My house is already listed for sale on the MLS but isn't selling; can I do a short sale?
Yes, a short sale in this scenario is relatively common. Some lenders even require that a house be listed for sale before approving a short sale in order to show that a discount is necessary.
A typical short sale situation is one like this (as used before):
Homeowner purchases a home for $600,000 in 2004 with 5% down payment.
In 2005, value has increased and interest rates have declined so the homeowner refinances to pull cash out. Home value $660,000, new mortgage $660,000.
In 2006, homeowner gets laid off and continues to make payments from savings.
By 2007, savings are gone and still no job. Homeowner begins to miss payments and decides to sell home for the former appraised value of $660,000.
As the months pass, the home is not sold because values have fallen to $600,000 and after 3 missed payments, the foreclosure process has begun. The Real Estate Agent presses the homeowner to lower the selling price, but that would require the homeowner to come up with cash at closing to cover the mortgage shortfall.
Homeowner is stuck in the house. He can't sell and can't catch up with the payments, and the foreclosure is proceeding toward eviction.
Given the above example, you DO NOT want to wait until the very end to consider a short sale. If you feel your back is against the wall and you need a way to avoid foreclosure, do contact us.
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