Whether you are in a Short Sale situation or not, you are directly affected by the Short Sale’s happening around you. With an average range, depending on area, of 25% to 40 % of homes on the market selling at a loss, the short sale and distressed market cannot be ignored. Here is a quick overview on the Who, What, Why & How of Short Sales.
WHAT IS A SHORT SALE?
A “short sale” occurs when a mortgage lender or lenders agree to accept less than the total amount of money they are owed on a piece of real estate in order to facilitate the sale of that property. This is generally accomplished when the owners of the property have fallen behind on their monthly mortgage payments and a foreclosure of the property is looming.
A “short sale” allows the property to be sold and the lender to recoup some of its losses. It also allows the homeowner or property owner to sell the property and avoid having a full foreclosure further ruin their credit and potentially severely impede their economic future for years to come.
WHAT QUALIFIES A PROPERTY FOR A SHORT SALE?
The owners of the property, in most cases, must be at least thirty (30) days behind on their mortgage payments and facing a potential foreclosure action. Further, the owners generally must show a financial inability to get caught up with their mortgage payments as well as a further inability to then continue timely payments in the foreseeable future. A recent hardship, such as a loss of employment, may favorably play into the analysis. The property value on the open market today must also be less than what the owners owe their mortgage lenders.
WHY WOULD A LENDER ACCEPT LESS THAN WHAT IS OWED?
Foreclosures are a very expensive and time consuming legal action for mortgage lenders in our state. Once the six (6) month non-judicial foreclosure process is completed and all the fees are paid, the lender then has to sell the property to try to recoup its money. This involves the sale costs to the lender that the now foreclosed owner would have been facing if they tried to sell the property on their own. Repair costs, marketing costs, Realtor® commissions, appraiser costs, title fees, escrow fees, excise tax, property taxes as well as having their money tied up in a nonproductive asset are all borne by the lender who foreclosed.
In today’s declining real estate marketplace there is a very good chance that lenders will still end up selling the property for less money than they were owed except that now they have incurred all of these additional costs of foreclosing as well as all the carrying costs on the property, such as real estate taxes and utility bills, while the property sits vacant. Because of these many costs and the unpredictability of the declining value marketplace, a properly submitted and documented short sale can often be very appealing to a lender.
HOW DO I SELL A PROPERTY IF I OWE MORE THAN IT WILL SELL FOR?
Anywhere from 25% to 40% of homes on the market in our area are selling at a loss. One homeowner in ten is behind on their mortgage right now. This economy has caused a lot of unbearable stress and heartache for many people. Most who sign a mortgage don’t intend to walk away from it. Still, unforeseen circumstances – huge medical bills, lost jobs, divorce or eroding property values – can overwhelm even the best-intentioned borrower.
As a leading Short Sale specialist I work with a group of real estate attorneys, paralegals, legal assistants, limited practice officers, title examiners and escrow closers to negotiate with your lender an amount less than what you currently owe on your loan in order to get your house sold; and virtually at NO COST to you.
Contact me for a confidential consultation.
Mike Rozell ~ 206.799.3414
