I wanted to address the common misconception of who qualifies for a short sale. Many homeowners think that a short sale is about people going into foreclosure or buying homes that they could not handle - that is very far from the truth. In fact, most people in a short sale situation now are the ones who could handle the storm, but the individuals who defaulted dragged the values down so low that the rest of us are left to clean up the damage. A short sale is simply a sale in which the mortgage outstanding is higher than the sales price on the home. A successful short sale must include these three key ingredients:
1. Financial Hardship - This is very broad and can be the result of many things. Our website has a list of all the acceptable forms of hardship, but the most common are job loss/transfer, divorce, adjustable mortgage, loss in wages, or illness/death of a spouse. Simply unhappy about your homes value is not acceptable.
2. Monthly Shortage - A bank or investor will not be too quick to accept your request to have your debt forgiven if they see that you are still showing a positive monthly inflow. If you are asking for a short sale but pulling in $1,000 more each month than your expenses, then why would the bank accept your short sale. However, if you have been transferred and now you have to find housing in your new job location, then you do not have extra money and thus would qualify.
3. Insolvency - Simply put, are your assets greater than your liabilities. Now most people are worried about their retirement and 401k - in most cases these are not counted in a short sale since most bankruptcy laws protect them from creditors. But if you have a significant amount of money saved or invested...even as a "Rainy Day" fund...then this is something that the bank will attach their debts to. Think about it this way, if you have $100,000 in the bank but are asking the investor to forgive $75,000 you owe them, how likely do you think they would do that?
Qualifying is the first step. Getting your home sold and in the proper hands is another. Before we list a short sale, our main priority is to make sure that you understand what is going to take place during the transaction. We have attorneys that we use to professionally negotiate on our clients short sales - this is part of our service that we offer to give our clients the best opportunity to successfully close their short sale. Make sure that you have that option at your disposal when you speak to an agent about a short sale.
If you are facing a short sale, make sure that you speak with an agent who can help you understand the process and has a system in place. Each short sale is unique, so even agents who have closed short sales can not guarantee that yours will close. What matters most is the package that is sent to the bank and how your sale is negotiated that gives you the best shot. Visit our website or give us a call for more information.
Jimmy Mulhern
http://www.HowToAvoidForeclosureInVirginia.com
