Monday, March 17, 2008

Short Sales

A real estate short sale is when the amount due in loans on a property exceeds the amount the property could be sold for.
Know your property value
Your REALTOR® will provide you with an estimate of your home's value in today's market. If you are selling the home yourself you will have to prepare your own market analysis for your property and the surrounding area.

Calculate your Closing Costs
Your REALTOR® will provide you with an estimate of your closing costs. If you are selling your home yourself have your Title company or Real Estate Attorney what your closing cost will be.

Determine how much you owe on your home
Total all of the loans on your property.

Calculation Time
Subtract the total amount you owe on your home from the estimated proceeds for your sale. The higher the positive number the better off you are. However, if this calculation yields a negative number then you have a Short Sale and move on to the next step.

Contact Your Lender(s)
Explain your situation to your bank's customer service department. This will not be their first call of this type. You will most likely be directed to to a specific department that the bank has set up to deal with short sales. Try to talk to a supervisor or manager; they will have more authority, training and experience.

What are Your Lenders Procedures?
This is where you will find a great amount of variance between lenders. Some lenders are willing to work with you to resolve the issue. They may offer to recast the loan with lower payments over a longer time period. They may offer loan forbearance for some time period, adding the missed payments and interest on to the back of the loan. The lender may settle for a reduced amount owed on the loan and allow you to sell the home for less than is owed. Other lenders may tell you the debt is your responsibility, period.

Sell the Home
Keep in mind however, that on certain types of loans the lender may require to make up the difference either by a personal note or thru collection.