Are you thinking of selling your home and the market value is less than you owe?
If so, then you are selling your home as a short sale. There still are many short sale homes on the market these days. The good thing is that most of the banks have figured out how to process the deals in a much quicker timeline than in the past. However it still takes more time than a traditional transaction. Bondi Realty recently closed three short sale listings in the past few months.
A short sale is one where the net proceeds from the sale won’t cover your total mortgage and closing costs and you don’t have other sources of money to cover the deficiency.
A short sale will impact your credit score less than a foreclosure.
If you are thinking of selling your home and feel you may qualify for a short sale follow the steps below before making any decisions on your own. The following advice is a compilation from several different sources including attorneys, mortgage professionals and accountants.
Consider Loan modification first.
When you have made the decision to sell your property because of financial difficulties; first contact your lender to see if there are any programs to help you stay in your home.
Your lender may agree to a modification such as refinancing your loan at a lower interest rate or provide a different payment plan.
When a loan modification still isn’t enough to relieve your financial problems, a short sale could be your best option if your property is worth less than the total mortgage you owe on it especially if you may have a financial hardship, such as a job loss or major medical bills. Contact your lender and see if they are willing to entertain a short sale.
Hiring a qualified team is the difference between being successful or not.
The first step to a short sale is to hire a qualified real estate professional and a real estate attorney who specialize in short sales. Short sales have increased in the last few years, so make sure the real estate professional and attorney that you hire has had extensive experience and closed a lot of short sales.
A qualified real estate professional can provide you with a comparative market analysis (CMA). This will help set an appropriate listing price for your home, market the home, and get it sold. Place special language in the MLS that indicates your home is a short sale and that lender approval is needed. Ease the process of working with your lender or lenders. Negotiate the contract with the home buyers. Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval.
It’s a good idea to gather documentation before any offers come in. Your lender or Short Sale Specialist will give you a list of documents required to consider a short sale. The short-sale package that accompanies any offer typically must include a hardship letter detailing your financial situation and why you need the short sale. Also include a copy of the purchase contract and listing agreement, proof of your income and assets and copies of your federal income tax returns for the past two years. Buyers must be prepared for a lengthy waiting period.
Even if you’re well organized and have all the documents in place, be prepared for a long process. Waiting for your lender’s review of the short-sale package can take anywhere from several weeks to months. When the bank does finally respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. Even if your lender does approve the short sale, it may take several months to close and may not be the end of all your financial concerns.
Keep in mind are you may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. Every lender handles the situation differently. Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Consulting with your experienced short-sale team will get you the best possible advice for your situation. Bondi Realty Group LLC has the expertise you can count on.
Betty Bondi
Owner/ Broker
Bondi Realty Group LLC
203-899-9990