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SHORT SALES
A short sale is where the homeowner can no longer pay the
mortgage, he is in arrears on payments and there is no chance of him making the
default up. The owner owes more than the property would sell for.
The owner is "upside down" on the loan. Rather than foreclose on the property with all the additional costs, the lender
MAY agree to negotiate a "short sale" where they will accept less than
the mortgage value of the property if the owner will simply leave without going
through the time and expense of foreclosure.
The owner/seller wants to save his credit rating. There
is a good chance of doing that through a SHORT SALE!
The owner finds a realtor who understands the nuances of Short
Sales. The owner and the agent put the house up for sale. For Sale By Owners FSBO's
normally do not have the marketing savvy to sell their own properties in this
type of a market (there are exceptions) and they do not understand the
negotiating strategies needed to deal with the bank and the buyer.
We
advise: GET A REALTOR!
FIRST: You need to verify the value of your property. You can
get a BPO which is a "Broker Price Opinion" also known as a CMA
"Comparative Market Analysis" for free (remember the old adage) or
at a very low cost. You need this in order to talk to the lender to show
them that your loan is for more than the value of the property.
SECOND: There are a lot of costs associated with selling your own
house so you need to add them up. Closing costs will include title and
escrow fees attorney fees, a portion of unpaid property taxes, re-conveyance
fees, notary fees, delivery fees, documentary fees and/or transfer fees.
Contact me to help add these costs up: Richard Newquist (904) 422-5091.
THIRD: Get the mortgage balance and compare it to the CMA or BPO
prices that you have. In order for you to propose a "short
sale" to your lender, your mortgage must exceed the value of the
property.
FOURTH: Get in touch with your lender or your agent will.
This will be difficult. They have a department that will deal with this
but no one will know the name of it. Once you find it, you MUST find a
supervisor who can make a decision. DO NOT SPEAK WITH ANYONE BUT A
DECISION MAKER!
FIFTH: Prepare your personal balance sheet showing the financial
problem and how it's not going away anytime soon. You must write a
letter to the lender explaining how you got into this mess in the first
place. It is a tearful (sob) explanation of the problem and why it would
be in EVERYONE's best interest to let you out of the mortgage for less
than the balance showing.
 | If you sell the property without the assistance of a real
estate broker, you will save the amount of the commission and have more to
apply toward paying off your loan.
| If you get a real estate broker, there will be less for the
lender but the transaction has a much better chance of working out.
Only 50% of these deals ever actually go through and almost ALL of them used
a real estate agent. The lenders understand this concept. They
would almost NEVER recommend a FSBO version of a short sale. |
| Get the estimates for repairing the house, improving the
value, and getting it ready to sell. These costs will be added to the
expense side to show the lender that you can't make the deal work without a
short sale. |
| Remember that the amount on your monthly loan statement
does not include interest. Interest is accrued until the date a loan is paid
off, so you may have as much as 30 days of interest on top of the balance
owing, and you'll need to include this interest in the total payoff amount.
| If a property is sold under a short sale, the lender
may require the buyer to make up the difference, either through a personal
obligation or a collection.
| To reiterate about the taxes: the IRS often gets
involved with short sales, because they are seen as a relief of debt and may
be treated as income. Check with your accountant. |
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Interested in getting information on the short sale and YOUR situation?
Just fill out the form below. NONE of this information will be released
to ANY third-parties for ANY reason. It is confidential and we respect
that. Your email address won't be provided to ANY third-parties for ANY
reason.
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