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- What is a Short Sale?
A short sale is the process by which a homeowner can sell a house for less money than he actually owes on the mortgage(s). This is done when a short sale expert in cooperation with the current homeowner can provide proper documentation to the mortgage lenders to convince them to accept less than what is owed. The mortgage lender (or bank) actually takes a loss (or write-off) on the mortgage because the value of the home has fallen below the mortgage balance and the homeowner is in a poor financial condition that will not allow him to continue to pay on time.
If the bank approves the discount on the mortgage, the home can be sold for a lower price without the homeowner having to come up with cash to cover the shortfall, the mortgage is closed, and the foreclosure is avoided.
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- Who needs a Short Sale?
A Short Sale is most beneficial for a homeowner unable or unwilling to continue making payments on the home that is upside down (has a higher balance than the current market value). Most short sales are done on properties in foreclosure or on their way to being foreclosed. This means the homeowner is at least 3 payments behind and the foreclosure process has begun by the mortgage lenders. Recently, more mortgages that are simply behind or "in default" are considered short sale candidates without actually being in foreclosure.
This situation is growing increasingly common due to the easy availability of 100% mortgages (no money down) as well as the recent decline in prices. So if you have decided you no longer want to live in the home do to it's declined value or your current financial situation, a Short Sale is the solution for you!
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- What is the benefit of a Short Sale?
First and foremost, it relieves the stress of being in foreclosure and being hounded by the mortgage lender; and it allows homeowners to get rid of their big mortgage payment and move on with their lives. A short sale allows you to stop the foreclosure process and get a fresh start. Since not many properties are being sold at retail prices these days, a Short Sale is the most common way to sell your home at a competitive price.
A short sale also prevents additional damage to your credit. Having late payments is no where need as bad as having a foreclosure on your credit history. A Short Sale only requires you to have a few late payments. A short sale results in the mortgage actually being paid off, which reflects positively compared to a foreclosure.
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- Why would a bank or mortgage lender want to do a Short Sale?
Mortgage lenders are in the business of lending money, not in the real estate holding and sales industry. When a bank takes a property back via foreclosure, it is a long and expensive process and often results in holding the property in their inventory as a non-performing asset. Banks have a limit to the amount of non-performing assets they want to hold. Once this limit is exceeded, they have strong incentive to get rid of the properties at discount prices.
For a lender, doing a short sale avoids many of the costs associated with the foreclosure process. Attorney fees, delays from borrower bankruptcy, damage to the property, costs associated with resale, property tax, insurance, etc. all must be paid by the bank during a foreclosure. In a short sale scenario, the lender is able to cut its losses by getting rid of the property faster.
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- What if I want to keep my home?
A Short Sale is the process of selling your home. With a Short Sale you must vacate the home and move on. If you experienced a hardship but would like to keep the home, then a Loan Modification is the product for you.
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- Do you handle Short Sales in my area?
We handle Short Sale negotiations across the country.
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