What is a short-sale?
A short-sale simply means a property is being marketed for less than what is owed to the bank. There are many individuals in this boat, they are attempting to sell their home for less than they owe. For example, they owe $300,000 to the bank, but their home is only worth $150,000...they are short to the bank.
Are banks working with these sellers?
Unfortunately, not often enough. Currently here in the Central Valley, 55% of our inventory are short-sales, but only 8% of our closings are short-sales. This means that more often than not the bank chooses not to work with the sellers in these situations.
Many properties have mortgage insurance on them. In other words, when the buyer purchased the home they didn't put 20% down, so they are paying mortgage insurance on a monthly basis to the bank. Or maybe the home has been refinanced, and at the time of the refinance, the home no longer has 20% equity. Again, the mortgagee would be paying mortgage insurance. This means the bank has insurance on the home.
This is often the reason a bank chooses not to work with a seller on a short-sale. What motivation do they have to do so? They can simply turn the home into insurance and recoup the entire amount versus allowing the home to sell for 50cents on the dollar.
Why attempt to do a short-sale?
A short-sale allows a buyer to salvage most of their credit, where a foreclosure damages your credit substantially. Also, you are able to purchase another home sooner than you would be allowed to do if your home went to foreclosure.
Also, more and more insurance companies are unable to pay out and are pressuring the banks to work with the sellers; this will hopefully create more opportunity for successful short-sales.
Questions I ask before taking a short-sale listing:
In order to be well informed before moving forward with the possibility of a short sale, it's best to find out what your current financial situation is and what steps have you already taken.
• Has there been a Notice of Default filed?
• Do you still live in the home?
• When did you make your last payment?
• How much do you owe?
• Is there more than one mortgage?
• Who do you make your payments to?
• Have you tried contacting the bank to renegotiate?
Call me
If you have questions or if you are prepared to move forward with the sale of your home, call me today. I will do everything in my power to make you and your home one of the short-sale success stories.
Ben Balsbaugh
Sales Manager, Realtor
PMZ Real Estate
209-491-3880
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