To sell short or not to sell short, that is the question

You’ve probably already heard of the term Short Sale (SS). This is when a seller (usually one who is in a current financial distress) tries to sell your home that is worth less than the amount you owe on your mortgage. The bank must approve the loss they are suffering as a result of the sale and, once they approve it, the SS can close with a new buyer in their place.

There are more than 7 million homes in trouble today; This means that the home is behind on its payments or that the home foreclosure process is already in place. The sad part is that for about half of the homes that run in this country, the owners did (or knew how to do) nothing about it. Today’s banks are hurting and NEED to look for alternatives other than foreclosure, and a successful SS has become the preferred process for absorbing the immense amount of distressed sales piling up across the country.

In a short sale, the seller remains the owner while the terms of the sale and how the sale will affect the seller’s financial future are negotiated with the bank. Of course, it would not be advisable for you to do it on your own; you want someone who is experienced and tenacious in dealing with a large financial institution and has your financial future on their side.

I have been successfully negotiating short sale transactions since 2006 (before most large banks had SS departments). You don’t become a short sales expert by taking a weekend class; comes from experience through the total amount of short sales you have successfully closed and how well clients finished after all was said and done. Also, homeowners facing financial difficulties today should know that there are several options to help depending on their situation and what you want to achieve. Many people stick their heads in the sand and choose to ignore all the bad things happening around them and let their house be run from the bottom. Foreclosure destroys your credit and is the worst thing you can do to yourself. On the other hand, making a short sale is the best thing you can do for yourself assuming you’ve done your research and tried to find alternatives to staying in your home. There are government programs to help keep homeowners in their homes, and people in general need to know that programs like these exist and are a viable option. For many homeowners, the hardships are too severe to justify staying in the property, no matter how the loan terms are readjusted, and a short sale becomes the most logical and reasonable solution.

Short selling can be really easy, but for many people it is a long and stressful process. They used to be almost impossible to do because there was no precedent set on how to deal with them just a few years ago. Today, all banks have handled short sales and most have strong teams of staff dedicated to processing these short sales files. As a result, the more short sales that are approved and closed, the more regular the process will be, and most banks will do it in a similar way, making it easier for agents to set up files for success at the start of an SS.

It goes without saying, but a short sale will hurt your credit and can have significant legal and tax ramifications. Your agent should advise you to speak with the necessary professionals to inform you about your situation and what your risk is in terms of the consequences you may suffer if you go the SS route. In my experience, most of my clients are better off doing SS. It is seldom better to foreclose. Your situation will be determined based on the history of your loan (did you refinance?), And the occupancy status of the home in question (are you an owner or an investor?), Among other things. Depending on what state you live in, these determining factors change the way banks can or can go after you, so you need to make sure you make the right decision from the start.

Most people will benefit from short selling, and my best advice is to find someone who has dealt with banks a lot. If your real estate agent is a friend but knows nothing about short selling, forgive the relationship and go to a professional unless you want to risk losing your friendship because you made a mistake when negotiating and communicating with the banks. Banks are interested in what they can get out of you along the way, and a less experienced agent can cost their clients a lot of money, whereas an agent like me rarely, if ever, sees a contribution. from the seller needed to fall short. -Sale approval.

Today the government has implemented a short sale program which is the program you will want to initially opt for with your agent, because if you can qualify, it is the best deal in town. The Home Affordable Home Foreclosure Alternative (HAFA) program is the government-sponsored program that was implemented this year to help distressed homeowners sell their home quickly without legal consequences and with some money. cash in your pocket for moving expenses. This is by far the most promising and beneficial program to date and it is only becoming mainstream as more and more homeowners discover they have options. With this program, not only can you gracefully retire from your home and your mortgage obligations, but you will do so without any legal recourse from the bank. In other words, the bank can’t chase you after the short sale no matter what, and they’ll give you $ 3000 for moving costs after all is said and done. This is a huge departure from a regular short sale where the bank wants to see absolutely nothing for the owner (and it makes sense because the bank is taking a substantial loss, so they realize why the owner should go with money). ?) With HAFA, all the potentially bad things that can happen from a short sale essentially disappear (not including the impact on your credit) and you end up with cash on hand; that’s why this is the best show I’ve seen to date.

Why does the bank agree to this? A short sale is the best alternative for a bank because they usually get more money from this process rather than foreclosure. From the numbers I’ve seen, on average, the bank gets 10% more value by doing a short sale compared to a foreclosure. In a short sale, the real estate agent and seller essentially find the buyer of the property and all the bank has to do is press the button to approve. Compare this to a foreclosure where the bank’s rising costs of foreclosure, legal fees, costs of holding, maintenance and repair, property taxes, and paying a full commission to a real estate broker to list the foreclosure, and you can see why go short sale. The route is beneficial to both the bank and the borrower.

2011 will be a year in which the short sale will occupy a majority share of the market. It also creates the most opportune time for someone to do an SS who could desperately benefit from one. Regardless of what your future holds, my goal is to help you take control of your financial destiny to put you in the most advantageous position to be successful. I hope this information has been helpful to you in understanding the short selling market today. Be an advocate for yourself, educate yourself and take action today. Best of luck!