Short Sale - What you need to know

You need to sell your house but owe more on it than what you can sell it for and don't know where to turn. In today's economy this is not an uncommon problem, more and more people are finding themselves in this exact situation. You've probably heard the word "short sale" bantered about but are unsure just what that is or how to go about it. In simple terms a short sale is when your lender agrees to allow you to sell your home for less than what you owe on it.

Unfortunately the definition is the only simple thing about it. It can be a long complicated process. Even though it seems as if everyone is doing it, its not just a matter of you deciding that's what you want, after all like any other debt legally you owe the full amount due on your mortgage. Your home is collateral on that debt and the bank is not obligated to release their lien on the home for less than what it is owed. If you can't make your payments they have a right to foreclose and take the property back. It is possible a short sale can be done but there are several important things you need to know about the process.

* To the bank its simply a numbers game. You need to show them that it is better for them financially to accept the short sale then it would be to go through with the foreclosure process.

* You have to prove to the bank that you have a hardship. This can include things like being unable to make your current payments due to loss of job or some other change in your economic situation, or a job transfer requiring you to relocate out of the area.

* You not only need to show that you are unable to sell the home for the amount owed on it, but also that you are unable to come up with the difference between what is owed and what it sells for. If the bank feels that you do have the ability to cover that difference they are not going to just let you out of your obligation, but will require you to come up with that difference out of pocket at closing to fully payoff the debt.

* You need to be careful that the agreement you reach with the bank includes them forgiving you for the amount shorted. The bank can release the lien allowing you to sell the house without making you come up with the difference at that time, but may retain the right to still hold you financially responsible for that difference. This means they can and in a lot of cases do file a judgement against you for that difference. Many people have been caught off guard when their short sale was not negotiated properly and they "assumed" the banks approval left them free and clear only to find out after the fact this was not the case.

To make sure your short sale is successful and you don't have problems, first and foremost you need to have an expert in short sales to advise and assist you through out the process. Its not enough to just go with an agent that has listed short sale properties. There are a lot of agents that have short sale listings, unfortunately a large percentage of those never do get to the closing table. You want to make sure the agent knows how to get your short sale package approved or that they work with someone that does.

At HRC Properties, LLC we have an Attorney on our team whose business is short sales and they will meet with you, discuss your options, and if you qualify for a short sale will see that everything that needs to be done to get the sale closed gets done. Because their expertise is short sales they make sure that everything that is required is in your package presented to the bank right from the start so that the process goes smoothly. I'm sure you've heard the horror stories associated with short sales and how hard it is to get the bank to approve the sale or how it can take forever. In most of those cases the reality is that the person handling it for the seller does not prepare the package properly so it is acceptable to the bank. This either causes outright denials from the bank, or delay after delay as more information must be requested and submitted.

Different banks have different criteria so to get a short sale through you need to know each lenders requirements and see that the initial package is complete with everything they need. You also need to know how to bypass the lower rungs and get the package right up the ladder to the person who will ultimately make the decision as well as how to negotiate it into an approval.

Whatever you do don't ignore the situation. Short sales take time and if you wait too long to explore your options you may find yourself out of time, thus out of options. Before this happens contact me and find out what we can do to help out.