Short Sales
The real estate market has become increasingly difficult for many people and likely to get worse, especially sellers with mortgages. Many sellers are "underwater," meaning they owe more money than their property is worth. Other sellers are behind on their mortgage payments for various reasons and do not see any light at the end of the tunnel. As a result, a “short sale” may be the only viable solution. A short sale is where the lender agrees to accept a loan payoff for less than the full amount due AND the borrower is released from any further loan obligations. Although a short sale may adversely affect the credit score of the seller (and have income tax consequences), it is much better than a foreclosure or bankruptcy. Moreover, many lenders will agree to give the seller money for moving and other incidental expenses. If you are not currently working with a real estate agent and/or attorney that regularly handles short sales, please contact us immediately.
For short sales, keep in mind:
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Your real estate agent should know the person responsible for handling short sales with your lender. This person will be able to send you a list of the things you needed to determine if you qualify for a short sale and your agent can walk you through this process.
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We will need a letter authorizing us to speak on your behalf. Most lenders will not release your personal information if they don’t have written permission.
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Short sales take time. On average, short sales take three to four months but it mostly depends on the lender. Some have closed in as short as one month and some have taken substantially longer than three months.
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The seller will need to prove a financial hardship in order for the bank to consider the short sale, i.e., you can't have substantial liquid assets. The lender will look at things like your income, your needs, and your property value.
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The bank pays all customary closing costs such as agent commissions, taxes, title fees and attorney’s fees.
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Your real estate sales contract should use the appropriate short sale rider (an experienced real estate agent will be familiar with these). The seller still accepts an offer but is subject to the lender's acceptance before any closing can occur.
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When an offer is presented, the lender will likely order a brokers price opinion (“BPO”), which is similar to an appraisal. Therefore, if the offer is lower than what similar homes have been selling for the lender may reject the short sale or counter at a higher price.
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There is no guarantee the lender will approve the sale, but working with the right agent and attorney will drastically increase your chance of success.