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| Short Sales, Loan Modifications & How I Can Help You |
Today's Tips |
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What is a Short Sale?
A short sale is a situation where in order to sell a property the lender must agree to accept less than is owed on the property, including absorbing all closing costs of sale, etc. For instance, say you owed $600,000 on your home and the sale price was $500,000, the lender would have to agree to accept the $100,000 as a loss and all of the costs of sale with the property.
Why would a lender agree to do this?
The only other choice for the lender if the borrower stops making payments is to allow that property to go to foreclosure, with costs that may be substantially more as a loss to the bank than could be absorbed by doing a short sale.
How do I know if I qualify to do a short sale on my property?
Not everyone qualifies. Generally speaking, you must be experiencing some sort of financial hardship, such as:
1) Loss of job or source of income.
2) Falling behind on mortgage payments or behind on property taxes.
3) Other adverse conditions, economically, medically or for another reason, that prevents you from making your mortgage payment(s).
4) Using money from your savings to "stay afloat" and make your payments.
5) Having the need to relocate to another area but not being able to sell your house without taking a loss.
Is my credit affected by doing a short sale?
Yes, it will be affected. Your credit report should indicate something like "debt settled for less than full amount."
Isn't that pretty bad to have on my credit report?
Yes, but it is nowhere near as bad as actually having your house go to foreclosure, which is probably the worst thing you can have on a credit report. With a short sale, the damage to credit is not considered so severely and there is generally a better chance of rebuilding your credit much quicker than with a foreclosure.
Is all this confidential? This is a tough position for anyone to be in and it's hard for me to call anyone.
PLEASE don't feel you are alone in this situation. In the next two years across America, $1.5 TRILLION worth of essentially subprime loans will reset their interest rates at a higher rate, and a large number of those homeowners will be in the same position. It's nothing to be ashamed or embarrassed about. Everything in our economy changed very quickly and a lot of people got caught. The important thing is finding the solution.
How can I make sure I am protected if I do a short sale?
It is VERY important that the homeowner has his/her short sale handled by professionals. For that reason all my short sales are now being done by a real estate law firm that specializes in doing short sales.
Here are the benefits to working with a real estate law firm representing you:
1) Short negotiations: the firm I work with has long established business dealings with many banks and for that reason they can generally get bank approval on a short sale MUCH quicker than the average real estate or other professional. Their shortest approval time from submission was 12 hours. They have successfully negotiated over 200 short sales with the banks.
2) There is NO cost to the seller of the property.
3) You, the seller, have peace of mind in knowing that the short sale was negotiated with the banks in as professional a manner as possible, ensuring that the short sale is done correctly.
4) Other professionals recognize that a law firm is involved and have a greater level of confidence that legal aspects of the transaction will be handled correctly.
5) This law firm has on staff an attorney who is also a Certified Public Accountant, who may be able to offer tax advice on possible tax ramifications to the seller for a small fee.
For further questions please contact me at
chrismerritt@firstteam.com or on my cell phone at
(714) 420-1415. |
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