What is Real Estate Short Sale?
Short Sale is a process in which a lender agrees to receive a lower amount of an owed debt in exchange for the sale of the property to a third party (usually at little or no cost to the borrower). The benefits of a Short Sale far surpass those offered by other solutions but in order to obtain them, the process must be conducted by experienced loss mitigation professionals. Ones that are familiar with every facet of the legal aspects and the procedure details.
FREQUENTLY ASKED QUESTIONS
What is a mortgage default?
A mortgage is in default when three or more monthly payments have been missed.
What is a Short Sale?
A Short Sale is a process by which a lender agrees to receive a lower amount of an owed debt in exchange for the sale of the property to a third party, usually at no cost to the borrower.
Who qualifies for a Short Sale?
Borrowers need to prove that they are experiencing substantial financial hardship. The lender must be willing to accept the Short Sale proceeds as full settlement of the debt.
What is Hardship?
A hardship is a situation that has a life-changing effect for the borrower that results in an inability to pay the mortgage debt in either, short or long term.
Some examples are Reduced Income or Unemployment, Separation or Divorce, Business Failure or Medical Bills, Inability to work due to health reasons, or Death of a spouse.
What is required from the property owner?
The property owner must:
- Provide all the required information and documentation (as per the packet you receive from the bank) about the property, the mortgage, your finances, etc.
- Sign a presentation agreement and a listing agreement for a real estate professional to negotiate with your lender on your behalf and list the property for sale.
- Cooperate in all aspects of the process, needed documents, showings, offers, etc.
- Agree not to finance or otherwise encumber the property.
- Be responsible to maintain the home in “show” condition.
- Be a responsible homeowner until the close of title and vacancy of home.
Why is it most important to be represented by experienced professionals when a Short Sale is negotiated with the lender?
You have only one shot to succeed in a Short Sale transaction, it is therefore highly recommended you work with professionals that specialize in this field, are experienced in Short Sale negotiations, familiar with the legal aspects of the process and can properly represent you.
How can a Short Sale benefit you?
Below is a partial list of real estate professional services:
- Possibly will help you avoid foreclosure and eviction
- Help you minimize credit damage
- Counsel you through the process
- Act as the liaison between you and the lender to ensure all parties work together toward a successful solution
- Provide relief during a difficult time
- Placing your property on the market and find a buyer
Why will my mortgage lender allow a Short Sale?
Your mortgage lender stands a much better chance of minimizing the loss on your property if they allow a Short Sale. This allows them to sell the property much sooner than a foreclosure. It is a known fact that it is also easier to sell an occupied property than one standing vacant or needing upkeep. Finally, a popular general strategy for dealing with foreclosures is to claim bankruptcy. This is not the best idea for you or the lender. Your credit will be impaired, and the lender will incur an additional cost. By agreeing to negotiate a Short Sale everyone can benefit.
How long is the process to complete a Short Sale?
Typically, it takes between three and six months to complete the process. Your attorney will present a contract of sale to your lender as well as the required documentation needed. As soon as the lender has agreed to the short sale, a settlement date can be arranged.
How do I know if a Short Sale is a good option for me?
If you are having difficulty paying your mortgage and there is not enough equity to sell your home, then you are a candidate for a Short Sale. Together with a lawyer will review your specific situation to determine whether you should proceed.
What do I do if my lender contacts me?
Once you have selected a realtor, there is no need for you to discuss your situation with your lender(s). The realtor will do so on your behalf and will provide your lender(s) with updates regarding the Short Sale of your property.
Why shouldn’t I just let my home go to foreclosure?
This is a personal choice; however, the consequences of your decision will adversely affect your credit for years to come. Since a mortgage is the most important form of debt, and it gauges very high on the credit scoring scale going to foreclosure may cost you a lot of money, time and aggravation. On the other hand, a Short Sale is listed on your credit report as “settled debt”. You are taking responsibility for your debt regardless of the circumstances. Your credit will be less damaged with a Short Sale versus a foreclosure.
For more information, Contact one of our real estate professionals at 718-987-7900.
According to Staten Island Multiple Listing Services statistics, Robert DeFalco Realty continues to be the No. 1 Real Estate company on Staten Island, selling more homes than any other company.
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Staten Island, NY 10305
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