Short Sales

As Certified Pre-Foreclosure Specialists, we can help you Short Sale your home at NO COST TO YOU.  The short sale process, in many cases, will allow you to:

  • Sell your home for market value
  • Avoid Foreclosure and Bankruptcy
  • Pay $0 in commissions or closing costs
  • Sell your home with NO mortgage debt and NO tax liability

COMMON SHORT SALE QUESTIONS:

WHAT IS A SHORT SALE?   A “short sale” or “negotiated settlement” or “short pay” occurs when a Lender agrees to accept less than the amount owed to payoff a loan as an alternative to a foreclosure. If the

property is worth less than the amount owed on the loan, then even if the Lender forecloses and takes back the property, they know they are going to take a loss. We can often convince a Lender that it is in their best interest if they take less than what is owed now rather than taking the property back by foreclosure and trying to sell it later.

HOW LONG WILL IT TAKE?  A short sale negotiation process is a lengthy one. It may take 6 weeks or more likely several months to get an approval. Many Lenders have several layers of bureaucracy, insurers, and investors that they will have to maneuver through in order to get a Short Sale approved. So it is important to be patient during this long process.

BUT MY HOUSE IS GOING TO FORECLOSURE, WILL I HAVE ENOUGH TIME?

It depends on the lender.  Just starting a Short Sale will not automatically stop a foreclosure. However, many times we can convince a Lender to postpone the foreclosure for the sake of a short sale consideration. With a complete short sale package ready, and the fact that lenders try to avoid taking back properties, they may grant the postponement and attempt to negotiate the Short Sale with us. So, while there are no guarantees, we may be successful.

CAN I STAY IN THE HOUSE? The key word in “Short Sale” is sale. The purpose of a Short Sale is to get the property sold. So you will be moving. During the duration of the short sale, you can stay in the home. The lenders sometimes prefer you do remain in the home during the process to ensure it remains presentable for showing, maintained and to avoid vandalism by leaving the property vacant.  A Short Sale is not a program that can stop a foreclosure and allow you to keep the house indefinitely.

HOW DO I KNOW THIS WILL WORK? You don’t. We can not, have not, and will not make any promises to you that this will work. However, the lenders do not want to foreclose on your property and we are very good at presenting alternatives to the Lender that they often want to accept rather than foreclose.

WILL I GET ANY MONEY FROM THE SALE? NO. A universal requirement of lenders in granting a Short Sale is that the borrower will not get any proceeds from the sale of the property. The Lender is going to take a loss on your loan and therefore will not allow money back to the seller.

WHAT HAPPENS IF THIS DOESN’T WORK? Your house will likely go to foreclosure unless you seek other alternatives after consulting with a real estate attorney or legal adviser. A Short Sale is something we try after you have tried other workout options that you may not have qualified for.

WHAT IS A “RELEASE”? A Lender may offer to “release” its security interest against the property in exchange for less than the total amount of the note. A release will allow the property to be sold without paying off the obligations of the note. However, the note is not satisfied. Advantages: This successful Short Sale will allow the property to be sold and thus avoid a foreclosure. You are able to purchase a property again usually within 2-3 years after a short sale as opposed to a foreclosure which may take 5 or more years. There is also a possible forgiveness of the remaining balance of your loan if the loan qualifies.  Disadvantages:  If the remaining debt on the property (sometimes call a “deficiency”) still exists, you are still liable for the note –in other words—you still owe the money. Reality: It is not likely that the Lender will pursue the deficiency unless you have other significant assets, and if you don’t try a Short Sale and the property goes to foreclosure, you are going to have a deficiency anyway.

WHAT IS A “SATISFACTION”?  A Lender may agree to accept less than it is owed as complete and total satisfaction of the note and release its lien against the property. Advantages: Your note and obligation to the Lender are satisfied for less than you owe. When the property is sold, the debt is paid off completely. Disadvantages: You may have some tax consequences that you should discuss with you tax advisor due to the fact that the Lender is making money you owe disappear. Sometimes our negotiations are successful in obtaining a satisfaction. Sometimes all we can get is a release.

WHAT DOES A SHORT SALE PACKAGE INCLUDE?  The Lender will require documents in order to conduct a review.

Those documents in a short sale package include:

  • Authorization to release information form
  • Two months bank statements
  • Two months pay stubs
  • Two years IRS tax returns
  • Financial worksheets
  • A hardship letter
  • A listing contract
  •  A purchase contract
  • Any other information requested by the lender.

The leading cause of delay and even denial of your offer by the Lender is caused by having an incomplete short sale package. That can be caused by the Seller failing to deliver these items in a timely manner. To help us succeed, please find as much of this information because time is of the essence. This will help us work faster and increase our success.

HOW CAN I HELP?  You can help by maintaining the property by keeping up on the landscaping, keeping the home clean and orderly for property showings, continue service of swimming pool and keeping up on your HOA payments.

WHAT IS A QUALIFYING HARDSHIP?

  • Loss of Income due to loss of employment or significant reduction in pay
  • Divorce or separation of domestic partners
  • Family illness or Injury
  • Employment relocation and only if there is not enough equity in the property
  • Increase mortgage payments or increase in living expenses

IF I MAKE MY MORTGAGE PAYMENTS, WILL THE LENDER CONSIDER MY SHORT SALE?

Maybe, maybe not. It depends on the lender and their policies. I am noticing that more and more lenders

Are requiring the borrower be behind 60-90 days in order to qualify for a potential short sale (and loan modifications as well). Very few lenders will allow the borrowers do a short sale when the borrowers are not yet delinquent.

CAN I DO A SHORT SALE IF MY PROEPRTY HAS 2 LOANS? Yes, you can. It is common for some properties to have 2 loans with the same lender. Even if the home is worth less than the 1sts remaining balance, we can work together with both lenders to agree on a short pay-off.

WHY DO BANKS CONSIDER SHORT SALES? Banks DO NOT want to own your home!  Banks are increasingly more willing to consider a short sale. There are real advantages in banks agreeing to short sales, even at a deeper discount, as costs to maintain the home are almost always maintained by the borrower. The banks avoid paying high fees associated in a foreclosure fees such as: attorney, court, processing, clean-up costs, taxes and in some cases, major repair costs. Not to mention the affect the foreclosure will have on the banks credit rating.