What is a real estate short sale?

What is a short sale request?

A short sale request is when you ask your mortgage company if they would take a discount on the amount that you owe on the property. Why does the short sale process work? Your mortgage company runs different scenarios on your property to determine what they will get for a return on their investment. Your mortgage company takes the following factors into consideration:

1. The foreclosure process costs them money.
2. They may have to pay realtors costs of up to 6% of the selling price of the house.
3. There are holding costs involved, for example, how long will the house stay on the market?
4. They may have to make repairs on the property.
5. They have to carry property insurance.

For these reasons, the bank is sometimes willing to take less than what is owed on a property. The question we ask is "Does the bank want their money now?" or "Do they want the same amount of money, or possibly less money, six months from now when the home goes into fullforeclosure?" A bank must decide if they are willing to take the chance on a short sale. If the bank goes into foreclosure the bank incurs expenses such as lost payments, attorney fees, realtor fees and possible court costs.

Why should I do this?

The foreclosure process is very fast. It is important that the homeowner be made aware of this fact. Obtaining a short sale from the mortgage company is a very time consuming and complicated process. It is important that you realize that the clock is ticking, and that the sale date is approaching fast.

Can I do this myself?

Yes. However, the process is complicated, even when you know the right questions to ask. Negotiating a short sale is only part of the process. The next part involves finding someone to "fund out", or purchase the house at a discounted price within the allotted time span. This, too, is complicated and time-consuming..

What are some of my other alternatives?

Our company is not a tax advisor, an attorney, or a representative of your mortgage company. However, some of your other options are as follows:

1. Sell the property yourself within the allotted time.
2. Hire a realtor to sell the property before the foreclosure sale.
3. Declare bankruptcy.
4. Pay off your mortgage.
5. Payoff your back payments.
6. Deed in lieu of Foreclosure.

How will this effect my credit?

Credit history is a very complicated issue. There are many factors that determine your credit rating, such as employment history and length of time at your current residence. If the bank accepts the short sale, you will not have a completed foreclosure on your credit.

Will the bank come after me for the difference?

The bank may decide to pursue a deficiency judgment against you. This is where the bank still holds you, the borrower, responsible for the remaining debt after the short sale. The bank must make you aware of its intentions when it accepts the short sale and will send you a letter explaining the terms of the short sale. They will ask that you sign it and return it to them. The letter will state whether or not the debt is being paid in full.  READ THIS DOCUMENT CAREFULLY!!! you can still negotiate with your lender on this as well!!! Consult a Real Estate Agent or Attorney to work out the wording. 

How long does this process take?

The short sale process is very quick. The entire process generally takes less than 30 calendar days. However, there are some variables that may speed up or slow down the process. They are as follows:

1. Some lenders have done much of the preliminary work before they are contacted. This work includes an exterior appraisal of the house, and market evaluation. This would speed up the process.
2. Some lenders are very difficult to get in contact with and are not good at returning phone calls. This would slow down the process.  The information that we will need to obtain generally includes the following: Bank Statements, Pay Stubs, Tax Returns, Financial Statement, and a Hardship Letter.

How much money will I receive from this process?

If a mortgage company takes a short sale on your mortgage you will not receive any funds from the sale. Your bank is going to request a signed HUD Statement from the sale. This is a federal form that works like a receipt for the sale of the property. The mortgage company has a position that if they are going to take less than owed on a property, then you should not receive any money from the transaction. If we were to show you receiving no money on the HUD Statement provided to the bank, and then get  money, you could be guilty of fraud. CONSULT AN ATTORNEY BEFORE DOING SOMETING LIKE THIS!!

Do you have to put a sign in my front yard?

Yes. We need to create interest in your property. Signs also make it easier for our investors and buyers to spot the house.

SHORT SALE IS ONE OF MANY SOLUTIONS TO FORECLOSURE.  NOT ALL WILL BE QUALIFIED FOR A SHORT SALE SO CONSULT A REALTOR OR A REAL ESTATE ATORNEY TO SEE IF YOU QUALIFY!

 

 *These answers are accurate but not guaranteed.