Top 10 Things to know about a Short Sale
1. A short sale is any sale of real estate, usually during the foreclosure process, or before, in which the lender(s) agrees to accept less than the balance due on the mortgage(s) or lien(s) in order to avoid the cost of foreclosure. Per HAFA requirements, the primary lender may not pursue the homeowner, but the secondary lenders do not have to agree to that provision.
2. You cannot do your own short sale. The banks will require you to hire a real estate agent to negotiate your short sale. Agents do not charge the home owner a fee they are paid by the bank at the conclusing of the transaction.
3. Advantages of a Short Sale? You can buy a home a lot sooner; your credit takes a lesser hit than if you foreclose. Fewer rolling 90 day lates on your credit report pulling down your score. With so many people having gone through the same situation as yourself with the short sale, banks are softening the lending requirements towards people who have had issues in the last few years.
4. You can try loan modification yourself! In my experience, banks rarely take the principal down but would most likely work with you in lowering your monthly payments. A lot of people would rather keep their home even if the value of the home is upside down. Keep an eye out during while you are working on a modification, if you are not making your payments or have an arangement in writing with the bank they could start forclosure proceedings while you are doing the modification. I have had the unpleasant task of letting a home owner know his home has been forclosued upon, while the home owner thought he was just about done with the loan modification. Usually two separate departments at your bank and they don’t always work together…
5. If you’ve done everything to keep your house, including loan modification, it might be time for a short sale. Sometimes its the only choice that makes sense. Work the numbers and ask for help.
6. The BIGGEST benefit of a short sale is your credit takes a LESSER hit compared to a foreclosure. You may be able to buy a house a lot sooner. Your life can get back on track sooner, rather than later
7. I think banks will only be getting smarter in trying to go after you (money they still think you owe them) even when a successful short sale happens. This happens mostly on second lien holders (second loans). So be sure you know what you’re doing. There are pros and cons. The biggest advantage is #3. Sometimes you are better off just letting it go to forclosure.
8. Once you decide on doing a Short sale, the banks won’t be as excited in talking to us until you’ve missed a couple of mortgage payments. It’s just what it is. Perhaps their way of prioritizing those who are really in hardship. I will never tell you to skip a payment, that choice is up to you.
9. There’s more and more inventory of Short sale out there. So be sure you still take care of the house, even if you’re “letting” it go. Cooperate with buyers and their showings. Remember your home is going to need to be lendable as well for the new buyer, ask your realtor about what has to be done to your house.
10. Lastly, a successful deal won’t happen if you do not work as a team with your short sale real estate agent. That means sticking it out until the end, not bailing on the team. Getting your paperwork in as soon as you can and jumping through all the hoops the bank puts in your way.
In summary, I’ve helped several people with short sales. No two are the same. Nobody can make these choices for you. I and my team are here to help you get the information you need to make a solid descession. Get in touch with us today, Robert@Hightower-Team.com.
Consult with your attorney and accountant to get the best bird eye view picture on your situation