Selling Short…
Yes, I know you have heard that term before…
now forget everything you think you know because this is different!
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A “Short Sale” has nothing to do with the amount of time it takes to sell one of these properties.
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A “Short Sale” has everything to do with the fact that you owe more money against the property than it is worth.
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You are asking his bank or banks to take less than what they are owed or “short money” and allow you to sell the property. Even though the bank does not own your property this gives the banker a tremendous amount of control over the sale.
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The dangers of this type of sale for you are
o Most banks take a very long time to decide, anywhere from 3 weeks to 9 months, to take less than what they are owed because that have things to consider like
§ Will they be able to write off the loss on their taxes?
§ Or will they be able to get a payback from you in the form of some cash at closing or a deficiency judgment after closing or both?
§ Will they be able to give you a 1099 for their losses, causing you to pay IRS?
§ Will they get any TARP money from the government if the approve the short sale or do they need to take it back at foreclosure to get taxpayer funds?
o Will the bank come back and ask for more money or change the terms of the sale after you wait all this time? Sometime they do that…and it could cost you the sale.
o Will it hurt your credit? No, if you are current and stay current on your payments it will not hurt your credit, it is only if the bank requires you to go behind in your payments that your credit is damaged by a Short Sale.
o the HOME AFFORDABLE FORECLOSURE ALTERNATIVES (HAFA) and the HOME AFFORDABLE MORTGAGE PROGRAM (HAMP)
o And several banks has come to discover that allowing the owner to Short Sell is still better than foreclosure
o The process can be very tedious and timelines can be inflexible so be sure you work with a professional on this.
o Getting a short sale approved requires a lot of paperwork and can be tedious and time consuming.
o Your REALTOR will help you negotiate away many of the negative aspects like deficiency judgments and cash payments or at least reduce them.
o Your REALTOR speaks the same lingo as the bank so they will be able to get things done more quickly and efficiently.
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Do not price your properties too low, while it creates excitement and gets lots of offers it could cause a problem later getting the sale approved if the appraisal comes in a lot higher than the price agreed to.
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Keep the property in as good of condition as possible, you will far outshine foreclosures and make buyers interested in buying the property over others they have seen.
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Answer all offers quickly so that buyers have a favorable impression of you.
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You can ask the buyer to purchase the property in its “AS IS” condition, but make sure appliances, fixtures and equipment do not get removed during the sale process and the property is generally in the same condition as when the buyer originally viewed it.
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Do not accept offers from buyers who are not preapproved for a loan as the bank will not consider the offer without a preapproval.
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Other than what I’ve told you here a Short Sale will proceed like a normal sale…