If there are any services that Chris Gabledon, realtor for EXIT Realty SCV, can do well, processing a short sale is at the top of the list.
No doubt, since the economy began tumbling in the last quarter of 2007, much of the news we heard about the realty market shifted from the rise in property values and property-flipping by liquid investors to the alarming number of mortgages that have gone “under water”. Highlighted in Michael Moore’s 2009 documentary, “Capitalism: A Love Story“, were the foreclosures and evictions of families from their long-time homes. Some families, however, managed to escape foreclosure by undergoing a short sale.
What is a short sale, anyway? According to Wikipedia:
A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.
If the definition had some “lawyerese”, here are the highlights:
- Mortgage to date + proceeds from sale < balance owed on property’s loan
- Selling the property at a loss is better than nothing
- Avoids foreclosure, large fees for the bank, and poorer credit scores for the borrowers
- Borrowers may still have an obligation to pay the loan
If you find that conducting a short sale is in your best interests, this is how it’s done. Using the services of a realtor may ease the process:
- Verify the value of your property.
- Add up all the costs of selling the property.
- Determine the amount owed against the property.
- Subtract the total amount owing against the property from the estimated proceeds from the sale.
- Contact the lender or lenders.
- Ask the lender what its procedures are for a short sale.
- Sell the property.