The Real Estate Short Sale - The Top Most Frequently Asked Questions
Q: What is a short sale?
A: A short sale takes place anytime a property is sold for less than what is owed on the mortgage and the lenders who own the underlying mortgages accept less than full payoff as a settlement. This allows the property to transfer to the buyer even though the lender did not receive the full amount that they where owed.
Q: How does the short sale process work?
A: short sales usually take place during the foreclosure process when a buyer is trying to buy a property and the purchase price will not cover the payoff of the mortgages in full. Most often these properties are bought and sold after the foreclosure process has started but before the process is completed through a sheriff’s or trustee’s auction sale. This stage is called the pre-foreclosure stage.
Q: Who Qualifies for a Short Sale?
A: Once a homeowner misses a payment and then moves on to missing a second and a third, the lender files the foreclosure notice. To qualify for a short sale the homeowner must be able to show through some recent hardship; job loss/income loss, divorce, sickness, death, etc. The homeowner must also verify they have tried to sell the home on their own or through the aid of a Realtor, tried to work out a repayment plan through a Forbearance, Loan Modification, Partial Claim or exhausted considerations of the option of a Deed-in-Lieu.
Q: What are the benefits of short sale?
A: The main benefits of a short sale for the homeowner is it will not be as damaging to there credit as would a foreclosure. They will more than likely be able to considered for a home mortgage again in about 2 yrs. versus 7 yrs. The other benefits are the lender will save anywhere from 40 thousand to 60 thousand in legal fees and holding costs from the time they foreclose on the property to when it is eventually sold. The neighborhood benefits since the market is stabilized with a quicker sale rather than another REO driving their homes value even lower.
Q: How does a short sale affect my credit? Will it hurt my credit?
A: The homeowners credit will take a hit but nowhere near the effect a foreclosure would have on it. The difference in time to be credit worthy could be as much as 7 yrs.
Q: Will A Short Sale Stop A Foreclosure?
A: If the lender is contacted by our team of negotiators with the completed short sale pkg. presented in a timely fashion during the pre-foreclosure process and accepted then a foreclosure is on hold till the final negotiations are acceptable to the lender and buyer through a letter of intent.
Q: How do I Write a Hardship Letter?
A: We provide a sample outline of one that we recommend you follow. This all part of the Homeowner Short Sale Submission Pkg. you will receive from us after our initial meeting. It only needs to be a one page letter explaining your current situation and why you can no longer afford to make payments on your home.
Q: When is the best time to start a short sale? Should I wait until I fall behind on payments?
A: The best time to initiate a short sale is when you realize you are not going to be able to make the monthly mortgage payments any longer and you have sought to sell the home and have gone through the other possibilities mentioned in the answer to question # 2 above. If you are behind already on a payment or so that is fine but please don’t call us and expect a miracle if you are 14 days from the sheriff’s or trustee’s auction date.
Q: Can I short sell multiple properties?
A: You can short sell multiple properties but your primary residence will have the least back end consequences. Most lenders are not pursuing a deficiency judgment at this time but we always recommend getting advice from your lawyer or tax adviser.
A: A short sale takes place anytime a property is sold for less than what is owed on the mortgage and the lenders who own the underlying mortgages accept less than full payoff as a settlement. This allows the property to transfer to the buyer even though the lender did not receive the full amount that they where owed.
Q: How does the short sale process work?
A: short sales usually take place during the foreclosure process when a buyer is trying to buy a property and the purchase price will not cover the payoff of the mortgages in full. Most often these properties are bought and sold after the foreclosure process has started but before the process is completed through a sheriff’s or trustee’s auction sale. This stage is called the pre-foreclosure stage.
Q: Who Qualifies for a Short Sale?
A: Once a homeowner misses a payment and then moves on to missing a second and a third, the lender files the foreclosure notice. To qualify for a short sale the homeowner must be able to show through some recent hardship; job loss/income loss, divorce, sickness, death, etc. The homeowner must also verify they have tried to sell the home on their own or through the aid of a Realtor, tried to work out a repayment plan through a Forbearance, Loan Modification, Partial Claim or exhausted considerations of the option of a Deed-in-Lieu.
Q: What are the benefits of short sale?
A: The main benefits of a short sale for the homeowner is it will not be as damaging to there credit as would a foreclosure. They will more than likely be able to considered for a home mortgage again in about 2 yrs. versus 7 yrs. The other benefits are the lender will save anywhere from 40 thousand to 60 thousand in legal fees and holding costs from the time they foreclose on the property to when it is eventually sold. The neighborhood benefits since the market is stabilized with a quicker sale rather than another REO driving their homes value even lower.
Q: How does a short sale affect my credit? Will it hurt my credit?
A: The homeowners credit will take a hit but nowhere near the effect a foreclosure would have on it. The difference in time to be credit worthy could be as much as 7 yrs.
Q: Will A Short Sale Stop A Foreclosure?
A: If the lender is contacted by our team of negotiators with the completed short sale pkg. presented in a timely fashion during the pre-foreclosure process and accepted then a foreclosure is on hold till the final negotiations are acceptable to the lender and buyer through a letter of intent.
Q: How do I Write a Hardship Letter?
A: We provide a sample outline of one that we recommend you follow. This all part of the Homeowner Short Sale Submission Pkg. you will receive from us after our initial meeting. It only needs to be a one page letter explaining your current situation and why you can no longer afford to make payments on your home.
Q: When is the best time to start a short sale? Should I wait until I fall behind on payments?
A: The best time to initiate a short sale is when you realize you are not going to be able to make the monthly mortgage payments any longer and you have sought to sell the home and have gone through the other possibilities mentioned in the answer to question # 2 above. If you are behind already on a payment or so that is fine but please don’t call us and expect a miracle if you are 14 days from the sheriff’s or trustee’s auction date.
Q: Can I short sell multiple properties?
A: You can short sell multiple properties but your primary residence will have the least back end consequences. Most lenders are not pursuing a deficiency judgment at this time but we always recommend getting advice from your lawyer or tax adviser.
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