Short Sales; A dignified solution to a homeowners’ financial crisis
The words “short sale” is heard a lot, but not really understood by many. A short sale may happen when a homeowner that NEEDS to sell their home can’t because the value has dropped below what they owe. The “needs-to-sell” determines who qualifies for a short sale. The “need”, in the eyes of the lender, is a circumstance or series of events that has made it impossible for the homeowner to continue to pay the monthly mortgage payments. These circumstances could be a reduction in income as a result of a pay cut or loss of commissionable income, a job loss, a divorce, a job transfer or new hire out of the area forcing a move; a death of either a family member who is a wage earner, or one who is not, prolonged illness, any serious medical condition causing a forced move, increase in medical bills, sustained medical leave of absence from the work force, or disability. In many situations there is a combination of factors that when compounded, the homeowner finds his savings depleted and the possibility of losing his/her home a more probable occurrence.
A short sale may be the best solution after you have tried the other options available to ease your financial crunch. Seeking advice, from your lender, for a possible refinance, loan modification or forbearance are possible ways to stay in your home while reducing your monthly financial obligation. Visit www.makinghomeaffordable.gov to research the viability of these programs for your situation. If those avenues don’t achieve successful results the short sale becomes the alternative to avoid foreclosure.
How you make your case to the lender? A critical part is the homeowner’s hardship letter which outlines what happened and what he/she has done to try to prevent foreclosure. Presenting one’s story in a 100% transparent fashion is the best approach. The letter accompanies the documentation one assembles when trying to qualify for a loan, however, in this situation, you are looking to de-qualify yourself from your present loan.
Each case is specifically unique and there is not a hard and fast rule as to who will qualify, with what lender conditions that may or may not be imposed, and who will not qualify. In most situations, the lender does not render his decision to accept the short sale until you receive, execute and submit a purchase contract contingent upon the lender and seller work-out agreement. Most lenders only want to review completely executed contracts and will not review any partially executed contracts. Remember this is a sale between a seller, the owner of record, and a qualified buyer with a contingency on seller lender approval, much the way a buyer makes his offer contingent upon a buyer’s loan approval from his lender. This is not a bank owned property where the bank collects multiple offers and makes a decision of which to select.
Does that mean you could go through all the documentation, showings, negotiations and contract acceptance and either be turned down by the lender or more probably be presented conditions by the lender that you cannot accept? The answer is “yes”. However, in today’s climate, lenders are actively interested in working with the homeowners to prevent foreclosures. Remember, the lender is in the business of lending money not acquiring property.
Not all homeowners will either get their loans modified or get an approved short sale and some will still face foreclosure. However, at the end of the day, it is important that you know you, along with your skilled REALTOR by your side, did everything possible to avoid foreclosure.
Your REALTOR plays a very critical role in this process and requires special training and acquisition of special skill-sets to understand how to best present your case. The CDPE designation, (Certified Distressed Property Expert), indicates a commitment to understanding the complexities of the short sale and the knowledge and skill-sets to maneuver through this tedious process. A highly respected national organization with more than 8,000 members, the CDPE training never stops as the short sale processes within every lender is continuously evolving. The initial training spans two days and more than 15 hours and is followed with opportunities for three hours of ongoing training monthly through scheduled member conference calls and twice monthly Advanced Webinar training. Your team to guide you through this complex maize should include your short sale specialist REALTOR, both a tax and real estate attorney, and a short sale trained Escrow officer to act in concert with you to assist you in accomplishing your goal of avoiding foreclosure, as there is a big difference in life without foreclosure as opposed to life after foreclosure. Look for the CDPE logo before you make your REALTOR decision.
If you have any questions or would like a referral to a CDPE in your area, contact Gayle Henderson PC CDPE, RE/MAX Excalibur Realty, Scottsdale Arizona. email@example.com .