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SHORT SALE FAQ's
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Q: What is a short sale?
A: A short sale is when a real estate owner negotiates the sale of their property with their bank (lender) for less than what is owed. This negative balance is referred to as the deficiency.
Q: I just got a letter from my bank stating they are giving me money to short sell my home. What's the catch?
A: Banks are now being very proactive in short selling homes in an effort to prevent foreclosure and offer their clients better options. The banks realize that your home, like half of the home owners in AZ, are underwater with their mortgage. They recognize the win-win situation giving you the option to short sale rather than foreclose and will often offer monetary compensation to do so. It most cases it would cost the bank more money to let you go through the foreclosure process and have to sell your home at auction.
Q: How long does a Short Sale take?
A: Unfortunately there is no exact timeline for how long the short sale will take. Our typical short sale, from offer acceptance to short sale approval, takes between 60-90 business days. Once the bank has negotiated the terms of the short sale and the seller approves the terms, the buyer typically has another 30 days to close their loan.
Q: Who pays the Realtor® commission in a Short Sale? How much does this cost me?
A: The bank will pay our fees. We try to make this process as easy as possible for our clients and do not charge any fees directly to them.
Q: Why isn’t there a more exact timeline?
A: Although the short sale process is handled relatively the same from bank to bank, every bank has subtle differences in how they process their short sales. Also, many factors change the time it will take to get the approval including but not limited to: whether or not the bank owns the note or if they are acting as the servicer to a third party investor, or depending on how many liens are on the property, etc.
Q: How long do I have until my property is put into active foreclosure?
A: Most lenders will put a property into active foreclosure after 90 to 120 days of not receiving payments. Statistics demonstrate to the bank that someone who has missed two or more consecutive payments will generally not be able to get their loan current. Therefore, once the payments are not made and no other arrangements are made with the bank, they will put the property into active foreclosure to try to preserve the home.
Q: Can I still short sale my home if it is already in active foreclosure?
A: Yes! Once in active foreclosure, it is much harder to reinstate your mortgage so a short sale it maybe a good alternative. With short sales, we are often “competing with the clock” as we get closer to the trustee sale, auction date. Therefore, once in foreclosure it is extremely important to get a short sale specialist involved as soon as possible to ensure the best possible outcome.
Q: How will a Short Sale affect my credit?
A: This is a hard question to answer as a Realtor®. The short sale, from our perspective really doesn’t hurt your credit as much as the missed payments. Most lenders we work with say that buying a home is not an option for at least two years after the short sale depending on how it is reported on credit. From our experience the missed payments have hurt our clients more than the short sale out come because it has more immediate effects. We work with several credit repair programs to help expedite the credit rebuilding process to help get back on the path to homeownership.
Q: Can the bank go after me for the unpaid balance?
A: Great question! This will depend on the type of property and how the funds were used. As a Realtor® we cannot give legal or tax advice, but in our experience, we do our best to ensure our clients are removed from liability once the short sale is properly processed. We only close on short sales where it is the best option for you the seller, each situation is different and it would be best to setup a private consultation as soon as possible to determine which option is the best for you!
Q: Can I still short sale my home if I have more than one loan on the property?
A: In most cases yes, most definitely. Almost all of our short sales have more than one loan, in some cases more than two. Again a private consultation is the best way for us to answer questions related to your specific situation .
Q: Should I continue to pay my HOA?
A: YES! HOA’s can and will put personal liens on you and your property and can send you to collections even if you no longer own the home. In addition, if the HOA puts a lien on the property it can prevent the short sale unless negotiated with the HOA.
Q: Can I still live in my home while pursuing a short sale?
A: Yes. Many of our clients continue to live in the home until the house is sold. This helps in maintaining and preserving the home while giving our clients time to build reserves for their move and exit strategy out of the home. It is becoming more common that your bank may request that you stay in the home and maintain it until the short sale is done often offering money for you to stay.
Q: When will I be able to buy again?
A: Per our lending partners, every situation will be different, but in most cases our lenders can get you back into a home after about two years. Again this is all dependent on how it is reported on your credit. We have had clients purchase in as little as 2 months after successfully short selling their home due to how their short sale was reported on credit.
Q: How do I get started in selling my home as a Short Sale?
A: Contact us for a no cost confidential consultation. We will review your situation and discuss the options and a strategy for short selling your home if you qualify. After you are comfortable with your options YOU make the best decision for you and your family.
Q: How do I know if a short sale is right for me?
A: Through a free, confidential consultation, we will present you with all the tools and information to help you decide if a short sale is right for you. Again, we are not going to embark in this process unless it is win for you in the end. We will not work with someone where we don’t feel confident that we can offer a better outcome than an alternative plan like foreclosure or modification.
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