 |
•My property is upside down. What are my options? A. Foreclosure Give up the home and walk away. Property is then sold in an auction, also known as a Trustees’ Sale. B. Deed-in-Lieu Give the Title back to the lender. C. Modification Negotiate with the lender to change the terms on your loan. D. Short Sale Negotiate with the lender to see if he will accept the purchase price of a property for less than its owed. •Of the three, which hurts your credit the most? Foreclosure. You ruined the mortgage contract with the bank, and will not be able to purchase another home for at least 7 years. •If I don’t want to go into foreclosure or deed-in-lieu, how should I decide between modification and Short Sale? Modification: If you want to continue to live in your current residence, then you should attempt to work with your lender to see if you qualify to modify the terms of your loan. Short Sale: If you want to get rid of your financial distress and move on, then short sale is the other way to go. •Is doing a modification the right choice for me? If you are able to make your monthly mortgage payments, but it is straining your income a little, then a modification may work. Most modifications will be re-adjusted for 6 months then reevaluated. It is not a long-term solution if you are deeply financially distressed. •Is doing a short sale the right choice for me? Generally speaking, if you are no longer able to pay for your monthly payments and the difference between your mortgage price and selling price is too high to pay, then a short sale is a clean way to break off your distress. •Do I have to pay for any closing costs, agents’ commission, etc., in a short sale? No. When the lender approves of the short sale, they are incurring the monetary aspects of the transaction, including all closing costs, agents’ commissions, title fees, etc. In modifications, there are fees for doing it, but in short sales, the lender covers the cost. •Are all lenders willing to do short sales and why? The bank already understands that they are going to incur a loss, so they want to choose the route that cushions the least loss. Short sales prevent them from having to pay foreclosure costs: acquiring the property, assigning a property manager, paying for repairs, etc. In comparison, a short sale saves them about 10% of those costs. The faster they can turn over a negative asset, the better. •Who is qualified to do a Short Sale? Financial trouble or adverse reasons that show your hardship. •Is a hardship necessary? Yes, whether it is financial or medical reason, the banks will not accept without one. Examples of hardships are: - Separation or Divorce - Medical Bills - Inability to work due to health reasons - Death of Spouse - Job Relocation - Reduced Income or Unemployment - Business Failure -…Etc. •What is the difference on my credit with a Short Sale? There is a huge difference between a foreclosure and a short sale. •Do I have to be behind on my payments to do a Short Sale? No. You can do a short sale without being late at all. •If I have already done or attempted a modification from my lender, can I still do a Short Sale? Yes. Doing a modification does not affect your ability to do a short sale. •What is the Short Sale Approval Rate? ≈10%. Sellers may back out of the deal, agents may not be experienced, pricing may be too high, too many reasons as to why it’s so low. •How long does a short sale take to get Short Sale Approval? From 2009, banks have sped up the approval process to 3-5 months, which is a vast improvement from previous years. They are constantly working on improving the short sale approval time due to the government support, and short sale approval times may increase in the future. •Can I gain any equity in the short sale process? No. Because there is already a negative difference between the mortgage price and your home’s selling price, the bank will be reaping in any gains that happen in the selling process, if any. The bank is eating up your negative cost, so you do not get any equity from it. •If I do a short sale, what kinds of items in my home can I keep? Like a regular/standard sale, anything that is permanently attached to the home stays with the home. Permanently installed items that you wish to take with you or to be sold separately must be stated with the buyer before signing the first purchase contract. •During the Short Sale approval process, do I have to maintain the upkeep of my home? Yes. Not only are we looking to get approval from the lender, we want to keep our potential buyers as well. After 3-5 months of the short sale, you do not want them to re-look at the home they want to purchase and think that it has deteriorated. Minor maintenance like lawn trimmings and tidiness is a must. •Should I prepare to move out as soon as I start the short sale process, even before approval? Before short sale approval, you do not have to prepare to find a new residence. Once you hear that your short sale has been approved and your home is about to enter escrow, is about the time to start looking for new residence. When you move out is up to you, but it must be finished at the close of escrow. •If I don’t want to do a Short Sale in the middle of the approval process, am I allowed to cancel the transaction? Yes, as long as you cancel the transaction before the bank approves of the short sale property and both seller and buyer have signed to enter escrow. •Will there be any monetary ($) penalty for cancelling my transaction midway? Because of the extraneous nature of the short sale approval process, many agents may charge a cancellation fee if you cancel after the bulk of the work has been accomplished. Please contact me for my personal short sale written policy. •If the short sale does not get approved, do I have to pay for any costs? No. If for any reason the bank decides that they do not want to accept a short sale on a particular property, then you do not have to pay any costs. •How long is the short sale escrow transaction time? This is similar to regular sale escrow times. Cash transactions normally around 15 days, all other short sale escrow transactions between 30-45 days. Most banks will ask for ASAP. •The Short Sale Buyer is asking to fix certain parts of the home. Do I have to pay? All homes are sold as-is in a short sale. If the bank approves of fixing the home, then they will be the ones responsible for paying for it. •There are a lot of fraudulent Short Sale companies out there that are promising amazing modification results. How do I tell the difference? 1. Never pay up front! No up-standing company would make you pay without delivering the results first. 2. Make sure they have a Certified Short Sale Real Estate License or Short Sale Certification. 3. How long has the Short Sale Company been established, do your research on Google (look up Company X Review or Complains.) 4. Definitely DO NOT give away any rights to your property title to anyone. Giving away your title does not relinquish your mortgage debt, but takes away your rights to the property. 5. There is no such thing as a free lunch! If the short sale deal sounds too good to be true, it might just be that! |
