The Simplest Way to Manage the Short Sale Process for Sellers
Unfortunately, most of us come face-to-face at least once in our lives with situations that force us to choose between two or more options that can lead to potentially unfavorable financial outcomes. Of course, we’ll pay for hospital services not covered by insurance instead of making the final payment for next year’s cruise. To keep our kids’ after school hobbies within our strict budget, we’ll also skip eating out as often as we’d like.
Decisions like these are somewhat easy to make, though we may take a financial hit or feel we’re missing out.
Deciding between seeing a doctor in the first place and buying your children school supplies or paying the mortgage on time, however, may be a tougher call. None of us likes to risk losing our house no matter what the payoff may be. But, the fact of the matter is that, sometimes, that is the choice you have to make. And, if circumstances—whether in your control or not—have forced your hand and you’ve fallen behind on your loan, the bank has probably come calling with threats to take your house back.
Since the last thing you need is to be forced out of your home by the bank who owns your loan, researching the short sale process for sellers is now a top priority.
Since it can be complicated, and you need things to be simple, we’ll break down the process and lay out your best options all in one place—right here.
Navigating the Short Sale Process as a Seller
If you’re not entirely sure what a short sale is, how it works, or why it might benefit you, you’re not alone. Though the short-selling of homes became a somewhat common occurrence shortly after the housing market crash of 2008—when homeowners all across the country suddenly found that they could no longer afford their mortgages—they are still far from the norm. In fact, only 5% of home sales are short sales, according to RealtyTrac. And, like you, those sellers probably never used the term ‘short sale’ in their day-to-day vocabulary—until they had to.
What is a Short Sale?
When you short sell a property, you are attempting to sell it for less than what is owed to the mortgage lender and other possible lien holders, like your county tax office. Apart from getting current on all of your payments or successfully renegotiating your debt obligations, a short sale is the first step toward avoiding foreclosure—the repossession of your house by a bank or local government office.
By listing the property for less than what is owed, it’s possible to attract more buyers and increase your chances of selling quickly—which can be a huge relief when your bills are too big to pay.
How Does a Short Sale Work?
Unfortunately, the short sale process for sellers can be frustrating—even when it works. After reviewing all of the offers that come in on the house and choosing a buyer with the best terms, you still have to get the bank’s approval. If you have a second and third mortgage, medical or tax liens on the property, or other debts tied to the house, you’ll likely have to get their go-ahead, too. You won’t just be asking that your lien holders generally take less than what is owed, either. You’ll also be asking that they take the exact number your buyer has offered and, if necessary, divvy that amount up between them.
Assuming your lender (and any other lien holders) agree to the sale and the amount that your buyer offers, the sale can move forward according to the terms of the contract much like any other real estate transaction. But, the approval process itself can take weeks, and sometimes months.
Even when only a single mortgage holder is responsible for making the decision, there can be a lot of corporate red tape to wade through and multiple individuals who need to weigh in.
Plus, your property’s current market value may need to be assessed and, as a result, your home inspected. Your buyer may have to submit additional paperwork to justify their price as well.
Just waiting to hear back from the bank is stressful. Factoring in their decision-making process, determining how quickly the sale of your house can go through—something that is critical to know if foreclosure is imminent and your time for stalling the process is limited—will be difficult. And, while you wait, you’ll potentially be falling further behind on your payments.
Can a Short Sale Benefit You?
As stressful as this hurry-up-and-wait process can be, however, it may still benefit you to try for a successful short sale.
If you owe more on your house than it’s currently worth or the payments have become burdensome due to a rise in your medical expenses, a job loss, or a death in the family, a short sale can provide financial relief.
It can also keep you from the embarrassment of having a foreclosure on your record and experiencing the pain of being forced out of your home. Upon short sale approval, some lenders may even offer a few hundred dollars to help you move.
Potential Problems with the Short Sale Option
Still, there are several reasons why you might not want to try a short sale. It’s always possible, even likely, that the bank won’t approve it. Remember, only 5% of today’s home sales are short sales. The reason for this is that it’s usually not in a lender’s best interest to take less money.
It could be worth more to the lender to foreclose on your home and simply try to resell it for more than the offer you receive. Or, they might approve the sale but at a higher price once they’ve appraised the house.
Unfortunately, if your current buyer isn’t willing to go up, the deal won’t close—and you’ll have to put your home on the market again at the new price. Even when a bank approves the sale and the price, it’s possible that other lien-holders—if there are more than one—won’t.
In any of these problematic scenarios, the countdown to foreclosure will still be ticking, putting you that much closer to losing everything.
It may still be an avenue worth taking, however, if your only other option is foreclosure. But, that isn’t likely the case.
There are some buyers, for example, who can take your home off of your hands quickly, deal with the bank directly, and save you from the hassle of a long, frustrating, and potentially disappointing short sale process. They can usually pay you cash for your house, too—in its current condition and without any inspections. They may even be able to assist with your move. And, one buyer, in particular, sees no situation as hopeless because they are a solutions specialist. So, if they can’t help you, they’ll find someone who can.
Sell Your Home Quickly by Expanding Your Options
Getting our clients’ homes sold as quickly and as easily as possible is our top priority here at Sell Your House Direct. Most of the time that means our clients sell their homes to us. After all, as home buying specialists, our business has been built on making fair, fast, and direct cash offers to people who need to get out from under a house that is weighing them—and their finances—down. Of course, one solution does not fit every seller. So, we also make it our business to review the benefits of every option so that you can choose what is best for you.
But, by no means will we leave you hanging if you decide that moving forward with a short sale is going to help you best move on with your life. In fact, if you need a referral for a real estate agent who is an expert at managing the short sale process for sellers, we can provide several. Not only that, but we’ll stay on hand to guide you through whatever option you choose so that you never feel left alone to deal with the sometimes emotional ride of selling your home. You won’t ever be charged for our time, either. Being here for you, no matter what direction you take, is simply part of what we do.