Short Sales
In these hard economic times, many homeowners have found themselves with financial difficulties and as a result, have had to try to sell their home in an effort to avoid a foreclosure. To make matters worse, many of these same folks have found that their home values have dropped 10-20 percent, making their home worth less than what they could hope to sell for on an open market.
When a homeowner finds themselves in financial trouble and starts to fall behind on their mortgage payments, there are usually only a few options available. The homeowner could apply for a loan from an institution or family member in order to pay off the delinquent balance or negotiate with their lender for one of the following:
- Temporary Indulgence Plan, which could buy a short amount of time such as 30 days in which to come up with the delinquent balance.
- Liquidation Plan, which would allow the borrower to make installment payments to eliminate the delinquency, such as double payments.
- Forebearance Plan, which would suspend or reduce mortgage payments for a defined amount of time but would have the lump sum due after the temporary condition no longer existed.
If the lender doesn’t agree to one of following above, the home owner may only have one choice left and that would be to sell the property before the lender decides to foreclose and send the home to auction.
Selling a home that’s worth less than what’s owed on the mortgage is very difficult but not impossible. If the home owner has some funds available, he/she could pay the difference between what the sale would yield at current market value and what would still be owed on the mortgage. But what if you don’t have access to enough funds to cover the difference in the sale? If you do nothing, eventually your lender will have no choice but to foreclose. You and your family will be removed from the home, your home will go to auction and your credit report will suffer a devastating hit.
The good news, if there is any, is that your lender most likely does not want to foreclose on your home and will only do so if there are no other options available. Lenders are not in business to sell homes and they don’t want them on their books costing them money. In most cases if they can avoid having to foreclose on your home and then have to market your home themselves in today’s market, they will. Many lenders in an effort to save themselves from the cost of having to foreclose have allowed homeowners to do what is called a Short Sale.
A Short Sale is when the lender holding the mortgage lien on a property agrees to allow a homeowner to sell their property for less than what’s currently owed on the mortgage. In most cases when a mortgage holder agrees to a short sale, it will consider the amount tendered from the sale as a full satisfaction of the debt. A short sale is not easy and it can take some time to complete but it can be a winning situation for all the parties concerned. The home owner could get out from under a home they no longer can afford while saving their credit report from a foreclosure. The mortgage holder would at least receive something close to market value for their asset and would save the cost associated with foreclosure. And the buyer would receive a home most likely below market value saving them money.
In conjunction with The Loan Workout Group an affiliate of The Carter Law Office, we negotiate with lenders to accept short sales and get homes sold before they end up in foreclosure. Together we work with the homeowner assembling all the necessary documents needed that make up the short sale package, market the home and negotiate with the third party for approval. The best part is we negotiate with the lender to pay our commission, saving the homeowner upfront costs!
If a doing a Short Sale sounds like a solution that could help you, please contact me today at (603) 610-8595 or (603) 755-1229 and I would be more than happy to explain and assist you in the process.
Paul Martin GRI, e-PRO Realtor