What is a Short Sale?
A short sale is when a lender is willing to accept less than what is owed on a mortgage as payment in full. For instance, if a home owner owe $150,000 on their house, but their house is only worth $100,000. Their mortgage company may allow you to sell the house for $100,000 and release the mortgage and lien.
Can anyone get a short sale?
No. You must have a valid reason for needing a short, sale also know as a hardship.
Some hardship examples are loss or reduction in income, job transfer, medical reason, etc. You must be able to show that you are no longer able to keep the house.
I don’t want to sell, are their other options?
Yes. If you want to keep your house, but can’t make your current payment you have options;
Refinance- There are many programs that allow struggling home owners to still refinance, so even if you think you don’t qualidy it is worth a quick call to a lender, and, get multiple opinions. One lender may not be able to do it, but another one may have a better program.
Loan Modification- Some banks will assist you by modifying the terms of your existing loan, either by reducing interest or extending the term to make your payment less.
What is the point of doing a short sale?
Liability. If your property goes into foreclosure and the bank only recovers $50,000 of the $150,000 owed to them. They may still be able to enter a judgement against you for the remaining $100,000. In a short sale, this deficiancy is usually waived.
Credit. A short sale effects credit far far less then a foreclosure. In fact, depending on the number of payments missed/not missed prior to the short sale, the effects on your credit can be minimal.
Future. With a short sale, you can buy again in as little as 1 year depending on the circumstance. With a foreclosure, it can be up to 10 years.
How do I start the process?
Your house should be listed with a qulified real estate agent, and once an offer is received and negotiated, your agent or a hired short sale negotiator will work with your bank to get them to accept.
You will need to provide some documentation through this process; mostly financial documents to prove your hardship.
It is crucial that your short sale be handled by an agent that is experienced and well versed in short sales as they are very delicate, and the smallest mistakes can cost you the deal.
We process our short sales in house, and have a proven technique to get approved short sales in the shortest amount of time possible. In the several short sales we have completed, only 1 has ever been denied.
TIMING is crucial. The sooner you start the process, the more likely you are to walk away with a good end result and minimal impact to your credit. As soon as you know you may be facing a hardship, you should start considering your options.
If you think you may need to do a short sale or loan modification, feel free to contact us anytime for more details.