SHORT SALE SELLER FAQ'S
- A short sale allows a house to be sold for less than what is owed on the mortgage, including all liens and all cost associated with the sale of the property. The lender and lien holders will take a financial loss and consider the debts paid in full. All decisions regarding the sale of the house are completely up to your lender.
When should a seller inquire if the property qualifies for a short sale?
- Time is of the essence, you should find out as soon as possible. I will assist in determining your qualifications for a short sale by first determining your hardship and other qualifications.
Can a seller request a short sale on more than one property at a time?
- Yes, if the properties qualify, a short sale can be done on multiple properties.
How much does it cost the seller to do a short sale?
- This is a no cost service to you as the homeowner. After a successful short sale, as your real estate agent, I will get paid at closing, and the lender will cover commissions and/or fees.
What does the seller need to provide to start the short sale process?
- You will need to provide bank statements, pay stubs, tax returns, and a hardship letter stating you can no longer afford the mortgage for any borrower(s) listed on the loan(s). In addition, the lender will require you to complete a loss mitigation packet, which will be provided at our initial appointment.
What are the expectations of the seller during the short sale process?
- Cooperation! Cooperation! Cooperation….. With a touch of patience. You will need to cooperate with scheduling showings. In addition, you will need to provide updated bank statements, pay stubs, and any other requested documents periodically during the short sale process. Delaying or not providing the paperwork to the lender will delay the process and the process will not move forward for review.
What are the qualifications of a short sale?
- You are experiencing financial hardship and/or can’t make the mortgage payments.
- You owe more than what the house is worth.
- You do not qualify for a loan modification.
- You have done several loan modifications forcing a short sale.
- You must be represented by a licensed real estate agent.
- If you are unsure if you qualify for a short sale, please contact us to discuss your options.
What qualifies as a legitimate hardship?
- Considered hardships are divorce, reduced or loss of income, death of a spouse/borrower/principal wage earner, job relocation, loss of a job, excessive debt, and/or overwhelming medical expenses. The list may go on. If you have questions about your specific situation, please contact me for more details.
How long does the short sale process take?
- The average time for a short sale depends on different circumstances and can take anywhere between 2 to 6 months.
What are some benefits of a short sale?
- A short sale allows for a house to be sold no matter how much is owed on the mortgage.
- A short sale prevents a buyer from purchasing a home with zero equity and/or requiring the seller to bring a large sum of money at closing to cure any balances.
- The seller may walk away without any judgments for the amount that was still owed due to the bank and/or lien holders forgiving the deficiencies.
- You may qualify for relocation assistance.
- A short sale is NOT a foreclosure.
- This is a free option to the borrower to avoid a foreclosure.
- You may be able to purchase another property within two to three years from completion of a short sale.
What are some disadvantages of a short sale?
- The short sale process can be lengthy in comparison to a traditional sale.
- Any missed mortgage payments will negatively affect your credit until the short sale is completed.
- The homeowner will be required to provide financials and supporting documents throughout the entire short sale process.
What is the difference between a short sale and a traditional sale?
- In a traditional sale, the homeowner approves the sale price, terms, and timelines. However, in a short sale, the lender approves the sales price, terms, and timelines, because they are taking a loss on the loan.
Why would a mortgage company agree to a Short Sale?
- Foreclosures cost lenders more time and money than a short sale. By accepting a short sale, the lender does not have any extra cost of holding onto the property.
How is the value of the house determined during a short sale?
- The lender will request an appraisal or BPO report which will assist the lender in determining the price they are willing to accept for the short sale.
Can I live in the house during the short sale?
- Yes, I strongly advise to reside in the property to maintain the property, prevent vandalism, and qualify for relocation assistance. Once the home is sold, you will need to vacate the house prior to closing. The house CAN NOT close if you have not moved out of the house.
Does the house need repairs or be updated for a short sale?
- No, the condition of the house does not deter a lender from accepting a short sale. The lender will take into consideration all the necessary repairs needed when determining the value of the house.
Is a home inspection required for a short sale?
- The bank does not require an inspection to be completed. However, the buyer may have an inspection done on the property.
During the short sale process can the lender still move forward with a foreclosure?
- Yes, the foreclosure process can still proceed, depending on the timeframe and circumstance. I will work to get the foreclosure stopped. If the lender will not agree to postpone the foreclosure to a short sale, I will refer you to an attorney to advise you on your legal options before the sale date.
Would it be easier to walk away from the house and let it go into foreclosure?
- Yes, it would be easier, but a foreclosure allows for tax consequences, lawsuits, and recourse from the lender. A short sale would prevent that.
What if the house is already in foreclosure?
- A seller can still request a short sale even if the house has begun the foreclosure process. Having a short sale review can delay the foreclosure process. A seller can still choose to sell the house the traditional way and still be liable for any debts not covered by the sell of the property.
How long will the house stay to be on the market?
- The house will remain on market until the house is sold.
What happens if no offers are initially received on the house?
- When the house is listed for sale, it will be listed at the market value, and continue to be reduced until an offer is received and approved by the lender.
What happens after the lender approves a buyer for a short sale?
- After the lender approves the short sale, an approval letter will be sent, and the short sale has to close within 30 days. The approval letter will include all the information for the buyer, the sales price of the house, any approved seller relocation funds, and the closing deadline. In addition, the letter of approval may include the forgiveness from debts stating the lender cannot seek settlements in the future.
Will I get any money from the short sale?
- You will not receive any funds from the sale of the house. However, if you are occupying the home, I will apply with your lender for relocation assistance. It will be determined by the lender if you qualify and for approval. If approved, you will receive money from that program after closing.