If you owe more on your house than what it is worth, you may want to consider doing a short sale…
What is a short sale?
As short sale is a settlement for a homeowner that is facing a hardship that is negotiated with the bank to accept less than what is owed on the house. First Class Realty has agents who are experienced and skilled at negotiating and convincing banks to take less than what is owed on the house. There is an extreme amount of paperwork involved which is why it is so important to have the right agent. If there is more than one loan, it becomes even more complex as we will also need to negotiate a settlement between the existing lenders as to what amount each lender is willing to accept to release their lien on the house.
Not all lenders are willing to accept a short sale or grant a deficiency waiver, therefore, it is important to have an agent who is experienced at convincing them that a short sale is in their best interest… that it makes financial sense for them to accept the short sale rather than go through the expensive process of foreclosing on the property.
The lender has to be convinced that if they don’t accept the short sale they will ultimately end up foreclosing on the property and will receive even less. It is very important to have an agent who will present all of your financial and hardship information in the most convincing manner. Hardships include reduced income or unemployment, job transfers, medical emergencies, bankruptcy, divorce or death of a spouse or change in loan terms. We will guide you in how to best explain your situation in a hardship letter that will be required by the lender.
As you can imagine, the process of getting a hardship package accepted, avoiding deficiency judgments, finding a qualified buyer and satisfying the bank’s pre-closing condition requires specialized skills and a highly organized systems. This is not something you want to trust to just any real estate agent.
Short Sale Vs. Foreclosure?
If you are not able to make your mortgage payments and a loan modification has already failed or you have decided that a loan modification in not in your best interest, it IS in your best interest to attempt a short sale before you just walk away and let the bank foreclose… for many reasons.
A foreclosure has significantly worse credit score implications and is considered abandonment of a debt by the lender and may be held against you by future creditors and even employers for years to come.
Then there is also the possibility that the lenders will sue you for a deficiency judgment for the difference in what they made on the sale after the foreclosure process and what you owed. At that point you will have to either settle with them or file bankruptcy to protect yourself from further liability. When we negotiate a short sale for you we make every effort to also get you a deficiency waiver so that you are then free from further debt to the bank.
You also get to stay in the house for the duration of the process.
You will sign a third party authorization that will give us permission to negotiate with the bank on your behalf and will stop all the harassing phone calls as the bank will be talking to us instead of you.
You will also know in advance when you will need to move and transfer possession of the house to the new owners rather than getting an eviction notice when the property has been sold at auction.
We may even be able to get you some financial incentive from the bank to help with your moving expenses.