You don’t have to be behind on your mortgage payments in order to qualify for a short sale –you have to have a hardship and you’ll have to write a hardship letter (and proof it) to the bank. You have to owe more, than your house is worth. There are certain rules that the bank has in order to determine if you qualify for a short sale or not. Oh, and, these rules change occasionally, so make sure your real estate professional is up with these changes.
Sometimes it’s very clear that a property is a or will be a short sale. The real estate agent will provide you with a market analysis. It shows homes like yours, that sold in your area in the last 3 to 6 months and how much they sold for. Together with your Realtor (R) you will come up with a possible sales price. Armed with this information you’ll decide to list or not to list.
Other times it’s not so clear if your property is a short sale. You might start out, listing your house at a price that will cover pay all that’s owed to the bank(s) as well as the cost of the sale. If your home does not sell for that price, you might consider lowering the price. Will this then ‘slip’ you into a short sale price range, in which some cost are not covered if the house sells for that? If so, you will sign a short sale addendum or decide that the deficiency is mall enough for you to bring money to the table in order to avoid a short sale.
Another option is to take the house off the market and ride the it out just a little bit longer. Renting has now become a great option, as rental prices have become strong.
Just so that you know: A short sale is nothing to be ashamed off. Your credit score will suffer, but this too shall pass. If you are able to keep up with other obligations after the short sale, you could be eligible to get a Fannie Mae loan in as little as 24 months.
But whatever you do, make sure you know what’s coming to you. You should talk to a:
- Lawyer familiar with short sales
- Talk to your tax professional about potential tax implications, due to the short sale.
- Get in touch with me to talk about the value of your home.