What Is A Short Sale?

Odds are you have heard the news lately about real estate. Lately we are starting to see a lot more short sales.

What is a short sale?

This is when trying to sell a home you are putting on the market for less than you owe.

There are a variety of reasons for doing this:
1. You purchased a couple of years ago and values in your area have come down since then.
2. You refinanced your home to get money for other purposes and now your home is mortgaged for more than it can sell.

Why Would I sell if I Owe More Than I can Sell it?

There are a variety of reasons why you might find yourself in this situation. Maybe you are a spouse lost your job and you cannot afford to stay in your home, you have been relocated for your job and need to move out of state, your mortgage payments have increased to a point where you can no longer make the payments.

A short sale can help you avoid foreclosure

If things have gotten to a point where payments are difficult and you feel like you are not going to be able to keep them up a short sale could be a lot better alternative to foreclosure. With a short sale you can sell the house and get out from your mortgage. If you just stop making payments eventually the bank will come knocking on your door and ultimately can take possession of the house. If this happens your credit can be damaged for several years and forget even trying to buy a home for about 7.

How is a short sale different?

If you are not using a Realtor to help you sell your home at this point, you may want to. Short sales are not for the faint of heart and they typically take a lot of time and energy.

The first step is to contact the lender and speak with someone at the loss and mitigation group. Some lenders will be up to speed and will have a list of paperwork to send out to be filled and signed off on, an others will not. The tough part of a short sale is every lender will deal with it differently.

Basically the goal is to negotiate with the lender for them to "forgive" the difference between what you owe and what it sells for. Some lenders will negotiate this up front, others will want to see an offer before they will even discuss it.

Short sales can be hard to sell.

Get help early!!! A Realtor will be able to help you navigate the negotiations with the bank. In some instances it can take weeks of phone calls to even get a person with the lender that has the authorization to make any decisions regarding a short sale of your home.

Buyers can be wary of short sales

As a buyer you may have the perception that something is wrong with the house. Or if something is unearthed during an inspection will you the seller be able to negotiate work that may need to be done.

It is really important to look at your situation to see what makes the most sense for your situation. Get help early and be realistic about your situation. It is not a happy place to be in, but if you are able to successfully complete a short sale you can limit the number of financial headaches for yourself in the future.

If you would like more information about short sales, you can contact me at 510.213.1139 or at lcartolano@apr.com