A short sale is what happens when the bank takes less then what they are owed. For example, a buyer buys a home for $150,000 in 2007. Unfortunately, they lose their job in early 2008 and cannot pay their bills. They try to work something out with the bank on their late payments and their account rep suggests a short sale (not usual). From there they put the home on the market with a Realtor and get and negotiate a sale for $125,000. They avoid foreclosure, eviction notices and investors knocking on the door at all hours… well maybe.
The real world isn’t so clean.
What has to happen in order for a bank to consider a short sale:
- Some sort of hardship – job loss, death in the family, medical bills (KEY: MUST BE DOCUMENTED HARDSHIP)
- Must be "upside down" and owe more than the home is worth when sold through a Realtor
Some things that will absolutely help you if you are in this situation:
- Go look and get approved for an apartment or rental immediately
- Keep all documents for eveything as soon you know you’re falling into foreclosure
- Don’t be fooled, filing bankruptcy can help you stay in the home longer but won’t stop the foreclosure process.
Benefits of a short sale to owner
- Get to stay in the home a little longer with no payments.
- Some lenders look at it as slightly better than a foreclosure when purchasing another home.
- Some banks will NOT make you sign a promissory note!
- Avoid foreclosure process.
If you have any questions, feel free to comment or e-mail me.
