By Guest writer, Mike Wiegert. (Sandi Bauman's broker at Chico Homes!)
So you’ve been marketing your Chico, CA home for the current average market time of 94 days and maybe you’re being transferred from our gorgeous gem of a town to Who Knows Where, Tennessee.
You thought that your house was really something special, better than any of the others on your street, but here you are over three months into the process and the moving vans are on their way.
A very dear and knowledgeable friend insists that your new employer must have a relocation program and would be ever so happy to buy your home for whatever you think it’s worth. So you make the call to Tennessee and your employer informs you that he is extremely regretful to inform you that the company that you’ve worked for a billion years does not have a relocation program as part of your benefits package. Oops, should have read the fine print!
Now what are you going to do? You have to pay rent on the new home in Who Knows Where, but you can’t pay rent and a mortgage on a vacant house back here in our little heaven on earth- Chico, CA. At the same time, you’re dreaming that once you get used to your new town, you’d really like to buy a house and put down some new roots. Well, that won’t happen if a foreclosure sale is on your credit report let alone all the late and missed payments you couldn’t make on the way to foreclosure. If you go to bankruptcy you know you’re going to lose any equity you thought you had in your home and it’s going to be years before you can rebuild your credit to the point that you could buy a clock radio on credit let alone a house. Is there any hope for a working family just trying to live the American dream? Maybe there is. It’s not especially pretty, but you don’t have a lot of options.
For homeowners that can’t afford to pay their mortgage, there is an alternative to bankruptcy or foreclosure proceedings – it is called the short sale.
The short sale really begins when you finally realize that your house just isn’t worth what it was just a few short years ago. The next realization is that if you sell you house for what it’s really worth, you’re not going to actually get any proceeds back from the sale. OK, that’s a big pill to swallow but after you have, you might have the final realization that you’re really just starting from scratch like you did a few years ago. Back then, you’re credit was pretty good, you had your health, all your kids were fairly normal and you had a job. So rather than losing your home in foreclosure AND ending up with a terrible credit report, you think “I wish we could just be back to where we were back then.” It’s at this point that a “short sale” might be the answer.
A short sale occurs when the net proceeds from the sale of a home are not enough to cover the sellers’ mortgage obligations and closing costs such as property taxes, transfer taxes and commission.
In other words, what a buyer might be willing to pay for your home isn’t going to cover what you owe on it and what it’s going to cost you to sell it. Unlike a foreclosure, a short sale can keep the homeowners credit intact. You may already be in foreclosure and the “short sale” may be an avenue your looking for.
The first step is to do some research a find a Chico CA Realtor that knows the local market and has had experience and success in the short sale process.
Your Chico, CA Realtor will need special skills and a persistent attitude in dealing and negotiating with your lender. Some lenders are extremely cooperative with brokers and agents requesting short sale consideration for their clients. Remember, banks are not in the business of owning and marketing homes and many would much rather discount the current amount of their loans than have to go through the process of marketing and holding a property in a slower market. This lender attitude will certainly grow as the number of foreclosures and repossessions increase. Conversely, the popularity of buying in the short sale market appears to be spreading rapidly.
Be advised, before you contract with any Chico, CA Realtor to market your home utilizing a short sale concept, you should consult a real estate attorney for the legal implications of the short sale and an accountant about the tax liabilities involved in the short sale. You must understand everything up front before the short sale process begins.
So what is the short sale process?
You must prove to your lender that you are unable to afford to pay your mortgage. If your lender is aware that you possess certain assets such as stocks or bonds, or you have a high paying job, your lender may require you to sign a note promising to repay at a future time any discount of what you owe that they make in the short sale. If you do not possess these types of assets or your job clearly indicates that you would not be able to repay such a debt, it is possible it may be forgiven.
The lender will appraise the current market value of your Chico, CA home. At that point in conjunction with your Realtor, the lender will calculate the amount of the outstanding debt and the customary costs of selling. If the proposed short sale will bring them more money than they would get during auction, the lender will mostly likely agree to it.
End result, you didn’t pull the equity out of your home that you might have thought you had, but your credit is still intact. You are out of a mortgage payment you can’t afford, and the dream of once again owning a little corner of this world still burns brightly.
