A lot of people have heard the term Short Sale but few people and even some Realtors don't have a clue what one is.
In the most simple term. A short sale is when you sell your home for less money than is owed to the lender and the lender accepts the payoff. Now normally you would be responsible to bring a check to closing to cover the shortage but in a short sale the lender accepts what is being odffered as final payment and releases the mortgage.
Why would a lender do this? Many reasons but the most important reason is that foreclosures cost them even more. Foreclosures create several problems for lenders, mainly being time and resources. The lender must employ a small Army of Attorneys to process the foreclosures and they must also wait a long time before they can take the property back and then re-sell it. A lot of this can happen during that time. The home can be vandalized, the pipes could freeze, the lawn and exterior start deteriating almost immediately. That is to just name a few things. But lets get back to the short sale. If you are behind on payments or are struggling to make them you should consider selling your home Short. Here what will need to happen to sell your home via short sale:
- Submit package to bank- they are not going to allow you to do this just because you want to. They will make sure that you are qualified, meaning debt are greater than income and you don't have $30,000 hiding in a saving account somewhere.
- List home for sale- You will need to contact a realtor and not just anyone, a realtor who has succesfully negotiated short sales before. You will need to list your home for an appropriate price based on it's current appraised value, not what you think it is worth.
- Get an offer- This is when is gets hard and why you need a qualified realtor. The number one reasons short sales fail is because of the buyer losing faith in the process. After receiving an offer you will be half way home.
- Close the sale- Your realtor will help get the sale closed from there, just like if your home was for sale without contingencies.
If you are behind on your payments and owe more than your house is worth, you need to contact a qualified realtor today. This is not a next day approval process. Your ability to purchase a home in the future is tied to this.
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