Not everyone can qualify for a short sale, but banks do generally look for ways to help homeowners get out from under and avoid foreclosure. The high number of foreclosed properties in the past eighteen months alone has left lending institutions in a position where they need to negotiate with you. The properties themselves don’t do them any good so if they can get even some money back on a loan that is going into default they will be happy to do so. With that said, there are guidelines that need to be followed.
The most common questions asked refer to financial hardship. In order for someone to be eligible to sell their home short there must be some type of financial hardship involved. Job loss qualifies, as does a shift in income levels within the household, like a cut-back in hours. If you have been in an accident of some kind or have otherwise become disabled and cannot work then you may qualify also. If you do qualify, short sales are one of the best options to foreclosure so make sure you know what is required.
Another question you will be asked is whether or not your payments are current. Not paying your mortgage for a year and then going to your bank looking to sell the property short may not work very well. They will want to see that you are doing business with them in good faith and have at least made the effort to honor your mortgage contract. The bank can still recoup their losses if they foreclose and resell your home so be careful about the way that you approach a short sell proposition.
In order for a short sale to be effective for the homeowner, the outstanding debt that remains after the sale is concluded needs to be forgiven by the bank. For this reason, all parties involved need to be realistic about the numbers involved. A few thousand dollars is not going to break a major lender, but asking for forgiveness of larger sums may be frowned upon. Seek some professional advice from a short sale realtor before you make any offer and consult a real estate attorney and tax professional so you understand the legal and financial responsibilities you will have.
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