What is a Short Sale?
A Short Sale is the sale of a home when sales proceeds do not fully pay off the existing loan(s) and lender(s) accepts a discounted payoff to fully satisfy the loan. The existing lender typically pays virtually all sales costs, including commissions, escrow and title fees and repair costs. You get your home sold, the loan(s) paid off and you avoid foreclosure.
Example: Homeowner owes $150,000 on a loan-Homeowner sales house for $100,000 with the bank approval-Bank forgives homeowner deficiency (debt) of $50,000.
What sort of hardship would my lender consider legitimate?
To some extent, that will depend upon the mortgage company considering the Short Sale request. Generally, we found that so long as the hardship is real and the mortgage company believes the loan is likely to become delinquent as a result, the Short Sale request will be processed by the Loss Mitigation Department. A big key to getting Loss Mitigation to accept a hardship is to submit a strong hardship letter. The hardship letter sets the tone for the entire file.
Below is a list of “hardships” that are common and frequently accepted by mortgage lenders.
- Family illness or injury
- Illness or injury in the extended family – particularly if it forces relocation
- Job relocation when the property is equity deficient
- Job loss or significant income loss
- Divorce or split of domestic partners
- Adjustment in mortgage payment or unforeseen increase in living expenses
I am concerned about my credit, how will a Short Sale affect my credit?
In the course of getting your short sale approved you may miss your mortgage payments, and these will show on your credit. But once the short sale is approved by your lender, you can avoid foreclosure. For more information or to receive advice, contact a certified accountant.
If I do a Short Sale, how much will I have to pay to sell my home?
It may be nothing. In most cases borrowers pay no sales costs if the lender approves the Short Sale. All commissions, title and escrow fees, and even most repair expenses may be paid by the lender as part of the Short Sale approval.
“Seller’s agreement to sell is subject to approval by existing lender of a Short Sale at no cost to Seller. Seller shall not be required to deposit funds to close escrow.”
Remember, lenders approve Short Sales and accept the resulting loss in an effort to avoid bigger losses through foreclosure.
My property is in rough shape and needs work; can I still do a Short Sale?
Absolutely! In fact, we found that lenders are more motivated to do a Short Sale on a property that needs work than on a property that doesn’t. The lender knows the risk of loss goes up when they foreclose on a property that needs lots of work.
How do I get started on a Short Sale?
If you would prefer to discuss it on the phone, or set an appointment Contact US. There is no obligation. If at the end of your case review, you would like to concider a short sale as an alternative to avoid foreclosure, our councelor will refer your case to one of our certifed realtor expecilized in Short Sale.
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