Short Sale

So, your house is going into foreclosure, you know that you can't keep the house and mentally you have came to terms with the fact you are losing your home. The market is tough and you don't think that you can get what is owed on the house. So now what do you do? What you need to do is contact a REALTOR that knows how to do a short sale. A short sale is when you list and sell your home for less than what is owed on it. Most banks are very willing to do these right now. They would rather take the loss on it now rather than to let the house sit vacant and take more of a loss on it after they have taken the house back. Short sales get marketed just like any other house on the market.

The next question that is usually asked is "Who is responsible for the short?" Because it so common right now, most banks are willing to forgive the shortage if you have a true hardship. You must supply financial documentation and a letter of hardship to the bank. If the hardship or financials do not look right to the bank, they may ask you to sign a promissory note to repay the shortage at a low interest rate over a period of several years. If you have a 2nd mortgage, those can be more tricky to get cleared. It will usually depend on how big the shortage is and once again what your financial and hardship situation looks like. If your 1st mortgage is taking a short, usually your 1st mortgage company will offer a token payoff of $500 to $1000 to the 2nd in order to get them to release the loan. Also, be patient. Once an offer is written on the house it can take over 60 days to get it approved and to the closing table. I've had them take as little as 45 days and I've had them take as long as 5 months to get them closed once an offer is accepted.

Another benefit is that it does not show up on your credit report as a big negative like a foreclosure or bankruptcy does. However, not all REALTORS know how to do a short sale. Not all REALTORS want to do a short sale- in fact most REALTORS do not like to do them and want nothing to do with them because they get paid less and have to do more work. So, it is important to find the right REALTOR. If you have other questions, please feel free to ask.