Short Sales/A Seller’s Perspective – You want to sell your home, but the market price will not result in enough cash to pay off your mortgage – what do you do? One possible approach is to sell your home as a short sale. Short sales have become quite common as the real estate market has caught many good and responsible people in a terrible bind. If you are in that bind, call us today – we can help.
What Is A Short Sale? – A short sale is when the bank agrees to take less than the full value of your mortgage and lets you settle the sale of your property.
You might ask why the bank would take less. In general, a short sale may be the best financial outcome for the bank. It is expensive for the bank to foreclose on any property. There are legal fees, waiting periods, and the risk that the house will become less valuable if you abandon it. It is to the bank’s financial advantage for you to live there until the ownership transfer takes place. A short sale avoids foreclosure and all of the costs and risks associated with foreclosure.
Why Does The Bank Have To Agree? – In order for you to sell your home to someone else, the bank must remove the lien the created when they issued your mortgage. Unless they are completely paid off, you cannot sell without the bank’s approval.
To make those decisions, the bank assesses the value of your home. They conduct a review to find what similar houses in the neighborhood are selling for and use that as a guideline for what your house should bring in the open market. You may sell if for a somewhat lower number, but not a lot lower.
Also, the bank will generally not let you sell short if you have the liquid assets to fully pay the mortgage. In response to this, you will generally have to show the bank your personal financial records so that they can make this assessment.
What If I Have A Second Mortgage? – A second mortgage can throw a monkey wrench into the transaction if it is not handled right. Usually, when a home goes to foreclosure, the second mortgage holder will get nothing. So they have some incentive to be reasonable. However, the first mortgage lender must allow some small amount to be paid to the second mortgage holder just to get them to remove their lien and let your sale be completed. It is a more complex transaction that we as your Realtor must negotiate.
How Does A Short Sale Work? – A short sale is different than the sale of a foreclosure because you, the homeowner, still own the house, not the bank. That can allow some great options. Because you are contracting with the buyer, you can agree to things like a subsidy paid to the buyer to help cover their closing costs. However, because the cost of any fixes to problems in the house are not known when the contract is signed, it is almost always better to list the property “as-is” and to include that in the contract. As long as the overall deal is attractive to the bank, however, and they take a net payment that they consider adequate, you together with us as Realtors can craft a contract that works for all parties. We will advise you of any conditions that the specific bank will not allow.
We sell your home. We will provide all of the services that we provide to any seller. Using our database of thousands of potential buyers, we pro-actively market your home.
Negotiate, sign and ratify a contract with a buyer and, if they have one, the buyer’s agent. As soon as the contract is completed, we remove your listing from active status on the MLS so that you do not continue to have potential buyers coming through your home.
Submit the contract to the bank for their review. Our negotiating team will present the contract along with any other information that they need, such as local market conditions and prices. Our professional team of short sale experts will present your case to the bank in a way that will encourage them to approve the sale.
We monitor the transaction. The bank goes through many steps to evaluate the local market, check your financial condition, and go through several levels of management inside the bank. Generally an individual person at the bank is assigned to work on the deal. We contact that person early and are in contact weekly as the transaction proceeds. This phase of the sale can be time consuming and can last three or months.
After Approval, Go To Settlement.
What Problems Can Arise? – The bank can reject the deal. No transaction is over until all the paperwork is signed. We avoid this problem working with them as the transaction is processed. We generally find out if any problems exist before the review is complete and will work with you to make whatever changes are required.
The buyer can walk. This, of course, is true of any real estate deal, not just short sales. To avoid this we also share information with the buyer’s agent, or the buyers directly if they do not have an agent. We have found that openness is a cure for many problems.
Can I Get My Sale Pre-approved By The Bank? – We will make every attempt to get the sale approved in advance, generally during the period that we are trying to sell your home. This is a step that the bank controls, so while we are generally successful, in some instances the bank will not cooperate.
How Long Does It Take? – It can take three months or more after you have signed a contract until the bank approves it and then another month to go to the settlement table.
Experience! – Experience with short sales is the most important element for your listing agent. It is the listing agent that conducts the communications with the mortgage lender.
Our team is trained and prepared to help you through a difficult process that has happened to many of our friends and clients.?