What is a Short Sale?

Real Estate Short Sale refers to a lender(s) accepting a sales price that is less than what is currently owed plus all related sales expenses. So basically, a potential buyer can make an offer on the home for thousands less than what is currently owed, and get it accepted by the bank! This is common in a declining housing market and can be a win-win for both the bank and the homeowner. Home sellers should consider a when the value of their home is LESS than the amount of their outstanding loans. For example, if your home is worth $225,000 but you have a loan of $250,000 then a Real Estate Short Sale is a consideration. Normally a bank will begin to look at the Short Sale Option only if the homeowner is behind on payments and begins to Face Foreclosure, but not always. In rare instances, the bank will still accept a Real Estate Short Sale if the mortgage payments are current. The process to end up at the short sale options typically works like this:

• The homeowner(s) begin to miss payments
           
• The lender(s) try to arrange a repayment plan
           
• The repayment plan fails or is never attempted and the bank mentions a Real Estate Short Sale

Now, if you do not have to sell your home, you could wait out the market and hope for a turnaround in real estate values. However, if you do have to sell your home you basically have three options. First, you can bring cash to the table. In today’s declining real estate market and using the example above, you would sell your home for $225,000 and pay another $25,000 to the lender out of your pocket to pay off the loan on your property. This does not include other selling costs such as closing costs, real estate commissions, taxes etc. Second, you could let the home go into Foreclosure The lender will go through the Foreclosure Process, force you out of your home and then auction it off to the highest bidder at a Foreclosure or Trustee’s auction. The third and best option is to pursue a Real Estate Short Sale.  To be successful in this type of transaction, you need to get Arizona Short Sale Help.

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Why Would The Lender(s) Accept A Real Estate Short Sale?

Why A Lender Would Accept A Real Estate Short Sale; The lender(s) have to incur expenses to complete a Foreclosure and take the property back. These expenses include attorney fees, court fees, and the lack of income from your monthly payments. Lenders also face unforeseen losses from damage to the property, vandalism if the property is vacant and then the additional costs of selling the property. Along with the expenses comes the risk of the property depreciating further, and having to hold the property on the books for an undetermined amount of time. Having a non-performing asset on their books prevents them from lending out more money that will produce a return. Plus, banks are not in the business to own real estate. They have to take back, inventory, and then hire a Realtor to list the property for retail on the open market. We all know how horrible the real estate market is right now and therefore they end up holding the property for many months, and then fire selling it for a loss anyways! Plus, if the homeowner leaves the property and it is left vacant, many times the property is vandalized and becomes costlier and harder to sell! Lastly, statistics show that almost 50% of homes that go to Foreclosure, just before the Foreclosure Sale, the old homeowners gut the house and sell all the items as a way to “get back” at the lender(s). This is illegal but nonetheless happens on occasion. Many lenders are tired of taking back trashed homes and choose to short sale instead. So basically, in most instances, a Short Sale is less expensive than the Foreclosure Process so lenders choose to cut their losses early and Short Sale; These are just a few of the reasons

Steps Found In The Arizona Short Sale Process

When starting there are a few basic items you must get in order to make sure you qualify for a short sale. The Steps In A Typical Short Sale are the same no matter why you are Facing Foreclosure or getting ready to fall behind on payments; Now we want to warn you of something first! In theory, a Short Sale  is not necessarily complicated. Putting together the necessary paperwork and sending it off to the bank is easy. It gets extremely complicated once the negotiations begin. To start, you need a purchase offer to get the process started. In most instances you will not have a buyer ready to put in an offer. Plus, banks DO NOT allow homeowners to negotiate their own Short Sale! A Short Sale Realtor must do it for you. The reason is it must be an arms length transaction meaning that you cannot discount your own mortgage and sell it to your parents who will end up letting you stay in the home. Also why we are on the subject, you cannot discount your mortgage and then buy the same house back at the discounted price! This is considered mortgage fraud and the lenders tend to frown on that. With these disclosures out of the way, let’s look at the Steps A Typical Short Sale First, you must be able to prove a financial hardship. Banks are going to request this proof in the form of paycheck stubs, tax returns, a financial statement, and a hardship letter. Without a good reason why you cannot afford the home any longer, the lender(s) will not likely allow you to Short Sale the home.

Second, you need to figure out the value of your property. Many times a Realtor ;or an Investment Company can provide you with a “market analysis” to give you an idea what your home is worth. We are trying to calculate your equity (or lack thereof) to figure out if you owe as much or more than what your homes current value is. If it is worth less than what you owe, we can continue with a Short Sale.

Third, you must decide if you want to use a Realtor...preferable or an Investment Company  to run your Short Sale? The reason you must choose at this point is that we need a purchase contract (buyer) to sell your property to. Obviously we want you to choose us and here is why. When you hire just a Realtor, you are hiring just one person. For most Realtors, Short Sales are a new phenomenon and they have little experience negotiating with lender(s). When you hire the Short Sale Experts at FashCash4HomesAZ.com, you are hiring a team of specialists that all play a key role in the Short Sale Process. We understand all of the Steps In A Typical Short Sale; Plus, we have years of negotiating experience, and have many contacts with most major lenders!

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What Is In A Typical Short Sale Package?
                                                           
Arizona Short Sale Realtor Bart Miller Explains;What Is In A Typical Short Sale Package - Items The Bank(s) Will Need. Remember the reason a lender will approve a Short Sale is because it will benefit them, not you! The lenders need to know that if they don't approve the Short Sale, they will have to Foreclose on the property and that the sale is more cost effective than Foreclosing.Every Real Estate Short Sale begins the same way with the building of a Typical Short Sale. The lender(s) need certain documentation and a proof of hardship in order to complete a Short Sale request. Below is a list of items commonly found in a Typical Short Sale Package:

• Hardship Letter. A handwritten letter explaining the borrower’s situation and requesting a Short Sale. It should describe why the borrower cannot make their mortgage payments and their fear of possible foreclosure. It should be a plea for the lender to consider a Short Sale!
• Two Years Tax Returns And W-2’s.
• Letter Of Authorization (LOA). This gives your Realtor authority to talk with your lender(s) on your behalf.
  Two Most Recent Bank And Retirement Account Statements.
• Two Most Recent Pay Check Stubs.            
  Current Financial Statement.
• Any Documents Supporting The Hardship.
• Current Market Analysis (CMA). Typically from a Realtor or appraiser.
• Estimated Net Sheet Or HUD-1 (Your Realtor or investment company will provide this document.
• A Copy Of The Executed Sales Contract With Buyers Proof Of Funds Or LSR.
• FHA And VA Might Have Their Own Forms

Once we get these items together, we package them up with an offer, and send the Typical Short Sale Packet off to your lender(s). Expect at least 1-2 weeks before it gets into the lender(s) system and assigned a Loss Mitigation Specialist. Once in the system, the lender(s) typically order a Brokers Price Opinion (BPO) to establish value.

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