Here are some reasons to work with someone who knows and is experienced in short sales and the 10 questions your realtor needs to ask you.
1. Who is on the loan? Is it just you, and or someone else? Even if you are divorced and your ex-spouse is on the loan, the bank will require that you both participate in the short sale and both signatures will be required on the short sale documents.
2. Who is on title? If only you are on the loan and maybe your spouse joined you on the title that will need to be addressed as well.
3. Who is servicing your loan? That is easy to know since that is whom you are paying your payments to every month. Your agent will want to know how much you owe on your home. They’ll want to know how short you are in terms of the payoff to the bank.
4. How many liens do you have on the house? Did you take out a 2nd mortgage and was it a purchase money loan or a 2nd line of credit? It makes a difference with the deficiency rules and every state has different regulations. Your realtor will order a title search from the company that they use. This search will show any liens that are attached to the home. An unpaid utility bills or charged off credit cards could secure a lien against your property. All these liens will have to be negotiated in order to do the short sale. Did you take out of HELOC, a HELOC is like an open line of credit and in most cases follows you even if you foreclose. Doing a short sale your realtor can negotiate with that lien holder to release the debt in order to complete the short sale.
It is highly recommended that you talk with a real estate attorney and your tax advisor about the ramifications of doing a short sale. You will want to know if you have any tax liability or deficiency when completing the short sale. Please ask your real estate professional who they recommend as not every real estate attorney knows all the changing rules of a short sale.
5. Who is the investor on your loan? Even though you pay the servicer of your loan every month, they may not be the owners of the note. Most of the time, lenders sell their notes to other investors. Those investors set the guide lines for each short sale. Knowing these regulations up front can help the realtor when negotiating with the buyer to pay unapproved fees right away within the purchase agreement. Knowing this upfront can save time and maybe even the deal once the short sale is approved. Here is a link that you can use to find out who owns your loan. https://www.mers-servicerid.org/sis/index.jsp
6. Is your loan backed by a government entity? This makes a difference right away as well. Is it FHA, Fannie Mae or Freddie Mac or VA? Again these entities set the guide lines for the short sale. Here are the links to find out if a government entity owns your loan. http://www.knowyouroptions.com/loanlookup https://ww3.freddiemac.com/corporate/
7. Does your Realtor know about all the particular bank short sale programs? Starting a short sale without knowing the bank programs can cost you money. Some banks, like Bank of America, have programs that will pay the homeowner from 5,000 to 30,000 to do a successful short sale. Chase does as well. In order to qualify for the program, you cannot have a current offer on the house. You can see what you qualify for, a HAFA without an offer in place or the CO-OP program which you can only do if you do not have an offer. Sometimes your realtor will wait to list your home in order to qualify you for one of those programs. If you have a Bank of America loan, make sure you are talking with a realtor who is a specialist since these programs are not available that much longer.
8. Do you have an HOA, Home Owners Association? If you do, you will want to stay current on your payments so that you can do the short sale. Lenders will not, in most cases, pay delinquent HOA dues. In some cases, banks will not allow the buyer to even pay those fees. It is best to keep current on them. In the case of having a lien placed on the property for unpaid HOA dies, your realtor will have to negotiate with that entity to remove the lien prior to completing the short sale. Those can be really tough to do and your realtor will have to fight hard to find a way to do it.
9. Do you own any unpaid back taxes? Often times the government can place a lien against the property. In that case, your realtor will have to negotiate with the IRS or any other entity that has the lien. Sometimes early in the short sale process these liens do not short up right away but may show up right in the middle of the short sale or even worse yet, at closing. Knowing this up front can alleviate any surprises.
10. Did you do a Bankruptcy on any of your loans? Knowing this upfront again will allow your realtor to know how many liens he or she will be dealing with. Even though you are protected from that bank going after you, in most cases that entity may not have removed the lien from the property. In that case, your realtor will have to again negotiate with that lender in order for them to remove the lien.