Short Sale Help
You've heard the term "Short Sale", but what does it mean? And how can it help you?
Technically, a Short Sale is "the sale of real estate in which the proceeds from selling the property is less than the amount owed". What this means is that under a "short Sale" you would be able to sell your home for less than what is owed the bank. Seems a little strange doesn't it? Why would the bank take less than it is owed on the loan? Typically a bank will accept "less" because the only other alternative would be a foreclosure and that tends to be costly. The bank could net 24% more during a short sale than they would during a foreclosure, therefore they can be eager to help.
The seller will need to convince the bank to approve the short sale by submitting a hardship letter in addition to all the documents that the seller would provide if they were to apply for a loan, such as tax returns, bank statement, pay stubs, etc. The seller needs the loan servicer, the mortgage insurance company and the investor to agree with the hardship letter and know that the seller can no longer afford to pay for the mortgage.
As a seller or a buyer, when starting the short sale process it is important to have a good team in place that is knowledgable, available and efficient. This team should include a skilled real estate agent, a CPA and sometimes a real estate attorney. Having these types of professionals on your side, could be the difference between alot of aggravation and a close. The difference between the seller and the buyer during a short sale is what motivates them. The buyer is motivated by getting a good deal, while the seller is motivated by preventing a foreclosure. While both of these participants are equally motivated, they are motivated by different needs. This is important to understand while in the negotiating process.
It is equally important to understand that even though you are involved in a short sale, the bank may not stop the foreclosure process. Typically the two are happening at the same time and if one option fails, the bank has a Plan B.
There are many things to keep in mind when preparing a Short Sale, but with the right team and the proper knowledge, a short sale can be the perfect solution to the foreclosure problem.