What is a Short-Sale?
The short-answer: A situation in which a lender will except less than what is owed on the property as pay-off of the loan obligation. Long-answer: A complex process involving changing rules, a lender that can veto a transaction for any reason and a buyer that may not have the patience to wait while the lender makes up their mind. This is not a do-it-yourself project.
Does every lender grant a short-sale?
No, each lender will examine and execute terms differently, some may grant a short-sale, some will modify the loan and some will proceed to foreclosure. The potential problems are immense and that is one of the main reasons that you need a specialist assisting you with this process.
What should you expect during the process?
#1 – Calculate the value of your property. This will be accomplished by preparing a CMA and looking at the competition that is in your area and the condition those homes are in. We will need to price and position your home so that it sells quickly and at a high enough price that the lender will agree to the terms.
#2 – Calculate your home’s financial position. In this step we will examine the value from step 1 and compare this to the mortgages and other debt that is supported by the home value. If your home value is significantly less than your debt tied to the property you are a candidate for a short-sale.
#3 – We will start searching for a buyer, especially those that have expressed interest in buying short-sale properties. Not every buyer will want your property given the status and tenuous nature of a short-sale. The buyer must be willing to deal with extended deadlines and additional demands made by your lender. Your lender is the key to a successful short-sale transaction and we will need them to feel confident in the new buyer.
#4 – We’ll need to contact your lender and explain your situation. Lenders are under no obligation to accept a short sale and the terms of the short-sale will be examined closely by the lender. The lender is the ultimate decision maker and will be the final approval for short-selling your home. Lenders may disapprove of any aspect of the transaction without reason or justification. Lenders do not have to be reasonable.
#5 – There maybe tax repercussions in enacting a short-sale transaction. Part of the process we will cover is the tax liability that may remain after the short-sale transaction is complete. As with any tax related matter we will advise you to seek counsel from a tax professional or tax attorney.
Is using a Certified Short-Sale Professional (CSP) really necessary?
If your goal is to remain out of foreclosure than using a CSP is a great advantage. CSP trained agents know how to work with lenders and how to present the offer to a lender that will make the lenders job easier and more likely to agree favorably. Understand that there are hundreds if not thousands of requests for short-sales. If a lender sees a well presented and thorough package compared to a package that will need much time and attention, which do you think will get the preferential treatment? Additionally, your CSP trained agent has connections with many lenders, local and national, and will understand the best way to guide your package through the system.