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Short Sale*

You are ready to sell your house and move on, but your loan balance is more than your house will sell for. Just ask your Lender to take much less than what you owe them and allow you to sell the house. Sounds simple enough…? With some patience and the assistance of an experienced real estate professional a Short Sale is often the best way for you to get a Fresh Start.

Why would my lender allow me to do a Short Sale?

If you have been late or missed a few house payments, your lender understands that you can no longer afford your house. Even if you have never missed a payment, your willingness to cooperate with a Real Estate Professional to list and sell your house does several things for your lender.

They can save time & money by not proceeding with a Foreclosure Sale. Foreclosure is expensive, and in many cases very time consuming. Your lender has costs involved with “sitting” on your loan with no payments coming in. They have carrying costs for the money (Yes, banks borrow money too.) Their money is “tied up” in your loan, and the time it will take to complete a Foreclosure Sale is time they could have the money invested somewhere else.

You relieve your lender of the liability of selling the property as an REO (Real Estate Owned) listing after the Foreclosure Sale. Regardless of the situation, there is always liability for the seller when a house is sold. You know your house, so you can tell the new buyer everything about it. Your lender has never lived there. If they miss telling the new buyer something, it may cost them additional money after the sale. When you sell your house as a Short Sale, your lender has no liability for the sale.

Your lender understands that vacant houses cost money to maintain. They are required to secure the property and maintain the house, even when it’s empty. Vacant houses invite vandals who cause damage and cost the bank money to repair damages. With your cooperation, it is in the banks best interest to work with you on a Short Sale. They may postpone a Foreclosure Sale for months just to keep you in the house until it sells as a Short Sale.

Things For You to Consider when doing a Short Sale

A Short Sale can’t be completed unless your home’s “Title is Clear”. Do you have a 2^nd Loan or other judgments against you or your house? Tax Liens, Home Owners Association Liens, Credit Card Judgments, Child Support Liens, and Other Liens will all need to be “Cleared”. Who will negotiate on your behalf with ALL of the liens on your house? The banks and your lien holders have “Negotiators”… Do you plan to negotiate with all of your lien holders, or are you working with someone to negotiate on your behalf?

Many real estate professionals claim to be “Short Sale Experts”. It is important to find out if they have become “Experts” by completing ACTUAL Short Sales, or did they take a class? Ask them how many Short Sale transactions they CLOSED in the last 90 days, and how many liens have they cleared on a single Short Sale? What is their negotiation success rate?

When you sell your house as a Short Sale, your Real Estate Professional becomes far more than just a Real Estate Agent… They are your chief negotiator. They have to be aggressive enough to convince other paid negotiators (representing all of the liens on your house) to take little or none of what is owned to them. There are many Real Estate Agents who are great at marketing and selling houses for top dollar, but a Short Sale takes far more than that.

Remember, you do not care how much your house sells for… Only that it closes and you don’t have to bring in any money. With a Short Sale, typically, all of the seller fees and agent commissions come out of the proceeds from the sale. The bank takes what is left as the Short Payoff amount. A Short Sale is uniquely different than a traditional home sale.

Why would you want to do a Short Sale

If you have a 2^nd Loan or other judgments against your house? Tax Liens, Home Owners Association Liens, Credit Card Judgments, Child Support Liens, other liens will all against your property, your Real Estate Agent becomes a professional negotiator (effectively paid by your lender) to negotiate, reduce and eliminate your liens. Without a Short Sale, you would pay for this service out of your own pocket.

If your house goes to Foreclosure Sale, your lender may seek a Deficiency Judgment for the difference between what you owed on your loan and what they sold the house for. This is perfectly legal in many states, and it becomes “unsecured” debt you owe just like a credit card. If you have an equity line or 2^nd loan on your house, your 2^nd lender is likely to pursue a Deficiency Judgment, since they have little chance of getting any money from the Foreclosure Sale. If done correctly, a Short Sale, will help to avoid these Deficiency Judgments. (Note: Recently some states have passed laws that prohibit Deficiency Judgments from 1^st or 2^nd lenders IF the lender approves a Short Sale.)

There are not many things more traumatic than being evicted. It might look something like this… The Sheriff, bank representative, locksmith, and moving company show up for the eviction. The Sheriff escorts your family outside, the locksmith changes the locks, and you all watch from the street while the movers put all of your property on the sidewalk.

When compared to your other options, Foreclosure is the biggest hit to your credit score. In addition, the notices nailed to your door for your neighbors to see and people coming to your door, offering “assistance” can drain your emotions. The stress of things being out of your control, and not knowing where you will live in the future can wear on even the strongest of us. You can’t control your bank, but you can control what happens to you… Take control and Contact Us to discuss your Short Sale options in greater detail.

I am ready to list my house as a Short Sale… What’s next?

Ø Start by selecting an experienced Real Estate Professional (About The Sinclair Group) experienced with Short Sales and dealing with the banks. Selection of the right agent can often mean the difference between a successful Short Sale and Foreclosure.

Ø Request a Short Sale Package from your lender. If your loan is with one of the big banks, try here: Bank of America Short Sale, Wells Fargo Short Sale, Chase Short Sale.

Ø Complete EVERY question and provide all pages of EVERY piece of information requested on the Short Sale Package.

Ø Your bank is unlikely to make a decision with only pieces of information, so plan to send ALL of the requested information in together.

Ø It is best to send the completed Short Sale Package to you Agent/Negotiator and they will forward it to your lender. There are several documents connected with the listing and sale that will need to be provided, and your agent has these.

Ø Keep Copies of EVERYTHING you send AND everything you receive. Plan on needing to send some things more than once.

Ø After completing the initial Short Sale Application, save copies of everything that changes with time… Bank Statements, Paycheck Stubs, Tax Documents. By the time your lender approves your Short Sale, the documents you provided in your original package will be months old and outdated. They WILL ask for updated documents.

Ø It should not surprise you that your lender will continue with the foreclosure & debt collection process while your house is listed as a Short Sale. They don’t want to foreclose, but they need to continue with the required timelines so that if your house does not sell, they don’t add months (and costs) to their foreclosure timeline.

Ø Your home loan file resides (on a computer) in several different departments at your lender. Don’t get frustrated if you speak to the collections department and they do not have the same information as the Short Sale department. Understand that the system is flawed, and don’t expect it to get fixed before your home sells.

Ø BE PATIENT! Remember, your Short Sale request takes time… In most cases, MANY MONTHS. It takes weeks for your file to move through each piece of a very overcrowded and unorganized system. There are tens of thousands of Short Sale Requests just like yours moving through the system every day.

The Sinclair Group specializes in helping homeowners navigate the complicated road ahead of you. IF you have a specific question, you are welcome to contact me anytime on my personal cell phone 714-401-5321. When the time comes, please take advantage of my team’s extensive Short Sale expertise to find the right buyer for your home, guide you through the process and deal with your mortgage bank to negotiate on your behalf.

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