|
What
is a Short Sale?
A short sale is
when a home is sold for less than what is owed - thereby being
"short". Common hardships that qualify for a short sale
include:
-
Reduction
of income or loss of job
-
Health
issues
-
Job
relocation
-
Medical
bills
-
Escalating
mortgage payments (ARM's)
-
Death of a
spouse
-
Any other
circumstance, typically beyond your control, that results in your
inability to make your mortgage payment
Frequenly
Asked Questions:
Why
would a lender agree to take less than what is owed?
Freddie Mac
says the typical foreclosure costs approximately $60,000. Add in the
fact that Michigan has a 6 month redemption period in which the borrower could
remain in the house during that time payment free, maintenance free - and in a
declining market! Is it any wonder that the department we negotiate with
is usually named "loss mitigation". Although lenders are under
no obligation to approve short sales, they are almost always preferable to a
foreclosure - for all parties involved.
Will
a short sale affect my credit?
Unfortunately,
you cannot have your cake and eat it too. During the short sale, you may
be missing payments which do get reported. Additionally, you lender may
report the sale as "debt settled for less than owed". Your
main purpose to do a short sale is to avoid a foreclosure, which by nearly any
measure, is more damaging to your credit than a short sale.
Why
not just "walk-away"?
| Short Sale |
Foreclosure
|
| Negotiated
Settlement |
Court
Settlement |
| Seller’s
Credit Bruised |
Seller's
Credit Ruined |
| No Attorney
Fee |
Big Attorney
Fee |
| Know What to
Expect |
Not Know What
to Expect |
| Buy Again In
2-3 Years |
Buy Again In
7-10 Years |
| All Liens
Negotiated |
All Liens
Extinguished |
What
happens with the deficiency?
The difference
between the sale price and what is owed is referred to as the
"deficiency". We negotiate with the goal of having the
lender(s) waive their right to pursue a deficiency judgment, however, as laws
change and lenders react differently, the final treatment of the deficiency
will not be known until the later stages of negotiation.
How
long does a short sale take?
The answer to
this question largely depends on who the lender(s) is/are and what kind of
negotiator the lender assigns (good vs bad). In general terms, 60 -90
days, leaning towards the 90.
How
much will it cost me?
As a general
guideline, you as the seller will come to close with no money, and leave with
no money. Lenders pay our fees as a ordinary and reasonable cost of
doing business. We only get paid upon successful completion and closing
of the short sale. |
