What is a Short Sale?
A short sale happens the market value of the house is less than the loan on the house and the seller has a need to sell at this time. The bank/lender is asked to take less for the house than the original loan. For example: Loan Amount is $300,000 and similar houses are now selling for $200,000. The owner would usually be able to Short Sale the house for $200,000.
Who can sell their House in a Short Sale?
The owner must prove financial hardship for the bank/lender to accept a short sale. Owner's will be asked to show why they are in financial hardship. Banks/Lenders also usually require the house be sold by a real estate agent.
What does a real estate agent do with a Short Sale?
The real estate agent is your representative to the bank/lender for your short sale. The agent's job is to work with the bank and owner to make the sale of you house go smoothly. The real estate agent acts in your best interest, to be honest, have integrity, use their real estate knowledge to assist you and observe all laws and rules involved in the buy/sell transaction. They are your consultant, negotiator and overseer to all details.
Does an Owner have to Behind in their Loan Payments to do a Short Sale?
Most banks/lenders DO NOT require the owner to be behind in payments. Owners who are behind in payment can still qualify for a Short Sale. So that all owners who have financial hardship can usually qualify for a Short Sale.
Can Owners in Preforeclosure do a Short Sale?
Owners who are behind in payments and owners who have received a Notice of Trustees Sale (Foreclosure) can still do a Short Sale. Usually the lender will postpone the foreclosure when an offer is received on the house. The sooner the owner puts the house up for sale the more likely to avoid foreclosure.
How Soon should an Owner Start a Short Sale?
The owner should begin the short sale as soon as the owner knows payments will be a problem. Sometimes the owner waits too long and there is not enough time for a short sale before the Foreclosure date.`
Can the Owner Get a Loan Modification Instead of Doing a Short Sale?
Sometimes this is possible but some owners are not able to qualify for a loan modification or the loan cannot be modified. Some loans are very difficult to modify because of how they are set up. I have had several clients who were not able to get a loan modification because of the loan was not a Fannie Mae product.
What is the effect of a Foreclosure and Short Sale on Credit Scores?
The latest information from the credit scoring company is this:
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Foreclosure – if your score was at 680 before the foreclosure your score could drop 85-105 points once the foreclosure is reported, if it was at a 780 it could drop 140-160 points once the foreclosure is reported.
Foreclosure – if your score was at 680 before the foreclosure your score could drop 85-105 points once the foreclosure is reported, if it was at a 780 it could drop 140-160 points once the foreclosure is reported. •Short Sale – If your score was at 680 before the short sale your score could drop 70-90 points once it’s reported, if it was at a 780 it could drop by 105-125 points.
Short Sale – If your score was at 680 before the short sale your score could drop 70-90 points once it’s reported, if it was at a 780 it could drop by 105-125 points.The Short Sale still impacts credit but not as harshly.
How to Start a Short Sale?
The owner needs to work with a real estate agent who is experienced in short sales. I have developed a process where I assist the owner getting the financial records together for the bank and do all real estate process too. I consult with the owner to see what options are possible. Negotiate with everyone and make sure all the details are done promptly and correctly.
Call me to discuss your options 480-694-8807
