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Questions homeowners considering a short sale ask
What is a short sale?
When an owner cannot make their house payment, or is having difficultly making their house payment they can ask the bank to approve a short sale. If the bank agrees to it, the house is sold for an amount less than the payoff amount. A short sale is the result of the home owner and the lender working together to create a solution that works for everyone in a difficult situation.
How do I short sale my home?
There are a couple ways to do this. First, your bank may actually recommend one if you have been behind on payments and will forward the short sale department information to you to give your agent. Or, you can select an agent and tell them you want to sell your home as a short sale and your agent will work at getting the approval.
Your agent will advertise the property as a short sale to prospective buyers. When offers come in, you select the best one and the offer is sent to the short sale department of your lender for approval.
I have a second trust deed on my house. Do I have to ask that bank as well?
What normally happens is, included in the package to the first lender is information about the second loan. When they approve the short sale they will also offer a small amount of the proceeds to the second lender. Both lenders will need to approve the short sale.
Will it take a long time? I heard short sales are hard to do.
A few years ago the banks dragged their feet on approving short sales, 80 percent did not come together. The odds are much better now; banks that have accepted stimulus money are encouraged to accept short sales. Plus, some lenders have figured out foreclosures cost them much more money than a short sale.
The fastest I have completed a short sale is five weeks, the worst has been six months. Bank of America (BofA) is known in the field to be the worst. There is a big push for agents to sell short sales in 2010 because everyone wins in a short sale. The community does not have an empty neglected house blighting the neighborhood, the homeowner gets out of a bad loan, the bank gets non producing loans off their books, and the country will be past this foreclosure market. BofA has just announced they have hired a company to handle all their short sales and it is whispered that Wacovia/Wells Fargo is setting to be able to approve one in less than a week.
Will it hurt my credit?
Yes, in fact, if you have not been making your house payment, you credit is already damaged. Every time you are 30 days late on your payment, it is reported to the credit reporting agencies. A short sale will be reported as a settled account, which is less damaging than having a foreclosure on your credit history. The important thing to remember is, once you get the short sale over with you can start rebuilding your credit and your life. In some cases, you will qualify for a new home loan in as little as two or three years after a short sale. After a foreclosure you will not qualify for a new loan for four or five years. You can visit my web site and see the complete article on Credit after foreclosure. |
