What is a Short Sale?

A few years ago my in laws got a great deal on a house because it was a short sale.

Short sales are what they sound like – home are sold for less than what the mortgage is for the property. Why would lenders agree to such a proposition? The motivation for lenders to go with this arrangement is to avoid a foreclosure which can be more expensive and longer to process.

The pros of doing a short sale for the current owners is that they get out from a heavy mortgage loan, with the exception of the balance. If they moved out of state due to a job offer, then this allows them to get away from having to shoulder two housing payments. With a smaller balance to deal with, borrowers can make the payments a little bit easier than previously.

On the other hand, the sellers are still on the hook for the reminder of the mortgage balance. If the balance is rather large and their income is still fixed, a short sale will only give them a small amount of relief.

Short Sale Process – The Basics

For those curious about how a short sale works, here’s a very basic summary of the process.

  1.  Determine the value of property. Here’s where the lender sees if it’s better for them financially to proceed with a short sale at all or look at foreclosure.
  2. Get a short sale application. Lenders have to give the go ahead on this before borrowers can try and sell the house.
  3. Borrowers have to submit a hardship letter to their lender. They have to present a case of why having a short sale is the best move in this scenario. Including numbers and any relevant data make the case stronger, borrowers increase their chances of having a short sale.
  4. Borrowers have to find a buyer for their home. It’s a detailed process and for some, it involves a lot of back and forth negotiations.
  5. If accepted, then closing on the property occurs.
Of course the details will vary house to house, but if you’e thinking about buying for selling, it helps to have an overview.

Thoughts on Short Sales

I’d love to get your thoughts on short sales – both the pros and cons of it for buyers and sellers. While the process was a bit of a headache, it was worth it in the end for  them. They have a home they love at a price that works for their budget.

Photo Credit: love♡janine

Need Quick Cash? Sell on eBay

Sometimes life happens and you need some cash quick. You don’t have enough savings to cover a car repair or your heater decided to quit. For some people, getting a loan is the answer – whether it’s from a friends, credit card, or one of those payday places.

However there is another option that can help you – selling your used items on eBay. It’s a win-win situation in which you get some cash for things you don’t use anymore. It can help you pay off that repair on your credit card.

Selling Smart on eBay 

With a little bit of effort you can sell your stuff and get cash. What I’ll share today are tips to specifically help you make more money from your items.

Price It to Sell

Too many people fail with selling their items because they have no idea of it’s real worth. What you paid retail price doesn’t have an effect on it’s current value to buyers. Before you put your item up for sell, go ahead and check out eBay and Google shopping to see what your stuff is actually selling for. Be honest with yourself about whether you’d be willing to sell it for around that price.

You have to have competitive prices if you want to make more money. Depending on which seller you talk to, you’ll get different opinions about using a reserve price. I think having a reserve price can fine – it’s hidden from buyers so you don’t have to worry about them anchoring on to the lowest price.

That said, if you need cash, then don’t set you reserve price too high. You may frustrate those who would be willing to buy it, but at a slightly lower price.

Share Pictures That Sell

Pictures are extremely important for eBay. Don’t just take one picture of your item and think that will be enough. Buyers are paying for items without holding it in their hands – they need some reassurance that they are getting a great deal. Make sure you take pictures that show the item in different angles.

Take pictures in a well lit, clean room to show customers that you have items that are in great condition. If there is a slight imperfection, show them.  Small details like that matter to buyers and can help you when they write reviews.

Describe It Effectively

Besides photos, having a great description can help you not only seal the deal, but maximize your earnings. Don’t settle and just  give the basic information about your item(s). Make it appealing by being descriptive. Again when you show buyers that they are getting a lot of value, they are more willing to buy at a price you want.

If you need ideas on what to write, use power sellers as an example. See how they describe similar items and use that as a template for your listing. If you want more relevant buyers to see your listing, get inside their heads.  You should think about what phrases they they would type in to find your item and include them.

