Short Sale Guide And Services For Sellers
A Step By Step Guide to Selling Your Home by Short Sale
The short sale is when the lender agrees to accept less then is owed on the outstanding debt. This is a situation no party wants to be in, but everyone has to deal with it.
With the precarious Phoenix market and roller coaster cycle many homeowners and investors find themselves in is a difficult pone where they may not be able to keep a property for multiple reasons. There are quite a few options for those in such a position: modification, foreclosure, deed in lieu of foreclosure or short sale.
♥ Short sales are increasingly the choice, especially once the government and related institutions started pushing banks and individuals to take this route, after it was realized foreclosures were very destructive and modifications not getting done on a large enough scale: so short sales are and will be a major way by which people in difficult financial situations are able to sell the property despite being upside down or under water.
We have to get through this process and the better the team you have the smoother it will go...because with short sales it's all about the money, the preparation and interaction of all parties that gets it done. So, before you proceed with a short sale please get educated.
The information will come from your Realtor, your lender, a lawyer, CPA and maybe your financial advisor. You need to do this because the consequences can be very costly and damaging for years to come.
Note: The Arizona Association of Realtors has published a short sale advisory which I highly recommend you read and study.
We've been helping quite a few people sell homes by short sale: some have late payments, some are behind a lot and other can still make mortgage payments. You don't have to be late to do a short sale and don't let anyone put you in that position without first consulting the appropriate parties.
It is with that momentum that we've put together a Short Sale Guide for home sellers: as step by step process of how to get started with selling short.
√ Get in touch for a consultation about selling your home via short sale.
Steps To A Short Sale
1. Talk To Your Lender:
An amazing amount of people never open their mail from the lender, but that's a mistake. There are lenders that will work with you, they want to work with you, first to pay, of course, but if you can't then there are options like a short sale and modification.
If you are wary of modifications they do get done, not in the high numbers they need to, but we know people who have had interest rates reduced to 2.25% fixed for up to 40 years and even principal reductions, but we're talking about short sales here. You may qualify for some special programs that exist, such as HAFA which can provide you with moving money, but you won't know if you don't call.
2. Consult Your CPA & Get Legal Advice:
To any of the choices, foreclosure or short sale, there are consequences both legal and economic. If done incorrectly the lender has up to 7 years to go after your assets with a judgment and that period of years can be renewed forever. Often these notes are sold to companies that will hold them until the time is right and they will pursue a judgment when you have a job and assets they can go after.
Consulting your CPA and especially getting legal advice is mandatory so that they can review your personal situation and choose a better course of action. Don't skip this step even though there is a cost involved.
After you have spoken legal counsel and you have determined that a short sale is appropriate then start the process full force by getting the required documents together and listing your property for sale.
3. Start The Process With Documentation: The Short Sale Package.
The short sale package is a key element in a short sale: put it together sloppily or don't put in what they need or put in too much and that package can end up and stay at the bottom of the pile or even be tossed in the bin. There is a right way and a wrong way to put a package together so consult the appropriate parties on doing this.
4. List Your Property For Sale:
Find a qualified Realtor to list and sell your property. Pick an agent not only based on some short sale designations as those in them selves are worthless, but make a selection of someone who can properly guide you through the short sale process, has closed short sales on both sides, has a successful marketing plan for your home and is able to process and manage the transaction from start to finish. Choose an agent with actual short sale that have closed like a MSSC short sale listing agent.
5. Submit A Buyer's Offer:
The package that gets submitted to the lender contains the buyer's offer, but it also much be a complete and good offer, one that will match the lender's requirements. In other words not all offers are worthy of submission. Some say submit any offer, but what's the point if it's simply going to get rejected and all that has happened is lost time and possibly cost.
6. Stay In Touch With The Lender And All Parties:
Communication is crucial: without it don't expect results. That is when your Realtor or your lender asks for stuff provide it and stay in touch throughout the process. The most successful and smoothest short sales are the ones where everyone is in tune and in touch.
7. Your Lender's Reply:
At some point, if all is well you'll get a reply from your lender: that could be a couple of weeks or a couple of months down the road from the start. The is usually called an 'agreement notice' and it spells out the details of the sale, how much the bank will accept net and where the difference between gross and net goes. It will also contain other details as to possible future recourse and liability. This 'agreement notice' should be reviewed by your legal counsel. If approved this is the key for the rest of the transactions.
8. Purchase Process:
At this point the sale almost becomes 'normal' with the same process as if this was not a short sale, but that's a hurdle in itself which also requires expertise and experience. Here is a quick run down of the purchase/sale process in Arizona.
The final closing is like the normal purchase process, but the lender needs to review the contract and all forms a few days before the closing so it is important not to wait until the last minute to close, especially if there is a looming trustee sale on the horizon. Asset managers are picky on this and obtaining an extension is quite difficult.
Get in touch for a consultation.