Frequently Asked Questions Regarding Short Sales
1) What is a Short Sale?
It is the sale of a property at less than what is owed on it. If you sell your home and you are “underwater” or “upside down” then you would have to short sale the property. A normal sale would be if you sold it and had any equity in the home.
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2) How does the bank decide what price to put on the property?
The bank will hire someone to do an appraisal on the property to determine what it should sell for.
3) Is a Short Sale right for me?
It depends on your particular circumstances and finances. I would suggest that you speak with an attorney prior to making that decision so you can make an informed decision.
4) What type of situation is the short sale best for?
It is best when you are relocating for work, or you have to get rid of an investment property, or you are ready to purchase another house. These days, short sales are best for many situations. Again, consult with your attorney to see if it best for you.
5) Does a homeowner benefit from a short sale?
There are many benefits to short selling a property. Again, it varies based on your circumstances so you should speak to an attorney to find out why it might be a benefit to you.
6) Can I short sale my rental property as an investor?
Absolutely.
7) Can I do a short sale if I am in foreclosure or I'm late on payments?
That is a perfect time to short sale your property. The point is to have control over the situation before banks or lenders foreclose on you.
8) If I do a Short Sale, how much will I have to pay to sell my home?
In most situations you should not have to pay more than some minor costs. (i.e. HOA payoffs, contribution towards closing in some situations, etc.) In most cases, the realtor fees are paid for by the lender (which is a huge savings to you). Attorney fees (should you hire an attorney) may be at your expense.
9) How do I get started on a Short Sale?
The best way to get started is to consult with an attorney before you proceed so you know what to expect, what you will need to do, and how we can assist in the process. Additionally, it’s important to know the potential outcomes and benefits to short selling your property.
10) Can I simply deed my property to someone else and avoid the hassle?
No. You can deed the property over to someone, but that does not relieve you of the liability on the loan under your name, secured by the property. That is the real issue – resolving the mortgage(s) on the property.
11) What sort of hardship would my lender consider legitimate?
Relocation, job loss, medical problems, and other situations where your expenses exceed your income.
12) I am current on my mortgage, will my lender consider a Short Sale?
Yes, but lender policies and recommendations may vary. It all depends on the entire picture and what your lender will allow.
13) Why would a mortgage company agree to accept a Short Sale?
The banks would rather resolve this matter rather than incurring the expense of foreclosing on a property, or trying to collect on the mortgage. Additionally, the banks don’t want to receive another foreclosed property that they will have to pay to clean up and sell.
14) Do lenders approve all Short Sales?
No. Unfortunately, they have the discretion to deny the sale. However, if the property is priced at or about their appraisal price, then the bank is more likely to allow the short sale.
15) I have two loans on my home (a first and a second loan), can I still do a Short Sale?
It takes a little longer and takes coordinating between the banks. It also requires the approval of both lenders so expect a lengthier overall time to sell, but it definitely can be done.
16) My property is in rough shape and needs work, can I still do a Short Sale?
Absolutely. However, the better it is intact, the more likely that you will receive a reasonable offer at market value. This will increase the chances of the lender accepting the offer. I’m not suggesting that you put money into the property by adding upgrades or features. But I would not suggest you remove cabinets, dishwashers or basic attachments to the home. Most buyers are turned off by homes that have been stripped of the basic features.
17) I am concerned about my credit, how will a Short Sale affect my credit?
Unfortunately, no one can answer that question. All we know is that it will go down because you are resolving a debt for less than owed. However, it will not be as bad as a bankruptcy or foreclosure on your credit.
18) My income problem was temporary. Do I need to sell my home?
If you can afford your home and you want to keep it, you do not have to sell your home. You can ask for a forbearance from your lender to buy you some time to get past the temporary period in which you are struggling.
19) What is a Forbearance Agreement?
It is an agreement that allows you to temporarily put off payments to a later date. Warning: Read your forbearance agreement carefully so you understand when you will have to pay those missed payments and whether interest incurs during that period of time.
20) What options other than a short sale might I have?
| a. Cure your mortgage default by paying everything that you owe including the missed payments, interest, and penalty fees. b. Attempt a loan modification that adjusts the terms of your existing loan. Unfortunately, most people that apply will not be approved, but worth a shot. c. Refinance your mortgage with another lender. This is an unlikely solution because another lender will not refinance your property if you owe more than it is worth. d. Try to sell your home through normal channels. This will only work if you plan to pay the deficiency in full at closing to the lender. e. Attempt to get your lender to accept a deed in lieu of a foreclosure. This is also worth a shot. Sometimes a lender may accept this, but this is not a desirable outcome for the bank because they will need pay to sell your property before they get their money. f. File for bankruptcy. Consult with an attorney to discuss this viable option if you qualify. |
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