be foreclosed due to an unpaid mortgage, selling your home for cash will help you pay your mortgage and start over sooner. 8 Day Home Sale has helped countless home sellers in this situation, as well as people looking to downsize, sell a property they recently inherited, seniors looking to transition to new housing, and people in countless other circumstances that merit a fast and easy home sale. If you’re interested in working with a cash home buyer, contact us today – we’ll work with you on your timeline, and you’ll walk away from the closing with cash in hand.

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Foreclosure

5 Ways to Stop Foreclosure in Maryland

If you have missed more than three mortgage payments, or your lender has filed a Notice of Default (NOD), you might think the loss of your home is inevitable. Even at this stage, there are five strategies you can use to stop foreclosure in Maryland.

Foreclosure Workout. Up until the time your home is scheduled for auction, most lenders would rather work out a compromise that would allow you to get back on track with your mortgage than take your home in a foreclosure.

Short Sale. After your lender files an NOD but before they schedule an auction, if you get an offer from a buyer, you lender must consider it. If they foreclose on your home, the lender is going to simply turn around and try to resell it; if you present them with a reasonable short sale offer, they may see it as saving them the time, effort and trouble of finding a qualified buyer in a soft market. So, if your home is on the market, continue to aggressively seek a buyer for it, even after your lender initiates the foreclosure process. Read our guide on How to Sell Your Home Fast When Foreclosure Looms for action steps you can take to unload your home fast, then make your best pitch as to why your lender should agree to the short sale.

Bankruptcy. Bankruptcy stops foreclosure dead in its tracks. Once you file a bankruptcy petition, federal law prohibits any debt collectors, including your mortgage lender, from continuing collection activities. Foreclosure is considered a collection activity, and so the day your lender becomes aware that you have filed for bankruptcy, the foreclosure process will effectively be frozen. But here’s the rub; once you get to court, the bankruptcy trustee’s role is simply to play referee or mediator between you and your creditors. Bankruptcy really just buys you more time to replace your lost job or recover financially from a temporary disability; it doesn’t let you off the hook for your debts. The law requires your mortgage company and other creditors to work in good faith with you to formulate a reasonable repayment plan so you can get back on track. Consult with a bankruptcy attorney regarding whether filing for bankruptcy is a good strategy for you.

Deed in Lieu. A deed in lieu of foreclosure is exactly what it sounds like. The homeowner facing foreclosure signs the deed to the home back over to the bank — voluntarily. This sounds like it would be a great option, but actually has the same impact on a homeowner’s credit that foreclosure does. Lenders are very reluctant to agree to take a home back through a deed in lieu of foreclosure for a number of reasons: They fear the homeowner will sue later alleging they didn’t understand what was happening, the lender must pay any second or third mortgages or home equity lines of credit (HELOCs) off before executing a deed in lieu, and the lender wants to be certain that the borrower’s financial distress is real. Allowing the foreclosure process to proceed is one way the lender can be sure the borrower is not faking poverty.

As such, a deed in lieu of foreclosure is virtually never granted unless: foreclosure is imminent; the owner has had their home on the market for several months and been unable to sell it; there are few or no junior loans or liens the lender will have to pay off; the seller can document their financial hardship; and the seller initiates the process and documents the voluntary nature of their request for a deed in lieu. Even when all these factors are present, many lenders will not agree to a deed in lieu, but it is worth a try!

Assumption/Lease-Option. Most loans these days are no longer assumable. The average mortgage now contains a “due on sale” clause by which the borrower agrees to pay the loan off entirely if and when they transfer the property. However, if you are facing foreclosure, you might be able to persuade your lender to modify your loan, delete this clause and allow another buyer to assume your loan. The lender may want to assess the new buyer’s qualifications, but it can be a win-win-win option for all. You might be able to negotiate a down payment from the buyer which you can use to pay off your outstanding past due mortgage balance.

In a lease-option scenario, the buyer becomes your tenant, and you continue owning the property until the buyer has saved enough down payment money, improved their credit sufficiently or sold their other home. In some situations, the buyer will make a one-time, lump option payment upfront, paying you to obtain the option to purchase your home. You can apply the option payment to bringing your mortgage current. Then, the buyer will make lease payments monthly which you, the seller, then apply to your mortgage. To successfully use a lease-option to stop the foreclosure process, you must negotiate lease payments that cover most or all of your mortgage payment, property tax and insurance obligations — enough that you can make up any difference and still pay to live somewhere else.

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