In today’s world, where foreclosures are one of the hottest topics of the existing economic crisis, almost everyone has heard of the term “short sale.” Don’t feel bad if you don’t understand exactly what it is or how it’s done. Many professional real estate agents do not understand the intricacies of a short sale. We buy homes that are prime candidates for short sales. If you owe more on your home to a lender, and perhaps to secondary lien holders, than your home is worth, then you should seriously explore the possibility of a short sale. This is the beginner’s guide on how to sell your home for less than you owe.
If you can’t make your mortgage payments, or anticipate a time in the near future when that will be the case, you probably need to sell your home fast. Before foreclosure becomes inevitable, explore a short sale. This is a business decision that a lender will generally accept if they see that they will not be able to sell your house and cannot get any resources from you. Banks and mortgage companies are not in the business of owning and selling real estate. They don’t want the expenses associated with owning and marketing a property after foreclosure. If your loss mitigation department understands this, agreeing to a short sale is quicker and will cost you less money down the road.
Look for companies or individuals with experience buying homes through the short sale process. These companies exist in every state and are very active in the Philadelphia area. Some of these short sale home buyers are interested in buying your home for investment purposes and others are real estate companies with people looking to purchase a home for less than current fair market value. The first thing to determine is what your home with its amenities and condition will actually sell for in the current market based on recent closed sales in your neighborhood.
Once you have obtained that information, the party who wants to buy or sell your home is ready to negotiate with your lender. The object of the game is to see how much of your loan the lender will forgive to allow a cash buyer to buy the house. How much will the lender have to give up now to avoid more heartache and loss on your property? The benefit to you as a seller is that you don’t have a foreclosure on your credit report. Short selling will appear, but it’s much less damaging, and you should be able to get out of debt.
Short sales are not easy and the entity buying your home will be involved in lengthy negotiations with the lender trying to work out all the details. Since the banks and mortgage companies are already overburdened, you need to convince them why they should agree to forgive part of your mortgage now to allow someone else to buy your property. They will want their own assessment, as well as verification of as many facts as possible regarding your situation. Finally, they must be convinced that the phrase “bird in the hand” definitely applies to their situation in order for them to agree to sign the negotiated terms of a short sale on your property. This takes time, and sometimes it may not happen. However, when it can be completed successfully, it is a great way to negate credit damage to the seller and allow a buyer to purchase your home at below market value.