Short sales are a hot topic in real estate. As more and more homeowners find themselves upside down in their homes, many are learning about short sales. We find that most people are very confused by the term and the actual process. We would like to help bring clarity to a confusing subject.
What is a Short Sale?
A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold.
In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation or workout department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.
How do I Know if a Short Sale is Right For Me?
This is the ten thousand dollar question and often the one most mishandled by real estate agents. We believe this question is best addressed to an attorney who specializes in short sale transactions and not a real estate agent.
An attorney offers you knowledge and protections a real estate agent can not. First are the skill sets needed to re-negotiate a legal document... your mortgage. Second is the fact that you will be discussing and supplying personal information and documentation. With an attorney you will be covered by attorney/client privileged.
Why Do I Need or Want a Realtor in a Short Sale?
A realtor is needed for many reasons. First, we work hand in hand with the attorneys to keep you safe and well informed. Second, we will perform the market/price analysis to determine what your home is currently worth. Third, we will create a marketing plan designed to attract as many potential home buyers as possible and present you with a viable offer. Fourth, we have the expertise to execute the purchase contract, negotiate with the home buyer and his/her agent, place the home in escrow and act as the information conduit between the various parties. There are a number of duties that come up during the transaction that we take care of as well.
How Long Does a Short Sale Take to Complete?
There are no hard numbers to offer. Some lenders are pretty quick to respond to a short sale offer and some are not. If you have more than one loan on the home it will take longer since your attorney will have to negotiate with them individually.
We did perform a simple study that may offer some guild lines. We looked at about 300 short sale transactions and found on an average it took 100 days after an offer was sent to the bank for the home to close escrow and ownership transferred to a new person.
Do All Short Sales Work Out?
Sadly, the answer is no. However, the lenders are, in general, being more proactive and the odds are much better than in 2008 and early 2009.
In 2008 only about 8% of short sales actually worked out positively. The most recent numbers indicate that the likelihood of a happy ending are way up and getting even better. One of the biggest shifts has come about by home owners using professional legal teams, along with their real estate agents. This team approach seems to be much more effective.
How Do I Get Started?
We have a simple form below that can get the ball rolling. Simply give us your contact information along with a short summary of your situation. We'll get back with you with the initial steps we would take if we were you.
