A Short Sale, also known as a Short Payoff or Pre-Foreclosure Workout, is an agreement with a lender to accept less than the amount owed by a borrower via the sale of the property to a third party. With this agreement, the lender releases the borrower from the mortgage, thereby preventing foreclosure.
Short Sales provide an excellent, win-win solution for the distressed homeowner and their bank. The homeowner avoids a foreclosure on their record and the bank avoids the effort and expense of the foreclosure process.
Benefits of A Short Sale
A Short Sale can be one of the best options for many homeowners facing foreclosure. A Short Sale allows the homeowner to sell the property and remove the secured debt associated with the home. The seller can walk away from the sale with significantly less damage than a foreclosure.
A homeowner who decides to Short Sale their property typically experiences less impact to his/her credit. There are no up-front fees or costs associated with the Short Sale. Your lender pays for all fees including closing costs, escrow fees and realtor commissions.
A Short Sale is sometimes the best course of action when homeowners who do not have equity in their homes are delinquent in their monthly payments or in default of the terms of their loan. Short Sales offer struggling homeowners an opportunity to wipe the slate clean and get a fresh start.
Do I Qualify For A Short Sale?
In order to be eligible for a Short Sale, a homeowner must be able to prove to the lender that they are a victim to a "hardship" and as a result are therefore unable to continue making payments on their mortgage.
A hardship situation is one that is the result of some extenuating circumstances that forced the borrower into a position where they can no longer afford their mortgage payments. While every situation is unique and must be evaluated individually, some common examples of hardship include:
- Adjustment in Mortgage Rate
- Unemployment or Loss or Primary Income Source
- Employment Relocation
- Divorce or Separation
- Business Failure
- Mounting Medical Expenses /Illness
- Death of a Spouse or Significant Other
There are several common factors a lender will consider when approving a Short Sale. Again, each situation is different and must be evaluated on an individual basis. Ask yourself the following:
- Owe more on your property than the current value?
- Not enough money to cover the difference of what you could sell your property for and what you owe the bank?
- No money to cover real estate commissions, closing costs, late payments, etc.?
- Having difficulty covering your monthly expenses?
- Property in foreclosure or default? Sale Date Approaching?
If you answered yes, to any of these questions, and can provide a financial hardship, you will likely qualify for a Short Sale. Ultimately, the decision is up to your lender.
Short Sale Process
After consulting with Property Masters Realty and reviewing all your options, if we determine that a Short Sale is the most appropriate solution for your situation, we can begin the process. Your lender will require a specific set of supporting financial documents to consider a Short Sale.
Time is of essence. The sooner we can begin the process with your lender, the greater the chances of a successful resolution.
Please call us today for a free consultation. |
