Short Sales, Are You Qualified?
Exactly what is a short sale? It seems like this term is thrown around a lot in recent months around the Real Estate Community. As a seller or buyer you may have heard this term and often wondered what it means. A short sell happens when the lender is agreeing to accept less than what is owed on the mortgage. For example if you owe the lender $150,000 on your mortgage but your home is only worth $135,000 then you are $15,000 short and that does not include your closing cost, real estate commissions, and title and recording fees. If the lender wants to side step the foreclosure process, they will agree to a short sell. This allows the buyer to enter into a purchase agreement with the seller for less than the seller owes on the balance of the mortgage. This happens while the home is in pre foreclosure status. In all there are 3 steps to a foreclosure they include: 1.) Stage 1: Default "Pre-foreclosure" stage, owners have already defaulted on their mortgage payments but foreclosure hasn't happened yet. 2.) Stage two: Auction- If a property doesn't sell in pre-foreclosure, and the home owner actually defaults on his mortgage, the home goes to public auction. 3.) Stage three: REOs - In this stage it has already gone through the public auction where it did not sell or the bank bought it back. This is where the lender will re list a particular property with a Real Estate Professional. REO stands for Real Estate Owned. Next are some steps you may see in a short sale: 1.) A listing agreement needs to take place between a seller and a Real Estate Professional with a lender's acceptance. 2.) An offer from a Buyer needs to occur, for less than the payoff of the mortgage. 3.) Seller has to agree to the purchase contract of the Buyer. 4.) The lender of the Seller has to agree on the purchase contract. Wait before you jump onto the short sale bus there are some qualifications you must meet before you are eligible for a short sale. If you answer yes to the following questions then you can proceed forward. 1.) Is your mortgage in or near a default status? 2.) As a Seller, are you in hard times? You have to prove this by writing a letter of hardship to the lender telling them why you cannot pay the difference at closing or why you are not going to pay the monthly mortgage payments. 3.) The value of the home is not worth the current market value. A few examples of hardship are death, divorce, bankruptcy, and unemployment. I hope this may help you in understand short sales. If you are thinking about selling your home and this sounds like the route you have to take, give me a call. 937-209-0462.
Your Consultant to the Real Estate World,
Real Living HER- Marysville