"SHORT" SELLING YOUR HOME
Please feel free to ask us about our success in closing "short sales". We are proud of our experience and are happy to share!
NELSON PROPERTIES will help provide you with an understanding of the options and alternatives to a short sale.
The first thing you need to know is how to go about keeping your property. Once you are informed about these alternatives and consequences, you will have a much better idea about the decisions you will make going forward!
You will also need to make sure you QUALIFY for a short sale:
1) Hardship ~ you must prove to your lender that you have a hardship and can no longer make your payments. For a lender to accept an offer that does not pay the seller's oustanding balance in full, and agree to write off that difference, you must prove a hardship. (At this point, the buyer is making an offer and the seller is offering this amount to their lender - which is SHORT of what they owe.)
Sample hardships:
- Lost job/Unemployed
- Divorce
- Too Many Debts / Borrower (seller) has a financial hardship and can no longer afford to make the payments
- Illness
- Death
- Job Transfer
2) Junior Lienholders ~ all lienholders (parties who have an interest in the home) MUST agree to release the lien during a short sale, or you will not be successful. Your ultimate goal is for these juniors to release the lien AND the loan! This can be a very difficult thing to do as many homeowners have taken out 2nd loans in order to purchase non-household items - boats, cars, trips, business ventures, RV, etc. This type of 2nd loan is considered a "recourse" loan and the lenders can 'come after you'. If you cannot show that you used that 2nd loan towards your home (home improvements, etc.), then these lenders can be challenging to deal with during the short sale process. You will want to contact them in advance to find out if they are willing to work with you on a short sale. In summary, have YOU...the seller....come to terms with the potential liabilities with regard to your credit, taxes/personal liability?
3) Are You Defaulting Strategically? ~ You need to be able to prove to all lienholders that you do not have the funds to satisfy the deficiency. Some homeowners want to walk away simply because they want to wash their hands of making a payment on an asset that has lost a great deal of value. They can still afford to make their payments, but they ask "Why should I?". This is not considered a hardship and if you do have other assets in which to access in order to pay a potential deficiency, the short sale lender will want to see that you buck up for a portion of the deficiency, if not all of it! So to be clear, in order to qualify for a short sale, you may have trouble if the lender feels you are "hiding" money and in fact, can still make the payments.
TIMELINES
~ Do you have time to do a short sale before the lender forecloses (keeping in mind that some short sales do not include a foreclosure)?~ Where are you with regard to your payments?
~ Have you missed one payment, two or more?
~ Has your lender filed a Notice of Default? A lot of lenders will file a Notice of Default after missing 2 months worth of payments. Some lenders will wait so long that you will wonder if they've forgotten about you. They haven't!!
Your timelines are important to keep an eye on....we knew of one agent who did not even realize that the lender had foreclosed. That agent still had the home listed, was marketing and showing the property ~ and was then approached by the bank's listing agent asking her to remove her For Sale sign. The sellers no longer owned the property!
Here is a graph that shows the Foreclosure timelines that you need to be aware of:
MAKING THE DECISION TO DO A SHORT SALE ON YOUR HOME
Once you have made the decision to try and short sale your home, there is a basic routine to follow, otherwise knows as the short sale process. This process involves the cooperation and involvement of all parties: you, the seller, your REALTORŪ, your lender or lenders, the buyer, the buyer's agent and the buyer's lender. If all parties do not communicate and contribute to this sometimes bumpy process, the challenges presented can be insurmountable. This doesn't mean that there won't be obstacles along the way....but they can a lot less intimidating when everyone is working together.
There is a RIGHT way and a WRONG way to do short sales, and to successfully complete the process is not for the faint of heart!
Please feel free to ask us about our success in closing "short sales". We are proud of our experience and are happy to share!
A short sale may have credit or legal consequences and may result in taxable income to the Seller. The Seller is advised to seek advice from an attorney, certified public accountant or other expert regarding such potential consequences of a short sale.