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Avoid the Foreclosure Process: Land Sales Contracts

Posted by dbergmann1on July 26, 2016in Blog Posts, Front Page1 Comment

The foreclosure process is extensive and costly. Avoiding foreclosure as a real estate investor would certainly be an advantage. Instead of using a normal Agreement of Sale for property, an investor can turn towards a Land Sales Contract which does not require the foreclosure process upon default from the borrower.

A Land Sales Contract (also known as “Contract for Deed” or “Land Installment Contract”) is a form of seller financing in which actual possession of the property stays with the seller until the borrower fulfills the contract by paying off the principal and interest. After the terms of the contract are met, title of the property transfers to the borrower. If the borrower defaults on a Land Sales Contract, the foreclosure process is not triggered. Instead, the seller simply executes an eviction in Landlord Tenant Court. The eviction process is much simpler and much less costly than a foreclosure.

Why would a buyer agree to a Land Sales Contract and give up the rights under foreclosure? The simple answer is that a buyer wouldn’t unless he or she did not have a choice. However, there are many times where a prospective buyer cannot get approved for the financing required for a mortgage even though they are financially sound. This can happen due to past credit troubles, divorce, and other instances. These buyers can be saved by seller financing through a Land Sales Contract. A seller can simply request more down, or a higher rate of interest. Either way, both the seller and the buyer win. The seller avoids foreclosure and the buyer can purchase a property without going through the conventional mortgage system.

For specifics and further implications on Land Sales Contracts and whether it is right for you, please call us here at Bergmann & Good.

If Your House is Worth Less Than You Owe, Let’s Talk About a Short sale

Posted by calgdasilvaon July 5, 2016July 2, 2016in Blog Posts, Front PageLeave a comment

The process of selling your house is stressful enough in a normal situation, but in the event of a short sale the process may seem completely overwhelming. First, what is a short sale you ask? Simple, if you owe more on your house that it is worth, you should consider a selling it for less than is owed. Or, perhaps you have lost your job and foreclosure is inevitable. Both of these life stressors can be alleviated by selling your house and moving on. Of course, in order to do this successfully, you need the cooperation of your lender.

Next question – why bother? Easy, a short sale has a much less negative impact on your credit than either deeding it back to the bank, or losing it in foreclosure. In other words, it is in your best interest to be proactive when you are faced with negative equity or a job loss.

First, talk about the options with us. Circumstances will vary depending on the value of your home, your lender, and any other liens on your property. In other words, do a complete evaluation of your particular hardship circumstances. Do not make the critical mistake of waiting and hoping for better days. Eventually the foreclosure notice will come in the mail.

Understand the Process

Although there is a sharp divide in both practice and opinion, we believe being represented by an attorney is beneficial in any real estate deal, but in the case of a short sale, a lawyer experienced with short sales is critical. Once a lawyer establishes you are qualified, you will complete your lenders forms and your lawyer will communicate with the bank as well as oversee the listing and sale process.

Notice that with a short sale it’s very important to talk about a short sale BEFORE you list the property. Other options exist, and they should all be explored with counsel before you list your home for amount of the mortgage balance and hope for the best. A thoughtful strategy is the most successful way to short sell your home and move on.

Make sure your real estate team knows what they are doing

In the event that you need to short sell your house, engaging a lawyer in advance of listing your home allows you to build the team to work together toward a common goal. Real estate agents with short sale experience are what you need. Not an agent acting as a quasi-lawyer. That scenario can get everyone in trouble. Short sales require a cooperative bank, a patient buyer, and a bit of luck. Experienced real estate agents will be better equipped to deal with problems as they arise and will likely be able to warn you at the beginning of the process about the most difficult parts of the process. Having a great real estate agent can also ensure you are selling your house quickly, because in a short sale price does not matter to you, only your lender.

Be Patient!

Short sales require lender approval, which often is slow to come. In the event you do have an interested buyer you will need your agent working hard on the deal, but you also need to be aware the deal may fall through if your buyer finds another property.

Understand what comes next

You attorney can not only help you through closing, they can also help you understand the aftermath of the sale. In the event a bank is willing to negotiate a release, you may be able to get out of any money you owe beyond the sale price of your property. This is essential and usually the primary reason to fully participate in the sale process. Working with an accountant or financial adviser is also something to consider to help you deal with and understand any remaining debt and/or tax consequences you may face after the short sale is complete.

If you are facing difficulties and fear foreclosure is in your future take control of the situation before it is out of control. Evaluate your options early and often. Surround yourself with qualified professionals. Give us a call at Bergmann & Good if this sounds like something you need to discuss.

All in the Family (Business)

Posted by calgdasilvaon June 14, 2016in Blog Posts, Front PageLeave a comment

Owning a family business can be one of life’s most rewarding endeavors. Not only can you enjoy success in your profession, you can also pass it along to your nearest and dearest when you choose to retire or at the end of your life. However, you also have to make sure your family business stays in the family. Here at Bergmann & Good, we strongly advocate setting up your business the right way and re-visiting those operational documents as you grow, expand or simply as time goes on (and laws and statutes applicable to your business change). Operating Agreements and clear formation documents are all important parts of owning and operating your own business, but what about the later years? If you’ve set up your business properly, you should make sure that the next generation gets the best possible chance to succeed as well. Here are a few things to keep in mind when building a succession plan for your family business:

Who is going to take over?

A business should have a clearly defined structure. If you want a family business to survive passing down to the next generation (something that statistics show is often unsuccessful) you should ensure someone is lined up and ready to take over. They should be aware of all facets of the business and understand how runs. It is also worth informing the rest of your family and your employees about who their next boss might be rather than keep it a surprise. Nobody likes a surprise.

Who is going to assume financial responsibility?

A family business can also involve members who are solely investors rather than involved in the day to day operations. Any succession plans should also involve the input of investors as they have a financial stake in the business. Any changes need to follow the rules of the operating agreement or formation documents used when the business was first established.

Is the business going to stay in the family?

If there is no one who wants to take over the business, then your succession plan could be to just sell the business and leave your family to split the proceeds. However, you should inform your family members this is your plan since selling a business can be a long undertaking. You should have a business attorney already lined up for your family to contact in the event this is your plan, that way they will have to do as little work as possible in the event of a family tragedy.

You’ve worked hard to build you family business and you’d like to have it offer opportunity and prosperity to your family and future generations. Make sure you know what is going to happen after you are no longer around to run things. Give us a call, and protect your legacy. Your Grandkids will thank you.