SU # 17__Listing - Distressed Properties Flashcards
What is a distressed property?
Real property that is undergoing a reduction in market price due to the pressures of a threatened foreclosure, divorce, estate settlement, drastic economic changes, and/or deteriorating physical condition.
List two options a seller might have to selling a distressed property.
Repayment plan
Loan modification
To what four questions must a seller be able to answer yes in order to realistically consider a short sale?
Has the home’s market value dropped?
Is the mortgage in or close to default status?
Can the seller prove that a hardship exists?
Is the seller void of assets?
List two situations that a lender would not consider a hardship.
Bad purchase decisions. Spending money on lavish vacations does not rise to the level of a hardship case.
A chronic history of seeking and exceeding higher credit limits.
With regard to experience and skill, what should a licensee do before handling a short sale?
Seek out advice from someone who has experience and can provide guidance. Enroll in short sales training classes to bolster knowledge.
Why is it important to know what types of loans the seller holds on a short sale property?
The types of loans on the property make a difference in how a lender treats a short sale. The lender is likely to be more receptive when it is able to recoup a greater share of loss from a prior guaranteed loan arrangement.
List three documents commonly submitted in a short sale packet. (See screen 12 for other correct answers.)
Financial Statement signed and dated showing the seller’s gross income and monthly expenses
Hardship letter detailing why the seller is unable to make the mortgage payments
Most recent paycheck stubs for all parties on the loan
What is important to know about advertising a short sale property in Illinois?
All Illinois Administrative Codes apply regarding advertisement. The brokerage is not allowed to advertise the property as “distressed” unless the seller gives permission. However, the MLS may require a short sale disclosure. Licensees should check with their broker and MLS board for clarification.
The seller’s main concern in arranging for the sale of a distressed property is
who will hold the buyer’s earnest money deposit.
what the lender intends to do about the shortage.
what will happen to her credit score.
how to report the sale to the IRS.
what the lender intends to do about the shortage.
The final step in the short sale transaction is _______.
the lender releases the lien.
the buyer delivers the funds.
the lender executes the deed to the buyer.
the seller delivers the deed.
the seller delivers the deed.
As part of the short sale consulting process, the licensee should discuss the following with the sellers
the tax issues involved if the sale includes “boot”.
the use of hardship situations that lenders have accepted even if the licensee’s seller has not suffered such a hardship.
hiding liquid assets before contacting the lender.
any portion of the loan that is “forgiven” may be considered income and must be reported for tax purposes.
any portion of the loan that is “forgiven” may be considered income and must be reported for tax purposes.
A licensee might suggest some optional strategies a seller might consider rather than a short sale. These strategies would include all of the following, except
reinstatement of the mortgage.
loan modification.
wraparound mortgage.
deed-in-lieu of foreclosure.
wraparound mortgage.
Before advertising a property as “distressed,” an agent should
increase the listing price to allow for the lower price that will be paid for the distressed property.
obtain the seller’s permission.
make every effort to remedy the circumstances that have put financial pressure on the property.
examine the foreclosure documents for conditions that might allow the property to be sold without the “distressed” designation.
obtain the seller’s permission.
One characteristic of a short sale transaction is that _____.
the sellers do not have to claim hardship to have a justifiable basis for a short sale transaction.
lenders are not permitted to consider the seller’s non-real estate assets.
lenders may not allow a short sale if they discover other assets the seller concealed.
lenders will not consider a short sale if the loan payments are current.
lenders may not allow a short sale if they discover other assets the seller concealed.
Which of the following is exempted from the lender’s scrutiny in considering a short sale?
The seller’s tax returns
The seller’s IRA account
The sellers other real estate properties
None of the foregoing are exempt
None of the foregoing are exempt
