What is a Short Sale?
A short sale occurs when a lender accepts less than the amount owe on the mortgage. A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, the benefit is having a short sale rather than a foreclosure on their credit report. In summary, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed.
How do I benefit from a short sale?
Most people who are considering a short sale are behind on their mortgage payments or are going to be soon and facing foreclosure. A short sale will have less of a negative impact on your credit than a foreclosure. However, if you have missed mortgage payments, you are going to have some negative impact on your credit score. It can vary for each person. We always encourage homeowners to consult with a CPA or attorney to fully understand the pros and cons of doing a short sale.
I know I want to do a short sale, how do I get started?
You can Click Here and fill out short contact form to request a phone consultation. We will respond promptly. In this phone consultation we will help you decide if a short sale is your best option. We will discuss all of your possible options, including loan modification, deed in lieu of foreclosure or foreclosure. We will also attempt to determine if we feel you would qualify for HAFA, the government sponsored short sale program where homeowners can qualify for $3,000 relocation money if approved.
Are short sales guaranteed to work?
No. Even though short sales are increasing the banks have to approve the sale. Each bank has their own guidelines to determine if they are going to approve a short sale. There is not necessarily a way for us to tell you if you are going to qualify, many times we just have to submit a package to find out. Typically we say that owners need to have a pretty significant hardship to qualify, but we have assisted many investors in short selling their over-leveraged investment properties. Many of these investors had assets and income, but the argument of the massive negative cash flow and significant loss in value was enough.
How long does a short sale take?
A short sale can take 30 – 90 days and sometimes longer. The earlier in the process we can contact the banks with your file, the better the chance that we can get the short sale completed. If you are a week away from a foreclosure auction, there is a slim chance that we can get that auction postponed, but the best option is to contact us well in advance of any auctions. The time line for short sales is also dictated by whether or not the initial buyer remains in the transaction. If a buyer cancels and we have to market for another buyer, then of course the time line will be extended.
How much does it cost to do a short sale?
As a seller who is in need of a short sale, a short should not cost you anything out of pocket. As your real estate agent we are paid commissions if we sell the property, just like any other property sale. The difference between a traditional sale and a short sale is that the short sale lender will the pay the real estate commissions rather than the seller. The short sale lender expects this as they would have to pay a real estate agent to sell the property if they foreclosed and have to sell as a bank owned property. For that matter, all fees associated with the transaction are paid by the lender. If funds are short to close and the seller “chooses” to pay a little to close, they usually can, but it is a choice by the seller.
If you have additional questions that are not answered here, please send an email to firstname.lastname@example.org with your question or give Kim a call at 480-201-4185. We want to answer any questions you may have.