Sell your home even if it is worth less than you owe – at no cost to you!
What is a Short Sale?
A Short Sale can be the solution when the proceeds from the sale of your home would not be enough to cover the mortgage payoff, commissions, and all other closing costs. It is a common situation in today’s market, especially if the home was purchased as a new home in the past 3-4 years, and/or at least 90% of the purchase price was financed. Many people think that the only choices are foreclosure, bankruptcy, or just being stuck with their house, because they don’t know about the Short Sale option.
With a Short Sale, your bank agrees to accept less than what is owed as “payment in full”, in an effort to avoid a potential foreclosure. If you are approved into the lender’s Short Sale program, the lender agrees to “write-off’ as much of the mortgage as is necessary for the home to be sold at market value with typical closing costs.
We can help you through the entire process and paperwork. It can be a complex process and lenders can be frustrating to deal with, so it helps to have an experienced team in your corner. When it’s all over, the house gets sold, you don’t need to bring any money to the closing, and there is no foreclosure on your credit report. Our fee to handle the short sale is the commission that the lender pays us. There is no out-of-pocket cost to you.
What are the advantages for the homeowner in doing a Short Sale?
- No cost or risk
- The homeowner avoids a foreclosure on their record
- The only damage to the homeowners credit is the points deducted for the missed payments
- No income tax liability for the amount of debt forgiven by the lender (Signed into law December 21, 2007)
Why would a mortgage lender accept a Short Sale rather than foreclose?
- Real estate law and the foreclosure process differ drastically from state to state and lenders do not want to tie up their financial and legal resources trying to keep up with all the idiosyncrasies of state-specific law.
- The foreclosure process is too time-intensive, too costly and too state-to-state specific. Banks would rather just “cut their losses” and move on to replacing “bad loans” with “good loans”. For the most part, mortgage companies do not want to be in the real estate business!
- Most lending institutions have to hold in reserves (and cannot lend!) several times the value of the REO properties on their books. As we all know, mortgage lenders make money by lending money… if the amount they have to hold in reserves is a function of the REO properties on their books, you can see that they would want to keep these properties at a minimum.
What qualifies a homeowner for a Short Sale?
- Behind on payments
- Hardship situation or lack of cash required to close
- Little to no equity