Robyn Yates Real Estate

Homeowners having difficulty making their mortgage payments should talk to their mortgage servicer or a housing counselor as early as possible.The servicer may not be the same company that originated the homeowners mortgage.
The servicer will work with their customers to find viable alternatives to foreclosure where possible.
A servicer may own the loans they service and/or service the loans for investors so the ultimate decision as to what alternatives can be provided may not be up to the servicer.

What is a Short Sale?

A short sale is a program that allows homeowners to sell the home for less than the amount owed on the mortgage.
Homes are sold at fair market value and the proceeds are used as payment in full on the mortgage.
Borrowers must qualify to be considered for a short sale.
Qualification does not guarantee short sale approval.
Note: A promissory note for debt not covered by the sale may be required by some investors or, junior lien holders to agree to the short sale.

Homeowner options include:

Why are there short sales?

Homeowners have an involuntary hardship and can no longer afford their monthly mortgage payments.

The property is worth less than what is owed.

Short sale homeowner benefits

Avoid stress of foreclosure sale; honorable exit to a difficult situation.
Homeowners can typically live in the home until the new owner closes, giving time to make other living arrangements.
Foreclosure is postponed and collection calls will stop once a written, signed offer is received and approved.

Short Sale impacts

Homeowner impacts

Credit report will state "paid off in full for less than full balance."Reestablishment of credit may be required to qualify for a new mortgage following a short sale.
There may be tax implications. The homeowner should speak with their tax advisers about the tax implications of a short sale.

What else homeowners should be aware of

Buyers cannot be anyone the homeowner has a close personal or business relationship with,including family and friends
Homeowners are responsible for making their mortgage payments while the home is on the market.
Mortgages in bankruptcy require special consideration.
Homeowners should speak with their mortgage company to discuss their options.

What does the Sellers' REALTOR need to know

Who would not be eligible buyers

Anyone with a close personal or business relationship to the homeowners; family, friends, neighbors.

How to possibly reduce the time line

Notify the lender that is servicing the property as soon as the listing contract is signed. This allows the servicing company to complete the property valuation and borrower financial evaluation prior to receiving the offer. This significantly reduces the short sale decision time on a submitted offer.
Allow the appraiser timely access to the property
Due to the complex nature of the sale, the process does not follow those of a typical real estate transaction

What REALTORS need to know

A short sale approval is good for only 30 days
If the closing does not occur within 30 days:
The entire short sale package may need to be resubmitted with updated information, and/or the approval process may need to start over.
Buyer concessions must be approved by the investor.