I have no doubt that in the last couple of years you most likely have heard the term “Short-Sale“. This is not brand new to the industry but it has not really been around or discussed much until the recent economic changes in our market. Now we are seeing a huge inventory of homes that are being marketed as a “Short Sale“.
What Is A Short Sale?
A short sale occurs when the proceeds or a real estate sale fall short of the balance that is owed on the property. This process does need to be approved by the mortgage lender or bank of the borrower. Typically the mortgage lender or bank will agree to discount a loan banlance due to a financial and/or economic hardship.
Example Of A Short Sale?
In the most simplest terms, your banks agrees to be paid less than the amount owed on a successfull sale of your home. As an example, let say you owe your bank or lender $250,000 on your property. You go out and find a buyer that is only willing to pay $230,000 on the property due to recent depreciation of values in your market. Because of financial hardhip you don’t have $20,000 plus costs to pay at closing. If the lender agrees to take the $230,000 than that would essentially be a Short Sale transaction.
Qualifing For A Short Sale
Now I used the words the “simplest terms” above on purpose. In almost every case its not that simple. There are certain qualifications that must be met. I want to make this easy on you and give you the basics right now. If you are suffering from some type financial hardship, you do qualify for this. I have listed below some common hardships that will qualify you.
Most of these are based off the fact that the homes are worth less than what is currently owed on it so selling it outright plus costs isn’t an option anymore.
- Loss of a job. This is common and obviously would put you in a situation where you may not be able to afford to stay in your home.
- Illness or loss of a loved one in your family. Many times this can put a financial stress on a family due to hospitals costs, loss of additional income.
- Intereste rate change. This is common in todays market with all the creative loans that were put out in the subprime market. There are many homeowners that are looking at a 3 or 5 year ARM forcing their rates to change. This additional money due can put you over the top if they force you into a situation where you can’t make that monthly mortgage anymore.
- Injuries. This can create a scenario where you have additional unexpected medical expenses and create a job loss or non-payment for the time during recovery.
- Divorce. This alone may not constitute a Short Sale but coupled with other scenarios which is likely in a divorce than it could be a valid hardship.
These are just a few of the common hardships that may constitute a hardship in a bank or lenders eyes but are not limited to just these. If you would like advice on whether you would qualify, please give me a call at, (815)-301-7007 and ask for Ray.
The purpose of this message is not to dispell myths, I will be doing this in another blog but, I did want to correct one very common misconception.
COMMON MISCONCEPTION
Many consumers and professionals have the beleif that you have to be late on payments or delingquent 3o days or more to be qualified for a Short Sale. This is wrong, if someone tells you that, they are wrong. It is true that lenders and banks give priority to people that are delinquent but it is not required.
One more thing about this, I have heard of banks telling their clients that if they want to do a short sale they have to be three months delinquent on payments. Please for your sake, don’t listen to this. This will put you right into the foreclosure process. Do you know what will happen to your credit if your 90 plus days late on your mortgage? Not something you can go back and change later, the damage will be done.
I do want to make sure you are aware of other pitfalls in a Short Sale before moving forward with this. I would like to tell you more about this in person as the laws and guidelines change on a regular basis. A Short Sale is the better alternative than a foreclosure and I will preach that all day long. There are tax ramifications, possible credit damage depending on the situation and potential deficiency judgements that may apply. These are items that are all dependent on the situation so I would advise you to call for more details. No matter what, a foreclosure is never the better option.
I have implemented a website that will be helpful in your search for information on short sales, foreclosures and pre-foreclosures. The website is http://www.youdohaveoptions.com/. It is totally FREE and for informational purposes only.
Here is some of the information you can expect to find on there.
- Nine alternatives to foreclosure.
- Three basic options the bank will give you.
- Why you should never attempt a loan modification without a professional helping you.
- The advantages to doing a short sale or preforeclosure sale vs. letting your home go into foreclosure.
- How you can stop the foreclosure process.
- Negative ramifications of a short sale vs. foreclosure.
- How a foreclosure will affect your future ability to buy a home, rent or even get a job.
- Who you can trust when discussing these options.
- What the banks really want from you.
- How to stop the banks and credit collectors from calling you. There are laws that protect you, it helps to know these.
Hopefully this information was helpful. I look forward to working with you. Please take a moment to check out the website. I put it up for you to help you get some quick answers to tough questions. It’s FREE and meant to help you out.
Again, it’s at http://www.youdohaveoptions.com/.
Call me if you have any further questions about the content of this website or other real estate needs.
Raymond Kennedy
Certified Short Sale Specialist
RE/MAX TEAM 2000
815-301-7007
info@SayRay.net
http://www.youdohaveoptions.com/
The areas I serverce are as follows:
All of Will County, All Of Southern Cook County and some parts of Nothern Cook County, Parts Of Dupage County in Illinois. Some of the towns are Mokena, Frankfort, Orland Park, Tinley Park, New Lenox, Manhattan, Joliet, Plainfield, Crest Hill, Oak Forest, Crestwood, Lockport, Homer Glen, Matteson, Park Forest, Richton Park, Palos Hills, Palos Heights, Palos Park, Naperville, Lemont, Shorewood, Channahon, Peotone, Beecher, Worth, Alsip, Steger, Burbank, Chicago Ridge, Flossmoor, Crete, Monee, Hickory Hills, Elwood, Romeoville, Bolingbrook, Midlothian, Justice and Alsip. If your location is not listed here, call me, I have othre professionals that may handle that area or I may forgot to list it.
