Short Sales – Info for Sellers
You may have heard the term “short sale” floating around out there. So what does it mean to you as a seller? A short sale is a situation in which the amount that you can sell your property for will not be enough to pay off your mortgage and thus you negotiate with you lender to accept less than what they are owed as a full payoff on the mortgage. (By the way, if you live in Michigan you are in good company if you owe more than your house is worth – a full 40% of home owners are in the same spot)
This may seem like a pretty good idea if you are ready to move and are upsidedown on your house. But hold on a minute…not just anyone can do a short sale. Who is a good candidate for a short sale? Basically someone who has a hardship and will be unable to pay their mortgage if they do not sell the house…a job loss, transfer, divorce, things like that. If you are upsidedown on your house and have money in the bank, sorry, but this is not the deal for you. In addition to a hardship, your lender will want to look at your financial information. All of it… W-2s, paystubs, tax returns, bank accounts. They want to make sure you don’t have any money squirreled away or that you could actually have the means to come up with the deficit. And no transferring the money to mom and dad’s account right before the sale…they will check back for several years.
So what are the benefits to doing a short sale for you as the seller? A short sale will not be AS large of a hit on your credit as a full blown foreclosure. It will still make your credit score go down. This means that you may be able to buy another house in the future sooner (or lease a car, or get a credit card, or any of the other of a multitude of things your credit tends to affect these days) In the meantime (and I say this as a landlord myself) it may be easier to rent a place with a short sale on your credit versus a foreclosure.
Finally, while you will not net anything at closing, you also should not have to pay anything to do a short sale. Though are lots of companies that may try to collect a fee upfront. DON’T DO IT. Any reputable real estate company in this market will have an entire short sale department, or at least agents who have experience with short sales. Make sure to ask your agent about their experience with short sales, including their success rate and average turn time. You don’t want to be their guinea pig.
As a buyer in Michigan right now you have certainly been unable to avoid the multitude of foreclosure properties available for sale. But there is another type of sale that you may have seen cropping up as well. A short sale. So what is a short sale? And what does it mean to you as a buyer?
There is a lot of talk out there about foreclosure property. On one side of the coin people are talking about how horrible foreclosures are. And they are. No doubt. But a savvy buyer can turn this crazy market into real opportunity if they are not afraid to get a little dirty. So what follows is some tips and advice from one Realtor who is on the foreclosure front lines to potential foreclosure buyers.
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