A short sale can be the saving grace for a homeowner on the verge of losing their house because they can’t make the mortgage payments. Unfortunately, 80 percent of short sales attempted by realtors fail, and the house ends up going into foreclosure despite the homeowner’s best efforts to get out from under the note.
How can you ensure that your short sale will be successful? The key is to work with an experienced realtor who has a solid track record in short sale negotiations. Better yet, find an agent who specializes in this area and does nothing but short sales.
In a short sale scenario, the house is sold for less than what is owed on the mortgage, and the bank agrees to assume the loss. To qualify, you have to be upside down in your mortgage—that is, you owe more than the house is worth—and you have to demonstrate financial difficulty. Simply wanting to get out from under your mortgage is not reason enough for a short sale; however, if you lost your job, have high medical bills, are getting divorced, or face a similar financial hardship, most lenders will consider and allow a short sale.
To start the process, the realtor lists your home at the current market value and looks to find a willing buyer. Once the buyer is in place, the realtor presents the buyer’s information to the bank together with extensive paperwork concerning your financial situation. The realtor is then responsible for negotiating with the bank to accept the buyer’s offer and arrange a short sale, even though it means the bank is taking a major loss on the loan.
Inexperienced realtors generally fail in these negotiations and often will tell the seller that the bank refused their offer. This excuse doesn’t fly, because banks prefer a short sale over foreclosing on a home. That said, a bank needs things managed a certain way to ensure they won’t be defrauded, which is why the realtor needs to be meticulous in managing the process.
When looking for a realtor to arrange your short sale, experience matters. Many realtors will take a certification class and subsequently market themselves as short sale certified or a short sale expert. As with any other profession, completing a ten-hour training program doesn’t make you an authority. Likewise, a realtor that has done one or two short sales is not necessarily qualified to handle yours.
You should also expect the realtor to manage the entire process, from gathering information about your financial situation to listing your home, accepting the buyer’s offer, and negotiating with the bank. If the realtor asks you to do any of the paperwork or speak with the buyer or lender, you’re destined to fail.
The prospect of losing your home in a foreclosure is stressful enough—the last thing you need is a realtor who makes empty promises. Like anything else in life, you need a specialist and not a jack of all trades to get things done right, so you can move on with the next phase of your life. We specialize in short sales versus traditional real estate transactions—short sales are all we do. We know the process inside and out, and we have existing relationships with numerous lenders to help expedite short sale negotiations. If we can help you and your family, please give us a call.