One of the most misunderstood elements of the real estate equation is the “short sale.”
When the bank that holds a mortgage on a home agrees to a home sale for less than is owed on it, it is a short sale. This is usually due to a downturn in the market, when property values sink below previous levels and a homeowner owes more on their home than it is currently worth. Although this option has been around for a long time, it became more popular around 2006, with the start of the downturn in the housing market. Important—for a short sale to be an option, your home must be worth less than what you owe on it.
Try to short sell it first. It costs you nothing to try and most lenders will pay all your closing costs including the real estate commissions, back taxes, sellers’ attorney fees, and title fees. Plus, chances are that your lender will agree to let you short sell the property, cancel the difference and not pursue you for the remainder in the future.
Banks tend to prefer short sales vs. foreclosures because they get more money back in the end. Banks are also offering people cash to participate in a short sale. Meaning, you can sell your home, pay nothing to do so, have your credit look better and get paid money for leaving.
You must be behind or about to fall behind on your mortgage payments. Banks have no incentive to agree to a short sale for customers who are current on their mortgages. Why should they? They keep getting paid every month. You must also show a financial hardship.
Your total expenses for a month must be greater than your income. This can be due to a number of factors: job loss/ unemployment, death of spouse, business failure, reduction of income, sudden illness/ medical emergency, divorce, increased property taxes, forced relocation, bankruptcy, military service, natural disasters and more.
The bank pays those. The seller is not responsible for them. In a lot of situations, the buyer will even pay for things just to make sure the deal happens.
About 90% for sellers with one mortgage and demonstrated financial hardship. Odds go down to 70-80% if there is a second mortgage in the mix. Our company does even better with a 99% success rate on short sales.
Yes, until the short sale closes and you move out. The homeowner is responsible for maintaining the property at its current level. That can also include keeping your HOA dues current.
Sellers owe nothing on a short sale. The key is picking the right people to negotiate and handle your short sale.
The first thing you need to do is hire a team to see if you qualify for a short sale and help you get the process started. You don’t need to be an attorney to handle and process a short sale, but it helps to have them involved. Artesian Title uses its team of CPA’s and Attorneys to handle all our Short Sales. It’s the reason we have a 99% success rate. And the good news is—you don’t pay anything for our services!