Short Sales

Ever wonder what exactly a short sale is? Well, you're not alone. As the economy and real estate market continues along its steadily slowing decline, the reality of not being able to (or wanting to) keep floating that monthly mortgage payment is on many minds. Ethical and moral issues aside, homeowners are increasingly having to face the prospect of trying to refinance loans that carried rates from several years ago, which are, in some cases, one to three percent higher than much of what is currently available. Those that have looked into such options may have found that they are unable to do so. Where do you turn next if you cannot afford to pay your mortgage and your bank does not want to work with you? Perhaps you have tried to modify your loan or loans with the same disappointing outcome. What next? You can always walk away from the home but then will suffer the yet unconfirmed long term effects a foreclosure on your credit profile.
Short sale, as the term has been more commonly known by the general public over the last several years, is a process that allows the homeowner to list the home for sale, submit an offer (usually the highest and best) to the bank to see if they will approve you as being allowed to sell the home, based on your well documented financial condition. Once the bank has reviewed your financials, they will turn to look and see what they feel the home is worth in the current market. This can be done using what the industry calls a BPO, or Broker Price Opinion, whereby the bank requests this through a local real estate broker to provide their "best guess" as to what the home may be worth, given current market conditions and recorded sales for similar homes. Once they have that figure, they run a series of complex financial calculations estimating whether it is cheaper to decline the short sale and foreclose, or grant the short sale and get out of the property for less than the cost of the foreclosure proceedings. The offer to buy the home is reviewed along with the other data by the bank or investors that actually own your mortgage. If they like it, they will grant the approval and instruct the bank to send the terms in a written approval, detailing final terms of the purchase and the time frames in order to close escrow.
There are many resources for homeowners to tap into, one such area is a great new web site that is the result of the latest joint state and federal settlement with the five major lenders and nearly fifty attorneys general. This is a great place to start and review all the info they have to see if you may be a candidate.
Another great resource is the link below, you will find a wide range of info dealing with many aspects of the whole short sale process. There is of course another great source which is contacting us directly for any questions, concerns or comments you may have. We have far more info than we could possibly write in a single post, as every short sale and housing challenge people face, are unique in their own right, it can offer great piece of mind to speak with qualified professionals. You can reach us directly at 949-677-3156 or via email at Matt@MJDavisProperties.com
Visit houselogic.com for more articles like this.
Copyright 2012 NATIONAL ASSOCIATION OF REALTORS®

No comments:

Post a Comment

Subscribe to: Comments (Atom)