Who is eligible for a Short Sale? A good Short Sale candidate is a homeowner who is behind on their mortgage payment and is unable to keep up with all of their monthly obligations. There are many reasons you might fall behind on your mortgage payments…divorce, job loss, job relocation, sudden change in your monthly income, unexpected medical expenses, or adjustment in mortgage payment or unforeseen increase in living expenses. Also a good Short Sale candidate has no equity in their home. They are not able to sell their home and pay off all of the outstanding loans that are secured against their home.
But I have 2 loans, will I still qualify for a short sale? It is possible to work with both lenders to approve a short sale. Even if the value of the home is below the balance of the 1st mortgage, we can normally get the two lenders to cooperate. And sometimes, both loans are held by the same mortgage company – this does make the process easier. In the end, neither lender wants the property back through yet another foreclosure.
Why would your bank agree to a Short Sale? Banks really are not in the business of owning homes. It is much more cost-effective for a bank to do a short sale rather than going through the foreclosure process on a home. Banks make their money from receiving monthly mortgage payments, not by owning real estate. While banks will take a loss doing a short sale, they can often minimize their loss by as much as 10-20% over a foreclosure.
How much will a Short Sale cost me? A short sale should not cost you anything at closing for sales costs. We strive to complete the entire short sale process without having you, the seller, bring any money to closing. In most cases borrowers pay no sales costs if the lender approves the Short Sale. All commissions, title and escrow fees, and even most repair expenses may be paid by the lender as part of the Short Sale approval.There are some items that certain lenders will not pay however. These items may include unpaid Homeowners Association dues, delinquent utilities, certain repairs – especially cosmetic. If you know you are behind on association dues or utilities, it would be a good idea to set aside some money for these at the close of escrow.Remember, lenders approve Short Sales and accept the resulting loss in an effort to avoid bigger losses through foreclosure.
How long will the Short Sale process take? All short sale situations are unique and follow their own timeline, The actual negotiation or approval process can take as little as 2 weeks or as much as 3 months to complete. On average most short sales take between 30 – 60 days from the date the offer is presented to the lender to the date of the Short Sale approval. Many variables are associated with this timeframe:
How quickly an offer is generated and accepted by the seller
How quickly BPO’s are completed when ordered
How quickly the lender responds to the offer (dependent on the quantity of other short sales the lender is processing)
How many lien holders need to provide approval
Once the Short Sale approval has been received from the bank or banks, the buyer should be prepared to close escrow within 21 – 30 days.
When is it too late to list a Short Sale? I was contacted today by a couple who wants me to list their Elk Grove home as a Short Sale They have been trying to work things out with Wells Fargo Bank for the past 9 months and have not been successful. They have been through the loan modification process with Wells Fargo, to find out if and when they agree to the modification their monthly payment will go up $500! So, needless to say, they are now 9 months behind in their payment and have no way to catch them up. They are way upside down in this home. They had purchased their Elk Grove home for $339,000 in 2004 and now it is currently worth approximately $210,000. The problem is not, can we sell the home…we can definitely sell this home.
The problem is simply, that the homeowners contacted us too late! Well Fargo has set the Trustee Sale on this home for Thursday, October 21st…that gives us a week to list the home, find a buyer and get the short sale package into Wells Fargo Bank. Wells Fargo Bank recently announced that they are not postponing Trustee Sales. With only 1 week left before the trustee sale there is nothing we can do.
So, if you are having trouble making your mortgage payments, don’t wait…call a Realtor right away to discuss your situation. Find out your options before it’s too late! Do you have a Wells Fargo/Wachovia loan and need to sell your home with a short sale?While they won’t extend if the process isn’t completed when they want it to be, they will work with you to let you sell your home with a short sale without you having to be late on your payments.If you are a Elk Grove or Sacramento area homeowner and are contemplating a short sale, we are here to help!
Real Estate Made Simple
The data relating to real estate for sale on this web site comes in part from Keller Williams Realty- Elk Grove. Database last updated 08/23/2017
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