Foreclosure rates are at an all-time high. If you meet the criteria, a short sale just might be the solution for you.
In today’s economic climate, homeowners are desperately looking for solutions to avoid foreclosure. One solution gaining popularity is called the short sale. With the help of a real estate agent, the homeowner may be able to sell their property for less than the amount owed to the bank, and walk away with no cost to themselves. If approved, the bank agrees to discount the loan balance, and will accept the proceeds from the sale as payoff. Banks may be willing to do this type of transaction because it is often less expensive than foreclosure.
Stacy and Michael Spikes operate America’s Home Rescue in Austin, Texas. Over the last six years they have completed about 250 short sales. They offer the following tips to get your lender to approve a short sale.
The most important part of a short sale is to pair up with a real estate agent who has experience with this type of transaction. They must have knowledge of the process and it is extremely helpful if they have established relationships with lenders (in particular, the loss-mitigation department).
To qualify for a short sale you must have a legitimate hardship, be behind on payments, and have less than 8% equity in the property. A hardship could be defined as loss of job, divorce, or serious injury or death, and some lenders may be more flexible than others.
A short sale will be different for each type of loan, so you must identify if you have a conventional mortgage or a government backed loan (an FHA loan for example).
You must be honest about everything including your bank accounts, assets, and exactly where you are in the foreclosure process.
Take action and be thorough! Get your lender’s short sale package sent electronically or pick it up in person to get the ball rolling immediately. (If you have more than one lender, make sure you target the right one, and your agent can help determine this depending on your loan.) Gather all materials completely and in an organized manner to deliver all at once. Make certain your name and loan number are on every page and keep your own copy of what you submitted.
Be patient. It is important to wait until you get the go-ahead from your lender before you submit your home to the MLS.
The contract should be as clean as possible. A skilled agent can assist with this and again, the details will differ depending on loan type.
Knowledge is power. Every bank will have a bottom line, and that is the only way to know how to price your property. Your agent should know the exact number your bank needs to hear. Typically, the net required for a conventional mortgage is 78-85% of market value for the home, and 82% for FHA loans. This will depend on lender of course, but also the type of loan and the market you are in.
If you are looking to escape without any costs, you should remember to “gross up.” This means to pad your selling price with any commissions or closing costs you might incur as a seller.
According to RealtyTrac, in the month of November alone, one in every 488 houses got a foreclosure filing. The numbers are frightening and the trend for 2009 only looks worse. If you meet the criteria, a short sale just might be the solution for you.
Author Resource:-
Helen Walker. ShortSaleSolutions.biz is the resource for all of your short sale needs.
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