Short Sales Explained

  Did you know that you can sell your home for less than you owe the bank-- and walk away without owing a penny? It’s true!

In fact, that’s all a “short sale” is. The bank agrees to take less than the value of the loan, write off the loss, and forgive the shortfall. That means you can sell your home for less than you owe, avoid foreclosure, and save your credit.

     Why would a bank agree to take less than a home is worth? The truth is that your lender doesn’t want your home. Foreclosing on your home is the last and worst option for a bank.

     That’s because foreclosure is very expensive for a lender. When a lender forecloses on a home, they must pay all debts, including any second mortgage, real estate taxes, and any other unpaid fees. Then they have to pay a company to maintain the home. The lender also has to pay any realtor fees, HOA fees, and real estate taxes on the property.

     In fact, it costs mortgage lenders an average of $60,000 to foreclose on a home!

     Also, every $100,000 of that unpaid home loan ties up almost $1,000,000 of lending capital. So a foreclosed home with a $300,000 mortgage actually ties up $3,000,000 of a lender's funds. 

     That’s why banks are willing to take a loss on your home sale. They lose money every month—not just from your loan, but from all the loans they can’t make! So even if a lender loses $100,000 on a short sale, it’s still less expensive than foreclosing on your home.

      How much are banks willing to lose on a home sale? Most banks will accept offers of 80% (and above) of your mortgage. So if you have a $300,000 mortgage, the bank with consider all offers above $240,000.

      So in theory, all you need to do is find someone willing to buy your home for 80% of the loan value. Simple, right? Not quite.

     You see, banks have very specific requirements for short sales. In fact, most lenders have a maze of policies, rules, and processes that must be followed to a “t”. If you don’t do everything exactly to the lender’s requirements, you may have your sale denied at the last minute. I’ve even heard of it happening within hours of a closing.

     To find if you qualify for a short sale, use the following checklist.

•  Can you can demonstrate legitimate hardship?
• Do you owe more than your home is worth ? 
• Have you recently lost your job or experienced a significant loss of income? 
• Are you are struggling or unable to pay other debts? 
• Do you have minimal cash reserves? 

      If you answered “yes” to the above questions, you’ll very likely qualify for a short sale. That’s great news, because you can avoid foreclosure, wipe out your debt, and avoid further damage to your credit.

     But short sales aren’t easy. Even if you do qualify, you still have to find a qualified buyer. And once you find a buyer you have to submit the offer, along with the rest of your short sale package, to your bank.

     What kind of information does the bank want? For starters, your lender will most likely want to see your last two years' tax returns, along with two (or more) recent paystubs. On top of that, they may also ask for information about any IRAs, CDs, stocks, bonds, or any other investments you may have. And the bank will also ask to see a recent bank statement.

     Then you have to make sure that the buyer is willing to purchase the property on the bank's timetable. You see, most banks take their time deciding on whether or not to accept a short sale offer. While the bank is making up their mind, your buyer could purchase another property.

     That's why it's a good idea to have a professional in your corner. As a real estate agent, former practicing attorney, and real estate investor, I've worked on dozens of short sales. I know how to work with the banks to get your short sale package through the bureaucracy. I know what to say--and what not to say--when negotiating with the bank rep. And I know how to keep a buyer "in the loop" so that they don't wander off and buy another home.

Free Short Sale Consultation Shows You

How to Beat the Banks at Their Own Game

    Right now you can get a free, no-hassle, no-strings-attached foreclosure prevention consultation and learn if a short sale is the best option for you.

      This free consultation is 100% confidential—just like meeting with an attorney.  Nothing we discuss will go further than your kitchen table, unless you give me specific written permission to do otherwise.

         When we sit down, I’ll carefully go over your situation.  I’ll give you all of your options.  And together, we’ll come up with a plan that works for you.

      There’s no pressure to sign anything.  I don’t believe in pushing people around. You’ve gotten enough of that from your bank. 

      If you decide that we should work together to stop your foreclosure—great.  If not—that’s fine too.  If nothing else, you’ll leave our meeting with a better understanding of your options.

      So if you want to learn more about how to stop your foreclosure—whether it’s buy selling your home, buying it, or just giving you some free advice—just call my office at 703-734-7045.

     Remember, you don’t have to play the bank’s game.  You can arm yourself with the right information and stop the nightmare of foreclosure.  You can move on with your life.  All you have to do is call me now at 703-734-7045.
 

Thanks,

Russell Arkin, CDPE
Realtor/Former Practicing Attorney
RE/MAX Distinctive
Russell@RussellArkin.com
703-734-7045

P.S.--And if you’re not quite ready for a consultation yet, no problem. You can just email me at Russell@RussellArkin.com with any questions you may have. I’ll do my best to get back to you promptly. For a faster response, it’s always best to call my office at the number above.