WHEN A HOMEOWNER MAY CONSIDER A SHORT SALE
A Short Sale simply put, is selling a property short. This means that if a person owes 200,000 dollars on their house and the market value will only bring buyers at 170,000, you are forced to ask the bank to take less money than what is owed to them. Why would a bank even consider something like this (another good question)? Most people who are in a position where they need their Realtor to negotiate a short sale are typically not in a good position financially. This could be for many reasons, the most common is an unfavorable loan that adjusted to an interest rate (Subprime loan) that now increases the mortgage to a payment that the owner can no longer afford. This is the situation that most people are facing that are in a short sale situation.
The lender will not always consider a short sale in this situation, some of the reason for that are for the following reasons:
- The offer that is submitted to them is unreasonable by their standards and is not supported by the BPO or appraisal. (Typically the bank will not give more than a 20 percent discount to a buyer) There are a number of factors that come into play, but this is a general rule.
- The seller does not have a good case or justification for the short sale. Most of the time, the bank needs to have some sort of hardship (Loss of Job, health problems and so on) in order to consider a short sale.
A short sale is not for everyone, but for those in a loan modification process working directly with the bank, a short sale is statistically for about 70 to 80 percent of those people. Here is the upside of a short sale if it is done correctly. Upon the sale to a qualified buyer, with all lien holders in 1st, 2nd position agreeing to it, once the property is sold the bank most of the time will agree that your debt has been satisfied. What does this mean for you? The bank will not come after you for the difference and place a judgment against you. Be aware that you must get this in writing, but the banks will agree to it in the majority of cases.
For more information on Short Sale, please feel free to give me a call.
KELLER WILLIAMS REALTY ATLANTIC SHORE
200 TILTON RD. SUITE #5
NORTHFIELD, NJ 08225