A Short Sale occurs when a bank agrees to accept less than is owed on the home, instead of going to foreclosure.
Why would the bank agree to a short sale? Because the overall cost to the bank is much lower than going through the foreclosure process.
If you owe more than your home is currently worth, and can’t afford the payments, a short sale may allow you to sell your home and avoid foreclosure.
Can any agent achieve a successful short sale? No! It’s important to hire an agent who understands the up-front paperwork, and the intricacies involvedwhen negotiating with the bank.
At Liquid Blue Realty we understand the differences in selling a short sale home versus a standard home sale. Most agents don’t, and you’ll only waste precious time if you don’t hire an expert.
If you are behind on your payments, don’t let your home go to foreclosure. We may be able to help you comlete a short sale.
Short Sale FAQ – Frequently Asked Questions
Q – What is a short sale?
A short sale in real estate occurs when the outstanding loans against a property are greater than the property’s current value. Short sales are a way for homeowners to avoid foreclosureand still be able to pay off their loan by settling with the lender.
Q – Do I qualify for a short sale?
Lenders vary in their requirements, but most lenders require the following:
1.Your payment is delinquent or is about to be. Most lenders will not work with homeowners who are successfully making their loan payments. Each lender policy is different, so if in doubt, check with your lender.
2.You have a qualifying hardship, such as divorce, loss of a job, medical bills, etc.
3.You have no other major assets. Lenders who see homeowners with large bank accounts or assets are less likely to cooperate on a short sale.
Q – How do I begin a short sale?
First, call Liquid Blue Realty. We will work with you in contacting your lender to determine if they will work with you on a short sale.
Q – What if I don’t have any money to pay the Realtor commissions?
In a Short Sale transaction you, as the seller, do not have to pay the Realtor commissions or any of the closing costs. The bank covers these costs. The banks will also pay for any unpaid HOA fees or unpaid taxes on the home.
Q – How long does it take to do a short sale?
The Short Sale process can be lengthy, and involves several stages:
1. The first stage involves Liquid Blue Realty working with you to gather all the documentation your bank will require. This stage shouldn’t take longer than a few days.
2. The second stage involves us preparing the listing paperwork and scheduling an appointment to see your home and prepare for the sale. This stage only takes 1-2 days.
3. The third stage involves aggressively marketing your home for sale and producing a ready, willing, and able buyer. This stage can take as little as a few days or as long as a few months. We will closely track the activity of your sale and make the necessary pricing adjustments to attract a buyer.
4. The fourth stage is the actual presentation of the offer to your bank. This is where our expertise and experience in negotiating Short Sales takes place. The negotiation and approval process can take anywhere from 30 to 90 days. In most cases, 60-90 phone calls and faxes back and forth between the lender and our team are required. If we are dealing with a single lender rather than multiple lenders, it is easier (although not necessarily faster) toobtain the approval.
5. The fifth and last stage to the Short Sale process is the period of time between Short Sale approval from the bank and the buyer closing on the home. Although the Short Sale addendum states the close will occur 30 days after bank approval, be aware that the banks typically push for a 2-3 week close. When possible we encourage all parties to accommodate the bank onthis issue.
Q – Are there any tax ramifications to a Short Sale? Any credit ramifications?
As always, we recommend that you seek legal and tax advice before any decision to do a short sale or before foreclosure. Both paths have potential legal, tax, and credit ramifications.
Q – Why do banks agree to a Short Sale?
Generally banks have found that it is more cost effective to do a Short Sale rather than foreclose on a home. Banks are not interested in owning real estate. While banks do take a loss on a Short Sale, foreclosing on a home can cost the bank an additional 10%-20% more.
Q- I am behind on my payments. How long until the bank forecloses?
It varies. Most notes (the I.O.U. that you signed when you took out the loan) give the bank the right to file a “notice of default” as soon as you are 30 days behind on your mortgage. While they have this right, most lenders do not file for a “trustee’s sale” (the legal process to foreclose) until you are 90 days or more delinquent. From the date of filing for a “trustee’s sale”, there is a 91 day period of time between filing and the actual “foreclosure sale” or “trustee sale”.
Q- When should I start the short sale process?
The sooner the better. Once you can no longer pay the monthly mortgage amount and if you do not wish to pursue any other lender remedies (loan modification, etc.) begin immediately. The more quickly you act, the better the odds for a successful short sale.
Q – Are all short sales approved by the bank?
No. We cannot guarantee that we can close every short sale. But we can assure you that if it can be done we will do everything in our power to get it approved. Sometimes the banks have inflated ideas about market value, second noteholders refuse to settle, or the lender will not halt a trustee’s sale.
Q – I haven’t filed taxes for last year. Can I still do a short sale?
Yes. Understand that the more missing pieces, the tougher the approval process. The more detailed documentation we provide, the quicker the process and the greater the likelihood that the short sale will be approved.
For more information, just click the Contact Us button at the top of the page, or call 440-552-2375.
