What is a short sale?

A short sale occurs when the amount of proceeds in a sale of property is not great enough to pay the outstanding amount of money owed on the first mortgage and any other mortgages. These lenders agree to take less than the total amount owed to them and release their lien on the property to allow the sale to proceed. When they agree to do this, they will issue a “Short Sale Approval Letter” that states the amount that they will settle for and any other terms that they may impose.

What types of property can be sold as a short sale?

Most any type of property can be sold as a short sale. Principal residence, second or vacation homes, investment property, etc. are all possibilities. There are different criteria and ways of treating the transaction for different types of property.

What are alternatives to a short sale?

Once a homeowner has exhausted their options to keep their home through loan modification, forbearance, etc., they may need to look at options to settle their ownership obligations.

An alternative to a short sale would be a Deed In Lieu Of Foreclosure. This occurs when a homeowner agrees to deed his interest in the property to the lender without going through the foreclosure process. This may happen when an acceptable short sale offer is not able to be negotiated with the lender.

Another alternative is foreclosure. This is when the lender seeks to obtain title to the property through legal action.

If there are other financial difficulties in addition to the home and liabilities exceed income and assets, bankruptcy may be an alternative.

Why is a short sale a good option?

A short sale will cause less of a negative impact on a borrower’s credit than the other alternatives. A short sale may allow the seller to buy a new home again in as little as two years. Of course, the borrower’s payment history following the short sale will make an impact in their ability to get a new loan and on the interest rate available. A foreclosure remains on your credit report for 10 years, and you may not be able to purchase another home for 5 – 7 years. Short Sales are not reported on a credit history. It will typically be reported as “settled”, “paid as agreed,” “paid as less than agreed.” or something similar. Current or future employers running a credit check will see a foreclosure, but they will not see a short sale.

Deficiency judgments may be negotiated between the homeowner and lender in a short sale, and a good negotiator is often able to negotiate NO deficiency judgment. On the other hand, banks do not negotiate deficiency judgments after a foreclosure, and you will likely have a judgment filed.

A short sale allows you to stop foreclosure and get a fresh start.

Although short sales and foreclosures are both much more common with the housing crisis and difficult economy, short sales also seem to have less of a social stigma.

What is a hardship?

This is simply any situation or change in your ability to pay your mortgage or to stay in your home. It may be due to a decrease in income, medical expenses, a death in the family, divorce, job relocation, neighborhood deterioration, etc. If your home is worth less than the unpaid balance due the lender, and you have a hardship that makes it difficult for you to continue to make mortgage payments, you may qualify for a short sale.

Why would the lender accept less than what is owed in a short sale?

The lender benefits enormously because they get a quick, certain acceptable alternative to foreclosure without having the expenses of the foreclosure process, carrying costs of the property (taxes, insurance, maintenance, etc.), and costs of sale when listed as a REO sale. They quickly remove a non performing asset from their books and immediately net more than they will likely get if they foreclose.

Who Benefits from a Short Sale managed by Serendipity Group?

The seller benefits from a short sale because we are looking out for their best interest, getting the short sale approved with usually NO deficiency. Your home sale will be handled like any other home sale, and you are in control of the sale, not the bank. You will be able to stay in the home until the short sale approval is received, and often upcoming sale dates are able to be postponed while the short sale process takes place. Our primary goal is to obtain the best possible outcome for our homeowners.

The buyer gets the property relatively quickly without the uncertainty of waiting for short sale approval and also gets a good value.

The Realtor benefits by having an experienced negotiator work with the lender, therefore freeing up the Realtors time to list, market and sell more homes. They also appreciate the results that we are able achieve for their clients.