Are you wondering “Should I bring my bank a short sale offer?”
In many cases, the answer is yes!
Frequently asked questions about short selling.
SHORT SALE, SHORT SALE, SHORT SALE.
We have been busy with short sales since 2006. This is true for the entire nation, short sales are now a semi-normal real estate transaction type but you will find many Realtors are disinterested in this type of lengthy transaction.
Do I have to deal with my bank on a short sale? This real estate market has caused unbearable stress and heartache, and experienced short sale agents understand that this is not easy for many homeowners. Expect discretion from your short selling agent. Most Short Sale Agents will have you authorize them to work directly with your bank, reducing your involvement. Short Selling Agents do this to help make the process more bearable for you.
Foreclosure options. Are you wondering if you have any options? Have you stopped making your mortgage payment, or perhaps you are struggling to make your mortgage payments? Some things can qualify you as a candidate for a short sale. Job loss, loss of income, illness, total debt, trauma, divorce, injury, disability, death, legal issues, increase in living expenses, job relocation, property condition, etc.
Do you know that a Realtor can help you get your bank to allow you to sell your home for LESS than what you owe? If you are in financial hardship, the bank will likely pay the closing fees, including the Realtor commission, in additional to forgiving the shortage amount, if you meet the Lender’s criteria.
If you are in financial hardship and you are willing to sell your home to avoid foreclosure, some lenders will agree to put your foreclosure on hold while you attempt to sell your home through traditional real estate methods.
Banks do not want to foreclose. It is expensive, it increases their liability, and it decreases the real estate market value.
Why would a mortgage company agree to a short sale?
There are several reasons why a mortgage company is smart to approve a short payoff. Foreclosure is a last resort for all parties. Lenders have come up with the various alternative to foreclosure, one of which is a short sale.
A short sale allows the lender the ability to cut its losses upfront by avoiding the expense and the time of foreclosure and potentially greater losses and increased liabilities.
It allows the Lender to help the Borrower out of a bad situation.
A loss in value and increased liability of owning a vacant home.
Asset Management Expense.
Will my lender consider a short sale if my payments are current?
Well, maybe. Some lenders will accept a Short Sale for approval on loans that are not yet delinquent. We can put your short sale package together and submit it to the bank for you. Sometimes a short sale agent is smart to submit your financials to see if YOU will qualify for a short sale, before putting it on the open market.
Do Lenders approve all short sales?
NO. Selecting the best Realtor for the job is critical, but not a gaurantee you will get an approval. Many outside factors are involved in short selling. One of the things you have control over is the Realtor you trust to work on your behalf.
I do not have money to repair my home, can I still complete a short sale?
Absolutely, yes! Lenders realize that their chance of loss and increased liability is a factor when considering a short sale. Besides not wanting to bear the expense of repairs, lenders are generally not set up to get the work done.
My lender might offer a loan modification or a forbearance agreement, what are they?
Loan Modification. A loan modification can be an excellent option for someone that wants to stay in their home, and that can pay the modified amount. Loan modifications can be AWESOME, and I mean A W E S O M E! I have heard of lenders going down to 2-4% interest to make a home more affordable to keep for a borrower. However, the process can be lengthy and involved, so arm yourself with information, and call your lender to see what their process is and if you qualify. Some modifications are temporary, some permanent.
Forbearance Agreement. A forbearance agreement is when a lender agrees not to take action against a delinquent borrower. The lender agrees not to foreclose. The borrower agrees to keep current on their mortgage (from that date forward) and repay the amount they are delinquent within a specified period of time. This can be by way of monthly payments, or with a bulk amount due on a particular date. Forbearance agreements are good for borrowers that have had a temporary hardship If the lender agrees that it appears the financial problem was short term, a forbearance agreement can be a nice compromise.
What if I do not have the money to pay a Realtor Commission? In a short sale transaction, you, as the Seller, do not have to pay the Realtor commission or ANY of the closing costs. The bank covers all of these costs, including delinquent property taxes.
If I have TWO loans against my home, can I still qualify to complete a short sale?
YES! It adds additional complications and can make for a more lengthy and time-consuming short sale transaction, but YES! Find a short sale agent who is familiar with facilitating a transaction with more than one mortgage. Even if your home is below the balance of the First Mortgage, an expereienced short sale agent can typically get the lenders to cooperate with each other. Sometimes the First and the Second Mortgage are held by the same lender, but many times they are different entities handled independently.
Can I sign the deed over to a new Buyer to solve my problem?
NO, PLEEEASE, do not do this! In this market, we are finding scam artists preying on homeowners that are in a rough spot. They are very clever, and often, very likable. Do not sign over your deed to anyone. Signing over your deed does not relieve you of your mortgage obligations. If someone asks you to sign over their deed, please do not do it. Also, if someone asks you to sign over a power of attorney, please consider the amount of risk you could be inviting into your life.
Short sales are a unique animal, and often very frustrating for agents that lack experience in the process. Some Realtors pursue short sale listings, rather than viewing them as an inconvenience. Find a local Real Estate Agent that wants short sale listings, who find them difficult yet enormously rewarding. Experience getting short sales approved and those Agents who have invested a lot of time and money into advanced education and training. They need to be able to negotiate their real estate commission to be paid from the Short Selling Lender(s).