There's nothing short about a short sale
March 26, 2014Many people have asked me what a short sale is. If you've ever gone through one or bought a short sale property, you know that, time-wise, there is nothing short about a short sale. For those of you who have not had the experience and are curious to know more, I'm here to enlighten you.
What is a short sale? A short sale occurs when you sell your home for less than the balance remaining on your mortgage and your lender agrees to accept a payment amount "short" of what's due. It is, in a sense, a pre-foreclosure sale, and gives the homeowner the opportunity to sell their home before being foreclosed, thereby helping them recover their credit faster than if they go through a foreclosure.
Short sales require bank approval and can often take as little as a few months, if the process goes smoothly, or longer than a year. The bank will be verifying that the seller can't continue paying the mortgage and decide if a short sale will be better than a foreclosure on the property. During the process, the bank may decide to accept the short sale price offered, reject the price and ask for a higher one, or conclude that the seller does not have enough financial hardship to qualify. It is, however, a better option than to simply go through foreclosure.
For buyers, a short sale does not necessarily mean, as many may believe, a better deal on the property, and often comes with a few extra risks. Oftentimes, properties are sold as-is since the seller is unable to make any repairs, or a seller may ask the buyer to take care of any additional liens on the property so the transaction can close. The buyer may also need to cover additional closing costs and any property inspections.
How do I know if I qualify for a short sale? You may qualify for a short sale if you have the following issues:
• You are ineligible to refinance or modify your mortgage.
• You are facing a long-term hardship.
• You are behind on your mortgage payments.
• You owe more on your home than it's worth.
• You have not been able to sell your home at a price that covers what you still owe on your mortgage.
• You can no longer afford your home and are ready or need to leave.
What steps do I need to take for a short sale?
If you have some of the above issues and believe you may qualify for a short sale, the next steps to take would be to:
• Gather financial information.
• Be ready to explain your current situation and why you're having trouble paying your mortgage.
• Contact your mortgage company to let them know that you are interested in a short sale and want to see if you qualify.
• Contact a real estate professional to list your property and help you handle the short sale process.
If you are unsure if you may qualify or still don't know where to start, contact a real estate professional to help you get started on the process.
All the best!
Jeana Boulos is a local real estate professional living in Valley Center. Feel free to contact her for any of your real estate needs at 760-517-6316 or firstname.lastname@example.org. Visit her website at boulosrealty.com.
CA BRE #01923953