A short sale in real estate occurs when the outstanding obligations (including all loans, lines of credit, etc.) against a property are greater than what the property can be sold for. Short sales are a way for homeowners to avoid bankruptcy or foreclosure proceeding by convincing the bank to accept a discounted payoff, meaning the lender(s) will release the lien(s) that is (are) secured to the property upon receipt of less money than is actually owed. Click here for a more in-depth explanation on the subject of Short Sales.
Will Your Lender Accept a Short Sale and Do You Qualify.
Lenders are in business to make money and by agreeing to accept a short pay off, they are agreeing to take a loss on the sale of the property. You can’t just decide you’re going to sell your home at a loss by asking for a short sale and ask the lender to take the hit for you. To qualify for a short sale a bank will want to see a clearly demonstrated financial hardship. Acceptable financial hardships include: relocation, loss of a job, payment increase or mortgage adjustment, business failure, reduced income, to much debt, illness or death, divorce, damage to property, incarceration, etc. In any of the fore mentioned cases, a bank will typically agree to a short sale and will usually accept the short payoff as payment in full on the loan (ie. the bank will not demand a cash contribution or a promissory note).
* Note if your payments are current, there is very little reason for the lender to consider a short sale. If your payments are behind, then a lender may be more agreeable to negotiate with you.
Who Might Not Qualify for a Short Sale with No Financial Penalty?
1. Homeowners who realize their home is worth less than what they paid and they just don’t want to make the payments anymore.
2. Homeowners who have significant assets and income.
* Homeowners who lack a qualifing financial hardship may be required to either sign promissory notes and/or bring cash to closing or the property will go into foreclosure.
Please note that there are always exceptions and in some areas/communities banks may be more lenient with negotiating due to the number of short sales and foreclosures in those markets. The observations referenced here are those we are seeing in our market. In most instances the borrower will walk away with little or no money out of pocket, and without the requirement of a promissory note even if they don’t meet the specific qualifications for a short sale.
What should you do if you are behind in your payments?
If you are behind in your payments, but want to try to keep your home contact one of the foreclosure prevention, loan modification programs operated by the US Government or which has it’s seal of approval. You may qualify for a loan modification or another program. Seek the advice of your financial adviser, accountant and attorney to give you all the information about your particular situation.
If you’re not interested in retaining your home and just want to get it sold contact an experienced short sale real estate professional to discuss your options. You may contact us for a free and confidential consultation.
Short Sale vs. Foreclosure?
The consequences of a foreclosure are severe and long lasting however, there is an alternative and foreclosure can be avoided through a short sale. This alternative sales method offers significant advantages to the homeowner and the lender! If you’re facing foreclosure and wonder what the consequences of a foreclosure are, and what advantages are offered through a short sale we strongly encourage you to read our post short sale vs foreclosure.
If you’re facing foreclosure you’re facing some very important decisions. We want you know you’re not alone and we are here to help with any questions you may have to assist you in making the best decisions for your situation. There is no charge for this service and we are happy to help! We offer confidential and professional real estate advice.
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Hilliard 43026 Lewis Center 43035 Marysville 43040 43041 New Albany 43054 Pickerington 43147 Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235