Short sales on Long Island are on the rise and may be the only option for some homeowners. We know Long Island homeowners are desperately trying to save their properties from foreclosure. Short sales are one of the alternatives available to homeowners in distress. As a real estate attorney on Long Island, I find the average Long Island homeowner may not be familiar with the risks and benefits of a short sale.
So what exactly is a short sale? A short sale is when your lending institution agrees to accept less money for your home than you actually owe on your mortgage. This is accomplished by having a real estate attorney negotiate with your lender on your behalf. The main reason why short sales are a viable loss mitigation alternative is to avoid a deficiency judgment where the lender can sue for the difference between the sale price at auction and the mortgage balance, including fees. Another benefit is that the effect on the homeowner's credit is less damaging than a foreclosure. If the homeowner chooses to negotiate a short sale, the drop in FICO score may only be 80 to 100 points as opposed to 300-400 points with foreclosure.
The short sale process is complicated and should only be completed by an experienced professional. You will be asked to submit a full short sale package to your lender. This will consist of financial proof that you are unable to continue paying your mortgage (tax returns, w2's bank statements). A letter will also be required to justify the hardship situation that necessitated the short sale. Most lenders require that you have a contract to sell the property to a qualified buyer before they will consider this workout option. However, Fannie Mae recently announced that they are investigating the benefit of disclosing the short sale price prior to an offer being made.
You will need to choose a real estate brokerage to assist in the selling of your home. Your agent must have extensive knowledge of the short sale process. On Long Island, many real estate agents do not have the experience to successfully complete a short sale transaction and will just tie up a property in a long listing agreement. Worse, many inexperienced agents poorly advise the seller, making the seller the unwitting accomplice in a fraudulent scam or otherwise delaying the transaction to the point of a foreclosure sale.
As a homeowner, it is imperative that certain objectives are met with regards to conducting a short sale. With 16 years experience in real estate, I know how overwhelming this situation can be to homeowners. It is vital that you have someone on your side with experience and knowledge specific to short sales.
Our office can provide you with direct answers to questions you may have about short sales and other options for avoiding foreclosure. The longer you wait, the more difficult it may become to negotiate with your lender. If you are a homeowner in distress please contact our office for help 516-620-4500 or visit our website at http://www.GoodHomeHelp.com.