Lenders are all about the numbers. They know that late payments and foreclosures would be detrimental for them financially so upon providing proof via financial documents that you are in fact struggling or will be struggling with your mortgage payments, they will consider an approval for the sale. However, servicers are extremely particular about complete short sale packages (i.e. updated documents, missing documents or signatures) and many short sale files have closed due to insufficient effort and organization in this area.
Contacting your lender. For your short sale, your agent should obtain authorization to speak with the lender on your behalf. This can be done in various ways but typically done in a written letter (called authorization form) from the borrower giving consent for the agent to speak on his/her behalf.
Your agent should then contact the loss mitigation department. This will be your agent’s direct contact thus, it is important for the agent to build rapport with this contact to streamline the short sale process.
Do not simply find a realtor and execute a short sale. If you do not want to be another failed short sale statistic, prepare yourself for success by taking the right steps leading up to the short sale. Your initial steps to pursuing a short sale is a crucial one as this largely affects the outcome of your financial future.
What is a short sale? A short sale is an alternative to foreclosure where homeowners have the option to “short sell” when their properties are worth less than what they owe to their bank(s). For example, your house is worth $500,000 but you owe your bank(s) $550,000 in loans, home equity lines of credit, etc. If you qualify for a short sale, you may be able to sell your property for less than what is owed, avoid foreclosure and walk away from the property with little to no remaining debt.
Although lenders are now more prone to giving approvals, short sales are still a challenging transaction to execute. Throughout years of trial and error exposed by other realtors, I’ve found there are 5 main reasons why a short sale would fail. In contrast, by observing the continuous success of my team of agents, I am adamant that an expert negotiator is crucial for a short sale to succeed.
A Short sale is an option where a homeowner is able to “short sell” when their property is worth less than what they owe to their bank(s). In short selling, the homeowner may walk away with a reduced promissory note of the remaining balance owed or the amount completely waived. Plain and simple, this is a good deal. However, it cannot be obtained by everyone.
Credit implications after a short sale or a foreclosure have been an important topic for many who want to maintain their good credit. The only way to prevent damages to your credit is by staying current on your mortgage(s) payments, selling your home via conventional sale, and paying the difference of what you owe to your lender. Otherwise, whichever direction you go, your credit will be negatively affected.
Today’s post is an explanation of how much impact your credit score will have in a short sale versus a foreclosure and a plausible solution to this problem.
If you are looking into short sales and/or other options, your home may be underwater, meaning you owe more than your home may sell for. You know your balance owed on your mortgage(s) from bills and other sources. However, do you know how much your home is worth? The difference between the remaining balance on your mortgage(s) and the home’s eventual sales price determines whether your home is underwater and affects how much you may owe your lender post short sale.
Although hiring a professional assessor produces a more accurate estimate, there are resources online that may give you a ballpark of what you are looking at so you may be better informed in your decision whether to short sale or not.
Conducting a short sale should not be executed by an inexperienced Real Estate agent. There are skills and tactics that experienced brokers have accrued over hundreds of successful deals that are indispensable traits you must consider when choosing your agent. One of the most important parts of a short sale are BPO’s (Brokers Price Opinion) or Appraisals. This can make or break the sale as the success of the short sale is largely contingent upon the appraisal.
In most cases, lenders generally do not want your home to fall into foreclosure. Their loss not only involves monthly mortgage payments from the homeowner but once the property is foreclosed on, it must be maintained, insured, marketed and eventually sold which is a financial hit they’d do anything to avoid. Lenders are realizing that short sales are more cost efficient for them and fortunately, this benefits all parties in the transaction. Bank of America recently executed a short sale pilot program in Florida where the seller may walk away with up to $20,000 or a minimum payout of $5000 after a short sale.
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