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What is a Short Sale?
What is a short sale? Who needs one?
We are being contacted by record numbers of people who are no longer able to afford their mortgage. Maybe their "ARM" has gone up, or perhaps they have lost valuable income or maybe they have had a hardship. They simply can't afford the mortgage. We can't help them in the traditional ways by negotiating a settlement with the mortgage company. If they can't afford the payment the mortgage company will never agree to a Repayment Plan . To make matters even worse they owe almost what the payoff is. These home owners are left with very few options.
Many people try and get them to file for Bankruptcy ... bad idea. That will eventually catch up to them and they will be right back where they started. The real answer may be a short sale.
A short sale is when the mortgage company will allow you to sell the property for less than what is owed and let you walk away from it. They will typically take 90% of the market value of the home. The market value is what other houses in the area of comparable value are selling for.
Here is an example of how a Short Sale would work:
Home is appraised at $150,000
Pay off is $135,000
Market value is $115,000
The home owner can't sell this home in the traditional manner because no one will give them what they need to satisfy the payoff. You can only expect to get on offer that is comparable to what other houses are selling for.
Here is where the short sale comes in:
-List the house with a Realtor for $110,000. Get a contract on the house and present it to the mortgage company for approval.
Here are some things to remember:
-List a contingency on the contract that the sale must be approved by the lender.
-The Realtor fee will be paid at closing by the mortgage company. In affect they will be getting even less.
-The property typically will need to be listed at a non-short sale price for at least 60 days before you can attempt this.
With the Realtor fees the closing settlement to the Mortgage Company will be around $100,000. They know they will lose a lot more if they allow the house to be foreclosed so they typically will approve this offer. This will stop the foreclosure on your home.
You walk away from the house with your credit intact, no foreclosure on your record and you have the ability to purchase another home that you can afford.
Please contact us or leave a comment if you would like some more information on this topic.
Related Entries
- Foreclosure vs Short Sale, which is better with Select Portfolio? - February 5, 2008
Comments
The bank can still come after you for the difference depending on your "note". They may obtain a judgment on you that is attached to your credit report.
thank you for your time
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IMPORTANT NOTICE: American Foreclosure Specialists (AFS) and our services are not approved by the government or your lender. www.afscanhelp.com is not associated with the government, nor is it a government sponsored website. To access information on government sponsored assistance, please visit makinghomeaffordable.gov. You need to know that even if you accept our offer and use our service, your lender may not agree to change your loan. Also, if you stop paying your mortgage, you could lose your home and damage your credit rating. Work Out and Loan Modification Plans vary and are dependent upon mortgage company criteria and financial information gathered as part of the efforts AFS provides. The information and notices contained on this website are intended as general research and information and are expressly not intended, and should not be regarded, as financial or legal advice. We attempt to ensure that the material contained on the website is accurate and complete at the date first published, however you should recognize that information contained on this website may become out of date over time. Readers who have particular questions regarding real estate law, finance, or who believe they require legal counsel, should seek the advice of a financial advisor or an attorney. AFS is neither a bank nor an attorney company. By submitting this contact request, you are consenting to be contacted by foreclosure specialists by telephone and/or email, even if you have previously listed yourself on any state or federal Do-Not-Call List.