A Short Sale can be more beneficial for you than letting your home go into Foreclosure and with recent changes, many banks are more willing to cooperate with a short sale in order for the homeowner to avoid foreclosure.
If you owe more on your property than it is currently worth, then listing your home for Short Sale with a real estate agent may be right for you. A real estate agent will market and sell the property through negotiations with your lender at no cost to you.
However, typically to qualify for a Short Sale the homeowner must have a financial hardship as to why they cannot continue to pay their mortgage. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of home purchase and the date of the short sale negotiation.
If we can be of any help or if you have questions, call us at 480.236.2796.
What is a short sale? A short sale is the sale of real estate in which the proceeds from the sale fall short of the balance owed on the property's loan. A lender typically agrees to discount a loan balance to prevent a foreclosure but the decision to proceed with a short sale is predicated on the most economic way for the bank to recover the amount owed on the property. Often a bank will allow for a short sale if they believe that it will result in a smaller financial loss than foreclosing.
How is a seller's credit affected by a short sale? Expect to suffer some credit score damage, but nowhere near as much as a foreclosure. Loss of FICO points can be around 75-125 and your report will show it listed as a 'pre-foreclosure in redemption' which can be far less negative.
Do I still have to pay an agent commission to list my home as a short sale? No, when you sell your home through a short sale, the bank pays the commission fees for both the seller and buyer's real estate agents.
I want to do a short sale and have a 2nd mortgage, does this make me ineligible? No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender.
If I pay mortgage insurance and default on my loan, why wouldn't that cover the deficiency amount? In some cases it will and in some cases it won't. It depends on the amount of deficiency. Usually the mortgage insurance only covers a certain amount. Moreover, the lender will try to collect from you before they file a claim with the mortgage insurance company. The mortgage insurance is not there for your protection, just the lender's.
I am current on my mortgage; will my lender consider a short sale? The answer is, maybe. Some lenders will accept a Short Sale file for approval on loans that are not delinquent. Other lenders will not accept the file until the loan is delinquent. We can put your Short Sale file together within a couple days and submit it for approval. That is the best way to determine if your lender will accept a file for approval on a loan that is current.
Are short sales guaranteed to work? No. Even if all of the paperwork has been correctly completed it can take several weeks, or even month. If the lender does not approve the short sale, no transaction occurs.
For questions or additional information on selling your home as a short sale, email or call William May at WilliamDMay@msn.com or 480.236.2796
