What is a SHORTSALE and why should you consider it as a Seller or as a Buyer

P.O. Box 1208 , 250 Route 49 in Campton , NH 03223

phone 603-726-8642 or 603-726-8941

Up until only a few months ago most people walking through the doors looking for the foreclosure list in our community were given a blank sheet of paper. Just Joking!! but not entirely. Where other areas of the country were hard hit with every other home being sold by the bank , it was more of a an exception to and not the rule here in central NH and in much of the New England states . The real estate market was soft but not down right in a hole . Over the last few months there have been some not a lot but some foreclosures . The problem is that those few have raised havoc to the values of homes here . The few homes that were foreclosed got snapped up quickly and have all but dried up for the most part . BUT the affect on the market in general was not so short lived. Since that period the only sales were foreclosures or SHORT SALES, they became the market. And while most sellers are still not willing to take a bath those that really need to sell have been hit much much harder. How do you sell in a market when because of a few brief foreclosure sales, your house is no longer worth what you owe? And the banks lending practices make it harder for a buyer to find funding even when you can find one? Well if you are lucky you don't need to sell and if you get your number and the buyer can get their financing , you sell and if you don't , you don't , oh well- waiting for better time so big deal. But if you really need to sell, and you have a hardship that leaves you with no choices but to sell, what do you do? . One of your choices are that you can ask your bank to allow you to sell it through a short sale- meaning for less then you owe on it Or if you would like to remain in your home and you have not already put youself in a negative light with your bank , you could if your position is going to get better in the future ask your bank to renegotaite your loan .

What is a SHORT SALE : A short sale is short and simply that you ask your bank to allow you to sell your home for less then you owe . In most circumstances they will allow this but you don't get off the hook for the difference. In some instances, they will allow to do this and they will forgive you of any money that is lost to them, the difference between what you owe and what you get from the sale . The criterior is most often (1) that you asking to sell for less as your property is not worth what is financed on the property- simply you can not sell and get all that you owe the bank and (2) that you have a hardship - circumstances that make selling a necessity as foreclosure is on its way if no other options can be secured. And finally they will not do this for you unless (3) You take the time to contact your bank and let them know what your circumstances are instead of not answering the phone for the bill collectors . In other words do not stick your head in the sand -face it head on. When you are in the position that you have to sell and you can't sell for what you owe , a Shortsale might be the right choice for you .

It is always good to not only explore this option with your real estate agent but enlist the help of credit counselours , trusted advisors that know finance such as a family lawyer or organizations like Ahead that are nonprofit and established to help you through the pitfalls, to know your rights and to make sure that if you choose this path, you come out in a better place than foreclosure would have left you . A shortsale does not always mean that the lender forgives your debt - it has to be asked for and agreed to.

Examples of situations you might be in that a shortsale might be a good option for you :you are facing foreclosure or you have some other hardship that requires you get out immediately such as an illness in the family , an accident, loss of a job(s), serious cut in pay anything that put you in a financial position that you can not pay your mortgage and you are at risk of losing your home and you owe more than you can get for your house is worth in the current market and if you move out you might find less expensive and more affordable options for your housing . If shortsales did not exist this would mean inevitable foreclosure and likely bankruptcy would have to follow.

How do you go about asking for a shortsale? Contact a credit counselor , Ahead is always a good option as they are paid for by grants, nonprofit and free to you . These people will work with your real estate agent and you to fill out paperwork with your bank that is required to detremine if you are eligible by the banks standards for a short sale . This paperwork has to clearly show that you really do have a hardship. Once the bank receives this they will order an appraisal of your home to detrmine that it is worth less then is owed. If you truey have a hardship and your home is worth less then what you can sell it for within the time you have , you will probably fall into their approved list. This does not mean that they forgive the difference, just that they allow you to sell it and work with you regarding the difference . You must ask them to also forgive the balance. Depending on your long term circumstances they will agree or not . If they do not agree they may offer you a payment plan for the residual.

What does that mean if you are a BUYER looking for a great deal. Well it means that you can get a great buy on a home . A lot more house then you can get from a seller whose back is not against the wall and yet unlike a foreclosure you have a seller to give you information on the home you are buying , a history . When buying a home that is already foreclosed the bank will tell you nothing about your home's history even if they know . This would create liability for them and therefore you will get the standard as is where is , we know nothing , say nothing type seller disclosure if you get one at all . This presents many major risks for the buyer that they will not likely have with a shortsale . Was the property a meth lab? The bank can not tell you yes or no. Has the house ever had a flood in the basement - the bank can not tell you yes or no. Is there heath risks in the house , the bank can not tell you yes or no but if you are buying a shortsale you have a seller that will and in fact is obligated to . Unlike a foreclosure the huge unknowns are for the most part not there .

It is a win win for both you and for the seller. They get out from under a very stressful situation and you get a bargain without as many of the risks of foreclosure . There is a downside. You have to be patient and the bank could always say no to your offer. Shortsales do not happen quickly . And an approval of an offer does not just mean a seller accepts your price. It means that after they accept it has to go to the bank for acceptance too. And if there is a second mortgage , a va, fha or other subsidising affiliate they have to approve it too. It takes a while . In fact it can take a month or two and often does. but if your offer is REASONABLE , and I am being clear , if the bank is to accept it too , it most likely will have to be reasonable and the sellers circumstances are in fact a hardship , what a deal you could get. You see, when the bank looks what they will lose if the property is to go into foreclosure -in legal fees, in real estate commissions, in property maintenance ..... and looking at what the property is worth, is the offer reasonable taking both into account. You might just have equity that you did not pay for, at the moment that you took ownership and/or sweatequity that you can achieve quickly that given the sellers circumstances they could not . Their loss could be your gain.

Everyone BUYER OR SELLER should unless personally experienced, get the help of an experienced professional when buying foreclosed or shortsale properties . This really is not something you should do on your own if you want to avoid serious mistake . AHEAD is a really good resource in helping you through the pitfalls of selling through this method. Ahead's phone is 1-800-974-1377 or visit them online at www.homesahead.com . And if you are a first time home buyer or you have some credit issues they have great counseling for you too .