When you’re about to lose your house, the stress can be pretty overwhelming. You already have financial problems, the debt collectors are constantly calling, your family is getting stressed out as well, and you find yourself wondering where you will live when they take the house away from you. Your main goal in life becomes getting rid of the stress.

You might know someone who has been through that already, so maybe you have an idea of what can happen. You might not even realize you have more than one or two options. Walking away from the house is tempting, but your real options have to include your end game. What do you want your debt and your credit to look like after the house goes away?

Whether you’re a homeowner, a real estate agent, or an investor, you need to know all the options for someone facing foreclosure. As a homeowner, your best bet is to get enough information to make an informed decision. As someone who helps homeowners, you need to make sure they understand that information. You need to set realistic expectations for the loss of their home.

Two of the options have been covered frequently in the media lately: deed-in-lieu and loan modifications.

A deed-in-lieu means that the homeowner agrees to simply hand over the property to the bank. It helps the bank make the repossession easier, but it still hurts the homeowner’s credit as if the foreclosure had actually taken place.

What about loan modifications? The government’s Home Affordable Modification Program (HAMP) promotes mortgage loan modifications as being a viable way to deal with the foreclosure crisis. Yet the current rate of success for those loans to go from trial to permanent modification is 4 percent. Using California as an example, roughly 140,000 trial loans have entered into the modification process; however, only 5,600 loans will be modified based on their current success rate (4 percent). California filed over 450,000 notices of default for 2009. Those being helped are few and far between given the current numbers.

There are four more successful options.

1) The homeowner can stay in the house and file for bankruptcy, allowing the courts to stall the foreclosure as long as possible. It doesn’t mean the foreclosure won’t happen, but it does mean that the homeowner can refuse to pay for a place to live until the auction date.

2) List the house for the amount of the debt and hope someone comes along who loves the house so much that they will pay your asking price before the auction date. You can dream all you want, but the odds are that nobody will pay more than the house is worth, and you’ll end up going back to option one.

3) List the house as a short sale, find a buyer, and make the buyer wait out the short sale process in order to buy the house at a discount. Many real estate agents recommend this solution because it sounds like the easiest thing to do while still earning their commission, but it’s a little more complicated than that.

One complication arises when the agent has to convince the buyer to not only sign the purchase agreement, but to wait at least 60 to 90 days to take possession. The typical buyer needs something that is already available.

Several roadblocks can come up during the process of negotiating a short sale if the seller and/or his agent don’t completely understand how to manage those negotiations. Lenders are very careful to train their loss mitigation department in debt collection, so sellers and agents who aren’t as well-trained in short sale negotiation skills can be easily sidelined.

For instance, sometimes promissory notes and deficiency judgments can be avoided after a short sale. Did you know that? It can be worth a great deal to a homeowner when you not only learn how the system works, but also how to work the system.

4) The real estate agent could list the house as a short sale, while arranging the purchase by a short sale investor who doesn’t mind handling the paperwork, negotiating a successful short sale on the seller’s behalf, and waiting for the lender’s approval before closing on the house. The homeowner would avoid a foreclosure, the agent would still get the commission, and the buyer would get the home as an investment property to sell or rent.

Why should the homeowner work with an independent short sale investor? People who negotiate short sales every day know the best ways to get the best deal for the homeowner. For instance, the BPO process is more than just having an appraiser stop by. An experienced investor will know how to handle the situation to the homeowner’s benefit.

As a real estate professional, you should be able to explain these four options to a homeowner who is facing foreclosure. They can let it go and file bankruptcy, they can sell for the amount of the debt, they can apply for a short sale and wait for a buyer, or they can apply for a short sale with a buyer already waiting for them.

If you’re interested in finding out how the short sale approval process really works, sign up for free downloadable reports on the Silver Membership page of the Strategic Real Estate Coach website. You’ll also learn about the foreclosure process, and you can gain access to networking opportunities with other people who are interested in helping homeowners avoid foreclosure.

Finally, if you want to get some insight into a variety of legal issues influencing real estate investing, be sure to check out attorney Jeff Watson’s blog at topshortsalelawyer.com.

Use the most current information about foreclosure options to inform yourself and the homeowners you work with. Educated homeowners are better able to decide what is best for their financial situation and make it possible to avoid foreclosure and go on with their lives.

Need to know more about foreclosure options? Get all the information you need from our real estate coaching website!

Those doing short sale investing or who are real estate agents dealing with short sales must understand “Shadow Inventory” and what it’s going to mean for your future in real estate.

Some experts say that the shadow inventory doesn’t exist, or that it doesn’t pose a problem, while others insist that the shadow inventory will cause another real estate market crash.

I’m going to discuss what shadow inventory is and how it will benefit short sale investors and real estate agents that deal with short sales. Let’s cover Shadow Inventory.

1. Millions of homeowners that are currently “safe” with their payments, and in no trouble with their loan simply want to move for location sake, upsize, downsize etc. Many of these homeowners are waiting to put their properties on the market, because they feel like the market will “turn around” and they can get a much better price. The end result will be when these millions of homeowners decide to sell at the same time, creating an oversupply of homes on the market, thereby driving prices down.

2. Let’s talk about the six hundred thousand homes that lenders are holding in their REO inventory. Most people don’t know that when a lender forecloses on a home, they don’t have to sell it right away. They can hold it until they decide to sell. What are they doing? Well, they too are “waiting” for the market to go up so they can add their huge inventory to the market.

3. There is an estimated 7 million homeowners currently in default in the US. this is massive beyond all measure, and will add to the 2 above. They will be trying to sell before losing their home to foreclosure, or simply adding to the banks’ inventory.

If you’re a real estate agent working short sales, or if you’re doing short sale investing, you are part of the solution. Without these solutions, the market will most likely get worse. Worse then we’ve ever seen it. Now is the time to learn about short sales, if you’re involved at all, you can help. It can also be very lucrative.

You can get a free ebook and the top 10 mistakes to avoid with foreclosure at our foreclosure training website. The 3 best strategies on buying foreclosed homes is also available there as a free gift.