Finish the Transaction Quickly

Once you have received your payment, go ahead at the earliest convenient time and ship the item quickly. Pay a bit extra for tracking to confirm the buyer had received their purchase and send a thank you email. Perhaps you two can work again when you have something else for sale.

Thoughts on Selling Stuff on eBay

I’d love to hear from you about your experience selling online. How many of you have sold something on eBay? How did it go? Did you get what you wanted for the item?

Photo Credit

Proportional Budgeting for Couples

For many couples finding a fair way to split the bills is a major concern. What makes it hard is that it is common for incomes to vary greatly between a couple as different industries, experience, and negotiation skills can create a huge gap. Going 50/50 on bills can be a financial burden on one person. One solution that has worked well for many is proportional budgeting.

What is Proportional Budgeting? 

Basically proportional budgeting is taking one’s income relative to the total and allocating expenses accordingly. Let me show you an example.

Family Income

Let’s say we have a two income family, one is a teacher and working part-time while finishing up a degree. Their take home income may look like this:

  • Person 1: $2500/month
  • Person 2: $1400/month
  • Total Income:  $3900

When they tally up their bills the total comes out to $3100/month. Looking at their income relative to the total we see that:

  • Person 1 brings in 64% of the income.
  • Person 2 brings in 36% of the income.

That means for the joint account, Person 1 deposits $2496 and Person 2 contributes $604. If they had split the bills 50/50, then Person 2 would have nothing leftover each month.

Proportional Budgeting with Our Finances

We feel like proportional deposits are a more fair way to handle the bills for us personally. We’re currently using proportional budgeting to determine how much each of us puts into the joint accounts. It’s been adjusted a bit as our finances have changed.  Originally the deposits were based on the ratio of our income to the family’s total income and were both deposited into joint checking. The rest was used to pay for gasoline and eating out.

We’ve now modified it that my husband’s portion goes towards the joint checking for necessary bills and my portion goes towards paying debts, savings, and investing.

Thoughts on Proportional Budgeting

I’m curious to see how you handle your finances. Do you split the bills or do you use proportional budget?

PHOTO CREDIT: DENNIS WONG

$125 Bonus with ING Direct

savings account

During Black Friday weekend ING Direct usually has specials on new bank accounts and this year is no different. For 2012, ING Direct is offering a nice sign-up bonus for their online checking account, Electric Orange. We love using ING Direct as we currently use for most of our banking needs.

If you haven’t tried them out and you’re interested in getting a bonus, here are the details of the weekend promotion:

$125 Electric Orange Bonus

Open an Electric Orange account November 23rd – 25th and make a total of 10 purchases (either signature or PIN-based) using your Electric Orange Card or 10 CheckMate deposits (or any combination of the two) within 45 days.

Your $125 bonus will be automatically deposited into your account on day 50. Bonus only available for new Electric Orange checking accounts.

Open a Kids Savings Account and get a $10 bonus.
Open a Kids Savings Account November 23rd – 25th and we’ll put a $10 bonus into your new account. Only available when you open a new account with at least one new Customer (either you or the kiddo must be a new Customer to ING DIRECT).

Your $10 bonus starts earning interest upon account opening, and is available for withdrawal after 30 days. A kid-friendly 0.75% variable APY (effective 11/21/2012)

If you want to open a checking account with ING Direct now is a good time as an extra $125 in your account is a nice buffer. If you want to have a savings account for your little one, they have also have a good interest rate.

Using ING Direct for Our Banking

We recommend ING Direct for several reasons and have been happy customers with them for years. We use online bill pay and setting it up the first time was a breeze.

We only need around 15 minutes a month to take care of everything. It’s extremely easy to maintain and we can quickly see what bills are pending and what our balance is at all times.

One of the advantages of using them is that they are a part of the Allpoint network. They have over 35,000 in their free ATM network which makes it incredibly convenient to access our money.

Thoughts on Banking Bonuses

What do you think of the bank bonus from ING Direct? Do you think more banks should offer deals like this for new customers? When looking for a bank, what are some features that matter the most to you? What are some of your favorite banks?