Short Sale Overview
When you owe more on your home than the property is worth in the current market, you are said to be “upside down.” If you obtained an adjustable rate mortgage, your payment may have risen to a level that you can no longer afford creating a difficult situation because you cannot simply sell your home to move into something smaller that you can afford. To successfully sell your home, in addition to your normal closing costs you would be expected to pay your mortgage company the entire balance owed to them.
Instead, we may be able help you negotiate a Short Sale with your mortgage company. A Short Sale is when the lender of a property allows the property to be sold for less than the amount due on the mortgage loan.
The benefits to you are obvious. You are able to avoid the severe credit score damage associated with a foreclosure. A foreclosure can stay on your credit report for up to 7 years and take a sizable emotional and financial toll on you and your family.
You may ask, however, what are the benefits to your mortgage company. Your mortgage company also wants to avoid the expenses associated with a foreclosure. If your mortgage company takes possession of your home through the foreclosure process, it will not be able to sell your home in the current market for any more than you can. A Short Sale can allow the mortgage company to recoup an amount of money greater than than what the mortgage company would receive through the foreclosure process.
In many circumstances, a Short Sale will be the best solution for your financial difficulties. We can help you decide if this is the best option for you. Since the start of the market downturn in late 2005, we have been refining our strategies for selling over-encumbered properties that require a “short sale” without the seller adding any cash to the transaction. Our extensive knowledge of the short sale process combined with the unique expertise of a professional short sale negotiating company has given us a success rate vastly higher that the norm. Assisting us is BGS3 who uses their inside knowledge to expedite the negotiations.
Contact Phill at (619)200-7156
or
Phill@KnappTeam.Info
for help weighing your options
The short sale process can vary, but it will generally work as follows:
1) Your property is listed for sale at a price that will generate offers quickly.
2) The lender is contacted to discuss the possibility of a short sale and to determine the lender’s process for completing the sale.
3) The seller issues a letter authorizing the release of personal information about their loan.
4) The seller will complete a "hardship letter," which will detail and explain all financial difficulties. Lenders will usually want to validate the seller’s financial situation by looking at bank statements, investment accounts, along with examining paystubs and other financial records.
5) An accepted offer is forwarded to the lender.
6) The lender will review a settlement statement, which will indicate the proposed selling price, remaining loan balances and itemize all expenses, including real estate commissions and other fees and expenses associated with the closing.
7) The lender will then look to a broker to provide a price opinion by examining the condition of the house and the market value of comparable properties.
8) The lender will then want to scrutinize the purchase agreement to determine if all amounts are reasonable and the real estate commission is acceptable.
9) The lender will verbally respond to the offer with the terms that will be acceptable to them.
10) It the lenders terms are agreeable to both the buyer and the seller, the lender will then generate a Short Sale approval letter and we will open escrow.
Because of the documentation required, the short sale process can be lengthy.
But if done correctly, it can work well for all parties involved. The lender avoids the uncertainty of the foreclosure process, the seller avoids a foreclosure on his or her credit report (along with potential bankruptcy), and the buyer hopefully got a good deal on a property.
Considering the complexity of the short sale process, you need someone with extensive experience on your side. We have the knowledge and experience required for a successful Short Sale in today’s topsy-turvy market. We can help you decide if a Short Sale is right for and then help you navigate the process if it is. If you are considering a Short Sale, contact us immediately as time is of the essence. You should also make sure that you discuss your situation with a competent lawyer and accountant in case of potential tax liabilities.
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