What is a short sale?
A short sale is a sale of the property where the proceeds to the lender are insufficient to payoff the outstanding mortgage balance The lender agrees to accept an offer for less that what is owed. Why would a lender agree to do a short sale? Banks are not in the business of owning homes. Typically, a Bank loses about 15% of the value as soon as a property is foreclosed on, and becomes “an REO or real estate owned property" Factor in the amount of costs in attorney fees, eviction fees, closing costs, realtor commission, bankruptcy fees, damage, lost cash flow, market depreciation, and you can start to see that a below market offer today is much better than taking the risk of a larger loss down the road. How much will the lender accept?
That largely depends on the value as determined by the lender. Your lender will not accept every low ball offer that comes over the table. It has to make sense to their bottom line. If they feel they
can make more money by taking the property to foreclosure sale versus taking a low ball offer, then that's what they'll do. How does a short sale benefit the homeowner? A short sale benefits the homeowner because a foreclosure can be avoided. A short sale will state on the credit report "paid for less than agreed", which is not great, but it's a whole lot better
than a foreclosure, which would have a very negative impact on credit. A foreclosure will stay on the credit for 7 years, which would diminish any future hope of taking out another mortgage for a
home. Also, If you have to sell, morally, it's a much better option than just walking away. There must be some sort of a hardship
A lender will not agree to a short sale just because you would like to sell your house. There has to be some sort of hardship, whereby you have already defaulted on your payments, or default is
imminent. We can not help everyone. Will I have to pay any closing costs to sell the house?No, the lender pays all of the closing costs including the Realtor's commission.
Can I get cash back from the sale? No, In most cases the lender is taking a loss, therefore you cannot profit from their loss. Do I need a Realtor? (REALTOR)
YES! Even if you already have an offer lined up, but you don't have a Realtor yet, you will need a Listing Agreement to begin the short sale negotiations.
If you haven't found a buyer, then there should be no reason why you would want to sell it on your own. The lender is paying all of the closing costs, including the Realtor's commission, and the Realtor will professionally market the property. |