The Long View on Short Sales
A local real estate agent asked me last week if I could contribute to her newsletter a short article about financing short sales. After some thought and discussion, we decided that perhaps a more refreshing angle on this would be one that took a "long view" on the financing aspects. That is, we decided to answer the question, "How can I short sell so that I can regain my financial footing the quickest?"
Here are three key points we agreed matter:
What They Don't Know Can Hurt YOU
That's right. Your Realtor is your best ally in this process, but he or she can only work with what's known. Short sales do not often happen in a vacuum and often there are other financial hardships that have been pushed to the back burner. It's important to make sure they don't come back to undermine your sale. Liens that can be attached to the title of the home may delay or prevent a short sale, so tell your Realtor if you think the IRS, a contractor who was not paid, or some other entity may be lurking in the shadows. Dealing with these issues proactively is always the best way. What your agent doesn't know, he or she can't help with, so keep them informed. Be honest and forthcoming --- it helps.
Property Condition Counts
It goes without saying that you should attempt to keep your home in the best physical shape possible. Seven out of ten homebuyers will need a mortgage to buy your home, and all of those seven will therefore need an appraisal to get the loan. If an appraiser notes obvious damage or safety hazards, the buyer's loan may fall through. By definition if you're in a place of financial hardship, there's probably not a lot of money to put into the home --- and why would you if you plan to get rid of it anyway? That's the common logic, but remember, the more eligible buyers, the more demand. The more demand, the more selling price the bank may get. The more they get, the more they are likely to approve the sale. All of these outcomes benefit you, the seller.
Your Next Loan
By short selling as quickly and as efficiently as possible, you set yourself up best for future eligibility to purchase a home. That may seem inconceivable now, but many short sellers from 2008 and 2009 are already homeowners again and managing their new properties just fine and within their budgets. If you do things right, within two to three years (loan program depending), you may be perfectly able to apply for, and approve for, a new mortgage. A foreclosure can have a much greater waiting period, so why deliberately go down that road?
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