Short Sale Myths by a Shortsale Specialist in Charlotte
A short sale can be an excellent solution for homeowners who must sell and owe more on
their homes than they are worth. Unfortunately, a number of myths about short sales have
developed, and it is important to understand the reality of this process should you find it
meets your current needs.
Myth #1 The Bank Would Rather Foreclose than Bother with a Short Sale
This is one of the most common misconceptions. The reality is that banks do not want to
foreclose on your property because the foreclosure process is incredibly costly. Banks,
investors, and even the federal government have all publicly stated that if a person is
qualified for a short sale, the deal needs to be considered. Overwhelmingly, banks receive
more on their investment through a short sale than a foreclosure.
The qualifications for a short sale include:
1. Financial Hardship There is a situation causing
you to have trouble affording your mortgage.
2. Monthly Income Shortfall
A lender will want to see that you
cannot afford, or soon will not be able to afford your
mortgage.
3. Insolvency The lender will want to see that you do
not have significant liquid assets that would allow you
to pay down your mortgage.
Myth #2 You Must Be Behind on Your Mortgage to
Negotiate a Short Sale
While this may have previously been the case, today lenders are looking for verifiable
hardship, monthly cash flow shortfall, or pending shortfall and insolvency.
If you meet these three requirements and believe that you soon may be unable to afford
your mortgage, act immediately. Any delay could limit your options. Do not wait until the
countdown clock to foreclosure has started and you have even less time left.
Myth #3 There is Not Enough Time to Negotiate a Short Sale Before My Foreclosure
This is a myth that probably hurts homeowners the most. Many do not realize that
foreclosure is a process, and that there is time to make decisions that may result in better
outcomes.
The foreclosing party in most cases a lender can stall a foreclosure up to the final day of
the process. Today, many lenders will stall a foreclosure with as little as a phone call from
you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with
a legitimate contract. For real estate professionals who understand foreclosures and short
sales, there is time available until the foreclosure process is complete.
Myth #4 Listing My Home as a Short Sale is an Embarrassment
It is understandable to have reservations about letting the world know that you owe more
on your home than it is worth. However, according to recent estimates, more than one out
of eight homeowners in the U.S. is in the same situation. You are to be congratulated for
admitting you need help, taking action, and finding a professional who can work with you
toward a solution.
With recent estimates showing 40-60% of U.S. sales will be short sales or foreclosures, you
are not alone.
Myth #5 Short Sales are Impossible and Never Get Approved
homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not.
For example, agents with the Certified Distressed Property Expert® (CDPE) Designation
receive thousands of short sale approvals on a monthly basis. These professionals have
undergone extensive training in methods to help homeowners in distress and process short
sales. While there are no guarantees in any transaction, more and more short sales are
being approved regularly. This is far from an impossible process.
Myth #6 Banks are Waiting on a Bailout and Not Accepting Short Sales
to do anything they can, within reason, to avoid foreclosing on properties. It is preposterous
to believe they would deny a short sale in hopes that some future legislation would pass and
pay them for losses.
Today, more banks are aggressively pursuing short sales and working with agents who
understand how to process them.
Myth #7 Buyers are Not Interested in Short Sale Propertieshis is a myth that potential sellers hear all the time. Thankfully, this is just not true. In fact, many agents are getting calls from buyers who say they only want to look at foreclosure and short sales. Specifically, international buyers are targeting these properties. Listing with an experienced agent who is educated in the short sale process will provide you with a great chance of quickly seeing a contract on your property.
In conclusion,
A Shortsale Specialist with the CDPE Designation has been trained in all aspects of the
short sale process, and know how to deal with the parties involved in foreclosures. Finding a
CDPE can explain what options you have, and get you on the path to recovery.
Courtesy CDPE. www.charlotteshortsales.com
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