Have you ever wondered about Short Sales?  A short sale occurs when a lender agrees to accept less money than is actually owed on a mortgage in connection with the sale of a property.  For example, even though you may owe $250,000.00 to your lender, you may be able to negotiate at settlement of $200,000.00.  Your lender would accept the $200,000.00 as payment in full, and discharge any further obligations.

Sellers may opt for a Short Sale if they have fallen behind on their mortgage payments.  This may be due to a number of factors including rising interest rates and payments or the loss of a job.  Often times in these situations, the decision to sell and use a Short Sale is usually a last resort in order to stave off an impending foreclosure. 

In other cases, homeowners may have already decided to sell, but the property value declined.  Homeowners may have purchased the property when prices were at their highest.  Others simply took advantage of low interest rates and 100% financing.  Either way, the appraised value of the home is usually less than the total amount a Seller could obtain for his home.  A Short Sale will prevent a Seller from having to bring money to the closing table just to sell his home.

So how do Sellers determine whether they will owe money at the closing?  They should first contact a reputable Real Estate Agent to help determine the value of the home.  Once a fair market value has been determined, Sellers should find out how much the realtor's commission will cost.  Commissions are typically fiver percent (5%) of the purchase price.  Other costs and fees Sellers may incur at the closing include Deed Stamps, which are a tax paid at the closing for $4.56 per thousand of the sale prices, attorneys fees, recording fees for the Discharge(s) of mortgage, and final utility bills.

Once Sellers have determined an approximate purchase price and closing costs, they should consult their mortgage companies and ask how much it would cost to pay off their mortgage(s) in full.  Sellers should not rely on their monthly mortgage statements for the payoff figure.  A typical payoff takes into account the outstanding principal balance, interest owed, and some additional costs and fees.  If the amount of the payoff(s) and closing costs exceed the estimated purchase price on the house, then a Short Sale may be an option.

For additional questions or advice on Short Sales or if you are interested in how to obtain a Short Sale approval, please feel free to contact me.

Kimberly L. Winslow, Esq.

508-281-8255,

kim@gnplawfirm.com

http://www.gnplawfirm.com/

Law Office of George N. Piandes, P.C., 132 Turnpike Road, Suite 110, Southborough, MA 01772