Who Can Tell Me What A Short Sale Is Really Just What Is It?
When most homeowners move, they sell their house. Usually, that’s not a problem. For some unlucky owners it is a problem.
Because of the easy financing, rampant speculation, flipping, and sometimes fraud, home values skyrocketed most everywhere. Not to long ago the market tanked and this came to an end.
Even when values are stable, sometimes there just isn’t enough money in the property to pay off the mortgage, then pay all the selling costs and moving costs.
What happens then?
Default, sometimes bankruptcy, and maybe even foreclosure.
When lenders agree to do a shortsale in realestate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.
If you are considering buying a shortsale, there could be drawbacks. For your protection, I suggest that all borrowers:
• Obtain legal advice from a competent real estate lawyer
• Call an accountant to discuss short sale tax ramifications.
Here are some rules to qualify.
The borrower must experience a genuine financial hardship.
If this fits, call the lender. Talk to customer service or the collection department and let them know what is going on. That way, knowledge of your hardship is communicated to the lender and becomes a part of their files. Keep your own communication log.
Call The Lender
You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the “real estate short sale” or “work out” department, you want the supervisor’s name, the name of the individual capable of making a decision.
Hire an Agent with Short Sale Experience
It’s one strike against you if the listing agent has never handled a short sale, but it’s even worse if your own agent has no experience in that arena. You need an experienced short sale agent.
I have helped many home owners purchase their homes. A few years back Lakewood CA homes for sale in the Southern California area were flying off the shelves. They still are but at highly reduced prices. Looking for homes during this market is great if you are in a position to buy.
I have helped others sale theirs too. If you want to sale your home, an agent with experience in short sales will help to expedite your transaction and protect your interests. You don’t want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner.
Qualifying the Property and Seller for a Short Sale
A lender is unlikely to agree to a short sale unless the seller has no equity and is unable to repay the difference between your sales price and the existing loans.
Sellers need to provide a hardship letter to the lender. Sellers may also owe taxes on the amount of debt that is forgiven.
Then your agent submits it all to your lender and…you wait. Normally, your lender can’t make the decision to accept a short sale on their own. If there is mortgage insurance, they get a say-so. Your mortgage has an investor. The investor gets a say-so.
If the deal “makes sense”, they believe your hardship is genuine, and you do not own any other property — you may get a “yes” decision. Your chances go up markedly if you have someone experienced negotiating for you.
If you have any questions call 800-409-3583 for further information.
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