*This is the Conclusion of a 6 Part Series on Short Sales. Click here to read the Entire Series.
Perhaps the most daunting element in a short sale may be the period AFTER you have secured an offer. You may be in one of two stages: the Pre-Foreclosure Stage in which payments are being made but are late and it is increasingly difficult to keep your head above water or in the Redemption Stage which in the State of Michigan is normally 6 months not withstanding some special circumstances. (Contact our office if you need information about situations in which the redemption period may be shortened)
After you have an offer which is acceptable to both parties, the purchase agreement must now be presented to the bank. You will need to give formal notification/permission to the bank to allow them to communicate with your real estate agent.
In addition, you will be requested to provide documentation of the circumstances which have created the financial hardship. This may include things like: a letter from you explaining the situation as you see it, bank statements, tax statements, your credit report etc. If you are negotiating a Short Sale on more than one mortgage, these steps may be duplicated by each lender.
Since there are few regulations that govern the process of negotiating a Short Sale (unlike the Collection Process in which there are some consumer rights) each lender develops it's own methodology for dealing with this situation. Some are more efficient than others. The time required to negotiate a Short Sale can range from a couple of days to several months!
Your file may be handled by an individual, a team or a committee. You will eventually be assigned an individual who is handling your case number. Keep in mind that he/she may have literally hundreds of files that they are handling at any one time. Be prepared to be persistent if you need to communicate with them. I have come to believe that they really do NOT like to answer their phones...probably because the news they are likely to hear is usually not good. It is in your best interest to be polite. Shouting and rudeness may only succeed in thrusting your file to the bottom of a large pile of files! Keep accurate notes of your conversations. They may not remember what they told you the last time you were fortunate enough to get through to a Live Person!
If done properly, Short Sale can assist in a faster sale of your home if it has been priced appropriately. Our office has successfully sold and negotiated a number of Short Sales and our Client Specialist are available to give you an evaluation and discuss the specific parameters which may be appropriate for you. In addition to the information supplied by you AND the completed purchase agreement, your agent will be required to provide a complete statement of ALL the proceeds which will be secured by the sale. This statement will detail all liens and encumbrances against the property including taxes as outlined in the terms of the purchase agreement.
You will be notified if your offer is accepted, rejected or modified. A modification of your accepted offer (by acceptance I am referring to the agreement between you and the potential buyer) will set in motion another round of negotiations with the buyer to come to a resolution with any NEW issues raised by the bank's counter-offer.
Due to the fact that the bank will be making the final decision anyway and because time is of the essence, it's probably better to simply forward offers as they are received rather than wasting time negotiating on a deal for which you will not have final authority to make a binding decision. If you are adamant about your refusal to continue paying on a home that you no longer own, make sure your agent includes wording in your contract which will protect you from agreeing to this. Be advised that this will NOT necessarily preclude the bank from going after you for any balance owed even if you choose to default and go into Foreclosure.
To end on a Positive note a Successfully Negotiated Short Sale CAN wipe out Most if not ALL of the Debt that you have incurred through the purchase of a home. At Audu Real Estate we have successfully negotiated a "Payment of the Debt in FULL' when we have closed on Short Sales. This can prevent the scenario in which the Lender tries to collect money on the balance owed on the loan after the home has been Sold.
Our hope is that you have found the information contained in this series beneficial and helpful. We encourage our clients to obtain counsel from qualified professionals in other disciplines such as Accountant, Lawyers and Mortgage Specialist to assist in a comprehensive and accurate evaluation of their situation.
The fact is that today, Short Sales are an unpleasant reality in EVERY Price Range. There are very few communities that have not been affected over the past 24 - 36 months. If you would like a private consultation to discuss your options or to obtain a comprehensive evaluation of your home, please contact us.
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