Homeowner's FAQ on Short Sales
Homeowner's FAQ on Short Sales
If you have questions or feel you may qualify for a short sale, please contact Kelly Walters at (336)253-5079 or email@example.com to schedule a free consultation. You may also visit www.GreensboroShortSale.com to receive more information via email.
What is a 'Short Sale'?
Simply put, a short sale occurs when a homeowner's mortgage company (or companies) agree to accept less than the full amount owed in order to allow the sale of a property at fair market value.
Do I qualify for a Short Sale?
Chances are we can successfully close your short sale if you:
- Have no equity and are unable to sell your home and pay off all of the outstanding debt
- Need to sell quickly
- Can't or won't bring cash to closing to make up the difference between what you owe and what your home is worth
What if I want to keep my home, but I can't afford my mortgage payments?
Your lender may agree to a loan modification allowing you to keep your home and make reduced payments. The loan modification process is very similar to the short sale process and can take 30-90 days to complete. Unfortunately, even the modified payments may be higher than what you are comfortable with and many homeowners short sale even after obtaining a modification. For this reason, we advise our clients to stick with the short sale process until the modification is complete and they are satisfied with their new payments.
I need to sell my home but I'm current on my mortgage and I don't want to damage my credit. Can I still Short Sale my home?
YES! You do not have to be in foreclosure or even behind in payments. Our clients that have continued to make payments right up until closing have seen little or no impact on their credit scores and in some cases were able to qualify for a new mortgage right away.
Why would a bank agree to a Short Sale?
The banks profit from lending money. They do not want to own or manage properties. It is much more cost effective for a bank to do a short sale than it is to foreclose. On average, foreclosing on a home could cost the bank as much as $50,000 or more! A short sale will allow them to minimize their loss by as much as 10-40% by cooperating with the homeowner to sell the home at current fair market.
Are there consequences to a Short Sale?
The resulting consequences of a short sale involve many variables and depend greatly on your individual circumstances. We suggest that you consult with both a real estate attorney and a CPA for advice. Here are a few things to keep in mind:
- Once you default on your mortgage (payment is 31+ days late), your bank can begin reporting your account as "delinquent" to the 3 major credit bureaus and that will have a direct effect on your credit score. After going through short sale or foreclosure, many people will have several 30, 60, and 90+ day late payments reporting on their credit.
- A complete Short Sale will generally be reported as "paid in full for less than the full amount" or "settled".
- It is difficult to predict how much a short sale will affect your credit score, but credit experts agree that the impact of a foreclosure is much worse. We encourage you to consult with a credit counselor for more information on this topic.
- Many of our clients have been able to continue making payments throughout the short sale process and as a result, their credit scores were generally not affected at all. However, even if you make payments until the completion of the short sale your account may still report as "settled" or "paid in full for less than the full amount".
- In both short sales and foreclosures, the lender is usually required to report the amount of cancelled debt to you and the IRS on a Form 1099. There may be tax consequences. We suggest you consult with a CPA or Tax Preparer, and visit the IRS website to learn more about The Mortgage Debt Relief Act of 2007 and the 6 things you need to know about mortgage workouts.
- North Carolina is a 'Deficiency' or 'Recourse' state which means that the lender is entitled to pursue the homeowner for any funds not recovered from the sale of a property. Typically, in exchange for the short sale, the lender will agree not to pursue the dificiency.
- In 99% of the cases, the amount of loss resulting from foreclosure is much greater than that of a short sale. It is almost always in the homeowner's best interest to do a short sale rather than allowing the property to be sold for less at Foreclosure or as an REO sale.
I heard that Short Sales take several months and that the lenders can change their minds at the last minute. Is this true?
Unfortunatley, there are many Realtors out there that do not understand how to successfully negotiate and close a short sale. Many have tried and failed. Others are just passing along the negative information they've heard from others. While there is some truth to these statements- the national average for closed short sales by Realtors is between 20-50%, an experienced and successful short sale specialist can and should close at least 90% of his/her short sale transactions.
It is extremely important that you interview and pre-qualify the agent that will represent you in the short sale transaction. Refer to Why should I choose Team Leung and How do I pre-qualify my Realtor for more information.
Why should I choose Team Leung?
- We believe that we are the most qualified, most successful, and most experienced short sale real estate team in the Greensboro/Triad area. Our 92+% success rate in closing short sales is unmatched in this area.
- We "put our money where our mouth is"- unlike other "Short Sale Experts" we do not charge an upfront fee for our services. We do not get paid unless we reach a favorable settlement between you and your lender. Typically, our compensation comes from the lender, not the homeowner.
- Team Leung is the #1 sales team in the Greensboro Keller Williams office and has been since 2007. We are currently ranked #8 in the Carolinas Region (NC & SC).
- We are a team of 7 real estate professionals with a combined 40+ years of experience. Refer to the About Us section to meet each of our members.
- Rather than hiring a "jack of all trades", with Team Leung you will have a short sale specialist that is dedicated to helping you negotiate the best settlement terms with your lender.
I'd like to interview a few other agents before deciding. What questions should I ask potential Realtors and/or short sale negotiators?
We believe that you should always make informed decisions in everything you do and that includes researching and interviewing prior to committing to the short sale. Your decision will likely be based on personal preference and who you feel most comfortable with, but here are a few key questions to ask:
- How long have you been doing short sales?
- How many of your short sale listings have closed successfully?
- How many of your short sale listings have foreclosed?
- Do you charge any upfront fees?
- Who is responsible for the prelimenary title work and HUD?
- What is your average days on market?
- Do you personally handle negotiations or do you work with a 3rd party negotiator? Who is responsible for paying the 3rd party negotiator in the very likely event that the bank will not?
Now that you are armed with reliable information, don't allow rumors and incorrect information to influence such an important decision in your life. Losing your home to foreclosure is always the last resort and you should seriously look at all of your options before letting your home go to foreclosure. We offer FREE, no obligation homeowner consultations. Contact us today.