Do you qualify for a Short Sale?

If you can answer yes to the 3 following questions, you are very likely to qualify for a real estate short sale.

• Has your home’s Market Value Dropped?

Hard comparable sales will be used to see if your home is worth less than the unpaid balance owed to the lender. Your real estate agent should be able to provide a BPO (Broker Price Opinion).

• Is your Mortgage Currently in Default or are you sure it will be soon?

It use to be that lenders would not consider a short sale is your payments were current, not any more. Many lenders are eager to head off future problems before they happen.

• Have you fallen on Hard Times?

As the seller you must submit a hardship letter that explains why you cannot pay the difference due upon the sale of your property, including why you have or will stop making your monthly payments.

Obviously these are difficult questions from many people to answer. But I want to be clear – Not all situations will merit a short sale

Deficiency Judgments!?!

Did you know you could still be on the hook for the difference between what you owed the bank and what your home sold for?

Pay very close attention this could save you THOUSANDS of DOLLARS!

In short, the answer to the question above is YES. Deficiency Judgments can be a ticking time bomb that could blow up years after you short sale your home. If the bank forecloses you can still be held liable for a deficiency judgment. Imagine getting a phone call one night from a collections agency telling you that you owe them $50,000?

Just because your bank approved the short sale doesn’t mean you were released from all of your obligations. You must ensure that you have negotiated and received a release (in writing) releasing you from any and all deficiencies. Lenders can pursue collections in more than 30 states.

Lenders are often willing to release their right to recourse but you have to ask, DO NOT ASSUME. Be sure your real estate professional is able to secure in writing a release from future claims or negotiate an acceptable settlement.

What is a Short Sale?

A short sale is the sale of a home in which the amount of the mortgage(s) are great than the amount the property can be sold for. Instead of the home owner coming up with money to close the sale, the sale is completed through a negotiation process with the lender where the lender agrees to accept less than what is owed on the property.

Its not a complicated legal process that requires you to have a team of lawyers. But short sales are a different type of real estate transaction. Once you quit paying your mortgage it is just a matter of time before the bank files for foreclosure. You only get once chance at making a short sale work. If you are using an agent that is inexperienced at short sales or doesn’t know how to negotiate with bank YOU WILL BE FORECLOSED ON!

A foreclosure will destroy your credit. You credit score will drop as much as 300 to 400 points and you will be hounded by debt collectors day and night. You will have difficulty getting credit cards, renting an apartment or getting a car loan for the next 7 years.

You home will be repossessed by the bank and either auctioned off or sold through a real estate agent who will put a large sign out front that says “Bank Foreclosure”.