Common Short
Sales Questions and Answers
What is a Short
Sale?
A short sale is when a mortgage lender or lenders agree to accept less
than the total amount of money they are owed on a piece of property
in order to facilitate the sale of the property. This is done when the
owners of a property have fallen behind on their mortgage payments and
a foreclosure on the property is imminent.
What qualifies
a property for a Short Sale?
The owners of the property must be able to show they are in a negative
cash flow situation and are about to go 30 days behind on their mortgage
payments and will be facing a potential foreclosure action in the near
future.
The owners of the property must show a financial inability to get caught
up with their payments and an inability to continue making payments
in the foreseeable future. Proof of a recent financial hardship is helpful
in making this determination.
The property must currently be valued on the open market for less than
what the owners owe their mortgage lenders. This valuation is done by
a licensed appraiser hired by the lender who is familiar with the particular
market the property resides in and is commonly called a BPO (Brokers
Price Opinion).
Why would a mortgage lender agree to take less money than they are owed?
Foreclosures are a very expensive and time consuming legal action for
mortgage lenders. Once the legal fees are paid and the legal part of
the foreclosure process is complete the lender then needs to sell the
property to try and recoup their money. This involves the same costs
to the Bank as the property owner would have been facing if they tried
to sell the property on their own such as repair costs, marketing costs,
Realtor costs, Appraiser costs, Attorney fees, Title fees, taxes, etc.
In today’s declining real estate market there is a very good chance
the lenders will still end up selling the property for less money than
they were owed except now they have incurred all of these additional
expenses of foreclosing as well as all of the carrying costs on the
property like real estate taxes and utility bills while the property
sat vacant with no money coming in. This is why a properly submitted
and documented short sale offer can be very appealing to a lender.
How long does the Short Sale process usually take?
The answer to this question is, as long as the lenders need to make
an informed decision. This varies not only from lender to lender but
from loss mitigation agent to loss mitigation agent within each lender.
Like all aspects of business, some people just work faster than others.
In general, however, you can expect an answer on a short sale contract
submitted to a lender within 30 - 45 days from the date they receive
the short sale offer.
Will the lender(s)
stop all foreclosure actions while the short sale contract is being
reviewed?
Normally they will. If the lender feels the offer is genuine then they
will grant a 30 day extension if a foreclosure sale is imminent. Current
pending legislation in Congress will require lenders to grant 90 day
extensions on foreclosure actions to give homeowners a chance to work
out a solution and avoid foreclosure.
What if the short sale offer is rejected?
Lenders do not normally refuse outright to accept a short sale. However
they may propose a counter-offer to the one which was submitted requiring
either the property to be sold for more money or for certain expenses
incurred at the closing to be reduced. This is when the negotiation
process goes into high gear as all parties must now find some common
ground or face foreclosure. The only time a short sale offer is normally
rejected in it’s entirety is when the offer is extremely low and
the investor’s insurance on the loan will pay the investor more
than they would recoup through a short sale.
Why should I use your service over someone else?
Our company is made up of Real Estate Attorney's, Mortgage Brokers,
Title Agents and Licensed Realtors with dozens of years of experience
in negotiating not only short sale contracts but distressed property
buyouts of all types. We have developed personal relationships with
many of the loss mitigation agents working for the lenders. They know
us and they know when we submit a short sale offer it is going to be
accurate, complete and genuine. We make our offers very easy for the
loss mitigation agents to process and in turn our offers get looked
at first.
Our policy of not taking
any money up front puts everyone involved at ease because they know we are not
just looking to collect a fee and ignore the file afterwards. We have negotiated
short sale offers for some of the largest real estate developers in the country
and on properties valued at over 9 million dollars. Experience makes the difference
between a successful short sale negotiation and a long, drawn out process where
everyone suffers. Our experience in negotiating with lenders and in the real estate
industry for the past 18 years puts us at the top and is why our company should
be the one you want working on your files.
Additional
Questions
If you have ANY other questions about short sales,
short sale investing, foreclosures or any aspect of real estate, please feel free
to call us at 888-SHORT-50. Consultations, like our negotiation
service, are always free and one of our attorney's or negotiators will be happy
to help you with any problems, questions or investment situations you may have.
Download
all of our Short Sale Forms
HERE.
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