Is a Short Sale For Me?
- Are you upside-down on your mortgage?
- Are you struggling to meet your financial obligations?
- Has your financial institution denied your attempt to modify your loan?
- Are you faced with foreclosure?
If you answered yes to ANY of these questions, you may wish to consider a short sale as a solution to your current situation. Listed below are questions commonly asked by those considering a short sale.
What Is A Short Sale?
A short sale is when a home is sold for less than what is owed to a lender. This is accomplished through negotiations with the lien holder(s) to accept a payoff amount short of what's owed, in lieu of foreclosing on the property.
Why Should I Do A Short Sale, Instead Of Allowing My Property To Foreclose?
With foreclosure comes excessive liability. A foreclosure may open the homeowner up to law-suits, deficiency judgments, and a seven year credit hit (making you “un-lendable”). Banks will often come after a homeowner’s assets, to compensate for any loss incurred by the bank. This can all be avoided through proper communication with the bank when negotiating a short sale.
What Are The “Pro’s” To Doing A Short Sale?
Aside from full release of the note with no deficiency judgements, doing a short sale results in a minimized credit hit, allowing you to be “lendable” in as little as 2-4 years from the date you completed the short sale (depending on your credit score and the steps you take to improve your credit).
How Long Can I Stay In My Home?
Despite not paying your mortgage, initiating the short sale process allows you to stay in your home until the conclusion of the short sale. This time frame ranges from lien holder to lien holder, but is typically anywhere between 3-6 months.
What Is The Short Sale Process?
To break it down, the fundamentals of a short sale transaction will look like the following:
- List the property.
- Obtain an offer at fair market value.
- Assemble the short sale packet.
- Begin negotiations with the bank.
- Achieve short sale approval.
- Open escrow and proceed to closing.
Is A Short Sale Guaranteed?
Each short sale is unique. Unfortunately, no one can guarantee the approval of a short sale. What can be said, however, is that banks are more likely to approve your short sale than they are to approve a realistic loan modification.
What Documentation Will I Need To Provide To You?
The following documents are needed from the seller in order to complete a short sale packet:
- Hardship Letter (an explanation of why you’re pursuing a short sale) dated and signed.
- Tax returns for the past 2 years.
- Bank statements & Mortgage statements for the past 2 months.
- Pay stubs for the past 2 months.
- 1126 Financial form (Provided by Brenda & Brendan Winans). If self employed, please provide a profit and loss statement.
Is there anything protecting me during, and after the process?
On July 15th, 2011, Gov. Jerry Brown signed SB 458 into law with an urgency clause making it effective immediately. Click here to download a copy of the bill.
Still have questions regarding short sales?
Please contact us with any additional questions that you may have, and we will be happy to answer them as soon as we are able.